My first question is again on Eugia. So, as you mentioned, the observation seems to be procedural in nature and it might be resolved within your stipulated timeline. But given we are yet to get full clearance from the FDA, what kind of trajectory we should build for or we should assume for the US injectable sales?
Yeah, Damayanti, like see, these are procedural in nature and we will respond and we are cautiously optimistic about the future of this facility. But ultimately, US FDA has to take a decision in terms of the warning letters. So, I cannot comment on what exactly they will do, but we feel confident that we will be in a position to respond. And in my view, probably like next year will be again same double-digit growth, what with the ramp up of supplies and other stuff happening from various other facilities. So, it should be in that same trajectory till the time the warning letter gets lifted. If in case if the warning letter gets lifted, then it will be a different this thing, that we can talk in subsequent quarters. But at this juncture, we are cautiously optimistic.
My first question is on Lannett. Could you give us an update on where we are in the approval process from the FTC and when should we expect the completion of that transaction? And just to follow up on Lannett, you know, in your view, what would be the rough overlap between the Lannett portfolio and Aurobindo portfolio that, you know, FTC could probably look at?
Thanks, Neha, for the question. Right now, we are actively engaging with the FTC through our attorneys and we are very pleased with the progression of the process to this point. We feel confident that this process will be completed early in the next fiscal year, that is Q1 of '27. As far as the overlap is concerned, you know, there are no surprises, there are no negative surprises. That is all I can say because obviously, this is a very confidential matter. I cannot disclose it. But we are quite pleased with the way it has progressed and with, like I said, there are no negative surprises.
And is it fair to assume that when you say we'll start seeing an impact of this from first quarter, you know, the facility will break even in first quarter FY27?
Let me put it like that. To give you some more color, we have already (achieved break-even) on the Pen-G facility and we started making a little bit contribution now itself. However, where we have been losing out is on the 6APA prices where there is a predatory pricing and it is going well below the cost of manufacture internationally also. And with the correction in the MIP, etc, hopefully this should get resolved by end of March or maybe by April.
Hi, a couple of book-keeping questions. We've been seeing a reasonably elevated tax rate for last four quarters. And second, just following up on the earlier participant, not specifically for Pen-G, but really, you know, various capacities are in the process of ramp up - Lyfius, Qule, Auroactive, China, Dayton, Raleigh, (Eugia) Steriles. So just wanted to get a sense on what's the EBITDA burn of all these businesses which are in the ramp up phase?
Yeah. So, Tarang, the first question is on the tax rate. What has happened is today, CuraTeQ, today Lyfius, all these are independent companies, right. We have incurred losses on account of the ramping up and other things, and CuraTeQ on account of the R&D cost and other things, right. So ideally for the losses, we should have taken a tax credit, but we have been very conservative in our accounting. So, we are not taking the tax credit. Once we start making profit we'll take that tax credit with a retrospective effect. So, that is the reason why you are seeing a higher tax rate. Otherwise, the tax rate for the entire company, in fact Lyfius the tax rate is around 15% and Qule also 15%., so we will move towards that. Over a period of time, we will be around 25%. But today we are in a ramping-up phase, and that is the reason you are seeing it. So nothing to worry about it. Okay? In terms of the EBITDA impact loss, as I told you, we are incurring losses in some of these which will get translated into profit in the coming quarters. We are not specifically giving any number, but we will be making profit coming over the period of time.
Last question on the US generics business. You know, up till calendar year '24, OTC was doing about $100 million of revenue. Just curious, how has that played out for calendar year '25, and what's outlook for calendar year '26?
Thanks, Tarang. We don't normally talk about the dollar value for separate set of business. But I can tell you for the last couple of quarters or three quarters, OTC has really picked up, and we are looking at it as a fast-growing segment within the US, and we expect very good momentum in the sales and volumes for the OTC business.
This budget announcement of this BioShakti, Dr. Satakarni, anything? I know it's early and maybe the details are not yet out for biomanufacturing in the country. Anything that you have, any insights from industry discussions?
