Ladies and gentlemen. Good day and welcome to the Gland Pharma Limited Q2 FY2026 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 call, please signal an operator by pressing star, then zero on your touch-tone phone. I now hand the conference over to Mr. Shriniwas Dange from the Investor Relations team. Thank you, and over to you, sir.
Thank you, Ravi. Good evening, everyone. We welcome you to Gland Pharma earnings conference call for Q2 of FY 2026. I am Srinivas Dange from the Investor Relations team at Gland Pharma. Today, we have Mr. Srinivas Sadu, Executive Chairman; Mr. Shyamakant Giri, Chief Executive Officer; Mr. Ravi Mitra, Chief Financial Officer from India office; and Mr. Alain Kirchmeyer, CEO of Cenexi, who is connected virtually from France. We will begin the call with the business highlights from Mr. Sadu, followed by operational highlights from Mr. Giri. This will be taken up by updates about Cenexi from Mr. Alain, and lastly, the group financial overview by Mr. Ravi. Before we proceed, I would like to remind everyone that some of the statements made today will be forward-looking and are based on management's current estimates. These statements should be considered in light of the risk associated with our business.
This call is being recorded. The playback and script will be available on our website shortly. With that, I hand over the call to Mr. Sadu for his opening remarks. Over to you, sir.
Thank you, Srinivas. Good evening, everyone, and thank you for joining us. Welcome to Gland Pharma's Q2 FY 2026 and H1 FY 2026 earnings call. I'll start with the strategic overview, followed by updates from Mr. Shyamakant Giri on operations, Alain on Cenexi, and Ravi on financial performance. Q2 FY 2026 was a very strong quarter for Gland Pharma, and we expect an even stronger second half, supported by new launches of a few pre-products, volume growth, CDMO contract wins, and continued improvement at Cenexi. Year-to-date, our consolidated performance reflects broad-based growth driven by strong execution and improvement in profitability. The recent confirmation that the U.S. will not impose tariffs on generic pharmaceuticals is a positive development, aligning with our expectations. This reinforces our strategic focus on strengthening our U.S.
and global supply chain presence, and we are well-positioned to capture emerging opportunities, including GLP-1, biosimilar biologics landscape, through our scalable manufacturing network and strong compliance record. Our strategy is focused on four key aspects: growth, capability, efficiency, and ROC. All aligned towards building Gland Pharma into a high-end, innovation-driven CDMO and specialty injectables company. On the growth side, we are expanding into a differentiated and complex portfolio. To the comprehensive list of our generic portfolio, we are steadily adding products centered on complex and differentiated technology, which will help Gland move to a value-led growth model. Our focus areas include complex portfolio in long-acting injectables, hormone suspensions, and peptides, ready-to-use formats for hospital use, a growing offering of products including suspensions and other niche high-value injectables that address global therapeutic needs. R&D continues to be a core differentiator.
We invested 5.8% of our revenue in R&D this quarter, focusing on complex injectables and next-generation delivery systems. We filed six ANDAs and received five approvals this quarter, with seven new products launched in the U.S. We have filed 20 RTU-backed products in the U.S., with 14 already approved and 10 more in development, targeting an opportunity of roughly $659 million. Fifteen products are currently under active development in high-potential categories, including seven 505(b)(2) and eight ANDAs, reinforcing our focus on differentiated injectable platforms. The second aspect is adding high-end CDMO capabilities from scaling capacity and competency. The second aspect of our value-led growth strategy is to build Gland Pharma as a high-end CDMO partner of choice for global investor and specialty pharma companies. On the capabilities front, we are investing in both capacity and technology across our network. Our biologic CDMO facility currently operates at 8 KL capacity.
We plan to expand biologic CDMO capacity to 23 KL as the next phase to support biosimilar and biologic fill-finished opportunities as well. We are increasing cartridge fill-finished capacity from 40 million to 140 million units, supporting both GLP-1 and insulin programs. Our infrastructure is designed for interchangeable fill-finished across vials, cartridges, and prefill syringes, ensuring flexibility and scalability. In parallel, we are expanding capacity in dry powder filling of thalmix and blow-fill seal technologies. CDMO programs in oncology and prefill syringes are progressing well, with new partnerships being added. These steps firmly position Gland among a niche global CDMO companies capable of delivering end-to-end sterile CDMO solutions from development to commercial scale. On the efficiency front, we are strengthening to strengthen margins and operations. A third key aspect. The third strategic focus is efficiency and profitability, as I mentioned before.
