Raise your hand from the participant tab on the screen. Please note this conference is being recorded. I now hand over to Mr. Varun Mali for the opening remarks. Thank you, and over to you, sir.
Thank you, Vandit. Good morning, ladies and gentlemen, and welcome to our second quarter FY 2026 earnings call. I'm Varun Mali from the Investor Relations and Corporate Communications team. We hope you have received the Q2 FY 2026 financials and the press release that was sent out yesterday. These are also available on our website. I would now like to introduce our senior management team on the call with us today, represented by Dr. Satakarni Makkapati, CEO Aurobindo Biosimilars Vaccines and Peptide Businesses, and Director Aurobindo Pharma Limited; Mr. Yugandhar Puvvala, CEO Eugia Pharma Specialties Limited; Mr. Swami Iyer, CEO Aurobindo Pharma U.S.A; Mr. V. Muralidharan, CEO Europe Formulations Business; Mr. S. Subramanian, CFO Aurobindo Pharma Limited. We will begin the call with the summary highlights from the management, followed by an interactive Q&A session.
Please note that some of the matters we will discuss today are forward-looking, including, and without limitations, statements relating to the implementation of strategic actions and other affirmations on a future business, business development, and commercial performance. While these forward-looking statements exemplify our judgment and future expectations concerning the development of our business, a number of risks, uncertainties, and other important factors may cause actual developments and results to vary materially from our expectations. Aurobindo Pharma undertakes no obligation to publicly revise any forward-looking statements to reflect in future events or circumstances. With that, I will now hand over the call to our CFO for the business highlights. Over to you, sir.
Good morning, everyone. Welcome to Aurobindo Pharma Q2 FY 2026 earnings call. Thank you for taking the time to join us today to discuss the company's financial and operational performance of the second quarter of the current fiscal year. Let me begin with a brief summary of our performance. Our consolidated revenues grew by 6% year-on-year to INR 8,286 crore, reflecting sustained business momentum through the first half of FY 2026. The growth was driven by strong U.S. formulation-based business and continued momentum in our European and growth market operations. EBITDA for the quarter stood at INR 1,678 crore with a margin of 20.3%, demonstrating a 7% year-on-year growth. The performance underscores our operating leverage, cost efficiency, and disciplined execution. Business highlights. Let me now walk through the key business highlights for the quarter.
The overall formulation business reported a year-on-year growth of 10%, with revenues reaching INR 7,325 crore, contributing approximately 88% of the total consolidated revenues. This growth was led by strong performance in the U.S., Europe, and key growth markets. The API business contributed to 12% of the overall revenues, amounting to INR 961 crore, reflecting the ongoing market dynamics and the current pricing environment. U.S. formulation. U.S. revenues stood at $417 million. Excluding GE development, the U.S. overall solid delivered a healthy 6% quarter-on-quarter, underscoring the strength and resilience of our diversified portfolio. This quarter also saw continued demand from our base business, supported by increased volumes and new product launches. Our U.S. injectable sales also grew by 6% quarter-on-quarter. During the quarter, we launched six new products, 13 ANDAs, and received seven final approvals, demonstrating robust pipeline execution and continued regulatory progress. European business.
The European business maintained a strong growth trajectory, delivering an 18% year-on-year revenue growth, amounting to INR 2,480 crores in EUR terms, amounting to EUR 243 million this quarter. With consistent performance across all major markets, we are firmly on track to comfortably surplus the EUR 1 billion annual revenue milestone from Europe by the end of FY 2026. Growth markets. Revenue from the growth markets increased by 9% year-on-year to INR 882 crores, or EUR 101 million, driven by strong volume growth and resilient commercial footprint. ARV formulation. ARV revenue grew by 69% year-on-year, reaching INR 325 crores, or EUR 37 million. This was primarily fueled by higher volumes and new tender wins across multiple geographies, and we expect to sustain this momentum over the medium to long term. Operational and financial highlights. Gross margins for the quarter stood at 59.7% compared to 58.8% last quarter, supported by raw material prices and the business mix.
Gross contribution stood at INR 4,947. Excluding GE development, on a quarter-on-quarter, our sales have increased approximately by 7%, gross profit by 10%, and EBITDA by 14%, respectively. R&D expenditure was INR 414 crores, representing 5% of the total revenue, thereby reaffirming our continued focus on innovation and advancing a robust pipeline of complex mineral and specialty therapeutics. Update on Pen-G. During the quarter, we started the operations of Pen-G on July 1st, 2025, after getting the necessary regulatory approval. The scaling of the plant is as planned and is poised to make a meaningful contribution to profitability going forward. During the quarter, we produced around 1,050 metric tons by operating at 40%-50% capacity, amounting to approximately 6,000 metric tons production on an annualized basis. It is pertinent to note that the yields are consistently improving.
