Aurobindo Pharma struggles with US drug approvals

Aurobindo Pharma is facing challenges due to delays in drug approvals in the US. The company reported that eight new drug applications received final approval in the last quarter of 2024, while 56 applications are still pending. Analysts expect that revenue from these new drugs will be weak in the upcoming March quarter. The company's stock has dropped 13% in 2025, which is worse than the 10% decline seen in the BSE Healthcare index. This poor performance is related to the slow approval process and the anticipated patent expiry of Revlimid in January 2026. This expiry may affect profit margins due to increased competition. To address these challenges, Aurobindo is expanding its product lines. The company has invested around $300 million in a new facility in Kakinada, Andhra Pradesh, which will produce penicillin G. This facility will meet a significant portion of the country's penicillin needs and is expected to be profitable by 2027. Aurobindo is also focusing on respiratory drugs and biosimilars. It plans to launch biosimilars in Europe by July 2025, while a new plant in China has already started production. This plant is expected to help boost revenue in the fiscal year 2026. In its latest financial report, Aurobindo achieved record revenue of ₹7,979 crore for the December 2024 quarter, an increase of 8.5% compared to the previous year. However, net profit fell by 10% to ₹846 crore due to foreign exchange losses. Despite these setbacks, analysts recommend buying Aurobindo's stock, projecting a target price of ₹1,568, which represents a potential upside.