Neuland Laboratories Limited (NSE: NEULANDLAB) Q3 2025 Earnings Call dated Feb. 11, 2025
Corporate Participants:
Abhijit Majumdar — Chief Financial Officer
Davuluri Saharsh Rao — Vice-Chairman and Managing Director
Analysts:
Ravi Udeshi — Analyst
Ayush Agarwal — Analyst
Shyam Srinivasan — Analyst
Sajal Kapoor — Analyst
Aditya Chheda — Analyst
Sanjaya Satapathy — Analyst
Ishmohit Arora — Analyst
Sachin Kasera — Analyst
Yasser Lakdawala — Analyst
Unidentified Participant
Sanjay Kohli — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Newland Laboratories Limited Q3 and 9M FY ’25 Earnings Conference Call hosted by Ernest and Young. As a reminder, all participant lines will remain in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star then zero on your touchstone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr Ravi Udayshi from Ernest and Young. Thank you, and over to you, sir.
Ravi Udeshi — Analyst
Thank you, Ryan. Good evening, friends. We welcome you to the Q3 and nine months FY ’25 earnings conference call of Laboratories Limited. To take us through the results and to answer your questions, we have with us the top management from New Land represented by Mr Sujit, Vice-Chairman and CEO; Mr Saaj; Vice-Chairman and Managing Director; Mr Abhijit Majumda, CFO; and Mr Sajeep Emanuel Medicunda, Head, Corporate Planning and Strategy. We will start the call with a brief overview of the financials by Mr Abhijit Majumgar and then Sahash will give you broad highlights of the business trends and what he is seeing in the market. And post this, we will open up the call for the Q&A session. As usual, the standard Safe-Harbor clause applies as we start the call.
With that said, I now hand over the floor to Abhijit. Over to you, Abhijit.
Abhijit Majumdar — Chief Financial Officer
Thank you very much, Ravi, and good evening and welcome to each of you for joining our call. The financials are as follows for Q3. Total income is INR401 crores, 0.9 which is a slight increase of 1.8% year-on-year as compared to INR395 odd crores in the same-period. This growth was driven primarily by the prime GDS and specialty business and as said consistently that the — I’d like to point out that the inherent nature of our overall business is uneven on a quarter-on-quarter basis.
As we mentioned in earlier calls, this financial year is expected to be flat. Our EBITDA excluding exceptional items of INR55.8 crores stood at INR90.3 crores with a margin of 22.5%. The decrease in contribution is attributable to the business mix and increase in operational expenditure, leading to a decrease in EBITDA in Q3 FY ’25 as compared to Q3 FY ’24, where EBITDA stood at INR122.7 crores.
Now coming to the specifics, the gross margin for the quarter was 53.2% as compared to 59.8% in Q3 FY ’24. This gross margin as always includes manufacturing expenses and other costs directly attributable to the product. The profit-after-tax was INR101.4 crores as compared to INR80.7 crores in Q3 FY ’24. This includes an exceptional item of INR55.8 crores arising from the sale of investment property. The quarterly EPS stands at INR79 rupees per share.
For the nine months ended, our revenue stands at INR1161.5 crores versus INR1180.8 crores, a marginal degrowth of 1.7%. EBITDA excluding exceptional items of INR76.4 crores stood at INR284.6 crores in the nine months of FY ’25 as compared to INR362 crores in nine months FY ’24. We continue to focus on cash to optimize our working capital, which stands at 111 days of sales. We have generated a free-cash flow-in the nine months of INR70.8 crores. We also paid some of our term-loan debt of around INR27.2 crores. Consequently, our net-debt position stands at a negative INR185.1 crores.
As part of our investments, we have invested INR147 crores in capital spends during the nine months and we are committed to balancing growth and profitability by continuously optimizing cost and processes to ensure long-term sustainability. While we expect FY ’25 to be flat, we are remain confident that our business will regain momentum from FY ’26 based on significant order pipeline and customer demand. Overall, we continue to be cautiously optimistic about our future potential that our business holds.
With that, I would like to hand over the call to Sahaj for his remarks. Thank you very much.
Davuluri Saharsh Rao — Vice-Chairman and Managing Director
Thanks, Abhijit. Good evening, everyone, and welcome to the call. Over the years, has steadily established itself as a dedicated API solution provider possessing in-depth expertise in extensive complex chemistry capabilities. And we are collaborating with both innovators as well as generic formulators to create a healthy world. So before talking about this quarter, I’d like to reiterate a few points, which we have made in the past. One, our business is uneven due to the inherent characteristics of the CDMO business as well as the specialty GDS business, which is focused on small volume products.
As a result, evaluating Newland’s trajectory on an annual basis is perhaps a more accurate measure than comparing quarter-to-quarter results. Again, there may be the odd year also where the trajectory will not be clear due to the specific mix or how products are taking off. However, you know, the completion of manufacturing facilities, coupled with the scaling up of commercial molecules on the CMS side gives us a great deal of confidence of achieving our stated objectives in FY ’26 and beyond. We continue to see increased interest in customers wanting to partner with Newland as they look to bring in their innovative medicines to patients.
