Aurobindo Pharma Limited (NSE: AUROPHARMA) Q3 2025 Earnings Call dated Feb. 07, 2025
Corporate Participants:
Shriniwas Dange — Investor Relations
Santhanam Subramanian — Chief Financial Officer
Yugandhar Puvvala — Chief Executive Officer, Eugia Pharma Specialities Limited
Satakarni Makkapati — Chief Executive Officer of Aurobindo Biosimilars, Vaccines and Peptide Businesses & Director of Auro
V. Muralidharan — Chief Executive Officer, Europe Formulations Business
Analysts:
Tushar Manudhane — Analyst
Kunal Randeria — Analyst
Kunal Dhamesha — Analyst
Anubhav Aggarwal — Analyst
Yash Darak — Analyst
Surya Narayan Patra — Analyst
Abhinav — Analyst
Tarang Agarwal — Analyst
Neha Manpuria — Analyst
Shyam Srinivasan — Analyst
Vivek Agarwal — Analyst
Presentation:
Operator
[Started Abruptly] For you to ask questions after the management’s opening remarks. Should you need any assistant during the conference call, please raise your hand from the participant tab on the screen. Please note, this conference is being recorded.
I now hand over the conference to management for opening remarks. Thank you, sir, and over to you.
Shriniwas Dange — Investor Relations
Good morning and a warm welcome to our 3rd-quarter FY ’25 earnings call. I’m from the Investor Relations team. We hope you have received the Q3 FY ’25 financials and the press release that was sent out yesterday. These are also available on our website. I would now like to introduce my senior management team on the call with us today, represented by Dr Satakarni Makapati, CEO of Biosimilars, Vaccines and Peptide businesses; and Director Arbino Pharma Limited. MR. Yugandar Povala, CEO of Pharma Specialties Limited; Mr Swami, CEO of Windo Pharma USA; Mr Vimuran, CEO, Europe Formulations Business; and Mr S. Subramanian, CFO. We will 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 actual developments and results to vary materially from our expectations. Auro Bindo Pharma undertakes no obligation to publicly revise any forward-looking statements to reflect in future events or circumstances.
With that, I will hand over the call to Mr S. Subramanian for the highlights. Over to you, sir.
Santhanam Subramanian — Chief Financial Officer
Thank you, Suni. Good morning all, and a warm welcome to our Q3 FY ’25 earnings call. I’m pleased to share that we have delivered an exceptional performance in Q3 FY ’25, continuing our strong growth trajectory. This quarter, we have achieved our highest-ever quarterly revenues, reaching INR7,979 crores with a remarkable growth both year-on-year and a quarter-on-quarter. Our performance are fueled by robust base product sales in US, sustained momentum in Europe and ongoing expansion in high-growth markets. We saw impressive volume growth, successful product launches and maintained stable pricing, all contributing to a strong quarter. Gross contribution also stood at highest-level at INR4,663 crores.
Gross margins remained at 58.4%, increased by 130 bps year-on-year despite low transient sale but owing to-high benign raw-material prices. Our EBITDA stood at INR1,628 crores with a healthy margin at 20.4% even after obsorbing higher R&D cost of around INR50 crores over Q3 FY ’24 — Q2 FY ’24 level, given our strategic focus on development of complex products, including specialty and biosimilar. EBITDA before R&D stood at 25.8% or INR2,056 crore against INR975 crores in Q3 FY ’24. Our net profit for the quarter stood at INR846 crores. Our cash flows have improved significantly on the backdrop of a strong working capital management, leading to a reduction in net-debt of — net-debt of US dollar 84 million.
Now let me take you through the business highlights for the quarter. Formulation business. In Q3 FY ’25, our formulation business witnessed a robust year-on-year growth of 11% to INR6,973 crores, contributing approximately 87% of the total revenues. The API business recorded a revenue of INR1,006 crores, while pricing pressures continued, these are partly offset by the volume gains and the improved asset utilization USA. During the quarter, our US formulation business recorded revenues of US $435 million against US dollar to $421 million in Q2 FY ’25, reflecting a strong quarter-on-quarter growth. The price erosion on overall basis remained neutral supported by our well-diversified portfolio.
Revenue from overall genetic products in USA increased by 4% year-on-year to US dollar, INR297 million, driven by volume gains and new product launches. The injectable and specialty property business in US remained at $76 million, mainly due to low transient business scales and cutoff related issues due to the Christmas. As of December 31, 2024, we have a total of 226 specialty and injectable filing with 170 having final approvals and 56 under review. During the quarter, we filed four ANDAs, received final approval for eight and launched seven products. Europe. Our Europe formulation segment continues to deliver strong results, registering a revenue of INR2,121 crores, a significant growth 23% year-on-year. In constant-currency terms, our revenues stood at EUR236 million against EUR229 million in Q2 FY ’25. This growth was driven by robust performance across all key European geographies.
Growth market. Revenue from the growth market saw a remarkable 39% year-on-year increase reaching INR873 crores or US dollar of INR1.4 million, driven by our successful graphical expansion and strong sales momentum. ERV — the ARV business INR3.07 million again US dollar 36 million. The growth in ARV business was driven by additional opportunities.
