AUROPHARMA - Aurobindo Pharma Ltd. Share Price

Aurobindo Pharma's management provided a positive outlook for FY26, building on the strong performance achieved in FY25. For FY26, the company aims for a high single-digit revenue growth, excluding any transient product impacts. They expressed confidence in sustaining growth, particularly in Europe and other key markets.

Key forward-looking points include:

• Revenue Targets: Aiming for a revenue growth rate of high single digits for FY26, with anticipation that revenues from the European market will continue to boost overall performance.
• EBITDA Margins: Management intends to maintain current EBITDA margins, which for FY25 stood at 20.8%. They expect similar performance in FY26.
• Pen-G Production: The company plans to include 6-8 months of production contributions from the Pen-G plant in their revenue guidance for FY26. The Pen-G facility was impacted by a fire incident but is expected to resume operations soon.
• New Plant Contributions: Expected commercialization of the US-based OSD plant at Dayton and significant contributions from the China plant, which has started supplying to Europe.
• Biosimilars: Approvals and the launch of several biosimilar products in Europe are projected to enhance revenue streams starting in the upcoming fiscal years, with Dr. Makkapati stating that he expects the biosimilar business could bring in revenues between US$ 250 million to US$ 400 million by 2030.
• Research & Development Expenditures: In FY25, R&D spending was Rs. 1,622 crores (5.1% of revenue), indicating ongoing investments in product development that will support long-term growth.

Overall, management showcased a strategic approach aimed at capitalizing on both established and emerging markets to drive sustained revenue growth and maintain profitability while navigating regulatory and operational challenges.

Question 1: Damayanti Kerai asked, "I understand moving from 3Q to 4Q, you have booked sizably large sales from Revlimid. My question is whether this 4th Quarter number reflects what you originally planned, or have you held back some supplies?"

Yugandhar Puvvala: "We've executed our plan for Revlimid fully in Q4 FY25. There were no supplies held back due to price renegotiations or competition. Everything we intended to achieve this quarter was accomplished, and we are prepared for the limited quantities in FY26 without any spillover from FY25 to FY26."

Question 2: Tushar Manudhane inquired, "Can you elaborate on the strategy to sustain Europe business, which has shown high-teen growth?"

Management: "In Europe, we've strengthened our supply chain efficiency and decreased out-of-stock situations. We anticipate maintaining this momentum with significant product launches planned for FY26, including loss of exclusivity products. Our focus on addressing shortages and enhancing logistics positions us well for sustained growth."

Question 3: Neha Manpuria asked, "When should we expect the production normalization for the PLI capacity post the fire incident?"

S. Subramanian: "Normalization will depend heavily on government approvals, which we cannot precisely time. We are actively working with authorities for a quick turnaround. Our PLI production must be at full capacity to be profitable. The current pandemic developments may impact approval timelines positively."

Question 4: Shyam Srinivasan sought clarity on the impact of the Pen-G plant fire incident and expected production trajectory.

S. Subramanian: "The fire was caused by the self-ignition of coal near a conveyor belt. We've rectified the issue and submitted renewal applications for inspection. We expect production to resume soon, though specific timelines are uncertain. Pricing dynamics are favorable as a result of competitive pressures in the market."

Question 5: Nitin Agarwal asked, "At what time frames do we start to expect decent returns on our investments in the biosimilar business?"

Dr. Satakarni Makkapati: "We anticipate 2028 as the inflection point for our biosimilars, with the business stabilizing around seven products in regulated markets by 2030. This timeline reflects our investments and the complexities of regulatory approvals, particularly in Europe and the U.S."

These questions and answers summarize the major themes discussed during the Q&A session, reflecting the company's performance, production expectations, and strategic plans for growth.