Aurobindo Pharma

Aurobindo Pharma Ltd. engages in the manufacturing of generic pharmaceuticals and active pharmaceutical ingredients. It operates under the following geographical segments: India, USA, Europe, and Rest of the World.

What is the macro play here for me ?

It is one of the biggest exporters of "generic" medicines to the USA. President Trump, who wants to decrease drug prices in the USA, will likely do it through more use of generic medicines. And who is the drug factory of the world? INDIA! 

What are Generic Medicines?

Generic medicines are versions of branded drugs made after the original patent expires. They contain the same active molecule and work in the same way inside the body with the same safety and effectiveness. Because the manufacturer does not bear the discovery and research cost, the price is much lower. Regulators like the USFDA and DCGI approve them only after strict bioequivalence testing to ensure they perform the same as the original drug.

According to reports, in the US and Europe, structural demand for generics is rising as governments move to lower healthcare costs. Generics now account for 90% of US prescriptions, a trend Aurobindo, as the largest US generic volume player, is perfectly positioned to capture this play.

On other end, it perfect for China +1 Strategy = 

Global buyers are actively diversifying their supply chains away from China. Aurobindo’s massive manufacturing capacity in India makes it a primary beneficiary of this geopolitical shift.

Also, a stable or slightly weakening Rupee against the Dollar/Euro typically benefits Aurobindo, as over 90% of its revenue is generated in foreign markets.

And the most important thing, Patent Expiries (2026-2028) = 

A massive "patent cliff" is approaching, where several blockbuster drugs will lose exclusivity. Aurobindo has one of the largest pipelines with 870+ ANDA filings ready to hit the market.

Well, I love these macros and I am bullish.

It has crossed a multi month resistance of ₹1275, stretching from the previous year. Such price action confirms our macro views mentioned above.

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