And I think many ways this can be attributed to a three factors. I think one is our reputation is continuing to grow as a result of the work we’ve done over the last couple of decades, especially on the CDMO business. Second, I think our business development teams who are also seeking new relationships are getting increasingly focused on finding the right opportunities that actually fit our long-term strategy. So being very selective, very decisive in whom we want to work. Thirdly, I think the macroeconomic factors, which we all have been talking about also have been favorable to us. And therefore, you know, we are enthused by the range of customers expressing their interest in working with us and I think that’s what’s kind of giving us excitement about this business.
Coming to this quarter, the CMS revenues were about INR156 crores as stated earlier. They were driven largely by molecules in the commercial segment. As indicated last quarter, one of the molecules in the CMS segment got recently commercialized. We are seeing good traction in terms of early-stage projects as well as customers reverting to us with more projects in their pipeline. So we expect the buoyancy in the CMS business to continue going-forward and don’t have any concerns at the moment.
On the GDS side of the business, we remain focused on innovating new specialty products while optimizing processes and expanding market-share for the key commercial APIs. The specialty API business, actually the growth is back on-track this time. If you recall the last quarter, I think the growth was weak and this is largely driven by and this time. In the prime segment, the strong products for us this quarter were, and and we are confident we are on course to meet the overall targets for the GDS segment for the year. I would like to emphasize the inherently variable nature of our business, which makes it challenging to provide any form of guidance. But having said that, in the manner in which the orders are currently taking shape, we expect FY ’25 to close on a relatively flat level, which is in-line with the comments we had made last quarter as well.
And on a side note, I’m happy to share that Newland has increased its S&P ESG rating to 70 compared to 64, which was the previous rating we had. And further, Unit-3, our newest manufacturing site has recently been awarded the prestigious Swote of Honor award by the British Safety Council. Another reminder from our previous interactions, we continue to maintain that there are a variety of factors that could influence our projections. These include performance of individual products, foreign-exchange fluctuations, raw-material cost volatility and other dynamics of the business.
We are aware of these challenges and continue to monitor these variables very closely. Regarding future capacity building, we are progressing as planned towards completing the new production block in Unit-3 and expect to commence commercial production in FY ’26, which is also going as per plan. As many of our long-term investors know, Newland has invested in the peptide space for the last 15 to 17 years. We, in fact have a team of around 50 peptide chemists who work-in our R&D side and they have delivered multiple projects at lab and small-scale. We have now reached a juncture where we need to enhance our peptide capacity to scale our business to the next level even as we have — as we’ve received a lot of interest from customers in our capabilities. And as always — as we all know, peptides are being considered a new modality for increasing number of therapies.
So this led to the announcement of the capacity enhancement for which you would have seen the press release and the disclosures. Flexibility and agility are crucial for effectively responding to the business environment and our growth strategy remains focused on pursuing high-value molecules from innovative companies, both on the CMS side and the GDS side. And we are committed to enhancing customer experience, which we believe that distinguishes us as a distinctive API provider. So our commitment to the future is evidenced by our investments in enhancing our capacities as well as capabilities, adhering to our foundational values of customer-centricity, agility and operational excellence. Newland is well-positioned to capitalize on long-term opportunities even as we continue to navigate any short-term challenges that may come our way.
So having said this, Ravi, I request you to open it up for Q&A.
Questions and Answers:
Operator
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Ayush Agarwal from Maple Value Investing Fund. Please go-ahead.
Ayush Agarwal
Hi. Good afternoon, sir, and thanks for the opportunity. I hope I’m audible.
Operator
Ayish, if you could please use your handset.
Ayush Agarwal
I’m sure. Is this better?
Operator
Yes, this is better. Thank you.
Ayush Agarwal
Great. Sir, my questions are on acid and I wanted to understand more on the supply-chain. As I understand, there are two players currently marketing in distinct geographies and we share a relationship with the innovator. So do we also share a relationship with the Europe partners because they are to shift their manufacturing supply-chain to the Europe partner and can that affect us if we don’t integrate ourselves in their supply-chain?
Davuluri Saharsh Rao
Yeah. Sorry, we will not comment on any specific CMS molecules. So if you have any other questions, we can be happy to answer them.
Ayush Agarwal
Okay. On this only, maybe if like you can say what is the current capacity of acid and what are we expanding it to —
Davuluri Saharsh Rao
Sorry, Pyush, we don’t respond to any questions on a specific CMS molecule because of the confidential nature of the business. So we — so therefore, we would not be able to comment on any question that you ask about a specific CMS molecule. So I would encourage you to ask a question about the CMS business or anything about it or about capacities in that front. But unfortunately, we’ll not be able to answer any product-specific question. I’m really sorry about that.
Ayush Agarwal
Understood. I’ll join back the queue.
Operator
Thank you. Ladies and gentlemen, please restrict yourself to two questions per participant. The next question comes from the line of Shyam Srinivasan from Goldman Sachs. Please go-ahead.
