Ladies and gentlemen, good day and welcome to the Granules India Limited Q4 FY 2025 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference has been recorded. I now hand the conference over to Ms. Prachi Ambre from MUFG Investor Relations Team. Thank you, and over to you, ma'am.
Thank you, Anushka. On behalf of Granules India Limited, I extend a warm welcome to all the participants on Q4 and FY 2025 financial results discussion call. Today on the call, we have Dr. Krishna Prasad Chigurupati, Chairman and Managing Director, Dr. KVS Ram Rao, Joint Managing Director and Chief Executive Officer, Ms. Priyanka Chigurupati, Executive Director, and Mr. Mukesh Surana, Chief Financial Officer. Before we begin the call, I would like to give a short disclaimer. This call may contain some of the forward-looking statements, which are completely based upon our beliefs, expectations, and opinions as of today. These statements are not a guarantee of our future performance and involve unfortunate risks and uncertainties. With this, I would like to hand over the call to Dr. Krishna Prasad, sir, for his opening comments. Over to you, sir. Thank you.
Thank you, Prachi. Good evening, ladies and gentlemen, and thank you very much for joining us on the Q4 FY 2025 earnings call. We appreciate your continued interest in Granules. We have uploaded a detailed presentation of our quarterly and full-year performance on our website and trust you have had a chance to review it. I will start with the update on the USFDA remediation at our Gagillapur facility. Let me begin with the update on the U.S. FDA inspection status at our Gagillapur, Finished Dosage Facility. As shared in our previous quarterly call, the facility underwent an FDA inspection in August 2024, which concluded with six Form 483 observations and was classified as official action initiated. On February 26th, 2025, we received a warning letter from the FDA for this facility. The warning letter does not affect the supply of approved commercial products.
However, it may temporarily impact the FDA's review of pending product submissions from this facility until the matter is resolved. While manufacturing and distribution continue, the ongoing remediation measures have resulted in a slowdown of operations, which impacted our Q4 output and is expected to continue for another quarter or two. Our remediation program, initiated immediately post-inspection, has been driven under the guidance of three globally recognized consulting firms with deep expertise in quality, compliance, and regulatory affairs. These experts have been closely collaborating with our team, both on-site and remote, since September 2024. As part of this initiative, we voluntarily bumped operations in September to conduct a comprehensive risk assessment. Operations resumed only after confirming there was no product safety or contamination concern, and in concurrence with the FDA. We initiated extensive testing of both previously manufactured and ongoing batches for cross-contamination.
So far, over 1,200 post-inspection and pre-inspection batches have been tested, all are within acceptable limits. Additionally, more than 2,600 swab and rinse samples have been tested with no deviations observed. We developed and validated 89 test methods, specifically for contamination testing, and analysis remains ongoing. We continue to generate and compile data to demonstrate the robustness and sustainability of our CAPAs in preparation for a future FDA meeting. Beyond compliance, we have implemented enterprise-wide quality culture initiatives, including corporate procedures for cleaning validation, visual checks, residue limits, change controls, and competency building across teams. We remain fully engaged with the FDA, customers, and other stakeholders throughout this process and are committed to embedding long-term improvements in our quality system. We are confident that the steps we are taking will lead to a satisfactory resolution within a reasonable timeframe.
Granules' growth trajectory remains focused and diversified, underscoring that our strategy is not solely dependent on new product approvals from the Gagillapur site. Key drivers include new launches from our GPI facility in the U.S., growth from large volume products in the U.S. and Europe, capacity addition and commercialization of the greenfield formulation facility at Genome Valley, manufacturing advancements in Europe, and our expanding oncology pipeline from Unit 5. Our near-term growth will be driven by new product launches from our GPI sites for the U.S. market, especially the CNS and ADHD segments. During Q4, we received approval for Lisdexamfetamine capsules, following the early approval of a durable gastric formulation and chew. With this, we now have both dosage forms, capsules and chew, to further and commercially launch, enhancing our presence in the CNS and ADHD segments.
