Aurobindo Pharma Limited Q4 FY22 Earnings Conference Call Insights

Key highlights from Aurobindo Pharma Limited (AUROPHARMA) Q4 FY22 Earnings Concall

Management Update:

• AUROPHARMA received final approval for 3 ANDAs and launched 4 products in 4Q22. The company also filed 14 ANDAs, including 3 Injectables during 4Q. The total number of filings at the end of March ‘22 was 727.

Q&A Highlights:

• Nimesh Patel of JP Morgan asked about the guidance for future. Santhanam Subramanian CFO replied that as a policy, the company doesn’t give guidance.

• Neha Manpuria with Bank of America enquired about gross margin trends. P.V. Ram Prasad Chairman replied that the current trends may continue for a couple of quarters and the company is trying to see how to improve upon it.

• Neha Manpuria with Bank of America asked that on the API front if the company has been able to pass on the cost increases seen in last few months to the customers. P.V. Ram Prasad Chairman said that in terms of the domestic industry, AUROPHARMA has been able to pass on a significant portion of it.

• Neha Manpuria with Bank of America enquired about the oral solid business in the US in terms of price erosion. Yugandhar Puvvala CEO said that the price erosion is continuing little bit. Average in the whole year it is 9%. 4Q it is 11.5%. Between Q3 to Q4 around 2%, 2.5% was further erosion and the company expects this may not stop here.

• Kunal Randeria of Edelweiss asked about acquisition strategy. P.V. Ram Prasad Chairman said at present and in future the company is not into very big acquisitions at least for the next 2-3 years. AUROPHARMA wants to complete the existing projects. So the company has to protect the cash to the existing approved pending projects as well as the completion of the existing projects and the projects completed operationally breakeven and profitable projects.

• Kunal Dhamesha asked that on the US price erosion, if the company has done any withdrawals from the market. P.V. Ram Prasad Chairman replied that as on today the company has not withdrawn any product. And based on the situation in next 2-3 quarters, it will be informed if any.

• Vishal Manchanda of Nirmal Bang  asked about the capacity utilization for the oral solid manufacturing unit at a consolidated level.  P.V. Ram Prasad Chairman said that in US plants nothing has started production. In New Jersey, the new B Block oral plant is going to start production in end of ‘23. And dermatology and MDIs and patches is the plant the company is starting.

• Vishal Manchanda of Nirmal Bang asked that on R&D, if the company would be at same level going forward as 7.5% of sales in 4Q22. P.V. Ram Prasad Chairman said that going forward the company many not be having this much of percentage, it will be around 6% is what AUROPHARMA is expecting.

• Vishal Manchanda of Nirmal Bang also asked about ARV business, if it will bounce back to the FY21 levels. K. Nityananda Reddy VC replied that at this juncture the company expects the business to be maintained at the same level.