Ladies and gentlemen, good day and welcome to OneSource Specialty Pharma Limited Q1 FY 2027 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Abhishek. Thank you and over to you, sir Abhishek.
Thank you, Renju, and thank you all for joining us today for the earnings conference call of OneSource Specialty Pharma Limited for Q1 FY 2027. We are pleased to have with us Neeraj, CEO and MD, and Anurag, CFO of the company, who will walk you through the key business and financial highlights for the quarter and the full set. I trust you have had the opportunity to review our results release and the investor presentation, both of which are available on our website as well as our stock exchange website. The transcript for this call will be posted on the company website within the next week. Please note that today's discussion may contain forward-looking statement which should be viewed in context of the risk inherent in our business. Should you have any further questions after this call, our investor relation team will be happy to assist you.
I now hand over the call to Neeraj for his opening remark.
Thank you, Abhishek, and a very warm welcome to everyone joining us today on this Saturday morning. I really appreciate your time, and happy to share the Q1 results with you. The quarter has been fairly strong for us. Revenues are at INR 4,490 million, and have grown 37% year-on-year. These are, yes, driven by the semaglutide commercial launch, new MSA contracts and also new customer wins across our various businesses. EBITDA has also come in at INR 1,233 million which has been up significantly, 39% year-on-year as well as sequentially 34% versus last quarter and which has been in line when we have said last time that we will be showing a sequential quarter-on-quarter growth.
The quarter also marks really a meaningful step up in our sema commercialization in Canada, which as you all know is the largest off-patent market available today in the world. Currently, all three approvals which are there in the market are with us. In fact, two of our partners who you know have already launched in the market. Even in India, which is the other significant market open available, many of our customers launched on day one. As of June 26, more than 40% of the generic pens market sold in India are manufactured at our site. In fact, I also want to say that despite the temporary disruption in supplies, which has been announced by Dr. Reddy's, our available capacities are full thanks to really our customer base which spans across markets and across companies.
This has really helped us pull the demand while the DRL supplies resume. In fact, in the same time, as we have announced earlier, you well know that our first phase of the INR 100 million CapEx investment which we have put in our CapEx, is now reaching fruition with our second cartridge line being set for commercialization in this quarter. This line, as you know, will double our number of sterile days available for production. This additional capacity will not only support supplies to DRL as and when they resume but also to multiple countries which are due to open in the remaining part of the year. Also this will help expand our customer base. We have been saying we have not been able to add new customers because of the supply gap. Now with this new supply available, we would be adding customers.
In fact, the process has already begun with our first new GLP customer coming on board last quarter. Within FY 2027, we will have yet another line which will get installed which will make us really one of the very few global CDMOs offering this level of capacity and having complete end-to-end capabilities, including assembly, packaging, the works in drug device combination. In fact, the strength of our complex peptide development and drug device capability was also demonstrated once again when with two of our customers successfully getting the first to file status in U.S. with tirzepatide which is a significant achievement for the team which has worked very hard on it. At the same time, our second key future growth pillar of biologics saw us adding yet another marquee global biotech major.
Our partnership with Formycon really brings together their biosimilar development expertise and our integrated manufacturing capabilities really to expand access, which is what is really key. Access to high-quality, affordable biologics for really global patients. It also speaks very well on how India and us specifically are emerging as a trusted partner for the global biologics development and manufacturing. Our pipeline, I think this is what is important for us to say, that the pipeline continues to be built with our RFP funnel today is almost 4x of what it was just over a year ago. This spans across innovators, biosimilars, as well as animal health companies. Now, this is strongest ever and also very significant because as you know, biologics is a long gestation business, but at the same time, also very sticky. Thus, this business will be a significant contributor to our growth even beyond FY 2028.
Across our base business, injectable soft gelatin, we see a very strong customer engagement and it spanned across our businesses. We have had nine new launches during the quarter. We added six new logos, which is really expanding our already wide customer base. One thing which we have always been proud of, and it gets reiterated in this quarter, that our compliance track record remains exemplary. We had 12 successful inspections this quarter across regulatory inspections and customer audits, including two surprise FDA audits across two of our sites. Really proud of our achievement there. In nutshell, I just want to say that it was a strong start to the year. The commercial momentum in our GLP business, which is supported by our new capacity coming online, and a very strong build-out in our biologics.
