)
The Aurobindo Pharma stock hit its all-time high on Tuesday, on reports that the company has been gaining market share in the US in its top-selling antidepressant drug, Cymbalta. The stock, which has gained 57 per cent since the start of the year, touched a new high of Rs 626.35 on Wednesday.
Nomura analysts say the company’s market share for the $5-billion drug in the week ended May 2 was at 26.4 per cent up 100 basis points over the previous week. This is way ahead of its peers such as Lupin (16.1 per cent) and Sun Pharma (7.3 per cent). After the patent expiry of the drug in December 2013, a slew of Indian companies have launched the drug to take advantage of the opportunity. It was the sales of this drug that helped Torrent post a March quarter performance, significantly ahead of expectations. Lupin, too, benefited from these sales. Given the performance of its peers, analysts are awaiting Aurobindo’s numbers, as the firm is expected to be the biggest beneficiary among generic players. CIMB analysts expect the company to report a sales growth of 67 per cent year-on-year for its US business at $150 million (Rs 900 crore) in the March quarter, aided by strong market share gains in Cymbalta. The market share for the March quarter is pegged at 22 per cent against 14 per cent in December 2013.
Besides Cymbalta, Aurobindo is also likely to benefit from launch of anti bacterial Moxifloxacin and two anaesthetics from its injectibles portfolio - Bupivacaine and Lidocaine that remain in the US Food and Drug Administration shortage list. The injectibles range and controlled substances are driving US revenues and profits for the company in a significant manner. Further, the increasing contribution from this product portfolio and decreasing dependence on low-margin anti-retroviral (HIV treatment drugs) is driving the company’s performance.
Praful Bohra at Nirmal Bang Institutional Equities says the business mix has significantly improved over the past two years, with the contribution from the formulations segment rising from 56 per cent in FY12 to 65 per cent in FY14 (estimate). Bohra adds that with around 70 per cent of the injectibles and controlled substances portfolio in the US is yet to unfurl, this momentum is likely to continue.