Now going to the other highlights. The raw-material continued to be at level supporting our gross margin which stood at 58.4% against 57.1% of previous year. Net capex for the quarter is around INR106. The business had a net cash-flow of INR49 million during the quarter. This is supported by improved working capital position. As a result, the net-debt after investments at the end of December improved to million from US dollar $133 million in September ’24. We expect the net-debt to improve for the end-of-the fiscal year FY ’25. The average finance cost for the quarter was 5.6%. The average USD ironR exchange is at 84.46% against 83.76 in Q2 FY ’25.
New initiative. Our manufacturing capacity, we have a present formulation annual capacity of 50 billion units plus we intend to further increase the capacity to drive further growth. We have commercialized our China plant with an annual OSV of around 2 billion unit, which is expandable further over near-to-medium term. The plant is expected to contribute to revenues in FY ’26. We expect our US-based OSG plant Dayton to be commercialized in the next fiscal year. Our other plant in US at Rally, which is currently manufacturing topical is expected to be fully operational next fiscal year to include transdermal and respiratory. Building a strong portfolio with the respiratory in nature, we are working on a multiple respiratory products. Recently, we have partnered with a global pharma major for development of respiratory products, highlighting our commitment towards the complex portfolio.
Our backward integration, we are witnessing a good yield improvements in the capacity ramp-up process in our strategic investments, namely the PENG and Forward direct is on-track. We expect to breakeven by March ’25 and strong biosimilar product-line. The recent certificates followed by positive opinions emphasize our commitment and capabilities in our space. Looking ahead, we are — we are confident to continue our growth trajectory, driven by our robust and diverse product portfolio coupled with significant capacity enhancement, multiple upcoming launches and favorable market condition.
Our backward integration efforts are expected to drive enhanced operational efficiencies and deliver strong contribution to our financial performance in FY ’26, which not only offset the anticipated decline in transient sales, but also strengthen and sustain our revenue and profitability going-forward. The growth momentum in Europe and other key market is expected to sustain further accelerating our revenue stream. At the same time, our proactive efforts to optimize the working capital cycle will further enhance our balance sheet and improve cash-flow, reinforcing our financial stability and long-term growth potential. We are on-track to achieve our EBITDA margin of 21% to 22% for FY ’25. The next quarter is expected to be stronger driven by increased transient sale execution of strategic initiatives and improved operational efficiency.
This concludes my remarks. Now our business leaders will give more clarity on any specific aspects in our Q&A session. We are happy to take your questions. Thank you.
Questions and Answers:
Operator
We will now open the call for Q&A session. We will wait for a few minutes until the queue assembles. We request participants to restrict to two questions and then return to the queue for more questions. While asking questions request you to please identify yourself and your company name. Please raise your hand from the participant tab to ask the question. The first question is from Tushar
Tushar Manudhane
Yeah, am I audible?
Santhanam Subramanian
Yeah. Yes.
Tushar Manudhane
Yeah. Good morning, sir. Sir, just on Penji, to start with like what kind of operational loss currently we have for the quarter
Santhanam Subramanian
We had around INR60 crore operational loss and the plant has gone for a small shutdown for including or modifying some of the equipments which has completed and we started it 10 days back.
Tushar Manudhane
And what kind of pricing outlook are we sort of building once we breakeven or let’s say for the external sales?
Santhanam Subramanian
See, you have to look at it like that. We are the current pricing of PenG is around $26. However, having said that, we are not depending on the PenG sales alone, we have created capacities across the value chain of. So we will be able to supply it as FNG or 6APA or or whatever maybe. So we have enough — we are able to manage it even if the price goes down and we will be able to do it better.
Tushar Manudhane
Understood. And secondly on the — let’s say, in terms of the raw-material prices, what’s the outlook and whether this — do you see the inventory in this industry itself lowering down so that will benefit in terms of raw-material prices for us going-forward?
Santhanam Subramanian
I think the current raw-material prices continue to be there and what will happen because of the inventory going down, it’s a very futuristic question. But I think we at any point of time will be having around three to six months stop. So may not be a big issue in our view.
Tushar Manudhane
And sir, just lastly on Eugea, when do we see the production scaling up or let’s say the sales scaling up we see now like second-quarter where sales been little trending downwards?
Santhanam Subramanian
Yeah, my colleague, there will answer. But I would request you to restrict to everyone to two questions because we need to give opportunity last-time we could not give.
Yugandhar Puvvala
And so as you rightly said, it is basically like we are scaling up the production, mainly from and we have completed all the remedial actions. And this quarter onwards, we will be reaching to our original what we used to do, which is around 60% to 70% of capacity utilization. Right now, we are still doing around 50% capacity utilization. So I expect this quarter onwards, we should go back to the previous levels and I don’t expect any further decline happening from here on
Tushar Manudhane
So thank you.
Operator
The next question is from Kunal.
Kunal Randeria
Good morning, sir. So my question is around your plans in China. So how should we look at this market shaping up? Because in the past you and several of peers have spoken of this opportunity, but I don’t think there has been any material contribution yet. So just wondering if you can share some details, the kind of products you have, the time it takes to get approval, the reimbursement process, the launch pipeline you have and the revenue projection for the next two to three years.