We are executing a company-wide drive to improve margins through stringent cost control, alternative API suppliers, and process optimization. Portfolio rationalization, pruning low margin or non-core products. Capacity reallocation toward high-margin and niche formulations, and continuous automation and digitization to improve yields and reduce waste. These measures are designed to ensure margin resilience even in a competitive pricing environment, while maintaining our high standards of quality and compliance. Capital efficiencies and value creation as ROC is very important to us. Finally, improving return on capital is central to our long-term value creation framework. We are allocating CapEx only to high-ROC, high-growth initiatives such as CDMO expansion, GLP-1 capacity, and complex injectable capabilities, while maintaining tight control on working capital and focusing on cash generation.
The goal is to grow not just in scale, but in quality of earnings and capital productivity, ensuring that each investment creates incremental and sustainable shareholder value. At Cenexi, we are optimizing product mix towards higher-value offerings and deepening integration with Gland's teams to capture operational synergies and efficiency gains. Our long-term strategic focus is clear: to build Gland Pharma into a global, innovation-led injectable and CDMO company that consistently delivers growth, margin expansion, and superior capital efficiency. Thank you for your continued trust and support. I invite our CEO, Mr. Shyamakant Giri, to share his perspective on operation and business.
Thank you, Mr. Sadu. Good evening, everyone. Thank you for joining us today. Building on what Mr. Sadu highlighted, our performance this quarter met expectations. Gland's core business is firmly maintaining its growth trajectory. Year-on-year, revenue increased by 6%, adjusted EBITDA by 13%, PAT by 12%. In Q2 FY 2026, we saw strong revenue growth in our regulated market, 10% in the U.S., 16% in Europe, propelled by strong 21% growth in Cenexi in rupee terms. With our current momentum, we are confident in robust growth in the second half of FY 2026. Having summarized our overall progress, let me now take you through the consolidated performance. In Q2 FY 2026, our consolidated revenue was INR 14,869 million, up 6% from last year. Consolidated EBITDA reached INR 3,139 million, also growing 6%, driven by margin expansion in our core business, but partly offset by planned operational shutdown losses in Cenexi.
Our Q2 FY2026 consolidated EBITDA margin was 21%. To further contextualize our result, year-to-date performance offers a more reliable view of our growth trajectory. For the first half of FY 2026, our consolidated revenue reached INR 29,925 million, reflecting a 7% increase over H1 FY 2025. EBITDA stood at INR 6,817 million, with a margin of 23%, up from 20% throughout the previous year, and was primarily driven by strong performance in our base business and reduced losses from Cenexi. Next, I will highlight the performance of our base business at Gland, excluding Cenexi. Breaking down our base business performance by market, in the U.S., we launched seven molecules in Q2 FY 2026, including daptomycin RTU, sumatriptan, and new colistimethate strength. U.S. revenue rose 8% year-on-year to INR 8,005 million for Q2 and reached INR 15,176 million for H1 FY 2026.
Our other regulated market, including Europe, Canada, Australia, and New Zealand, generated revenue of INR 462 million and INR 1,574 million for H1 FY 2026, growing 18% year-on-year in H1. The rest of the world market contributed INR 1,635 million in Q2 FY 2026 and INR 3,168 million in H1 FY 2026, and remained almost flat year-on-year. For H1 FY 2026, while our own product sales revenue in ROW grew by 19%, the tech transfer and the CMO product revenue went down by 53%. The Indian market generated INR 665 million in Q2 FY 2026 and INR 1,258 million in H1 FY 2026, accounting for 6% of the total business revenue. Let me move to Cenexi. Performance in H1 FY 2026 showed improvement over the previous year, despite the planned shutdown in Q2. For the first half, Cenexi reported a revenue of EUR 88 million, marking a 10% year-over-year growth in euro terms.
