Onesource Specialty Pharma Ltd (NSE: ONESOURCE) Q3 2026 Earnings Call dated Jan. 24, 2026
Corporate Participants:
Arun Kumar — Founder and Non-Executive Director
Neeraj Sharma — Chief Executive Officer and Managing Director
Anurag Bhagania — Chief Financial Officer
Abhishek Singhal — Company Secretary
Analysts:
Unidentified Participant
Abdulkader Puranwala — Analyst
Rupesh Tatia — Analyst
Nitin Agarwal — Analyst
Abhishek Kumar Jain — Analyst
Sukriti D Patil — Analyst
Mehul Panjwani — Analyst
Presentation:
operator
Ladies and gentlemen, good morning and welcome to the one source Specialty Pharma Limited Q3FY26 earnings conference call. As a reminder, all participant lines will be 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 this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Singhal from OneSoul Specialty Pharma Ltd. Thank you. And over to you sir.
Abhishek Singhal — Company Secretary
Thank you Moderator Good morning everyone and thank you for joining us today for the earnings conference call of OneSource Specialty Pharma Ltd. For third quarter of financial year 2026. We are pleased to have with us Arun, Founder and non Executive Chairperson Neeraj, CEO and MD and Anurag, CFO of the company who will walk you through the key business and financial highlights for the quarter. I trust you’ve had the opportunity to review our results release and the quarterly investor presentation, both of which are available on our website as well as 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 contain forward looking statement which should be viewed in context 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 Abhishek. Good morning everybody and thank you for joining this call on a Saturday morning, especially in a long weekend. We had our board meeting with several of our directors on a virtual basis yesterday so we could only announce the results late in the night and therefore we appreciate your time today. Before I hand over the call to Neeraj and Anurag to discuss further on our results, I would just like to set the context of today’s discussions in terms of our numbers and how we see the business evolving. Firstly, I would like everybody to draw my attention.
Sorry, draw your attention to my Q4 FY25 commentary where I had highlighted that FY26 is a transitional year where our primary focus is will be to build readiness in our operating capacity, executing our MSAs and preparing for scale. All of these key milestones have been achieved and we continue to invest on this singular focus. Our Q3 FY26 results has been impacted by revenues being deferred. As all of you know, our DDCs have a major fill up to our numbers and our FY28 outlooks. Having said that, the only large market that was available to operate at scale was Canada between January and end of March when other markets opened.
Consequent to several of our partners having not received the Canadian approval for Senna Blue died, we have had a scenario where we have deferred, we had to defer our revenues until that event happens. Now while I get into more details of the Canadian regulatory approval and our view on that, I would like to reiterate our FY28 guidance. At the time of our listing in January 2025, the singular guidance that we have provided provided to investors is a number of $400 million with an EBITDA of $160 million for FY28. This obviously does not include any of the inorganics accretions that we have announced later.
We remain extremely confident on our ability to achieve these targets and I will explain why we believe so. Let’s get into the elephant in the room which is of course the Canadian regulatory approvals. We have several partners for the Canadian business and of course some of you are aware of the public statements that one of our key partners have made about their partnership with us. And this obviously refers to one of our anchor partners, which is Dr. Reddy’s. They were expecting an approval for this product at market opening which was in January. This has since been deferred as they had received certain requests for additional information from the regulatory agency.
We believe and based on their guidance that their approvals are slated anytime between now and May. And we also believe that other filers from our facility for the Canadian market will be in that range a little later. Consequently, we believe it may not be prudent to build a near term guidance on these assumptions and we rather wait for these events to unfold before we can give better clarity on how the DDC business is for the Canadian market operates. Having said that, many of our partners have received approvals for the Indian market and after the last, towards the last week of March those opportunities open up.
And while India is a market that we can immediately commercialize, obviously we believe that the competitive intensity for the Indian market is severe and it is not a market of focus. Having said that, you will find our products at market opening in the Indian market through our partners. Now several of the other markets that are opening up in the emerging markets outside of Canada, the only other markets are the emerging markets where over between 80 to 100 countries open up around the end of March. Many of these countries the regulatory process is dependent on what we are able to provide as a document called CoPP which is Indian government Certificate of Pharmaceutical product which is only available after a product is launched in India.
