On Eugia US sales numbers for Q4 FY25 and Q1 FY26 - can you give them?
We are not giving that number separately. In general, regular injectable sales is growing and we have shown a growth of 11% (year-on-year as well as quarter-on-quarter).
On the Pen-G plant - what visibility on ramp-up? And update on Minimum Import Price and risk assessment?
Pen-G production is improving in the last 3-4 days and yields are improving. We are pretty confident this going will be very good in coming 2 months and we will do very well in Q3. On MIP, we cannot talk in detail because lot of things are happening - probably we can talk about it in the next call.
On U.S. oral solid business - can you quantify the de-stocking impact?
It's hard to quantify exactly. Total U.S. demand has been pretty stable and we have got our awards intact barring few losses and few gains. My guess would be it could be anywhere between half a month to one month - if wholesalers stocked up, they would have stocked it for at least 15 days to one month for tariffs. That's only a guess.
On Lannett - are NCE minus 1 opportunities still valid? And given portfolio overlap based on IQVIA data, would direct means be required to get FTC approval?
On the pipeline, we get not only commercial-stage products but also pipeline products - quite excited about a few products in pipeline. On FTC, given the sheer volume of work to submit data, it could take time. We feel optimistic we should get approval for the entire portfolio of commercial products and pipeline, barring few where there could be conflicts. Overall, we are quite upbeat.
On the 12% growth ex-gRevlimid - is it US or overall company?
12% is year on year, overall group as a whole on consol basis. We are not given any specific US number directly - we never used to give.
On annual guidance - last quarter we talked about single digit growth. With Pen-G restarting, do you see any requirement to upgrade annual guidance?
I will be able to give a better picture in the November quarter. After that, it is your call what you want to do.
Implied gross margin based on the gross profit multiple given seems like 30% gross margin business - how can we achieve 15% EBITDA on 30% gross margin?
We have reviewed it product-wise - there are some synergies, some options. Overall, we think gross margin will also go up and EBITDA would go up.
On 12% ex-Revlimid growth - if I just adjust 150 crore in this quarter on a year-on-year basis, we would be at more like 6% growth. How do we get from 4% to 12% if we adjust for 150 crore?
Discuss with me offline, I'll explain to you.
When are we expecting something on tariffs and how much will generics be excluded or not? Any insights?
That is something President Trump can say - we cannot say at this point. We have not seen anything so far. Various press statements - somewhere he said he is going to do it after a year, going to bring in a huge duty. We don't know - it is the President's and President administration's call.
On gRevlimid, just to clarify - the Rs. 150 crores less number and Rs. 550 crores less versus Q4 - is it at the EBITDA level?
That is at the topline level. EBITDA you can work it out yourself.
On gRevlimid pricing pressure - can you still make some reasonable sales from this product in FY26 or is the opportunity broadly gone?
Most of our Revlimid settlement quantities have been sold; we have nothing more to sell other than minimal remaining quantity, so price impact will not have any bearing on future revenues. We don't expect significant sales coming from gRevlimid because we already sold off.
What has happened in API and is it temporary - can you see recovery ahead?
API turnover has dropped mainly because of pricing pressures. Over a period of time it will start recovering because it cannot sustain for a long time.
What are the key drivers giving confidence to maintain EBITDA guidance for the year?
Despite low gRevlimid we have been able to maintain. The numbers of the last quarter (Q1 FY26) help retain that confidence.
On operational losses for various plants - if you club together for FY26, what is that number? And how to think about FY27 considering any new plant?
Last year we incurred losses predominantly in Pen-G, Qule and others. We are expecting good EBITDA starting Q3 onwards, so the losses will come down. Pen-G was the biggest loss last year and hopefully that will not get continued.
How much loss for first two quarters of this year, given scale up benefits coming from H2?
Last quarter was a very low number, around less than Rs. 50 crores. The yields are improving day by day and hopefully will get stabilized in August/September, so by Q3 onwards we'll be able to do well.
How much PLI income to consider for this year?
We are expecting anywhere between 7,000-8,000 tonnes production. We can take more than half of it, maybe around Rs. 150 crores. Clearer numbers will be known in the next quarter once yield improvements sustain.
