Onesource Specialty Pharma Ltd (NSE: ONESOURCE) Q3 2025 Earnings Call dated Jan. 29, 2025
Corporate Participants:
Unidentified Speaker
Arun Kumar — Founder and Non-Executive Director
Neeraj Sharma — Chief Executive Officer and Managing Director
Anurag Bhagania — Chief Financial Officer
Analysts:
Nitin Agarwal — Anallyst
Amey Chalke — Analyst
Kunal Dhamesha — Analyst
Anubhav Agarwal — Analyst
Sudarshan Padmanabhan — Analyst
Abdulkader Puranwala — Analyst
Alankar Garude — Analyst
Vivek Agarwal — Analyst
Aman Vij — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the One Source Specialty Pharma Ltd. Q3 and 9 month FY25 earnings conference call. 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 Abhishek [Phonetic] from OneSource Specialty Pharma Limited. Thank you, and over to you.
Unidentified Speaker
Thank you. Good afternoon everyone and thank you for joining us today for the inaugural earnings conference call of one source Specialty Pharma Ltd. For the third quarter and nine months ended for the financial year 2025. We are pleased to have with us Arun Founder Neeraj, CEO and MD and Anurag, CFO who will walk you through the key business and financial highlights for the quarter. I trust you have had the opportunity to review our results release and the quarterly investor presentation, both of which have available on our website as well as the stock exchange website. The transcript for this call will be posted on the company’s website within the next week. Please note that today’s discussion may include forward looking statement which should be viewed in light of the risk inherent in our business. Should you have any further questions after this call, our investigation team will be happy to assist you.
I now hand over the call to Arun for his opening remarks.
Arun Kumar — Founder and Non-Executive Director
Thank you. Thank you, Abhishek. And good afternoon everybody. Thank you for joining us amongst a very busy day of several earnings calls. We appreciate your time. Before I let Neeraj and Anurag take take over this call, I just wanted to express my gratitude to all our shareholders, especially the strike shareholders who steadfastly supported the evolution of One Source. It’s been a seven to eight year journey with a lot of support from the parent and I’m delighted to have that One Source is today morphed into a very special business that we had planned over the last two to three years.
In this process, we shareholders of Strides has been extremely supportive with all the resolutions to support at that time and then the formation of One Source. Several of our partners worked tirelessly to get One Source to where it is today. And I’m extremely delighted with what we have evolved as a company of very differentiated company, but more importantly having achieved a stellar process of NCLT and listing process, but more importantly a good listing and a good outcome. I’m also pleased that all of this has resulted in persistence for the site shareholders and the compounding value that has been created.
Almost 8000 crores has been delivered in this process and this continues to be our theme for several years and this is our second big distribution of value unlocking after Agila and by far the largest. So we’re very delighted that we continue this strategy and we believe that One Source is poised with strong leadership under Neeraj and his colleagues to deliver an outstanding result. Today is the beginning of that journey where we believe that the OPEX leverage and the space that we are in will play through and will create significant value going forward.
With that I will hand over the call for the call to be continued by Neeraj and followed by Anurag, our cfo. Thank you.
Neeraj Sharma — Chief Executive Officer and Managing Director
Thank you Arun and welcome everyone for this very first call of One Source. We are all very excited and at the same time really humbled by the interest in our listing and also in this call. Just as a quick background about myself, I have been part of the group for four years as a CEO of the CDMO business, been in the industry for three decades and have been very fortunate to have lived and worked across multiple countries across the globe. And today I’m very keen to share with you our journey as one source and also what we have as vision for the future.
I just before just to start, I will take some time to explain to you the genesis of one source and how one source the whole inception was basically coming from our customers desire to simplify supply chains to go for one stop shop providers especially in the areas of cdmo. And obviously we in the group had multiple capabilities which it made sense to bring under one roof. So on one hand it would obviously help our customers reduce complexity in their supply chain and obviously for one source it means higher share of our customers wallet. And I’m really happy to say that the inception philosophy is really playing out today as we speak.
When we started OneSource we had no customer which was common across all our service offerings. And today we have got many customers who are common across all our service offerings and several who are common at least with two service offerings which is what the entire story was on one source. And that’s how the birth of one source happened which is India’s first specialty pharma cdmo. And we are really one of a kind in this business and that’s for several reasons. When I say that we are one of a kind when it comes to our width of service offering, you know we are one of a kind. So across, across the drug device combinations, biologics, sterile injectables, soft gelatine capsules, you know, here this width we are at par with some of the leading global multimodality CDMOs. Then we are one of a kind because of our industry leading capacities across all our service offerings we are, you know, whether it is our drug device combination so gelatine, we are significantly higher than anyone else.
Our one of a kind story remains with our the fact that we have a very stellar compliance track record. You know, very happy to share and some of you might have seen our press release yesterday that you know one of our key sites, which is our penicillin site here in Bangalore has received the EIR from us FDA just to reinforce our continued compliance track record. And thanks to all these, we are also one of a kind in terms of our industry leading EBITDA margin profile. So that’s what one source is about. I wanted to give you a background on our business, how we are different as a cdmo. I will now take you to the highlights of the quarter, the last quarter which just got over in December. Obviously you are aware a lot of work happened in ensuring we had a successful listing in stock market.