With all this, we really remain confident and are happy to reiterate our FY 2028 outlook of INR 400 million organic revenue as well as EBITDA margins of 40%. I really thank you once again and would be happy to take questions along with our CFO, Anurag.
Thank you.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your 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 a question. The first question comes on the line of Rupesh Tatiya with Long Equity Partners. Please go ahead.
Yeah. Hi, Neeraj. Thank you for the opportunity and congratulations on good steps. I have several questions. Let's see how many I can get in. First question, Neeraj, is on the soft gelatin capsules. The capacity went from INR 800 million -INR 2.4 billion. It has been quite some time now. The business was around INR 500 crore-INR 550 crore kind of revenue. I thought by now it will already be INR 800 crore-INR 900 crore and maybe INR 1,200 crore next year. You don't give the split, but it doesn't seem like that business has grown. What is the issue there? The corollary to that is the broader group companies are facing issues in ibuprofen. Is that impacting this business?
Rupesh, thank you for your question. I think we have been very clear in saying that our new capacity has come on board. Soft gel is a significant business with very long legacy. We are among few companies with such deep expertise in development and manufacturing. With the capacity we have put up, we are certainly among the top four or five companies when it comes to pharmaceutical soft gelatin capacity. Having said that, you know that this business under Strides was primarily focused on captive IP-led products. With this new capacity which we have added, we have started offering CDMO services. There is a significant amount of interest in this considering some of the largest players in Europe have had various challenges, either because of acquisition or otherwise.
This interest, it takes finite amount of time for tech transfers to happen from other companies, other sites to our site. The process is on. In fact, we see our capacity which was added to be completely taken over the next 12-15 odd months. I also want to share with you that because we have no possibility to increase capacity further in the current site, we have already initiated a process of starting a greenfield, and over the next quarter or so, we'll be sharing with you the update on that. We are very confident of our soft gelatin business, and we continue to add customers. It will be a strong driver of our growth in this foreseeable FY 2028 guidance, but also beyond that period.
That's encouraging. Also, any update on the margin improvement program we had for Steriscience? That also, I think we haven't discussed that for a while now.
In the injectable business, as we had said, our injectable business is very focused on scarcity play, whereas you know that we either go for products which require dedicated manufacturing, like penicillins. You know we have one of the few FDA-approved penicillin plants anywhere in the world with an absolutely excellent compliance track record, thanks to which we have a significant share of penicillins in the U.S. and the products which are perpetually in FDA shortage list. It's a focused portfolio. It's not a huge portfolio, it's a focused portfolio. Also our customers there are those who really value sustained long-term continued supplies over low prices. Therefore our plan is very clear. What we have also said that we are adding new capability in the injectable business, which is around prefilled syringes. We are also significantly adding to our lyophilization capacities.
As we had said earlier, in fact, this first half itself, we will be taking a shutdown on one of our sterile injectable sites, basically to add this capacity. You will see this addition will be a significant contributor to our FY 2028 numbers.
Thank you. Mr. Tatiya, please rejoin the queue for more questions. Next question comes from the line of Abdul kader Puranwala from ICICI Securities. A reminder to all the participants, as you press star one to ask a question.
Hi. Thank you for the opportunity. Just taking the conversation ahead from the previous participant. Sir, you mentioned about the plant shutdown on the injectable side. Did that have any impact in this quarter as well, or that's something you plan to do in the second quarter?
Abdul, it will be starting this quarter. The Q2 will be the quarter in which the shutdown will be taken, and it will last between this quarter and the next quarter.
Okay. Sure. Understood. Sir, if I have to just understand your sequential performance. If I look it in the U.S. dollar terms, your revenues were quite identical, but the margin in this quarter has improved significantly. Anything to highlight here both on a mix point of view as well as on your overheads? If you could help us understand the numbers a little better.
I definitely can say, Abdul, that it's basically the mix which is driving this. As you see, there's a significant improvement in margins, which is primarily coming from higher contribution from the drug device combination business, which I already said in my opening remarks. Also, you know, traditionally it's always the case that our base business, soft gelatin as well as injectables, is primarily H2 heavy. The contribution from softgel obviously starts more towards the second half of the year when the flu seasons pick up, et cetera. Primarily coming from that, the margin gets driven up. That's why the mix between revenue as well as margin.
