Please note that this conference is being recorded. I now hand the conference over to Mr. Ankit. Thank you, and over to you, sir.
Thank you, Mira. Good evening, everyone, and we welcome you to Gland Pharma Earnings Conference Call for Q4 and FY 2024. My name is Ankit, and I head Investments, M&A, and Corporate Strategy at Gland. Joining me today are Mr. Srinivas Sadu, our MD and CEO, Mr. Ravi Mitra, our CFO, and we also have today Mr. Alain, the CEO of Cenexi, our European CDMO business.
Together today, we'll discuss our business performance and address any questions that you may have. We'll begin with the business highlights on Gland and Cenexi from Mr. Sadu, followed by an overview on Cenexi and the turnaround strategy from Mr. Alain, and lastly, the group financial review by Mr. Ravi. Before we proceed, I'd like to remind everyone that some of the statements made today may be forward-looking and based on the current estimates we have as management.
These statements could be should be considered in light of the risk associated with our business. Please note that the call is being recorded, and the playback will be made available today, and the transcript will be available within this week. With that, I hand over the call to Mr. Sadu for his opening remarks. Thank you. Over to you, Mr. Sadu.
Thank you, Ankit. Good evening, everyone, and thank you for joining us for Gland Pharma's fourth quarter and fiscal year 2024 earnings call. This past year has been positive for Gland Pharma, marked by a significant rebound of our core business and the exciting new chapter we have begun with our first international acquisition of Cenexi in Europe.
Despite the evolving business environment, we have demonstrated resilience and delivered a performance that exceeds last year's results and sets the stage for continued growth and success in the years to come. Let's delve into our fourth quarter consolidated performance. Gland Pharma achieved revenues of INR 16,375 million in Q4 FY 2024, a remarkable 19% increase compared to Q4 FY 2023. Not only did our recent acquisition of Cenexi contribute to this growth, but our base business also continued to grow.
It highlights the ongoing strength of our core business, driven by the sustained market leadership of our key injectables and the successful introduction of new products. Notably, our EBITDA for the quarter rose to INR 3,587 million, a significant improvement over the INR 1,684 million reported in Q4 FY 2023.
Our base business operations, excluding Cenexi, experienced substantial growth in Q4 FY 2024. Revenues reached INR 11,737 million, a significant 50% increase compared to the same period last year. Profitability also rose, with EBITDA margins hitting 37%, a 16 percentage point improvement year-over-year. Shifting our attention to the full FY 2024, our consolidated revenues reached INR 56,647 million, a substantial 56% increase compared to the previous year.
While the integration of Cenexi played an important role in growth, we also experienced strong momentum throughout the year in our base business, growing by 15%, driven by new product launches, successful relaunches, and the continued market dominance of our leading products. Our consolidated EBITDA for FY 2024 amounted to INR 13,331 million, up from INR 10,248 million in FY 2023.
Our consolidated EBITDA margins for the year were at 22% and were impacted by the inclusion of Cenexi, which is still in the process of reaching its optimal performance level. However, for the full FY 2024, our base business EBITDA totaled INR 14,140 million, a 38% increase from the previous year. Base EBITDA margins for the entire year also saw impressive growth, reaching 34%, a six percentage point increase compared to FY 2023.
The Board of Gland Pharma is pleased to recommend its first-ever dividend to shareholders post-listing. The Board recommends a final dividend of 2,000%, equivalent to INR 20 per equity share for the fiscal year ending March 31, 2024, subject to the approval of our shareholders. In terms of our geographic performance, our core markets achieved 59% revenue growth in FY 2024 and now represents 75% of our total revenues.
We successfully introduced our 50+ new molecules to the market throughout the year, including Linaclotide, Ganirelix, Buserelin, Oxybutynin, Carbocisteine, and Ketamine. These launches included 30+ relaunched molecules that were temporarily unavailable due to challenges with some partners. Excluding Cenexi, the base business in core markets grew by 21%. Our key products, Enoxaparin Sodium, Cisplatin, Levetiracetam, Ropinirole Bromide, Zoledronic Acid, and Vancomycin, continue to demonstrate strong growth, and we haven't observed any major price-related fluctuations.