Alain will further share details. With many strategic initiatives, namely headcount optimization, finance and IT back office creation in India, price increase initiatives with key customers, EUR 1 million BD integration, capacity enhancement at BLA, and Fontenay product validations underway, we remain confident in delivering a solid performance from Cenexi and achieving EBITDA improvement year-round. At the overall company level, we continue to strengthen our presence in high-growth rest of the world markets by expanding our reach and introducing differentiated high-value products. Building on this and leveraging our expertise in key therapeutic areas, we are actively evaluating inorganic growth opportunities in markets aligned with our strategic priorities. In the U.S., our focus remains on acquiring new customers while deepening relationships with existing partners. We remain committed to excellence in quality and regulatory compliance while maintaining our cost leadership.
We believe that investing in top talent, enhancing our leadership capabilities, and building organizational strength will position us well for the next phase of growth. With this, I would like to hand over the call to Alain for a more detailed update on Cenexi's performance. Over to you, Alain. Thank you, Mr. Giri, and good evening, everyone. Cenexi recorded EUR 40 million in revenue this quarter, an 8% increase over the same period last year, driven mainly by strong performance at our Braine-L'Alleud and Aulnay sites. Year-to-date revenue stands at EUR 88 million, reflecting a 10% growth year-over-year. Although we incurred losses in H1 FY2026 due to a planned shutdown, EBITDA losses decreased to EUR 5 million from EUR 11 million last year. This improvement demonstrates that our turnaround strategy is taking effect. I will now provide key site-level updates.
In Fontenay, we used the shutdown period to upgrade infrastructure and equipment. I am pleased to report that our GMP certification has been renewed through the end of 2026. Most of the ANSM's observations have been addressed. Our progress was reviewed during the routine inspection in July. The activity of our Aulnay site remained on track with our recovery plan. This quarter, activity increased significantly, driven by the ramp-up of two key products: an inactivated vaccine and a sterile ophthalmic gel. Both sites of Braine-L'Alleud and Osnay maintained a strong momentum. At Braine-L'Alleud, qualification of two new freeze-dryers is underway and expected to be completed by the end of 2025, which will significantly expand our lyophilization capacity. Our outlook remains positive. We secured four new project wins this quarter, reflecting increased confidence in our capabilities and our strategic shift toward higher-value offerings.
We remain on track to improve EBITDA in Q3 FY2026 and to establish a sustainable growth trajectory for Cenexi. Thank you for your attention. I now invite Ravi to take you through our financial performance in more detail. Ravi, over to you.
Thank you, Alain. Good evening, everyone, and thank you for being with us on the call today as we review our financial performance for the second quarter and first half of the fiscal year 2026. During the quarter, our consolidated revenue stood at INR 14,869 million and increased by 6% year-on-year. Base business revenue stood at INR 10,767 million, supported by growth in the U.S. markets, albeit constrained by other regulated markets. Cenexi revenues improved by 21% year-on-year to INR 4,102 million. Overall, gross margins stood at 63%, up from 59% in the previous year. Excluding Cenexi, base business gross margins are at 61%, against 56% in the previous year, supported by favorable business and product mix. H1 FY 2026's performance remained robust. During this period, our consolidated revenue stood at INR 29,925 million and increased by 7% year-on-year. Base business revenue stood at INR 21,176 million.
Cenexi revenues improved by 20% year-on-year to INR 8,750 million. Overall, gross margins stood at 64%, up from 59% in the previous year. This was supported by favorable business and product mix. Excluding Cenexi, base business gross margins were at 60%, against 54% in the previous year. During Q2 FY 2026 and H1 FY 2026, expenses were higher, mainly on account of high R&D, employee cost, one-offs, and continued high cost at Cenexi. Our total R&D expense for the quarter was INR 614 million, or 5.8% of sales, and increased from INR 493 million in the same period last fiscal year due to a higher number of filings. Our R&D programs remain on track. R&D expenditure for the first half stood at INR 1,075 million, or 5.1%, and increased from INR 982 million during the previous year.
Excluding ESOPs, employee cost for the quarter stood at INR 3,710 million, which increased by 12% year-on-year. Further, at Cenexi, various initiatives to reduce overheads are progressing well. During Q2 FY 2026, adjusted for ESOP-related non-cash expense of INR 140 million and one-off GST-related provision to the tune of INR 76 million, EBITDA stood at INR 3,355 million, reflecting a margin of 23%. For base business, excluding Cenexi, adjusted EBITDA stood at INR 3,971 million, reflecting a margin of 37%. We expect to improve EBITDA at Cenexi with improvement in sales from Q3 FY 2026. In H1 FY 2026, adjusted for ESOP-related expense and one-off provision, the EBITDA stood at INR 7,092 million, reflecting a margin of 24%. For base business, excluding Cenexi, adjusted EBITDA stood at INR 7,622 million, reflecting a margin of 36%.