Got it. Next question is on one of your customers have been talked about shutting down their API manufacturing, and they've been talking about some kind of a delay in terms of the market reentry. I understand we would have many customers to cater to, but are you assessing some kind of a temporary disruption in the near term because of that customer pulling out for a temporary period?
I think, Abdul, as you rightly mentioned, I alluded to it also in my opening remarks that the benefit of having a very diverse customer base. We have more customers in Canada, we have customers all across. We have customers with commercial launches, we have customers with MSAs. Thanks to all these, we are able to actually pull demand into this quarter. Therefore, which is what the timeline which Dr. Reddy's have shared publicly. Therefore, thanks to that, we don't anticipate any impact on that, on our supplies. As I said, we don't have any reasons to not believe what Dr. Reddy's has said in terms of resumption. Therefore, for us, we are very clear that we have enough capacities. All our capacities right now are full thanks to multiple customers.
At the same time, you know that we are adding new capacities starting this quarter itself. As and when Dr. Reddy's resume, our capacities will be sufficient to meet their demand as well as demand of our other customers.
Okay. When we talk about our capacity addition and customer demand. Just directionally, if I have to understand, what is the kind of order book visibility do you have today? I know we are reaffirming our FY 2028 guidance. Achieving that INR 400 million kind of revenue, do we have that kind of an order book visibility today?
I can tell you, Abdul, the short answer to your question is yes. The little bit longer answer is that we've got multiple pillars of that business, right? Yes, indeed, drug device combination is going to be one of very important contributors. There, as you know, that apart from the customers who already are there, and in Canada, for example, three on three. Even if Dr. Reddy's has a temporary disruption, still three on three approvals in Canada are with us. India, we are today almost 40% of the market, our generic brands we are supplying. Multiple new markets opening up in the next six, eight, nine months, and our customers being present across all those markets. Keeping all those in mind, the drug device combination business has a very significant traction, and that order book is very clear.
I come to our other key pillar, which I have already mentioned, our biologics business, very significant traction. We have already announced new contracts, new customers coming on board. We have a very strong funnel there, which is going to be converting over the next coming quarters. Our base business, as I mentioned to you, soft gelatin, new customers getting added, the capacity available getting filled. The injectables, which I just mentioned to you, while we take a shutdown of few months in this year, but that is entirely going to be available, the new capacity and the new capability available for the full year FY 2028. Each of our business offerings is going to be contributing to our FY 2028 guidance, what we have given.
Got it, sir. Thank you and all the best.
Thank you.
Thank you. A reminder to all the participants that you may press star one to ask questions. Next question comes from the line of Girish Bakhru with [Avendus]. Please go ahead.
Thanks. I'm just trying to assess line two utilization. Can the customers from line one be added to line two? In case, let's say, [Equatex] in this case requires more capacities, who takes that call? Is it the customer or you can shift given the high batch size in line two?
Thank you, Girish, for the question. The answer to your question is straight that the lines, what we have added, even when we had started this program of adding capacity, the idea was all lines should be able to cater to all our customers. That is exactly how we have planned. The capacities are fungible across customers, across products. Based upon all the work with the teams have done, both our teams and our customer teams, we will be moving existing customers on the new line as well. In fact, customers will be serviced from both the lines.
As we have said, we are working very closely with the customers to actually increase the batch sizes as well from mostly 200 L- 500 L, which would be of immense benefit to our customers as well as for us to be able to bring a significant increase in the output from the same trial days. Yes, in fact, one line is coming online this quarter, another line will also be ready within this current financial year. All these customers would be able to use.
Understood. This batch size variation, let's say, does it need to be resubmitted to authorities for approval, or can this be done without any paperwork?
Our understanding, Girish, along with our customers, is that it should be possible for most geographies. It will depend market to market, but in most geographies, it should be possible to increase the batch size in a pretty quick time period.
Can you share how many CSAs are right now on line 1 and how many you anticipate on line 2 say end of the year?
I think that may not be usually relevant metric for you. I think what you need to understand is that the customers who we have are fairly, as I mentioned, three on three in Canada. You have Dr. Reddy's has told you some other names also, which are going to be getting added. We have got customers who are also new customers we have added from MSA point of view.
The idea of adding capacity is that the new lines is that we should have the flexibility to be moving from one line to another, customer A to customer B, so that not only we are able to meet the demand of all the customers, but to be able to get right customers and give them the timelines which they really need to reach. Therefore, I think the right metric for you is that we have sufficient customers and sufficient customer demand on both the lines, which will be available for this year.