Shyam Srinivasan
Yeah, good evening and thank you for taking my question. Just on the peptide announcement, Saharsh and team, if you could, INR255 crores INR54 crores is what I think we have articulated. So how should we look at that in terms of what are the next steps in terms of either timelines? I know you don’t talk specific clients, but is this tied to a CMS client or are you doing it for the generic GLP ones? So some color around the entire peptide project and when can we expect like timelines and monetization of these assets?
Davuluri Saharsh Rao
Yeah, Shyam. So the investment itself is to — it’s kind of spread across three different domains, largely for creating a new large-scale manufacturing facility in Unit 1. But a small part of that approved investment is also for enhancing the capabilities of our existing peptide facility, which is also located in Unit 1. So think of it more as a pilot-scale peptide facility. And another small part of that approved CapEx is for enhancing the R&D scale peptide capabilities. So in many ways, this entire capex, I would say majority is going into creating a large-scale facility, which does not exist today, a small part into the pilots facility and a much smaller part into the R&D facility. And the idea is that with this investment, we’ll have seamless capabilities from lab to pilot to commercial for peptides.
Having said that, the idea is to create facilities, which would be usable for both the GDS business as well as the CMS business. And unlike some of the other investments, these are not — these are not product-specific investments. So to your question, there is not one anchor product or one anchor customer for which this investment is being made, we are looking at it as an opportunistic investment to kind of take us into that peptide domain by giving us a larger piece of infrastructure. So the plan is to file maybe two DMFs for the generics business. One of it would be a GLP-1 tirzepatide and this is public information, you’ve disclosed it before and another peptide called, both are generic peptides. These would be scaled-up in that new facility and a DMF would be filed.
Other than that, there are also CMS opportunities, which are currently either under R&D or under discussions with our customers and those could potentially be future projects for that peptide facility. So the idea is to have a mix of CMS and GDS projects. And if the business continues to do well and we have successful projects, then there could be a subsequent investments, which we’ll take-up in the future years to further enhance the capacities. So that’s the broad overview of the — of the investment. At the moment, we don’t have any definitive visibility on revenues or products or cash-flow. So we will have to see how it goes. It will probably take three to five years to really ramp-up this investment?
Shyam Srinivasan
Yeah. Very helpful context,. Just some follow-ups and I’ll take a second question if it’s okay separately is on — when we talk about peptides, are we also in GLP-1 category or these are broad-based? This could be non-GLP-1 as well.
Davuluri Saharsh Rao
Yeah. I think GLP-1 is also falls under the domain of our capabilities, Shyam, it’s a synthetic peptide. So anything that’s a synthetic peptide would fit into capabilities. Tirzepatide is one of the products we are developing for the generics market. That is actually GLP-1 category product. The other GLP ones we are evaluating, but it’s too early to say. Yeah.
Shyam Srinivasan
Understood. Last question on this is on the size, the capacity, right? We are at six — we’ll probably reach 6.4 kiloliter over-time. Sir, in terms of landscape, if you look at the of the world, they are at 40 KL going to 100 KL. So do you think this is a meaningful scale and will help you win orders globally?
Davuluri Saharsh Rao
Yeah. Yeah. I think, Shyam, the — see, unlike our small-molecule business, right, where 1,000 kal means something very definitive, in peptides, this whole Kale business is a little tricky. So I’m not quite sure if it’s an apples-to-apples comparison. From what we know about the space and I think based on all the work we’ve done, we believe it’s a substantial investment and it is a fairly large-scale facility and it should provide meaningful volume of peptides. But yeah, again, I don’t know much about the infrastructure of Bouji. So it’s difficult for me to compare, but I know it’s a big jump-up and it would probably be one of the large peptide facilities at least out of India.
Shyam Srinivasan
Understood. Thank you and all the best.
Operator
Thank you. The next question comes from the line of Sajal Kapoor from Anti-Fragile Thinking. Please go-ahead.
Sajal Kapoor
Yeah, hi. Thanks for taking my question. Good afternoon all. Only two questions I have. First is, and any thoughts that you could share around the sudden kind of almost U-turn type of a thinking from big pharma, big global innovators, they are now returning back to small-molecule spaces and there is a pattern developing. And this is not in the last one month or two. I mean, if you look what they have done over the last, let’s say, 18 months, in particular, if not after COVID, there is a definite desire and intensity to come back to small molecules because I mean, is it related to patient compliance, the oral molecules are easier and to administer or is it something to do with the cost or a combination? I mean, what is — because the reason I’m asking is previously big pharma’s statements was that biologics will rule the world and small molecules we are done and dusted with the R&D.
Davuluri Saharsh Rao
Yeah, Sajal, maybe just a short response because obviously, we are not the experts in commenting on the broader theme that you’re referring to. I think definitely what you’re seeing is true. There is — seems to be some sort of a reversal in terms of the pipelines, so to speak. I think what we have been told is that sometimes companies are just pursuing a therapeutic area, right? Let’s say a big pharma wants to go begin CNS. Now ultimately, they are pursuing CNS assets because they have a CNS, you know infrastructure. And ultimately, if it’s a small-molecule, then it’s — it’s a small-molecule, if not, it’s a biologic. That’s the only limited understanding we have. But you’re right, as in there seems to be some sort of a reversal maybe because costs are more attractive in small molecules. Maybe the — I think the — the formulations are more easier, but again, you know, not the experts to comment further on that, sorry.
