Aurobindo Pharma plans local market foray with buyouts, targets Rs 1,000 crore domestic formulation sales

Aurobindo Pharma, one of India’s largest listed pharmaceutical firms with a large contribution from global sales, is exploring a foray into the domestic formulations market and is actively looking at inorganic growth opportunities.

The Hyderabad headquartered firm is looking at opportunities in the domestic market in the areas of branded formulations, over-the-counter (OTC) portfolio, and personal care portfolio.

Disclosing this at an investors/ analysts call held on February 10, the Aurobindo Pharma chairman PV Ram Prasad Reddy said the company wants to reach around Rs 1,000 crore of sales in the domestic market through inorganic route in “3 years from the date of the first launch.”

Stating that the company expects clarity on the product segments in the coming one or two quarters, Reddy said, “we want to go to the either branded or OTC or personal care and all three together, then complete. Because things are changing in the branded formulation, people are not going multiple thousands of reps, that trend is slowly going. So, this is the time we want to go organic and inorganic.”

Aurobindo Pharma shared the transcript of the investors/ analysts call with the bourses on February 17.

Responding to analyst queries, Aurobindo Pharma’s chief financial officer Santhanam Subramanian said, “the new business strategy is under evaluation” and that “the aspiration for us is in the third year we should be achieving a turnover of 1,000 crores and whether it can be organic or inorganic.”

The CFO claimed that the company has the surplus capacity and that without waiting for the strategy work to complete, the company “will do the things parallelly in such a manner, we will be able to meet our aspirational growth.”

Spends Rs 400-500 cr on PLI project:

Meanwhile, Aurobindo Pharma said it has invested Rs 400-500 crore on the production linked incentive (PLI) scheme, said, chairman Ram Prasad Reddy.

Vice-chairman and managing director Nithyananda Reddy said the company was going ahead with a project for 15,000 tons of Penicillin G at Kakinada in Andhra Pradesh. He said the company has completed the land acquisition, obtained the environmental clearances, and construction of the project was going in full swing. Further, he said the company expects the production to commence by FY 24 end.

Providing more details on the PLI project at Kakinada, chairman Ram Prasad Reddy said the company increased the capital expenditure outlay by Rs 200-300 crore on Penicillin G alone and that out of the land of 400 acres bought, the company is using 120-130 acres for Penicillin G alone.