Aurobindo Pharma encourages improvement in US sales during Q2

The stock saw a gain of over 6% in morning trading on Tuesday.

US sales were soft in the first quarter, keeping Street concerns high on mounting pricing pressure. Analysts at Yes Securities said US revenue growth was aided by acquisitions of brands and brief new pharmaceutical applications (ANDAs) in Q1.

Aurobindo Pharma also did well for new products. It filed 27 NDAs, including five injections, with the US FDA in Q2 of FY22, which is the highest ever NDA filing by the company in any quarter. The company has a strong pipeline of products and is expanding its niche product range in the form of injections. About 54 products in the injectable space are awaiting final approval for launch in the US. The company’s pipeline for other products also remains strong with 171 products in the non-injectable space pending approvals.

Europe remains the second most important region for Aurobindo to drive its sales growth. On the positive side, Europe revenue up 10% YoY in Q2FY22 ₹1,662 crore, accounting for 28% of the consolidated revenue. Revenue growth was supported well by performance in growth markets as well. Analysts said Europe and growth markets also saw QoQ increase by 5% and 17%, respectively, with a gradual pick-up in demand.

However, the ARV business was down 51% sequentially from higher inventory stocking on advance purchases last year. Even the performance of Active Pharma Ingredients or API business was slightly soft with revenue ₹781 crores. slightly less than ₹812 crore in the last quarter.

Rising input cost was also lower with a margin of 20.0% compared to 22.1% in the year-ago quarter and 21.2% in the previous quarter.

Net profit against this background ₹696.7 crore also missed the expectations. For example, analysts at Motilal Oswal Financial Services expect a net profit of ₹802 crores.

However, the company’s reported earnings ₹marginally higher than Rs 5941.9 crore ₹5922.7 crore expected by MOFSL

With the good performance of America and Europe, people’s confidence in Aurobindo also increased. Analysts expect cost pressures to ease as well by the fourth quarter and the improvement is noticeable in the US.