As I mentioned we are hugely. It’s a very significant milestone in our journey and the fact that the group is known for our very strong corporate governance. And I can tell you that we have actually inherited the same DNA and same legacy on this front as well as many other. And of course we are putting together a very highly accomplished board which we will be announcing soon, coming to our numbers. Very happy to tell you that we have made a very strong debut in our first quarter as an independent company. So in the quarter we delivered a revenue of 393 crores and an EBITDA of 143 crores. And especially I want to highlight on EBITDA where our EBITDA for the quarter was actually more than the previous two quarters combined and with a very strong margin of 36%. And this is where you know our biologics and drug device combination business is taking increasing traction which is at a very high EBITDA margin. That is what is reflected in our EBITDA margin increase for a 9 month period we are at about 1000 crores, little lower and EBITDA of about 28084 crores.
I also want to highlight here that for our biologics and drug device combination which is a key growth segment for us, as you are aware, predominantly the revenue in this year is coming from what we call Ms. Which is basically all the revenue from the pre approval part. So our business actually has got two revenue streams especially when it comes to biologics and drug device combination which is MSA which is a pre approval and CSA which is our commercial revenue once the products get approved. And this year in FY25 predominantly as I said it is coming, the revenue is coming from the MSA part. But in steady state we would have the ratio actually 80:20 in favor of CSA which is the commercial revenue. And while we reach steady state in a couple of years we will have FY26 which is basically a year. It’s a cusp year where we will evolve from predominantly MSA to significant CSA and we will see how the mix would change from quarter over quarter and we will talk more when we come to you for subsequent quarters during the quarter.
Also we had a number of good wins in our business across all our service offerings. And again to give you a sense of what these wins are about, just in this third quarter our MSAs we have signed more MSA contracts than we did in the full year FY24. So just to tell you that the traction to our services across all modalities is increasing. Our customer base has gone up. We have got today 60 plus logos across all our service offerings and the fact that as I mentioned already number of these customers are common to more than one service offering. So again how our story of inception is playing out very well. I would also like to tell you an area which obviously there’s a lot of interest around the GLP1 here also we have increased our customer base.
Today we have got 20 customers in GLP1 and I can tell you these are, these are who’s who of the global generic space. And here also there are multiple customers who are our customers for more than one GLP1. And the fact that we have as we speak we have got seven potential NCE1 actual or potential NCE1 programs including GLP not just the pipeline remains healthy across all including biologics which which if you recall we had mentioned earlier that we have a new biological entity as our first project which is progressing very well. We continue to see new RFPs. We continue to see increase in visits from innovator companies whether it is American, Japanese or biotech companies. We are as we speak we have got multiple RFPs open and course our unique position that in biologics we are having a unique site which is an UN.
Integrated biologics, drug substance and drug product side, which is a huge value proposition for our customers in our oral technology soft gelatin business. You know, as you know, we have increased our capacity and we are right now at the capacity which we have. We are among the global leaders in soft gelatin capsules we have and a lot of this new capacity has been spoken for thanks to the new CDMO customers which we are, which we are building. And obviously as a cdmo, you know, the key to our reputation, apart from our capacity and our capability is the third C which is the third C of compliance. And as I mentioned to you, our stellar track record remains and reinforced just in last year 2024, we have had 36 successful audits both from regulatory bodies and customers, including the one I mentioned to you, which we just got eir yesterday.
So now what does it really mean? As we go into our future here, I would like to tell you and reinforce our medium term guidance. And as we have guided earlier, we will be looking at a growth of anywhere between 25 to 30% on a CAGR basis and will be a 400 million revenue company in the next three to four years with a very significant EBITDA margins of 40%. And here of course this growth, a significant part will be coming from commercialization of the products which are under approval, whether these are GLPS or some of the others, as well as the customer base which we have, which continues to expand. And of course because we have, as I mentioned to you, a very significant customer base.
And thanks to the fact that these are the global leaders, we also have a very strong demand and a very robust forecast. And based on this we are proactively expanding our capacities so that we ensure when our customers need the supplies, we are there for them. And for that we will be investing about 100 million in capex over the next next two to four years. While significant part of this capex will be towards our drug device combination capacities, we will also add new capabilities in our sterile injectable space. So the basic idea is to be very well positioned to capitalize on opportunities. And finally I would just say that we are hugely excited in what is in front of us, the opportunities and are fully geared up to execute this is what I wanted to say.
Thank you for listening. I would now request my CFO Anurag who will run you through the numbers and also tell you the key financial ratios. Anurag, thank you.
Anurag Bhagania — Chief Financial Officer
Thank you Neeraj. Good afternoon everybody. Thank you for joining our first earning call as one source. As a quick brief introduction, I am the CFO for OneSource. Very excited to be building out OneSource through its journey. Right now I have over 25 years of experience, 10 plus years of which is largely in publicly listed companies. But you know what I am excited about is the results that Neeraj briefly talked about. In addition to that I will also walk you through a little bit about some of the process initiatives and progress on the NCLT process. But first on the financial performance and the top line is something very very exciting. Q3 we stood 3926 million rupees and growth of about 18% closer to about 400 crores for the quarter and on a YTD basis we are already exceeding thousand odd crores. We are 1,189 million rupees and these are a result of the significant wins and long term contracts coming through our offerings which truly reflects the amount of customer trust and the strong belief that they have in us.