So we expect to have these certifications in the first few days of April after which we expect a flurry of approvals for several of our partners in emerging markets. And there are very significant emerging markets that will add up to the volumes. I will now come to the capacity prioritization. So we could have continued to accept MSAs from new customers but we decided to prioritize our capacities for commercial sales considering that we have contractual obligations but also we want we obviously make more economics when we move from MSAs to commercials. Accordingly, until we have all these approvals in place, we expect the next two quarters to remain relatively soft.
Having said that, our aggressive capex of over 700 crores to increase capacities are progressing very well and we believe that by H2FY27 we will have significant additional capacity that will come up for increased demand. As we see, as we see most of our customers have started increasing their forecasts and we strongly are now very confident that we’ll be able to meet an increased outlook. Another factor that we are confronting and working with our partners is the current batch size and the scale up. The current batch size because of the high cost of the development of most of our partners are suboptimal and in many cases not very commercially viable when you want to run very large production runs.
So we are working very actively with our partners to scale up capacities. But these involve scale up batch sizes to meet our increased capacity so that we can be more efficient and cost competitive for our partners to be more competitive in their markets. Space. Market space. And we are working with several of our partners and we are in the process of concluding those activities and getting regulatory approvals in several markets such that we can increase our scale. In hindsight, these approval related uncertainties have played out as we have anticipated. Reinforcing our decision not to provide an FY27, 26 or 27 guidance and pivoting our guidance to FY28 which we now continue to reiterate.
The negative operating leverage that we expect now in H2 of FY26 and partially in H1 of 27 reflects the absence of new MSAs due to strategic priorities and the fact that commercial supplies have not yet commenced. Notwithstanding these near term factors, our confidence in the DDC opportunity remains high. Customer forecasts continue to be revised upwards. There’s not one customer has not revised forecast upwards. FY27 will mark the beginning of material CSA revenues with H2 significantly stronger than H1. We expect our Q4 FY27 analyzed exit run rate for both revenues and EBITDA to be a good reflection of a near close FY28 guidance numbers.
Now you will appreciate that many of these actions we are dependent on our partners and while our partnership philosophy is strong, we are working strongly with these partners to work to get the maximum outcome for both them and for us. And all of this makes business sense for us to reprioritize. Another operational highlight before I pass on the conversations to Neeraj and Anurag is an update regarding our sterile facility in Bangalore. You will appreciate that this facility is approximately 20 years old since it has got several FDA inspections including a stellar recent inspection. However, we are converting a large part of this capacity to include increased demand in specialty injectables like long acting injectables, high viscous pre filled syringes and we are taking a four month shutdown where we will significantly increase our capacities in lyophilization, pre filled syringes, high viscosity pre filled syringes and also other capabilities and consequently this will have a near term impact.
This is not going to be a material near term impact, but I thought it is important we use this occasion to also bring this up to your notice. The last point that I wanted to discuss in today’s call was the business decision that we have taken as a company. We now have little over 30 new customers that we have added in the last few years since the formation of Stellus and then eventually one source. We currently hold approximately 250 crores as advances from customers who pre book our capacities. It is in normal circumstances very easy for us to enforce our take or pay contracts.
But considering that some of our partners have got delayed approvals, considering that our partners have increasing batch sizes, increasing their contract tenure with us in many cases we have we are now working with our partners to be proactive and find solutions where both partner and us benefit and consequently in some cases we have either deferred our take or pay contracts while we continue to receive significant advances from our customers. And this is very important for us as we have managed in most cases to extend the contractual obligations of our partners and where we haven’t, we obviously are now evoking the take away contractual obligations.
So with this I will let I’ll pass on the I’ll let Neeraj to discuss the rest of the call and then I will of course be available if you have any specific questions to my opening commentary. Thank you.
Neeraj Sharma — Chief Executive Officer and Managing Director
Thank You Arun and welcome. Good morning and welcome everyone to our Q3 results. As Arun mentioned, this quarter’s performance has broadly been shaped by the SEM approval delays for our customers in Canada. And as the transition from MSAs to CSAs has been pushed out and as a deliberate choice, we did not take new DDC MSAs purely purely strategically. As a result, the Q3 revenue declined by almost US$10 million versus the previous quarter. And considering the nature of our business, the revenue shortfall resulted in very unfavorable operating leverage and thus the EBITDA declined by more or less the same amount.