Santhanam Subramanian
Yeah, Kunal, we started our China plant in the last week of November and it is in the ramping-up process. The China plant will start — will start building sometime in the month of April, mainly to the European markets. We also have certain approvals in for China also, right? And also we are getting the — we already got the European approval, so we can supply to Europe. China, we are in the process of getting it and after that there may be a inspection for US also. So in the next year, it will ramp-up fully and probably in another two to three years, we will see good attraction coming out-of-the China plant
Kunal Randeria
And the kind of products and just curious why would you be, I mean not trying to supply more to the Chinese market?
Santhanam Subramanian
No, I mean, immediately, we are having the European approval. So we’ll supply to Europe as and when we get the approval from China plan — China regulatory authorities for the China plan, we will supply to China also.
Kunal Randeria
Right. And any revenue number would you would like to call-out now for the next few years.
Santhanam Subramanian
This being the first year we may not like to test because we are also moving ahead. So we may not like to give it in the first year. But certainly in two to three years, I see a significant revenue coming up in two to three years’ time.
Kunal Randeria
Sure. And just one more if I can. For the 4th-quarter, should your Revlimid sales be higher than the 4th-quarter of last year? I mean very significant
Yugandhar Puvvala
I think, yes. And beyond that, I don’t want to say anything, but yes.
Kunal Randeria
Sure. Thank you, sir.
Operator
Thank you. The next question is from Kudal Dhamesh.
Kunal Dhamesha
Hi, thank you for the opportunity. So sir, when I look at we have said that our revenue growth in this quarter on a year-on-year basis, excluding the transient product is around 12% year-on-year. So that’s a — that’s a good outcome. Can you help us with a similar number for nine months FY ’25?
Santhanam Subramanian
I will work it out. I don’t have it right now. I’ll get it done.
Kunal Dhamesha
Sure, sure. And on the transient product, how do we expect it to evolve in FY ’26 since there is a patent expiry also coming in for us because there’ll be some buying pattern change as well. So how are you thinking about it you?
Yugandhar Puvvala
Sorry, Kunal, I didn’t get — is it specific to some product or like
Kunal Dhamesha
Specific to generic Revlimid, right, because there is patent expiry in, let’s say, January and everyone has given particular market-share, you know. So is there a meaningful change that you expect early-on in the year, let’s say, FY ’26 in terms of buying pattern, price erosion, volumes or would it be most —
Yugandhar Puvvala
A lot of things are possible, Kunal. That’s why like we are trying to do because we don’t know exactly how the market will shape up going-forward into FY ’26. So we are conscious of that and whatever volume what we have, we wanted to maximize the opportunity in Q4 and Q1. That’s our thought process. Now how things will shape up, I won’t be in a position to clearly tell, but yes, the closer you go towards Jan 2026, things are going to change dynamically, okay. So I don’t know what others will do, but I know what I will do, okay. Obviously, like we do have plans of continuing generic leverablimid post the patent expiry starting from 1st February 2026 and it will be like any other generic but we want to be there, even the post.
Kunal Dhamesha
Sure. Sure. And one for Dr Satkarni on the positive CHMP opinion that we have got on filgrasib now. So what’s our launch plan, I believe we need to still get the marketing authorization approved and then we can launch. So what’s the timeline there and then how the pipeline is looking?
Satakarni Makkapati
Good morning, Kunal. So with respect to the positive opinions that we have received from CHMP, team on the long-acting team. I expect the marketing approvals in two months’ time that’s the usual timeline from receiving a positive opinion to completing the European Commission formalities for receiving a positive opinion. So considering Dyrupeg or the gets approved in April and slightly before that, we already have a biosimilar approval in UK so I think we will be starting our commercial supplies into the EU starting the quarter of July.. So in all likelihood, I expect a quarter-and-quarter and a half of revenue bookings to begin from this year. That’s part one of your question. Now what was the part two about the pipeline, right?
Kunal Dhamesha
And yeah, yeah. In terms of how we have evolved, let’s say quarter two, quarter three, any clinical trial updates, etc that we have for the pipeline for pipeline?
Satakarni Makkapati
So we have four more products in the Phase-3 clinical trials. As I told you, I think last quarter, the biosimilar to XGVA and, which is a denosmab biosimilar being tested in post-menopausal. We are on-track to conclude the clinical study by May this year, which means that we will have the clinical study report available with us by September and I hope to if there are no further delays because this trial was completely conducted in eight European countries and 65 sites. So there are no further delays in cleaning the data, then I expect the European filing to be in the — in the October quarter and the US filing to be in the Q4 of the next fiscal.
With respect to, which is a biosimilar to Jole that is being tested in chronic spontaneous across the European sites in Caucasian public. We are slightly delayed by about four to five months in closing out the recruitment. I think I talked about it last quarter, but what is important to note is we made-up for a couple of months by increasing the number of sites in India. Earlier, India was not part of the recruitment plans, which means that I’ll still have a delay of three months in closing out the study, but I am quietly confident that by the end of this year, the omaligimab clinical study will be concluded as well. We already announced a positive Phase-1 results with versus the European and the US innovative product, I think last year.
So we are quietly confident of closing out the clinical study by the end-of-the year and Q4 filing at least in Europe still looks a possibility in the next fiscal. So that’s about the omaligimab clinical study. The bevacizumab clinical study has been going on for about three years now. We are — we are inching towards the closure. I think in two quarters’ time we will conclude the recruitment and phase and probably we will have a filing in Q1, Q2 of the next fiscal which means 26/27 for bevacizumab. But with the MHRA approval that we received for bevacizumab, we are talking to a few regulatory agencies in the emerging and the semi-regulated markets where we can position the dossier based on the MHRA approval alone.