Very interesting question. I get asked this question in the last 2-3 days. Broadly, Shyam, I speak for myself and not for Aurobindo here. Broadly, initiatives like Biopharma Shakti are directionally positive for the sector, if executed well, and that's my big takeaway... if executed well, it has the potential to strengthen the ecosystem, biotech ecosystem, in terms of... from the fine script what I read, in terms of skill development, the clinical trial sites, and how we go about conducting clinical trials, and the availability of the sites, faster translation from development to manufacturing, and let me remember... the predictable regulatory and quality environment that the government wants to create around this initiative. So for the biosimilars and biopharma industry, I think the biggest takeaway will be an improved ecosystem, maybe into the beginning of the next decade, if it is implemented well.
Okay, and so the MIP, when you would have made the representation to the government, what would be the basis of that? Would that be like the cost of production plus a decent profitability? Is it on that basis that the government would have decided based on your representation, or there are more factors into consideration?
Kunal, your question is absolutely right. But since I'm privy to certain information which has been worked along with the government, I am unable to disclose anything further on this.
Great. One question I'll take now is you mentioned capital allocation, the buyback figure given there has been some tax this thing as well. And last time we did it at Rs. 1,450, now the price is lower, and of course there is a slight tax benefit for the non-promoters.
Yeah, it's a very good... I mean, this is a very good option which came in the budget. Probably the entire management, I mean, top management, promoters, board, everybody is aware of that. I think this is coming with effect from 1st April. Let's wait and see. We have another two months' time. Now, this needs to be passed by the Parliament and any changes, anything we will take into account and decide appropriately. The board will consider these and then decide in their best wisdom, depending upon the circumstances.
We have got the MIP at $25 for Pen-G. But sir, if you do the calculation, the two Pen-G equals to one 6-APA, and most of the formulation plants source 6-APA or the Amoxicillin, where the prices are similar to the market. So from the modelling purpose, should we take the prices at $25 per kg, or we should reduce it down keeping in line to the ratio and MIP that we got on the Amoxicillin and the 6-APA?
Harshit, your question is very good, but you should ask some of the consumers to get the right answer. Certainly I may not like to give any number now. I think directionally I have already said no, the prices have started going up. To what level it can go up, where it will end, we do not know, but certainly we are very confident about it. Yeah, right understanding. But certainly when you buy Pen-G solid and then convert it into 6-APA, there are additional cost involved, etc. But the way our process have been done is we will not crystal, we will not do solid Pen-G. We will convert it at the liquid level. There is a saving coming.
Sir, thanks for taking my question. So there has been a significant depreciation of the Rupee against the USD, as well as the Euro over the last few months. Are the numbers fully reflecting... already beginning to reflect some of the impact of depreciation, or how should we think about it next year?
I think one of the thing... the depreciation is not... because of that translation effect also, the depreciation is going up, right? And that is also one of the reasons. It's already started reflecting on the numbers, right? Whatever sales are happening at the end customer i.e. at the Europe level or US level, etc., we translate at the average rate for the quarter. And so the numbers are reflecting the actual... If there is further depreciation of any currency, etc., against dollar or appreciation against dollar like Euros, etc., that also will get reflected going forward.
Got it, and just one last question is with regards to... is there anything if you can help as... overall how should the US market and sales look for margins look for the next year, maybe dollar terms or whichever? And should we... With this CapEx, etc., is there something on the RO returns or the ROC or ROE that we may want to comment on?
Yeah, so the next year, the coming year, I think it should not bit different from the current year. Actually, we are looking for some improvements in terms of numbers, overall numbers. So obviously, when the numbers improve, the margins should also be better. We are not seeing anything that's going to be negative at this point of time. Oral solids is sitting at base of about 1 billion, and then as in specific segment we might have. But if you see the oral solids at 1 billion, it's very difficult to achieve. But who knows. We have got Lannett that's going to be merged, acquired, hopefully with the FTC approval, and that can create synergies and that can help us better business deal. But as you grow bigger, it's going to be difficult in terms of percentage of growth.
Sir, with respect to Eugia III inspection, if you could share some color in terms of the nature of observations. Secondly, if implementing any measures to address this issues, will this require certain, let us say, temporary stoppage of production or anything of that sort?
