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Aurobindo Pharma Ltd.

BSE: 524804 Sector: Health care
NSE: AUROPHARMA ISIN Code: INE406A01037
BSE 00:00 | 06 Oct 542.55 -1.50
(-0.28%)
OPEN

550.80

HIGH

552.40

LOW

540.30

NSE 00:00 | 06 Oct 542.50 -1.75
(-0.32%)
OPEN

549.95

HIGH

552.75

LOW

540.25

OPEN 550.80
PREVIOUS CLOSE 544.05
VOLUME 41947
52-Week high 742.25
52-Week low 494.75
P/E 22.17
Mkt Cap.(Rs cr) 31,788
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 550.80
CLOSE 544.05
VOLUME 41947
52-Week high 742.25
52-Week low 494.75
P/E 22.17
Mkt Cap.(Rs cr) 31,788
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Aurobindo Pharma Ltd. (AUROPHARMA) - Chairman Speech

Company chairman speech

Preparing to emerge stronger

At Aurobindo Pharma we remain committed to becoming one of the mostsustainable organisations in the pharmaceutical industry. We are diligently workingtowards the goals set for reducing carbon emissions replacing traditional fuel sourceswith renewable energy mindful management of water and waste and conservation ofbiodiversity.

Dear Shareholders

The challenges caused by the Covid pandemic during FY21 continued intoFY22 and some new challenges got added. The start of the Russia- Ukraine war in Q4 FY22set the stage for all-round commodity price volatility which significantly affectedmargins and profitability in our key product segments. However the diversified spread ofour product portfolio and the vast number of markets that we operate in helped to minimizeand mitigate the extent of negative impact and we were successful in maintaining anEBITDA margin of 18.7% despite these headwinds.

We have a very strong presence in the US market which accounts foralmost half of our formulations revenues and houses the largest number of ourmanufacturing facilities outside of India. However this business was one of the hardesthit this year due to increasing competition on pricing of formulations vis-a-visunprecedented rise in input materials.

Our Europe business on the other hand grew at a steady pace of around10-15% as did our growth markets in countries like Canada and Brazil. We have completedthe development of our injectables manufacturing facility in the US and expect a good pickup in demand realizations from that region in the coming years.

SHIFTING GEARS REALIGNING PRIORITIES

Two challenging years back-to-back have helped us to put ourpriorities into perspective. We will be shifting gears and realigning our business overthe near- to medium-term - continuing with some of our focus areas and reducing dependenceon the rest. Our strong background in generic formulations has created an over dependenceon raw material procurement input prices and logistical performance - all of which arefactors beyond our control. Unpredictability in any of these dimensions can potentiallycorrode overall growth. We are keen to moderate this impact over time.

We will continue to drive our injectables business where we envisagestrong growth and healthy margins and a working model that premiumizes value addition.

Our biosimilars portfolio growth has been gaining steady momentum andin FY22 we filed two oncology biosimilars with the European Medicine Agency.Additionally three more are at Phase 3 licensure clinical trials stage of which one isexpected to complete these trials by early FY23. As we build our biosimilars pipeline weare optimistic about the new revenue streams starting in the next 1-2 years.

Closer home we have been working consistently on the opportunitiesunleashed by the government's Production Linked Incentive (PLI) scheme with thepenicillin and allied areas throwing up some very attractive prospects. We have initiatedbuilding capacities in these areas and invested this year 72677.7 million and the totalcapital for this project is expected to be around 718500 million to 719000 million whichwill help us to significantly enhance our backward integration make our production valuechain more resilient and improve control over costs and sustainable profit margins. Thesupply chain difficulties faced this year with sourcing from China only underlines theimportance of having a diversified sourcing base and for import substitution.

DEVELOPING NEW MARKETS BALANCING DOMESTIC AND GLOBAL DEMAND

The domestic market too promises strong growth in the therapeutic areasand our team has been reviewing all existing and emerging possibilities. As India'sGDP growth outstrips most other global economies we will be able to cater both domesticand international demand.

We have been consistently growing our presence in the China marketwhich is one of the largest healthcare markets in the world other than also being adominant supply base. We are creating an oral formulation facility in China and plan tofulfil our international demand apart from domestic contribution. We began localmanufacturing in that country from January 2022 and aim to shift 30 products from Indiainto China. Of these two have been approved and we expect another 10-15 products toreceive their approvals in this year. We also intend to transfer a few products fromEurope to the China facility. With a total target of reaching 40 products in China if weare successful in realizing our plans then there should be significant accretion to bothour topline and bottomline spreads.

TAKING THE R&D ROUTE TO CREATE DIFFERENTIATED PRESENCE

Our long history in the pharma industry has its roots in our R&Dstrength. The nine R&D centres that we run today are supported by a pool ofworld-class talent and highly trained regulatory and intellectual property teams. We arebuilding a diversified portfolio of finished dosage forms in orals liquids topicalsbiosimilars nasal and parenteral products targeted at the global markets and in FY22our primary R&D focus was complex parenteral products. Our longterm goal envisions ashift to a higher mix of branded products within the categories where we have a dominantpresence. An array of distinctive brands will enable us to make our own space and to shiftfrom the crowded generics market with a better command over profitability and usersegments. Our new product development capability along our manufacturing flexibility andvery large geographic presence would act as force multipliers. In FY22 our R&Dinvestment towards future pipeline growth totalled '15814 million with a significantshare going towards the biosimilars pipeline.

COMMITTED TO ESG AND CREATING A BETTER FUTURE FOR ALL

At Aurobindo Pharma we remain committed to becoming one of the mostsustainable organisations in the pharmaceutical industry. We are diligently workingtowards the goals set for reducing carbon emissions replacing traditional fuel sourceswith renewable energy mindful management of water and waste and conservation ofbiodiversity. Adoption of sustainable packaging techniques and practices for controllingmaterial wastage steadily increased over the year as did our efforts to keep‘greening' our supply chain. We have successfully built capabilities to generatesolar power and during the year 43000 MWh of solar energy were generated and consumed.In our concerted attempts to control and eradicate ‘beyond-the-fence' waterpollution and reduce the AMR burden we have started retreating the wastewater generatedduring product manufacturing at API manufacturing facilities with the goal of reusing thetreated wastewater.

The dynamic competitive landscape that the pharma industry operates inrequires our people to be fully equipped to handle the emerging challenges so that patientsafety product quality and compliance remain of the best standards. It is equallyimportant to balance employee health wellbeing career advancement needs and personalgrowth with the organizational needs. At Aurobindo Pharma we make the best careerdevelopment opportunities available through our diverse suite of learning and developmentactivities.

Commitment towards the society underlies what we do everyday and ourwork with our adjacent communities reflects our social purpose. Prevention ofmalnutrition control and eradication of disease amongst rural communities sustainableagriculture womens' empowerment are some of the social development areas that we areinvolved in as we attempt to do our bit towards a healthier society and a sustainableplanet.

As we look forward to a year that promises to be different from the onewe have left behind we are preparing ourselves for the many opportunities that aregetting uncovered. Disease inequity in access to health reducing resources are issuesthat keep our purpose fresh and relevant. There are miles to be covered for challengesare always opportunities in disguise and we are more than ready for it.

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