It’s still very dynamic in the way regulatory agencies look at how a product gets approved only based on Phase-1 and what is the process forward in approving it. So if there are any approvals that I receive in emerging markets or semi-regulatory markets, I’ll let you know. The ophthalmic product is slow. We have a ophthalmic product in clinical trials. We are only at around 50% of the recruitment. So I don’t think we’ll be able to complete the recruitment in 2025 as estimated before. I think we will be well into the second-half of 2026 when we conclude the Phase-3 clinical trial for the ophthalmic product.
So in the nutshell, except for the ophthalmic product, the pipeline is advancing fairly well and with the — with the approvals that we have received or the positive opinions that we have received, we are quietly confident by ’26, we will be able to at least have six to seven products in the European and the semi-regulated markets. I hope that answers your question.
Kunal Dhamesha
Yes, yes. Thank you, sir for the detailed update and all the best.
Satakarni Makkapati
Thank you.
Operator
Thank you. The next question is from Anubhav Agarwal
Anubhav Aggarwal
Yeah. Hi guys. Good morning to all. Two questions. One is for Ugandha, sir. First, on the injectable business. When I look at data, I do not see significant ramp-up over last two or 3/4. The sales are just languishing. I understand that you guys been shipping this quarter had cut-off effect, etc. But is it just a production problem where you say that you have 50% capacity utilization or there is unwillingness from the customer side to take product because of UJ situation.
Yugandhar Puvvala
No, it is mainly the production problem. I can tell you that with full confidence, it is that we are ramping-up slowly and we don’t want to rush anything. And all our contracts and interest from the customers is very much very, very-high and we are not in a position to meet the demand. But I don’t want to rush anything just to meet the demand. That’s why I said it is main July, I expect Q4 and Q1 of next year to be much better. But in terms of customer interest and all the contracts, very much in-place. Absolutely no issues.
Anubhav Aggarwal
And on the utilization, the reason utilization is low is because CAPA progress is happening are — does the facility still have a lot of consultants over there?
Yugandhar Puvvala
No. Consultants are no longer there. We just have transient consultants like just — I think you are aware that we had a meeting with FDA and everything has been sorted-out in October itself. And we have just transit consultants who are just two or three people working with us. Beyond that, we don’t have any consultants no longer available and normal required even as per FDA. And so we are just — what we are doing is because we have put in a lot of, we are recruiting more people to ensure that we meet up to our and the recruitment process has taken time because you know like injectables getting good manpower is also not easy. So now like we have all the people in-place. We have 95% of our requirement in terms of number of people, all have joined. They are under training. From February onwards, everybody is on-the-job. So that’s why from March onwards, I expect the production ramp-up to happen to the original levels.
Anubhav Aggarwal
That’s very helpful. My second question is on the biosimilar front and this is both for Supramenium sir and sir both. I’m just trying to understand today as a fact, when we have R&D above INR1,700 crores for the year, how much of that is going to biosimilar? That’s one part of the question. Secondly, how much freedom has Satani — sir got in terms of expense that you can do on the biosimilar front, what is the target that when does biosimilar as a business become profitable for Window?,
Satakarni Makkapati
I would take the question and ask Subur to chime in with the numbers. The part one of the question, I think we spent roughly about — as a company, we spent roughly about, 30% 35%, 30% to 35% of our R&D spend goes into funding the development of biosimilars. So we will be able to give the exact numbers. But this is primarily driven by the Phase-3 clinical expenditure. So out-of-the overall spend that we make on biosimilars, around 70% to 75% of the expenditure is incurred towards conducting the pivotal of Phase-3 efficacy studies. So in the nutshell, around 30% to 35% of the overall R&D spend is spent towards biosimilars. Now to the part two of the question, what was the part two of the question? Part of the question?
Anubhav Aggarwal
Yes. Part two of the question is, one, when does biosimilars as a division becomes profitable? Secondly, you are only using R&D as part of R&D as a resource right now, Armando has a very strong balance sheet also. So do you have the liberty to buy products also as your peers are doing versus developing all yourself?
Satakarni Makkapati
So very interesting question. I’m actually dabbling with those thoughts on how myself because any company of the size of us cannot do all biosimilars by ourselves. It requires an armity of resources allocation to conduct and develop these many products and clinical studies that we are doing. If you look at when we started out in 2018, July to now, we have conducted about, I think six Phase-3 clinical trials around eight or nine Phase-1 clinical trials. So that’s the size of biosimilar studies that companies like Sandoz and the do. But having said that, any licensing opportunity that comes our way that we believe will lend a advantage to our businesses in Europe and US, we are open — open to those. We are scouting for a couple of opportunities, but we are more internally focused right now.
In fact, our second wave of products or the third wave of products that you may call them post 2028, most of the product pipeline is now in a decent development-stage where we may begin the Phase-1 and Phase-3 clinical studies starting end of 2025 and early 2026. So any products that we miss out from our portfolio, which we think will make a significant addition to our commercial base in regulated or semi-regulated markets, we are — we are open to in-licensing opportunities. There is enough freedom to go out and scout for products and in-license them when and if required and hope. But right now, we covered most of the important products that we think will position us both in oncology, dermatology and the immunology segment, so dermatology is part of immunology. So we seem pretty confident with the broader pipeline that we already have.
