Aurobindo Pharma Limited (NSE: AUROPHARMA) Q3 2026 Earnings Call dated Feb. 10, 2026
Corporate Participants:
Varun Mali — Aurobindo Pharma Limited
S. Subramanian — Chief Financial Officer
Yugandhar Puvvala — Chief Executive Officer
Venugopalan Muralidharan — Chief Executive Officer Europe Formulations Business
Swami Iyer — Chief Executive Officer &Aurobindo Pharma, USA
Satakarni Makkapati — Chief Executive Officer &Aurobindo Biosimilars, Vaccines and Peptide Businesses & Director
V. Muralidharan — Chief Executive Officer & Europe Formulations Business
Analysts:
Unidentified Participant
Tushar Manudane — Analyst
Damyanti Kerai — Analyst
Neha Manpuria — Analyst
Tarang Agarwal — Analyst
Shyam Srinivas — Analyst
Kunal Dhamesha — Analyst
Harshit Dhoot — Analyst
Nitin Agarwal — Analyst
Presentation:
operator
Ladies and Gentlemen, good day and welcome to Aurobindo Pharma’s Anand conference call for the third quarter of FY26. Please note all participants line will be in listen only mode and there will be an opportunity for you to ask questions after management’s opening remarks. Should you need any assistance 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 confidence to Mr. Varun Mali for opening remarks. Thank you. And over to you sir.
Varun Mali — Aurobindo Pharma Limited
Thank you Vandit Good morning ladies and gentlemen and welcome to our third quarter FY26 earnings call. I’m Varun Mali from the Investor Relations and Corporate Communications team. We hope you have received the Q3 FY26 financials and the press release that was sent out yesterday. These are also available on our website www.aurobindo.com. i would now like to introduce our senior management team who’s on the call with us today. Represented by Dr. Satakarni Makapati, CEO, Aurobindo Biosimilars, Vaccines and Peptide Businesses and Director, Aurobindo Pharma Limited Mr. Ugandar Powala, CEO, Ugfarma Specialties Limited Mr. Swami Iyer, CEO, Aurobindo Pharma USA Mr.
V. Murlidharan, CEO, Europe Formulations Business Mr. S. Subramanian, CFO, Aurobindo Pharma Limited we will begin the call with the summary highlights from the management followed by an interactive Q and 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 a future business, business development and commercial performance. While these forward looking statements exemplify our judgment and future expectations concerning the development of a business, a number of risks, uncertainties and other important factors may cause actual 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.
S. Subramanian — Chief Financial Officer
Good morning everyone. A very warm welcome to Aurobindo Pharma Q3FY26 earnings call. Thank you for taking the time to join us today to discuss the Company’s financial and operational performance of the third quarter of the current fiscal year. Let me begin with a brief summary of the performance Our consolidated revenue for the quarter grew by 8.4% year on year to 8,646 crores reflecting sustained business momentum through the nine months of FY26. This growth was driven by continuous strong performance in our European operation coupled with stable US based business and growth market operations. EBITDA for the quarter stood at 1773 crores with a margin of 20.5% demonstrating a 9% year on year growth.
This quarter demonstrates strong operating leverage, fiscal prudence and consistent execution of our strategy last year. This quarter we had significant quantity of transient product and this quarter this is very minimal. Business Highlights Let me walk you through the key business highlight for the quarter. The overall formulation business reportedly a year on year growth of 10% with a revenue reaching 7683 crores contributing approximately 89% of the total consolidated revenue. The growth was led by strong performance in various businesses. The API business contributed to 11% of the overall revenue amounting to 9,633 crores in line with ongoing market trends and prevailing pricing landscape.
U.S. formulation U.S. revenue stood at 420 million excluding G revolver U.S. overall solids remained stable demonstrating the strength and resilience over diversified product portfolio. During the quarter our core business continued to see healthy demand supported by volume expansion and recent product launches. Our US injectable sales also grew by year on year by 17%. During the quarter we launched nine new products and received seven approvals reflecting strong pipeline performance coupled with suspend progress in regulatory approvals. European Business the European business maintained its strong momentum in growth delivering 27% year on year revenue growth amounting to 2703 crores in euro terms amounting to 261 million this quarter.
Consistent execution across key European market firmly underpins our trajectory to exceed 1 billion in annual European revenue by close of FY26. Growth markets revenue from growth market remained flat at 865 crores or 97 million driven by stable volume and strong diversified commercial base across the strategic market. We have continued to expand our presence in key markets such as Canada during the quarter. ERV Formulation ERV formulation reached to 376 crores or 42 million with 22% year on year growth. The continued growth momentum was driven by higher volumes and new tender wins across the key markets over the medium to long term operational and financial highlights Gross margin for the quarter stood at 59.7% supported by softer raw material prices and business mix.
Gross contribution stood at 5165 crores excluding G development year on year basis our sales have increased approximately by 9%, gross profit by 13% and EBITDA by 15% respectively. R&D expenditure was 409 crores amounting to 5% of the total revenue, thereby reinforcing our commitment on continuing to build a robust pipeline of high value products including complex generics and Specialty Therapeutics. Net CapEx for the quarter stood at 79 million in line with our strategic priorities of enhancing our manufacturing capabilities, strengthening compliance and accelerating our automation. We generated net cash inflow of 118 million during the quarter resulting in improved net cash position including investment and appropriating for the purchase.