Like other companies, we have made our representation to the government to implement the minimum import price, which will support the further ramp-up in achieving 100% capacity utilization, taking the production to 15,000 metric tons in a very short term. Next, the net CapEx for the quarter stood at $106 million, in line with our strategic priorities of enhancing our manufacturing capabilities, strengthening compliance, and accelerating automation. We generated net cash inflows before dividend of $57 million during the quarter, resulting in an improved net cash position, including investment of $170 million as of September 30, compared to $140 million as of June 30, 2025. Average finance curve declined to 4.7% compared to the previous quarter, reflecting effective treasury and cash flow management. PAT for the quarter was INR 848 crore. Looking ahead. Outlook. Looking ahead, we remain confident about sustaining our growth momentum and driving value creation across all businesses.
Our optimism is underpinned by expected volume expansion and reasonably stable pricing environment. Europe continued to deliver robust revenue growth, underscoring the region's strategic importance and operational strength and market challenge to the company. In the U.S., data has transitioned into commercial phase with manufacturing underway, packaging approvals secured, and product launches scheduled from January, positioning the site to start contributing significant revenues in FY 2027. Meanwhile, Raleigh is awaiting regulatory clearance. The OSG facility in China continues to ramp up, advancing towards the capacity of 2 billion backed by European approval of 10 products and 3 local product approvals. The site is on track to deliver the EBITDA break-even by Q3-Q4 FY 2026, reinforcing its strategic importance to the global network.
To summarize our next two years, our growth will be driven by several key factors, including ramp-up of our Pen-G facility, commercialization of the biosimilar portfolio, and the rapid progress in our biologic CMO. We expect continued improvement in injectable business driven by continued supply ramp-up, increasing supply from China planned to Europe, additional contribution from a robust pipeline of new launches, and the land acquisition in the U.S., which will further strengthen our market position, expand our portfolio, and drive medium-term growth. Last but not least, we are confident of achieving our internal margin target of 20%-21% for FY 2026, as communicated earlier. We remain focused on execution, operational excellence, and disciplined capital management, all of which position us well for sustained performance in the coming quarter. We now look forward to taking your questions.
Our senior leadership team will be pleased to provide additional insight, details, and clarification wherever required. Thank you.
Thank you, sir. We will now open the call for Q&A session. We will wait for a few minutes until the queue assembles. We request participants to restrict to two questions and then return to the queue for more questions. While asking questions, request you to please identify yourself and your company. Please raise your hand from the participant tab on the screen for asking questions. The first question is from Dayamanti Kerai.
Hello. Am I audible?
Yeah, yes.
Okay. Good morning, everyone. Thank you for the opportunity. Sir, my first question is on generic injectable business in the U.S.. Sorry, I missed your comment. You mentioned it grew 6% quarter-on-quarter. A few clarifications. Are we broadly back to the level where disruption happened? How do you see this business shaping up in the next two years? If you can just talk a bit about some of the key pipeline products which you might have in your pipeline.
Hi, Dayamanti. It is still we are not back to the pre-disruption levels. I think we still have another $5 million-$10 million to go to reach that level. It is mainly driven not because of existing product growth, but because we do not have the new products to offset the single-digit price decline. We still have a quarter or two to go to come back to the pre-disruption levels. The production is back on track, and there is no issue there. Going forward into the future, what we are looking at is number one on the injectable side. We have some interesting products. Hopefully, once UGF3 gets the reinspection and approvals, we have multiple products to launch. Second is with respect to our Vizag and Vizag commercialization and some new products coming from Vizag plant.
From a specialty portfolio, we have a lot of oncology oral solids, which we are expected to launch in Q4 and Q1 of next year. The multiple levers going forward.
Sure. If you can just remind us about when you are expecting UGF3 reinspection?
Yeah. UGF3, like. We have already requested FDA and in the month of. That is end of Q2. Now we have the confirmation from FDA granting a reinspection for UGF3. Normally, as per. We received the official letter from FDA on 25th of September. Saying that they have accepted our request for reinspection. As per GDUFA III guidelines, normally it is anytime from now till for eight months. Okay. They can come in anytime for the reinspection.
Okay. So majority of new launches which we are expecting is broadly tied up to UGF3 clearance, right? If my understanding is correct.
Yeah. Injectables, yes, but not oral solids. Mainly the oncology oral solids are all from UGF1. I do not have any problem from UGF1. Those approvals will continue to happen. UGF3, yes, part of injectables are from UGF3.
Okay. My second question is on Pen-G plant. Swami sir, you mentioned now the capacity has reached up to 6,000 metric tons on an annualized basis, right? When you go and discuss with government for the PLI benefit, what kind of scale-up by then you are expecting? And what is the amount?
We are not running all the fermenters. We are running only 40%-50% of the fermenters. As and when we are represented to the government, as and when any policy changes take place, we will ramp it up in a very short time.
The current production, will that enable you for the PLI benefit or not?
This current, yes, it is enabling me benefit. No doubt about it.
Okay. Okay. I'll get back in the queue. Thank you.
Yeah. Thank you.
We request participants to restrict to two questions and then return to the queue for more questions. Thank you. The next question is from Neha Manpuria.