To answer the next part of your question, when we think as a business, we will be breaking even. As I told you, 2028 to 2030 will be the inflection point of this business. You can already see that we have three products which are approved two with a positive open in Europe, one in UK and we are expecting one more this year. And with adenosmab, omaligimab and one more in the next year, we expect at least seven products to be commercialized fully by the year 2027 and 28 to 30 will build-in a good revenue base for us where I think the company takes off by itself. So we are expecting a — we are enthusiastic about the progress that we are making and we are very sure — very sure footed in our investment and very prudent about the choices we are making in the biosimilar segment and above.
Anubhav Aggarwal
Thank you. That’s very comprehensive. Thank you very much.
Satakarni Makkapati
Thank you.
Operator
Next question is from Yash Hi, yes.
Satakarni Makkapati
And we go to the next question.
Yash Darak
Hello, am I audible?
Operator
Yes. Yeah, yeah.
Yash Darak
Yeah. So can you please state around with regards to the operationalization stage — operationalization status at PenG and at what percent of utilization are working and how do we see it progressing forward?
Santhanam Subramanian
Sure. Yeah, yes, the question of talking about utilization is secondary. The first thing what we have done is how do we improve the yields, et-cetera, which we have been working and we have been fairly success after the modification, slight modification, et-cetera, we have been done and we’ll be — we have been seeing very good results really. And next two months, we will continue that and the ramp-up will take place starting April.
Yash Darak
Okay, sir. Thank you.
Santhanam Subramanian
See, it is not the question of capacity utilization. You need to achieve that desired EBIT yield level, that’s what we are working on.
Yash Darak
So do we expect the sales to ramp-up from April?
Santhanam Subramanian
I think that is what we are planning. In fact, if it, everything goes well, March also, we may able to do that, but let’s take it as the April.
Yash Darak
Okay. And secondly, sir, there was a PLI scheme which was introduced in the budget with regard amounting to INR45 crores. Are we expecting to benefit from that?
Santhanam Subramanian
That is more of R&D, if I’m right.
Yash Darak
Yes, with regards to APIs.
Santhanam Subramanian
Yeah, I think I have not seen in the last four days any guidelines, et, probably I probably busy with the board papers and other things, probably certainly if there is an opportunity, we’ll apply to them. I think lot of good are being done in by the various business teams starting biosimilar injectable peptide, everything. So certainly respiratory and other things. So certainly, we look into every possible opportunity, but we have not seen the guidelines as on-date. At least I have not seen here.
Yash Darak
Yeah, I understood. My final question would be regards to the EBITDA margin. When we guide for 21% to 22% of EBITDA margin, is it excluding the R&D or is it included in the R&D? Since
Santhanam Subramanian
We don’t know R&D, SEB, everything put together only we optimal.
Yash Darak
Because we haven’t been able to achieve the guided target these 3/4. So are we still confident of achieving the 21% to 22% EBITDA margin guidance?
Santhanam Subramanian
Yes.
Yash Darak
Okay, sir. Okay, sir. Thank you. That’s all from my side.
Operator
Thank you. The next question is from Surya Patra.
Surya Narayan Patra
Thanks for the opportunity, sir. My first question is on the respiratory product opportunities what you have talked in the opening remarks also. So we know that there has been around 14 odd products that has already been there in the various stages of development. And I think last quarter that we have also collaborated with one of the US companies to develop even a basket more. So could you give some sense what is the progress on those products, what kind of product that we are talking about there? And by when that we will really start seeing a seeing revenue contribution coming from that side.
Satakarni Makkapati
So maybe we can take this question is Primarily we are talking about the MDI and DPI. Yes, you’re right, we had announced last month — last quarter about type with firm, an international firm. Now apart from that, we have a good R&D setup. We are developing a few products and we are in the stage — various stages. In some cases, the fighting has been done and then at least two of them filing has been done and few more are in advanced-stage. And we believe that these are good products with fairly good dollar values. And we anticipate some of these products to come in late in FY ’26 FY26 or maybe in the mid first-half of FY ’27. And then from there, we would have regular products coming in.
Surya Narayan Patra
Okay. And this collaboration, if you can just add some color on that.
Satakarni Makkapati
See this is we have already announced what whatever — I mean, we had already talked about it earlier. We have tied-up with the firm for the development of the product and we will be launching it. This is a little medium-term, it’s not short-term. Obviously, the development takes some time. We believe that this product has got a large market and we also feel confident that we should be able to launch it without any IP constraints. And we have taken care of that. We believe. And so beyond that, what can I tell you? This is a large company that we have tied-up with and there is another party which is helping in the development too.
Surya Narayan Patra
Okay. Okay. My second question is on the US business front, sir. I think we have seen there is a kind of that uptick in the branded oncology business beyond the kind of a run-rate of a 25 to 30 what it has been indicated earlier. And similarly, even the OTC also has seen a kind of a sequential as well as a Y-o-Y uptick. And on the UGR front, what around sequentially in the last two quarters, $20 million kind of a sequential decline that we are witnessing. So is it entirely because of that facility issue. So if you can address these three segments.
