Aurobindo Pharmaceuticals

Aurobindo Pharma Ltd. was founded in 1986 and started operations in 1988-89 manufacturing SemiSynthetic Penicillin (SSP). It went public in 1992 and listed its shares in 1995.

Expansion Moves
1993 (two new units - for manufacturing antibiotics and for formulations) 1996 (100 Cr. plans for expansion to manufacture cephalosporins and generic formulations.) 1998 (Increased its bulk drug and intermediates capacity three-fold to 2,135 tonnes per annum) 1998 (2 units abroad (Hong Kong and US)), 2 new formulations unit in India 1999 Establishes R&D (27Cr; 50Cr over next 3 yrs) 1999 Acquisition of brands; Acquires a formulation company in Mumbai 2000 joint ventures in Brazil and China, US (Med- Pharmex Inc of the US and Shan Tongling of China to set up two units in the US and one near Beijing) 2001 aggressively expanding its activities and making forays into new value-added segments.. Upgraded manufacturing facilities to be FDA compliant 2001 planning to offer anti-AIDS drugs at prices that are 15-20 percent below market price. Aurobindo Pharma of Hyderabad, which entered the AIDS segment by launching anti-HIV products in May 2001, has plans to capture 50 percent of the market, currently dominated by Cipla. The company has already launched 10 of its options in the anti-HIV segment and plans to launch another four options in a phased manner in 2002. The company has sold Rs2 crore worth of anti-HIV products in the past seven months. The total market size in India for anti-HIV products is presently estimated at Rs25 crore. 2006: AUROBINDO ACQUIRES UK GENERICS FIRM MILPHARM (to be financed partly through the $600 million raised through convertible bonds). Aurobindo Pharma, a company that manufactures bulk drugs, has acquired a cGMP manufacturing facility in Dayton, New Jersey, for $25 million. The facility is approved by the US Food and Drug Administration (US FDA). 2007: Expansion in R&D

Market Share over 20 Years

14% in SSP segment in 1993 Largest in SSP Segment in 1998 Formulations Antibiotic and Antibacterial segment

The major customers of Aurobindo Pharma are; Ranbaxy Labs, Cipla, Dr Reddy's Labs, Torrent Pharma and SmithKline Beecham Pharma. Fifty percent of its turnover is from cephalosporin-sterile.

Export as a % of turnover over 20 Years

26% in 1993 41% in 1998 30% in 1999

Bulk Drug v/s Formulations over 20 Years

1996: 90% bulk drug; 10% formulations 1998: 94% bulk drugs 2001: 90% bulk drugs 2002: Aurobindo Pharma of Hyderabad has unveiled a fourth generation broad spectrum injectible cephalosporin for the first time in India, making it the second company in the world to do so after Aventis Pharmaceuticals. Cephalosporin presently contributes to sales of about Rs250 crore, which is almost 25 percent of the company's turnover. Cefpirome, the fourth generation drug, would be available in three parental dosage forms of 500 mg, one gram and two grams and would be packed in vials. 2010: 94% Formulations

Export Markets
1997: Switzerland, Germany and Hong Kong 2002: ANVISA, the Brazilian Regulatory Authority, has granted good manufacturing practices certification to Aurobindo Pharma Ltd's formulations unit located at Hyderabad. This certification will facilitate the Rs1,000-crore pharmaceutical firm to export pharmaceuticals to Brazil. 2002: foray into the regulated markets in the US and Europe by introducing 12-15 products during JanMar 2003. The company plans to file one or two drug master files and abbreviated new drug applications every month from Jan 2003 in cephalosporins, cardiovascular, depression and respiratory segments. 2003: Medicines and Healthcare Products Regulatory Agency of the UK has given its approval to Aurobindo Pharma's Unit 3 formulations manufacturing facility for the manufacture of formulations for the UK market. The unit at Hyderabad has a capacity of 2.7 billion tablets/capsules per year. It is devoted to the manufacture of non-penicillin and non- cephalosporin dosage formulations. The clearance from the UK agency marks Aurobindo's foray into European regulated markets. Unit 3 has also received approvals from South African MCC and Brazilian ANVISA besides ISO and approvals from other countries.

