Aurobindos mega overseas plans

Hyderabad: The city-based Aurobindo Pharma has outlined a massive expansion plan for its overseas business. Aurobindo has embarked on a strategy of entering into the regulated market and to focus more in the growth-oriented areas in the non-regulated market.

Aurobindo officials say the new entry strategy will involve exclusive products in the area of sterile and non-sterile ephalosporins, speciality products coming out of product patents, and acquiring or formulating joint venture companies in the overseas market.

They said to achieve significant penetration in the non-regulated market, Aurobindo has been widening its portfolio and therapeutic groups, marketing networks and manufacturing establishments in key countries across the world.

As a part of the new initiatives, the company has plans to form joint ventures in China and subsidiaries in Brazil and Mexico. The proposed upgradation programme in the formulation plants and the construction of a new facility near Visakhapatnam will also provide a further competitive edge to the company in its quest to enhance its presence in non-regulated markets, the officials said.

The funds required for these projects are being met by internal accruals and fresh borrowings. To meet the additional fund requirement for the ongoing projects and capital expenditure plans as well as investment in the joint ventures, Aurobindo intends to raise further capital by way of private placement.

Aurobindo management has already decided to go for a Rs 125-crore private placement programme. The board of directors of the company on 8 December approved the proposals to issue equity shares or warrants on a private placement basis. An extraordinary general body meeting is had also been convened to seek the approval of shareholders for this private placement.

Officials said this would enable Aurobindo to deliver value to its consumers and stakeholders. The company has already taken major steps towards achieving its objectives. A world-class R&D centre is now fully operational in Hyderabad. Two mega bulk facilities and two large formulation facilities are getting upgraded to comply with USFDA requirements. The joint venture in the US has also registered a good progress as per the schedule.

The private placement will involve preferential allotment of equity shares/share warrants or other instruments as set out in the resolution to foreign institutional investors, financial institutions, mutual funds, banks, corporates, promoters or such other persons as the board may deem fit with suitable premium for an aggregate value of Rs 125 crore.

 With the completion of these projects and the capital expenditure plans, the company can look forward to sustained and healthy growth. In addition, economies of scale, enhanced presence in non-regulated markets and entry into regulated markets are expected to result in a huge positive impact on both the topline and the bottomline of the company. Indeed, Aurobindo Pharma is well placed to become an R&D-led world-class international pharmaceutical company, the officials say.