Satakarni Makkapati
Sure. So usual part, I would leave it to you,, to handle. Other than, I can talk about oral solids and RX oral solids in the OTC. So would, would you like to take a first?
Yugandhar Puvvala
I think I already clarified that like last two quarters have been, it is mainly related to supply-related issues and it is per quarter like we were impacted by around $10 million. And I expect from this quarter onwards, we’ll back to normal run-rate. It is mainly driven by the supply challenges, not related to the demand challenges. Okay. So that I hope I’ve clarified multiple times. I hope that addresses that your question.
Surya Narayan Patra
Thank you, sir. Okay.
Satakarni Makkapati
So I’ll talk about the oral solids and OTC. On both sides, we had a very good quarter with all-round progress. There has been steady progress and we believe that this will continue going-forward and we are focused on sustainable long-term waste business and we are making more efforts to try and achieve that growth. And we have a robust set of commercial products already in important — almost all therapeutic segments and we are rapidly moving to a future with much more diversified portfolio. You had mentioned about the MDI, the inhalation product. Similarly, we have in transdermal area and we are trying to diversify into different presentation more value-added, value-creating a product.
And we have also emerged an expansive pipeline with great potential to sustain. And our goal is to be the global generic powerhouse, which we are to an extent at this point, but we will — we expect to continue being there and doing better. Okay. On the OTC, I’m sorry, I’ll just briefly mentioned about OTC. So finally, we have seen some traction in the OTC business in the last two quarters and December quarter was fairly significant in terms of some breakthrough. We think that OTC would continue to grow. And over the next few quarters, I think you would hear more about it and we would see a fairly good growth in OTC business.
Surya Narayan Patra
So with your permission, can I just ask one more clarific question, this is about oropeptide. Now can you — Satani, sir, can you give some sense about what is our preparedness about the GLP ones? And also the kind of a competitive edge that we would be having because here most of the competing peers are indicating about integrated operation there. So if all are kind of yeah hello with
Satakarni Makkapati
Can you hear me, Surya?
Surya Narayan Patra
Yeah. Hello. Yes, sir.
Satakarni Makkapati
So is into the manufacturing of APIs. So with respect to GLP, right now, we have one peptide, one GLP-1 peptide with an active DMF, the other one we are going to file the DMF this year. And we are investing in development of another GLP-1 peptide. Anything on the finished product, you should talk to Yugandar. He will be able to answer that.
Surya Narayan Patra
Yeah. Yes, please.
Yugandhar Puvvala
Yeah. So yeah, we have entire GLP product range. In fact, our Wisack plant, we have a significant capacity cartridge line where we’ll be filing all the GLP-1 products, Lira, CMR, eriperatide, okay. Everything in the GLP pipeline is covered by us and we will be filing from our new plant.
Surya Narayan Patra
Okay. And even the devices are captive.
Yugandhar Puvvala
Device is always outside because either it is from BD or from somebody else like device manufacturing is always by any company for that matter that all devices are procured from outside, but device assembly along with the medication happens in our plant. But device per se is always from outside companies. Nobody produces device pharma companies.
Surya Narayan Patra
Sure, sure. Yeah. Thank you, sir.
Operator
Next question is from.
Abhinav
Hi, good morning. A couple of questions from my side. We have seen exceptionally strong growth in Europe and ROW for the quarter as well as nine months. What is driving this? Europe, ROW.,
Santhanam Subramanian
Please.
V. Muralidharan
Yeah. Hi, good morning. This is Murli Garan. Yeah, thank you for raising this question. Is Europe has been contributing close to 27% of the global revenues for. Currently, we are doing this based on the wide portfolio of the products and efficient supply-chain and increased supplies originating mainly from India and faster turnaround of the products at our quality lab, mainly at Malta. Some of these factors are — and a well-oiled front-end infrastructure and machinery commercial infrastructure. So all these are working in our favor at this moment. Also, we are availing the market opportunities in a big way and other mechanisms and advance like the demand forecasting and timely supplies. All these are contributing to this robust performance and we expect the momentum to continue in the coming year and quarters ahead. And having said that, we are looking for further launches that will happen from UGI space as well as biosimilar space and that will further take us to the higher levels.
Abhinav
Got it. But most of these things would have been a work-in progress over the years, but what has really happened this year that suddenly there is a growth spot?
V. Muralidharan
No, over the — you’re right in it, but at the same time, over the last several quarters or last couple of years, we were fine-tuning. We are missing out on a couple of these aspects to happen in the right tandem and definitely things are happening in the right perspective as of now.
Abhinav
Got it, got it.
Yugandhar Puvvala
Just to add because there can be supply challenges from a lot of companies and we are in a position to take — in fact, like even UGI has been growing at a rate of 20% in Europe. So we don’t want to comment on other organizations, but yes, we have been seeing supply challenges from multiple companies and we are in a position to fulfill the demand wherever the gaps are.
Abhinav
Understood. Thank you. My second question is about India. So you have this trustusumab approval already. How do you plan to sell it? Have you partnered with other companies? And second, when the GLP-1 opportunity opens up in India, how do you plan to sell it? Do you have partners already in-place?
