Aurobindo looks to cash in on custom research

India's Aurobindo Pharma is steeling itself for some expiring patents, looking to boost revenue by investing in its custom research and manufacturing business.

The company's nascent CRO/CMO unit snagged its first contract last year, The Economic Times reports, and Aurobindo is on the hunt for long-term deals with Big Pharma, hoping to get 25% of its annual revenue from contract work over the next 5 years.

Company managing director N. Govindarajan told the paper that contract work is more lucrative than generics production, and focusing on that business will help Aurobindo cope with patent expirations and a corresponding decline in U.S. revenue. And Aurobindo won't be the only Indian pharma feeling the pinch. The Times reports that, in 2013, the sales value of drugs coming off patent in the U.S. will drop to $15 billion, down from $44 billion this year, rising to just $22 billion by 2015.

For Aurobindo, diversifying its revenue sources will help it stay afloat during lean times ahead, Govindarajan told the paper, and the lower cost of research and manufacturing in India will make it an attractive partner to drugmakers. "We want to seriously support drug discovery," he said. "In partnership with some companies, we do have a couple of products that are in Phase II of clinical trials, and [it] will take three to four years for them to be launched."

At the same time, Indian regulators are looking more closely than before at the country's CMO operations. Andhra Pradesh, a manufacturing hotbed, reformed its environmental regulations, and Aurobindo and 12 other manufacturers were forced to close their plants over violations last month. Furthermore, India's excise-tax-free zones have come under fire of late, and the policy that allows some CMOs to produce tax-free drugs may not be around much longer.

- read the Economic Times story

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