Yeah. Thanks for taking my question. My first question on Pen-G. Swami sir, what would be the EBITDA loss contribution from Pen-G at the moment? At what level do we break even on the Pen-G plant? Second, let's say if this MIP representation does not come through or gets delayed, what's the plan B in terms of achieving break even? Does that impact our ability to ramp up the plant even if MIP gets delayed or does not come through?
It's a good question, Nega. As I explained to you, we have been improving on the yield, etc. We are nearing the break even, right? From the current operations, etc., we have been doing around 6,000 tons per annum. We are doing 500 tons per month. I can increase it to 800 immediately, not a big issue, right? Once I touch 800, certainly it will contribute to the EBITDA. Having said that, we also need to look at it at what price we need to take that and move on. That is what we are looking for, the policy changes. As and when it happens, we will do that. As a plan B, what you are saying is we have been continuously working on improving the yields and other things.
That is going in a very positive direction, as informed to you in the earlier this one. We are ready with the plan B in case if there are any issues, but I do not think that is necessary in my view.
Sorry to harp on this, Swami sir, but what would be, given where prices are for Pen-G and Pen-G Allied products, are we still cost competitive? If we get to 8,000 tons per month production levels, will we still be cost competitive to be able to?
Yeah. We are the biggest consumer of 6-APA, amoxi, everything in the country. Irrespective of that, we will produce it, and then we will consume it ourselves, right? That will help me in terms of improving the overall capacity utilization, and that will take me. I also work on other necessary actions. We will work on that to improve the capacity, which I will not like to share it now.
Understood. Okay. Got it. My second question is on the U.S. business. Swami sir, are we seeing any change in the erosion trends? Actually, Yugandhar and Swami sir, are we seeing any change in erosion trends in the market in the recent times? Obviously, one of our competitors has seen issues in their plant. How does that position us to probably scale up our business in the U.S. on the back of that? Any color there?
Swami?
Yeah. Sorry. I unmuted. Yeah. Neha, I'm not sure I understood your question. You're talking about price erosion?
Yeah. My question is, have you seen any change in the price erosion trend in the U.S. in the recent months? With this disruption in one of our competitors' plants, how does that position us to probably gain more volume in the market? Do you see that as an opportunity in the near term?
When we take it as a basket, we think we are close to neutral. We have a little bit of erosion, which is very low, single-digit. I would say it is closer to one for the quarter. This is based on an overall basket of products. There are some increases, there are some decreases. However, I have to make one point here. We did have some products which were opportunistic, which for a limited period, you get some better opportunity in terms of pricing and volume. Those things, when they taper down, when a competitor comes in, those prices will go down. When you have a single player or when you have just one competitor, later when somebody enters, it could go down. We have seen such phenomena for a few products. In any quarter, if you take, you will always have one product which.
You have either got a shortage because of that there are opportunities and there are products which go out. Net-net, I think we are still at a comfortable stage.
Understood. And Yugandhar, any color from you on the injectable pricing? I think you said single-digit erosion. Has that increased in the recent months?
No, it is a similar trend. The only thing is, as Swami rightly said, there can be one-off products here and there where the erosion can be higher or lower. On an overall level, it is still single digit.
Thank you. Requesting participants to restrict themselves to two questions, please. The next question is from Tushar Manudhane.
Good morning, sir. Am I audible?
Yeah.
Yes, Tushar.
Sir, on the EBITDA margin first, like the guidance of 20%-21% for FY 2026, now that Pen-G plant is largely stable, closer to EBITDA break even, UGA-related operational cost is largely done, probably inspection can only move up in terms of profitability from here on. If I have to extend this for FY 2027, maybe without considering the inspection outcome of UGF3, how do we see the margin trajectory from here on?
I think we will be able to give a, I mean, clear guidance once we come to know about the status of the Pen-G MIP, right? Which hopefully it will happen very soon, maybe a month to two months' time. We will be able to tell you very clearly in the month of February.
Got it. China plant operational cost, how much that is? I mean, trying to understand.
No, China, as on it, in the quarter, I'll be incurring a loss of around, maybe $1 million. Probably we'll be able to achieve the break even between Q3 and Q4. After that, China will start moving up in the overall, contributing to the growth of the EBITDA growth.
Got it. In fact, trying to understand that even without, let's say. The MIP-related benefit on Pen-G, still, how much is the scope to improve the EBITDA margin from the current 20%-21% for FY 2026? Or FY 2027?
Tushar, you are putting a lot of variables. Like, do not consider UGF3, do not consider Pen-G. Then it will remain the same. Because these are all the key drivers which are expected to take it up in the next year.
Understood. Secondly, on Europe, which has been sort of a robust growth for now almost three years and reaching $1 billion. Given this size of the business, do we think that we'll be able to still sustain mid-teen sort of a growth over the next two to three years?
Murali?