On gRevlimid - basis contract is over. With increased competition, will we sell beyond contract or stay out? How to think about the product?
The entire market will open up from 1st February 2026. We are getting prepared to take more market shares starting from February 2026. Even though limited sales for next 1-2 quarters, we expect Q4 because the entire market opens up and we have capacities to take share - it will be an open market game.
On API pricing pressure - is it on account of domestic supply being more aggressive or because of imports or both?
Because of both.
On the 16% decline in API - this is something I've never seen in the business in multiple quarters.
It may be 16% on the topline but may not be that much in terms of volume. Plus, this quarter is always a summer quarter, so the offtake is also very low across India.
European exposure of Eugia or ROW exposure continues to be in the ballpark of $35-$40 million a quarter?
It's a split - around $50 million there, Europe is $100 million and growth markets like Canada, Brazil continue to grow. Overall, we are trying to shift the balance of sales from 70-30 to 60-40 and we are hopeful of doing that.
On TheraNym - initial CapEx was Rs. 1,000 crores then appended to Rs. 1,500 crores. What's happening there and are you seeing incremental demand?
TheraNym was started with two 15-kL mammalian cell culture bioreactor lines and the CapEx guidance was around Rs. 1,000 crores. We are strengthening our collaboration with MSD which translates into adding two more 15-kL bioreactor manufacturing lines and associated purification and utility capacities. These will come into full operation in 2028. Additional CapEx of around Rs. 350-400 crores essentially is to enhance capacities and strengthen our collaboration with MSD.
On free cash generation - last two quarters consistently around $100 million per quarter. Is $400-450 million annual free cash generation visible? And on Lannett - why does the transaction take 8-12 months to close?
On free cashflow, we have reduced working capital considerably and overall CapEx has come down - this quarter is around $73 million compared to earlier trend of more than $100 million. We will strive to achieve cash generation of $100 million quarter on quarter, subject to any strategic expenditure being incurred.
On Lannett - why does the transaction take 8-12 months to close?
The Lannett acquisition is subject to FTC approval, with back and forth expected. We have given 9 months as a matter of abundant caution; it could be earlier and we will do whatever we can to expedite. If clearance comes earlier, integration would happen earlier.
How difficult or how soon can you integrate Lannett? What synergies are you looking at?
Integration is very easy because we have similar kind of products - they are in ADHD segment, mostly controlled substances. They have a strong BD team and bit of in-licensing - that's one synergy. They have 70 plus active products, many in controlled substances and short supply, with consistent quota utilization and stable market pricing. They also have a good CMO business with manufacturing capacity utilized only at ~40%, giving us 60% to bring in Aurobindo's large portfolio especially for the government market. Lannett also discontinued some products which we can revive. They have a good workforce with long tenure.
On U.S. business destocking impact - what is the nature of this destocking? Is it tariff-related preparation?
Tariffs were supposed to go into effect from April 1, so there was a huge surge in the quarter ending March - wholesalers stocked up the product in anticipation. We have not seen a decline in oral solids demand nor any major loss of awards. It is our understanding that wholesalers stocked up during the last quarter and are winding down those positions.
On European business margins - with new capacity, what outsourcing dependence remains and what margin performance for Europe?
We are steadily moving products in-house as much as possible. Some small volumes or technologies we cannot handle continue to come from third party. On margins, where we were in mid-teens a few quarters ago, now we are going strongly much above to high teens and touching the 20 mark very soon.
Have injectables seen any ramp up in Europe?
We have been growing at a rate of 20 percent for European market because of shortages in Europe. Demand is outstripping capacity, so we have taken a decision to add two more oncology lines to take care of European requirements. Quite positive that Europe will continue to grow.
On U.S. business decline QoQ and ex-Revlimid injectable trajectory - if it's just 15 days/one month destocking, is the entire 550 crore decline just Revlimid? How far are we from injectable business pre-disruption levels?
G-Revlimid was much higher in Q4 - your assumption is to some extent right. We are back to pre-disruption levels with respect to injectable business. My entire injectable business is growing, all production facilities are back and running, and Eugia 3 is back. We are very, very confident we have come back to pre-disruption levels.
Gross margin holding at 59% - with Revlimid down QoQ by ~$17 million and pricing pressure in API, what's helping hold margin?