Yeah, I think, Tushar, we have already clearly mentioned this, stating that these are all procedural observations. There is no stoppage of production, no stoppage of any nature and these are procedural and technical. And we are very confident of responding within 15 working days to USFDA. I do not see any issue.
So, that way the production also will be on the continued process per se?
That is right. I think we are very, very clear. I think last time inspection was completely different and this time inspection is, it is very positive from that perspective that we do not have any data integrity issues, which was the issue last time unfortunately. And these are all procedural in nature and procedural means like it requires a one week or 10 days, some SOP changes, some corrections here and there. So, absolutely no problem.
And just one clarification from the opening remarks. So, ex-gRevlimid, we highlighted US sales would have grown at what rate over year-on-year basis or quarter-on-quarter?
I think we have given it around 9%. No, overall.
My second question is on your Europe business. So, although in reported numbers, I think reported terms, growth looks very strong. In constant currency, we are seeing this segment growing in low double digit for last two quarters or so. So, with now the China supply improving, how do you see this business ramping up?
Good morning. Murali here. Low double digit in itself is well ahead of the market growth rate. So, this is what we are tracking. And all of our leading geographies, whether it is France, Portugal, Germany, and Netherlands, they are all showing double digit growth. And of course, with more launches happening and supplies from China, we expect to grow further. And several launches are lined up, both yet to launch and some of the loss of exclusivity products. So, we expect further ramping up in the coming period.
And one last question, if I may ask, if you can update on your Vizag facility, what is the status or update there? Injectable one.
Yeah. Injectable one, like we have already filed 3 products and some 10 more products are under filing. We expect a slow commercialization to happen in next year, FY27. And because we are going to file a very, very important product from this facility, because we have a cartridge line where like we will be taking all the GLP-1 products from there and we'll be filing. And we have a PFS, we have a BFS and total, so, it will be 8 lines by end of this year, this calendar year. And that is what we want to restrict it to, so that the ramp up should happen starting from FY27 and we should take full benefits starting FY28.
My second question is on the Pen-G capacity. Subbu sir, you know, roughly what would have been the EBITDA impact from the Pen-G facility in fiscal '26? And as we think about the 10,000 tons production that you have mentioned over the next year, at what point do you see this actually start reflecting in the gross margins and, you know, possibly even external sales?
You see, as I said, you know, while we have been improving the yields consistently and increasing the production this quarter, obviously, the MIP is having a, I mean, compared to the current prices, the MIP prices are a little bit more. So, the full impact of it, we will be seeing it from the first quarter because there is already a stock available in the market, which hopefully will get consumed by end of February or mid of March. So, you should start seeing the improvements in April onwards.
Subbu sir, just to follow up, this Pen-G sale for the quarter, how much was produced and was it also, was it sold or fully utilized internally?
I think the last quarter we are fully utilized. We are fully utilized and we, see we are now, based on the January production, we are nearly, nearly 9,000 to 10,000 (MT) annualized number. We have gone to that extent. We have already ramped up significantly in the month of January and hopefully this will get further ramped up in the coming months, depending upon the availability of the stock in the market. So, we will ramp up in such a manner there is no over material available like that. Yes, it has been everything, I mean barring few tons, right, we have mostly consumed it internally.
Sir, what I was wondering is, you know, last quarter the MIP was not in place, so the market price was low. So, using our in-house Pen-G, did it really help the margins? Because from outside you would have probably...
No, as I told you, Pen-G, we have been making, I mean, we are making a breakeven of slight profit. It's a question of 6 APA across the market and the resulting Amoxicillin price, which has really put the entire market at a loss. So that is getting corrected. Hopefully by April it should get corrected fully. Yeah, so we incurred loss and that loss has been in, that loss has been absorbed as part of the EBITDA margin.
The second, you know, the quarter gross margin about 59.5% is one of the highest, you know, probably higher than some of the quarters where generous contribution of generic Revlimid was there. So, what has led to this kind of strong margins and how sustainable is it?
