On Revlimid - moving from 3Q to 4Q, you booked sizably large sales. Does Q4 number reflect what you originally planned, or have you held back some supplies due to price renegotiation from additional competition entering the Revlimid market?
Normally, we don't comment on Revlimid sales or units or value. But like in fact, we have done whatever we planned to do. And we are only left with balance for the next year. But beyond that, I won't be in a position to comment in terms of the numbers.
On the PLI capacity post the fire, by when do we expect production to normalize? Is the PLI capacity profitability ramp-up still on track?
To make profit as contemplated, we need to run the plant at full capacity. We don't want to run half capacity pending approval because it's a big plant. With COVID coming back in news, government may give approvals fast. Government is also working on minimum import prices which will help avoid losses and achieve planned profits. Cannot give timelines when it comes to the government.
On growth in FY26 - you highlighted Europe and emerging markets but were silent on US which contributes about 45% of total. Is there a risk to the overall growth guidance, or can you give clarity on US business?
I told in the opening remarks, we will be able to achieve high single digit revenue growth, excluding the transient product. We will be able to give better clarity post tariff announcements. As on date, the existing business, we are trying to grow it with a high single digit growth.
On fixed cost base excluding R&D for FY25 versus FY24 there's been a quantum leap due to Eugia remediation, Pen-G, Vizag, China. How much was the quantum of one-offs from regulatory reasons or amplifying capacity not contributing revenue?
Total other expenses during the year was Rs. 1,995 crores against Rs. 1,805 crores. Other expenses have not grown significantly. One reason is the translation impact taking place with Euro at higher rate now. Otherwise, fixed expenses remained the same in India, Eugia, USA. Q3, Q4 alone where there is not much remediation charges, it is mainly translation impact.
On the Rs. 100 crore one-off in Q4 and Pen-G/remediation costs in earlier quarters - would the one-offs for FY25 be Rs. 400-500 crores or materially low? On US OTC for FY25 and outlook for OTC and oral solids in FY26?
On the one-off Rs. 105 plus crores during the quarter - take 50-50 between cost of goods and other expenses approximately. Typically we don't talk about OTC numbers. OTC has done well in last two quarters and continues to grow. With regard to OSD, we are confident in our outlook for improved growth in FY26 with planned new launches and a more diversified portfolio of growth drivers.
On US pipeline - the plant is under preparation for transdermals and respiratory products. Where are we on filings? In short term, would drivers be largely injectable products and hormone products, or anything else?
Transdermals and respiratory products are not in the near term. We are progressing better than anticipated in filings. These products would come in medium term, not necessarily short term. As far as short-term drivers, we expect newer launches from oral solids and volume increases in certain products launched recently and other new launches done in the last 1-2 quarters.
On Europe FY26 improved growth from LOE products - can you name some? And how should we look at growth in this market beyond FY26 - will it come back to single digit market growth or is there a long runway?
Generic growth in Europe is rather flat or low single digit, maximum 4-5%. We have been consistently clocking high single digit growth and confident this new fiscal we'll be doing close to 8-9% growth. About six LOE products will be launched during the year market-by-market on a risk-based approach based on legal opinion. We were close to billion-dollar mark this year at US$ 987mn, and next year we'll be scaling past the billion mark in style.
On July tariff announcement - generics were exempted last year in 2019 even under Trump-1. Has there been any change suggesting differently?
We are not suggesting anything. We are not making anything, not guessing anything. We are just saying there is an announcement likely in the month of July. Let's wait for that. We don't want to make any guesses about it.
Excluding CDMO and only the biosimilar part - over '28-'30 timeframe what is the potential size? Is it US$ 500 million, billion-dollar business?
I would hate to put numbers because we are looking at extremely complex and dynamic environments in Europe and US biosimilar business and its disruption. With four products approved followed by Denosumab, Omalizumab, Bevacizumab likely approved in next 4-6 quarters, by 2030-31 the business would be anywhere between US$ 250 to US$ 400 million in revenues. It depends on various factors and is very subjective - cannot pinpoint a certain number, but expect significant size provided certain regulatory decisions go our way.
On guidance - what contribution from Pen-G plant coming back are you including? How many months of production?
We are including around 6-8 months. We cannot specifically tell numbers of individual business. If we are able to make production of 8,000 to 10,000 tons in a year, certainly ~50% will go into external market - depends on price at that point. If unable in one business, we'll try to make it up in another business.