Additionally, we launched multiple key products during the quarter, including paracetamol-oxycodone, paracetamol-hydrocodone combination, and tropicamide capsules. These launches reflect a continued focus on expanding our complex generic portfolio and reinforcing our position in the U.S. prescription market. Our formulation facility at Genome Valley under Granules Life Sciences is progressing well. Phase I, with a capacity of 2.5 billion doses, has been commissioned, and commercial dispatch of monograph products is ongoing. We are awaiting inspections for both European agencies as well as the FDA towards commercialization of prescription products from GNS. Inspections are expected in Q2 of FY 2026. Phase II, with an additional 7.5 billion dose capacity, has been commissioned in the current quarter, and validation activities for monograph products have also commenced. I will now talk about Granules' foray into peptides and the acquisition of Senn Chemicals AG.
The global market for peptide-based anti-obesity and anti-diabetic therapy has already crossed $50 billion in annual sales and is projected to reach $100 billion-$150 billion by 2030. Beyond metabolic disorders, we see exciting opportunities in oncology, cosmetics, and telecommunications, where peptides are enabling next-generation targeted therapy. With the strategic acquisition of Senn Chemicals AG and Senn Chemicals AG's CDMO, Granules has entered the high-growth peptide therapeutic space. This marks a formal entry into complex peptides, including GLP-1 receptor agonists, one of the most transformative classes of therapy in the fight against diabetes and obesity. Founded in 1963 and headquartered in Switzerland, Senn Chemicals AG is a specialist CDMO with a strong multi-decade track record in developing complex liquid-based and solid-based peptide synthesis processes for peptide APIs and fragments, offering end-to-end customer manufacturing solutions across pharmaceuticals, cosmetics, telecommunications, and amino acid derivatives.
We have completed the acquisition formalities in April, and integration activities are in progress. We will provide more updates in the coming quarter. On the sustainability front, we made significant progress during the year. Granules received a gold rating from EcoVadis, placing us in the top 5% of the pharmaceutical companies globally in our very first corporate-level assessment. We also improved our CDP climate rating to a B and secured SBTi validation of our climate goals. Additionally, we launched a supplier sustainability program to extend our impact across the value chain.
To summarize, we remain firmly focused on strengthening quality and compliance systems across the organization while staying on course with our clearly defined growth strategy. In the near term, momentum will be driven by new product launches from our Gagillapur facility and ramp-up commercial operations at our Genome Valley formulation site. Looking ahead, we are strategically expanding into high-growth areas such as oncology and peptides, which will shape our medium- to long-term trajectory. Concurrently, we continue to invest in R&D to build a differentiated portfolio that underpins sustained value creation and global competitiveness. Dr. KVS Ram Rao will provide further insights on some of these initiatives. I now hand over the call to Dr. Ram Rao.
Thank you, Chairman. Good evening all of you. At Granules, developing a strong and diverse product portfolio has always been a key priority, and it remains central to our strategic approach. Over the last financial year, Granules' R&D spend was INR 238 crore versus the INR 199 crore in FY 2024, representing a 20% increase in investment, which demonstrates our commitment towards R&D. We have been making steady progress in achieving our R&D goals. With every passing quarter, we continue to expand and strengthen our product portfolio. We have a total of 127 dose years wide across various regions. We have 85 ANDAs in the U.S., 16 pending for approval, 18 in Europe with 10 pending for approval, and 24 in other regions, including Canada, with 8 pending for approval. We have received two approvals, one in the U.S. and one in Europe in the last quarter.