Sure. Yeah. Tushar, thank you for raising this question. Just one interesting correction. We are now touching the EUR 1 billion mark. Whereas last financial year, we were at a touching distance of $1 billion. We are well on track for EUR 1 billion. Yes, as you have seen in the last three years, Q1, Q2, we are demonstrating growth. Considering my all major countries. Contributors in France, Portugal, Netherlands, and Germany continue to demonstrate this growth trajectory, I am very confident in the coming quarters and period as well. There will be a sustained growth.
Got it, sir. That's it from my side. Thank you.
The next question is from Bino.
Hi. Good morning and good evening. Swami sir, if I heard correctly, you said the EBITDA excluding revenue has improved 14% QoQ. Is that correct?
That's right. That's right.
Sir, what are the drivers of this? Is it mainly coming from lower losses in the Pen-G plant, or is there something else to it?
That is also one. Sales has grown up by about 7%. Gross profit also gone up by 10%. I think overall, there is an improvement across the businesses, which is what is driving the overall improvement of the EBITDA.
Okay. The gross margin QoQ has gone up despite a lower level revenue made. What has driven that? What has changed so much in the product mix?
See, one is, if you really see the formulation products have gone up this quarter compared to API, right? That is one small product change. Second, if you really see, Europe has been continuously growing. The operating leverage is getting increased quarter on quarter, which is also helping us. The third point is there is a product mix which is happening across. The U.S. also, right? I may not like to get into the details in terms of which segment, which product, etc. There is a good amount of product mix changing place in the U.S., which is also helping. It's a combination of multiple factors which are helping to grow the thing. The last one is, once the Pen-G comes, the gross margin will be very high because the major cost, apart from the raw material, is the coal.
You'll be able to see a slight, I mean, slight increase in the gross margin once the Pen-G plant comes fully operational. Once it's operated fully, probably we may cross 60% also.
Understood. Revenue made, was it minimal for the quarter, and are we completely done with it?
No, it's minimal for the quarter.
Okay. Next quarter will be close to zero?
Yes.
Understood. Sorry, one last question on tax rate. For the first half, we have been at a tax rate above 30%. Is that likely to be the case for full year as well?
See, basically, some of the businesses are incurring losses, which you know that at a PBT level, like Pen-G, Lyfius. Some of the other businesses. We do not take tax credit on the losses. We will take only as and when it started making profit, we will adjust it. Because of that, it appears like we are having a 35% tax rate, but in reality, it is only 25%. Whereas the tax returns will carry the losses, tax credit. In books of account, we do not.
Okay. So once they become profitable, the reported tax rate can fall below 25%?
Below 25%. Yes. You're absolutely right.
Understood. Thank you very much.
Hello? The next question is from Tarang Agarwal.
Hi. Am I audible?
Yeah, Tarang.
Hi. Good morning. A couple of questions, sir. Both on U.S. and Europe. If you could give us a sense on what's the portfolio coverage. Currently, specifically in the U.S., how does Lannett help it improve, say, quantitatively, and what are the steps to improve? Similarly, in Europe, things get a little complicated in Europe because it's a confederation of many countries. If you could give a more granular insight on some of your major markets. That's on portfolio coverage. On cash flows, CapEx intensity of the business continues to be reasonably high despite a reasonable amount of capacities which continue to be unutilized. H1, it's already at INR 1,500 crore. How should we really now pencil in CapEx intensity for the business given a vast footprint of unutilized capacities? Thanks.
Let me talk about U.S. first.
After that, probably we can talk about Europe, or you can generally talk about other countries. As far as the U.S. is concerned, we have a prescription of about 10.2%, which is the largest. That tells you the coverage. It's very fairly large across all segments. We have been growing. We have been growing now this quarter. We have seen some momentum in terms of seasonality. That has also helped us. That's as far as the U.S. is concerned. When you talk about Lannett specifically, Lannett has a number of products which are good additions to our portfolio, like the ADSG products. We are very excited to have those products in our portfolio once the merger is done. We are still awaiting the FTC approval, as you may be aware. That's a process we have to go through.
Sir, if I could just chip in, I mean, I understand that you've got north of 10% volume share. But does it come after covering, say, 50% of the market, or does it come after covering 60% of the market? It's really that's the metric that I was looking for. I didn't get your question. I don't know what is that 50% and 60% you're talking about.
Your portfolio coverage, Swami.
Yes. Oh, portfolio coverage. Okay. So we are into all segments, all therapeutic areas. I would say that we are probably around 50% or more. But it does not cover all the presentations of a product. For example, now foam, let us take foam as one, some of the derma areas, we have still not covered. So I would only say that we have significant coverage in the therapeutic area. So I do not have the exact percentage, but that is where we are. Sure. Yeah. If you are done, Tarang, maybe I can touch upon the European part of the query. Murali here. You touched upon the portfolio breadth and also the complexities in Europe under which we are operating. Let me touch the second point. Yes.