Sajal Kapoor
No, that’s absolutely fine. Thank you for that,. A question for you, Abhijit. What was the — so you mentioned the free-cash, I’m asking about operating cash. What was the nine-month operating cash after adjusting for all the working capital? So the Nine-Month EBITDA is about INR272 crores. How much of that has been converted to net operating cash adjusted for working capital.
Abhijit Majumdar
So operating cash net of capex is INR70 crores.
Sajal Kapoor
And no, including capex, what is the operating cash and
Abhijit Majumdar
So
Sajal Kapoor
INR72 crores,
Abhijit Majumdar
INR70 plus 1470 plus 147.
Sajal Kapoor
Okay,
Abhijit Majumdar
You can take that INR230 crores.
Sajal Kapoor
Yeah. Okay. So this is out of INR272 crore of Nine-Month EBITDA.
Abhijit Majumdar
That’s right.
Sajal Kapoor
Okay, brilliant. Thank you so much. That’s all that. Thank you.
Operator
Thank you. The next question comes from the line of Aditya Chheda from InCred Asset Management. Please go-ahead.
Aditya Chheda
Hi. So this was to better understand the CMS segment. Today, in terms of the active CMS projects out of 97, 19 are commercial, but the bulk of them are pre-registration or below. So whether the development income that is almost down 50% Y-o-Y in nine months, is there an element of few molecules driving the bulk of CMS development revenue today? And if you could help us understand better in terms of your CMS pipeline, since bulk of the projects are still on the development side, why is there more volatility in development versus is commercial so if you could comment anything on that
Abhijit Majumdar
So I think to answer your question in terms of the revenues, they are mapped to the actual flows during the course of a quarter and during the course of the year. And as we have said in the past, we expect that a significant — a lot of the growth that we were expecting was going to come in from the commercialization of molecules. In the past, you would have seen that we have had significant revenues even from the development part is because we have had molecules which were ready or which were — were where the customer was looking to take quantities for launch, but the product was not yet approved. So as a result of that, those revenues were recognized as development revenues. But once a molecule is approved and we are part of the filing, it moves to commercial and that is why that scales faster and is a higher proportion, whereas the development quantities are likely to be volatile because we are say waiting for a customer who takes material for Phase-2 to come back for Phase-3, which may take longer time. So that largely explains the volatility in development.
Davuluri Saharsh Rao
So and I think the — I think the commercial revenues tend to be a lot more stable. And I think ultimately the other factor that matters is different molecules contribute different scales of development revenue. So while it it is a little difficult maybe even for investors from the outside. But the truth is that development revenues are going to be very lumpy and volatile. And ultimately, I think that’s why we try to give an aggregate sense of where the business is heading. But yeah, I think for us, for now, commercial revenues are what could be seen as a stable base from an outside perspective and that’s why we give the split between commercial and development.
Aditya Chheda
Got it, sir. That’s it from my side.
Operator
Thank you. The next question comes from the line of Sanjaya Satapathy from Ampersand Capital. Please go-ahead.
Sanjaya Satapathy
Yeah, sir, thanks a lot for the opportunity. My first question is that when you mentioned your commercial CGMO revenue is much more stable, but in-quarter one, it was some INR170 crores from that it has fallen to some INR110 crore, INR120 crores. What could be the reason for this decline, sir
Davuluri Saharsh Rao
Sorry, which revenue are you talking about that declined?
Sanjaya Satapathy
The commercial of CMS business, commercial part of the CMS,
Davuluri Saharsh Rao
The commercial? Yeah. I think see, again, commercial revenues, I would not look at quarter-to-quarter movement to look and maybe Call-IT a decline or a growth because I think a lot of times these products are lined-up to get dispatched across different quarters in a year. And I think the way the mix is coming out is how it is. And as I had mentioned in the opening remarks also, I think our portfolio is doing well and I think molecules are continuing to grow steadily. So there is nothing to concern — nothing of concern with regards to CMS commercial for the moment. I think our quarter-to-quarter movement is very natural in our business.
Sanjaya Satapathy
Related if you can just explain that when this molecule goes from development to commercial, so you get to supply for that commercial for several years together, right? It is not as if like it is a very small window of opportunity.
Davuluri Saharsh Rao
Yeah, I think typically the way the relation works with the innovator is that once it gets into commercial, we would continue supplying API until the patent expires. And of course, there are a lot of dynamics at play. There could be additional sources that could come in and that could have an impact on the volumes. They could also be a performance of the drug itself that would matter. But when we track these molecules, we are constantly looking at the IP timelines and therefore, you know, that’s what we look at.
The gap between the development to commercial as in what could be the waiting period. That again depends molecule to molecule. There sometimes there’s hardly any gap. You finish development and then there’s a short break and then you start commercial. Sometimes you supply development quantities and then they go through an NDA filing and an approval, sometimes you might have to wait for a couple of years as well. So it’s very hard to have a standard expectation for this transition from development to commercial.