Nothing has spilled over from 4Q to next fiscal, can you indicate that?
We haven't. In fact, like nothing has spilled from Q4 to the next year. It is just as planned. We have done it. So, whatever limited quantity will be there for FY26, that is what we will do. But there's nothing, no spillovers from FY25 to FY26.
In your margin expectation for FY26, are you including significant pickup happening from China plant or some of the plants in the US?
US plant Swami will talk about, which we already mentioned in the original remarks. In the China plant, already it has incurred some losses, and that will become break-even or slightly positive in the coming year.
Is China supplying to all the markets - local market as well as Europe and US? And what's the status of Dayton and Raleigh plants in the US?
Not US. They will be supplying to China during the year, as well as Europe; Europe supplies have already started, China will be after some time, maybe Q2. Dayton plant is going to commence manufacturing on commercial basis with commercialization in Q2 of current fiscal. Raleigh facility had an FDA inspection with some issues raised, which we are addressing proactively. Raleigh plant does not have much contribution in revenue currently and we do not have major product launches planned in the short term, so this is not going to impact our numbers in a meaningful way.
On the Europe business - it has been consistent high-teen growth for a couple of years. If you could elaborate on the strategy to sustain this growth movement.
Europe momentum is sustained through a combination of factors - shortages management (market intel to understand what's going short and addressing with Aurobindo replacement products), enhanced supply chain efficiency, and turnaround time at Malta. We can sustain this very strongly because the number of launches in FY25 were significant and in FY26 more products are planned, including loss of exclusivity products, indicating much stronger growth in the coming year.
On margin front - with Pen-G plant resumption, normalization in Eugia-3 offsetting Revlimid impact, is there any other factor for margin uptick or downtick for FY26? Can you quantify China plant losses for FY25?
Some new units like China incurred losses, expected to be break-even or nominal positive in the coming year. The China plant in its first year incurred a loss of around Rs. 35 crore plus. There are multiple opportunities to improve performance with growth plans and full year impact of last year's launches helping to maintain profitability. However, we need to wait for the impact of the tariff announcement likely in July '25.
On US business - just wanted to understand improvement in both base business in injectable and oral solid. Is it fair to assume the injectable business has gone back to pre-Eugia Unit-3 disruption levels in this quarter?
Last year we have taken whatever supply-related disruption issues and it got offset by some other opportunities. But from Q1 of next financial year i.e. FY26 Q1 onwards, we should be back to normal. Last year has been a tough year because of Eugia-3 remediation issues and supply disruptions. From Q1 onwards we should be back to where we were in the past.
How should I think about growth for the injectables given Eugia-3 hasn't been cleared and Revlimid goes away?
FY26 is going to be muted in terms of growth per se, because Eugia-3 is yet to be cleared and there's no super star product coming in FY26. FY26 will be in similar levels as FY25, whether including or excluding Revlimid. FY27 should be a good year - we will clear all FDA issues in FY26 and FY27 has significant launches and settlement-based launches planned.
On Europe surpassing your guidance of €900 odd million - regarding facilities contributing to growth. China plant supplying Europe, Vizag injectable plant for Europe injectable launches. How meaningful can China supply be for Europe? Last year European outsourcing was around 50%.
We are already up towards €225 in revenue. Supply chain efficiency contributes through Vizag injectable plant and Unit 15 at Vizag for oral solids with substantially upped capacity. China supplies have just started with two products and we expect 10 products to kick in during the financial year. The injectable facility is approved and supplies will start from Vizag. Turnaround time at Malta is also being innovatively reduced.
What are the cumulative investments in the biosimilar business till March 25?
It is around US$ 400 million plus.
On biosimilars - launching biosimilars in Europe next year. When should we expect meaningful contribution considering three to four products are filed?
We received two approvals from EMA in last quarter, plus Bevqolva approval in Q3. We received positive opinion for Dazublys (Trastuzumab biosimilar) last month and expect European Commission approval in July. Plan to start supplies from Q2 of this fiscal. Once we iron out supply chain and stabilize manufacturing, meaningful contributions from biosimilars business will flow from the next fiscal year. We expect double-digit revenue starting next fiscal.
On interesting US launches in FY27 including settlements - would you be able to name them? Is Macitentan part of it?