Consideration of domestic pharma acquisition of 251 million as on 31st March 2025 compared to 170 million as of September 30, 2025. On average finance costs were 4.9% net profit. Further period stood at 910 crore after one time cost due to change in the Labor Code Amendment rupees 65 crores. Update on Fengji plant and Map the ramp up of the facility is progressing in line with expectation and is well positioned to deliver a meaningful uplift and profitability over the time. Based on our current production level, we expect to produce more than 10,000 metric term on an annualized basis over the next 12 months.
It is important to note that the yield levels are steady and improving consistently over time. The Government of India issued a notification introducing a one year CAF on minimum import price for 10 G6AP and Amoxylink. The policy change will act as a very important and positive catalyst event for the company. Finally, we consider this decision by Government of India strategically important for creating India self reliant in antibiotics and reducing supply disruption risk and will boost the domestic manufacturing of APIs and KSM. Outlook as we go look ahead. We are highly confident in our ability to sustain the growth momentum and consistently create long term value across all business segments supported by our strength of diversified operating model, expanding manufacturing footprint and strategic bolt on acquisition.
With manufacturing capacity exceeding 60 million units and further expansion underway, we are well positioned to support rising demand across various markets while improving operating leverage. Europe continued to deliver their strong and consistent revenue growth. Our operational execution, expanding product basket and reliable supply capability continue to drive over performance and reinforce customer partnership in us. We are entering into an important phase of growth. The Dayton facility has successfully transitioned into a commercial phase with manufacturing underway right and will begin contributing revenues from significantly from FY27 onwards in parallel railway facility remains on track pending regulatory clearance and we are fully prepared to scale up the operations.
The land taxation further strengthened the US business and this is under subject to regulatory approvals. Our OSD China facility continues to progress steadily advancing towards an annual capacity of 2 billion units currently supported by EU approval for 10 products and 3 local product approval. We remain confident of achieving a ebitda breakeven in Q4 and significantly meaningfully contribute to the bottom line EBITDA in the next year. Our strategy on Penge 6 and 6 API nomoxicillin represents structurally important initiatives that will enhance cost competitiveness, reduce external dependencies and strengthen margin over a period of time. We expect to ramp it up to nearly 65 to 70% by March 26th against the last year average of 42%.
Already we are significantly ramped up in January 26th. Looking ahead over the next two years, our growth will be driven by several clearly defined and scalable initiatives. We continue to build differentiated product portfolio with increasing focus on complex generics across dermal, transdermal, nasal respiratory and oncology with positions us well for sustainable growth over the medium to long term. Incremental contribution from robust pipeline of new product launches. The injectable business continued to show steady improvement supported by supply ramp up improved service level and higher capacity utilization contributing to better operating performance. Supply from China operations into Europe are increasing and helping improve global cost efficiency and supporting margin optimization.
We are seeing incremental benefit from portfolio acquisition which strengthens our business in the growth markets and adds scale to the overall business. We are progressing well on our biosimilar and biologics strategy. Taken together, these initiatives provide strong earnings growth, visibility and reinforce our confidence in achieving our internal EBITDA margin target of mostly on the higher side of 20 to 21% for FY26. We remain sharply focused on our execution excellence, operational rigor and prudent capital allocation which we believe position us for sustained performance and long term value creation. With that, we would be happy to take your questions.
Our senior leadership team looks forward for sharing additional insights and classifications.
Questions and Answers:
operator
Thank you Sir. We will now open the call for Q and A session. We will wait for 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. Please raise your hand from the participant tab on the screen to ask questions. The first question is from Tushar Manudane.
Tushar Manudane
Good morning sir. Am I audible? Am I audible?
operator
Yes,
Tushar Manudane
thanks. Thanks for the opportunity sir. With respect to USA3 inspection, if you could Share some color in terms of the nature of observations. And secondly, if implementing any measures to. Address these issues, will this require certain. Let’S say temporary stoppage of production or anything of that sort? If you could throw some light on that as well.
Yugandhar Puvvala
Yeah, I think Tushar, we have already clearly mentioned this stating that these are all procedural observations. There’s no stoppage of production, no stoppage of any nature. And these are procedural and technical and we are very confident of responding within 15 working days to US FDA. I don’t see any issue.
Tushar Manudane
So that way the production also will. Be on the continued process per se.
Yugandhar Puvvala
That’s right. I think we are very, very clear. I think last time inspection was completely different and this time inspection is very positive from that perspective that we don’t have any data integrity issues which was the issue last time, unfortunately. And these are all procedural in nature and procedural means like it requires a one week or a 10 days, some SOP changes, some corrections here and there. So absolutely no problem.
Tushar Manudane
That’s, that’s good to hear, sir. And just one clarification from the opening remarks. So X revenue made. We highlighted U. S sales would have grown at what rate? Over year, over basis or quarter? Quarter.
Yugandhar Puvvala
I think we have given it around 9%
Tushar Manudane
U.S. sales. Right.