Looking ahead, we remain optimistic about the potential in this market. We are confident in our ability to maintain our competitive edge through ongoing compliance, cost leadership, scale, and our diverse portfolio of offerings. Our core market outside the U.S. saw a significant boost from the Cenexi acquisition, achieving 3x growth in the fiscal year.
We have been actively working to identify and capitalize new synergies with Cenexi, while also expanding our base portfolio in this market with products already approved in the U.S. The rest of the world markets accounted for 20% of our revenue in FY 2024, an increase of 63% from FY 2023. This increase was primarily driven by Cenexi volumes. We have seen positive traction for some of our products in these markets, and we anticipate significant growth in the businesses we have recently established over the next 2-3 years.
In contrast, the Indian market contributed 5% of our revenue in FY 2024, and we are currently evaluating strategic options to develop a well-considered future plan for this market. Turning our focus to research and development, our total R&D expenses for Q4 FY 2024 were INR 436 million. We filed 4 ANDAs during the quarter and received approval for 6 ANDAs.
For the full FY 2024, R&D expenses amount to INR 1,773 million, representing 4.3% of our base business revenue. We filed 19 ANDAs throughout the year and received approval for 24 ANDAs. As of March 31, 2024, Gland and its partners had filed 349 ANDAs in the United States, with 286 approved and 63 pending approvals. The company currently holds 1,667 product registrations worldwide.
While our progress in the Chinese market has been slower than anticipated, we have filed 9 products so far, of which 3 have been approved. We have commercialized 1 product, but its contribution has not yet been substantial. We are actively collaborating with Fosun to reassess our approach and identify strategies to achieve more significant success in China, a vast market with considerable potential.
Regarding complex injectables, we targeted to develop 19 molecules, addressing a market size worth $9 billion, as per IQVIA. To date, we have received 6 approvals, of which 4 products have been launched. We recently launched Eribulin as our first major complex product in this category. The next 2 years will be crucial for realizing meaningful results from our complex product portfolio. We are also exploring potential acquisitions, co-development, and in-licensing opportunities to accelerate our growth and strengthen our position in this segment.
While biologics represents a long-term play, our immediate priority is to obtain regulatory approvals for our facilities through our existing business and potential near-term wins. Overall, biologics remain a key driver for our future growth. This has been a good year for quality and operations, with over 40 successful audits completed, including those by regulators and partners. All of our sites are operating smoothly and are in a state of control, with establishment inspection reports already received.
We remain committed to maintaining compliance as a core pillar of our strategy, ensuring it's deeply ingrained in our culture and every business decision. Before I wrap up, let's discuss Cenexi in more detail. Alain, Cenexi's CEO, will provide a roadmap for our turnaround strategy. Before handing it over to him, I would like to share a few points.
In Q4 FY 2024, Cenexi recorded revenue of INR 3,637 million, with a gross contribution of 77% and a negative EBITDA of INR 720 million. For the eleven months of FY 2024, revenue totaled INR 14,878 million, with a gross margin of 76% and a negative EBITDA of INR 812 million. The quarter's revenue decline of 18% was primarily due to operational disruptions, which led to a backlog of orders.
Additionally, there was a delay in executing the tech transfer for the new business, which was intended to replace the phasing out business. We are actively investing in capacity expansion, capability enhancement, and optimizing our filling and packaging lines to ensure consistent execution. Our long-term turnaround plan also addresses critical areas like hiring needs, operational excellence, supply chain efficiency, and integrating value-adding technologies.
While achieving the full potential of the acquisition has been delayed by a few quarters, the thesis behind the acquisition is intact, and we remain confident in Cenexi's strong medium to long-term outlook. We are committed to maximizing this business' strategic value with a healthy order book, a strong customer base, many tech transfer projects, and promising growth opportunities. With that, I'll turn the call over to Alain, the CEO of Cenexi, who will share insights into the company's progress and strategy. Thank you all for your attention. Over to you, Alain.
Thanks, Sadu. Good evening, everyone. My name is Alain Kirschmeyer. I took over as the Cenexi CEO and President in February this year. I'm happy to be in India and participate in this investor call for Gland Pharma Limited, our parent company. At this pivotal juncture for Cenexi, I'm confident that we can leverage our industry expertise and the strong support of Gland and Fosun to capitalize on significant opportunities and establish ourselves as a leading CDMO in the European market.