On our EBITDA impact performance we’ve had a very strong growth and therefore the impact on the EBITDA due to the operating leverage that we have in our business. We generated an ebitda of about 1432 million rupees, 143 crores to be precise, and a normalized pat. And these are the numbers that you can also refer to in our earning presentation that is uploaded and I’m sure you would have already looked at it. What is normalized pat? Therefore it’s excluding one time exceptional items, it’s excluding interest on discontinued debt and it also excludes scheme related amortization, all of which is more like one time items and not truly reflective of the operating performance of the business. So we’ve taken that out and after those adjustments what we see is our Eeps stands at 7.8 rupees for the quarter on a fully diluted basis and our return on capital employed is in the mid-30s range and trending nicely towards our future outlook of three to four years.
Beyond the numbers there are also very very significant developments in terms of some of the process. We went through the NCIT process this quarter, we got all the approvals in place and as a result of those approvals we are now a listed company on the Bombay Stock Exchange and the National Stock Exchange. We are very thankful to all the regulatory bodies, to our professional partners and colleagues and it gives us huge amount of confidence in terms of the execution rigor that we are building as an organization for the future of One Source. In addition to that we also had a significant amount of fundraise during the quarter. We raised about 800-801-0 million as you would have known. And we’ve already used half of it to retire some of our high cost and some of our complicated guarantee back debts.
You know, all of these actions will start showing outcomes in the future P and L as we expect our interest pretty much to go down half of the levels that you see today. We’ve also significantly reduced our guarantees that are existing in the earlier quarters. So as you see at the end of quarter three we are net of deposits and net of cash and cash equivalents about five eight one seven million rupees on our debt which is 581 crores to be precise. And we are anticipating a healthy over a medium to long term period debt to ebitda of less than 1. We actually aim to be debt free before end of financial year 27. And the balanced amount of cash that we generated, we’ve kept it aside for our CapEx program.
As Neeraj earlier mentioned, we are eager and you know, prepared for the future in terms of our capacity build out and therefore we plan to invest about $100 million. Half of it obviously is coming from, you know, the capital raise that we did. And in addition to that we anticipate a significant amount of cash generation in the business and some customer participation which will pretty much make sure that all of that hundred million that we want to invest over time. We are taking care of that, you know, priorities for the quarter is obviously running on this journey further and drive on our integration process as we bring together the business to make the future of one Source.
With that I invite Abhishek back and open it up for questions.
Unidentified Speaker
We’re good to start the questions.
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 one on their touchtone telephone. If you wish to remove yourself from the question queue you may press STAR and two 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 Nitin Agarwal from Dam Capital. Please go ahead.
Nitin Agarwal
Thanks. Congratulations Arun and the team for a tremendous Milestone in getting one source listed. Tremendous achievement. Congratulations again. I just had two questions. One is Arun on the GLP1 business, the DDC business. This is a little bit of a unique business to investors out here in India. So in your assessment, how should we be thinking about this business in terms of qualitatively, how should we think about the capacity utilization of the capacity that you talk about as well as the revenue and linked to it, the revenue generation in this business? What framework should we use while thinking about this business?
Arun Kumar
Nitin, you see this is a business that’s evolving in terms of forecast. So the forecast reliability is a function of constant change. At this time we know that our existing capacity of 40 million is not enough. We have already expanding capacities as we have articulated in the deck. We strongly believe that we need to add more and therefore we are going almost, you know, increasing our capacity 5x from the 40 odd million to almost 220 million in the next three to four years. You are aware that these are extremely long lead time equipments. We are one of the few manufacturers producing GLPs under an isolated system which is hard to get long lead time on equipment. And that supports our quality philosophy.
I think from a modeling perspective, Nitin, the way to look at this is to understand that when we communicate that 20 of the leading generic players are partners, our experience says that these companies have got significant market share as regional champions or global champions or European champions to kind of support their forecast with other products that they sell. So at this time we say that we have to keep this capacity because we’re already seeing on products like Ziraglutide where we haven’t put much emphasis on onboarding customers but we are seeing whichever customers we have the volumes increasing quite nicely. But obviously we are more excited about Ozempic and later Begovi. And how we see this is, is that you need to have the capacity to meet increasing demand. We play the risk along with our partners jointly in the sense that we expect our partners to participate in Capex or in reservation capacity free consequently we have that ability to take those decisions. And that is why Anurag has articulated that
CapEx will be from internal accruals because we don’t need to borrow to build these CapExes. So we are doing this risk share with our partners with a minimum guarantee that our assets are properly utilized. So at this time I can’t. It’s a blue sky. I can’t give you a specific way of doing it, but I think we are in a good position. We think that a large part of the global files that are from the challenges come from our site and therefore we strongly believe that increased capacities would be ideal so that we can use those opportunities that come our way. Yeah. So you know, 26 is a. 27 is a big year. As you know, the markets form mainly in Canada in January and then in January of 26 and then bulk of it is only in the last week of March, so effective. And that also will result. And that is why in FY26, you know, we will have fluctuating quarters because we obviously are reserving capacity.
