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Last Updated : Aug 10, 2017 02:22 PM IST | Source: Moneycontrol.com

When Rakesh Jhunjhunwala grilled Aurobindo Pharma top brass after muted Q1 results

EU formulations contributed 25 percent to the total revenue registering a growth of 18.1 percent to a Rs.831 crore, led by an acquired business that has seen profitability during the year on the back of increased focus, product pruning and cost efficiencies.

Ace investor Rakesh Jhunjhunwala of RARE Enterprises, who holds close to 1.12 percent stake in Aurobindo Pharma as of the quarter ended June 2017, quizzed its top brass on price erosion in the US market in a conference call on Thursday.

Reacting to the numbers reported the pharma major and the price pressure seen by the company in the US, Jhunjhunwala asked the management that it looks like the market is bottoming out.

N Govindarajan, managing director of Aurobindo Pharma responded by saying that it will not be wise to generalise the situation because many companies have gone aggressive with respect to pricing.

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Adding to that, Jhunjhunwala said that he is not trying to predict the future but if we track the performance from Q4FY17 to Q1 FY18 there is not base erosion in the overall portfolio. The erosion is there on a YoY basis.

To this, management responded by saying that we are not expecting big erosion in base products, maybe (+/-) 3-5 percent.

Does this indicate that the industry is bottoming out, asks Jhunjhunwala?

The management responded by saying that yes, it could be a possibility.

The other question, Jhunjhunwala asked about the performance of EBITDA margin and turnover of Europe likely this year?

The management responded by saying that in June quarter the Europe EBITDA margin crossed double digit this year.

EU formulations contributed 25 percent to the total revenue registering a growth of 18.1 percent to a Rs.831 crore, led by an acquired business that has seen profitability during the year on the back of increased focus, product pruning and cost efficiencies.

In January 2014, Aurobindo bought loss-making western European commercial operations of Irish drug maker Actavis Plc for €30 million.

The antiretroviral portfolio added Rs 244.6 crore to the total revenues of the company, posting a decline of19.3 percent.

In the Q1FY18, India's third largest drug maker on Wednesday, posted an 11.4 percent decline in net profit to Rs 518.5 crore for the first quarter ended June FY18 with flat US generics sales and drop in revenues of API and anti-retrovirals impacting the bottomline, despite a surge in Europe business.

The company reported a net profit of Rs 585 crore in the corresponding quarter of the previous year. The revenues declined 2.3 percent to Rs 3678.75 crore for the quarter ended June.
First Published on Aug 10, 2017 11:02 am
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