Understood. I'm just thinking more from, let's say, given you have these extra sterile days now available, you would rather have more mix of commercial agreements, right? Is there a significant mix change we will see going forward, between what is MSA versus CSA?
The lines are driven by the CSA. We have always said that the mix of the company is going to be driven by significantly more CSA. The whole idea is that, the capacity has been constrained till now, right? We have been very open about it, that we have more demand than we are able to cater. Now with the new line coming in, there is significantly more capacity available. Thanks to that, we are absolutely able to onboard new customers, which also in the previous calls, I have mentioned that we are not able to add new customers because of this capacity constraint. Now that we have clear visibility of the new capacity getting added, we have initiated adding new customers. We already had a new customer coming in last quarter, and that is what is key for us.
Just in terms of the mix, it will be significantly more commercial sales than MSAs.
Very happy to hear. Thank you so much. It's very helpful.
Thank you.
A reminder to all the participants that you must press star and one to ask questions. Next question comes from the line of [Gautami Agarwal] and Indegene Investors.
Hello, sir. We know about the FY 2028 guidance of $160 million EBITDA. Can you highlight few initiatives you are taking for a longer term, which is beyond to FY 2028? Say model FY 2029, FY 2030 for OneSource, do we think of growth trajectory longer term on 2028 basis remain intact or otherwise? Can you give some clarity on that bit?
Thank you for asking. One clear answer for you is that, yes, our EBITDA trajectory will continue to go upwards beyond FY 2028. This is going to be dependent on all our modalities, which all our service offerings. I already mentioned today that our biologics business, which is a great contributor, going to be on this growth, simply because while our RFPs have seen significant growth over this last 12, 15 months, biologics takes time to establish, but it sticks on much longer. The kind of customers we are adding across the segments, whether it is animal health, biosimilars, innovators, this is going to be a very long legs of our business because many of these customers, the commercial revenues will start coming in FY 2029 onwards. Right now, over the next two years, most of these will be the development MSA revenues and then getting converted beyond.
Thanks to the visibility which we have on our customers, we are also going to be taking some of the capacity expansion because we see our current biologics capacity will require expansion. We are going to be expanding both the mammalian as well as the microbial capacity. This will be a very strong driver of our growth beyond FY 2028. Our soft gelatin business, which we just spoke about, that with the capacities getting filled, this will again be driving growth for us. The new capabilities being added in injectable business, those will be significantly beyond FY 2028 for us. We should certainly not forget that the drug device business has got also very long legs. The reason we are adding all these capacities is because right now, up to FY 2028 guidance, we are only dependent on the emerging markets, apart from Canada, emerging markets volumes.
From 2029, 2030 onwards, Europe opens up and then of course, U.S. opens up with all our FDF customers. Again, reiterating all the businesses, the drug device combination, biologics, as well as the soft gelatin and injectables will be driving our business beyond FY 2028.
Sir. Thank you. That perfectly answers my question. Thank you.
Thank you.
Thank you. Next question comes from the line of Pranav Chawla with JMAC. Please go ahead.
Congratulations, sir, for the good set of results. I just want to understand on the biology. You recently announced a couple of contracts. Can you give some color on those contracts? When will they begin to contribute? How large can these contracts become for us? Do you plan to add any dedicated capacity for these?
Pranav, I think your voice was breaking, but I understood the questions. You see, as we have been saying, right, we are really focused on expanding the biologics business, and that's what the new wins are really helpful. We announced in the last quarter that one of our pillars, which is animal health business, we were able to get additional contract. We are in this quarter, another pillar of our business, which is biosimilars, we added a very important large global player, Formycon, as a customer. Last year, we had another European biotech company, which was a customer. These are all going to be staying with us for long term.
The reason they are coming to us is simply because with the change in biosimilar guidelines, as you know, in both U.S. and in Europe, there is a requirement of agile partners of manufacturing who are quick to help companies read the market and remain competitive over a very long time. That is what we in OneSource offer to these customers. These companies have got a very strong pipeline, and partnering with them is giving us access to that pipeline. We see them significant contributors in our growth journey. As I said, beyond FY 2028, because while right now we will do the MSAs for them, but the commercialization for these companies will be FY 2029 and beyond.
