Good morning, ladies and gentlemen, and welcome to our fourth quarter FY26 and full year FY26 earnings call. I'm Varun Mali from the Investor Relations and Corporate Communications Team.

We hope you have received the Q4 FY26 financials and the press release that was sent out yesterday. These are also available on our website.

I would now like to introduce our senior management who is on the call with us today, represented by: Dr. Satakarni Makkapati, CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses and Director - Aurobindo Pharma Limited; Mr.

Yugandhar Puvvala, CEO - Eugia Pharma Specialities Limited; Mr. Swami Iyer, CEO - Aurobindo Pharma USA; Mr.

V. Muralidharan, CEO - Europe Formulation Business; Mr.

S. Subramanian, CFO - Aurobindo Pharma Limited.

We have also requested Dr. Ashish Anvekar to join us for any questions related to Acrotech Biopharma USA.

We will now begin the call with the summary highlights from the management, followed by an interactive Q&A session. Please note that some of the matters we will discuss today are forward-looking, including and without limitations, statements relating to the implementation of strategic actions and other affirmations on our future business, business development, and commercial performance.

While these forward-looking statements exemplify our judgment and future expectations concerning the development of our business, a number of risks, uncertainties, and other important factors may cause developments and results to vary materially from our expectations. Aurobindo Pharma undertakes no obligation to publicly revise any forward-looking statements to reflect in future events or circumstances.

With that, I will now hand over the call to our CFO for the business highlights. Over to you, sir.

Thank you, Varun. Good morning and a warm welcome to our Q4 FY26 earnings call.

I'm pleased to begin the call by sharing that the company has delivered an excellent quarter and a strong financial year, underpinned by sustained growth and reflected in our highest-ever revenues and highest-ever EBITDA margin, both quarterly and annually. For FY26, revenues stood at ₹33,653 crores, while EBITDA came in at ₹6,856 crores, translating into a healthy EBITDA margin of 20.4%, which is in line with our revenue as well as EBITDA guidance for FY26, supported by favorable product business mix and other factors.

For Q4 FY26, revenues were ₹8,853 crores, and EBITDA stood at ₹1,801 crores, resulting in a robust margin of 20.35%. During both the quarter and financial year, we witnessed good performance across our businesses, primarily driven by stable volumes, new product launches, and sustained momentum in regulated markets, supported by pricing conditions.

Despite insignificant Revlimid product sales compared to Q4 FY25, EBITDA before forex and remained flat year-on-year growth and grew by 2% on quarter to ₹1,801 crores. Net profit increased by 2% year-on-year to ₹921 crores.

For the full year FY26, the revenue grew by 6% year-on-year to ₹33,653 crores. Ex-gRevlimid, our full year revenue growth was 9.5%, and for Q4 year-on-year, ex-gRevlimid growth was 15.3%.

In USD terms, it was 7%. Gross contribution also reached the highest-ever absolute levels of ₹20,165 crores, reflecting margin 60%, that is an improvement of around 100 bps.

The EBITDA before forex and other income grew by 4% year-on-year to ₹6,856 crores. Let me now take you through the business highlights.

Formulation business: Formulation business in Q4 FY26 witnessed a growth of 5% year-on-year to ₹7,646 crores and contributed around 86% of the total revenue. The revenues are mainly supported by growth across the markets.

API business: For quarter, API business contributed around 14% and revenues improved by 25% quarter-on-quarter to ₹1,208 crores. For the full year, API business contributed 12% and clocked a revenue of ₹4,147 crores.

USA: For the quarter, revenue from US formulation remained flat. On a constant currency basis, US revenue decreased by 18% year-on-year to $387 million.

This is mainly on account of high gRevlimid sales in Q4 FY25. Our large product portfolio helps us to maintain the price stability.

Revenue from US formulation for the year remained at ₹14,408 crores or $1,631 million, with growth primarily accounted by lower gRevlimid. Europe: For the quarter, Europe formulation clocked ₹2,795 crores, an increase of 30% year-on-year.

In constant currency terms, the Europe revenue was €261 million against €236 million of Q4 FY25. The growth was driven by robust performance across all key European geographies.

For the full year, European formulation achieved a significant milestone of €1 billion revenue in terms of annual revenues. Growth markets: For the quarter, growth markets revenue stood at ₹980 crores, with a year-on-year growth of 25% and quarter-on-quarter growth of 13%.

For the year, growth market revenue was increased by 10% to ₹3,499 crores. In US dollar terms, revenue grew to $397 million from $376 million in the previous year.

ARV business: For the quarter, ARV business revenue increased by 6% year-on-year to ₹328 crores or $36 million. For the year, ARV revenue increased by 33% to ₹1,384 crores or $157 million, driven by continued business opportunity, partly offset by pricing pressures.

Specialty and injectables: For the quarter, global specialty and injectable business reported a revenue of $122 million. Ex-gRevlimid product sales, the business grew by 13% year-on-year.

For the full year, revenue stood at $513 million. Ex-Revlimid, growth was 12%, mainly due to improved supplies, new product launches, partly offset by pricing pressure.

Now going on to other highlights: The gross contribution stood at the highest-ever absolute levels of ₹5,424 crores. Gross margin stood at 61.3%, increasing by 153 bps quarter-on-quarter.