Now, while the revenue trajectory got impacted during the quarter, what is really heartening for us, and it should be also for our investors is that the underlying demand of our business remains absolutely robust. Our order books continue to expand and this is for customers in Canada, India, rest of the world markets which are all opening up for samargutide in this quarter and both us, ourselves and our customers. We continue to believe that our customers will certainly be among the first movers across all these markets, notwithstanding the delays and this includes the Canadian market. And once the approvals are received over the next couple of quarters and the commercial supply start, we are absolutely confident that the incremental revenue which is coming will flow meaningfully through to the bottom line and basis that our capacity expansion plans remain absolutely on track.
And as of last month we have already committed almost 3/4 of our total planned 100 million capex investment spend which we have set for our flagship site. And obviously we also continue to man and to run these lines. We are expanding our workforce and in our flagship site year to date, we have doubled our workforce by adding almost 3, 300 new FTEs. So overall, you know, we obviously remain very positive about the GLP1 opportunity and while we expect the approvals to be staggered over the next couple of quarters, you know there will be a very, very significant commercial uplift starting in FY27.
But also beyond going beyond drug device combinations, we have also made notable progress across all other service offerings. In fact, we are most excited about our nascent biologics business which has benefited from some very strong tailwinds both from the new FDA guidelines on biosimilars as well as the passage of the Biosecure act in the US then as a result, our RFPs today are almost 4x of what they were at the end of last year and our funnel is at absolute historic highs. Also happy to share that during the quarter we onboarded yet another global biosimilar customer this is a US based biosimilar major and at the same time active discussions ongoing with multiple European players.
Our customer engagement seems high. The teams are out in the market meeting customers and also there have been a significant increase in the customer visits to our sites in this year. Beyond Biologics also, you know we continue to add customers even during the quarter in our injectables and soft gelatine business. The whole founding philosophy of One Source which was the integrated one solution offering and cross selling is resonating very well with the customers. In fact in our soft gelatine business we have in the last quarter secured approval for our first oncology asset. This is a new, you know we never had oncology product.
Now we got approval for Oncology Asset and this is an NDA and it is happy to also tell you that it has been partnered with one of the top 10 US generic companies which really adds to our specialty offering. And also in our injectable business we continue to our customers continue to gain share and both for existing products as well as adding new projects into the pipeline along with the business when it comes to operations also our execution remains robust and I’m extremely proud of the fact that our quality record and the compliance record remains stellar.
Year to date we have had 36 inspections both from regulators as well as our customers. In fact also delighted to say that yesterday at our flagship DDC site we have a very very good inspection so we will keep you informed on how this continues to advance. Also as a very responsible global cdmo we continue to advance our sustainability agenda, earning actually equal bronze medals this year and a very meaningful increase across all the categories which were there. To conclude what I would say that despite the near term timing effect and the approval hiccups, our customer orders continue to strengthen our capacity build out remains on track and our commercial readiness is very high which is really helping us to reiterate our FY28 guidance which we have given of becoming a 400 million revenue company organically and we are absolutely confident of achieving this through execution across all our service offerings.
So as we continue to build One Source I really want to thank our teams for their dedication and our customers for their collaboration. Thank you very much. I will hand over to Anurab who will share with you details on the financial performance.
Anurag Bhagania — Chief Financial Officer
Thank you. Thank you Neeraj and a very warm welcome to everyone joining us on this Saturday morning. I will now present to you key financial highlights for the third quarter of FY26. As Neeraj already mentioned and Arun also spoke about it our quarter performance has been largely impacted because of the delays on customer approvals in Canada. As a result, the reported revenue is about two nine zero three million rupees which is a 26% year on year decline. The shortfall in revenue combined by our fixed cost base resulted in an EBITDA of 170,73 million rupees. Adjusted PAT stands at a loss of 472 million Indian rupees and adjusted EPS on a diluted basis is a negative 4.1 per share.
As you all know during the quarter there has been a regulatory change related to the code of wages and as is prudent and appropriate we have fully provided for the impact of this change as an exceptional item in our financials. Our PAT and EPS exclude exceptional items, you know, which are related to scheme intangibles. I would also like to highlight that the balance sheet includes goodwill arising from the scheme of arrangement that we had last year which reflects the strategic value in that transaction. The goodwill is a non cash item and has no bearing on our operating performance and cash flow on the working capital trends.