Satakarni Makkapati
I’ll take the question be no so we have an approval by the for. We are we are putting together a domestic marketing and sales team which will kick-in probably by the end of this year. But until then the first two quarters, the sales will be through co-marketing partners. But going-forward, in the domestic market, we are going to add a good sales team essentially take our biosimilars to the patients and the prescribers. So that’s the strategy that you will see evolving in the next two to four quarters’ time.
Abhinav
Understood. And the is only for biosimilars. You won’t have any other products.
Satakarni Makkapati
So for the — for the biosimilars, we are having a separate sales team because they specialize in branding it and importantly, there is a lot of network that is required to put forward biosimilars to the prescribers convincingly. But having said that, any support to medication or concomitant medication that goes with biosimilars will also be — will also be marketed by the same team.
Abhinav
Understood. And GLP-1 plans?
Satakarni Makkapati
For India GLP-1, we have our plans. We are talking to the agencies to see what sort of study requirements our study requirements must be met, but you will see some announcement from me in the next two to two quarters’ time about our strategy in the domestic market for GLP-1s.
Abhinav
Okay. And do you expect
Santhanam Subramanian
My suggestion is there are 10 people waiting now. Let’s restrict you have been keep on asking questions. Sure. 10 people waiting the queue, only 10 minutes left out.
Abhinav
Sure. Thank you. Yes.
Operator
The next question is from Tarant Agarwal
Tarang Agarwal
Hi, good morning. Am I audible?
Santhanam Subramanian
Yeah.
Tarang Agarwal
Okay. On UGIA, sir, you said that UGI utilizations currently are at about 50% for UGI 3. Does this also include the expanded capacity of UGA 3?
Santhanam Subramanian
No current. It’s actually like expanded capacity is line 13, line 14 and I’m not even considering. I’m talking about the about the existing capacity of — because those lines are not approved so-far. So I don’t consider them as a capacity available. But up to whatever lines we have, we have been using around 70% 75% in the past. Right now, we were using around 50. So like we are confident that we will come back to our original levels of 65% 70% capacity utilization of the previous capacity. As and when the new line gets approved, that will be an additional capacities.
Tarang Agarwal
Got it. Sir, so practically what is the utilization that the business can go through, number-one. Number two, between line 13, line 14 and the plants, when do you expect the approvals to come through? And if one were to consider line 13 and line 14 capacity to be theoretically available and to be theoretically available as on-date, what would be the utilization for the injectables business.
Santhanam Subramanian
It will be — and see like is still in an escent stages because we got approvals for terminally sterilized lines. Now we will be going for the aseptic lines approval, that audit is due and then we will be adding different varieties of things in. The cartridge lines will be all exclusive only for VISAG and there is a PFS, BFS, all those lines, what we will be adding. So between UGI 3 and the facility, we will have significant capacity to take care of till up to FY ’30 in terms of the capacity available for the business and our business growth plans.
Tarang Agarwal
All right. And would it be fair to presume that for the normalized injectables business, $85 million to $90 million of US revenue and about $45 million of Europe revenue should be a good base to go from Q4 onwards?
Satakarni Makkapati
Yes.
Tarang Agarwal
Got it. Thank you, sir. And the last question on Europe, sir, you know, fantastic execution over the last three years, I would say, euro revenues have been growing at the range of anywhere between 10% to 13%. If I look at it from a nine monthly basis. Just wanted to get a of you know-how are the margins on this business? Because as we understand at some point of time, the margins were low middle digits and there was an inflection point that the business was looking for those margins to really inch up. So a comment there would be helpful. And how should we see this EUR235 million run-rate going-forward on a quarterly basis,
Satakarni Makkapati
Tarang, thank you for this. Yeah. I mean on the margin side as well, as we are very constantly looking at the opportunity sales to be awhile, definitely, we are clocking better margins. Of course, specific numbers Subhu will be able to comment at the appropriate time. And coming to the run-rate of EUR230 million-plus is we are confident of sustaining this in the coming period as well. If I have to take January as a benchmark, definitely we are on it. But yes, we will announce the full-quarter results as we come to the end-of-the financial year.
Tarang Agarwal
Okay. Thank you, sir, all the best.
Satakarni Makkapati
Thank you
Operator
In mind the time we will restrict to one question only. The next question is from Neham and Guria.
Neha Manpuria
Yeah, thanks for taking my question. Sami, sir, you, the 2 billion units in China that will free-up capacity probably in the India manufacturing for the US market. And the fact that we are also adding capacity in rally, et-cetera, how much additional capacity would you have for the US market going into next year? And how confident are we of being able to actually capitalize on that without you know necessarily putting pressure on the market given how large we have become in the US?
Santhanam Subramanian
Thanks. I’ll take the second question first on the ability to sell the volume that’s being generated. We are happy to take on more volumes. We have a good market. As you know, we have — we are number-one in years in terms of prescription. We have a large base, but we believe that we have scope to grow. We are today 11% market-share. We think that this scope to grow given our background, given our infrastructure in India. Now the North Carolina facility is nothing to do with the oral solid. It’s a differentiated presentation. One is the topical transdermal and the inhalation. So that we don’t have to count towards a normal 2 billion-odd we are selling here. As far as China is concerned, China is not only for years, it’s also for other markets. So we are looking for contribution from China in terms of volume. And even our own units, I think they are adding balancing equipment, they’re able to ramp-up. We could see some more volume surge in the next few quarters and we’ll be able to take it off. We don’t see a situation at this point where we would have these facilities being underutilized, except for pockets. There may be a seasonal issue at that time, it may be an issue. Otherwise, we think we are good one.
