Dr Reddy’s is now the second pharmaceutical company as the old order changes

Sun Pharmaceuticals retained its position as the largest drugmaker in India, with sales of ₹10,809 crores for the three months ended September 30.

Dr. Reddy’s, based in Hyderabad, recorded a turnover of ₹6,331.8 crores in the September quarter, while Aurobindo saw its revenue drop to ₹5,739.4 crores. Cipla, based in Mumbai, recorded a turnover of ₹5,828.5 crores during the period.

Dr. Reddy’s and Cipla’s outstanding performance was helped by sales of the generic version of the oral cancer drug Revlimid, which accounted for just over a third of Dr. Reddy’s total U.S. business, according to a Axis Securities analyst. Cipla did not disclose any new business related to the blood cancer drug. The first companies to submit an application that meets the US drug regulator’s requirements get the coveted 180 days of selling the drug in the US without any competition from generic rivals. In this case, Cipla and Dr. Reddy won US FDA approval for their generic versions after the patent for Revlimid, developed by Bristol Myers Squibb, ended last year.

“Dr Reddy’s is currently investing in a variety of businesses that have the potential to generate long-term growth,” Axis Securities analyst Ankush Mahajan wrote in a Nov. 1 note. “While high inflation and price erosion could squeeze margins, the company proactively building a global biosimilars pipeline, developing NCEs (new chemical entities) for immuno-oncology and building a portfolio of nutraceuticals, vaccines, CDMOs (contract development and manufacturing organization) and digital healthcare platforms.

Aurobindo was bogged down by weak sales and lower prices from its current US formulations business, which accounted for 46% of total sales. Aurobindo’s revenue fell sequentially for the second time in nine months after sales fell 3.2% in January-March.

“We have reduced our FY23-25E EPS estimate by 10-17% to account for lower margins and sales in the US. Aurobindo Pharma’s performance was weak in the first half of the year. FY23, given cost headwinds and lower U.S. sales,” Param Desai and Akshaya Shinde, analysts at Prabhudas Lilladher, wrote in a note dated Nov. 16. along with a stabilization in pricing pressure in the core business.”

Until a few years ago, Lupine Ltd was the second largest pharmaceutical company before Aurobindo replaced the Mumbai-based company in January-March 2015. Subsequently, Cipla and Dr.Reddy’s also overtook Lupin, which is now the fifth largest pharmaceutical company. by sales.

Earlier this month, Aurobindo saw one of its directors (the son of company co-founder Ram Prasad Reddy), P. Sarath Chandra Reddy, arrested by the law enforcement branch. The central agency alleged that Sarath Reddy, through a private company, paid bribes to obtain the right to sell alcohol in Delhi. This development prompted investor Abu Dhabi Investment Authority (ADIA) to reprimand Aurobindo’s management. ADIA is the third largest sovereign wealth fund in the world, with over $790 billion in assets under management.

“(On) corporate governance, you know, serious work needs to be done there on what directors do,” said Prashant Poddar, portfolio manager at ADIA, during an investor interaction with Aurobindo on November 14. “Just because some of them are promoters, they can’t do what they want, can they? I mean, such a responsible position – that of a director of a big company , which has an Ebitda of over 400 million dollars and such a large responsibility as an exporter – it’s disappointing, you know, because it wouldn’t even work well with your buyers. I mean, they would also like that you follow certain corporate governance rules, I think.”

Poddar declined to comment, while an email seeking comment from an Aurobindo spokesperson went unanswered.