Yugandhar Puvvala
No, overall.
Tushar Manudane
Okay, that’s it from us. Thank you.
operator
Thank you. The next question is from Damyanti K.
Damyanti Kerai
Yeah, hi, good morning and thank you for the opportunity. This is Damyanti from HSBC securities. My first question is again on uga. So as you mentioned, the observation seems to be procedural in nature and it might be resolved within your stipulated timeline. But given we are yet to get full clearance from the FDA what kind of trajectory we should build for or we should assume for the US Injectable sales. In your opening remarks, obviously you mentioned this segment has seen good pickup. So if you can just talk a bit about it.
Yugandhar Puvvala
Yeah. These are procedural in nature and we will respond and we are cautiously optimistic about the future of this facility. But ultimately US FDA has to take a decision in terms of the warning letter. So I cannot comment on what exactly they will do. But we feel confident that we will be in a position to respond and in my view probably like next year will be again same double digit growth what with the ramp up of supplies and other stuff happening from various other facilities. So it should be in that same trajectory till the time the warning letter gets lifted.
If, in case, if the warning letter gets lifted then it will be a different this thing that we can talk in subsequent quarters. But at this juncture we are cautiously optimistic.
Damyanti Kerai
So during the quarter you mentioned sale, your injectable sales grew 7% or 17%. Sorry I missed that number.
Yugandhar Puvvala
It is 17. That is what Subbu mentioned,
Damyanti Kerai
17. Okay, okay, so that’s good to hear. My second question is on your Europe business. So although in reported numbers, I think reported terms growth looks very strong in constant currency. We are seeing this segment growing in low double digit for last two quarters or so. So with now the China supply improving, how do you see this business ramping up and say from current low double digit in constant currency? What kind of growth we can assume once we see higher supplies coming from China.
Venugopalan Muralidharan
Can I take this?
Yugandhar Puvvala
Yeah. Murali. Yeah,
Venugopalan Muralidharan
yeah. Dementia and Good morning Murali here. Yeah, low double digit in itself is well ahead of the market growth rate. So this is what we are tracking. And all of our leading geographies, whether it is France, Portugal, Germany and Netherlands. They’Re all showing double digit growth. And of course with more launches happening and supplies from China, we expect to grow further. And several launches are lined up, both later launch and some of the loss of exclusivity products. So we expect further ramping up in the coming period.
Damyanti Kerai
The trajectory should improve as China supply picks up. That’s what we should look forward for
Venugopalan Muralidharan
differently. This is what the trend we have. Been demonstrating if you really observe from the last couple of years, Q1Q and. We will continue to maintain that momentum.
Damyanti Kerai
Sure. And one last question if I may ask. If you can update on your Vijac facility. What is the status or update there,
Yugandhar Puvvala
Mayanki? Is it because are you talking about injectable facility? Which one are you referring to?
Damyanti Kerai
Injectable one. Yes.
Yugandhar Puvvala
Yeah, injectable one. Like we have already filed three products and some 10 more products are under filing. We expect a slow commercialization to happen in next year, FY27. And because we are going to file a very, very important product from this facility because we have a cartridge line where like we will be taking all the GLP1 products from there and we’ll be filing and we have a pfs, we have a BFS and total. So it will be eight lines by end of this year, this calendar year. And that is what we want to restrict it to so that the ramp up should happen starting from FY27 and we should take full benefits starting FY28.
Damyanti Kerai
Okay, so 27, 28, 20 or is a time when we can see significant contribution coming from here.
Yugandhar Puvvala
Yeah, that’s right.
Damyanti Kerai
Okay, thank you. Thank you very much.
operator
You next question. Is from Neha Manpuria.
Neha Manpuria
Yeah, thanks for taking my question. My first question is on Lynette. Could you give us an update on. Where we are in the approval process. From the FTC and when, when should. We expect the completion of that transact? And just to follow up on Lynette, you know, in your view, what would be the rough overlap between the Leonard. Portfolio and Orbindo portfolio that, you know, FTC could probably look at?
Swami Iyer
Yeah, thanks Neo for the question. Right now we are actively engaging with. The FTC through our attorneys and we are very pleased with the progression of the process to this point. We feel confident that this process will be completed early in the next fiscal year. That is Q1 of 27. As far as the overlap is concerned. We, you know, there are no surprises, there are no negative surprises. That’s all I can say because obviously this is a very confidential matter, I cannot disclose it. But we are quite pleased with the way it’s progressed and with, like I said, there are no negative surprises.
Neha Manpuria
Understood. So I should assume that, you know, there’s no risk from an FTC perspective in terms of timelines for the closure.
Swami Iyer
Of the sea at this point. We are not looking at it. In fact, we are looking for a closing sometime soon. When I say soon, it’s like I said, in the first quarter of 2017.
Swami Iyer
Understood, that’s very helpful, sir. My second question is on the Penzi capacity. Suppose you know, roughly what would have been the EBITDA impact from the Penzi facility in fiscal 26 and as we think about the 10,000 ton production that you’ve mentioned over the next year, at what point do you see this actually start reflecting in the gross margins and you know, possibly even external sales? You know, how should I think about how we monetize this capacity?