We are talking of multiple regulators, multiple language packs, different language packs, and fragmented market, and different market archetypes, whether it is a tender generic market or pharmacy-driven or prescription-driven. Across all these, we have demonstrated our success. There is a very well-set system, front-end commercial infrastructure, well-motivated team acting across these different markets. That way, we are able to overcome the challenges. In addition to the regulators, we are also answerable to the European Commission, European Medicines Agency. Newer challenges like on nitrosamines, we keep hearing. We are able to overcome all these with all of our efforts. Coming to the portfolio on the representative market, if you can assess, we are on upward of 80% of portfolio coverage. We are constantly striving to touch that 85%-90% levels. Of course, here I have excluded biosimilars and inhalation products.
There again, very soon, we will be making our launches. When you say represented markets, what do you mean? Because I felt there was an asterisk to it when you called the term represented market.
That's where I qualify telling some of the biosimilars range and inhalation range, which I have excluded. Otherwise, the generic market in which we are operating in, we are able to have over 80% of the portfolio addressed.
Okay. Yeah. Last one, CapEx.
Tarang, in terms of the CapEx. We are, as we communicated, we are not going for any major greenfield projects, etc. What we have done, the major CapEx during the quarter is on account of. We have increased. We entered into an arrangement with a global pharma major for which we have to pay the milestone payments, which we have been doing. Plus, you know that the U.S. also has put the new warehouse and other related things. We are also going to incur going forward on the biologics, which Satakarni can give more color into that. Otherwise, we are not having all our minor CapEx, which are going on. There is no major CapEx. Only these two, two, three things will only contribute to the CapEx going forward.
Okay. Yeah. Any comment on biosimilars because you specifically spoke about CapEx there, sir?
Tarang, hi. Biosimilars, as you know that we have invested in capacity expansion. One and a half years ago. This is not a new CapEx per se. I told you in the earnings call sometime back that we are adding two 2,500-liter mammalian bioreactors to the existing CuraTeQ facility. Now, after 18 months of that CapEx approval or maybe two years of CapEx approval, those lines are now getting commissioned. Likewise, to make us commercially ready and to ensure a good supply chain, we also needed to add filling capacities. As part of the last year's 2024 CapEx approval, we are adding a vial filling line to the filling capacities at CuraTeQ. Those equipment will come online. I think the bioreactors will come online, will be fully commissioned and qualified this quarter. The filling line will be fully online and qualified by June.
For the July quarter, the July quarter next fiscal. With respect to TheraNym, as you know, that's another CapEx investment for Aurobindo. As I told you, the company committed a capital investment of about INR 1,000 crore to establish 2 into 15K mammalian bioreactor commercial scale facility. TheraNym continues to make steady progress on executing this project. I believe this project will be ready for inauguration sometime in June, July next year. That's the CapEx exposure that we continue to have. During the last quarter, we further strengthened the collaboration with MST by signing a second product contract with them to support this expanded scope. Two additional 15K mammalian bioreactor lines are being added as part of block two in the same facility. That's another CapEx exposure that you'll be witnessing. Otherwise, what are CapEx commitments that Swami has been talking about?
The fiscal prudence in terms of expenditure is extremely tight at Aurobindo. We are very conscious of the fact on the question that you have raised. We are maintaining prudence in expanding this CapEx.
Wonderful, San. I do not know if this was called out before, but congrats on the expansion of scope with MST. Thank you.
Thank you.
Thank you. The next question is from Shyam Srinivasan.
Yeah. Hi. Good morning. Thank you for taking my question. Just. Dr. Satakarni, just sticking to biosimilar commercialization and even the pipeline updates, if you could share, please. Thank you.
It's pretty interesting in terms of the last quarter that we had. We announced a successful phase three clinical study outcome for our denosumab biosimilar. We conducted a phase three trial entirely in Europe in 446 patients enrolled across five European countries and I think 40 clinical sites. We are working towards submitting the marketing authorization applications for denosumab biosimilars, both for Prolia and Xgeva biosimilars, to the European Medicines Agency in April 2026. I have given this guidance before that I would like to submit the MA application in January. Considering my other clinical commitments and the facility availability, the validation batches are taking time. April is when the European submission for this biosimilar will happen. The FDA submission, we think that we can be able to do it in the July quarter of 2026 calendar year.
This is a good development for us. Likewise, Omalizumab, which is a very important product, a biosimilar to Xolair, we have successfully completed patient recruitment in our phase three trial. This is in chronic spontaneous urticaria. I believe that we'll be ready to submit the European marketing authorization application in June-July 2026, and a quarter later in the U.S. We are on track with this product. An important development is for tocilizumab, which hitherto was not part of our regulated market plans. We have completed a clinical PK/PD study for tocilizumab already. We went to the European Medicines Agency. My regulatory team was able to get a phase three clinical study waiver with the European Medicines Agency, which means that now we are doing everything to fast track tocilizumab, which is also an immunology product. We believe we will be able to.