R&D expenditure stood at ₹400 crores for the quarter. For the year, R&D expenditure stood at ₹1,590 crores, which is 5% of revenue.

Net capex for the quarter is $82 million, and for the year around $341 million, which includes capacity enhancement projects and plant expansions and CDMO project. Improved profitability coupled with improvement in working capital, the business generated a net cash inflow after payment of purchase consideration of Khandelwal Laboratories non-oncology business around $32 million.

As a result, the net cash position after investments at the end of March '26 improved to $317 million from the net cash position of $276 million in December '26. The average finance cost was 5%.

Outlook: As we look ahead, we remain encouraged by the stability across our core businesses and the continued progress on our strategic priorities. Our diversified portfolio continues to provide a resilient and balanced earning profile, with no disproportionate dependency on any single product or geography.

Coming to the US business, we continue to see multiple growth levers through the expansion of the basic businesses, new product launches, ongoing—that is the topical ointment—acquisition Lannett, and the expanding pipeline across oral, transdermal, and respiratory products from our Dayton and Raleigh facilities. With these initiatives, our US business is aiming to touch $2 billion revenue milestone over the near term.

Europe: Europe continues to remain a strategic growth engine for the company, supported by portfolio expansion, improving market penetration, reliable supply capabilities, and stronger customer relations. We expect the business momentum in the region to remain strong going forward.

From a long-term value creation perspective, we continue to focus on improving the quality and the predictability of the earnings through balanced mix of scale, specialty, and operations. Our biosimilars and biologics CDMO strategies continue to progress well and represent important long-term growth drivers alongside our core generic franchise.

Geographic expansion across the growth markets remains a key strategic priority, supported by focused launches, portfolio expansion, and selective acquisitions. Our China OSD facility continues to scale up steadily with increasing approvals and supplies into international markets, particularly Europe.

India business is evolving into a new growth engine for the company, further strengthened through recent acquisition, continue to expand through new division, wider therapeutic presence, and deeper pan-India reach. Our backward integration efforts across Pen G and 6-APA and amoxicillin continue to strengthen supply security, reduce import dependency, and improve long-term margin profile.

Based on current operating level, we expect annualized Pen G production to exceed 10,000 metric tons, with a capacity utilization levels exceeding 80% at consistent yields. Overall, these initiatives provide us strong visibility on the revenue growth, profitability improvement, and cash flow generation over the coming years.

Going forward, we remain focused on disciplined execution, operational excellence, prudent capital allocation, and sustainable long-term value creation. FY27 financial outlook: We firmly believe that the business is entering into the next phase of calibrated and profitable growth, with visibility towards stronger revenue.

We expect the EBITDA margin to sustain and progressively improve to north of 21%, reflecting the scale of our operations, execution capabilities, and leveraging the new business levers. That concludes my remarks.

We will be happy to take your questions. Thank you.

Good morning, and thanks for the opportunity. Sir, your operating cost excluding R&D has increased 11% Q-o-Q and 17% Y-o-Y.

Can you throw some light on this, and can you tell us is there any one-off element over here for the quarter?

See, the one-off element will always be there in terms of the year-end provisions, etc., but that becomes a routine thing. What is the main factor which has increased other expenses cost?

It includes power and fuel consumption for the Pen G plant, which has taken off very significantly in the last quarter, that is the Q4 of this quarter. That is the reason why it has increased.

We should expect this rate to continue going ahead?

Yes, it will continue like this because now what is happening is we are using our own 6-APA for our captive consumption. We are not buying it from the imported material.

Because of that, our raw material cost will come down, and the other expenses goes up. That you can see very clearly why our gross margin also improved by about 3 percentage.

That's helpful, sir. My second question: can you tell us how much EBITDA loss you have incurred in FY26 from your new projects like Pen G, Eugia Sterile, biosimilar, and China facility?

Do you expect most of the projects to turn breakeven in FY27?

I think if you take Pen G and 6-APA put together, we have got a positive EBITDA contribution last quarter. That is mainly because of the higher operating leverage, and we have started getting better yields now.

That is the thing. We expect this to continue for the coming years here as a whole.

Last quarter, last year as a year as a whole, we would have incurred around must be around the 200 must be around ₹200 crore-plus EBITDA loss on account of Pen G, Lyfius, and Q. In terms of the China plant also, we incurred loss, which is expected to we are profitable EBITDA margin EBITDA contribution this year.

That's helpful. I'll get back in the queue.

Yeah.

Hi. Good morning.

My first question is on the US, where you mentioned you are looking ahead for this $2 billion mark in near term. Any timeline for that?

While we can't say anytime, it's in the near future, probably in the next maybe couple of years, I would think. Our confidence is based on what's going on in terms of acquisitions and some of the business opportunities that we have.

Okay. Directionally, you are looking at this $2 billion mark maybe a couple of years down the line, not in immediate or medium term.

Yeah.

Damayanti,

what Swami says, if acquisitions materialize, we may move towards that very fast.

Okay. On that note, are you on track to close the Lannett deal as indicated earlier?

There'll be some difference in timing. We'll probably close by Q2 of the current fiscal.

What we didn't factor in was the government closure for 76 days in between February and April. When the government shuts down, the FTC does not function.

