Aurobindo expects Sandoz buy to make it second-largest generics firm in US

Aurobindo Pharma says it expects to become the second-largest generic drugs entity by prescriptions in America, once it completes the acquisition process involving the dermatology and oral solids business of Sandoz.

The Hyderabad-based company is at fifth place in prescription sales, next to Indian counterpart Lupin, in the US.

After the acquisition, Aurobindo's market share in the US will be 8.6 per cent, higher than Mylan (6.4) and Lupin (5.7) in terms of number of prescriptions dispensed. Teva is top with 14.3 per cent. 

Aurobindo signed the deal with Sandoz in September 2018, for upfront payment of $900 million. The firm is hoping to generate a similar amount of sales from the acquired business in the first 12 months, while adding an additional 3.1 percentage points to the overall market share.

Earlier, it had said it hoped to complete the transaction in the course of 2019. The acquisition is the largest made so far by Aurobindo in any geographical region. Among domestic players it had become the second largest generics pharmaceuticals firm by revenue, with sustained performance in the US and Europe. Export contributed 90 per cent of Aurobindo’s total revenue last year. 

With the acquisition, Aurobindo gets a big market hold in dermatology, where Sandoz is present across the generics, branded and over-the-counter market in the US. In all, it will have a diversified portfolio of 300 products, including projects in development. 

In 2017-18, its US revenue had for the first time surpassed the $1-billion mark; it crossed $600 mn in the first half of 2018-19. With the Sandoz business, Aurobindo should be having revenue upward of $2 bn in the US in the first 12 months after the transaction is complete.

In 2018, it also made inroads into the European market, with the acquisition in July of Apotex’s business in five countries there. The company also opened Unit X, a new manufacturing line in the Naidupet Special Economic Zone in Andhra Pradesh, primarily designed to meet the export need of its European business.