We filed three US ANDAs and six European dossiers in quarter four, including a first-to-file product from the Gagillapur facility. On the API front, we filed 18 DMFs, including US DMF, CEP, ASMF, Korean, and Brazilian DMFs. There has been significant progress in our ADHD portfolio. We have been developing a robust ADHD portfolio with about 10 products in the pipeline for development, which includes day-one launches and day-181 launch opportunities, including some first-to-files. In February, we launched Lisdexamfetamine capsules and chewable tablets in the U.S. market. Furthermore, API validation and DMF filing is expected to be done in quarter one 2026 for Lisdexamfetamine, which leads to vertical integration and supply chain reliability for this product. Overall, Granules' ADHD portfolio covers a significant portion of the US ADHD market. We continue to expand our oncology portfolio with around 10 products currently under development.
This includes NC-1 day-one launches, plus-two-files, and day-181 opportunities. We continue to make significant progress in our oncology portfolio. Last quarter, we submitted a promising high-growth oncology ANDA in the U.S. and the European geography, marking the commencement of our oncology pilot. FY 2025 also saw the entry of Granules into the peptide and the global 3Ds focus sector. Peptide has emerged as one of the most important and promising class of therapeutic agents, from treating metabolic disorders like obesity and diabetes, GLP-1 agonists, to offering innovative targeted therapeutic cancer treatment. Peptide holds the potential to significantly enhance treatment outcomes across a range of conditions. As a part of the strategic objective to tap into this rapidly growing segment, Granules has acquired the Switzerland-based Senn Chemicals AG. This acquisition marks a pivotal moment for Granules. It will accelerate our transformation into a more diversified, science and innovation-led organization with sophisticated product capabilities.
With Senn Chemicals AG, we are not just bringing a European company to our fold. We are gaining immediate high-value access to the rapidly expanding peptide therapeutic market while also formally establishing our footprint in the specialized CDMO sector. Senn Chemicals adds to Granules' proficiency in complex high-growth areas like peptide development and manufacturing using technologies like liquid-based, solid-based peptide synthesis. It also brings in long-standing relationships with pharmaceutical, cosmetic, and telecommunications clients worldwide. Looking ahead, we are confident the strategic synergies created by this acquisition will unlock significant value.
Our focus going forward will be on seamlessly integrating their expertise while maintaining the operational excellence, accelerating joint development activities, and maximizing the opportunities with approvals in production. This acquisition represents a tangible step in our journey to evolve our complex product portfolio, enhance our technical capabilities, and solidify Granules' position as a leading global pharmaceutical player in high-value specialized segments. I'm pleased to share that we have remained steadfast in our commitment to executing our R&D strategies and developing robust portfolio and capabilities for the future. Thank you all. Now I hand over to Mukesh Surana, CFO. Thank you.
Thank you, CMD and GMD. Let me take you all to the top financial parameters now. Revenue, the fourth quarter revenue was INR 11,974 million as compared to INR 11,758 million in Q4 FY 2024, with a growth of 2%, and revenue grew by 5% as compared to Q3 FY 2025. Sales growth is some increase in FD and API sales though there was a continuous price erosion. The full-year revenue was INR 44,816 million as compared to INR 45,064 million in FY 2024. Formulation sales grew by 18% despite a voluntary pause of production in September 2024 at a Gagillapur facility in response to U.S. FDA observations and with remediation efforts, slowdown of production in H2. Further price erosion and demand issues in API and TFI have impacted the sales growth. The sales breakup back for business divisions, geographic regions are presented in our investor presentation, which is available on the website.
Gross margin, our gross margin as a percentage of sales for Q4 FY 2025 was 63.4% as compared to 60.1% in Q4 FY 2024. Gross margin as compared to Q4 FY 2024 is up by 333 basis points achieved due to higher finished dosages, sales with higher margin. Gross margin as a percentage of sales for Q4 FY 2025 is up by 169 basis points from Q3 FY 2025. Sustained higher finished dosages sales with higher margin has given this improvement. The full-year gross margin as a percentage of sales for FY 2025 is up by 635 basis points from FY 2024. Margin improvement is due to strategical shift towards high-margin formulation products. EBITDA and EBITDA margin, EBITDA for the quarter was INR 2,524 million, that is 21.1% of sales as compared to INR 2,557 million, that is 21.7% of sales in Q4 FY 2024, a decrease of 16 basis points from Q4 FY 2024.