At least the first time we had some flexibility, but the second time it was very long and it took 76 days. I think they have largely made up the time, there could be some delay, but I think early Q2 maybe a better estimate.

We feel fairly confident about that.

That's helpful. Thank you.

My second question is on Europe business. Where you have now marked €1 billion milestone there, and when we look at the sales in euro terms last two quarters, you were somewhere in €261 million range.

Can you directionally indicate how things will move up from here? I understand supplies from China will be a big contributor.

As we anticipate higher supplies from China, how should we look at, say, '27 from Europe business perspective?

Good morning, Muralidharan here. Thank you for this query.

Hi, Murli. Yeah.

Hi. Thank you for this query.

Yes, having achieved the €1 billion milestone, which we had taken up on ourselves as our mission for FY26, we are definitely bullish. We are very confident that we will be moving northwards of this base business that we have achieved.

Contributions from China means already more than 10 products have kicked in in some form or other, whether it is a new launch or tech-transferred products. Progressively, that will increase and contribute to the Europe business.

We are quite confident that despite the geopolitical issues, we will be growing further in this base that has been built.

Any indication on the growth rate, say, we can comfortably target for double-digit growth, say, low double-digit to mid-teens, or any number you would like to share?

We are definitely striving to achieve the double-digit growth. Of course, considering the current geopolitical situations, we have taken it a bit conservatively, but we are confident it'll be minimum double-digit.

Sure, thank you. I have more questions, I'll get back in the queue.

Thank you.

thank you, sir, for taking my question. My first question is on the CDMO unit, biological CDMO unit.

When do we start seeing it commercializing, and when do we expect the first revenue from the segment? Dr.

Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director): Hey,

about the CDMO unit, the unit one will be commissioned by end of this year. My guidance around the first 60 kL capacity installation, commissioning remains the same, with the PPQ batches, which are the validation batches scheduled in 2027, and the filings in the markets by the customer also slated to happen in 2027.

We expect some stockpiling requirements from the customer in 2028. A steady stream of revenues to answer your question would begin in unit one from 2028.

With respect to the recent product schedule three that I have signed and we have informed the exchanges about, that's a greenfield drug substance manufacturing facility. We expect to close the commissioning of the facility in '29, two years from then, 2031 would be the start of revenues from unit two.

In the nutshell, between unit one and unit two, you would expect the revenues to kick in from 2031, but unit one will have a head start from '28.

Thank you, sir, for this. My next question is again on the Pen G.

When do we start the external sales from the unit, while it has been contributing to the internal supplies, but when do the external supplies start?

The external supplies has already been happened in the last quarter. We have sold more than ₹100 crore worth of material in the last quarter, both Pen G as well as 6-APA to the outside market.

We also already informed all the customers that they can pick up the material because some stock were there in the market earlier because of the high imports in the Q3 of this year, FY26. The offtake was very low, but we expect the offtake will take up strongly in the coming days, coming weeks.

Okay. Thank you so much.

That was my question.

Thank you for this opportunity, sir. My first question is on the European business.

Congrats for the €1 billion milestone mark that you have achieved. If you can update, what is the EBITDA per—

Surya, our EBITDA is just in excess of 20%, and we'll be moving northwards of same as stated by our CFO.

Hello?

Hello, I hope you could hear.

I'm able to hear.

Yes. Yes.

Hello. Hi, sir.

Thanks for taking my question. Sir, I guess your $2 billion revenue guidance for the US business factors in Lannett as well, which alone should contribute $300 million incremental sales, and with that, you should get to $1.9, $1.95 billion.

This guidance is essentially driven by Lannett. If you can also talk about how do you expect the base US business to grow ex of acquisitions?

I'll take this question, okay?

Yeah.

Rahul, Lannett is probably going to be there for two quarters in the current fiscal, this is going to be half of Lannett, right? That's number one.

Then number two is once that is also subject to approval, which we expect, which we are confident. That is one.

Then we are looking at some business opportunities, and those opportunities we believe that we are in a good position now. Timing-wise, I can't tell you for certain.

We are heading towards the $2 billion goal, and Lannett is part of it. Maybe in the next 1 to 2 years, definitely we are getting there.

You're already aware that Lannett is about $300 million. Obviously, we should be heading towards that $2 billion mark in the near future.

That's all I can say. Maybe in one year-plus, maybe in one year if we are lucky.

Again, it depends on the FTC approvals and some of the business development deals getting operational.

Sure, sir. These business opportunities, are these NBOs which you are targeting, or these would again be, let's say, M&A kind of opportunities?

It's not NBOs that I'm talking about. It could be business opportunities in terms of in-licensing or we are not going for any big-bang acquisition, at least I hope we don't.

Right now, we are in the process of doing Lannett acquisition. That needs to be completed.

We do look at opportunities of some in-licensing and some ANDA acquisitions that's ongoing. Now we're focusing a lot on business development in the US in addition to our own products.

That's why I feel confident that sometime soon we will touch that $2 billion mark that Subbu mentioned. Whether it's going to happen in one year, I don't want to commit that at this point.

Maybe we'll have a better sense in the next one, two quarters.

Sure, sir. Sir, my second question is with respect to the guidance for the European business.

You talked about cautiously looking towards a double-digit kind of a growth. Can you clarify that's in constant currency?

It is.

Okay. Sure, sir.

Thank you. That's it from my side.