Sanjaya Satapathy
And I mean it has nothing to do with any — the product not living up to its potential scale because the file you had given some 5% to 10% kind of growth guidance at the beginning of this financial year, you had brought it down to about flattish number. So it — I mean, was it because of a slower response to some of the new products, which are commercial or how one should be looking at it? And when we are looking at a better growth from FY ’26, is it going to be because of more number of products becoming commercial or same business is scaling up lot more.
Davuluri Saharsh Rao
Yeah, see, again, Sanjay, I don’t think there’s any concern per se. I think our business is such that we have limited high-value products that contribute significantly. Our revenue and our forecasts in our budgets are based on our dispatch plans and a lot of times due to various reasons, things get shifted a little bit. And I think we kind of expecting a moderate growth, which was stated earlier and then we kind of revised that to say it’s flattish is more to do with those dynamics rather than with how the products are performing.
And as I said it already, our products are doing well. And I think the CMS business and the GDS business, I think whatever we have stated that FY ’25 is going to be a flattish year, I think is actually an amalgamation of how the products are picking-up, but I would not read too much into that change from moderate growth to flattishness beyond what has been already said.
Sanjaya Satapathy
Understood. And if you can just help us
Operator
If you can please
Sanjaya Satapathy
Your bottom-line, the margin has come off quite a lot. Is there any kind of sense of how margin will recover from here on?
Davuluri Saharsh Rao
Maybe we’ll answer this question later, Sanjay. I think there is a long queue. So please I think let the moderator take the next question and we’ll get back to you.
Operator
Thank you. Ladies and gentlemen, in the interest of time and fairness to others, we request you to restrict to one question per participant and rejoin the question queue. The next question comes from the line of Ish Mohit from SOIC Research. Please go-ahead.
Ishmohit Arora
Hi, sir. Congratulations for like turning around your business over the last five years from 123 EBITDA percent basically operating margins to at least reaching 20% even in a flattish year. So sir, my question was see like FY ’24 was an inflection year for us. FY ’25 we understand the train is waiting at this station. Do you think FY ’26, ’27 again will be sort of inflecting wheels for us when it comes to our product mix change in CDMO business really accelerating from it.
Davuluri Saharsh Rao
Yes, I think as we had said earlier, we expected FY ’25 to be a kind of a flattish year and we also had stated previously that we expect growth to resume from FY ’26 onwards and therefore, we expect our business to continue growth from FY ’26 onwards as well. But again, we’ve kind of restrained ourselves from talking about FY ’26 versus ’27 and how that will pan-out because I think it’s — it’s better we kind of look at a slightly broader horizon than try to kind of look at it. But ’26 growth should resume. That’s something that we want to say it very clearly.
Ishmohit Arora
Can I ask a second question or?
Davuluri Saharsh Rao
Yeah, go-ahead.
Ishmohit Arora
Yeah. Sir, second question was that in a pre-commercial stage, currently we have 11 molecules, I think five in intermediates and six in APIs. Are we expecting any of these to go commercial in FY ’26 or ’27
Davuluri Saharsh Rao
At least, maybe two, but we’ll have to wait-and-see because again these are still going through trials and filings, etc. But one we are fairly certain will happen in the next year.
Ishmohit Arora
Okay. Thank you, sir, wishing you all the best for the future.
Operator
Thank you. The next question comes from the line of Sachin Kasera from Swan Investment Managers. Please go-ahead.
Sachin Kasera
Yeah. Hi, and congrats for the progress that we achieved in the last two, three years. I just had one clarification. One of your slide number 12 in the presentation mentioned that the pre-registration in the Phase-3 molecules, which you used to early classify as part of development are now part of commercial. And so this is effective which financial year you have done the reclassification. So when we look for the nine months FY ’25, your development revenues are 116 versus 2. So in that case, the L2 of Nine-Month FY ’25 includes the in Phase-3 or anything you’d like-to-like just a clarification I wanted.
Abhijit Majumdar
Yeah. So I think if you look at revenues for FY ’24 for the nine months, it includes — means I think the classification of development and commercial remains the same. It’s only that a molecule which was in, say, pre-red reg phase moved to commercial during the course of the year. And I think that moved at the end of Q2, so from Q3 is being recognized say from Q3 will be recognized as commercial revenue.
Sachin Kasera
Okay. Sure. And so when — and I understand that quarter-to-quarter is not fair, but at least if you look around nine months-to nine months, and if I look at your filings, the number of products in preclinical Phase-1, Phase-2, Phase-3 are more or less the same. So this decline from 2 to 116 is primarily because one large molecule which was earlier where you had good revenue as commercial is not being booked under commercial. Is that what is causing this type of sharp decline in your development revenues nine months-to nine months?
Abhijit Majumdar
Yeah. I think one — I think yes, that is correct. And I think in general, when there are large increases in development revenue, that is usually an indicator that means either there is a large clinical trial or there is a molecule where the quantities are going for launch. So I think those are two indicators when especially when the development volumes go up
Sachin Kasera
In the future. My second question is on
Operator
If you can please rejoin the queue.