S. Subramanian
You see, as I said, while we have been increasing, improving the yields consistently and increasing the production this quarter, obviously the MIP is having compared to the current prices, the MIP prices are a little bit more so the full impact of it, we will be seeing it from the first quarter because there is already a stock available in the market which hopefully will get consumed by end of February or mid of March. So you should start seeing the improvements in April onwards.
Neha Manpuria
And what would be the EBITDA impact in your assessment from the Pengi capacity this year? I mean, what would be a rough. Assessment of how much burn we have seen from that facility?
S. Subramanian
I think we should be getting a good EBITDA and you are already knowing the numbers. While we may not like to Specifically talk about the EBITDA numbers, but it is well known based on the current market price and the MIP price, etc. Even assuming some discount, we could see a better improved EBITDA in the coming year.
Neha Manpuria
And is it fair to assume that when you say we’ll start seeing an. Impact of this from first quarter, you. Know the facility will break even in first quarter. FY27,
S. Subramanian
let me put it like that to give you some more color. We have already broken on the Pengi facility and we started making a little bit contribution in now itself. However, where we have been losing out is on the six API prices where there is a predatory pricing and it is going well below the cost of manufacture internationally also and with the correction in the map, etc, hopefully this should get resolved by end of March or maybe by April. You got it?
Neha Manpuria
Understood. Understood. So I should start assuming 6 APA. Sales, external sales from first quarter as well then in that case.
S. Subramanian
Correct? Correct, Correct. Because there is enough stock in the market and at low prices.
Neha Manpuria
All right, got it. This is very helpful, sir. Thank you so much.
operator
Thank you. The next question is from Bino.
Unidentified Participant
Hi, good morning Subuza. Just to follow up this Pengi sale for the quarter, how much was produced and was it also was it sold or fully utilized internally?
S. Subramanian
I think the last quarter we are fully utilized. We are fully utilized and we see we are now based on the January production, we are nearly nearly 9,000 to 10,000 annualized number. We have gone to that extent. We have already ramped up significantly in the month of January. And hopefully this will get further ramped up in the coming months depending upon the availability of the stock in the market.
So we will ramp up in such a manner, there is no over material available like that.
Unidentified Participant
Understood. And last quarter whatever was produced was used internally.
S. Subramanian
Yes, it has been everything. I mean barring few tons. Right. We have mostly consumed it internally.
Unidentified Participant
Understood.
S. Subramanian
And one good thing is the yields are improving, the production are stabilized fully. And it is a question of we need to put more fermenters and then produce. The maximum capacity is of two things. One is utilization of all the fermenters and second is the second factor is the yield improvement. Yield improvement we have been achieving progressing well and full deployment of the fermenter. We are, we are in the process only we will do it and ramp it up the way the time we need to ramp it up.
Unidentified Participant
Got it. So my what I was wondering is. You know, last quarter the MIT was not in place, so the market price was low. So using our in house png did it really help the margins? Because from outside you would have probably.
S. Subramanian
No, as I told you, no ping, we have been. I mean we are making break even or slightly slight profit. It’s a question of six APA across the market and the resulting Amazon price which has really put the entire market at a loss. So that is getting corrected. Hopefully by April it should get corrected fully.
Unidentified Participant
No, no, you break even. I understand that. But since the market prices were lower for the entire product basket, not just PNG or 6
S. Subramanian
so we incurred loss and that loss has been in that loss has been observed as part of the EBITDA market.
Unidentified Participant
Okay, got it. Second, you know the quarter gross margin about 15, 9 and a half percent is one of the highest, you know, probably higher than some of the quarters where generous contribution of generic revolumid was there. So what has led to this kind of strong margins and how sustainable is it?
S. Subramanian
I think we have been consistently.
I mean it wasn’t meant for me or any specific business you are asking
Unidentified Participant
no, no overall gross profit.
S. Subramanian
Overall. I think with improved performance of the PNG and the related products, I think our losses, whatever the losses we have incurred has come down and which will turn into positive and this will help. And overall Gandhar also said no is the injectable business is expected to go up and every business is working and Muruli has said he is working on a double digit growth etc. So all put together I think we should be able to show you a sustainable improvement in the EBITDA margin and the overall profitability.
Unidentified Participant
Got it. And one last more question. There is this product Pomalidomide Pomalyst which is opening up for generic competition soon anytime now. Are we part of that first to market launches?
Yugandhar Puvvala
Yes, we’ll be launching and we have already prepared for the launch.
Unidentified Participant
Okay. This quarter itself, right?
Yugandhar Puvvala
That’s right.
Unidentified Participant
Okay, thank you.
operator
Thank you. Request participant to restrict two questions and then return to the queue for more questions. For asking the question, participant may raise the raise their hand from the participant. The next question is from Tarang Agarwal.
Tarang Agarwal
Hi, good morning. Am I audible?
operator
Yes.