Thank you.

Hi, sir. Thanks for taking my question.

Sir, on the biosimilar business, you highlighted a FY30 vision, or a 2030 vision for the biosimilar business. If you can probably just articulate in terms of what are we looking at, especially in terms of number of products being marketed, commercialized by then, and which geographies, what kind of geographical spread we're looking at by 2030 for the biosimilar business?

Dr. Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director): Nitin, it's a good question.

We are right now in the early innings of launch since a quarter, I suppose, with biosimilars, Nitin. Supplies have been initiated to certain territories in the EU.

A tender is being serviced in LATAM. Under STADA agreement will start to fructify from the end of this year.

Revenue recognition will follow as those products will move through distribution channels into procurement, etc. In terms of what we are doing, we have omalizumab and denosumab, as I have talked about in the last quarter, that will be entering the filing phase with European Medicines Agency, Health Canada, and the FDA this year.

Additionally, I have also provided guidance in Q2 that we plan to file bevacizumab, which is already approved with Health Canada, approved with MHRA, and currently under review with European Medicines Agency. We also plan to file that in the US.

So 2026 will be an year where we wanted to execute the US filings, the three filings in the US, at least two, but three filings in the US. What it does to the business, if you look at 2030, is that the first wave of products that have been or are being commercialized now, plus the three more products that will be approved in Europe is a clear base.

You have about seven products in Europe, emerging markets, and the growth markets. As I have provided guidance in the earnings presentation, I am also stitching partnerships in territories where we are not directly present.

For all these to strategically fructify would take a year or two.

With a seven, eight product base model in Europe approved and in growth markets, a potential three products approval by '28, '29, or '30, even with a slight US FDA setback if there is any, by 2030, you're looking at biosimilars business having seven to eight products in Europe and growth markets, plus a potentially two to three products in the US. I would not give any guidance specific revenue figures at this stage, but the commercial momentum is real and is building, and I expect by 2030, with the 7+3 products that I am planning in the US, biosimilars business will have an inflection point as I have also guided all through in the last year and the last quarter as well.

Does that answer your question? Satakarni, just to add to that, the fact that we are in the first wave of launches coming much behind the competition, what kind of opportunity do you still see, while you've already talked about it in terms of our cost competitiveness on COGS in the business, with the dynamics over the last few years, last few quarters, are we still confident that there is still a relevant opportunity for us in emerging markets in Europe on these products?

Dr. Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

I can't hear you. Your voice was breaking.

Can you repeat your question?

Just give me once. Sir, can you hear me now?

Yeah.

Dr. Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

Be a bit slow.

Yeah. I was saying, in the first wave of launches that we have, the fact that we are coming much behind the competition in Europe and in emerging markets, do you still see an ability for us to make reasonable revenues on these products?

Is the opportunity still relevant for us in the first wave of launches? Dr.

Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

In the first wave of launches, the opportunity is relevant to the extent the aspiration is. We are not looking at a 15%, 20% market share in those territories.

With the right cost of goods, we still believe there is an enough opportunity for everyone. Also, if you look at the nature and dynamics of the biosimilars business now, even if you look at products that are going off the patent cliff in 2032, you have about 10 to 11 players who are already doing clinical trials or developing them.

If you want to sustain in this business, you need to really create a COGS model that will allow you to position yourselves in the market. What is also important is creating a basket of products in oncology and immunology.

Right now, the choice of products that we have made, I'll give an example of pegylated filgrastim, which is a long-acting filgrastim that is expected to increase the neutrophil count in cancer patients who suffer from a condition called neutropenia. There is no follow-on drug for this product.

What we are looking at from the first wave, Nitin, is products that have a longer life cycle. Pegfilgrastim, even now, is a potentially $3.5 billion, $4 billion market, and I expect it to continue to grow.

In US, I think there are about four to five or five players there. I am sure if you're looking at a $50 million, $60 million revenues and not looking at taking away 20%, 25% of the market share, you are still in the game.

In that sense, it's a very calculated move from us to pick products that have a longer life cycle. The another example is trastuzumab, where we launched the 150 and 420 mg, but the real game with trastuzumab is the subcutaneous that we are developing.

The patent goes off in '28, '29. You should look at it from a strategic perspective of how we are positioning the products that will advance our aspirations in this space.

Our COGS, I think, will continue to sustain us, but if you are saying will I be picking up a 20%, 25% market share, absolutely not, and that's not the aspiration at all.

Thank you, sir. That helps.

Sir, secondly, at what point of time do you start to see you start to be part of the first wave of launches going forward? Dr.

Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

It's a trick question. Omalizumab, I think we will be in the first wave.

If you say first wave is three or four players, right now with omalizumab, there are three serious players. Celltrion has already made the move.

That's a potential $4 billion market. There are two other players there, and then there is us.

We expect omalizumab to be a $2 billion, $2.2 billion product even after the biosimilar competition kicks in. I think that would be the first wave, and we have the capacities to sustain the supply chain in markets like US for omalizumab.

With the next wave of products, we are trying to greenlight the clinical studies for the next wave of products that goes off patent cliff from 2030, '31 onwards, and we may be in the first wave. First wave is becoming very subjective these days, Nitin.

If I pick a product from 2034 like atezolizumab, there are nine players who are already developing it. We really see how the dynamics play out.