It is public information. We have most oncology oral solids coming - Pomalidomide, Nintedanib, Sugammadex. Multiple settlements will kick in end of FY26 and into FY27. We have tentative approvals and expect final approval just before launch. Macitentan is not part of it.
Tax rate for the year was high compared to earlier years. What should we look at for FY26 at consolidated level?
The general tax rate for us is around 25%. Being conservative, we don't take the deferred tax credit for all loss-making units. Once they start becoming break-even, I will get the tax rates done. You can take approximately 28 to 30% as the tax rate. You'll get a better idea going forward in the coming quarters.
From outside perspective with exception of Europe, general growth trajectory last year was around 10%. What makes you say results are good? What would be expectation of good result for next year given the muted commentary?
If you see Q4 year-on-year growth, we have achieved around 10%. Excluding the transient product, we'll be achieving around high single-digit growth - meaning base business is growing consistently plus transient product contribution. Different businesses move in different directions, but our job is to ensure that overall on a consolidated basis we have to grow. With base of around Rs. 32,000 crore, high single digit growth means Rs. 2,500 to Rs. 3,000 crores. High single digit is what we are targeting for next year.
Can you explain importance of Eugia Unit-5 versus Unit-3?
Unit 5 has four lines installed and we are adding four more lines related to BFS, PFS, cartridge, and one more aseptic line - so almost eight significant lines with capabilities of aseptic, terminally sterilized, cartridge products, BFS and bag products. We expect Vizag to be a future plant - de-risking for Eugia-3 and contributing significantly starting FY27. Plans to file roughly 10 products for US and 15 for Europe. FY26 will be significant filing year, with FY27 contributing decent revenues. Unit-3 has 17 lines; we want to limit future plants to maximum 10 lines.
On cumulative investments in Pen-G, Biosimilar and CDMO - can you give a cumulative number and how much cumulative impact on P&L now, and how it normalizes?
We have invested around Rs. 2,700 crores in Pen-G. It has the potential to take the EBITDA more than Rs. 1,000 crores, and if good prices can be higher. On Biosimilar, Satakarni already mentioned plans. CDMO TheraNym - investing close to Rs. 1,000 crores to build 15 KL into multiple bioreactor capacities. Plant commissioned in Q2 of next fiscal [FY27], validation batches complete by Q4 [FY27], revenues from following fiscal [FY28].
Over 3-4 years should we see these earning company-level EBITDA margins or could it be sooner? With free cash flows improving post-CapEx commitments, is there any possibility for buybacks?
For CMO it would be about 3-5 years time frame depending on sponsor capacity utilization and regulatory approval timing - 3 best case and 5 worst case for normalcy. The last buyback was closed on August 31st 2024, so cannot do buyback before August of this year. Cash flows are pretty strong. Maybe board can consider either buyback or dividend - probability is good with cash flows strengthening.
On Pen-G plant fire accident and approval pending from Andhra board - what went wrong, mitigation efforts and when does it restart? On production trajectory and 6-APA prices being cut by Chinese players.
Fire happened in coal yard near conveyor belt due to self-ignition of coal heap from temperature differential between surface and inside, common in cement industries. Conveyor belt impacted has been rectified. We applied for renewal as one year was over in April and subjected to inspection - meantime accident happened so couldn't proceed. Will take up with PCB. With new COVID news we need to push government fast. On 6-APA pricing, if low it's good - we can take advantage and make more money than producing ourselves, until minimum import price comes.
On minimum input price proposal - is it to help domestic industry? For which products?
Government is contemplating putting minimum input prices of few products. We have also represented our product. Once we know from the government anything officially, we will let you know. For PLI products only. This is from industry sources - want to make it abundantly clear.
On biosimilar business with US$ 400 million investment - at what time frames do we start to expect making decent ROCs - is it FY27, FY28 or subsequently?
We expect '28 would be the inflection year for the biosimilar business. The business will stabilize with about seven products in regulated markets, both in Europe and possibly a couple of products in the US by 2030. You should look at '28 to 2030 as the years where you can see biosimilar business trajectory building up.
On lenalidomide/generic Revlimid - would FY26 be significantly lower than FY25 or flattish? Just qualitative sense given guidance excludes transient product.
FY26 will be less than FY25.
On other operating income - this year was about 350 crores. Roughly next year, will it be flattish or grow at higher single digit?
Mostly, our other operating income should be around 200 crores plus.