Neha Manpuria
Understood. So we don’t see a situation where the additional capacity in India does not necessarily get absorbed in the US. We have that much of visibility.
Santhanam Subramanian
Yeah, not in the short-to-medium term, definitely.
Neha Manpuria
Understood. And my last question on the CDMO capacity, I see that we’ve announced an expansion in the presentation, we’ve mentioned we are adding, I think another 30 KL. Is this still for MSD or is this a new CDMO contract or this is in anticipation of demand?
Satakarni Makkapati
Nehar, this is in anticipation of the demand. The reason being that when we conceptualize a facility for 4 into 15 KL bioreactor capacities, building two lines and leaving out the other two in — for Phase-2 addition, we did not want to leave it too late. So we just wanted to make sure that as we construct the facility now, we have the scope of adding these two lines so that there are no future design changes that would be required. So it’s more of a more of an engineering prudence that drove the decision and the business prudence would be that we at some point would expect more demand and to meet the demand, it is better to have the capacities in-place than arrange it then with some sort of a delay. So it’s more of in anticipation of the demand and considering the engineering requirements now.
Neha Manpuria
Thank you so much.
Operator
Keeping in mind the time, we will now take last two questions. The next question, the next question is from
Shyam Srinivasan
Thank you for — good morning. Thank you for taking my question. Most of my questions have been asked. So just one on the macro and new administration in the US. So just want to understand there’s a potential tariff that potential tariff on pharmaceuticals. So as a company, as an industry, what are some of the pushbacks that we give like a lobby back to the US government, which probably may think of tariffs? Is it our footprint in the US in terms of manufacturing? When we talk about new capacity additions in the US, is there more onshoring as a theme that you will probably suggest to them? And what could be some of the mitigation efforts on this one? So I know it’s a — it’s a hypothetical question at this point of time, but want to understand what are some of the broad contours that the management is thinking about.
V. Muralidharan
Thanks, Shav. I’ll –, I’ll take this question. So we — as yet, we don’t know what’s the final outcome. We don’t know about the tariff. There’s a lot of noise right now. We do know that from China, there is some import tariff. But there is nothing that we don’t believe is going to be a challenge for us. You know, we would continue to import from India and what happens even the competitors would be in the same-state as we are in. That’s one. You’re right, as not just as a mitigation strategy, but as a strategy itself, we have built-up good infrastructure in the US. We have a plan that’s coming up and we also have the Puerto Rico plan which can be — which we can commercialize very soon with short notice. So we are — we believe that we are well geared up to meet any challenges that comes up as far as the US market is concerned?
Shyam Srinivasan
And sir, just if I may squeeze in. In terms of ROCEs, are these investments, or is there a way to make sure these ROCEs are higher than where we are corporate averages are because that’s the prime reason why we moved manufacturing out in the first-place, right? So is there any other way to recoup margins or returns?
Santhanam Subramanian
No, I mean, Shyam, the units like or Qual or China, these are all-in the ramping-up and then incurring losses. Once the full ramp-up is taking place, you see it will get converted into positive, so which will help us to improve the ROCE, right? And plus the capital expenditure, which you’re doing more of adding lines to the existing plants, etc., more of, which also will help to improve the ramp — which will also help to improve the ROCE in a significant manner. Probably the — you can see the big actions — I mean, all these actions will be coming in the second-half of the next fiscal. Clearly you will able to see that that’s what my belief.
Shyam Srinivasan
Got it. Thank you and all the best.
Santhanam Subramanian
One thing we go to next question again
Satakarni Makkapati
Looks like there is a problem when the theme self was not there got knocked off from the list. Okay. So I think,, you can take it out. Yeah. Yeah.
Santhanam Subramanian
So the next question is from the line of Mr Vivek Agarwal. We’ll take this last question and then conclude. So, can you please unmute Vivek?
Vivek Agarwal
Yeah, thanks. Thanks for the opportunity. The question is related to gross margins. Currently, we are in the range of around 58%, 59% over the last few quarters and again, it’s a decent number. Just want to understand, will you be able to maintain this margin, let’s say, around one to two years down the line? Because there’s a couple of moving parts like Pen G is coming, there may be like relimit, et-cetera, might be coming down. So any broader color would be helpful for a one to two years perspective, how we should look at this number? Thank you.
Santhanam Subramanian
Asking question, you have already given the answer. What else I can add beyond what you’re saying? Already all this product and other things should start contributing, which will help to retain the gross margin certainly.
Vivek Agarwal
Understood. Thank you, sir. Just understanding — just trying to understand, can this margin move-up from here on — from here on meaningfully or you will be able to maintain this margin? Thank you.
Santhanam Subramanian
Let’s park this question for the next call now.
Vivek Agarwal
Okay, sir. Thank you.
Santhanam Subramanian
Thank you.
Vivek Agarwal
Good luck.
Satakarni Makkapati
Hey. Shini, close it.
Santhanam Subramanian
Okay. Thank you all for joining us on the call today. If you have any of your questions unanswered, please feel free-to keep in touch with the Investor Relations team. The transcript of this call will be uploaded on our website, www.arbindo.com in due course. Thank you and have a great day thank you all.