Cenexi EBITDA losses were down to INR 530 million from INR 971 million in the previous year. Other income, primarily consisting of foreign exchange gains and interest earned from bank deposits, amounted to INR 842 million in Q2 FY 2026 and INR 1,417 million in H1 FY 2026. Consequently, our net profit for the quarter stood at INR 1,837 million. During the quarter, we achieved a PAT margin of 12% in line with Q2 FY 2025. This is after considering the above-mentioned additional cost factors. Net profit for H1 FY 2026 stood at INR 3,992 million, or 13%, against 11% in the previous year. On a standalone basis, our effective tax rate was. 26% for the quarter. As of September 30, 2025, our total cash and equivalents at the group level stood at INR 30,999 million, including non-callable deposits of INR 3,960 million.
External debt at Cenexi level stood at INR 2,544 million. Cash flows from operations during Q2 FY26 was INR 3,312 million, while for H1 FY26, it was INR 5,933 million. Our average cash conversion cycle was 163 days for the first half, compared to 172 days at the end of FY25, largely on account of better receivable and payable management. Total CapEx during the first half of the financial year amounted to INR 1,969 million, mainly deployed in Cenexi for the new projects, capacity building, and maintenance CapEx. Expected CapEx for full year FY26 for Gland-based business is approximately INR 2,500 million, and for next year, it is expected to be approximately INR 3,000 million. We are investing in capacity enhancement at our Parshmandalam site in cartridge fill finish, including pen assembling and packaging line, insulin production, powder filling line, and ophthalmic suspension line.
With that, I would now like to request the moderator to open the line for questions. Thank you.
Sure. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask questions may press Star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and 2. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Sucrit Patil from Eyesight Fintrade. Please go ahead.
Good evening to the team. I had a forward-looking question on Gland Pharma's long-term planning. As global pharma outsourcing grows and competition intensifies, what is Gland Pharma doing to build a strong edge, not just by expanding capacity but by creating something deeper that makes the company hard to replace?
Thank you. Yeah. If you have looked at, I mean, heard about my original comments on what we're trying to do, not just capacities on what we have today but also building capabilities around the complex side. If you look at the growth which came from last quarter also or from the launches, what we have done on the specialty segment, CDMO launches that we have done, whether it's auto injectors, what is the end device systems. Added to that, the complex injectable manufacturing setup, what we have done, that also we are expanding into different technologies. From a manufacturing capability perspective and technology perspective, we are expanding the areas where there is an entry barrier to others to come in. Added to that, we are also entering spaces of biologics and biosimilar CDMO as well.
Not just from the compliance perspective but from a manufacturing and development perspective, these are difficult areas compared to the generic portfolio, what we've been doing for many decades.
Thank you. I had a final question in regards to margin and cost planning. As input cost and regulatory dynamics keep on shifting, how are you planning to protect the margins, and what cost levers do you think will remain strong over the next few quarters?
If you have seen the last three to four quarters, we are actually improving our margins on a quarter-on-quarter basis because of the initiatives we have taken. Both from automation of lines, also from input materials, and also from the operational efficiencies perspective. Working on the batch sizes and also looking at the bottlenecks where we can automate smaller things. Several initiatives have been taken, and that is what is leading to, if you really see from the adjusted EBITDA perspective, the base business today is around 37% EBITDA, which is more than what we were anticipating, where we were targeting on 35%, now it is 37%. Also, the portfolio rationalization we have done, so one of the key aspects is how to get good ROCs.
The initiatives we are taking are on the portfolio side, which are the areas we want to enter in and focus on instead of just going after the small margin products. The focus is on margin and EBITDA and PAT rather than just the top line. Because on a long-term basis, we think with low-margin products, and especially in injectables, high-quality production, it is difficult to sustain on the long run. That is why you could see a shift on how we are looking at things moving forward on specialty products and investments we are making towards that.
Thank you very much, sir. May I know your good name, please?
Srinivas Sadu.
Thank you very much, sir. I wish the entire team the best of luck for Q3.
Yeah. Thank you.
