An employee holds pills at a pharmaceutical lab. (Photographer: Sara Hylton/Bloomberg)  

Aurobindo Pharma To Spend $200 Million On Capex In FY20

Aurobindo Pharma Ltd. will invest up to $200 million or about Rs 1, 400 crore on capital expenditure and over five percent of sale value on Research and Development during the current financial year, a senior company official has said.

"Around $200 million is what we are targeting (on capex in FY20)...Capex for biosimilar may not be a huge one for FY20. The majority of the capex should be in terms of creating certain both finished dosage and active pharmaceutical ingredients capacities," Managing Director of Aurobindo N Govindarajan said in a recently held earnings call. He said this included formulation facility for derma.

Also, the company needs to expand API capacity with the growing need, as well as bringing certain APIs needed for the future, he said. "So from that perspective it would be a combination of both finished dosage and API expansion," Govindarajan said.

The city-based drug maker spent $225 million on capex last year and R&D expenditure was at Rs 872 crore or 4.5 percent of the revenues for the year, he said.

"Please remember the fact that next year will be more crucial. We would start Phase-I for at least two to three biosimilars and one Phase-III. So definitely it (R&D spend) will be in the range of 5 percent to 6 percent or 5 percent to 5.5 percent on the expanded basis. We will get much more clarity as we progress," he explained when asked about the proposed R&D expenditure for FY20.

On the acquisition of commercial operations and three manufacturing facilities in the U.S. from Sandoz Inc,Swami Iyer, chief financial officer at Aurobindo Pharma, the U.S., said the process was on to get necessary permissions for the U.S. Federal Trade Commission, which the company expected to get in 12 weeks.

"Regarding Sandoz, we are in the last leg of the process of obtaining FTC approval. We would be probably submitting the final letter with the product and buyers list to the FTC. We cannot speculate on how much time they would take. But it is our own estimate that it could be anywhere between 8-12 weeks, Iyer said.

Aurobindo Pharma in September 2018 said its U.S. subsidiary entered into an agreement to acquire commercial operations and three manufacturing facilities in the U.S. from Sandoz Inc, USA, a Novartis Division, for $900 million.

The business has been carved out by the management of Sandoz for sale and consists of dermatology and oral solids businesses, it had said. The acquisition will add approximately 300 products, including projects under development, as well as commercial and manufacturing capabilities in the USA.

Also read: Aurobindo Pharma, Subsidiary Made Party To U.S. Litigation

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