Sachin Kasera
This is my second question. I believe everybody is able to ask two questions. That’s what you was mentioned. So my second question on peptide. We announced a fairly large capex. Over a bit of time, once it is fully utilized, can you give us some sense in terms of what type of revenue we could see two, three years after the commercialization of the peptide block? Thank you.
Davuluri Saharsh Rao
And Sachin, at the moment, we would not share anything because I think it’s a very wide range. And I think maybe over-time, we’ll probably be able to give a better color because again, it depends on what molecule scale-up over there. And therefore, there is a very wide range and it might not be very helpful for you guys. But I think maybe in the course of time, we will try to give a little bit of color on that. But for now, maybe we’ll just hold-off.
Sachin Kasera
Thanks and all the best.
Operator
Thank you.
Sachin Kasera
Thank you.
Operator
The next question comes from the line of Yassir from M3 Investment Private Limited. Please go-ahead.
Yasser Lakdawala
Yeah, hi, good evening. So broadly in your CMS side, you see AD1
Davuluri Saharsh Rao
I think your voice is breaking. I’m sorry, I’m not able to hear anything.
Yasser Lakdawala
Hello, is this — is better now
Davuluri Saharsh Rao
Yes.
Yasser Lakdawala
Could you sort of comment on the terms of you know, big pharma, small biotech and the mix of that? And secondly, typically, when you’ve seen this increase in projects, like how many customers have sort of more than one project with us would give us some sort of you.
Davuluri Saharsh Rao
Could you repeat the first question again? It blanked — you said something about big pharma biotech, but could you just complete the question?
Yasser Lakdawala
Yes. Just in terms of your customer mix in these 97 active projects, like are we — are we — have we sort of graduated towards moving towards working with big pharma or if you could give some qualitative sort of insights on that?
Davuluri Saharsh Rao
Sure. And the second one again?
Yasser Lakdawala
And the second one is like do we have like customers that probably do like have more than one project with us?
Davuluri Saharsh Rao
Yeah. So I think the big pharma biotech split is something that we don’t have, but we are largely a biotech company. And as we stated also in the past, usually if we are working with big pharma, it’s either for a very specialized area like peptides or it’s because you know big pharma has come and acquired our customers. We don’t have that mix and we’ll see if we can provide that maybe at a future date. But you can presume that we are largely biotech focused. With regards to multi-project customers, we do have several customers that we do multiple projects with. And again, we don’t have the number for that, but maybe that’s something that we’ll get back to you. But I would say maybe at least, 20%, 30% of our projects are second or third projects with the same customer. And it’s just a intuitive number.
Yasser Lakdawala
Yeah. And as you sort of alluded to earlier, when a big pharma company acquires our customer in — so what be your experience over the years where you’ve seen you know the switch-over to maybe someone in their CDMO sort of value chain or do they tend to persist with the and if you could sort of share some experiences over the years, like how does that play-out?
Davuluri Saharsh Rao
Yeah. Again, maybe this will be a generic response based on our own experiences. What we have observed is that because there is a regulatory filing involved and Newland is registered as an API manufacturer. There is anyway a certain level of stickiness that is involved with our site. So it’s not very easy to displace Newland as a API company, even if the big pharma is not very familiar. So that’s point number-one.
Point number two, I think even from a big pharma perspective, I think they just look at things from a risk point-of-view. And as long as they feel comfortable that this company that is currently producing the API is not going to create any significant risk for their API supply, they would tend to continue working with us. That’s the second point.
And third point is, ultimately, I think the long-term relationship is dependent on our ability to execute and deliver. And I think that’s where the relationship is built. And I think that’s the — that’s the journey that Newland has is kind of going-in right now. But — but I think just given the advanced nature of these programs, and even if there is not a lot of familiarity with big pharma, we have not seen any kind of reluctance or hesitation to work with a new API supplier, provided the risks are manageable. And I think that’s where New Lin stands out because our facilities in terms of our quality management system, in terms of our ESG practices, they all are top-tier, not just in the country, but even at a global level. And that also creates a certain level of comfort for these large MNCs when they come to evaluate Newland as an API company.
Yasser Lakdawala
Fantastic. That was really helpful. And secondly, on the prime and specialty side, I mean, I just wanted to sort of get a get long-term vision here for this business in terms of like eventually do you plan on probably you know, becoming a cost leader in a few molecules? What are your thoughts on sort of backward integrating in some of them? And do we look at this sort of the prime and the specialty piece more as a capacity utilization play to sort of combat the cyclicality of the CMS business? Or is it like that, as I said earlier, do you want to become a cost leader and eventually a market-leader in some key molecules on that portfolio. If you could shed some light, that would be really helpful.
Davuluri Saharsh Rao
Yeah, sure. See, I think New Land as a company, I think for us, the GDS business is as important for us as the CDMO business. And in many ways, they’re not really competing with each other, right, because ultimately, there’s a lot of synergies in these businesses and they cater to different customer segments. And because of that, our strategy over the long-term is to pursue both the business environmently. However, the way we have nuanced our approach in the GDS business is to try to move a little away from prime and go deeper into specialty. And we believe that going into specialty gives us the ability to command that market-share leadership, which sometimes is very difficult to achieve in the prime products where price tends to be the key determining factor.
