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News: Aurobindo Pharma (ARBP) has received approval for generic Seroquel in US from
Unit III facility
Impact: We estimate a revenue of USD8mn‐USD10mn from the product during FY11,
assuming 95% price erosion and 7% market share for Aurobindo. There are ten players
in the market including Lupin, DRRD and Sun Pharma.
Edelweiss view: USFDA had issued a warning in May 2011 relating to mislabeling issues
at Unit III facility, leading to delay in approvals. However, the facility has recently been
inspected by USFDA post the corrective actions by Aurobindo. The approval for generic
Seroquel from the facility gives an indication that the inspection has been successful,
leading to a resolution to issues at the facility which is a key positive. While the Unit VI
facility is still under the import alert, the management has hinted at an inspection latest
by Jun‐July 2012. There are 10‐11 products pending approval from the Unit III facility.
Outlook and Valuations: Maintain ‘HOLD’
We are positive on the outlook going forward, and have built in higher growth
prospects via a recovery in the US business though margin expansion will depend
largely upon a resolution of Unit VI facility. We have highlighted earlier that margins,
which bottomed out in Q2, have seen a recovery in Q3FY12. We maintain our estimates
and await incremental traction in business. Moreover, CBI/IT enquiries also remain an
overhang on valuations. Maintain ‘HOLD’
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
News: Aurobindo Pharma (ARBP) has received approval for generic Seroquel in US from
Unit III facility
Impact: We estimate a revenue of USD8mn‐USD10mn from the product during FY11,
assuming 95% price erosion and 7% market share for Aurobindo. There are ten players
in the market including Lupin, DRRD and Sun Pharma.
Edelweiss view: USFDA had issued a warning in May 2011 relating to mislabeling issues
at Unit III facility, leading to delay in approvals. However, the facility has recently been
inspected by USFDA post the corrective actions by Aurobindo. The approval for generic
Seroquel from the facility gives an indication that the inspection has been successful,
leading to a resolution to issues at the facility which is a key positive. While the Unit VI
facility is still under the import alert, the management has hinted at an inspection latest
by Jun‐July 2012. There are 10‐11 products pending approval from the Unit III facility.
Outlook and Valuations: Maintain ‘HOLD’
We are positive on the outlook going forward, and have built in higher growth
prospects via a recovery in the US business though margin expansion will depend
largely upon a resolution of Unit VI facility. We have highlighted earlier that margins,
which bottomed out in Q2, have seen a recovery in Q3FY12. We maintain our estimates
and await incremental traction in business. Moreover, CBI/IT enquiries also remain an
overhang on valuations. Maintain ‘HOLD’
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