Overall, I think with the improved performance of the Pen-G and the related products, I think our losses, whatever the losses we have incurred has come down and which will turn into positive and this will help. And overall, Yugandhar also said, the injectable business is expected to go up and every business is working, and Murali has said that he is working on a double-digit growth, etc. So, all put together, I think we should be able to show a sustainable improvement in the EBITDA margin and the overall profitability.
And one last small question, there is this product Pomalidomide - Pomalyst, which is opening up for generic competition soon anytime now, are we part of that first to market launches?
Yes, we'll be launching and we have already prepared for the launch.
On the biosimilars business, we saw an announcement around vaccine restructuring. And second, I was curious for Lucentis, is the Phase 3 through EMA waived?
Hi, this is Satakarni. I would answer your first question. With the AuroVaccines merger, the intent is consolidating and improving our utilization of the existing capabilities that were built in AuroVaccines. Essentially, the idea is to retain some flexibility to repurpose the capacities that we have built there from 2018 to the COVID period, as these capacities, some of them, can also be needed to support the future biosimilars roadmap. So, in the nutshell, from the board and management, this is more about us looking into operational efficiency and agility, but not a change in strategic direction.
For ranibizumab, is the Phase 3 waived in Europe?
No. So Ranibizumab is a product that goes into the eye. So it's an ocular product used for wet AMD. So essentially, you need to inject the drug into the (vitreous cavity near the) retinal nerve of the eye. That requires a small minor surgical procedure, which is done in a clinical setting. So the Phase 3 is not waived for such products because you can't do a PKPD study of such ocular products that gets injected into (the vitreous cavity near) the retinal nerve of the eye in healthy volunteers. So you will not have any volunteers to do this study. And hence, a Phase 3 for products like Ranibizumab will not have a waiver.
Satakarni sir, just again on the biosimilar journey, now in the next 12 months, what are some of the milestones and timing that we need to keep in mind? And any way to kind of assess how large this could be for us over time, maybe fiscal '27 and over time?
Good morning, Shyam. In terms of milestones, Shyam, in the last quarter we have announced (the) first Canadian approval (for Dyrupeg), which is an important milestone for us, on the back of the four biosimilar approvals that we had in the European Economic Area. So we are preparing some momentum in Europe and growth markets through these approvals, which will be translating and converting into launches in this year. Bevqolva, which is Bevacizumab biosimilar, is already launched in the UK. Dazublys, which is our Trastuzumab biosimilar, was launched in the Baltics territory through a partner. This means we are moving from the readiness or the development phase, to real on-the-ground commercialization. I believe 29 (2029)... to answer the second part of your question, as I have always stated, 29 (2029) would be the inflection year for biotech. All the efforts that we have made in bringing four biosimilars into the market (read as approval) in the last one year, and with two or three more ready for filing in both Europe and US, we expect to ramp all this up, convert this into some sort of commercial momentum by 2029, which is our inflection year, I believe.
So just my last question to Subbu sir on the balance sheet, our net cash. I know there's a Lannett acquisition still. But just want to understand from an outlook perspective on M&A, or what are some of the key priorities for us apart from CapEx and dividends, what are some of the key priorities for us as we look forward?
So Shyam, which I told you earlier also, we are not going for any major greenfield project other than whatever we are committing to TheraNym which is the biologics which Satakarni has informed. Otherwise, we are not going for any major organic. In terms of the inorganic, yeah, we keep on looking at it, but it is not that we need to do it urgently, etc. If we get the targets at the right price and to our strategy, fitting into our strategy, we will look into that. I think this is the main thing actually in terms of the capital allocation.
Sir, just one question on the Pen-G and 6-APA. Since the prices of those imports had started coming down at the start of FY26 or the end of FY25, and we have imported little bit of 6-APA in FY26, so is it fair to say that some of the gross margin improvement that we are baking in from the internal consumption from our facility is already there in the numbers?
Kunal, your question is right. That was the scenario one month to one and a half months back, but now the prices have started going up, okay? And whatever may be the production, We are anyway not going to buy it from them unless it is required, absolutely essential for various reasons, right? We will be producing, and our cost of production is also coming in line. So we should be seeing an improvement in the gross margins very clearly going forward, right? That is the thing.