Submit this product also in the July quarter next year with the European Medicines Agency. We will start engaging with the U.S. FDA to discuss about the possibility of a phase three clinical study waiver for tocilizumab. So tocilizumab, I haven't talked about this product before. But now this comes into the filing domain in the next year from us. bevacizumab, there's an interesting update. You know that we have completed a phase one study and we have gotten approval for our Bevqolva biosimilar in the U.K. Last time I'm told it's already available in hospitals in the U.K. for purchase from yesterday. With the European Medicines Agency, we had scientific advice and we received a waiver for phase three clinical study, which means that I need not wait until the study completion, which is late next year, to submit the file with Europe.
We will be able to also submit this file. We are planning to submit this file in April 2026 with Europe. With U.S. FDA, we still believe for this product because it doesn't have a good PD marker. We still believe the phase three study will be relevant. So the U.S. FDA filing plans don't change. That will be towards the end of the next year. You can see the portfolio is progressing really well. To your second question, Shyam, on the EU launch and supplies. We are pleased to share that we have successfully invoiced and delivered our first batch of biosimilar in the European market, which is an important milestone. Currently, we are focusing on streamlining our testing activities with the CRO partners to ensure timely testing and compliant QP release of products.
At the same time, we are also actively aligning our manufacturing and supply capacities so that from March 2026, we will be able to supply continuously to our European partners. Also, what is important to note is we are in the process of negotiating a couple of strategic deals in the European market that will broaden our product portfolio and maximize our supply potential. We expect to share more clarity and details on these developments in the next quarter. Overall, I remain confident in our European supply roadmap and also the emerging market roadmap that we are putting together. We are committed to delivering value to patients and partners from 2026 onwards. The 2027, 2028, which I always told, will be the inflection point in the biosimilars business where I expect about seven approvals in Europe and possibly a couple of approvals in the U.S. on the upside.
Hope this answers your question.
Yeah. Thank you, sir. Just one sub-question is on the new biosimilar guidelines in the FDA. From a competitive intensity standpoint, do you now see a lot more of your peers who have probably skirted this opportunity? I'm talking Indian peers to start looking at it seriously. Are you worried about it at all?
It's a very interesting question. I can give my perspective. In October 2025, the FDA released a new draft guidance aimed at streamlining and simplifying the biosimilar approval process. Now, the way I read the guidance, the draft guidance is the key regulatory shifts. The language is important. Please read the language that I'm talking about. The key regulatory shifts include reducing the reliance on comparative efficacy studies. It is not about eliminating comparative efficacy studies at this point. Eventually, just like Health Canada, European Medicines Agency, and MHRA, I believe U.S. FDA will also reach a point where the need for phase three efficacy studies will be removed. Right now, it is about reducing the reliance on comparative efficacy studies and eliminating the requirement of interchangeability.
If you are following my earnings calls for the last two or three years, I have been telling that the interchangeability designation will go. That is happening. There is a clear mandate on eliminating the requirement for interchangeability studies. I have not invested in any interchangeability or switching studies in my portfolio. Reducing the reliance on comparative efficacy studies. Now, to the part two of your question. By reducing the developmental hurdles and costs, do you think there will be a peer group that can essentially build capabilities and deliver biosimilar on a day-to-day basis? I believe the entry barriers are still on the science. Developing a biosimilar is more akin to developing a biologic minus the discovery.
The barrier and inertia of good science to be able to leverage a strong analytical and comparative data expertise still remains a significant barrier for most companies, Shyam. I can comment on CuraTeQ. CuraTeQ has already demonstrated proven biosimilar developmental capability with approvals in Europe. Therefore, I believe our business is well-positioned to benefit from any removal of the need for doing comparative efficacy studies. The timelines will definitely shrink. The inertia that you have in terms of being able to characterize the biosimilar analytically so that you can have the waiver for phase three on a case-to-case basis still remains a significant barrier for most companies, Shyam, if that answers your question.
Got it. Yeah. Thank you. All the best.
Thank you.
Thank you. The next question is from Kunal Randheria .
Hi. Can you hear me?
Yes.
Yeah. Thank you for the opportunity. Sir, since we are quite confident of getting a minimum import price for Pen-G, if you could highlight that, would it be only for the Pen- G HS code? Secondly, what is the range that we are looking at? What is the representation that we have made in terms of what should be the minimum import price? That would be helpful.
Kunal, all the questions are very relevant because it is already in the review by the DOP, right, and the government. We will not be able to comment on any of your questions.
Sure.
Ultimately, the range, etc., it is their prerogative. What is that they're going to give, etc., it is their prerogative. We are making representation. We have been taking up with them, etc. Ultimately, as and when they inform us only, we'll be able to communicate.
Okay. Sure. Let's say MIP ideally should not have any impact on the internal consumption of Pen-G for us, right? It only kind of should affect the external sales. Is that the correct understanding?
No, it is not the correct understanding because once again, it is linked to your first question. Your understanding is not right, but I will let you know after some time because it is linked to the first question.
Okay. I still don't get it. So yeah, because internal consumption would not get impacted by MIP.
Internal consumption is you have to look into the supply chain as a whole. Pen-G, 6-APA, amoxi, like that, it goes into multiple layers.
Right.
That is the reason.
We should be able to offset our internal consumption of Pen-G or 6-APA.