Thank you. The next question is from Yash Singhee from Renaissance Investment Managers. Please go ahead.
Hi. Am I audible?
Yes.
Yeah. Hi, sir. I just wanted to ask a couple of questions on the US business. I just wanted to understand, when does the revenue pick up from Tangular and Delta Ventures, if expected to kick in, and how is the ramp-up expected going on in US business going to happen post that, and how the margins are going to look post the ramp-up? That was the first question.
Dalbavancin is next quarter. The goal date is this quarter, sorry. This quarter is dalbavancin. The goal date is actually this month. You will see revenue coming from that product this and next quarters. Initially, there will be a larger quantity pickup because of the pipeline filling, and then it will normalize. Kangrila, we have time because of the patent situation, but dalbavancin is this quarter. From a U.S. growth perspective, like we said, actually, it has been a strong quarter for the U.S. We have grown, if you compare to the previous quarter, we have grown almost, if you actually break down the U.S. sales, we have grown from the product perspective almost 17%. Almost 7% coming from the new launches and 10% from the products which were there before.
In the previous quarter, we did mention new contracts that were signed with GPOs that started effect last quarter. That is what has generated another 10% growth. Where we have lost is on the milestone revenue. Milestone revenue, actually, we did only about INR 44-45 crore, which is normally we do around INR 75-80 crore. That is a normal run rate. Combination of different factors. One is, of course, the situation in the U.S., and so people slowed down on licensing products to wait and see. That is one. Second, of course, the timing. Generally, some quarters it might be low, some quarters it might be higher, depending on the milestone we achieve in that particular quarter. It is more of a timing issue which might bump up in the next couple of quarters. I think overall, we are on track.
At least the U.S., we are doing better than we thought of.
Understood. Understood. Milestone revenues are related to enoxaparin and heparin, is that right?
No, no. Milestone revenue is on the new products, what we license out to companies. Whenever we reach a milestone in terms of development or filing and approval, we get different milestones. Once you achieve that, you'll get that milestone revenue.
Understood. Understood. Just on the enoxaparin and heparin sales, if I look at the FY 2023 levels, is that wrong to look at as an elevated level because of COVID or something? Is the range currently in which we will grow based on the last year's base? Is that right understanding?
That's correct. FY 2023 was a COVID year, so that's an aberration. The growth is from the previous year. Enoxaparin to Civica Supply started this quarter. It's one of the growth levers which I have mentioned last quarter.
Understood. So there's no inventory buildup issue now, is that right?
No, no, no. There's no inventory buildup. It's normal. Normal sale.
Thank you. That's all from my side. Thank you, sir.
Thank you. The next question is from Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead.
Sir, in addition to milestone revenue, if you could also share how much has been the profit share for the quarter? Of the revenue share.
Profit share is about 13%.
Okay. And sir, secondly, what explains this? Because the proportion of, let's say, milestone and revenue share for the quarter has been probably lesser compared to, let's say, earlier quarter or even year-on-year basis. Despite that, the gross margin of base business has been improving. If you could first sort of highlight that, and then I.
Profit share generally is around 9%-10%. It is because of the high-margin products that we launched last quarter and the previous quarter, so it is a bit high, 13%. You can consider the margin of the products have improved compared to before. We see the contribution margin of the products are also higher compared to before. While the milestone revenue has gone down.
On the Cenexi side, the gross margin has been trending lower. If you could elaborate on that aspect as well.
I think it's more to do with the product mix. And then the products that you make during the shutdown, what's possible. But overall, I think if you consider, look at the entire year, the product mix won't change much. I think it's more to do with what you produce during that quarter. On a YTD basis, we maintain the gross margin at 74%.
Full year 2026 can be considered to be 74%-75% to be the gross margin on a sustainable basis?
Yes. Yes. Yes.
Secondly, just on this, so considering the number of products being approved under RTU, if you could just share how much sales may be analyzed quarterly we make from these products.
We take that offline, Tisha. You can reach out to us.
Yeah. Thanks. Thanks.
Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Neha Manpuria from Bank of America. Please go ahead.
Yeah. Thanks for taking my question. The first question is. While you mentioned that the second half would be even stronger. We've given a guidance of mid-teens for the consolidated revenue growth previously. Does that still hold? I mean, how much stronger can second half be? Because if I look at your first-half run rate, that would imply second half being over 20%. Sort of good. Do we have that kind of visibility on second half?