One question is with regards to the Lannett acquisition. The settlement amount of the fines. Is it final, or it can increase? And will it get adjusted in the price or not?
The settlement of Lannett is their liability, and Aurobindo is in no way liable, nor does it change the math. Yeah, till today, I mean, till the actual acquisition happens, and any liability till that date will be that of Lannett.
Okay, with regards to the PLI amount, when and how much are we expecting to come from the government?
So it is like this, Jigar. As per the government, it is Rs. 240 crores for every 10,000 MT, right, And as and when we produce the quantity, it will proportionately come. Absolutely. You can see... I mean, hopefully everything goes well, we should be able to see the full year... next year, we should be able to see the full amount.
Okay, sir, and the second part. As the Eugia plant inspection has just completed, are there any other plants which are due for inspection, or which you think can be for the inspection for let's say next six months or one year?
No, these are all unannounced audits. We don't know when they will come and what they will do. So there is nothing called pre-scheduled inspections, mainly from USFDA. So it will be very difficult for me to comment which plant might get audited next.
So my question was, is there a lot of gross margin improvement, or can we...? Is it fair to assume a fair bit of that has come on because the depreciation of the Rupee against the dollar and the Euro?
No, no, because everything will get translated into... No, whether it's a cost, everything we will translate into the average rate. So it is not that only the top line we are translating, other things we are not translating. In fact, if you really see, you look at the other expenses, typically it used to be around Rs. 1,700-1,800 crores. Because of the translation effect, etc., it is now at Rs. 2,000 crores.
Right, right. And the last one on this, on for Europe, what kind of sourcing do we do? What proportion of our supplies are done from India, and how much do we source in Europe itself?
Yeah, I would know, maybe I can give a high-level update. Closer to 60% of the sourcing happens from in-house sources, and steadily we are also transferring the third-party products, the key ones, to our sites. And the balance comes from third-party sites.
Thank you. Last one, sir, on US, how many new approvals or new launches are expecting in FY27?
So approval is one thing, and then we have the launches, because some of the launches could be what is approved, we may be launching later. So we launched about nine products in the last quarter ending December. We believe similar kind of trend would continue for the next 12 months. On a yearly basis, if you multiply, that's what we can look at.
If it is a large and similar, CapEx should we assume for the business for FY27? And how much money is spent or spent on the biologics, CDMO business over the next couple of years?
I think, other than the biologics CapEx which I mentioned, where we are trying to work... I mean aligning with a strategy of the biologics, I don't think we will be incurring anything beyond around USD 150 to 200 million, because we are not planning for any greenfield. Maybe some acquisitions, etc., may come, right? That is a one-of, depending upon the target. Nitin, so the CapEx into the CDMO business, TheraNym, right now is about USD 120 to 130 million over the last seven quarters. Subbu, you may correct me. So that is where the CapEx expenditure stays, unless we have a few business deals and we decide to expand our CMO offering and build additional capacities. But right now, what has been spent on TheraNym, or what will be spent on TheraNym in total, with the spend that was incurred over last 6-7 quarters, is all put together will be, I think, USD 120 to 130 million.
It is a follow-up on the previous question only. With regards to this USD 120-130 million, how much would have come in by now, and how much would come in FY27? And if I had to assume that these are for two products, and if there is a product addition, then another Rs. 300-400 crores of additional would one should budget with every new product?
I will answer your part two of the question and will ask Subbu to answer the specifics of the budget later. So part two of your question, this deal was signed for one product in May 29, 2025 (read as 29 th May 2024), and then we added second product schedule somewhere towards the end of, I think, Q2 or Q3 last fiscal. So essentially, this is for two products, and the CapEx... the total CapEx projected, is around 120 to 130 million for both the products – (for building) the capacities for both the products together. Yeah, Jigar, the CapEx, as Satakarni says USD 100 to 120 million type, probably we may be incurring anywhere between 80 to 120 million in the current... the next two years. We have incurred certain things already, depending upon the level of progress Satakarni is going to make in this... accelerate the entire process in this Q4, the balance will be incurred in the going forward.