No, ultimately, Kunal, if you really look at it, everybody, I mean, the representation includes amoxi also. That is having a bearing on the market price where we both converge, both external and we.
For us, yeah. For us, 6-APA shouldn't be an issue, right?
Ideally, it should not be an issue.
Okay. MIP is not basically leading to that internal consumption part for 6-APA. Amoxi maybe, not 6-APA.
I will explain to you. Give me a week's time. I'll explain to you.
Sure. Sure, sir. Sure. Secondly, for Satakarni sir, would you say with all these changes in regulatory, potential changes in regulatory landscape, would you say that the plant compliance and good manufacturing practices would be the primary entry barrier for the new player for the biosimilar business, given that PK studies, etc., those are not very costly to conduct?
Yeah.
I mean, I'll repeat my answer. There are three things here. One, you need to be able to develop analytically. High-quality biosimilars. That's the first barrier. Two, because if you develop a high-quality biosimilar that is characterized well with a virginator biologic, the chances are, on a case-to-case basis, you will get a phase three waiver, which means the companies which were investing anywhere between $50 million-$150 million in conducting these clinical studies don't need to expand that much now. A PK/PD study with a strong immunogenicity data package. The immunogenicity requirements, I believe, will increase, Kunal. Having said that, the timelines will shrink. The investments will no longer be required to the extent that we were making before. All this is good. The third barrier would be the GMP. That's a given for any product that goes into a patient.
The regulatory norms in terms of good manufacturing practices continue to be of the highest scrutiny and rigor. Every company had to meet those. I still think the science to get a biosimilar analytically characterized, companies who have achieved that sort of resource capability building in their organizations stand well-positioned to take advantage of these shifting regulatory norms, be it with the FDA, be it with EMA or Health Canada. When you have good GMP practices that go with it, then the approval pathway will become easier. I hope this explains your answers to your question.
Sure. Sir, lastly, where do we stand on the plant inspection from U.S. FDA perspective? I mean, what is our preparedness here? When do we expect our first filing and U.S. FDA to inspect the plant?
Based on my earlier guidance, I was hoping to file a trastuzumab with U.S. FDA. But considering my supply commitments and it's a lyophilized product, recalculating my capacities and the utilization, I realized that I will push down trastuzumab to the later half of next year. So the first filing would now be denosumab. Followed by omalizumab. So if you file it somewhere between April to June, then I expect the inspection to happen by the end of the calendar year 2026 with the U.S. FDA.
Sure, sir. That is helpful. All the best. Thank you.
Thank you.
Thank you. The next question is from Nitin Agarwal.
Hi, Nitin. Can you hear us?
Hi, Nitin. Can you hear us? One thing, can I go to the next person? Then we'll come back.
Sure. The next question is from Surya Patra.
Thanks for the opportunity. My first question is on the European market. Is it possible to now share what is the injectable revenue mix within Europe now? What is the margin performance for the entire European business now we are having?
Yeah. The injectable component is about 10%. We are touching a $100 million mark. Here, what I wish to state is not all of the products are in copious supplies. We are waiting for some of these products to kick in from UGF3. At that time, we will be having a quantum jump that we expect in FY 2027. Of course, the margin percentage-wise, yes, we are touching at 20% levels, high teens.
Okay. Okay. So means we are anticipating to reach towards 20% level, but currently, high teens. That is what is the.
Yeah, that's what.
Okay. Second point is that we are seeing a kind of interesting development on the growth market front. By creating multiple kind of fully-owned subsidiaries like that. Could you discuss something, your kind of moves and initiatives on the growth market side? What is the kind of growth trajectory that you are now thinking there? Any specific strategy change on those market front? Anything on that front, sir? Having created a significant presence in the U.S. and Europe.
You would touch upon this?
Me?
Yeah. The query is on the growth markets perspective.
No, no. See, Surya, on the overall, if you take the rest of the growth markets, see, the growth markets are not concentrated in one, and it is across all the things. Where we are having, looking for a good impact coming next year is the China one. That is one thing. Other markets are like Canada, Brazil. I think all the markets are growing reasonably well, and there is no specific one market is growing like that, except the new market, which is going to add to the volume. I mean, top line and sellers, the EBITDA level is the China one, which we had talked about earlier.
Okay. Is it right to think this way that given the large volume opportunity in the name of GLP, what is coming, upcoming, to participate there aggressively in the majority of the emerging market.
Are we becoming a bit aggressive and hence creating platforms and presence and positioning? What is our thought process about India, about GLP also, if you can?
You go on there on the GLP, please.
No, on the GLP-1 piece, I think we have been very clear that we will be doing this product on our own at our Vizag plant. We will be in the second phase of launches. We are looking at filing the products across all markets sometime next year. Okay.
On the India front. Probably we may do some small acquisitions. It may not be a big one. We'll not do a big one because we'll just need to, I mean, slowly take off for the Indian market. As of now, we are doing around a turnover of something like INR 275 crore-INR 300 crore per year. And probably we may take it to by another INR 100 crore, like that only we will do. We'll not go aggressive on the Indian market.