If our customers do give us money to reserve capacity, then we have to reserve capacities for them. But revenue recognition would be more kind of hard coded towards the second half of the year. I think FY26 would kind of be a little bit ambiguous in terms of what exactly can we sell all the 90 million that we will have before the end of the year. We would like to believe so. But can we sell the 40 million? 100%. So that’s how we are modeling our kind of guidance. And if you look at our guidance, it’s guarded, it’s not low ball, but it is based on, you know, it’s not rationally exuberant but it is also.
We are also excited about the possibilities that the plant has the ability from a model and nature of this design that we can expand very rapidly capacities and we have access to those equipments since we already ordered them. So yeah, it’s a hard question. Typically you do have these difficult questions for us. But I think you have to play between the 40 and 90 million in the first phase of our evolution.
Neeraj Sharma
I think what just to add what also gives us confidence is that multiple, our customers have increased the forecast upwards on multiple occasions which gives us confidence and that’s why we are investing for this capacity.
Nitin Agarwal
Thank you so much. It’s just one quick one, Arun. When we look at the recast balance sheet post restructuring we see there’s a large amount of good because of the accounting method which is used for the merger or rather restructuring. Rather a large goodwill and intangible sitting along with the pretty sharp increase in our network. So adding Any thoughts about how to control the size of the. Optimize the size of the balance sheet because these are all sort of non cash items sitting in the balance sheet.
Arun Kumar
Exactly. And we know that it has a negative impact on our ro C and but you know almost 5000 crores has been added because we didn’t have common control. We had TPG as our partners and it would be unfair for us to have expected a common control commitment from them as snow pes would sign up for that. And between TPG and the family office and Stripes we had, we had the ability to, I mean between TPG and the family office we had the ability to have common control. Had we done this, this would have been a very standard, straightforward process without this very large amount sitting on a balance sheet. We are evaluating the possibilities of how to address this very quickly and we are engaged with advisors and consultants and tax advisors mainly bear with us and I think we will have more concrete solutions for the next call considering that we’ve just been listed and we’re very preoccupied with our results. Yeah, but I think from an operating margin and flow through and the cash flow through we will have a very significant free cash generation and an adjusted ROCE of 30% already but then growing strongly. But I think we will find some answers around it. We’re looking at comparable situations on an international basis. We want to be sure that they meet compliance and governance requirements, shareholder rules at all. And we’ll come back. But Nitin, at this time it’s, it’s highly active matter that we are working on.
Nitin Agarwal
Thank you. Thank you so much. Best of luck.
Operator
Thank you. The next question comes from the line of Amaya Shalke from JM Financial. Please go ahead.
Amey Chalke
Yeah, thank you for taking my question and congrats to all Arun Meeraj and Abdak for the first call and all one source team. The first question I have is we have around 20 customers on the GLC1 side. Is it possible to give some clarity on how many of these 20 customers would have already filed the product and how many would be in the MSAs and how much of these would be for US or Europe kind of geographies and how much would be for row. Thank you.
Neeraj Sharma
Just take your question. Thanks for your wishes. First of all, you know, you know, I mean we are as a cdmo we are, we are in business of keeping confidentiality on who we work with and the details around that. Having said that, as I mentioned to the customer base we have is literally the who’s who of global generic industry. Right. So they, you know, there are companies who are global leaders, there are companies who are, you know, regional leaders, there are companies which are leaders at a country level. So across all these, you know we have for many we have completed the the MSAs, many have filed, some are in the process and as I mentioned to you, these customers are across molecules.
So they could be different for different products. But suffice to say that our customers are going to be present at the market formation across all major markets. I think that should give you comfort. It should also I’m also happy to share that even a product like Tirzepatrite which is actually going to be expiring, the pattern is going to be expiring in 2036. We already have customers for those especially the ones who are targeting the NC minus one filing deadline of 2026. So as I mentioned a very, very large and diversified customer base and our customers will be there at market formation.
Amey Chalke
Right. So the reason I’m asking this question because as you understand the capacity globally is quite limited. So while choosing this customer is very important from our perspective as well, right? Whether that customer would be filing for the market which is going to see patent expiry in the initial years because you would have to allot that capacity to that particular customer, right?
Neeraj Sharma
Yeah, correct. So you are right in saying, you see that the biggest challenge right now for everyone in the market is getting access to capacity. And that’s the reason Arun mentioned earlier. Our customer contracts are such that to get access to our capacity there are customers who are either participating in our capex program which will give them that access. There are customers who are giving us reservation fee again to block get some dedicated capacity and then there are customers who have given us forecasts which are anywhere between 24 to 36 months forecast out of which anywhere between 12 to 18 months are binding forecast which is basically equivalent to take or pay. So thanks to these various models which we have with our customers that’s how we are allocating capacity and the very fact that again both Anurag and Arun mentioned we are proactively expanding our capacity and quite a bit of this capacity will come online in the FY26, some will come later but we will be prepared to support our customers.
