Aurobindo Pharma was up 9% at Rs 826, surging 22% in the past three trading days after the company on Thursday announced the acquisition of Sandoz’s generic business in the US for $900 million. Currently US business contributes to around 45% of its revenue.
“Sandoz acquisition seems to be transacted at attractive valuations (1x sales and 5x EBITDA), which will give Aurobindo higher scale (USD 2.3bn of consolidated US sales) and diversification in US (derma portfolio). Although the generics cycle in the US is going through a tough environment, we see Sandoz acquisition as value-accretive,” analysts at Elara Capital said in event update.
“Strong US business and an emerging EU (transitioning from negative OPM into the double digits) show drivers are in place. The EIR receipt for Unit IV in April 2018 and gErtapenem launch will aid in injectables sales in the US in FY19,” the brokerage firm said with a ‘buy’ rating on the stock and target price of Rs 836 per share.
Glenmark Pharma was up 2% at Rs 692, gaining 8% in past eight trading days after the company on August 29, entered into an exclusive licensing agreement to commercialize generic Tiotropium Bromide dry powder inhaler (DPI) in Western Europe.
Tiotropium Bromide DPI is a generic version of Boehringer Ingelheim’s Spiriva Handihaler. The product is used in the treatment of chronic obstructive pulmonary disease (COPD). According to data from IQVIA, Boehringer Ingelheim’s Spiriva Handihaler recorded sales of US $724 million in the EU in the 12 month period ended March 2018.