It's quite intuitive and subjective to answer the question, but I hope you got the clarity on the point that I'm trying to say.

Yes. That's very, very helpful.

Sir, if I can squeeze in a last one: sir, on CDMO, how should we think about CDMO? Our CDMO strategy is all about these two MSD projects, or do you see opportunities to significantly go beyond that, and at what point can that happen?

Dr. Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

It's a good question. See, the scales at which we are attempting to become a CMO is a key differentiator in India, right?

Now, if you look at my product schedule one, product schedule two, and product schedule three that we have disclosed to the exchanges, the total drug substance manufacturing scales amount to about 120,000 liters of mammalian cell culture capacities. Now that's by far the largest CMO space in the country and which will put us into the lower-end bracket of the largest CMOs in the world.

For example, Lonza has about 570,000 liters. Samsung has around 600,000 liters.

Having 120,000 liters is a statement and intent that we are here to stay. Now, why do I build a business model around one anchor customer?

Because India traditionally did not have contract manufacturing organizations in the new biological space. It requires deep competence, infrastructure building, and nurturing of human resources capabilities like no other.

That's the reason why I wanted to derisk the ramp. By mean of derisking the ramp, I wanted to get an anchor customer like MSD, get a contract with them for about 10 years, and see how credibly I can build the business for the next 5 years.

To answer your question, does Theranext and does I and Aurobindo and the board want us to be a single customer CMO after 2032? No.

The vision statement for 2032 which I presented to my board yesterday also is that we wanted to be a multimodality, multicustomer contract development and contract manufacturing organization. Right now, we are a CMO.

Make no mistake about it. We are not a CDMO right now.

We wanted to be a CMO, but we wanted to backward integrate by 2032 to become a contract development organization. This is not going to be a one-customer business, but for the first 5 years until I build credibility around an anchor and service the anchor and create a space that we are also a credible CMO coming out and can service the new biological entities and become part of the global supply chain, yes, we would like to stay with MSD and learn through the curve.

The long-term aspiration and ambition is to become a multimodality, multicustomer CDMO and transition from a CMO to CDMO. Does that answer your question?

Yes, it does. Thank you so much, and thank you so much for your time.

Sir, thanks for the opportunity. Sir, just extending on this biologics venture, at the time of commercialization, what kind of gross margins or EBITDA margins are we sort of building into our estimates?

May not be at a product level, but maybe at a portfolio level if you could share. Dr.

Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

Tushar, is this about the biosimilars or the biologics CMO?

Biosimilars. Dr.

Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

Biosimilars: on an average, you are looking at a gross margin of around 65% to 70%, Tushar. As the product mix matures to include omalizumab and include trastuzumab subcutaneous after '28, '29, the gross margins will probably shift to the higher side of 70% to around 75%.

It's still a very healthy margin business. It also depends on the countries you would be in.

The moment the inflection point in US and some of the growth markets will kick in, then you are looking at better gross margins. Some of the products are retail products.

For example, a product used in postmenopausal osteoporosis like the denosumab. Whatever little you sell there, the margins are going to be higher.

It's a tricky subject, but I would say take anywhere between 65% to 75%. As we continue to evolve in the next 5 to 6 years, we will make the transition from around 65% to 75% with more first-wave or differentiating products or retail products adding into the business, because Denosumab is a retail product.

Omalizumab is a mixed model, you tend to get higher margins there, Tushar. Sir,

this is after building particularly in biosimilars, we've witnessed a sizable price erosion post-competition coming in. This kind of gross margin basis the manufacturing skill set which we have got, what kind of price erosion we try to build for these set of products?

Is that so that we understand, post such kind of price erosion, the gross margin is 65% to 70%? Dr.

Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

For the first wave of products, we have already built in the price erosion to a great extent. Even with a 75% price erosion, we expect to have around 65% gross margin as a base, and only then we enter into developing these products.

In the US, we are not building more than a 60% price erosion. In Europe, we are building close to around 75% to 85% price erosion.

We have seen that happen in chronic segment in Europe. In growth markets, actually the pricing is good in some of the growth markets.

To answer your question, even after building a very healthy price erosion of around 70% to 80% in most markets, this is what we would like to achieve, Tushar.

That's pretty interesting, sir. Just to sort of complete this loop, in chemical synthesis, probably the scale does help in getting the EBITDA margin, but with respect to biosimilars, just trying to understand, despite such kind of price erosion, we able to achieve 65% to 70% gross margin.

To just help with that missing link compared to, say, a chemical synthesis process. Dr.

Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

It's a very interesting question from a sense that you should always look at in biologics, you should always look at yield versus COGS as a function of also capacities, okay, which is true even in small molecules. In biologics, when I plot yield and capacities on the primary y-axis and the secondary y-axis and COGS on the horizontal axis, you see the tapering of the COGS pretty early.

Depending on your capacities, if my capacities are around 5,000-liter scale and my yield is around 4 g/L, then the incremental improvements even after increasing the scale are going to be very, very minimal in terms of cost of goods. Factoring all these models, we still think if you have built your capacities right, if you have positioned your titers or the yields around 4 to 6 g/L, because after which the downstream cost will start to trade off any benefits that you will get from the cell culture yields, around 4 to 6 g/L and a capacity of around 2,500 to 5,000-liter bioreactors, you should have a cost competitiveness for most monoclonal antibodies that are at 100 mg to 400 mg fill volume filling doses.