It reflects a planned inventory buildup for significant launches that are upcoming on the semaglutide launches. These are all temporary and timing related and we expect it to normalize over the course of time gradually over FY27. These inventory buildups are customer backed either with advances or firm purchase orders and largely expected to normalize during the course of time. On the treasury side we’ve got some very exciting developments during the course of the year we’ve had two notches upgrades, two rating upgrades leading up to four notch upgrades on our credit rating. All of that is now starting to show up on the decrease in interest cost and we are very happy to announce that we are now 200bps lower versus last year less than 9% effective interest rate.
We’ve made significant arrangements to ensure that our CapEx plans are fully funded. We’ve tied up with strong relationships across global international leading bankers including very significant partnerships with local Indian bankers and. We. See that for a short term the capex funding led, you know increase on the net debt. However, we are very confident of the near term guidance of less than 1.5x of EBITDA as our net borrowing. We remain confident about the fundamentals of our business and very strongly building the future of our business, remaining committed to the shareholder value that we want to create. I thank you all once again and look forward to your continued partnership.
Neeraj Sharma — Chief Executive Officer and Managing Director
We are good to open for Q and A.
Questions and Answers:
operator
Thank you very much. We Will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may Press Star and 2. Participants, you are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abdul Kader Puranwala from ICCA Securities. Please go ahead.
Abdulkader Puranwala
Yeah, hi morning thing and thanks for the detailed explanation and outlook for the business. So just my first question is with regards to this plant shutdown. So you know first, was there any impact in this quarter as well and is it the same DDC plant where you’re planning to expand your capacities for injectables?
Neeraj Sharma
Abdul Ieraj here. No, Abdul, this is not the Blackship DDC site. You know, that’s that the expansion plan there goes absolutely on track. The plant Arun was referring to was the general injectable site which is in Bangalore. And that’s the site which is one of the oldest sites in the group where we supply general injectables. And that’s the site where we are adding capacities in liabilization, we are adding some new capabilities. And that’s the site where we would need to take shutdown. Our flagship site obviously is, you know, there is absolutely no shutdown there in the flagship DDC side that the expansion which I mentioned, you know, we continue to.
In fact we already committed almost $75 million in that expansion.
Abdulkader Puranwala
Got it sir. And second is on, you know, the quarterly numbers. So you know, just trying to understand the quarter performance. So the 290 crores of revenue, what is posted in Q3, is it a fair reflection of your softgel and injectable business?
Neeraj Sharma
So yes. So at the gap, as we said, you know, the, the decline or the shortfall let’s say for in the revenue is primarily from the DDC business. And that’s what you know because as we know that the DDC business has a very, very significant EBITDA margin that the delta there flows down to the bottom line. And that’s what is coming to the bottom line. Yes. So to answer your question, yes, it is a fair reflection.
Abdulkader Puranwala
Okay. And last one on my end. So I mean when we talk about the working capital being higher because of the inventory pile up of semaglutide, you know, I mean what is the color we have from our customers? Because we are sitting on some advances as well as on the inventory. So you know, if you could highlight, you know, what Happens if the launch gets delayed beyond whatever timeline we are currently thinking about.
Neeraj Sharma
So Abdul, you know, as we are a cdmo, as you imagine, whatever inventory comes to us from our customers, it belongs to the customers. Obviously, you know, we have all the, all the procurement has been done in conjunction in agreement with the customers and the delay, you know, are actually or on their side. So as a cdmo, all inventory risk, if that’s your question, actually belongs to the customers.
Abdulkader Puranwala
Understood, sir, I have more questions, but I will get back in the queue. Thank you.
Neeraj Sharma
Thank you.
operator
Thank you. A reminder to all the participants, you may press star and one to ask a question. We have the next question from the line of Rupesh Tatia from Long Equity Partners. Please go ahead.
Rupesh Tatia
Yeah. Hello sir. Thank you. Thank you for the opportunity. My first question sir is to understand the peak capacity utilization. So I think in the last call you said that let’s say for on the 40 million base DDC capacity peak production can only be 20 to 25 million devices. So that. That seems a little low to me. So many. Any, any you know, technical explanation you can give for this. And then maybe you can also tie this with the batch size increases that we are looking at. I mean batch sizes. I. I always thought was an API. It was using the API parlance but.
But pardon my ignorance. So how. What are we trying to do there also with this increasing batch sizes, what what will happen with to the capacity and the capacity utilization?