Yeah. If you see, we have seen a growth compared to the first quarter. And then dalba is a bigger product which we're going to launch this quarter. 1%, 2% this way, that way, but we should come closer to that.
Just to be clear, on a full-year basis, we still maintain the mid-teens growth guidance?
Yeah. Neha, on the consolidated basis, which should be there, maybe a few percentage here and there, but should be there. As Mr. Sadu mentioned, that the bigger products are planned to be launched in H2.
How much of this would be driven by select C levels? Select C, because we've seen 20% growth, I think we'd mentioned EUR 50 million as the revenue run rate that we want to achieve exit. Are we on track to achieve that for Cenexi?
Yeah. EUR 50 million is our target. From Q3.
Okay. And just an extension on Cenexi again. While the profits will improve, will the EUR 50 million allow us to achieve break-even in Cenexi? Would that be a fair assumption?
Yes. That should be a bit positive, yes.
Okay. So technically, that would mean exit third quarter, fourth quarter, we are a bit positive in Cenexi?
Yeah. Maybe a couple of million lower than that also could bring us a bit of positive. For sure, if we hit EUR 50 million, then it will be a bit of positive.
Understood. I think in the opening comments, there was mention of new bins in Cenexi for a couple of products. If you can give some color in terms of when we should start seeing that flowing through. I think we talked about a $250 million build for Cenexi in the next two years. I mean, do we have the building blocks to get there? If you could give us some color on that.
Okay. Thanks. Neha will check that and let you know by when this specialization will happen. Neha, just to add on, there are many strategic initiatives that we have taken. In Cenexi, like headcount optimization, price increases. We are creating a back office in India to support the finance and IT. The capacity enhancement and all of that. There are many things going on. The whole EBITDA decrease from 11 to 5 signals that our transformation project is on the right track, and it will continue to remain on that track.
Understood. Sorry, I have two more questions, if I may. First, on the other regulated markets, that seems to have come off very sharply. I read that in the presentation that you mentioned phasing. So by phasing, you mean that some of these supplies have been captured in the first quarter, and I should look at the first quarter as the run rate, or some of these supplies are likely to come in the third quarter?
This is more one molecule timing issue in Europe that you see. Yeah. This will get corrected in the quarters to come. So we had.
Okay.
Dr. Manjushari moving from one quarter to another.
Okay. So this still comes from the second half?
Yes. Yes.
Okay. Last question on ROW. I think we had mentioned that that's a big growth driver that you're looking at. We are investing in creating a portfolio. When can we start seeing momentum in the ROW business? Because it's clearly not evident in the last few quarters. When does ROW start picking up for Gland?
ROW, if you were to literally split the ROW business into two, one is the product sales, the product that we sell to our partners across ROW. That part is growing by around 19%, Neha. And that part is a significant portion, around 90%-93% of what we do in ROW is that part. We also have our CMO product. We also do some CMO business for companies where the goods end up getting distributed in the ROW, the tech transfer project. That part is going on the 53%. Therefore, the net result is a little flattish growth. Yes, as you said, our strategies in ROW started to work, where we have seen growth across regions. Latin America, Southeast Asia, Africa, Middle East, of the world. We are happy that our product sales are growing 19% on the first half, 19%. That, to me, is industry-beating growth.
This year is likely to remain subdued for the next few quarters, since I'm assuming that tech transfer is not happening?
We do things for Lilly, Dr. Reddy’s Laboratories, and all of that. That will also increase, but it will take a couple of quarters to come to the top.
Understood. Thank you so much.
Thank you. Participants who wish to ask questions, please press star and one on your touchstone telephone. The next question is from Bino Pathiparampil from Elara Capital. Please go ahead.
Hi. Good evening, all of you. Just a couple of questions, maybe a little bit follow-up to earlier questions. I was looking at this overall regulated market business. This is stuck at around $95 million ±
I think you have to look at the combination of what we do in the U.S., just not our own products what we sell, but also the complex CDMOs what we're doing. I did mention in my previous call that from the growth what we achieved of 17% in the U.S. last quarter, 7% actually came from the CDMO portion of the business, which we are doing for companies that are already there in that market where they did a tech transfer to our sites. In addition to the products what is giving us growth with the new launches what we're doing from our R&D portfolio, there's also substantial growth coming from the initiatives we're taking from the CDMO aspect. That's where you're seeing this growth coming from the U.S. If you really see pure generic U.S. market, it may be growing at 4%-5%, but we're growing higher than that.
