Aurobindo Pharma soars 4% on USFDA nod to manufacture Fingolimod capsules

Aurobindo Pharma stock soared 4 percent to Rs 1,069 on March 2 after the pharma company received final approval from the US Food and Drug Administration (USFDA) to manufacture and market Fingolimod capsules, 0.5 mg, which are bioequivalent and therapeutically equivalent to the reference listed drug (RLD), Gilenya Capsules, of Novartis Pharmaceuticals Corporation.

The product will be launched in March 2024.

Fingolimod capsules are indicated for the treatment of patients with relapsing forms of multiple sclerosis. The approved product has an estimated market size of $447.3 million for the twelve months ending January 2024, according to IQVIA.

Meanwhile, Aurobindo Pharma shares were trading lower a day before, on March 1, after the company received seven observations from the United States Food and Drug Administration (USFDA).

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The USFDA inspected the injectable facility of Eugia SEZ Pvt Ltd, a 100 percent step-down subsidiary of Aurobindo Pharma Ltd, at Polepally Village in Mahaboobnagar district of Telangana, from February 19 to 29.

The inspection closed with seven observations, which are procedural in nature and need to be clarified within the stipulated time, the company said.

The stock has skyrocketed 130.5 percent in the last one year and over 30 percent in the past one month.

Financials

The company reported a 90.6 percent on-year rise in consolidated net profit at Rs 936.2 crore for the October-December quarter of the current financial year.

The company reported a profit of Rs 491.2 crore in the same period last year. The revenue from operations in Q3 FY24 came in at Rs 7,351.7 crore, up 14.7 percent from the year-ago quarter numbers of Rs 6,407 crore.

Brokerage Calls

Q3 gave a glimpse of an improved core business scenario and a 21 percent EBITDA margin (excluding gRevlimid and clawback tax) reaffirms the sustenance of performance in the US and EU.

“We raise FY24/25E EPS by ~1 percent/5 percent to factor in a high margin. Rolling over to Q3FY26, retain ‘BUY’ with a target price of Rs 1,180 (earlier Rs 1,100) based on 18x PE,” said analysts at Nuavam Institutional Equities.

HDFC Securities maintains ‘ADD’ given steady US growth visibility and value unlocking in key R&D assets (biosimilars, respiratory, and speciality). “While the outlook remains steady, we believe any escalation at Unit 3 poses a risk to both growth and margin,” the brokerage said.

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