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Aurobindo Pharmaceuticals – USFDA Import Alert
Aurobindo Pharma (APL) has announced that the USFDA has imposed an import alert for the
detention of products from its Cephalosporin facility (Unit VI) located in Andhra Pradesh,
India. The unit was audited by USFDA in December 2010. APL had sent the compliance
report to USFDA, which was under review. Subsequent to the audit findings, the USFDA
imposed an import alert. Apart from Unit VI, the USFDA website indicates an import alert on
Unit IV also. However, currently the company has indicated that it is not selling any products
from the site. As regards Unit VI, APL is unsure if it relates only to sterile products and/or oral
products manufactured. Until the issue is resolved, the import alert will impact any further
shipment from Unit VI to the US market. This plant generated around US $70mn of sales in
FY2010, of which US $35mn (4% of FY2011E sales) were from the US, of which sterile
products constituted only US $4mn–5mn of sales in the US. Apart from these products, APL is
awaiting approval for 15 ANDAs, mostly sterile, from the site. Consequent to the
development, we have revised our sales downwards by 4% and 5.2% in FY2011 and
FY2012 and net profit by 9.5% and 10.2% for FY2011 and FY2012, respectively. However,
the stock has corrected significantly and current valuations trade at 9.3x FY2011E and
8.1xFY2012E, respectively. We maintain our Buy recommendation on the stock with a Target
Price of `210, valuing the core business at 12x FY2012E.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Aurobindo Pharmaceuticals – USFDA Import Alert
Aurobindo Pharma (APL) has announced that the USFDA has imposed an import alert for the
detention of products from its Cephalosporin facility (Unit VI) located in Andhra Pradesh,
India. The unit was audited by USFDA in December 2010. APL had sent the compliance
report to USFDA, which was under review. Subsequent to the audit findings, the USFDA
imposed an import alert. Apart from Unit VI, the USFDA website indicates an import alert on
Unit IV also. However, currently the company has indicated that it is not selling any products
from the site. As regards Unit VI, APL is unsure if it relates only to sterile products and/or oral
products manufactured. Until the issue is resolved, the import alert will impact any further
shipment from Unit VI to the US market. This plant generated around US $70mn of sales in
FY2010, of which US $35mn (4% of FY2011E sales) were from the US, of which sterile
products constituted only US $4mn–5mn of sales in the US. Apart from these products, APL is
awaiting approval for 15 ANDAs, mostly sterile, from the site. Consequent to the
development, we have revised our sales downwards by 4% and 5.2% in FY2011 and
FY2012 and net profit by 9.5% and 10.2% for FY2011 and FY2012, respectively. However,
the stock has corrected significantly and current valuations trade at 9.3x FY2011E and
8.1xFY2012E, respectively. We maintain our Buy recommendation on the stock with a Target
Price of `210, valuing the core business at 12x FY2012E.
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