While the road ahead will demand focus, the groundwork is in place for us to achieve this ambitious goal and become the group's flagship CDMO company. As Sadu highlighted, Cenexi is navigating a transitional period, and our performance is affected by near-term operational challenges. While the business' long-term potential is substantial, we must overcome these hurdles to achieve our goals sustainably.
With Gland's operational and financial support, we have initiated a comprehensive plan outlining detailed short-term, medium-term, and long-term goals to address these challenges, as detailed in the earnings presentation shared with you all. We are actively investing in asset upgrades, capacity rebalancing, and developing future-ready capabilities that align with evolving CDMO market demands and will drive Cenexi towards higher-margin business....
In the short term, we are implementing a plan to maximize site utilization through extra shifts, enabling us to normalize the order backlog. We have enlisted third-party support to optimize preventive maintenance and changeovers and minimize downtime. These measures will increase output from existing capacity and mitigate revenue decline. In the medium term, we will address line level utilization challenges by moving some high volume products within sites, enhancing flexibility, reducing format changes, and ensuring timely and efficient service.
Additionally, we are accelerating technology transfer projects for faster new product launches, driving increased turnover. We are adding one new high-speed ampoule line in our Fontenay plant and evaluating further capacity increases for prefilled syringes. We are also transitioning towards a leaner, centralized corporate structure to streamline decision-making, reduce redundancies, boost agility and foster a unified Cenexi culture.
From a business development perspective, we are actively engaging with partners on a high margin, complex projects in biologics, complex generics, and NDAs, while leveraging the combined strength of Gland Pharma and Cenexi for enhanced market positioning. We also identify cross-selling opportunities and increase wallet share with our partners by mapping our customer base. Additionally, we are engaging in discussions with existing partners to optimize pricing and ensure profitability.
In the long term, we envision Cenexi as one of the most advanced CDMOs, capable of offering a wide range of sterile injectables and consistently delivering high margins and profitability. Clearly, our immediate goal is to bring Cenexi back to profitability, and in the medium to long term, deliver high teen margins. Thank you. I will now turn the call over to Ravi to discuss Gland and Cenexi financial performance. Ravi, please proceed.
Thank you, Alain. Good evening, everyone. I trust you have had the opportunity to review our financial results in this presentation and press release we shared through the stock exchanges. Let me begin with an overview of the performance this quarter and the full year. Our business has demonstrated strength, contributing to a 96% year-over-year surge in revenue from operations, and amounting to INR 15,375 million in Q4 FY 2024.
This robust performance, coupled with the successful integration of consolidated revenue from our recent acquisition of Cenexi, has propelled our total revenue for the fiscal year FY 2024 to INR 56,647 million, a significant 56% increase compared to the previous year. The revenue, excluding Cenexi, also grew by 50% in Q4 FY 2024 on a year-over-year basis, and 15% in FY 2024.
Other income for Q4 FY 2024 reached INR 421 million, primarily consisting of interest and fixed deposits. This represents an increase compared to Q4 FY 2023, which saw INR 389 million in other income due to positive Forex movement. For FY 2024, total other income amounting to INR 1,702 million. This figure is lower compared to FY 2023, due to lower interest on fixed deposits and lower foreign exchange gains from operations.
Our gross margin for Q4 FY 2024 reached 61%, a notable improvement from the 54% recorded in Q4 FY 2023. Cenexi's high gross margin profile primarily drove this year-over-year enhancement in gross margin. Additionally, we are pleased to report that our base business also experienced an improvement in gross margin to 56% compared to the previous year.
In Q4 FY 2024, we achieved an EBITDA of INR 3,587 million, a 113% increase compared to the INR 1,684 million reported in the same quarter of the previous financial year. Our EBITDA margin for Q4 FY 2024 stood at 23%, up from 21% last year. For FY 2024, our EBITDA reached INR 13,331 million, a 30% increase compared to INR 10,348 million in the previous financial year. However, the EBITDA margin for FY 2024 was 24%, lower than the 28% reported in the last year consolidation of Cenexi. We are actively implementing corrective measures to ensure Cenexi business rebounds to its expected margin levels.
In contrast, our base business, excluding Cenexi, achieved an improved EBITDA margin of 37% in Q4 FY 2024, significantly higher than the 21% reported in the same period of the previous year. For FY 2024, the EBITDA margin of our base business stood at 34%, compared to 28% in FY 2023....