Amey Chalke
Sure. The second question.
Operator
I’m sorry to interrupt you there. If can please join back the queue.
Amey Chalke
Sure. Thank you so much.
Operator
Thank you. The next question comes from the line of Kunal Damesha from Macquarie. Please go ahead.
Kunal Dhamesha
Hi. Thank you for the opportunity and congratulations on a good maiden quarter. For one source. The first question is again on the GLP1, probably from a market total addressable market perspective. While we are going to increase from 40 million to 220 million, if you can provide some color as to what’s the current market size or current cartridge requirement for just for GLP1 globally and how do you expect that to kind of grow and maybe a broad split between the markets which are opening up in 2026 versus markets which are opening beyond 2030 would be helpful.
Neeraj Sharma
Yeah, sure. Thank you. You see when you look at the market, this is a market which is evolving market. Right. You know, it’s, I would, I call it a fool’s errands if I were to forecast where this market would be the way it is growing. I can just tell you that what IQVR today reports, and as per IQVR, the total GLP1 units are, let’s say about close to about 500 million units, which is between us and the rest of the world. But I think what is really important for you to look at and primarily your question related to the markets which are coming off patent early, which are the ex us, ex EU markets, you see what IQVI is showing today, that’s just the tip of the iceberg.
Simply because this market has been constrained by supplies, Novo has been focusing almost entirely on us and then Europe. Therefore most of these markets, these are very large markets. If I look at the population of Brazil, especially when we are talking about having diabetic population in 200 million people, very high incidence of diabetes, very high incidence of, of obesity. Some of the largest markets, India, China are not serviced at all by Novo. So you know, while the current numbers are what I mentioned to you, where these numbers are going to be once the market gets geneticized, once these large number of patient population get access, I think it will be a very, very different number. And that’s the reason you see us going, you know, increasing our capacity 5x so that we are able to, our customers are able to get maximum, maximum opportunity to access these markets.
Kunal Dhamesha
And in your view, your customers, which are 20 customers, I think, you know, earlier you were at an 1517 customers. Do you think that they are finding you as the first source of the product or they’re also doing their internal filings? I mean what is your sense on that? Yeah. And then how complex it is. Does it require additional filing for them to add you as a source? How does it work?
Neeraj Sharma
So I can tell you to answer to your first question, yes, we are the first source for our customers. And the thing is when a customer comes to us today, a customer is spending anywhere, anywhere between 5 million to 15 million plus for each approval. Right. So you know, and you can understand this level of investment and these are, you know, these are not very easy products to move. These are not easy products to switch. Arun mentioned, you know, to have isolator based capacity. It is not easy to build. We are the only ones, you know. So we don’t see anyone entering in this with this technology anytime soon. So the fact is that we are the first ones and we see even if, you know, even if somebody would develop or add in house capacity and it could happen for sure, we would still remain a significant supplier and add a share of the total of these customers.
Kunal Dhamesha
Sure. One more with your permission on the seasonality. So I see that there is a significant gross margin improvement that has happened between first half versus quarter three. So how should we look at the seasonality from a business perspective? Because a lot of the CDMO companies do have seasonality.
Arun Kumar
The seasonality is a function of only for the next few quarters. Like Nipesh mentioned earlier from FY27, 80% of our volumes would be predictable CSS, I.e. commercial sales. So yeah, we are already guiding for a lopsided H2 because that’s when commercial supplies start. But we are also guiding for FY26 within that margin range of what we have reported this quarter. But there will be quarters when it will be lower, there will be quarters which are higher. The seasonality is therefore a function of only the time when we have freedom to operate in certain markets for the GLPs. So I don’t think you need to look at us as regular CDMOs, especially in the API space where they’re heavily lopsided towards a particular quarter or a half. We are just already guiding you that this is only a one off year for us the next five quarters. But after that we will have a very steady state business with growth Q on Q. And also we are guided for 40, so I think the fluctuations in EBITDA and seasonality. Fluctuations in ebitda, not necessarily seasonality is the more apt word that you need to use for us.
Kunal Dhamesha
Sure. Thank you. And all the best.
Operator
Thank you. The next question comes from the line of Anubhav Agarwal from UBS group. Please go ahead.
Anubhav Agarwal
Yes. Hi guys. Good afternoon to all. First question is very basic. With 40 million cartridge capacity, how many end patients can it support? Like would the end patient be needing about, like somewhere about five, 10 cartridges in a year? What is that number?
Neeraj Sharma
Yeah, so just to give you an idea, you know in a pen which takes a cartridge, especially if I take product like Ozempic, it is about 12 pence in a year. So 12 pans in a year. Ozempic is patient takes. But if I take. Similarly if I take lira, Ozempic as you know is once a week. But lira gluteide is actually once a day. So lira the same ratio works, actually one is to three. So three times of ozempic is what Saxanda or lira luteide patient takes.