So I think over a long-term perspective, I don’t want to get into the growth rates and the business mix because again that’s too detailed kind of guidance that we would give. But ultimately both businesses, our idea is to grow them to their best potential. Even if you take the example of the new peptide facility, it has been designed to cater to both GDS customers and CMS customers. And ultimately, what products — what segment will do more revenue in the peptide facility remains to be seen. So I think that’s the effort and — but however, I think we will not focus as much on prime just because it’s not really area of our strength to compete on price, but we will focus more-and-more on specialty products and eventually a molecule like peptide will also become a part of the specialty portfolio.
Yasser Lakdawala
Sure. That was really helpful. Thanks, a lot and congrats on your performance over the years. Thank you.
Operator
Thank you. The next question comes from the line of Rahul Bharatwaj, an investor. Please go-ahead,
Unidentified Participant
Thank you for the opportunity and congrats on the numbers. So just one question. Great performance over the last decade. I think more so over the last five years. And how should we as investors kind of look into this trajectory? If you can kind of color this, what should be the — what are the company’s expectations for the next five to 10 years? How do you see the business mix changing? And I know you won’t give guidance, but in terms of numbers, your PAT has grown around about 30% in the last 10 years, I don’t know, maybe 70 plus in the last five years. So should we look at the growth in the last five years more of an exception? How should we kind of look into this data and how do you see the business going-in the last — in the next five to 10 years. I think just to add, I think in the past, we’ve kind of focused on moving from prime to a specialty and CDMO side of business. If you can give a bit of color into this, that will be helpful for everyone, I think.
Abhijit Majumdar
No, thanks for your question. Hash alluded to this in his previous response, but just to reiterate that, I think going-forward, we have equal emphasis in terms of growing our generic business as well as our CDMO business. Our sweet-spot in the CDMO business is to work with biotech companies, which have molecules all the way from clinical to preclinical to Phase-3, all the way to commercialization. On the generic side, we focus more on the specialty APIs where the barriers 20 are much higher. Obviously, many years ago, 80% of our revenues came from prime sort of products, but over the years, we’ve systemically focused on developing molecules with higher barriers-to-entry, more IP protecting it and our ability to hold-on to our market shares for a longer period of time.
I think in terms of efforts, both in terms of capital expenditure, the resources allocated, the number of molecules that we select, the lifecycle management that we do, our supply-chain strategy, everything is geared in the organization to make sure that we focus on both of these segments equally. Obviously, we see the CDMO business to have a little bit more potential because the market is larger and we still look at ourselves as an organization that can gain a lot more market-share on the CDMO size side and therefore, you see higher-growth in that business as well. But from an emphasis point-of-view, it’s going to be equal going-forward.
Unidentified Participant
Well, thank you for your response. I think I had one pending question from some of the previous calls. It was in regards to any thoughts on stock split that the management would have thought about if it’s good or not good for business and investors. If there is any update on that.
Abhijit Majumdar
No specific update at this point, but obviously the Board of the organization from time-to-time does examine these sort of issues from a shareholder point-of-view, but currently, we don’t have any specific updates.
Unidentified Participant
Thank you so much and good luck for future.
Operator
Thank you. Ladies and gentlemen, in the interest of time and fairness to others, we request you to restrict to one question per participant and rejoin the question queue. The next question comes from the line of Gaurav Mahidhar, an investor. Please go-ahead.
Unidentified Participant
Hi. Hi. Firstly, I would like to thank the management for being so forthcoming and honest with their guidance. It really makes a difference. Thank you so much for that. So I have a couple of questions. I’ll hire the first one. What percentage would the cost of an API form for an NPE from an innovator’s point-of-view? I guess it would vary from molecule to molecule? And if my guess is correct, what are the factors that affect it? Like does the complexity or say a certain scale of manufacturing required by the API supplier affect it? That’s the first question.
Davuluri Saharsh Rao
It’s actually — I think maybe this question was asked in the past and it’s a very difficult question to answer because there is a very wide range of what percentage an API could be in terms of the final drug product pricing. We’ve seen products where it could be as high as 10%, 12%. We’ve seen products where it’s like 0.1%. So — and honestly, I think it’s very difficult to be able to determine, even for us what would be appropriate number to take. So I think maybe it’s a very I’m not quite sure how much we can help you on that front yeah, so maybe if you can go-ahead and ask your next question.
Unidentified Participant
All right, no like we currently garner 40% of our revenues from the US. If push comes to Shav, how would import tariffs affect us and our supplies to the USA
Davuluri Saharsh Rao
Think, see, I think we have considered all possibilities and we have also, as part of our enterprise risk management, we kind of look at all kinds of risks, including tariff risks, geopolitical risks, et-cetera. I think just looking at all plausible scenario — scenarios, I think one thing to consider, I think just from a newland perspective is that we make APIs, right? We don’t do drug product and most of the APIs we make are — the alternate sources are either in China or in Europe or in India. There’s not a lot of captive capacity for these APIs in the US and therefore, it seems very unlikely that tariffs could be affecting our business directly.