Professional expenses have gone up on account of consultancy for remediation of US FDA observation that has impacted the EBITDA margin. EBITDA as a percentage of sales for Q4 FY 2025 is up by 83 basis points from Q3 FY 2025. EBITDA margin is better despite continued professional expenses on account of consultancy for remediation of US FDA observation and increase in R&D expenses. EBITDA for the year was INR 9,452 million as compared to INR 8,560 million in FY 2024, a growth of 10% over the previous year. EBITDA improved with a better margin despite higher price and professional expenses incurred for remediation of U.S. FDA observation. R&D, our R&D expenses for the quarter was INR 665 million as compared to INR 609 million in Q4 FY 2024 and INR 568 million in Q3 FY 2025. R&D expenses for the year was INR 2,377 million. We are going to continue to spend on R&D in the coming quarters as well.
Net debt, our net debt was INR 7,061 million as compared to INR 8,289 million in Q3 FY 2025. Our net debt was INR 8,421 million at the end of March 2024. Cash- to- cash cycle, our cash to cash cycle was 202 days in the current quarter as compared to 213 days in Q3 FY 2025 and 161 days at the beginning of the year. Cash flow from operations, cash flow from operations for the quarter was INR 3,183 million as compared to INR 1,315 million in Q3 FY 2025, and for the year was INR 8,666 million as compared to INR 4,394 million in FY 2024. CapEx, CapEx spent during the quarter was INR 1,598 million and for the year was INR 5,700 million, primarily invested in Granules Life Sciences of INR 3,135 million in FY 2025. ROC, ROC for Q4 FY 2025 is 16.6% as compared to 16.4% in Q3 FY 2025 and 16.5% in Q4 FY 2024. With this, I open the floor for questions.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please proceed.
Yes, thanks for the opportunity. Sir, we prefer to do Senn Chemicals, what further investigation.
One question asked to Tushar. I would like to request you to please come closer to your device while asking a question.
Is this better?
Yes.
It's better, Tushar.
Yeah. Sir, just wanted to know in terms of Senn Chemicals AG what further investment would be required for next two years to further sort of either integrate with Granules and further scale up the capability or capacity?
Tushar, we have been analyzing the whole situation. We have to, there's going to be a lot of CapEx that has to come up in Switzerland. Also, we are putting up a peptide R&D facility in Hyderabad, which will be followed by a peptide manufacturing also. Some of the developments will happen in Switzerland, and commercialization of large volume products will happen here. We are analyzing what we have to do, and maybe the next quarter we'll have a clear idea on this. Definitely, there's going to be CapEx on peptides.
Currently, sir, we need sales or profits from these entities. If you could share that number.
It's sort of breakeven or a slight loss as of today. Yeah. I think in the next one or two quarters, three quarters, it will continue to be around that level. Going forward, with the new strategy, it should improve.
Just secondly, as far as Gagillapur facility is concerned, you said the production is a quarter off. If you could share FY 2026 revenue EBITDA guidance.
We cannot give you any guidance on this, but definitely, all I can say is it's going to be better than last year. I also want to make it clear that the slowdown on operation in Gagillapur will continue for a quarter or two. Despite that, we think that we will do better than last year.
Just lastly, this professional and consultancy fees which would have you paid for Gagillapur in FY 2025, if you could quantify that.
I'll just quantify not only professional expenses, all kinds of expenses, including ad rate and the U.S. FDA consultancy expenses, all have been close to INR 50 crore for FY 2025.
This will not recur in FY 2026, or there will be some more spending in FY 2026?
It will continue for Q1 and Q2, but slowly or declining. Definitely, till Q2, we see that it should be continuing. We have taken up a complete remediation plan, not a band-aid exercise. We have a lot of consultants working on the site. We think that this will continue for some time.
Just to follow up.
The clarification is that the ad right may not be. Ad right has what we have incurred in Q3, particularly in FY 2025. There we are seeing a improvement with the better planning.