No, I'm looking at the whole regulated market business as a whole. If somewhere in the U.S. grows, something else is coming off, and something else grows, the U.S. comes off. And this 17% you are talking also has a huge tailwind of currency depreciation. In U.S. dollar terms, the growth is not that big. So as a whole, the regulated market business piece, do we have visibility of double-digit growth over years, over the next few years?
Yeah. We do have, because of some of the contracts we signed on the CDMO side for Europe market. If you're considering that also regulated, then we do have growth. We did mention about colistimethate, which is an on-market product, which we had a dedicated line. That's getting started next quarter. That's a huge business. If you combine all this in the regulated market, there is a growth. Most of it is actually coming from the CDMO side of it.
Understood. Second on this Cenexi, earlier we had a very firm guidance of break-even in Q3. Do we still have that strong visibility, or is it that we have a target of EUR 50 million, and if we achieve that, we will break-even?
No, no. We do stick to that break-even. Your guidance for the next quarter, this quarter.
Understood. Okay. Thank you very much.
Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. Ladies and gentlemen, to ask questions, please press star and one. The next question is from Abdul Qadir Puranwala from ICICI Securities. Please go ahead.
Yeah. Hi. Hi, sir. Thank you for the opportunity. My first question is with regards to your R&D expense going up this quarter to roughly 6% of the top line. If you could highlight where those expenses are exactly getting invested into.
If you see filings, there are six filings which happened this quarter. If you have the filings, it's also the complex portfolio what we're handling. That's a bit more expensive compared to the generic product what we produce. It's a combination of these two.
Okay. So I mean, should we account this as a kind of a one-time and then it moves back to that roughly 4%-5% range what you normally do?
Yeah. Roughly, we always say around 5% on an annual basis. It should be around that.
Okay. Okay. My second question is with regards to the progress on GLP-1, capacity, and biologics. Any comments on how the traction is building in terms of getting new customers for your additional capacity? On the biologics side, in the past, I think we announced something for Dr. Reddy. Where are we on that as well?
On the GLP side, as I mentioned, we have launched the first partner, GLP-1, liraglutide. We have 40 million capacity up and running, building another 100 million. By mid of next year, we'll be having 140 million capacity on cartridge, which makes us one of the top-tier capacities here. On GLP-1, on the cartridge line, we are also exploring approaches beyond GLP-1. Two more contracts are getting signed on the GLP-1. We will, of course, tell you guys when it's signed. On the biologics, the DRL revenue has started to—we started reporting the DRL revenue this quarter onwards. As we go further, that arrangement is solid. The whole biologics plant has started to give us revenue. We also have intent to increase the capacity in the biologics plant from 8 KL to 23 KL. Collaboration discussions are going on with companies in India and outside of India.
Okay. So with the revenues for DRL, which segment are we exactly recording that right now?
We have not any separately segment we are recording. It's in the normal revenue it is coming. We have only one segment as of now.
No. I'm talking with regards to your markets, like US, Europe, other core markets, or ROW, where exactly that gets captured?
Currently, it is India only.
Understood, sir. All right. Thank you. I'll get back in with you.
Thank you. Participants who wish to ask questions, please press star and one. Next question is from Aman Goyal from Axis Securities Limited. Please go ahead.
Good evening, sir. My question is related to US business. Can you just elaborate the difference between price erosion and the volume upticks in the US-based business and contribution from the new products?
Price is almost flat if you compare to the previous quarter. There's no variance. Quantity 10% and new launch is 7%.
Okay. Sir, what is the update on RTU? How much market share are we targeting for consolidated RTU?
Generally, any RTU product is, I mean, any product. You start with 15% or so till the contract opens. If it's already available in the market, it's easier. Otherwise, you have to create that market. There are several products which are already there where we initially drew out 15%-20%, and then it will increase once the GPO contract opens. You see top 20 products, almost I would say 80% of the products we have market share of 25% and above. We should assume that we'll get there sooner or later. Some we also have like 40% market share.
Okay. That's all. Thank you. That's all from my side.