But having said that, I think also take into consideration that for most of the products we operate on both in the GDS and CMS side, we are typically one of the only suppliers or maybe one of the two suppliers and a supply risk could actually harm US patients. And that’s also something to be taken into consideration. And yeah, so I think for us, we will have to figure it out. I think worst-case also understand our business, we — I think almost all our CMS as well as GDS specialty customers considered us to be partners. And if something substantial like a tariff would happen, we would work with the customer to ensure that tariff cost is absorbed by the customer to ensure that there is a seamless supply of material. I think these are the few responses maybe I can offer. Any anything else?
Unidentified Participant
Yeah. Thanks.
Operator
Thank you. The next question comes from the line of Meet Katrodia, an investor. Please go-ahead.
Unidentified Participant
Yeah. Thank you so much for the opportunity. Sir, has built a strong reputation as a trusted APA player, right, particularly in the cardiovascular segment, given the rising demand for certain cholesterol lousing therapies in global markets. What sector does Newland consider crucially for gaining further market-share and improving supply vis-a-vis with the key customers? You ask my question. Hello.
Davuluri Saharsh Rao
Yeah, I’m sorry, I didn’t follow the question. Could you could you rephrase — rephrase it and speak a little slowly?
Unidentified Participant
Yeah, sorry, sorry. Yeah, so my question was on that case in the cardiovascular segment, one lowering drug therapy is doing very well in the global market, right? So what sector does consider to gain more market-share in the supply-chain
Davuluri Saharsh Rao
Think it’s again a difficult question to answer, right, because the product you’re referring to falls into our CMS business. And again, we will not be able to talk about product-specific questions due to confidentiality reasons.
Abhijit Majumdar
The only thing I’ll add to what Harsh is the only thing I’ll add to what Harsh said is that I think as an organization we focus on making sure that we are delivering the product on-time, on the quality, on the compliance as well as maintaining a competitive position. So basically based on our history, what we’ve seen is that the market-share that we gain is directly proportional to how we perform from a customer perspective, and that’s where we focus. The wallet share or the market-share is a direct outcome of that. Thanks.
Unidentified Participant
Yeah. Okay. So on the second part question, right. So growth guidance for —
Operator
If I interrupt you, but your audio is not clear.
Unidentified Participant
Hello. Hello, am I audible?
Operator
Yes, please go-ahead.
Unidentified Participant
Yeah, yeah. So growth guidance for which you are giving for FY ’26 and beyond is due to the visibility in this cardiovascular APA or any other molecules will drive the growth, only this yeah.
Davuluri Saharsh Rao
I think the outlook we’ve given about growth resuming in FY ’26 is at an aggregate business level. It is not at a segment level or at a product level. So what we would like you to just take-away from our message is that you can expect New Land’s business to grow in FY ’26, it was flat in ’25. It grew well in ’24. It was flat in ’25 and you can expect the growth to come back-in ’26. I think that’s the only message we have given. Beyond that, we will not be able to give any further details to it?
Operator
Thank you. The next question comes from the line of Sanjay Kholi from Goldstone Capital. Please go-ahead.
Sanjay Kohli
Yes. Good afternoon and thank you. So I just wanted to understand that essentially we are a 100% chemistry company. So when we supply to the biotechs what happens there’s a further there’s a the biological manipulation of our products and then in some plant in overseas it gets developed into biologic in case of the CNS and case of the generic either bio biologic or a biosimilar does that essentially our customers are biotech
Davuluri Saharsh Rao
No, I think maybe the confusion also comes because we call these companies as biotech companies, but essentially these are all small-molecule companies, they don’t really do any biotechnology work and-or they don’t do any biologics. The products makes are all small molecules, so they’re synthetic and chemistry based and they’re not biology based. And the — it works similarly in the generics business. Our customers, these biotech companies procure the API, they get them formulated at another CDMO packaged and then sold. But the entire product value chain is only synthetic and there is nothing to do with biology.
I think perhaps what can create a confusion sometimes is that because the industry nomenclature calls these small and midsized US-based companies, they are called as biotech companies. Ironically, although they don’t do biotechnology, they are called biotech companies, but — but as you know, we are not in the biotech space and therefore, we are not involved in creation of any biologics. I hope that clarifies. I know it may not be a comprehensive answer, but I hope it helps.
Operator
Thank you. Ladies and gentlemen, due to time constraint, we take that as the last question. I now hand the conference over to the management for their closing comments.
Abhijit Majumdar
Thanks. Good evening — good evening, everyone. We want to thank you for taking the time and participating in the call. Your interest and the questions help us think deeper about the business and the future. We hope we have answered all your questions. And in case of any further questions or feedback, please reach-out to Ravi of EY. Thank you all once again and wish you a good evening.
Operator
Thank you. On behalf of Ernest and Young, that concludes this conference. Thank you for joining us and you may now disconnect your lines