Neeraj Sharma
How I can explain to you is in the following way that yes, you’re right that the 40 million cartridge that’s the headline capacity. So one way to look at it is the headline capacity of the line. But the second way to look at it also is the number of days which are available in a site to produce that. Right? So how it works in any manufacturing, especially in style injectable manufacturing, we always work on number of days and when it’s also that the days taken between MSAs and CSAs are different. When we run commercial campaign, we can do for example as many as six batches in seven days.
However, when we end up doing MSAs, you we end up doing only two batches in seven days. So purely from number of cartridges it could be, you can imagine less than a third of the commercial. So we don’t always look at the number of cartridges coming out while it is in the MSA phase. As I said earlier in my call that because the MSA to CSA progression has been prolonged, that’s why it’s not the right time to see actual number of output it is number of days which get utilized. That’s number one. And to your second point on the batch size increase, how it again works, batch size is not just of the API.
Batch size is also of the finished product. And that’s how for you to understand that in one day we make one batch. So if we make a batch of let’s say 200 liter and a certain quantity comes out per day in the same day if we are able to increase the batch size to 500 liter it becomes, the output becomes two and a half times of that within the same time taken. So you can imagine the actual output from the site goes up, you know, by that, by that scale. And that is the point which Arun mentioned that that requires regulatory approval and in conjunction with our customers we are working towards that.
Rupesh Tatia
Okay, so just one follow up sir. So on when we go let’s say 100% CSA at some point in H2FY27 on this 40 million capacity the peak production can be 70, 80%. That’s a fair assumption.
Neeraj Sharma
So yeah, so that is in a style injectable. That’s what typically works. 70, 75% capacity utilization is what we work with. Yes.
Rupesh Tatia
My second question sir is let’s say whatever these 20, 25 million devices we sell, whenever, whenever we sell first 25 million. Let’s say what would be the rough split between you know, different geographies based on your vantage point? I know, I mean your customers obviously will have more information but based on whatever you have seen, seen the market looked at the market between, let’s say you know, Canada, India, Brazil, Turkey, Saudi Arabia, row any rough split you can give just to understand which markets have high volumes.
Neeraj Sharma
Yeah, so I mean Rupesh, that data is the same which is available to us, is available to you. The fact is that Canada is by far the largest obviously it’s the second largest semaglutide market in the world after us. So that will remain the biggest consumer. But at the same time as the approvals come in, as the product becomes available, the market will expand in all the major markets whether it is Brazil, Turkey, Saudi Arabia, India, so on. So all these will ramp up and but I would only say that as a CDMO we will go by our customers allocation to us.
And for us, as I mentioned previously also we are agnostic whether in terms of pricing or anything else. For us geography doesn’t matter. We supply the product at our factory gate.
Rupesh Tatia
So this last comment, we are geography agnostic. But now I think in the opening comment also Arun said that India will become severely competitive and also regulatory barriers are different across the different markets. Right. I mean Middle East India will be a little bit lower. Canada will be higher. Brazil is probably also higher. So do you, do you not see you know, fill finish pricing diverging between the countries based on the you know, regulatory barriers?
Neeraj Sharma
Sorry, I didn’t get your last point. So again I think the pricing is, you know, for our customers to work at Rupesh. But again I have always maintained we have the right capacity b the right capabilities to support our customers both in terms of their demand and for them to remain competitive. And that’s the reason which Arun mentioned and I just explained, you know, for us to expand batch sizes, you know, it’s both, it helps both additional capacities and remaining competitive throughout.
operator
Thank you. A reminder to all the participants, you may press Star and one to ask a question. We have the next question from the line of Nitin Agarwal from Dam Capital. Please, please go ahead.
Nitin Agarwal
Thanks for taking my question. You know just sort of referring back to the earlier comments, mainly opening comments around the fact that we looking renegotiating some of our ticker pay agreements. I mean so directionally what does it need to put to the business in terms of obviously when we are letting, what is it the business gaining from a more structured perspective when we’re looking at some of these contracts Just help us understand that better.
Neeraj Sharma
Yeah. So Nitin, I think Arun mentioned that the customers who we have and we are fortunate to have the who’s who of the generic industry, some of these names are in public domain. What we gain from being acting like partners and not like mercenary CDMOS is, is to really gain a long term partnership with the customers to ensure because we know that changes which are there are not because of any inherent gap either in their demand forecast or in their willingness to buy it is purely based on regulatory delays. And that’s the reason, you know, we are being flexible with some of our key customers, gain their trust, gain their long term relationship.