I think 60%, 65% should be very straightforward in biologics, even with the price erosion of around 70% that you witness. The trick there is: do companies have the yields of around 4 to 6 g/L at the right quality?

Do companies have the right capacities for the products they are putting in at 4 to 6 g/L? If either of these on the primary and secondary y-axis don't meet together, then you are looking at numbers and margins that can be significantly less because your COGS is going to be higher.

Got it, sir. This is pretty interesting.

Just lastly on this aspect, just to refresh in terms of the overall investment done till date, while we have highlighted in the presentation the upcoming investment with respect to unit, but just to refresh in terms of the overall investment done till— Dr. Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

In biosimilars?

Yes. Dr.

Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

About $450 million is the overall investment, including capex and opex that was done in biosimilars, and that had resulted from 2018 July to now, including the two COVID years, into four European approvals, two Health Canada approvals, and three more product filings now, the fastest in the peer group that you can look at. I'm confident that we will continue the momentum.

So $150 million to $175 million is over and above— Dr. Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

No, this is a CMO, okay? The CMO is going to be about $175 million US dollars in the greenfield facility.

Got it, sir. Thanks.

Thanks, sir.

thank you for the opportunity. The first one for Subbu sir.

Sir, can you suggest what's the kind of translation effect that we get from the INR depreciation against USD and euro? Let's say 1% depreciation in INR, what's the positive impact that we get on EBITDA?

See, 1% which INR depreciation against dollar?

Yes.

On EBITDA, we'll get around ₹100 crores.

Okay. Euro, INR depreciation against euro would be additional to that, right?

No, euro is very little, okay, because already euro has achieved the peak. Earlier, it used to be around 100 1.03.

Now it is hovering between 1.16, 1.17. May not have a big, significant one on euro, but rupee EBITDA on dollar rupee translation, we'll get around ₹100.

Sir,

the 21% EBITDA margin guidance for FY27, does it bake in this positive impact of the INR depreciation? Don't look into that,

no, because see, nothing comes free. When rupee is depreciating, why is it depreciating?

Raw material prices are going up. Solvent prices have gone by 2.5x.

Don't link it only rupee depreciation going to translate. It is a combination of all things we have to see.

Freight cost actually has gone significantly high in the last month March and continuing in April and May. Solvent prices have gone by 2.7x.

Other raw material prices are also going. You have to look at it in a holistic matter rather than seeing it in a very limited matter.

I'll rephrase that with all this cost going up, it will still have a positive impact, right? Given the strong—

No, you asked what is the impact of it, we have said. How will it get offset by other factors, etc., obviously, yes.

Okay. Maybe 21% bakes in the net impact of all these positives and negatives, right?

All these factors, all the pluses, minuses, etc., we are working.

Okay. Second question on the Pen G, we said that the 10,000-ton is the output, we are going to reach that kind of level now with an 80% cap utilization.

To me, a very very basic math kind of points to 12,500 tons of total capacity versus our total capacity is 15,000. Is it fair to say in terms of yields, there could be some more improvement going forward?

No, no, not like that, Kunal. I said it is about 10,000k.

We have achieved in the month of March itself is around 11,300 tons capacity, right? April, we made it around 10,800.

The capacity is not either 10,000, 15,000, or not like that. We have 17 fermenters.

We can run any number of fermenters I wanted. Accordingly, the capacity is achieved.

We have to ensure that inventory buildup is not happening, working capital is not locked in, and at the same time, we need to achieve the right yields, etc. That is what the team is working.

Sure.

You got it, no? Yes, yes,

yes. Lastly, for Dr.

Satakarni on the Theranext contracts: sir, can you suggest how many products have we got right now from Merck, and are these in development stage or already commercialized? If they are already commercialized, are they in the early part of their product life cycle, late part of product life cycle?

Any color would be helpful.

Dr. Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director): Product schedule one is for one product.

Product schedule two is for one product. In the nutshell, each product schedule is for one product.

We signed about three product schedules, which means that we signed for three products. Right now, technology transfer of one product, a new biological entity, is happening.

This is a product that is already commercial. The second product schedule also is a commercial biological entity.

One of them is an early commercial product. The other one is a relatively established product.

I cannot give more details about the sponsor's products, but we will be into the commercial global supply chain right from day one after receiving the regulatory approvals. That is the business model of Theranext.

Right from day one, once you have the regulatory approvals, the product that we are going to manufacture at Theranext is going to be used by MSD into their global supply chain for the patients in the territories and the markets they would like to supply the product to. Does that answer your question?

There is no development product at this stage. Both are commercial assets.

Okay. Earlier, we had said that this supplies would initially be used for emerging market and then in Europe and then in US.

Is that the correct way of understanding? Dr.

Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

That's correct, because capability building and GMP compliance takes time. Initially, I expect MSD to file it in emerging markets, followed by Europe, and potentially at some point, maybe they would say they would also like us to become part of the supply chain for the US.

Right now, I would keep the aspiration to emerging markets and Europe.

Thank you, and all the best, sir. Dr.

Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

Thank you.

Good morning. Thank you for taking my question.

