 "Aurobindo Pharma hits three-month high")
Aurobindo Pharma has surged 5% to Rs 809, its highest level since February 2, this year on the BSE.
The stock has gained over 6% in the past two trading sessions after the company said it has received final approval from the US Food & Drug Administration (USFDA) to manufacture and market Lacosamide tablets, 50 mg, 100 mg, 150 mg and 200 mg, used for treatment of partial-onset seizures in American market.
The stock has gained over 6% in the past two trading sessions after the company said it has received final approval from the US Food & Drug Administration (USFDA) to manufacture and market Lacosamide tablets, 50 mg, 100 mg, 150 mg and 200 mg, used for treatment of partial-onset seizures in American market.
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According to IMS, the approved product has an estimated market size of US $782 million for the twelve months ending February 2016.
This is the 73rd ANDA (abbreviated new drug application), including 15 tentative approvals, to be approved out of Unit VII formulation facility in Hyderabad, India for manufacturing oral non-antibiotic products. Aurobindo now has a total of 257 ANDA approvals (221 final approvals including 11 from Aurolife Pharma LLC and 36 tentative approvals) from USFDA, the company said.
Aurobindo Pharma has gradually transformed itself from an API (active pharmaceutical ingredient) player to an established formulations player in the generic space.
“There are multiple growth levers in place with the change in business mix led by increased focus on formulations. The major thrust comes from US market on the back of growth expected from the huge ANDA pipeline in injectables, controlled substances and oral solids space, break-even expected in acquired product portfolio of Actavis in Europe in FY16 which is likely to contribute to higher single-digit margins in FY18, and reduction in debt led by free cash flow generation over the next two years,” according to Nirmal Bang.
"The stock historically traded at a lower valuation (five-year average of 12x) owing to high contribution from low-margin API sales in overall business, a highly leveraged balance sheet, poor margins and return ratios, and the overhang from USFDA issues on two of its units. With most of these problems resolved, we expect the valuation gap with larger-cap peers to narrow and expect a further re-rating of the stock,” the brokerage house said in a research report dated April 7, 2016.