Our net profit of PAT for Q4 FY 2024 increased substantially by 145% year-over-year compared to Q4 FY 2023, reaching INR 1,924 million. For the full FY 2024, our PAT amounted to INR 7,725 million. Although this marks a slight 1% decline compared to the previous year, it's important to note that this was achieved despite losses at Cenexi, which were offset by significant growth in profitability from our base business.
Our PAT margin for Q4 FY 2024 was 13% and 14% for FY 2024. Notably, our base business, excluding Cenexi, achieved a significant improvement in PAT margin, reaching 25% for FY 2024, compared to 22% in the previous year. Total R&D expense for FY 2024 amounted to INR 1,772 million against INR 2,014 million in FY 2023.
This represents, four percent of our revenue from operations, excluding Cenexi. On a standalone basis, our effective tax rate was 26% in the fourth quarter, and for twelve months of the current fiscal year. On a consolidated basis, the ETR went up to 35% in Q4 FY 2024 due to the absence of a deferred tax asset at Cenexi for the PBT losses during the year.
As of March 31, 2024, our total cash and equivalents on a group group level stood at INR 24,953 million. However, considering the outstanding loans on Cenexi's books, our net cash position was lower at INR 21,756 million. During the 12 months ended March 31, 2024, we generated INR 9,968 million in cash flow from operations.
As of March 31, 2024, net working capital was at INR 24,074 million in FY 2024, compared to INR 24,010 million in FY 2023. The net working capital remained flat despite increased revenue due to a decrease in inventory levels. Our average cash conversion cycle improved, reaching 169 days for FY 2024, compared to 256 days in FY 2023. We invested INR 3,975 million in capital expenditures during the current fiscal year.
Of this amount, INR 2,368 million was spent on upgrading and setting up production lines and routine maintenance at our facilities in India. Balance of CapEx spent at Cenexi will positively impact performance to reduce downtime and lower maintenance costs. With that, I will turn the call over to the moderator to open the floor for questions and answers.
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 touchtone 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 your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from the line of Sayan Mukherjee from Nomura. Please go ahead.
Yeah. Thanks for taking my question. Just wanted to check on Cenexi. So, you know, from the current level to breakeven to high teen, what's the kind of timeline, if you can give some more granular details on the key milestones, that we should, you know, look out for as far as EBITDA margin improvement is concerned with the timelines, please?
So Alain, speaking, I will take that, the question. So, our goal to reach, high-teen margins is, a mid to long-term goal, and there are a number of, actions that we have to take. The first one, as you've seen in the presentation, is to, fix our operation issues and improve, our operational, results. The second one is to, speed up, our tech transfers, to our HSC, site in, in France. And of course, continue on, all the business development actions that have already been, initiated, to gain, to gain new customers. And for that, we need, of course, to invest, in new CapEx to increase our, capacity.
Yeah, I think I was just looking at, you know, how should we think about Cenexi EBITDA for next fiscal and the year after? You know, just, you know, and just to understand what your mid to long-term timeline means here. So if you can guide for FY 25 and 26 on Cenexi.
We're looking here at a midterm goal, meaning typically one to two years.
Okay. Okay. So in two years you are expecting to get to high-teen EBITDA margin here? Okay.
Yeah.
Yeah, and thanks for that. Just one question on the base business. We have seen a very strong recovery here with U.S. and other markets, you know, growing, EBITDA margin getting to 37%. So Sadu, how should we think about, you know, this number going forward? We are seeing good traction, you know, maybe you will have more products and the partnerships coming in. How should we think about EBITDA margin, gross margins, as the business kind of, you know, stabilizes and goes from here?
Yeah, I think, the pricing-wise, it's kind of stabilized. If you see, year-on-year, its price is almost same, I would say 1% negative, I would say, but it's almost same. But the relaunches, what we have done, what we have lost last year, everything got relaunched. So that kind of brought back the volumes. So we—if you see the combination of our new product launches and the relaunches are almost 17%, that is, you know, we got back the numbers what we had.
In addition to that, you know, if you look at our top 10 products, almost eight products we have grown substantially, you know. We got the contracts back, what we have lost earlier. We are aggressive in it and, I did several things to work on the cost, so could get the a few major contracts back. So the growth on those are almost like, you know, two times, three times.