Okay. Just last one bit, sir, about the acquisition plan for the capital allocation plan. So we have been acquisitive also. Do you have any plan for any larger acquisition if that is possible? What would be our thought process about inorganic growth going ahead?
Certainly, wherever we are getting opportunities which create a new market or new technological platform which will add.
I mean, we'll not go and then do specifically for the existing products. Wherever we get like Lannett, take the example of Lannett. It is a leader in the control substance. Like that, we have done. We'll look into case by case, and there is no specific, this is what we are going to do like that.
Okay. Okay. Sure, sir. Yeah. Thank you. Wish you all the best. Thank you.
Thank you.
The next question is from Kunal Randheria.
Hello. Good morning, sir. Sir, my question is regarding some of your new plants. For example, in China, you have spent around $145 million. I am just wondering what kind of asset turn should one expect? When can this plant achieve its peak sales potential?
I think the plant started invoicing since April this year. Within this year, we are able to get a, we are able to achieve a break even in the first year itself. Going forward, what we are trying to see is in the next three years, we should be able to take the turnover to triple digit, beyond triple, I mean, into a triple digit, which will help us to achieve a significant, because the margins, because generally the productivity there is high and the margins will be good. We are trying to, in two to three years' time, we will be able to achieve triple digit turnover number.
Should I kind of assume then three years or so, you could have an asset turnover around one? Maybe around $150 million is a potentially likely number.
Could be.
Sure. Sure. Secondly, sir, you did touch upon this M&A that you are looking to do. There was some news item earlier that you were looking to buy Zentiva, and the payout could be as much as $5 billion. Is this the kind of scale that you are comfortable doing?
No. As I said, first of all, we said very clearly we are not given any binding offer. Okay? Second is, it is not that every M&A which we are looking into that, we are going to buy it. We'll go case by case on what are all the synergies, how it will help the company as a whole, institution as a whole, and what are all the new technological things which we are able to achieve, new market front, right? In the case of Zentiva, I made it very clear in the last call itself. We are not present in Central and Eastern Europe. It has come very handy. That is a one-off case. Need not be everything will be like Zentiva.
Sure, sir. No, I understand that. I mean, my question was more like, would you be comfortable spending, levering up and maybe going for a $4 billion kind of an acquisition? That's more from not Zentiva specific, but more like a $4 billion kind of a payout. Would you be comfortable doing that?
No. See, Zentiva also, if you really see, assuming EUR 4 billion, we are not given any number, assuming EUR 4 billion, the interest coverage will be more than two times, two and a half times, right? Even assuming 100% leverage. It all depends upon the case to case. Zentiva is a very unique case. That's what I've been telling you.
Got it, sir. Got it. Thank you.
Thank you. The next question is from Nitin Agarwal. I think his connection is not there. We'll move on to the next question. The next question is from Bino.
Hi. Thanks for a follow-up question. One question on the biosimilars layer. In your understanding, by the time you reach market, how many other players could be there in the U.S. market?
It depends on product by product, Bino. So with omalizumab, which is a primary product for the U.S. market, a potential $4 billion global market, around $2.5 billion-$2.6 billion coming from the U.S. alone. We will be the third player. As of today, we'll be the third player. The product is in two indications: chronic spontaneous urticaria and respiratory asthma. Very recently, the innovator also got an approval for accidental food allergies, which is supposed to grow the market significantly. Now, when you come to denosumab, the patent expiry is towards the end of this year. We expect biosimilars to shape the market in the next 12-14 months. I am not in the first wave of product launches. We will be in the second wave. But we believe any biosimilar these days that you.
Look at from the analytical reports, business analytical reports, etc., even those with patent expiries. Beyond 2028 or 2030, there are at least 8-10 players who are developing them. I believe the goal post has slightly shifted from attempting to be the first one to launch. Aurobindo is not at this point of time because we have at least a decade and decade and a half lag time in catching up with the competition who have started way ahead of us. We were there for the last six, seven years, and we started this grounds up. We will be cost competitive. We will be the last man standing. We would like to shape the market in a manner that we can sustain our efforts over a long term.
We are picking products that we believe have a longer product life cycle in terms of the patient care and management, which means the follow-on biologicals are not really exciting. Such products make our portfolio. In some products, we may be the third or fourth to be there in the market. In some products, we may be sixth or seventh to be in the market. It really depends on the product, Bino.
Understood. Thank you very much.
Thank you. Any closing remarks, sir?
Yeah. Thanks. Thanks, Vandir. Thank you very much, everyone, for joining us on the call today. If you have any of your questions unanswered, please feel free to get in touch with the investor relations team. The transcript of this call will be uploaded on our website, www.aurobindo.com, in due course. Thank you, everyone, once again, and have a great day ahead.
Ladies and gentlemen, on behalf of Aurobindo Pharma, that concludes today's conference. Thank you for joining us, and you may now disconnect your lines and exit the webinar. Thank you.