AUROPHARMA - Aurobindo Pharma Ltd. Share Price

Management Outlook and Major Points:
Aurobindo Pharma's management expressed confidence in sustaining strong growth, driven by robust U.S. generics, Europe's momentum, and expansion in growth markets. They highlighted record quarterly revenue of Rs.7,979 crore (11% YoY growth in formulations) and EBITDA margin guidance of 21"“22% for FY25, supported by cost optimization, benign raw material prices, and reduced net debt ($84 million).

Key Strategic Initiatives:

1. Capacity Expansion: Commercialization of a China OSD plant (2B units) by FY26 and U.S. facilities (Dayton, Raleigh) for complex products (respiratory, transdermal).
2. Biosimilars Pipeline: Positive CHMP opinions for Filgrastim in Europe, with approvals expected by April 2025. Plans to launch 6"“7 biosimilars by 2027.
3. Backward Integration: Pen-G plant to break even by March 2025, enhancing API self-sufficiency.
4. Segment Performance:
   • U.S. ($435M revenue): Stable pricing, 7 new launches.
   • Europe (Rs.2,121Cr, +23% YoY): Sustained growth across geographies.
   • Growth Markets (+39% YoY): Expanding footprint.

Near-Term Focus: Q4 FY25 is expected to benefit from transient sales (e.g., gRevlimid), operational efficiencies, and R&D investments in complex therapies. Management anticipates improved margins from backward integration and specialty portfolio scaling, offsetting future pricing pressures.

Question 1:
"Just on Pen-G, to start with, like what kind of operational loss currently we have for the quarter?"
Answer:
The operational loss for Pen-G was Rs.60 crore in Q3 FY25. The plant underwent a brief shutdown for equipment modifications, which was completed recently.

Question 2:
"And what kind of pricing outlook are we sort of building once we break even or let's say for the external sales?"
Answer:
Current Pen-G pricing is ~US$26, but Aurobindo plans to optimize revenue by supplying derivatives like 6-APA or Amoxicillin, ensuring flexibility even if prices decline.

Question 3:
"In terms of the raw material prices, what's the outlook whether do you see the inventory in this industry itself lowering down, so that will benefit in terms of raw material prices for us going forward?"
Answer:
Raw material prices remain stable. Inventory levels (3"“6 months) are unlikely to significantly impact future pricing.

Question 4:
"And lastly on Eugia, when do we see the production scaling up or let's say the sales scaling up?"
Answer:
Eugia-3's capacity utilization is expected to reach 60"“70% (from 50%) starting Q4 FY25, with remedial actions completed and FDA compliance resolved.

Question 5:
"Can you share details on plans in China, including product approvals, revenue projections, and timelines?"
Answer:
The China plant (2B units/year OSD capacity) began operations in November 2024, targeting European supplies by April 2025. Approvals for China/U.S. markets are pending, with significant revenue expected in 2"“3 years.

Question 6:
"For Q4, should your gRevlimid sales be higher than Q4 FY24?"
Answer:
gRevlimid sales in Q4 FY25 are expected to exceed Q4 FY24, with plans to continue post-patent expiry (Feb 2026) as a generic product.

Question 7:
"What's the update on Filgrastim's CHMP opinion and biosimilar pipeline?"
Answer:
Filgrastim and pegylated Filgrastim approvals in the EU are expected in ~2 months, with commercial launches from July 2025. Denosumab (Q4 FY26 filing) and Omalizumab (delayed by 3"“4 months) are progressing, while Bevacizumab targets FY26"“27.

Question 8:
"Why are Eugia's injectable sales stagnant despite IQVIA data showing demand?"
Answer:
Production challenges (50% capacity utilization due to post-FDA remediation) caused delays, but normalization is expected from Q4 FY25, with customer demand intact.

Question 9:
"What is Aurobindo's R&D allocation to biosimilars, and when will the segment turn profitable?"
Answer:
30"“35% of R&D spend (~Rs.1,700Cr/year) is for biosimilars, focused on Phase 3 trials. Profitability is anticipated by 2028"“2030, driven by 6"“7 commercialized products in regulated markets.

Question 10:
"What is the respiratory product development status and collaboration details?"
Answer:
Respiratory products (MDI/DPI) are in advanced stages, with 2 filings done. A partnership with a global firm aims for launches in late FY26 or H1 FY27.

Question 11:
"How are Europe's margins trending, and can the €236M quarterly revenue sustain?"
Answer:
Europe's margins are improving due to operational efficiencies and product mix. The €236M run rate is sustainable, supported by new launches (biosimilars, injectables).

Question 12:
"Will additional U.S. capacity (China, Raleigh) lead to oversupply concerns?"
Answer:
No near-term risks: China serves global markets, while Raleigh focuses on transdermal/respiratory products. The U.S. oral solids business (11% market share) has growth potential.

Question 13:
"How is Aurobindo mitigating potential U.S. tariff risks?"
Answer:
U.S.-based facilities (Dayton, Puerto Rico) provide onshoring flexibility. Current tariffs on Chinese imports pose minimal direct impact.

Question 14:
"Can gross margins (58.4%) sustain despite Revlimid's decline and Pen-G ramp-up?"
Answer:
Margins will be supported by Pen-G optimization, API backward integration, and cost efficiencies, though specifics were deferred to future updates.