To your question on the capacity, as I mentioned, yes, based upon the pipeline visibility we have today, we do see the need to go beyond our existing capacity in both mammalian and microbial. As and when you know we have recently completed the CapEx in the drug device combination. Therefore we would not shy away from adding capacity as and when it is required to be able to service not only the demand of these existing customers but also the customers who are in the pipeline.
Sir, one last thing from my end. Within biologics, where do you stand in the value chain for a customer? Do we also do R&D or we are primary a CDMO partner? Just trying to get some color on your biologics business.
Yeah. Thank you. Sure. Our value proposition to our customers is that we are among very few completely integrated drug substance and drug product player in biologics. We actually can take right from a gene to the final product which the patient uses. We provide entire value chain from scaling up to the drug substance and once you scale up to a drug substance to be able to fill finish in the same site and to be able to pack it, assemble it in an auto-injector or in a pen injector and give the final pack which the patient opens at home. The full end-to-end value chain is our proposition. We have a very strong, significant R&D team, development team, which is able to offer services across the board. That's the value we offer to our customers.
Sir, one last question, if I may be able to squeeze in. From what we understand, a lot of domestic players are also trying to get into the CDMO piece for biologics. Obviously our backward integration or being able to be part of the whole supply chain does help. Do you see this as a material risk going forward for our biologics offering?
See, I can tell you there is a significant increase in demand for CDMO services globally, especially in biologics. Today, biologics and drug device combination are two of the fastest-growing segments in CDMO globally. Thanks to this demand, more than 50% of all drug discovery today is biologics. With all the change in guidelines, biosimilar access is just going to get a huge boost. With all this demand coming in, India today has got a very insignificant share of this. With the demand coming in, with the challenge, the need to push out of China, all this put together means that the share which will come to India will be sufficient. There'll be enough demand for all the new capacity coming in. Remember, the capacity which is available in India is still a very small fraction of what is available in countries like South Korea, for example.
I see this as an opportunity for companies coming to India and especially to OneSource because we are among a very small group of CDMOs offering integrated drug substance and drug product in the same site.
Got it. Thank you so much, sir, for your answers. That is all from my end.
Thank you. Next question comes from the line of Ritika Agarwal with ValueQuest. Please go ahead.
Hi, sir. Thank you for taking my question. First question is, what we understood is, you are expanding capacity in almost all of the segments, which is DDC, injectables, softgel, and biologics maybe going ahead. Could you help us understand what is the capacity utilization currently for each of these segments?
Ritika, as we mentioned, the reason for our investing significant amount in adding capacity in drug device combination was basically because we didn't have capacity to service the demand we have. You can imagine, the utilization of all our current capacity there is complete. Similar function, I can tell you, for injectables, because the reason we are adding so much lyophilization capacity is that the demand today is higher than the capacity. Soft gelatin, the reason we decided to add capacity because till now, under Strides, the entire business was captive. It was in-house development meant for sales by Strides front end. Now as it comes to OneSource, we are able to really offer this expertise, both in development and in manufacturing, to a very wide group of customers, which is what the demand is.
At the same time, there, we need to keep capacity to service new customers. As a CDMO, please understand, we have to have capacity first and then add customers because we can't start building capacity when we have the customers, because that's the whole model of CDMOs, that we build capacity, build capability, and then go and serve. It's going to be a combination of using the capacity to serve existing customers and then keeping spare capacity to be able to onboard new customers.
Got it, sir. We should understand DDC and injectables are running probably at the peak capacity while soft gelatin, we are adding capacity to serve this CDMO demand. Apart from that, of the current INR 2 billion kind of capacity, what should be our current capacity utilization for softgels?
On softgels, your question is that what kind of capacity utilization?
Yes. On the current capacity.
Remember that as I said, right, we increase the capacity to basically cater to CDMO customers. CDMO customers basically are the ones who would do the tech transfer from their existing locate site. As we speak right now, that's the process which is underway, where customers are doing their tech transfer. At the same time, as I mentioned, we will over the next two years or so, completing the capacity utilization of this site. Beyond that, we would need a greenfield site to be added. That's what we will be doing. Even on our drug device combination, what we have added while our capacities on cartridge filling are complete. Remember, we also have prefilled syringes capacity, which still most of it is available as we add new customers in that specific area. Both.
