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Aurobindo Pharma aims to cut Actavis Ebitda operating losses to 10 million euros

Monday, 18 August 2014 - 4:19am IST | Place: Mumbai | Agency: dna

Hyderabad-based Aurobindo Pharma is expecting to bring down the Ebitda losses of its Dublin-based Actavis business to about 10 million euro in the current fiscal (2014-15).

During the first quarter result earnings call with analysts, chief executive officer Arvind Vasudeva, said, "As we indicated last year when we got the business, the earnings before interest, taxes, depreciation and amortisation (ebitda) loss was 23 million euro. We estimate that we should be able to bring it down to about 10 million euro in the current financial year."

In January, Aurobindo had inked a long-term commercial and supply agreement with Actavis to acquire its personnel, commercial infrastructure, products, marketing authorisations and dossier licence rights in seven European countries for 30 million euro. In April, the company had announced the completion of the acquisition of certain commercial operations in Western Europe from Actavis Plc.

Vasudeva said that during the first quarter Actavis reported a sale of Rs 624 crore.

N Govindarajan, managing director, Aurobindo Pharma, said, "Europe recorded sale of Rs 798 crore in the first quarter this fiscal thereby growing more than fourfold over a corresponding period of last year sales of Rs 174 crore. This has been more on account of our recent acquisition of the Western European commercial operations of Actavis to help enhance our European presence among the top 10 generated players in the coming years."

The share of European business during the quarter increased to 35% from 16% in the corresponding period last year amplifying our focus on that market, said Govindrajan. The company also expects the Actavis business to break-even in the fiscal year 2015-16.

Talking about the expansion of its US-based wholly-owned subsidiary Aurolife, a generic pharmaceutical product manufacturer, chief executive Robert Cunard, said, "We are expanding Aurolife operations. We currently have 18 products pending with the FDA for Aurolife and six out of those seven products are controlled substances. We think the controlled substances are a big driver in the future. The IMS data for generic sales of those products annually are about $500 million. We also continue to grow in the government contract space and that contract represent about a third of the revenues for Aurolife in our first fiscal quarter." Aurolife clocked revenue of $26 million in the first quarter compared to $75 million in the last fiscal.

AuroMedics Pharma LLC, the company's another US-based wholly owned subsidiary which markets generic injectable pharmaceutical products in the US is also showing rapid growth. AuroMedics Pharma president Ronald Quadrel, said, "On the injectable side, we are growing fairly rapidly. Over the last quarter, we increased sales from the previous quarter by about 30% and year-on-year around 123%.

Our sales numbers for last year were $36.7 million for the year and we are expecting around $61 million this year. A lot of that is growth in terms of establishing our presence in the US market and garnering more share in our base business. As we get towards the end of this fiscal year we'll start seeing more approvals from our pipeline portfolio. And as we move forward over the next two year with the number of filings that we currently have with the FDA, we'll see some fairly significant growth."

AuroMedics has generated $15 million revenues during the first quarter of the current fiscal as against $37 million during the last fiscal.

The company expects this to ramp up to $60 million in the current fiscal with revenue contribution from Unit IV increasing to 25%, said a quarterly report of the equity research firm JP Morgan.

Brokerage firm Spark Capital also said in a report that investments in injectables, oncology and hormonal products, over-the-counter (OTC) drugs, penems and peptides are interesting long-term drivers for Aurobindo. "The company is vertically integrated in most of these segments providing a significant cost advantage. Margin improvement of the Actavis business is likely to be gradual," the report further said.

The company is also working towards reducing its debt situation. As on June 30, gross debt of the company stood at Rs 3,337 crore and net debt is around Rs 2,695 crore.

Aurobindo is also expecting to maintain a PAT benchmark of Rs 400 crore for every quarter. Net profit after minority expenses during the first quarter of the current fiscal stood at Rs 415.4 crore as against Rs 18.6 crore during the corresponding period of the last fiscal.

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