Okay. Okay. Thank you.
Thank you. The next question is from the line of Rashmmi Shetty from Dolat Capital Markets Private Limited. Please proceed.
Yeah. Thanks for the opportunity. Just on the Senn Chemicals, you said that you will also be exploring the GLP-1 opportunity. Which part of the value chain would you be targeting, only intermediates or the entire formulation part? You will be targeting generic companies in the CDMO space, or you will be supplying to the innovators?
On the CDMO, it will be some of the innovators we are targeting already. On the GLP-1 separation, basically, let me explain a little bit in detail for everybody's benefit. Our relationship with Senn Chemicals AG started with us wanting them to develop GLP-1 products for us. We gave them a contract manufacturing opportunity, and when we saw that they had some very good capabilities, we thought we should get hold of that company so that we can also have a kickstart with technologies ready-made. We are working on APIs for GLP-1, and we expect to plan to do formulation. Formulations will be developing in India and getting it contract manufactured for the time being.
It will be for various markets, like because India and the other emerging markets are already opening up from March 2025 end?
India markets also, but it will be a little late for India market starting now because our API will be available after a while. Definitely, for the US market, US is the biggest target we have. We have to wait for a while. The other GLPs going forward, we have a lot of time, and we will be targeting all markets at one time.
Okay. You mentioned that EBITDA or the PAT currently is at the breakeven level or slightly lower. What is the current sales from Senn Chemicals AG? What kind of products have been manufactured over here?
Currently, they are doing roughly CHF 20 million a year with a breakeven EBITDA. They are largely into CDMO related to peptides, pharma, and cosmetics. They also have amino acid derivatives, so largely peptides, CDMO.
Okay. So with the CapEx plan forward for Senn Chemicals and plus we also have an ongoing CapEx for Granules. So put together, what will be the CapEx guidance for FY 2026 and FY 2027?
Currently, we have done estimate for FY 2026. FY 2027, we are still working on. FY 2026, per CapEx estimated, the whole INR 600 crore. This includes further CapEx, which we have to incur for Granules Life Sciences and also oncology and peptide injection.
This includes the Senn Chemicals CapEx also? That will be additional in case if you plan it?
Yeah. This includes that as well.
Understood. On the GLS phase II, that is 7.5 billion doses, the entire CapEx is over or that extra amount is going to come in FY 2026 also?
It will come in FY 2026 also.
Okay. So the plant is not ready for 7.5 billion doses, sorry.
We do have some CapEx credit there. Also, we are incurring additional CapEx expansion in terms of packing facility and some press kits. All of that will be spent in FY 2026. Commercialization has already started in the new phase II, Rashmeet.
Okay. But the capacity total, installed capacity currently is not 7.5 billion. I mean, it is ongoing, right?
No, no. We have already INR 2.5 billion in phase I. And this will be INR 7.5 billion.
Yeah. That is first phase. That is your first phase.
That's right. 7.5 billion is, I think you can say 7.5 billion capacity by next month almost. Okay.
Sorry, 7.
7.5 billion from next month. If we take the time to get into full utilization because we first need to get the approval from the European authorities, which we expect to have in Q2. Once we get this approval, we'll start full production. I think by possibly this year, we may do about 40%-50% capacity utilization and close to 90% by next fiscal year.
Got it. So 7.5 billion doses will get over by, we can expect by Q2 of FY 2026. The CapEx will get over.
No, no. It will be 27.
27. Okay.
Close to 100%. Okay. 90% or so.
Got it. Got it. Just from the gross margin, we had a strong formulation sales during the year, and that is why with the help of good business mix, our gross margin was 61.5% during the year. What are we expecting for the API and PFI segment from the last two consecutive years? Due to the external factors, we have seen a decline. Whether any small growth or anything we can expect in these two segments? If the sales increase of these two segments, FY 2026, the gross margin would decline or it would be at the similar level?