Just the first one on the specialty injectables: I think in the opening remarks, it was said $513 million US has been the total revenue for the year, and I think 13% growth. Sir, if you could just double-click there, and how should we look at the outlook for it in '27?

You heard it right from Subbu. Other than the lenalidomide, it is 13%, and I feel like the same as double-digit growth is expected going forward.

Yugandhar, there is some Revlimid already in '26, right? So $513 million includes Revlimid.

You are excluding it and telling us it's whatever, double-digit growth? Sorry, can you just help us what the base number is?

Base is actually like the base number would be around 480-plus. Like we expect the similar double-digit growth, because this year, of '27 onwards, we will not have that Revlimid.

We expect the base business to continue to grow in double digits.

Any interesting launches coming up in this segment, Yugandhar, anything to fall out?

At this juncture, it is too early for me to comment, Shyam, because of Eugia III. There are some interesting launches from other plants, but we are at this juncture keeping ourselves on watch for all the regulatory approvals for the plants, so that in next quarter, I can give more color.

Got it. Helpful.

Swami, just Q-o-Q, I know Y-o-Y there is Revlimid in US total, but Q-o-Q, there is some seasonality, is it, for why the Q-o-Q revenues are down?

Typically, the fourth quarter is less than the third quarter. Second and third quarter, this is what we see.

There are aberrations, of course. If the cold season extends to January, March, it could be higher, but otherwise, second and third quarter are the best.

So $30 million drop and all one can explain just by seasonality?

Yes, that is one. We also have some partners.

We'll also have to look at that. Broadly, yes, there is a seasonality.

Understood. Thank you.

My just last question to Dr. Satakarni: Dr.

Satakarni, now we have all your large-cap peers, large peers, all talking about biosimilar. Sun through the Organon deal has got it, Dr.

Reddy's, Lupin have got it. I'm not asking for names, but I'm just saying is this going to be an interesting phase where we have to now slug it out with some of your other peers, and is there something you will do differently to kind of get your whatever rightful share?

Dr. Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

It's interesting, Shyam. How can I comment on the slugfest that is going to unfold in the biosimilar space?

It's already happening in Europe. To one of the previous questions from Nitin, I told the market dynamics is going to be so interesting, the price erosion is going to be so interesting, the competition, any product that you pick, there are about 10 to 11 players.

What is important is to ensure that you have a basket of products that you can go into the market, create a brand name as long as they are continuing to be brands like in Canada and US, and make sure that your COGS setting is good enough to still give you a reasonable margin. I don't think I can do anything differently than what I have done.

The speed and agility with which we have looked at the last 7, 8 years in building these capabilities, I would like to sustain the momentum, and if that happens, I think we are in good space. Right now, the most important aspect for CuraTeQ is the execution of the US filings, and can we execute it right first time?

If we do, I think we will be having a very different conversation.

Got it, sir. Thank you, and all the best.

Dr. Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

Thank you.

I'm sorry. Firstly, congratulations on the decent set of numbers under the circumstances with API prices and freights.

I think Europe, growth markets, etc., I think all helped API. One is with regards to China and India.

Has China breakeven helped in margins this time, and as far as India, I think is about ₹76 crores a quarter. Will this Khandelwal acquisition kind of contribute to run rate?

In terms of the China, as I said, last quarter, we had a loss of around $7 million, last year, I'm sorry, last year. Certainly, this year will not only breakeven, we'll contribute significantly, at least we are working to achieve a low double-digit EBITDA margin for the year.

That is what we are trying to do that. In terms of the Khandelwal Labs, etc., it's a very decent acquisition, and it is contributing to the EBITDA margin.

We expect overall the entire domestic formulation business will grow in double-digit during this year.

Got it. One is, as of now, only Unit 3 is amongst the larger unit which is left for the EIR, right?

Yugandhar?

Unit 3, we are waiting. Even Unit 1 of Eugia is also audited, and we are waiting for that as well.

There are two units in Eugia network, we are waiting.

Helpful. Just one more question if you can answer: so if at all you can update on eczema or Polymyst, and also what's your perspective with regards to repurposed drugs?

Satakarni sir mentioned of the slugfest possible on the biosimilar, but is there something which is evolving for repurposed drugs as well?

Sorry. Satakarni, would you like to take that question?

I didn't understand. Dr.

Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

What is the question?

One was would it be possible for you to update on eczema and Polymyst? Also your thoughts with regards to repurposed drugs.

You mentioned of the slugfest expected on the biosimilar, but don't see any of the larger companies probably warming up to repurposed drugs or these things or any of the generic companies also. Dr.

Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

I would answer the part two of the question. Part one of the question should be answered by relevant CEO.

Yes. Yes.

Okay. Dr.

Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

What you mean by drug repurposing is whether we are interested in the practice of finding a new therapeutic use for the existing drug, is that what you meant by drug repurposing?

Yes, I think, because a lot of it the biosimilar— Dr. Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

I know what's happening around that. At this point of time, I'll get back with my investor relations again, but from the little I understand from our board strategy and all, at this point of time, we are not looking at any reprofiling or repositioning or repurposing of the drugs.

That's still not part of our Aurobindo board's strategic initiatives. We will look at this space closely.

Maybe that's a differentiator at some point. Right now, not.

Let me go back and correct myself if there is something happening somewhere and provide you an answer via Does that satisfy you?

Absolutely, sir.