Tarang Agarwal
Hi. A couple of bookkeeping questions. We’ve been seeing a reasonably elevated tax rate for the last four quarters. And second, just following up on the earlier participant, not specifically for PNG but really various capacities are in the process of ramp up life is fuel Autoactive China, Dayton, Rayleigh Steriles. So just wanted to get a sense on what’s the EBITDA burn of all these businesses which are in the ramp up phase probably for 9 month FY26 or your estimate for FY26.
Yugandhar Puvvala
Subu, this question is for you. I think he is asking a bit of burn because of various initiatives.
S. Subramanian
Can you hear me now?
Yugandhar Puvvala
Yeah, we can hear you.
S. Subramanian
Yeah. So the first question is on the tax rate. What has happened is today curatech. Today Life has all. These are independent companies, right? We have incurred losses on account of the ramping up and other things and curating on account of the R D cost and other things. Right. So ideally for the losses we should have taken a tax credit. But we have been very conservative in our accounting. So we are not taking the tax credit. Once they started making profit, we’ll take that tax credit with retrospective effect. So that is the reason why you are paying a higher tax rate rate.
Otherwise the tax rate for the entire company. In fact lifers, the tax rate should be around 15% and fuel also 15%. So we will move towards that. Over a period of time we will be around 25%. But today we are in a ramping up phase and that is the reason you are seeing it. So nothing to worry about it.
Tarang Agarwal
Okay, so there’s a deferred tax asset that’s getting created. Is it for. For all these?
S. Subramanian
No, we are not creating the deferred tax asset. That is the point I am trying to tell.
Tarang Agarwal
Okay, got it
S. Subramanian
Okay. If I take the deferred tax effort, if I create it automatically, I should give the creator to the P and L which I have not done. Right. In terms of the EBITDA impact loss, as I told you, we are incurring losses in some of these which will get translated into profit in the coming quarters. We are not specifically giving any number, but we will be making profit coming over the period of time.
Tarang Agarwal
Got it. On the biosimilars business, you know, we saw an announcement around vaccine restructuring. And second, I was curious for Lucentis, is the phase three through EMA waived?
Satakarni Makkapati
Hi, this is Satukarni. I will answer your first question. With the Orovaccines merger, the intent is consolidating and improving our utilization of the existing capabilities that we have built in our vaccines. Essentially the idea is to retain some flexibility to repurpose the capacities that we have built there from 2018 to the COVID period. As these capacities, some of them can also be needed to support the future biosimilars roadmap. So in the nutshell from the board and management, this is more about us looking into operational efficiency and agility, but not a change in strategic direction. So I hope this answers the part one of your question.
What was part two
Tarang Agarwal
for Ranibizumab? Is the phase three weight in Europe?
Satakarni Makkapati
No. So Ranibizumab is a product that goes into the eye. So it’s an ocular product used for wet amd. So essentially you need to inject the drug into the retinal nerve of the eye. That requires a small minor surgical procedure which is done in a clinical setting. So the phase three is not waived for such products because you can’t do a PK PD study of such ocular products that gets injected into the retinal nerve of the eye in healthy volunteers. So you will not have any volunteers to do this study and hence a phase three for products like Ranibujumab will not have a waiver.
Tarang Agarwal
Got it? Got it. Understood Yes. Yes. Understood. Thank you. Last question on the US genetics business. You know up till calendar year 24, OTC was doing about $100 million of revenue. Just curious, how is that played out for calendar year 25 and what’s your outlook for calendar 26? Thank you.
Swami Iyer
Thanks. We, we don’t normally talk about the dollar value for separate set of business but I can tell you for the last couple ofquarters or 3/4 OTC has really picked up and we are looking at it as fast growing segment within the US and we expect very good momentum in the sales and volumes for the OTC business.
Tarang Agarwal
Okay, thank you.
operator
Thank you. The next question is from Shyam Sridhar.
Shyam Srinivas
Yeah, hi, good morning. Thank you for taking my question. Sadhgurani sir, just again on just the biosimilar journey now in the next 12 months, what are some of the milestones and timing that we need to keep in mind and any way to kind of assess how large this could be for us over time? Maybe fiscal 27 and over time.
Satakarni Makkapati
Good morning Shyam. In terms of milestones, Shyam, in the last quarter we have announced our first Canadian approval which is a important milestone for us on the back of the four biosimilar approvals that we had in the European economic area. So we are preparing some momentum in Europe and growth markets through these approvals which will be translating and converting into launches in this year. We have already built our first product the previous quarter. We are trying to execute multiple things. Belcola, which is devastuzumab Biosimilar is already launched in the uk. Dazu Bliss, which is our Transgemab Biosimilar was launched in the Baltic territory.
To a partner, this means we are moving from the readiness or the development phase to real on the ground commercialization. Beyond this, we also our economics, our strategy in European economic area extends far beyond simply selling biosimilars through our subsidiary. So we aim to achieve comprehensive coverage across European economic area, across LATAM markets and also in Canada. In fact, in Latam we are making a stepwise and disciplined approach, country by country. We just won a tender in Mexico which we have to service in this year. So we have made a strong start with Mexico. We are also making a foray into Brazil.