We were, of course, the injectable business. We are always saying it was a temporary. They were not taking it up. So if you see what we have done in last two quarters and, you know, the first quarter is completely different. So we're heading back to what we were guiding the market in terms of volumes in '19-'20.
And we're also looking at a bit, little bit higher opportunity side as well. So a lot of products are, you know, took actually what the market share from what we had earlier and became strong. So we're kind of confident on those because we kind of got back the GPO contracts. And margins are also kind of stabilized, you know, the regulatory landscape, what's in the market.
So that also helped us in some of oncology products. We got a good market shares, products like, you know, platinum, you know, so. That way the base business has improved. Yeah, I would say it's more stabilized now.
But now, the growth rate that you have in the base business in the US, so is that stable? How much can it grow? And then you on top of it, you will have new launches. If you can just talk about the headroom that's available with all the disruptions and your recovery from what we have seen before in this quarter.
So we kind of guided last time also. I think we still were at, you know, want to stick to that, about 15%, around 14%-15% on annual basis growth rate. Combination of the base and the new launches for the end, because now it's a larger base, right? So we want to stick to that.
Okay. Just if I can ask one last question. What is the milestone and profit share number, if you can share for fourth quarter and for full year?
It's in the similar range, 2%-3% this way, that way. What you have to understand, we are also doing now some complex products, so milestones will be a little higher than earlier, so probably a couple of percentage. But otherwise, on annual basis, still it's similar range.
Okay. Thank you.
Thank you. Next question is from the line of Amey Chalke from JM Financial. Please go ahead.
Yeah. Thank you for taking my question, and congratulations to the management. Good set of numbers. So the first question I have is related to FY 25 outlook. Like this year, we have seen a good amount of contribution coming in from the new product launches. Are we expected to replenish a similar kind of sales from the new products next year?
Because I expect there would be some price range happening, which could be substantial, for the new products which have been launched last year. And the second thing which I have is, second question I have related to this is: Generally, when we have seen a CRAMS players supplying the products, we see the fluctuations or volatility in the contracts.
If we have seen a good amount of ramp up this year, do you expect that similar kind of contracts to get repeated next year? Or you think the inventory adjustment could happen, that could drag the growth a bit in next year? Thanks.
Yeah. So, when you're saying new, new launches, I know I did mention that a lot of these are relaunches. We have about 30+ molecules to relaunch what we lost last year because of the Athenex and Akorn exit in the market. So that got relaunched, so kind of got back the product volumes what we lost. It's not like these are new products where the pricing levels will happen because it's already like very generic products, where it's already kind of settled.
So really new products, what we launched, in terms of the entire business, what we have grown, will not impact that, that, does not impact that much in the scheme of things in terms of new launches, how much it has contributed to the growth. The other question about... One second. Yeah.
So you were talking about the, contracts, right? The volatility contracts. Not a lot of contracts what we signed recently, it is the second part of the year also. So if you actually annualize it, the volumes will increase because we signed some in last quarter, some in the previous quarter also. So it's actually not the annual numbers.
That should have stabilized. Like you said, initially there will be a higher uptick because I think they also build a pipeline. But you need to consider that, you know, if you see the numbers, it's going up from third quarter to fourth quarter. So most of these contracts are signed and getting launched this quarter as well. So even now, some are still not yet launched. That way, once you annualize it, I think it should balance the whatever you're talking about, the initial uptick.
Sure. The other question I have is on the biologics. It's been a while since we had acquired this unit. What steps we have taken to ramp up our position in this space and how we can use increase the utilization of this unit?
Yeah, the efforts are there, you know, small projects we are doing, but, you know, biology normally takes a longer time compared to others. And in last one year, you know, so many headwinds from different aspects. The focus was how to get the base business back and lot efforts went into that, in terms of we need to reduce our costs and be more competitive.
And also, you know, the interest situation in the U.S., a lot of funding has stopped. And whenever you have a new asset, especially guys entering into the biology space, you need to work with the smaller development companies where the funding has stopped. So efforts are there and continued discussions are happening.
So that is why I would say, you know, it's a slow process, but we have to stay there because, on the CDMO side, that's the area we want to grow, in the near future. So currently it's more on technical side and, skill development of people. Currently, that's what we are focusing on, and, I think that once we have that, everything else will follow.
