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Multilateral deal on HIV treatment likely to boost Aurobindo Pharma’s business

LiveMint logoLiveMint 25-09-2017 Isha Trivedi

Mumbai: Aurobindo Pharma Ltd’s HIV drugs business is set to receive a boost from the latest multilateral agreement to provide a new class of anti-retroviral (ARV) treatment to low-and middle-income countries. Hyderabad-based Aurobindo is one of only two suppliers of these drugs for the initiative.

Aurobindo’s ARV business, which accounts for 7% of total revenue, has been under pressure for the past one year. This agreement likely signals a revival.

The multilateral agreement announced on 21 September is aimed at accelerating the availability of the first affordable, generic, single-pill HIV treatment regimen containing dolutegravir to public sector purchasers in low-and middle-income countries at around $75 per person, per year. Dolutegravir is a medication used in the treatment of HIV infections.

The governments of South Africa and Kenya; the Joint United Nations Programme on HIV/AIDS (UNAIDS); the Clinton Health Access Initiative; the Bill & Melinda Gates Foundation; Unitaid; the UK Department for International Development; the US President’s Emergency Plan for AIDS Relief (PEPFAR); the US Agency for International Development; and the Global Fund to Fight AIDS, Tuberculosis and Malaria are part of the agreement.

Aurobindo and Mylan Laboratories Ltd are the two firms that will supply the once-a-day generic fixed-dose combination of tenofovir disoproxil fumarate, lamivudine, and dolutegravir (TLD) under this initiative. The TLD combination is expected to be better than the existing tenofovir, lamivudine, and efavirenz combination used as the first-line treatment of HIV patients.

New anti-retroviral medicines such as dolutegravir can suppress viral loads more quickly, and they have fewer side-effects, are less prone to resistance and have the potential to lower treatment costs and make treatment programmes more sustainable, UNAIDS said in a report released in 2017.

Mylan and Aurobindo have developed the generic TLD combination drug as part of the licensing agreement with innovator firm ViiV Healthcare Ltd and recently received tentative approval from the US Food and Drug Administration (FDA) for the product.

“Aurobindo will benefit as it is among the first ones to provide this product and volumes of sales will be high. Even when competition trickles in at a later stage, the company has an advantage of being an integrated player. Moreover, for this agreement, the company will not have to incur marketing or distribution cost,” Ranjit Kapadia, senior vice-president at Centrum Broking Ltd, said.

In fiscal year 2016-17, Aurobindo earned Rs1,185.4 crore in revenue from the ARV business, down 2% from the previous year. Total revenue was Rs15,089.9 crore. In the June quarter, the ARV business was down 19.3% on year at Rs244.6 crore.

In a conference call with analysts on 10 August, N. Govindarajan, managing director of Aurobindo Pharma, said increased competition and pricing pressure was weighing on the ARV business, but added that the outlook was positive because of the new combination drug in the pipeline.

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