In fact, we have a GMP and VISA inspection announced in May which will then lead the path towards approval of at least four products. So over the medium term, with the omalizumab and denosumab biosimilars that I was providing guidance for which I have to complete the validation campaigns and then start filing them from June, July in both Europe and US the capacities will get freed up and the commercialization readiness will become more real, I believe. 29 to answer the second part of your question, as I always stated, 29 would be the inflection year for biotech.
All the efforts that we have made in bringing four biosimilars into the market in the last one year and two or three more ready for filing in both Europe and U.S. we expect to ramp all this up, convert this into some sort of commercial momentum by 2029, which is our inflection year, I believe. Does that answer your question?
Shyam Srinivas
Yeah. Thank you. Dr. Sadhguri, just one sub question before I go into the second one. This budget announcement of this bio Shakti. Dr. Sadhgarni, anything? I know it’s early and maybe the details are not yet out for bio manufacturing in the country. You know, anything that you have, any insights from industry discussions or if you were to say or recommend to the government, what would be some of those things?
Satakarni Makkapati
A very interesting question. I get asked this question in the last two, three days. Broadly Shyam, I speak for myself and not for Aurobindo here. Broadly, initiatives like Biopharma Shakti are directionally positive for the sector. If executed well, and that’s my big takeaway, if executed well, it has the potential to strengthen the ecosystem. Biotech ecosystem in terms of, from the fine script, what I read in terms of skill development, the clinical trial sites and how we go about conducting clinical trials and the availability of the sites, faster translation from development to manufacturing. And let me remember the the predictable regulatory and quality environment that the government wants to create around this initiative.
So for the biosimilars and biopharma Industry I think the biggest takeaway will be an improved ecosystem maybe into the beginning of the next decade if it is implemented well. The challenge is therefore can we develop a stronger local capability in clinical development? When I say clinical development, do the trials that we do for complex biologics and biosimilars and new chemical entities in India stand the scrutiny and rigor of the agencies like FDA and ema? Are many companies going to achieve that sort of skill? That’s question one. Then I believe this also helps build stronger local capability in single use and critical consumable supply chains.
As you know, during COVID the industry in general has suffered from dependency on the west on single use bag filters and resin which are so vital to delivering drug and purifying them or producing them. And hopefully the commentary in the Biopharma Shakti about skill development because there’s a lack of human resources school right now that can really help us compete with the evolved industry in the West. So I believe these are the three big takeaways. An improved ecosystem in terms of local capability building and process and clinical development, innovation, single use, critical consumable supply chains, etc.
So what is important again to summarize is the regulated markets will continue to require extremely stringent quality systems and rigor in GMP and GCP compliance. So the success of Biopharma Shakti will depend on the execution. So let’s wait and watch. It’s just been I think two weeks so let’s wait and watch. I am supportive of the tailwind it brings especially when people like you ask the questions which means you are looking forward to the tailwinds that we will bring. So let’s hope, let’s wait and watch that it translates into real results.
Shyam Srinivas
Thank you. Helpful sir. Just my last question to Subhusar on the balance sheet. We are now net cash. I know there’s a Lennet acquisition still but just want to understand from an outlook perspective on M and A or what are some of the key priorities for us apart from Capex and dividends, what are some of the key priorities. For us as we look forward?
S. Subramanian
So Shyam, which I told you earlier also we are not going for any major greenfield project other than whatever be committing to Theranin which is the biologics which Satkani has seen form, right? Otherwise we are not going for any major organic in terms of the inorganic, yeah, we keep on looking at it but it is not that we need to do it urgently etc. If we get the targets at the right price, at right price and to our strategy, fitting into our strategy. We will look into that. I think this is the main thing actually in terms of the capital allocation.
Shyam Srinivas
Helpful, sir. Thank you. And all the best.
operator
Thank you. The next question is from Kunal. Damesha,
Kunal Dhamesha
Hello, can you hear me?
operator
Yeah,
Kunal Dhamesha
yeah. Sir, just one question on the PNG and 6 APA. Since the prices of those imports had started coming down at the start of FY26 or the end of FY25 and we have imported. So is it fair to say that some of the gross margin improvement that we are baking in from the internal consumption from our facility is already there in the numbers because we are already getting a lower price import? Right. So
S. Subramanian
Kural, your question is. Right. Actually that was a scenario one month to one and a half months back. But the now the prices have started going up. Okay. And whatever. Maybe the production which we are anyway not going to buy it from them unless it is required. Absolutely essential for various reasons. Right. We will be producing and our cost of production is also coming in line. So we should be seeing an improvement in the gross margins very clearly going forward. Right? That is the thing.
Kunal Dhamesha
Okay. And for the mip, when you would have made the representation to the government, what would be the basis of that? Would that be like the cost of production plus a decent profitability is on that basis the government would have decided based on your representation. Or there are more factors in the consideration.
S. Subramanian
Kunal, your question is absolutely right. Actually this is a question. But since I am private to certain information which has been worked along with the government, I am unable to disclose anything further on this.
Kunal Dhamesha
Sure, sir. Thank you. And all the best.
S. Subramanian
Thank you.
operator
Thank you. Next question is from Dighar Walia.
Unidentified Participant
Yes, thank you so much for the opportunity. One question is with regards to the Lannet acquisition, the settlement amount of the fines by is it final or it can increase and will it get adjusted in the price or not?