Arun Kumar
So to answer your point, it’s more like 8, no, 9 million patients at 40 million. And we know that’s not a big needle mover.
Anubhav Agarwal
So. Yeah, so that’s the starting point I want to understand. So when you give a capacity, ramp up schedule 40 million going to 220. See, returns are very good. In fact superlative returns, like 40% margin, 200 returns, it’s a great business, right? And Even on your 220 million capacity, let’s use your number itself, right? Maybe you will be serving like 45 crore, 40, 50 million patients. Right? Which is what would be market share at that point of time. I’m just trying to understand that how do you think about this phase up? I mean, what is the thing which you’re not sure about? So the demand is there. Yes, but difficult to say how it will ramp up. But if something else is a constraining factor because with such great return with what is stopping you?
Arun Kumar
If I May. Firstly, the 220 million garbage capacity kind of services all the markets that we think at peak demand for markets that are going off pattern before 29th. So this doesn’t cover our needs for Europe and for the us we have plans, we’re working around it. But we have the luxury of time for installing additional capacities. Okay, so that is one.
Secondly, remember that the innovators, either due to supply chain constraints or or strategy have starved emerging markets and markets that can afford generics from supplies. This is a very standard problem that we’re seeing. And we are seeing that even in Saxenda, as Neeraj alluded that we are seeing demands being forecasted upwards because these markets were under service. So I think the 220 or even 400 million is a very small percentage given that it is expected that over a billion people would potentially be the customer base. And obviously that’s not the capacity that we are developing will probably service 3 to 5% of that total opportunity.
What we are seeing is the expansion of that patient pool with better pricing and price points and service levels. So we will be an important player from being first to market formation with our partners. But we are also in a very strong position with our partnership in the U.S. but that’s many years away. So we have the ability to in our plant and elsewhere in our group, I mean within the one source ecosystem to add more capacities on a global basis. So I think 220 million units is a good starting point. It is still not a very big percentage. But I think considering that most of the first generic files are housed out of our plan, I believe that we will have an important share of that market formation of the generic.
Anubhav Agarwal
Can I ask you one clarification on this, on your response? So in FY27, let’s say FY28, roughly what would be your market share in the cartridge segment in the film finish? Would you be like 20%, 50% of the market? What would that number be roughly?
Arun Kumar
More like 15, 20% is our estimate.
Neeraj Sharma
I think steady state. Once all markets are out, I think we could be about a third of the total generic market. It could be. Now whether that happens in 27 or 28, difficult to say. I can only tell you the way market is evolving. I think it’s very important that as Arun mentioned, most of these markets which are coming off patent early, whether it’s Brazil, which is less than 1% of potential population is being covered right now by Novo. And really put together in Canada, market like Canada is no more than 5 or 6%. So there is huge market out there which would be expanding. And this is only with all the numbers we are talking about are only Based upon type 2 diabetes and obesity, you know. And we all know how the indications are expanding. Yesterday Novo got an approval for chronic kidney disease. And suddenly chronic kidney disease opens a huge different market, you know. So therefore as we said, you know, this is an evolving market and everything will evolve.
Anubhav Agarwal
Thank you.
Operator
Thank you. The next question comes from the line of Sudarshan Padnaban from JM Financial. Please go ahead.
Sudarshan Padmanabhan
Thank you for taking my question and congrats on great set of numbers. So my question is, you know, beyond the GLP1, which you have, you know very well, you know, elaborately explained to us, you know, I also see that we have very unique capabilities in the biologic space. Probably one of the very few people I can think of in the integrated between, you know, the drug substance and drug products in this space. Specifically, can you talk a little bit more about the kind of capabilities that you’ve created in terms of platform technologies, you’ve talked about life utilization. I mean, are we planning to extend it further towards other technologies? What are the kind of clientele that we are working with right now and where do we see the commercialization benefiting us?
Neeraj Sharma
Sure. So on Biologics, as you rightly said. Thank you for highlighting that point. We do have very unique capabilities and capacities when it comes to biologics. As I mentioned earlier, we are one of the few sites globally with integrated drug substance and drug product in the same site, which is a huge value to our customers. And you know, of course the benefit of starting with a drug substance and ending with a full finished product is something which customers really value. And here in Biologics we already onboarded our first customer in the area of microbial.
While we have capacities in both mammalian and microbial, our real niche and uniqueness is in the area of microbial where we are able to do development, we are able to supply clinical trial quantities and commercial quantities. And that’s where we see we already have our first innovator customer in that area and where we have got multiple ongoing conversations with some of the large companies. And this is where we are going to be doubling down. You know, that’s a unique area we have as well as areas that you mentioned lyophilization and complex injectable. That’s a legacy which we have a very, very long legacy and we will continue to strengthen and double down in that area as well.
Sudarshan Padmanabhan
And when do we see the commercials in terms of sales and numbers benefiting us in this space, sir?