2005: AUROBINDO GETS CANADIAN NOD FOR TWO OF ITS UNITS (Health Canada has approved unit-III and unit-VI of the company), More in US 2005: AUROBINDO'S ANTI-DEPRESSANT DRUG TO HIT BRITISH MARKET (British Medicine and Healthcare Product Regulatory Agency cleared Aurobindo's Sertraline Hydrochloride) 2007: FINNISH NOD FOR AUROBINDO UNIT. approval of the Medicines Control Council of South Africa to market Metformin tablets. The company will market the tablets in 500 mg, 850 mg and 1 gm strengths. The drug is used in the treatment of Type 2 diabetes. 2007: AUROBINDO PHARMA FORAYS INTO ITALIAN GENERIC MARKET (to acquire the intellectual property and marketing and marketing authorisations of TAD Italy). AUROBINDO PHARMA SETS UP UNIT IN SAUDI ARABIA (will hold a 55% stake in the joint venture) 2008: Australia

Paradigm Shifts over 20 Years

1997: bulk drug producers are diversifying into the formulations segment Reasons - bulk drug market is facing pressures like dumping from neighboring countries, decrease in duties and excess capacities. Moreover, profit margins of formulation products are higher 1998: The consolidation phase in the pharma sector would give rise to many mergers and acquisitions. Local companies would benefit after the customs duties for bulk drugs are increased and the Drug Price Control Order (DPCO) is modified in the coming budget. 2000: The Government of India may allow Indian subsidiaries of overseas pharmaceutical companies to outsource bulk drugs from basic stage from Indian manufacturers through licensing or tolling arrangement. 2000: The focus of the Rs25-Rs30 bn Indian bulk drug industry is shifting towards manufacturers who have technology to produce new generation molecules. This is due to the shift of focus of the pharmaceutical industry to cardiovascular and psychiatry segments. The companies, which can invest in R and D of new generation molecules, will gain importance especially with the introduction of Intellectual Property Rights (IPR) in 2005. Of late, the bulk drug industry in India is going through difficult times due to declining global prices, dumping by China and the low prices in India, which are below the Drug Price Control Order range. Only companies like Aurobindo Pharma, Cheminor Drugs and Orchid that trade in large volumes have survived and companies like Ajanta Pharma have hived off its bulk drug business. In the post-IPR period, firms like Morepen Laboratories, Sun Pharmaceuticals and Dishman Pharmaceuticals and Chemicals among others are expected to have a commanding position in the bulk pharmaceuticals market. 2001: The domestic anti-AIDS drug market is set to witness a major price war with both domestic as well as multinational companies planning to enter this segment. Cipla currently dominates the anti-AIDS drug market in India, which also includes other companies like Ranbaxy Laboratories, Aurobindo