Sure. Thank you so much. I will join that. Yeah.
Thank you. Next question is from the line of Bino from Elara Capital. Please go ahead.
Hi, good evening. Couple questions. One, could you comment a bit on the opportunity in this Eribulin product? As I see, you are the only approved generic in the market. Do you expect competition near term?
It's around $170 million-$180 million product, and we are the first ones to launch. We just launched last month, so we have to see how the market behaves, because, you know, a couple of people have filed it. We don't have the approvals yet, where, what stage they are in. But generally, when you are the first, first in line, you tend to get the contract. So, we, we just hoping good business from the market, but just to give a number, it's too early, I would say.
Okay. So, a normal assumption would be that over the next 6-18 months, we may see 1 or 2 more entrants in the market?
Yeah, we might see some in... I mean, it's too. I can't really comment on somebody's filing, but you can see in the next six months, but I'm not sure.
Understood. Second, if I remember, last year, there was a plant shutdown in Cenexi during summer holidays, et cetera. Is that a routine thing, or will that happen this year as well, and which months would that be?
Give me a second, yeah. So the plan is this year, you know, to... I think I did mention the last call, that we are trying to invest in a new line. So the plan is to, we're pushing the supplier to get that line, before that shutdown happens, so that we can utilize that time for the installation of the line.
So that, you know, once this line gets added, then we can have a decent capacity, where we are today we are struggling. You know, today the issue is not orders. We have a EUR 20 million-EUR 25 million orders on backlog, and the concern is the capacity. I would say, you know, that's a special training so that we can install new line in the time.
Okay, so shutdown is happening. Which month would that be?
This August.
Yeah. August, okay. And, last, just one question on tax rate. This year, the overall confirmed tax rate has come to 35%. It's a big jump over the last few years. So the concern is the tax rate we are looking forward to in the next 2-3 years?
I'm sorry, you're breaking down. You're breaking up.
I was asking, this year, the tax rate has jumped to about 35%. Why is it so? And, over for the next 2, 3 years, what's the tax rate expected, overall?
So, currently the 35% is because there is no negative tax or deferred tax asset created at Cenexi level because of the losses. However, the normal tax rate at Cenexi is 27% in France. So the time it starts to be activity positive level, this tax rate would surely come down. Which we are expecting.
Thank you.
Thank you. Next question is from the line of Charul Agrawal from Bank of America. Please go ahead.
Hi, am I audible?
Yes, ma'am.
So my first question is on the U.S. revenue medium-term growth. So, when we think about the ramp-up of U.S. base from here, how do we look at it in terms of drivers? How much of it would come from new product launches versus adding partners in the existing product?
So with the large base we have, we still see 3%-4% coming from the pure new launches and some, you know, the relaunches. So normally it's around 10%, 10%-11% is figures we get from the launches. Combination of relaunches and purely new products.
Cool. So the other proportion is it basically expanding market share from the current partners itself, or do we see scope of adding new partners, in the products that we have?
It's a combination of both. So basically, you want to increase your market share when you add up both, right? So it's a combination of both, but mostly getting into some contract situations like this, just like I said, some we have entered large parts into the contract, it gets annualized. The growth will come from those markets also. So whenever these GPO contracts are opening up, we are focusing on how to get those contracts into.
Okay. Thank you, sir. Sir, my next question is on Cenexi. So, this quarter we have seen higher costs for the business. So going ahead, how do we see the cost from this level? Do we expect to incur additional costs over this, or can we see this as the base?
So this cost related to typically maintenance all will come down. We expect there will be lower cost base in actual terms also as we complete our expansion and the volume grows and fixed cost gets more utilized. So on a percentage term basis and as well as absolute term, we would expect the cost to be lower than today. Of course, there will be certain inflation to counter that.
Sir, this would start reflecting from the next quarter as well, or do you expect this to happen a few more quarters down the line?
It will take a few more quarters because as Mr. Sadu was just explaining, there is going to be a new line, the high-speed line, which is being installed in September quarter. Post that, we would expect the volume to grow.
Okay. So the absolute cost as well will happen from after the September quarter, or is it the revenue ramp-up that you are saying will happen after the September quarter?
No. So, September quarter, the installation will start, and then it will take a quarter or so to start the commercial and ramp-up to happen.