But having said that that’s not with all. There are customers with whom we are invoking these clauses strongly and will continue to do as we progress
Nitin Agarwal
and in. Spite of these large customers where the flexibility sort of work kicking in. So what does it do to the business? Does it mean that you’ve got more visibility of volumes now F28 and beyond or what does it change there?
Neeraj Sharma
Yes, so we definitely have visibility from customers in fact long term, in fact beyond three years as well. So that we in fact the whole idea of this is getting into a much longer term, much longer term relationship with them. And that’s exactly how it’s a double street. We work both ways, we give them flexibility and we get a much longer term view from them. And in fact that has been one of the key supporters where we have decided to invest 100 million in capex. This is all based upon some very strong visibility from the customers.
Nitin Agarwal
And just following on the business as we the newer capacities that you’re talking about, what are timelines when these capacities incrementally will start to become available for us?
Neeraj Sharma
They are as we have said we are by end of financial year FY27 we would be having, you know, almost, let’s say installed almost 200 odd million. I mean these new capacities will be available and as we go along in this year, you know, at regular intervals the capacity enhancement will be happening.
Nitin Agarwal
And what kind of regulatory timeline do you have for post one? These facilities are available for them to be commercially for you to supply to customers?
Neeraj Sharma
Yes. So you know we have done that work and you know, for most customers, most markets, you know there will not be any new regulatory impact because many of the markets, you know, these are annual reportable kind of changes. So there is not likely to be additional regulatory types of timelines involved here.
Nitin Agarwal
And secondly, just the last one on this, on the guidance that we put out, we’ve talked about debt to EBITDA peak guidance of less than one and a half times for F28. So just two questions here. One is a what is our expectation in the near term? What is our peak debt that we’re expecting given the delays in revenue recognition? And two, I think we had earlier talked about being net cash positive over the forecast period. So what sort of changes this outlook here from a guidance perspective?
Anurag Bhagania
Nathan, let me try and answer that. So while on the base business on a steady state we expect to be debt free by 28 but given our visibility on the biologics, especially on the microbial, we will need to put more CapEx. So 1.5 is more a guided number. On the base 500 million, 200 million EBITDA. We don’t expect to have debt on a regular basis but we’re just keeping that guidance of 1.5 as more an internal measure as we believe that there could be more investments in terms of beachheads in the US and Europe and also an increased capacity build out in our microbials.
So it’s more a guidance guided number. But on the base business steady state, there should be no debt and If.
Nitin Agarwal
I can stick around on that, on the biologic cdmo. There’s been a lot of positive commentary in the deck around the progress we’ve made in biologics cdmo. I mean, if you can just help us understand a bit better exactly what is changing and how should we see the probably a qualitative sense of the trajectory for this business.
Neeraj Sharma
Yeah. So what is nitin, what really is happening? As had a number of positive things which are happening both at a macro level and obviously which are flowing through at the company level. So you may have followed. Everybody has a lot of noise around the final approval of the Biosecure act which came in. But it doesn’t matter what the shape or form of the Biosecure act. What it is really does is to actually accelerate the entire diversification, the geographical diversification plan for companies. And that is resulting in a lot of biotechs, big Pharma, you know, American, Japanese, European, you know, looking at India, especially one source as a positive, as a probable site for drug, substance.
And something which is more immediate and near term has been the change in the FDA guidelines on the biosimilar approval timeline. So which is, you know, what has happened there is that there’s a kind of change in the guidelines. Most biosimilars do not require now or will not require clinical trial of phase three. But and the two things as a result, the cost of developing a biosimilar has come down from 100, 120 million to 30, 40 million. And the timeline from start to finish in the market coming down from almost eight, nine years to half of that.
So all these really are in favor of CDMOs, especially the CDMOs with capacity, as Arun mentioned, microbial capacity, which is which we are fairly unique in that and ability to offer a very competitive solution to our customers. So that is really, as you know, these things have really helped increase the funnel of biosimilars which we have.
Nitin Agarwal
Okay, thank you so much.
operator
Thank you. We have the next question from the line of Madhav from Fidelity. Please go ahead.