Pharmaceuticals, Zydus Cadila, Ambalal Sarabhai and Ginix Pharmacueticals. Other domestic pharma firms including Sun Pharmaceuticals and Torrent are likely to enter the market with their respective versions of anti-AIDS drugs. The rising competition in this segment has lead to market leader, Cipla, resorting to steep price cuts in its various products. In the last three years, Cipla has reduced prices of its AIDS drugs 5-6 times in the domestic market. It has also reduced its prices globally by 35 percent. This in turn has put pressure on other pharma companies to cut prices of their AIDS drugs in the coming months. Industry analysts feel that the domestic market for anti-AIDS drugs will continue to grow by at least 15-20 percent per annum, despite the entry of a large number of players. 2003: The Indian drug companies will have better fortunes once the two bills pertaining to health care are legislated to become laws. The companies to benefit immediately will be Ranbaxy and Dr Reddy's Labs, which have established operations in the US. Other companies, like Sun Pharma, Cipla, Aurobindo, Lupin and Wockhardt who have alliances in the country will also gain. Of the two bills, one will give US consumers, like Medicare beneficiaries, faster access to low-cost copies of branded prescription drugs or generics, giving them relief from the high-cost patented drugs. The other bill will add prescription drug benefits into Medicare. These two bills will increase the size of the generic pharmaceutical market in the US. 2005: The Indian pharmaceutical industry is readying itself to take on the challenges posed by resurgent multinational companies (MNC) and diminishing product pipelines. Strategic alliances and partnerships are in the offing with the new product patent regime coming into being in India. With India transient to the product patent regime, MNCs are expected to introduce top-of-the-line patented products in the country and enhance their market share, which is expected to rise from 30 percent to 40 percent by 2015. Indian pharmaceutical companies will not be able to introduce copies of new patented products anymore, which is an impediment to their ability to launch new drugs and will hinder their growth. Hence there is a wave of strategic partnerships, joint ventures, in-licensing deals and marketing, research and manufacturing tie-ups as drug makers are looking at ways to meet the challenges and leverage economies of scale. Manufacturers of active pharmaceutical ingredients are expected to team up with manufacturers and exporters of formulations. The Mumbai-based Glenmark has already tied up with Shasun Chemicals and Drugs to develop, register and sell 12 generic drugs in USA. Ranbaxy has entered into a R&D tie up with GlaxoSmithKline for new drug development in selected therapeutic segments. Similar alliances have taken place between Lyka Laboratories and Hetero Drugs; Aurobindo Pharma and Citadel Fine Pharmaceuticals; and Orchid Pharma has acquired Mano Pharmaceuticals and its sister concern Sali Healthcare. India is expected to develop as a major centre for activities relating to intellectual property rights and pharmaceutical services. Contract manufacturing, tie-ups for research and development, in-licensing and marketing tie-ups with MNCs will also take place. Nicholas Piramal India Ltd (NPIL) has already worked out a strategy to enter into contract manufacturing tie-ups and marketing alliances with MNCs. Pfizer India is looking for marketing tie-ups for its cutting-edge technology products with Indian companies specialising in the marketing of high-end speciality pharmaceuticals. 2009: Indian drug companies have secured a majority of drug approvals under the US President's Emergency Plan for AIDS Relief (Pepfar). Indian companies have secured about 95 percent of the 100

approvals given by the US Food and Drug Administration (FDA). Aurobindo Pharma has received 34 approvals, followed by Cipla and Matrix Laboratories with about 15 approvals each. Companies such as Strides, Emcure and Hetero will also supply about 5-15 drugs each under the programme. The Pepfar programme is aimed at the prevention, treatment, and care of people infected with HIV/AIDS worldwide.

Strategic Moves
1997: Bulk Formulations 1998: The demand for SSPs is expected to be sustained over the medium term, lending stability to APL. The large production volumes and backward integration of APL lend it a competitive edge. APL is trying to reduce its dependence on SSPs through forward integration by manufacturing formulations and bulk sterile products. 2001: Aurobindo Pharma Ltd (APL) of Hyderabad in Andhra Pradesh has reshuffled its managers to brace up for the planned growth to enter into lucrative international markets. PV Ramaprasad Reddy, till now Managing Director, has been appointed as the Executive Chairman of APL. K Nityananda Reddy, copromoter and former Joint Managing Director, has been appointed as the Managing Director. These changes have been intimated to the Bombay Stock Exchange (BSE). APL aims to become a global pharmaceutical company rooted in research and development (R and D). 2002: Aurobindo Pharma Ltd has formed a 50:50 joint venture with Citadel Fine Pharmaceuticals Ltd. Citadel Aurobindo Biotech Ltd (CABL), the joint venture, will takeover the branded formulations business of the two companies. It will own about 80 formulation brands of the two partners. Aurobindo and Citadel will contribute an initial equity of Rs1 crore each in CABL. They will transfer ownership of the formulation brands on a valuation basis. CABL will combine the strengths and talents of Aurobindo and Citadel with a field force of 800 people and network of over 1,500 distributors and clearing and forwarding agents. It will start operations with four lines of branded formulations for the domestic ethical markets. It hopes to record a turnover of Rs135 crore in the first year of operations. Of this, Citadel brands would account for 70 percent and Aurobindo brands, for the remaining. Some of Citadel's brands are Pressmax, Fepanil, Presslin and Andial. 2002: Aurobindo Pharma Ltd wants to reposition itself as a generic drugs manufacturer. 2008: PFIZER-AUROBINDO PACT MAY EXPAND TO CIS, ASIAN MARKETS (will expand the agreement to about 30 countries). PFIZER, AUROBINDO SIGN MARKETING DEAL (to commercialise drugs that have lost patent protection in the US and Europe)

