Aurobindo Pharma enlisted PEs stake sale in injectable divisions

Aurobindo Pharma is establishing a specialized injectable facility at Vizag

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Aurobindo
Aurobindo is establishing a specialised injectable facility at Vizag.

PV Ramprasad Reddy, K Nityananda Reddy, and a small group of dedicated experts founded the Aurobindo Pharma in 1986. The firm began operations in Pondicherry in 1988-89 with a single unit producing Semi-Synthetic Penicillin (SSP). In 1992, Aurobindo Pharma became a public corporation, and in 1995, its shares were placed on Indian stock markets. It has a presence in major therapeutic categories such as neurosciences, cardiology, antiretrovirals, anti-diabetics, gastrointestinal, and anti-biotics, among others, in addition to being the market leader in semi-synthetic penicillins.

Aurobindo Pharma NSE -0.72% has begun talks with private equity funds to sell a 30-35% stake in its injectable business for $4,500-5,250 crore as the Hyderabad-based drugmaker plans value unlocking in its core businesses.

TPG Capital Management, Advent International, Bain Capital and Blackstone have been sounded off for a potential transaction, valuing the business at Rs 15,000 crore. The Carlyle Group and PAG are the two other firms that have been reached out for a potential deal, the people said, as reported in Economic Times.

Aurobindo has appointed Kotak Mahindra Capital to handle the official sale process.

The consortium is establishing an injection facility at Vizag

The company reported worldwide injectable sales of $105 million in the second quarter of the current fiscal year, and management reiterated a $650-700 million annual revenue forecast by fiscal 2024.

According to Aurobindo’s last annual presentation, the firm is establishing a specialized injectable facility in Vizag for the EU and other worldwide markets as part of its injectable business expansion. Aurobindo has a substantial presence in injectables, with liquid and lyophilised vials, bags, ampoules, and prefilled syringes among its delivery systems. In the US, it has completed the development of an injectable plant. The Vizag facility should be ready for commercial production by the end of the year.

In 2019, Aurobindo paid $160 million to Spectrum Pharmaceuticals for a portfolio of seven branded oncology injectable drugs, allowing the firm to join the branded oncology market in the US.

Last year, the business stated that its injectable assets will be transferred to Eugia Pharma Specialties, a wholly-owned subsidiary. The transfer of Unit IV, which manufactures generic injectables and ophthalmics, was completed for Rs 876 crore. In financial year 21, the unit generated Rs 926 crore in sales and contributed 5.86% of the company’s total revenue. This approach was viewed as a harbinger of future value unlocking deals.

The formulation business constitutes 88% of its revenue with exports contributing more than 90% to the sales. The US remains the key market with nearly half of the total revenue, supported by its strong pipelines for 681 generic drugs, Julius Baer said in a note on November 18. “Albeit the near-term headwinds, we remain constructive on Aurobindo’s prospectus, given its health product pipeline, low product concentration, expected increase in contributions from complex generics injectables and biosimilars, the improving profitability in the European business and current attractive valuations,” Julius Baer analyst Milind Muchhala wrote in a note to clients as reported by Economic Times.

 

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