S. Subramanian
Swami,
Swami Iyer
the settlement of Lannet is their liability. And Arbindo is in no way table nor does it change the mat.
Unidentified Participant
Okay. So the price also remains the same while these will be settled independently.
Swami Iyer
Yeah, till today. I mean till the actual acquisition happen happens. And any liability till the date will. Be that of landed.
Unidentified Participant
Okay. With regards to the PLI amount, when and how much are we expecting to come from the government?
S. Subramanian
So it is like this. As per the government, it is 240 crores for every 10,000 tons. Right. And as and when we produce the quantity, it will proportionately it will come.
Unidentified Participant
Got it. And we are already at 9,10,000 you mentioned kind of. So
S. Subramanian
absolutely you can see. I mean hopefully everything goes well we should be able to see the full year next year we should be able to see the full amount.
Unidentified Participant
Great. One question I’ll take now is you mentioned capital allocation buyback figure given there’s been some tax thing as well and last time we did it at 1450, now the price is lower and of course there is a slight tax benefit for the non promoters.
S. Subramanian
Yeah, it’s a very good. I mean this, this is a very good option which came in the budget probably the entire manage. I mean top management promoters board everybody is aware of that. I think this is coming with effect from first April. Let’s wait and see. We have another two months time now in this needs to be passed by the parliament and any changes anything will take into account and decide appropriately. The board will consider these and then decided in their best wisdom depending upon the circumstances.
Unidentified Participant
Got it. Thank you. Thanks.
operator
Thank you. The next question is from Harshit Dhoot.
Harshit Dhoot
Hi sir, am I audible? Hello, Am I audible?
operator
Yeah, yeah, you’re audible.
Harshit Dhoot
First of all congratulations to the Subhusar and the Aurobindo management team for the MIP on the Peng part. Sir, just one help which I wanted on the modeling purpose we have got the MIP at $25 for Pangae but sir, if you do the calculation the two pang equals to one six APA and most of the formulation plates source six APA or the amoxicillin where the prices are similar to the market. So from the modeling purpose should we take the prices at $25 per kg or we should reduce it down keeping in line to the ratio and MIP that we got on the max Amoxicillin and the six apa.
S. Subramanian
Ashish, your question is very good but you should ask some of the consumers to get the right answer.
Harshit Dhoot
We will not buy certainly.
S. Subramanian
I may not like to give any number now.
Harshit Dhoot
No, no, no, I’m not looking for exact number Just directionally Sir, lower than 25
S. Subramanian
I think directionally I have already said no. The prices have started going up to what level it can go up barrel end we do not know but certainly we are very confident about it.
Harshit Dhoot
Okay, so. So because 262 pang 160 pay implies 50 prices but we got the might of 37 prices so if we take in modeling the 25 price and it implies to 50 while actually it will be 37 is it right understanding? Sir,
S. Subramanian
you’re right understanding but certainly when you buy PNG Solid and then convert it into 6 APA, there are additional costs involved etc but the way our process have been done is we will not crystal, we will not do solid png.
We will convert it at the liquid level. There is a saving coming. Okay.
Harshit Dhoot
Okay sir. And the second part as the USA plant inspection has just completed and are there any other plants which are due for inspection or which you think can can be for the inspection for let’s say next six months or one year?
Yugandhar Puvvala
No, these are all unannounced audits. We don’t know when they will come and what they will do. So there is nothing called pre scheduled inspections mainly from us fda. So it’ll be very difficult for me to comment which plant might get audited next.
Harshit Dhoot
Okay sir, thanks. Thanks a lot. Thank you.
operator
Thank you. The next question is from Nitin Agarwal.
Nitin Agarwal
Thank you. Question There has been a significant depreciation of the rupee against the USD as well as the euro over the last few months. Other our numbers fully reflecting already beginning to reflect some of the impact of depreciation or how should we think about it next year?
S. Subramanian
I think one of the thing. No, the depreciation is not because of that translation effect. Also the depreciation is going up. Right. And that is also one of the reason you’re talking about the rupee depreciation on the top line or how what is your exact.
Nitin Agarwal
Yes, the repeat impact of the rupee depreciation on a pnl.
What kind of gains can we get and is it already beginning to reflect in a number?
S. Subramanian
It’s already started reflecting on the numbers. Right? Whatever, whatever, whatever sales happening at the end, consumer end customer, I.e. at the Europe level or US level etc. We translated the average rate for the quarter. Right. And so the numbers are reflecting the actual this one. If there is further depreciation of any currency etc against dollar or appreciation against dollar like euros etc. That is also will get reflected going forward.
Nitin Agarwal
So the question was like, you know, is there a lot of gross margin improvement? Can we.
Is it a fair to assume a fair bit of that has come on because of depreciation of the rupee against the dollar and the euro?
S. Subramanian
No, no, because everything will get translated into no. Whether it’s a cost, everything we will translate into the average rate. So it is not that only the top line. We are translating other things we are not translating. In fact, if you really see no use, look at the other expensive. Typically it used to be around 1700,800 crore because of the translation effect etc, it is now a 2000 crores.
