Aurobindo Pharma shares slump 5% as co clarifies on Zentiva buyout news

Aurobindo Pharma shares slipped 5 per cent in Wednesday's trade after the drug maker clarified on a 'potential' acquisition, saying the company regularly explores various strategic opportunities in the ordinary course of its business, including potential acquisitions and partnerships, to enhance long-term shareholder value. That said, no definitive decision has been made by the board of directors of the company in relation to the Zentiva transaction.

Aurobindo Pharma was responding to reports that it was closing in on a $5.5 billion Zentiva buyout. There is no binding agreement yet, Aurobindo Pharma said calling the news reports as premature and "should not be relied upon."

On Wednesday, Aurobindo Pharma shares fell 4.67 per cent to hit a high of Rs 1,039.30 on BSE, commanding a market capitalisation of just over Rs 61,000 crore.

Aurobindo Pharma said in the event of any definitive development requiring disclosure under the SEBI Listing Regulations, the pharma company will promptly make the necessary and timely announcements to the stock exchanges in accordance with applicable regulatory requirements.

"We maintain continuous compliance with the disclosure obligations as per the SEBI (Listing Obligations andDisclosure Requirements) Regulations, 2015," it said.

If completed, this would mark the largest-ever acquisition by an Indian pharma company, surpassing Daiichi Sankyo’s $3.2-billion purchase of Ranbaxy in 2014 and Biocon Biologics’ $3.3-billion cash-and-stock deal for Viatris’ global biosimilars business.

Economic Times had earlier reported that Zentiva will significantly boost Aurobindo’s European footprint, specifically in the east European region–Czech Republic, Romania and Slovakia, where the market is seen as fertile and steadily warming up to a raft of biosimilars, following patent expiries of big prescription brands.

Moreover, since healthcare spending in Eastern Europe is largely driven by government-led bulk procurement, returns tend to be more stable compared to the persistent price erosion seen in the US. Notably, Aurobindo already generates the highest revenue from Europe among all Indian pharma peers, ET reported.