Rashmeet, first of all, our API and TFIs we make are slowly getting consumed in-house. It is a vertical integration that is giving us the benefit. Except paracetamol API, where we have a large capacity, other APIs are all being used in-house. Paracetamol, we had quite a substantial API sale, which has been impacted by extra capacity created in the world. Instead of trying to push more API into the market at negligible margins, we are concentrating on converting most of it into TFIs and FDs. We will see the FDs at this level or possibly increase a little bit more. Definitely, I can tell you API percentage will not increase.
API % will not increase. Year on year, we will see a small decline or maybe flattish.
Yeah. Because all that is the capacity is going into conversion.
Being getting converted to the FDs. Got it. Got it. This kind of gross margin is sustainable.
We hope to, and we are confident as of today, definitely.
Okay. Okay. Got it. And one last question. Just on the Europe business, we have seen for quarter four and for the full year decline, whereas even in the rest of the world, we have seen a decline. The other markets like India and U.S. have done well. Is it mainly because of the paracetamol and the API segment impact, which is actually reflecting in the geographies like Europe and all?
Yeah. You're perfectly right. Europe was mostly driven by paracetamol API with some of the big brands. There was a slowdown there. It's slowly picking up, but I don't think it will go back to where it was. The price erosion continues to stay. I don't think we'll get back to the old levels, which actually was held during COVID. Except for very valued customers, we do not plan to sell paracetamol. European sales will be mostly driven by formulation. Where we had a lot of filings, there was a little delay in launching these products. Once these products are launched, European sales will increase. As a percentage, it may remain the same.
Okay. Okay. Got it, sir. Thank you. That's it from my side.
Thank you. The next question is from the line of Tarang Agrawal from Old Bridge. Please proceed.
Thanks for the greeting and congrats for a reasonable set of numbers given with the background of Gagillapur. So three questions, sir. Firstly, on shock and admission. So what's the medium-term milestones and slightly?
You have missed it.
I know you are breaking up, Tarang. I can't hear you properly.
Yeah.
Audible?
Yeah. They're a little bit weak, but let's try again.
Okay. So what are the this is basically with respect to the Senn Chemicals AG acquisition. What are the medium-term milestones and, say, slightly longer-term milestones that you're looking at? A subsequent question, given the strategic nature of this acquisition, how should we calibrate the eventual success or failure of this acquisition?
On the Senn acquisition, the medium term, I think we will be focusing on, A, improving the CDMO segment. As already mentioned in the speeches, there are four areas where there is already enough customer base. Also, there is a lot of potential, and we will be exploiting this potential on both the science technology as well as the infrastructure to enable Senn to be competitive, diversified, and lead to a kind of a good CDMO play in the medium to long term. That is one segment. Second segment, the GLP-1s, as already mentioned by Chairman, we actually started our journey with them on GLP-1s, and we have gone quite a bit of distance in development of the product.
This will become an important journey in terms of looking at GLP-1s and therefore using this knowledge, experience, and technology to look into various fragments of GLP-1, both for CDMO business and also for the Granules consumption. I think that will be the long-term approach to Senn. The strategic importance, Karen, is that we will have access to good capabilities rather than starting from scratch. If there is going to be a tech transfer from there to India for increased volumes of GLP-1s to start with, then there are various other sectors we want to concentrate on as we go by.
Got it. Got it. Second, I mean, your R&D clip has been quite significant, especially in the last five years. How are you measuring the productivity of your R&D spends? I mean, if you could help us with some anecdotes, it will be quite helpful.
R&D spend productivity is seen through, one, the number of quality filings that we are doing both in the US and Europe in ADHD and oncology segments. I think that is the first measurement that we see. The second measurement is on the value of the filings. The NC-1s, the first two files, are the differentiated filings. I think we have been very consistently maintaining that our portfolio is going to be focused on ADHD and oncology segments and the measurement of filings. You already see that we have lisdexamfetamine chewables and oral tablets approval as a beginning of our journey into the ADHD segment. We are very clear on the number of filings globally and also in specific geographies as one big productivity measure. I think we are pretty satisfied with the kind of progress we are making on our R&D spend and its productivity.