Dr. Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director): Thank you.

Part one, can someone answer part one?

Actually, we didn't understand the part one question of the Polymyst.

Is there any update on the eczema and Polymyst that we can have it?

Sorry, Jigar, this is Ashish here. Is your question on the eczema drug which was approved?

Yes.

Yes. Thank you.

We are right now looking into launching it as soon as possible. Most probably quarter two of our fiscal year is when we are aiming to launch.

That's all I can say for now. All the preparation work is going on right now to make sure that we launch our first NCE for Aurobindo in a very successful manner.

All right. Thanks a lot, and I'm hoping that you'll be upwards of ₹2,000 crore EBITDA in the coming quarter onwards and higher EBITDA levels also with the integration falling in place.

Thank you. Thanks so much.

I got a couple of questions. Good morning and congrats on a recently firm performance.

On Europe, sir, you spoke about double-digit growth going forward. You mean constant currency or you meant in INR terms?

Constant currency basis, which I already reaffirmed. This year, we achieved a double-digit, and also our growth planning for the upcoming year revolves around our base business growth plus new launches, annualized revenue on the FY26 launches and upcoming FY27 launches.

We are quite confident we'll be able to achieve on constant currency basis.

Okay. Sir, if I look at the trajectory of this business, right, Aurobindo's been trying to build this business for the last 12 years.

Something's really sort of pivoted in the last 3, 4 years versus the decade before. In a market which is certainly not growing, especially with the sort of products that we are running with, what has changed in terms of your ability to drive this business, and at the speed and scale that you've been able to?

Just a couple of pointers. Is there a lot more focus than before, maybe, were there some supply chain challenges, has the market become more interesting with some players exiting?

What is it? Just wanted your aerial view in terms of without getting into significant granularities, yeah.

Sure, Tarang. I get the flavor of your question.

Thank you for your compliments. Yes, one, Aurobindo has been an evolving organization, our understanding of the market and extremely a well-streamlined team across our footprint countries setting in and understanding the market dynamics and of course, as you rightly said, on the supply chain side.

We have definitely done a lot of improvements by way of order processing, turnaround times, understanding the market, the upsides for certain competition out of stock that can happen and all these things. It's a combination of several items, but at the same time, as you underlined, it's a very complex market.

We are answerable to multiple regulators. The expectations or challenges are increasing, whether it is nitrosamines or other complaints requirements.

Despite all this, Aurobindo as a team has been able to deliver. I would like to thank our management for the confidence reposed in Europe, constantly providing us new product opportunities, developing more and more products.

It's a combination of all these positives that's happening, and we are very confident this will be sustainable in the coming period as well.

Wonderful, that helps. Satakarni sir, on Theranext, whatever progress that you spoke of, when you spoke about consistent delivery for contract one in 2028 and then for contract two from 2031 onwards, were you referring to calendar year or were you referring to financial year?

Dr. Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

I'm referring to the financial year, Tarang.

That's helpful. On US, on the eczema product, Mr.

Anvekar, do we expect you to build a significant front end, or would you be continuing with the current cohort that you have? Second, if we could get an update on what's happening with Ryzneuta.

Where is that product? I think about 1 and 1/2 years now since the approval's come through, some update there would be helpful.

Sure, Tarang. For the Adquey, which is the brand name for our eczema drug, we are going to build the suitable infrastructure as it is required, because we will be in a competitive space, but in a very good competitive space, we have to invest in making sure that we are giving the brand the due attention and the resources which is required.

Our current presence is in oncology, right? We will be having a separate team which focuses on dermatology.

For the Ryzneuta, though we had an approval for a year and a half, the product launch was delayed. Much of the scientific story is still being built.

We have started getting some traction in the market now, but the story from a brand perspective still needs to be built in the marketplace. The market is very competitive, it will take us some time for that product to be established.

We just want to make sure that the product has a basis of a scientific story, which is a longer-term story, rather than a short-term pricing story.

Got it, that's helpful. Swami sir, is $400 million a reasonable base for the US business, notwithstanding the seasonality going forward, ex-acquisitions and some of these NCEs contributing?

I didn't understand the question. Yeah, 400 you're saying $400 million is the base.

That's correct.

So, 'cause it came down to 387 this quarter,

it's

just

That's reasonable to assume.

Got it. Last on Eugia, if you could give us a split for FY26 and '25 between US and ex-US.

It is

anyway, because we don't give separate numbers, but it is still contributes around 70% of the overall business. 30% comes from other than US, but going forward, we expect that to be a 60-40.

Got it. The 513 is the overall number, right?

US as well as ex-US.

That's right.

Okay. Wonderful.

Thank you. Dr.

Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

Tarang, let me correct myself. I think I talked about 2028 and 2031 in my earlier commentary and guidance for unit one and unit two of CMO.

If it is '28 and '31, then I'm talking about calendar years and not financial year. My apologies.

Got it. Thank you.

Thank you. Thank you very much, everyone, for joining us on the call today.

If you have any of your questions unanswered, please feel free to get in touch with the investor relations team. The transcript of this call will also be uploaded on our website, www.aurobindo.com, in due course.

Thank you once again, and have a great day ahead. Dr.

Satakarni Makkapati (CEO - Aurobindo Biosimilars, Vaccines, Peptide Businesses & Director):

Thank you.