Patents
2002: two patents for lifestyle drugs in the US market. The company presently markets about 32 lifestyle drugs and has so far filed six patents for its non-infringing process in the antiviral category. The company is now looking at central nervous system and cardio vascular system therapeutics. Aurobindo has so far filed about 800 dossiers in 72 countries for its various formulations and has received approval for 281 of them.

2003: The company has so far filed 20 process patents to enable to introduce generics in the US and European Union markets. Two of these have been granted by the US patent office. Aurobindo is in the process of getting international certifications from regulatory authorities. Three active pharmaceutical ingredient manufacturing units and two formulation manufacturing units are ready for regulatory inspection. These facilities are actively working on drug master file and abbreviated new drug application filings. The Research Centre of Aurobindo employs over 260 scientists, who are engaged in creating intellectual property in global generics business. Hyderabad-based Aurobindo Pharma has filed 20 patents in the areas of central nervous system, cardiovascular and anticholesterol segments. The company has also obtained two approvals from the United States Trademark and Patent Office (USTPO) for its cephalosporin drugs. 2005: Aurobindo Pharma Ltd has got approval of the US Food and Drug Administration (USFDA) for its abbreviated new drug application (ANDA) of Metformin. The drug is indicated in treatment of diabetes. The company has set up 4 units each to manufacture formulations and active pharmaceutical ingredients (APIs) for regulated markets. It will manufacture formulations and APIs for Metformin at these units.

Setbacks
2008: Loss due to FOREX. ELI LILLY FILES SUIT AGAINST LUPIN, AUROBINDO IN US (the company has alleged infringement of patent of Cymbalta 2010: Indian generic drug companies Sun Pharmaceutical and Aurobindo Pharma have lost Eli Lilly patent case. 2011: Aurobindo Pharmaceuticals Ltd has received a warning letter from the US Food and Drug Administration (FDA) on two of its units. The FDA had banned imports of products from unit VI of the company near Hyderabad in Apr 2011. The company manufactures Cephalosporin oral and injectable products at the facility. The US FDA has asked the company to submit the action plan for improvement of the two units within 15 days. Aurobindo Pharma Ltd has withdrawn several lots of its Mirtazapine 45-milligram tablets from the US as per an order passed by the US Food & Drug Administration (US FDA). The drug was withdrawn as it failed to meet a specification for a known degradation product during routine stability testing. Pfizer sues Aurobindo Pharma over Lipitor. (alleging infringement of its patent). PFIZER SETTLE PATENT ROW OUT OF COURT (Pfizer had sued Aurobindo Pharma over a patent infringement for Lipitor) Pfizer of US has slashed its offtake from Aurobindo Pharma of Hyderabad due to scrutiny by the US Food and Drug Administration (FDA). Pfizer had entered into an agreement with Aurobindo to leverage its expertise in producing products in high volumes. 2012:

Aurobindo Pharmaceuticals Ltd has announced a net loss of Rs128.91 crore for Apr-Jun 2012 (Rs122.8 crore for Apr-Jun 2011). Its net income has gone up to Rs1,214 crore (Rs1,076 crore). The company has incurred higher manufacturing costs due to increase in the cost of power and fuel.