Got it. Thank you.
Yeah, expecting an impact Q1 next year, Q1, Q2, depending on how the ramp-up goes.
Got it. Got it. Thank you, sir. That was my questions.
Thank you. A reminder to all the participants, you may press star and one to ask a question. Next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.
Yeah, good afternoon, and thank you for my question. First one is on Cenexi. For the 11-month, I think in EUR terms, we have done a revenue of EUR 166 million. I'm just annualizing it for the 12th month; it's around EUR 180 million, and maybe I'm wrong, but this used to be a EUR 200 million run rate.
So is the EUR 20 million the lost opportunity that we have seen because of some of the breakdowns, some of the challenges? And for the quarter, I think it came at EUR 40 million. So just if you could help us quantify what is the missing part that should have ideally come through this quarter and may actually flow through potentially in the future.
So, like I mentioned, about INR 20 million is the backlog orders we have in order to supply because of the operational issues we are facing. So that itself should cover the difference that you mentioned. So it's a slow ramp-up, you know, 40 could be your base, and you'll see a slow ramp-up of the revenue.
And any revenue add, you know, if you're seeing the gross margin is 77%, it just flows down to the bottom line. So the initial focus now is how to make it more efficient, the line, so that way output will increase, so that we can make more supplies and the top line increases automatically flows down, and then work on the new lines in parallel. So, you know, the...
We have, unlike at, unlike Gland where we have, you know, we put up a new line, we have space, and then we remove the line, we transfer products, we don't have that kind of, flexibility there. We have to work on, because the capacity is 100% utilized today.
Several lines we have a demanding high. So we have to partially take some action so that it will not impact the running business. At the same time, you know, install lines and, newer machinery so that it helps to grow the business. So it's little different, volume compared to what we do here.
Mr. Sadu, sorry, I'm unable to understand. So I get the INR 20 million order backlog, but should we look at quarter one, quarter two, quarter three when we look next fiscal for Cenexi? Is it the INR 40 million run rate is what we think we can do, or you know, there is a ramp up at some point of time?
It will ramp up. It will ramp up slowly, you know, could be from 40, it might go to 43 and 45, something like that. Yeah.
Yeah. And at what time, when we reach the 50 million run rate quarterly... I'm just, sorry, I'm looking historical numbers. That's when we reach, what about the pre-acquisition run rate of over EUR 200 million, is when we'll potentially get the EBITDA margin to be positive. Would that be fair? Hello?
Give me a second. I'm just talking now. Around three quarters to hit to get to that INR 50 million quarter number.
Okay. At that phase, at $50 million, we should be having positive EBITDA. I'm not asking you to quantify any specific margin number, but do you think that is where-
Yeah.
Or it takes, it takes longer than that?
Yeah.
Okay.
That's correct. Yeah.
Understood. Okay. Thank you. Second question is just on the whole shortages scenario in the U.S. Some of the data, external, API data seems to suggest it's at a multi-decadal high. So what are some of the benefits that we may have accrued?
Do we benefit from it? In the past, Mr. Sadu, you have told us it's very cyclical, so may come some years, goes away some year. But do you think, given the kind of focus on trying to reduce shortages, could this be a sustainable advantage longer than usual? And when we look at the margins of 37% for the quarter, is there an element of shortages that is helping us reach there? Thank you.
I think there is shortages, at least for this quarter, which suggests that this shortage has been happening, for many, many years, and with more regulatory, issues in the recent past, that increased. It's very difficult to say, you know, when it will go away.
And, yeah, on the oncology side, we did get benefit out of it. Earlier we were not competitive enough to compete in that space, but because of the shortages, we did get benefit of certain products for sure. But timing-wise, you know, I can't really say, how long it will stay, but historically, consistently you saw the shortages, in the U.S. market. There's a combination of how many people want to actually sell this product because of margin and, you know, being, I mean, get the boost, it kind of stay there.
Got it, sir. Thank you, and all the best. Thank you.
Thank you very much. As there are no further questions, I'll now hand it back to Ankit, sir, for closing comments.
Thank you everyone for joining today. We appreciate your participation. If there are some questions that are still answered, you can reach out to us. Thank you once again. Looking forward to host you again next quarter.
Thank you very much. On behalf of Gland Pharma, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you.