Neeraj Sharma
Yeah, the number so see Biologics, I just to tell you, you know, Biologics is a, is a long gestation business. I can tell you, you know, the investments which we have made were made way back in 1718 and you know, we had our first customers on board it now. So this is a business which requires significant work. I can tell you between starting discussions and actually but the good thing is that once you have a customer, you have a customer for almost for life, right? That’s where we see a huge benefit. So while we are all our customers which onboarding now we will start seeing the commercialization right now while we’ll continue to have a significant MSA revenue over the next two to three years. But in the really commercial will be starting three to four years from now. And in fact in the guidance which I mentioned earlier of 400 million we have from biologics only limited contribution because most of the commercial revenue in biologics will be after that period. But after that then we have a very long legs for our business beyond even the period we have given for guidance.
Sudarshan Padmanabhan
So that’s very interesting because even beyond the GLPC have a long run.
Operator
Please join back the queue for follow up questions. Thank you. The next question comes from the line of Abdul Kadar Puranwala from ICICI Securities. Please go ahead.
Abdulkader Puranwala
Hi sir. Thank you for the opportunity. So first question is on the capacity expansion of $100 million which you’re planning to do over the next four years. Could you help us, you know split this amount between what is going for fill finish or your DDC and for softgel and sterile injectables.
Neeraj Sharma
We don’t get granularity. We need to understand that we can’t get into these finer details of what exactly all of it is going. Everything that is mentioned in that slide will cost us about 100 million.
Abdulkader Puranwala
Okay. Okay. And so with you know, this new addition on, on your cartridge full finish line of close to 220 million units by 28. I mean, you know, while that is quite encouraging to also understand that how should we see the utilization levels at least say starting by 26, 27. Any, any color on that would be very helpful.
Neeraj Sharma
Well, I think you have to considering that we have completed a very significant investment phase which is delivering value in our business of CDMO. Like all CDMOs do we have to put Capex ahead of business. Right. So what we are investing 100 million is not going to give us turnovers tomorrow morning. And that is why you have to go by the guidance that we have provided on the caval of growth and the EBITDA reach. So you have to do your math around that and make up your model. The point I’m trying to make is that we can’t give you granular details about each line item. What is it going to deliver? Because we are investing Capex based on our ability to forecast watercolor customers will deliver our ability to take risks. But overall we have committed three critical line items for you, which is growth, EBITDA and Rosie. So we’ll achieve all of that.
Operator
Thank you. The next question we take from the line of Alankar Garud from Kotak Institutional Equities. Please go ahead.
Alankar Garude
Hi, thank you for the opportunity. First question. So you mentioned one source is the primary source for the 20 GLP1 customers. Are you also including clients having their own capacities when you say this?
Neeraj Sharma
I think, as I mentioned, you know, I would like to know how many, you know, clients have that capacity today. But the idea is very clear that we would be the primary supplier for all of our customers.
Alankar Garude
Understood. Maybe a follow up there, Neeraj would be, I mean, do you see any of your clients also looking to add capacities for cartridges or they’re still in a, I mean, in a bit of an unsure state at the moment about investing on their own.
Neeraj Sharma
Sure. You see there, you know, I’m sure, as I said, our customers are the global who’s who of the industry. And I’m sure, you know, as a de risking strategy, you know, some of them would be looking at their own, their own capacity. But I can tell you that, you know, because we are the pioneers here, we have a significant head start. The kind of both the capacity, the capability and the compliance track record we have, it’s not very easy to replicate. But having said that, some will certainly do their own in house capacity.
Arun Kumar
As Neeraj already earlier mentioned, there’s a significant hurdle in terms of our customers from thinking about any other site other than ours since they have already gone with us so far. There’s a 5 to 15 million dollars of initial investment which they will have to reinvest. So practically there’s a lot of value in terms of continuing that relationship.
Alankar Garude
Got it. And the second one, a quick one, you spoke about not putting too much emphasis on getting customers for Liraglutide. Should we expect a minimal contribution from Lira in FY26? Sorry, I missed that.
Arun Kumar
Yes, you can.
Neeraj Sharma
Yeah. So there is, you know, by the time we started, it said, you know, the whole focus of the market is on sema, whether at the prescription level or at the, or at the, you know, obviously the company’s level. So yes, a significant part will be coming from sema.
Arun Kumar
But to answer your specific question, yes, there would be some revenues from lira too.
Operator
Thank you. The next question comes from the line of Vivek Agarwal from Citigroup. Please go ahead.
Vivek Agarwal
Hi, thanks for the opportunity. One question is on biologics, as you have mentioned, that you have onboarded a new customer. So is it possible, if you can elaborate. What kind of the customer it is, that is or the product, let’s say whether it’s early stage product or for example some kind of the middle or later stage product. Thank you.
Neeraj Sharma
Yeah, so I can, you know what I obviously as I mentioned to you, we are a cdmo, we don’t give customer details. But I can tell you that it’s, it’s an innovative customer. The product which is a new biologic entity, it’s the first in class and it’s already, you know, the development work has been done. It’s a product which we have taken at a, at a phase three. So you know, so that’s how we will, and we will be taking it to cities and, and eventually to commercialization on approval. So post commercialization basically you are going to participate and when you expect, let’s say as far as the commercialization concerned, if it happens, as I mentioned to you, these are, you know, keeping in mind the entire approval timeline if the commercialization is about three to four years out.