Some capacity is fully utilized, a lot of capacity is still available for us to be able to add new customers and to add to our growth to FY 2028 and beyond FY 2028.
Sure. Last question. What is the kind of CapEx that we are looking for this year and the next year, including all the capacity expansions that we are talking about?
We already said, right? That roughly last year we mentioned we are taking about $100 million US CapEx to be invested across sites, most of it coming to drug device combination. As we sit today, almost 80% of that CapEx has been committed. That's where we are looking at. As and when we do the capacity expansion in biologics, we will see what additional CapEx will be required. It will be certainly significantly lower than what we have invested in, or what we are investing in drug device combination.
For this year, no significant CapEx is what we are looking at, or what would be the CapEx number, which is balance 20% of the $100 million and anything additional apart from that?
As of now, this is what we have clear visibility on. As I mentioned, as and when we expand our biologics, we would be needing beyond this number, but it'll be significantly lower amount than what we have invested in DDC.
Thank you. Ms. Agarwal, please return to queue for more questions. Next question comes from the line of Anish Jobalia with Girik Capital. Please go ahead.
Hi, sir. Good morning, and thank you for the opportunity. My first question is, if you can give some comments on how our customers are seeing the response for the generic versions of the weight loss drugs that are being introduced in our key markets like Canada and India. That would be helpful because they have been recently launched, just to know how the response has been.
Anish, as you know, we have mentioned earlier in previous calls as well, the constraint in this market has been supply, not demand.
Right.
In fact, the demand has been significantly outpacing the supply, both in the where the brand was present launching. What have essentially done is to provide access to the latent demand which has been there. If you see all the markets, India, for example, which is completely out of pocket market, you see how within a year we were at less 2,000 pens in a month, going up to now 150,000, 160,000 pens. This is, you see still a significant constraint in supplies. Same, Canada is very early yet to say, but I think there is a clear trajectory because the demand of the patient number is going up, and the availability as well as the price delta versus the brand will all drive significant demand. That's what our customers are showing. All our customers have their forecasts remain as robust as .
Okay, sir. Sir, am I audible? That's clear to hear. My second question is, basically, sir, we have one line coming up in this quarter. Are there any risks that we have to monitor in terms of scaling up of those lines? If you can just speak a little bit about are there any challenges or how they will be scaling up over the next few quarters. Also, if you can comment, like, in this year, we are only looking at one line or all the four lines will be in place, which we are targeting.
Understood. Yeah, see, as I mentioned, till now, we have been really struggling to meet the demand because of one line was heavily overbooked. The reason for us to add a new line, not new line, but new lines is-
Yeah
because we have a very clear visibility on the demand. The new line which is coming on board, we are absolutely sure of getting that capacity filled. The third line will also be ready the current financial year. In fact, you know that while three lines will be available fully for FY 2028, but later in the FY 2028, we are going to be having a fourth line as well because as I said, not only we are bothered about filling all the demand over the next two years, but beyond, with lot of new markets opening up from 2028, 2029 onwards, we will have sufficient capacity to cover all our customers who are literally the who's who of the global generic market. We will be able to service all the demand coming beyond the emerging markets as well.
Okay, sir. Thank you for your time, wishing you all the very best to achieve your guidance.
Thank you.
Thank you. Next question comes from the line of Maulik Varia with 360 ONE Capital.
Yeah. Hi sir, I hope I'm audible. Thank you for the opportunity. My question is, you secured your first oncology soft gel NDA with a top 10 U.S. generic. Has the customer launched the product? If yes, how should we think about the revenue ramp-up? As I think there's only one supplier other than you.
Thank you, Maulik. Yes, indeed, the product, which is our first oncology product going into the market, the customer is expected to launch it in the current quarter. What this product is really giving us, as the first-ever oncology, unique, because it's a brand, it's an NDA and not an ANDA, and there is only one other supplier, as you mentioned. It gives the capability, basically to showcase the capability of OneSource in this specialized oral technology. In terms of revenue, I can only say that it's a small market, so we don't really see a very significant contribution to the revenue in near term.
Okay. Thank you, sir.
Thank you. Next question comes from the line of Nitin Agarwal with DAM Capital. Please go ahead.
Hi. Thanks for taking the question. Yeah, just some of these things have been asked earlier. Just trying to get a little more color on this. On the sterile, on line one, how would you assess, for example, what we've done in Q1 in line one? Because the line is running to capacity. From an EBITDA perspective, is it the optimal contribution from the sterile days, which line one has, that you've achieved in Q1?