It is a combination of multiple things - favourable mix in terms of businesses (when API revenue share goes down, weighted average improves because API does not give same margin as company average), Eugia did well, plus existing product profile is good in solid orals.
What are the Pen-G prices in the market today and what is your latest estimate of profitability levels - at what price will you be profitable?
Current market price is anywhere north of $20 per kg. We will be breakeven somewhere around a couple of dollars plus or minus, depending upon the yield in that particular month or quarter.
For being eligible to get the PLI payment, is there a minimum level of production required?
No, there is no minimum level of production. Whatever you produce, you will get a percentage on that as PLI incentive.
On biosimilar launches in Europe - what infrastructure, preparation and initial market shares are you targeting?
We started making manufacturing quantities for commercial supplies and made one supply to UK. First six months leading to March will essentially be meeting launch quantities, enabling commercial operations teams and partners to park launch quantities. No number guidance for first six months - it will be a very small single digit commercial revenues trickling in. We have four product approvals from Europe (three EMA, Bevqolva with MHRA). In markets where we are directly present, Aurobindo will handle commercialization; in others we have partners like Orion Pharma in Nordics. By April quarter next year, we will have fairly stabilized commercial supplies.
Versus your earlier shop's first European launch - is profitability in Europe for biosimilars distinctly different now and lower?
Absolutely there is a big difference in pricing erosion versus 2012. Europe is distinct - some countries are tender-driven, some retail prices give 80-85% gross margins, some give 15-20%. Any company with COGS allowing overall 40-60% margin is still in the game. In chronic segment (immunology, RA) you see major price erosion; oncology segment less so. Any biosimilar developer needs to prepare for an overall 50% margin from the entire European market - some countries 70-80%, some 10-15%.
Lannett FTC vs the failed Sandoz acquisition - what gives confidence this time? And on the 12% growth ex-gRevlimid - is it US or overall company?
On FTC, we don't have any of the critical products we think will have a conflict - we don't expect that many products with this issue, it will be a smaller list. We are focused on products that should go through without much difficulty. The main product should be intact, giving us flexibility.
What are utilization levels at PEN-G unit currently?
Currently doing around 50 to 60%. We are trying to improve yields - that is our primary objective to cut down losses. Once we stabilize that in next two months, we will scale it up.
On the controlled substance business - some Indian companies have seen struggles. Update on the market and where do we stand to benefit?
Controlled substances are in two buckets - opioids and non-opioids. Opioids have legal issues and many players, can be challenging. As far as Lannett is concerned, it is mostly non-opioid - ADHD products which are all in short supply. So we feel very confident about it. Lannett is all about ADHD medication and these are non-opioid.
On Lannett - if there are overlapping products and FTC asks divestment, would you divest on Lannett side or Aurobindo side?
That's not our call - it's dictated by what FTC tells us, ultimately their decision. We have reviewed both scenarios and feel confident our business will still be good even if we divest our product or theirs, wherever the strength is. Even in the worst-case scenario, we are still in good shape.
On the 15% EBITDA margin suggested in the Lannett presentation - is it for a particular year or do you plan to reach 15%?
This is the current run rate - if I take TTM trailing 12 months, we are somewhere around that. I believe that's a very conservative estimate. We think in the future we will be able to get a margin of 15% or more.
With US government prioritising domestic manufacturing of generic drugs reportedly supported by Japanese funding under trade partnership, what is the outlook on US generic business and impact on competitive landscape and pricing?
US government is pushing for manufacturing in US and if any company is prepared, we are best suited - we have a New Jersey facility, Lannett with huge capacity, plus another facility waiting to be commercialised, plus a fourth facility we can do with some time. If manufactured in US, product pricing would go up higher because basic cost level is higher. US manufacturing happens only when supplies from other countries are not cost-effective. We are ready whichever scenario happens.
Howard Letnick said $330 billion from Japan will be used, some part for domestic manufacturing of generic drugs.
If we are getting $330 billion or whatever amount, infrastructure for US generics will probably go up if they invest in the generic market. But all I'm saying - operating cost in US would be higher. If forced to manufacture in US, we will do it and we will be competitive - it's a level playing ground.