Vivek Agarwal
Okay, understood. And one more question I have on GLP1. So what kind of competitive advantage that you have? Because everyone is sensing this opportunity coming and can invest into the capacities etc. So what is stopping the other players in putting the capacity as you are seeing that, not seeing anyone entering the technology zone. Thank you.
Neeraj Sharma
I think it’s what I mentioned. You know, we are the pioneers when we started, you know, nothing is stopping anyone from coming. I’ll explain to you how it works. If today someone were to come in and start putting the investment, put in an order just to get a filling line, it will take them anywhere between 24 to 36 months. And even if they have, once the machine comes in three years from now to take the batches you need to generate six months of data before you can go to fda. You generate six month data, you go to fda. It takes another six months before FDA comes to approve and then at least another one year for you to get the approval of the product. So today you invest the first revenue dollar comes back in five years. And by the time, as I said, we as pioneers have a significant head start. And the fact that we have multiple customers, experience with multiple customers, a very, very significant drug device expert team. You know, we have taken more technical transfer batches in GLP1 than most companies do commercial batches. So I think all this put together, you know, puts us answer your question about competitive advantage. I think all this puts us in a very strong position versus anybody else.
Unidentified Speaker
Ryan, can we take last two questions in interest of time, please.
Operator
Sure. The next question comes from the line of Aman from Astute Investment Management. Please go ahead.
Aman Vij
Yeah. Good Evening, sir. Just two, three quick questions. First on GLP1, so when we talk about this 40 million number for next year and 90 billion for in blue sky scenario or maybe in FY27, could you talk about how much say take percentage will be take or pay where we have like definite probability of that happening. Plus if you can also talk about client concentration. So when we reach that 90 million, is it dependent on 3, 5 customers? Because what we keep hearing, there’s a lot of issues in getting the API right. So if we are dependent on that, then can our story be derailed? And finally on this 40 million for this year, which is base case when you talk about minimal is lira. So is it safe to assume that in terms of volumes, lira will be like lira semic will be 2080. These are the questions on GLP. One, just one, two more questions I have.
Neeraj Sharma
You have to go back on the queue. There are a lot of other people.
Aman Vij
Yeah, you can answer these then.
Neeraj Sharma
I think your point on client concentration, when we announced that we have 20 active customers, obviously the concentration is not at all there because 20 customers in GLP is a lot. Second, will all of them get approvals? We don’t know. That is why we have 20 in the first place. Right. So I think the point is please be guided by our outlook. The outlook has got all of these questions sensitized in a manner that management is confident to stick its neck out to provide a guidance which we normally would not do otherwise.
Operator
Thank you ladies and gentlemen, in the interest of time, we take the last question from the line of Anubhav Agarwal from ups. Please go ahead.
Anubhav Agarwal
Yeah, thanks for my follow up. Question one is on ddc, just trying to understand the duration of contract typically for you guys. So one, what kind of duration we talking about here? Secondly on the pricing, is it valid for the full duration of price changes each year or do you have some escalation clauses, just not the numbers but what are the kind of contracts?
Neeraj Sharma
Okay, so on. You know our contracts are typically between five to 15 years, you know, so you can take an average of about 10 years. All our DDC contracts, that’s to your first question. And in terms of pricing, obviously, you know, it’s as a typical cdmo we have a volume based staggered pricing because for us as a manufacturer it depends upon their efficiencies which come in with increasing batch sizes and increasing volumes. And obviously most of our customers when they started, they started at small batch sizes. Now considering the big growth in forecast by everyone, the batch sizes are increasing quite dramatically. And our pricing obviously is also staggered. But it is there in the contract and staggered pricing.
Arun Kumar
Just to add to what Neeraj is saying as a typical cdmo, we operate as an international cdmo, so we sometimes put risk capital in partnership with our partners, which effectively means we get an upside share on profits, royalty, stuff like that. So it’s a combination of floor pricing from a pure manufacturing activity, but also an upside in terms of profit share. And you know, you probably are aware that we are partnered for the first NC minus 1 in the US it’s a long, long haul, long drawn timeline. But we do have other, smaller arrangements like this for other markets. So it’s a. The deep part of our business is significantly designed, or I would say designed more like international CDMO players. And our manufacturing part has got a healthy minimum EBITDA target. And then we have these additional value streams which gives us a lot more confidence in how we build this business.
Aman Vij
Sure. That was very comprehensive. Thank you.
Operator
Thank you. Ladies and gentlemen. That concludes the question and answer session.
Neeraj Sharma
Sorry, I just wanted to say thanks once again to everyone. But also I know there are many questions today which perhaps remain unanswered. Just to make sure that we give you sufficient time. What we are organizing is actually an investor day. It will be done in Mumbai sometime end of February or early March where we’ll be able to interact more and answer more questions.
Our investor relations team will reach out and give you more details.
Arun Kumar
And in the meantime, please write to us if you have any specific questions. And thank you so much for your time today. Thank you.
Anurag Bhagania
Thank you.
Unidentified Speaker
Thank you.
Operator
Thank you. On behalf of one source Specialty Pharma Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.