Thank you. A reminder to participants that you may press Star and 1 to ask questions. Ladies and gentlemen, to ask a question, please press Star and 1. The next question is from Rahul Jeewani from IIFL. Please go ahead.
Yeah. Thanks, sir, for taking my question. Sir, I had a question with respect to the base business Cenexi. Now, if we see our base business Cenexi has been flat for the past five, six quarters. Now, obviously, a year back, we had guided to a mitigating kind of growth on the base business as well. Given the muted trends which we are seeing on the base business, apart from the ramp-up which we expect in the second half because of a couple of new launches like dalbavancin, can you provide some outlook in terms of how the base business growth would be going into 2027, 2028? That is my first question.
Although we are flat overall, on the US side, we grew by 8%. Let me give you some more data on our US business. Our top 20 molecule on a YTD basis has grown by 9%. Our top 10 molecule on a YTD basis has grown by 14%. Our customers are intact. Our top 10 customers in the US have grown by around 19%. Yes, US is where we are today. We have talked about the timing issues in Europe. Come back to the US market. We are growing 90% YTD. On the CMO side in ROW, we have been growing 53%, which again will get corrected from an overall standpoint. Having said that, our base business, and given all the R&D launches, all the new product launches, we are confident that we will grow the company.
Just to add to this, if you see, we have been investing into the CapEx, including the pen assembling line, seal and finish of cartridges, insulin production, powder sealing, and ophthalmic suspension. All this portfolio of complex products would help us to have a growth in the rest of the world market and the regulated market as well. Put together, we are confident of achieving a mid-teens growth in the coming couple of years.
Sure. This mid-teens growth guidance which we have for 2026, obviously, there is a currency benefit of Cenexi sitting in there. Cenexi in the first half of this year has grown 30% in INR terms. If we look at the constant currency growth for Cenexi, that is around 10%. This year, again, has been muted if you X out the currency benefits. Some better visibility, clarity in terms of what would help us to achieve this mid-teens kind of a growth going forward would be helpful.
A couple of large projects are, like we mentioned, the dalbavancin project. The other is the CMS project, what we just got approved. That is a large project where its on-market product is already being—yeah, that is almost INR 150 crore project. That is a larger one. The other one.
Sure, sir. On the GLP-1 portfolio, while you have commercialized liraglutide with a partner, when do you expect your semi launches to begin across markets? At least our earlier expectation was that the incremental 100 million vial capacity or cartridges capacity which you are putting up would largely be from a regulated market perspective. Just in terms of semi launches across EM and ROW markets, what kind of visibility do you have right now for utilization of the initial 40 million capacity?
We have one contract already, two in line, three total. We are also looking at more contracts in GLP. Our 40 million cartridge capacity, which is currently now, is kind of filled up. The 100 million capacity that we are building, second half of next year, is where we will start selling those capacities. We are already in talks with many companies—Indian companies for the global market, global companies for global market. Yes, we have positioned ourselves as a top-tier GLP capacity company. A lot of RFPs and a lot of discussions are happening today.
Rahul, what we have signed off is three earlier, right? And two more under discussion. Out of the three filed products. As you know, semi opens up next year in some markets. It will start supplying to those markets if they get approval. Ultimately, it's a CDMO business. Once they get approval in those markets, we start supplying. As everybody knows, these are the—other than Canada and India, there are a couple of other non-regulated markets where the supplies will start too, once the approvals come. Till that time, majority of the contracts are signed on the exhibit batches and all that. Of course, Lira is also going from the same line. The majority of the market comes only to 30, right? I mean, the semi. All the semi-regulated and Canada will start next year once our partners get approval in those markets.
Sure, sir. Just a follow-up on that.
Let's say this 40 million capacity, the initial capacity. You are confident of utilizing this entire capacity, let's say by FY 2028, because by FY 2028, we would be into two years of semi launches across these markets.
Correct. It's a combination of Lira, semi, and a few other projects what we are working on that. It will utilize—at least it will take two years to ramp up from. Early next year.
Sure, sir. Thank you. That's it from my side.
Thank you very much. That was the last question in queue. I would now like to hand the conference back to the management team for closing comments.
Thank you all for joining us today. We appreciate your participation in the question and answer session during the call. If you have any follow-up questions, please feel free to reach out to us. We look forward to connecting with you again next quarter. Thank you.
Thank you very much. On behalf of Gland Pharma Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.