Nitin Agarwal
Right, right. And the last one on this for Europe. What kind of sourcing do we do in what kind of what proportion of our supplies are done from India and how much do we source from Europe itself?
S. Subramanian
I think Murali would like to take the question or can I?
V. Muralidharan
Yeah, no, maybe I can give a high level Update. Closer to 60% of the sourcing happens from in house sources and it is steadily. We are also transferring the third party products, the key ones to sites and the balance comes from third party sites.
Nitin Agarwal
Thank you. Last one sir. On uasf, how many new approvals or new launches are we expecting in F26?
V. Muralidharan
Can you repeat that question? Nitin?
Nitin Agarwal
So how many new launches are we. Expecting in the US market in F26? F27, sorry.
V. Muralidharan
So approval is one thing and then. We have the launches because some of the launches could be what is approved. We may launching later. So we launched about nine products in the last quarter ending December. We believe similar kind of trend would continue for the next 12 months on a yearly basis. If you multiply that’s, that’s what we can look at.
Nitin Agarwal
What capex should we assume for the business for F27?
S. Subramanian
I think other than the biologics Capex which I mentioned where we are trying to work, I mean aligning with the strategy of the biologics I don’t think we’ll be incurring anything beyond around 150 to 200 million because we are not planning for any green field.
Nitin Agarwal
Right, right.
S. Subramanian
Maybe some acquisitions etc may come. Right. That is one. I mean that is one of depending upon the target
Nitin Agarwal
and how much money is spent to be spent on the. On the. On the biologic. Cdmo Biologic CDCMO business over the next couple of years.
Satakarni Makkapati
Nitin. So the capex into the CDMO business Theranium right now is about 120 to 130 million US dollars over the. Over the last seven quarters. Subu, you may correct me. So that’s where the CAPEX expenditure stays unless we have a few business deals and we decide to expand our CMO offering and build additional capacities. But right now what has been spent on theranium or what will be spent on theranium in total with the spend that was incurred over last six to seven quarters is all put together will be I think 120 to 130 million US dollars.
Nitin Agarwal
Okay, thank you so much.
operator
Thank you. The next question is from Digarwalia.
Unidentified Participant
Yes, thank you for the follow up. It’s a follow up on the previous question only with regards to this 12130 how much would have come in by now and how much would come in FY27 and is fair to assume that these are for two products. And if there is a product addition then another 3, 400 crores of additional wood. One should budget with every new product.
Satakarni Makkapati
I will answer your part two of the question and we’ll ask Subu to answer the specifics of the budget later. So part two of your question. This deal was signed for one product in May 29th, 2025 and then we added product schedule somewhere towards the end of I think Q2 or Q3 last fiscal. So essentially this is for two products and the capex that the total capex projected is around 120 to 130 million for both the products. The capacities of both the products together. Subu, can you answer him on the the capex flow?
S. Subramanian
Yeah, the capex. Now as Sadkani says, you know 100 to 120 million type probably we may be incurring anywhere between 80 to 120 million in the current the next two years.
Unidentified Participant
Got it, got it.
S. Subramanian
And so we have incurred certain things already depending upon the level of progress Satkan is going to make in this accelerate the entire process in this Q4. The balance will be incurred in the going forward.
Unidentified Participant
The bulk should come up in FY27.
S. Subramanian
Correct.
Unidentified Participant
Got it. And just one last question is with regards to is there anything if you can help us overall, how should the US market and sales look for margins? Look for the next year maybe dollar terms for whichever and should we with this Capex etc. Is there something on the RO returns or the ROC or ROE that we may want to comment on? Thank you sir.
Swami Iyer
So Subu, you want to talk about the margin or the years?
S. Subramanian
No, no, you see we are here, we are not giving any specific margins for any business. Overall margins only. Yeah, you can take it the balance.
Swami Iyer
Yeah. So the next year, the coming year I think it’s not different from current year. We actually we are looking for some improvements in terms of numbers. Overall numbers. Obviously when the numbers improve the margins should also be better. We are not seeing anything that’s going to be negative at this point of time.
Unidentified Participant
Okay. Okay. I was more like is a double digit something which is possible or which one should expect?
S. Subramanian
Double digit of what?
Unidentified Participant
Growth. U.S. growth.
S. Subramanian
Okay, that saw me.
Swami Iyer
The total solids is sitting at base of about 1 billion. And then as in specific segments we might have. But if you see the oral solids at 1 billion it’s very difficult to achieve. But who knows, we have got lanet that’s going to be mild acquired, hopefully with the FTC approval, and that can create synergies and that can help us better business deals. But it’s, you know, as you grow bigger, it’s going to be difficult in terms of percentage of growth.
Unidentified Participant
Thank you very much, sir. Thanks a lot, sir.
Swami Iyer
Thank you. So I think there is.
operator
Yes, sir, Please go ahead.
Swami Iyer
There is only one person left with that. You can close it. Oh, yeah. So I think everybody. Yeah.
operator
Ladies and gentlemen, on behalf of Aurobindo Pharma, that concludes today’s conference. Thank you for joining us. And you may now disconnect your lines and exit the webinar. Thank you so much.
Swami Iyer
Thank you.