Karen, we also have a benchmark for return on investment of one particular ANDA. How many times of that in what period? These are different numbers for regular products, P3 products, and for going forward with the first two files, and though it is going to be another aspect. We are fairly happy with the progress and the returns we are getting. Sure. Just last question, sir. With whatever uncertainty that has sort of been created over the last two-three months with the impending tariffs, given your significant exposure to the US, how are we able to integrate it? I mean, do you position or how, I mean, what are the conversations that are happening internally to address the eventuality, if at all, it would come to it?
Yeah. More than internally, I think external communication is important. We are talking to all our customers in the U.S. about the possible impact. We have been mentioning that if the duties tariffs come in, we will have to increase prices if nobody can absorb them. We do not see too much resistance as of today. Let's see when it actually happens what the impact will be. My feeling is this is going to impact everybody, just not us. It is a level playing field. There may not be too much of an effect because everybody is going to get hit with this tariff. There is so much anybody can absorb on margins, especially products genericized long ago.
Got it. And last time, Mukesh, on CapEx, what's the CapEx number for FY 2026?
600 crore, Tarang, we will be able to take it.
Okay. And SHANCAM is on top of that. So about INR 1,100 crore of outlay. Correct?
Sorry?
SEN Chemical.
Yeah. You are right. Senn Chemicals investment is on top of that. That is equity plus debt put together, INR 450 million, as when we did the fees.
Okay. Thank you.
All the best.
Thank you.
Thank you. The next question is from the line of Sahil from M&S Associates. Please proceed.
Hello, sir. Thank you for the opportunity. Sir, I have a couple of questions. Firstly, regarding the new formulation facility at Genome Valley, which commits commercial dispatches, sir, could you discuss the impact of it? Could you discuss its impact on the overall capacity and revenue?
Only phase I has been commercialized, Sahil. And phase II is under commercialization right now. It should happen within a quarter or two. There has been, like we said, a slowdown in Gagillapur. Since the remediation is completed, there will be a slowdown because of various activities that are being undertaken there. All that from this quarter, both to chemistry and Q2 in a better way, will be made up by GLS and also from our U.S. side with new product launches. Going forward, Genome Valley site is going to play a very important role in our revenue because even when Gagillapur returns to full normalcy, the demand for our products reportedly will be increasing. We definitely see that this site will contribute quite a bit.
Understood, sir. Sir, secondly, how is the company addressing the decline in European sales? What are the plans to regain market share in that region if you can shed some light on that?
I just mentioned a little while ago that Europe was mainly dominated by paracetamol API sales. Now API sales demand has come down. We are moving the APIs more into KFIs and formulations that have been happening in the U.S. and other places. This paracetamol sale, API, will improve a little bit, but we do not see it going back to the old times. We will make up for European sales by formulations where the margins also will be higher. We had a delay in launches of some products. We expect that to be back on track. Sales will definitely improve. As a percentage, I said a little while ago, it will not be. U.S. will continue to be the biggest growth driver.
Okay, sir. Thank you. That's it from my end. Thanks.
Thank you.
Thank you. The next question is from the line of Varun Mishra from SK Investments. Please proceed.
Yeah. Hi, sir. Thank you for the opportunity, sir. I had a couple of questions. I wanted to know, from North America, we have been accounting almost 79% of our total revenues as per Q4 and FY 2025. Sir, what are our strategies in place to diversify our geographical revenue mix?
Yeah. We do have a strategy. Priyanka, would you like to take that?
Sure. I'll take that question. We've been working on the North America strategy for almost 10-12 years now in terms of filings, etc. That market has been and will continue to be our biggest growth driver. If you look at the number of filings that we're doing in other regions, this year, we've done about 11 filings for Europe. We continue to increase that momentum. In addition to that, we are framing up the strategies for the rest of the world, for Senn Chemicals AG, and plan on increasing our existing current API and KFI business as well. Going forward, you'll see an absolute increase in numbers coming from our ROW markets as well. I just want to reiterate that the U.S., just the size of the market, is so big that even for us, that will continue to be a focus.