Yeah, Nitin. Thanks. As we have said, right, that we look at one line at about roughly 225 odd days, sterile days available. Based upon the per day realization for us, I would say that Q1, we had reached fairly the full contribution, which is there per line. And that's how. That covers the last quarter. Once the new line gets fully functional from next quarter onwards, we will start seeing the same contribution of sterile days, because as you know, each line doubles our sterile days. From 225, on a full year basis, the next line will provide us another 225. When the third comes in, another 225. Let's say for FY 2028, we'll have 475 sterile days available to us.
Which I get. My question here is that from the delta that we're looking at, right, from the two lines coming through, there still is a lot of gap between what you've delivered in Q1 to what we expect to achieve in FY 2028 with the two sterile days tripling. Right? My only question was, have we achieved the optimal EBITDA contribution from line one in Q1?
I would just say from a revenue perspective, yes. Remember also that we have been saying that with all this new capacity coming in, the OpEx has to be up-fronted. While the new line revenue will be coming in as the lines get installed, the OpEx is there today already. As new lines will come in, the OpEx leverage will play in more. The real incremental contribution from those lines will come when all the lines are in place because very limited incremental OpEx, because most of the OpEx we have up-fronted on these lines already.
Okay. The revenue is largely sort of reflective of the peak utilization of line one. The profitability is not because there's a lot of costs from subsequent phases already up-fronted in the expenses.
Indeed, absolutely.
Okay. Thank you so much.
Thank you. Next question comes from the line of [Gaurav Shukla] with [FinvestR]. Please go ahead.
Am I audible, sir?
Yes, indeed, you are.
Sir, congratulations for good set of numbers, and thank you for giving me opportunity. Sir, my question is that how we see FY 2027 and FY 2028 in this scenario? What is the effect of geopolitical issues on this and new latest announcement of President of America about tariff on generics after two years? How will you see some coming here?
Yeah. Sure. See, the geopolitics is in a flux, no doubt about that. Especially, what is happening in the Middle East is in nobody's interest. For us also, typically, it has impacted in terms of the freight challenges with the Suez and Strait of Hormuz being closed. All the shipments from India to Europe and to U.S. have to take a much longer route across the Cape of Good Hope, which actually really increases the shipment time. Not only that, it also is leading to constraint in the supply of containers because the turnaround is reduced. That is certainly not in anybody's interest. It also increases the cost of freight. The benefit, let's say, or how would I say? As a CDMO, our impact is fairly muted there simply because we have all Ex Works contracts.
Any additional time and cost is actually picked up by our customers. It is not in anybody's interest because we really hope the things calm down quickly. On the impact of the announcement from U.S. administration a couple of days back, as we have all seen, right, that the number of changes and the back downs done by this administration, we see exactly the same story to pan out. It is too early to say, but we don't see this to be causing any long-term harm to us or to our customers.
Thank you. Mr. Shukla, please return to the queue for more questions. Next question comes on the line of Parth Sodha with Trinetra Asset Managers. Please go ahead.
First of all, good morning and thank you for the opportunity. Almost my questions are covered, but I need just more clarity on the FY 2027. What are the key milestones investors should monitor over the remaining three quarters of FY 2027 to assess whether the company is on track to achieve FY 2028 objectives?
I think as we have said that right now we have got fairly strong visibility on our order book and on our capacity utilization. Therefore the first thing which we have been tracking is the addition of the capacity, which as I mentioned, we will be adding new capacity starting this quarter. Our next capacity expansion will happen towards end of the year as again we have mentioned, which is a key thing for you to see. You will also start seeing once the impact of new line getting added and the revenues ramping up accordingly in the second half as also we have mentioned. Other than that's the operating leverage. Of course, you will see this as a sequential quarter-on-quarter improvement in our revenue and in EBITDA.
Got it. Thank you so much and all the best.
Thank you. Ladies and gentlemen, that was the last question for today. We have reached the end of question and answer session. I now hand the conference over to the management for closing comments.
Thank you for all the questions. Thank you for the interest, thank you once again for spending your Saturday morning with us. Thank you very much.
Thank you. On behalf of OneSource Specialty Pharma Limited, that concludes this conference. Thank you for joining us. You may now disconnect your line.