Aurobindo Pharma Arm Acquires Khandelwal Labs Biz for ₹325 Cr

Introduction

Aurobindo Pharma Ltd has announced a significant move to bolster its domestic market presence. Its wholly-owned subsidiary, Auro Pharma Ltd, has acquired the branded non-oncology prescription formulations business from Khandelwal Laboratories Private Ltd. The all-cash transaction, valued at ₹325 crore, is set to strengthen Aurobindo's portfolio in key therapeutic areas. Following the announcement, shares of Aurobindo Pharma Ltd saw a positive response on the stock market, closing 1.18% higher at ₹1,197.00 on the NSE.

Details of the Acquisition

The acquisition was executed through a Business Transfer Agreement (BTA) and is structured as a going-concern purchase. According to the company's exchange filing, the transaction will be effective from January 1, 2026. This strategic purchase is an all-cash deal, indicating Aurobindo Pharma's strong financial position to fund inorganic growth opportunities. The move is aimed directly at scaling up the company's operations within the Indian pharmaceutical landscape, a market that continues to show robust growth potential.

What the Deal Includes

The acquisition provides Auro Pharma Ltd with a substantial portfolio of established and pipeline products. The deal encompasses 23 brands currently marketed across 67 Stock Keeping Units (SKUs). Additionally, it includes nine products that are in the development pipeline, promising future revenue streams. A key component of the acquisition is the integration of Khandelwal Laboratories' human resources and distribution network. Approximately 470 field staff will join the Aurobindo group, bringing with them valuable market expertise. The deal also includes a well-established distribution network of over 1,600 stockists and related infrastructure, which will enhance Aurobindo's market reach across the country.

Financial Profile of the Acquired Business

The non-oncology business of Khandelwal Laboratories has demonstrated a solid financial performance. For the fiscal year 2024-25, the business reported a turnover of ₹113.53 crore. During the same period, it recorded an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of ₹28.99 crore. These figures highlight the profitability and scale of the operations that Aurobindo Pharma is integrating into its fold, providing an immediate boost to its domestic revenue and earnings.

Strategic Rationale and Market Positioning

This acquisition is strategically aligned with Aurobindo Pharma's goal of strengthening its foothold in the domestic market. The addition of Khandelwal Laboratories' portfolio, which is strong in the anti-infective and pain management segments, complements Aurobindo's existing product offerings. Khandelwal Laboratories, founded in 1973-74, has a long-standing reputation in India for its prescription formulations. By acquiring this business, Aurobindo not only gains market share but also enhances its brand visibility and therapeutic coverage in high-demand areas. The management team at Auro Pharma stated that the acquisition is expected to enhance the company's growth prospects by providing a wider range of prescription medicines to patients in India.

Market Reaction and Company Performance

Investors reacted positively to the news of the acquisition. On the day of the announcement, Aurobindo Pharma's stock registered a gain, closing up by 1.18% at ₹1,197.00 on the National Stock Exchange. This uptick reflects market confidence in the company's strategic decision-making and its potential for future growth. The acquisition comes at a time when Aurobindo Pharma is actively pursuing various growth initiatives, including global expansion, such as the recent incorporation of a subsidiary in Chile, and maintaining stringent quality standards, as evidenced by regular US FDA inspections of its facilities.

Broader Industry Context

The Indian pharmaceutical industry has been navigating a dynamic global environment, with challenges such as US tariff threats and intense competition. In response, many leading Indian pharma companies are increasing their focus on the domestic market and other non-US export markets. This acquisition by Aurobindo Pharma is a clear example of this trend. By investing in its domestic capabilities, the company is de-risking its business from over-reliance on any single international market and tapping into the consistent demand within India. This move allows Aurobindo to leverage its manufacturing scale and R&D capabilities to better serve the Indian healthcare ecosystem.

Conclusion

Aurobindo Pharma's acquisition of Khandelwal Laboratories' non-oncology business for ₹325 crore is a well-defined strategic step to expand its domestic operations. The deal brings a valuable portfolio of brands, a skilled sales team, and a robust distribution network. It immediately strengthens the company's position in the anti-infective and pain management segments. As Aurobindo Pharma moves forward with the integration of this new business, the focus will be on leveraging these new assets to drive sustained growth and create long-term value for its shareholders.