All right, man. Thanks a lot for that. My second question was around what is your outlook on the API and the PFI segments? Could you give the current contributions to the revenue? How are they contributing? Could you throw some light on that?
Yeah. Currently, it's less than 25%. This is how the trend also we see going forward, as Karen clarified in the earlier conversation. We are producing API more for in-house consumption. We are focusing more on formulation. This trend of around close to 25% of API PFI will be in that range.
All right, sir. My last question is, so can you please provide an update on the CapEx spend on the GLS and the CZRO projects in FY 2025? How do we see these projects contributing on the top line in the coming years?
In terms of CapEx investment, I had clarified in my speech. We have spent about INR 313 crore in FY 2025. We have further left investment, left amount to be spent in FY 2026 also in granularity time. In CDMO, we are going slow. We have not incurred much in FY 2025. Largely, whatever we have incurred is on the land, which was incurred a year before, and some pilot facility which we have incurred over the last few years. In CDMO, we are cautious and going slow. At the right appropriate time, we'll do. In terms of priority, the GLS expansion is our priority. Also, the new oncology and peptide facilities are our priority. In terms of near-term revenue, we do not expect much from CDMO immediately in the near term. Also, similarly, from peptides in the near term in terms of revenue, other than the acquired revenue percent. In terms of Granules Life Sciences, our Chairman has clarified that this year, it would be about 40% of CapEx utilization. Next year, we'll be closer to 90%.
All right. Thank you. That's all from my side, sir. Thank you. All the best.
Thank you.
Thank you. Before I take the next question, I would like to remind participants that you may press star and one to ask a question. The next question is from the line of Mr. Doshi from an individual investor. Please proceed.
Hello, sir. So thanks for the opportunity. I hope you can hear me.
Yes, yes, Mr. Doshi.
Yep. Sir, I just wanted to have some color on the oncology portfolio that we have. You just mentioned that we filed one U.S. ANDA. I wanted to understand what are the total number of molecules that we have here in the pipeline and where are we in the development of regulatory timeline, along with any market sizes for the same, if you can share.
On the oncology pipeline, as I mentioned in my speech, that we have already filed one molecule in the U.S. and European segment. We have a good double-digit pipeline of oncology products, which will be, as I told before, that it will be NC-1 segment. Some of them are part-to-launch. Some of them are parafor 181. Most of these products are for global development. As mentioned by Priyanka, we are building our Europe and our W business. Oncology will become a significant element of this building of the business in terms of PFI stroke, the formulation business. Overall, this is the portfolio. We expect this portfolio to start yielding us revenues from FY 2028 onwards.
Okay. Okay. All right. Got it, sir. This was the first filing. Do we expect to see filing every quarter or every six months from now on?
I think every quarter, we make progress in terms of filing. But you know R&D, and therefore, I would not like to say a quarter or less than, but we have a fairly good idea about the timeline of filing in U.S. and in other geographies.
All right. Got it. Just an extension to that one. We would be here looking at making the API in-house with full integration and then going on to the formulation, or how are we talking about it?
As Granules' strategy, and as you heard our Chairman just a few minutes ago, I think most of it will be vertically integrated. The entire differentiation in the API comes completely from vertical integration. That is one of the reasons and also one of the strategies for selecting our portfolio.
All right. Okay. Thank you so much, sir. That's all from my side. All the best.
Thank you.
Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Thank you very much, ladies and gentlemen. It's been an interesting discussion. I look forward to meeting you all once again in the next earnings call that possibly has better results. Until then, have a great day and a great time ahead.
All right. On behalf of Granules India Limited, Q4 FY 2025 earnings conference call, that concludes this conference. Thank you for joining us. You may now disconnect your lines.