Unidentified Participant
Hi, good morning. Thank you so much for your time. I wanted to understand, you know, if the India supplies for example, for us starts a little bit earlier than Canada, for example, is there like a big difference in pricing that we have across different markets? Like if we supply to a customer in Canada versus maybe the same customer in India, does the pricing vary from a one source perspective?
Neeraj Sharma
So Madhav, as I said, thank you for your question, but as I said earlier, for us the market is completely immaterial. Our Pricing with our customers is fixed and it is based upon volumes and not volume tiers and not on end market. So whether they sell it in Canada or they sell it in India or in Brazil or in Saudi Arabia, our pricing to our customers is the same.
Unidentified Participant
Okay, understood. And just one more if you could share any update on how do you see the supply landscape for generic Samaz Rutide evolving? I know the question is asked you very regularly but now that we are very close to generic launches globally, how do you see the supply landscape evolving? What kind of market share we could have? I know that don’t need a point exhibit but just very broad thoughts are also helpful just to understand how that shapes up in the next one of the year.
Neeraj Sharma
Thank you Madhav. Again if I answer it at a macro level we are only seeing the the demand continued to actually to expand and this is true across markets as the supplies as you have seen, whatever supply improvements have come from novo have all been taken up and the volumes have been boosting across markets in a secular way. That is as far as the overall market is concerned. When it comes to supply position obviously what we have to be very very clear is the regulatory position. It will be. It will first is going to be defined by regulatory position.
As I mentioned despite the delays our customers expect to be in the first wave of approvals and we and our customers continue to believe that they will be very limited number of players getting approved in a market like market like Canada. So you know the supply obviously the first movers will continue to get will definitely get a significant share of the opportunity and overall supply chain. I also want to add that the supply chain overall continue to remain remains constrained whether it is in APIs or in cartridges or in devices and obviously also in the fill finish capacity.
So it will be a factor of increasing supply as the markets open up and that’s how we see it happening.
Unidentified Participant
No understood, appreciate that point. My only question was that let’s say two years later Redis obviously is the customer which you all speak about and then there could be other customers as well. With these customers do we expect to have a lion’s share of their wallets as they ramp up their volumes globally or this could be split across 2, 3, 4 CDMO vendors. How do you see that sort of evolving in couple of years time?
Neeraj Sharma
This is you know these drug devices.
Arun Kumar
So Madhav, let me just answer this. So one is one of the reasons why we keep extending or engaging with our partners for extended period in contract period is when we renegotiate some of or kind of soften our heart stands on takeoff. Phase is when we know our customer is at market formation will take a significant market share and that enables us to extend the period of the contract. To answer your point, it’s normal that competition generics would come and then customers would lose market share. So we have to be a position for competitive pricing, which is what we do in terms of batch size increases and stuff like that.
Devices, change devices, the whole nine yards we do in terms of a CDMO typically to make the partner more competitive. And that allows us to sign up longer term contracts because bulk of the work is suggested and done by us in partnership with our customer. So at market formation it’s typical that customers lock in generic companies and buy our universe for a longer period of time. Time. And they typically in the more sophisticated markets like Canada and others will have the first rate of refusal to match pricing. So it’s important for us to align with near term significant upsides to long term consistent CDMO contracts. And that is why we are tweaking and you know, remodeling a little bit of our operating model with our customers.
Unidentified Participant
All right, okay, thank you.
operator
Thank you. We have the next question from the line of Abhishek Kumar Jain from Alpha Accurate. Please go ahead.
Abhishek Kumar Jain
Thanks for opportunity. Sir. Sir, my first question on that overall GLP1 so how do you see adoption of the oral GLP1 is by innovators or generics as a threat to the utilization rate of the this new injectable capacity?
Anurag Bhagania
Yeah, Abhishek, obviously this is a oral specialty for capacity has recently been launched. I think we have maintained earlier that orals will definitely have a place in the entire anti obesity and the diabetes regime. They will certainly have a role to play especially for the patients who have needle phobia or who cannot take needle. But having said that, you know, thanks to the difference in the efficacy levels and because of the frequency of dosage daily tablet versus a weekly injection, it is widely expected both by all major analysts as well as in fact the company themselves.
Lilly and Novo have been very clear in saying that orals will get a share but no more than a quarter to max a third of the the total anti obesity market. That’s at the innovator level. You also mentioned generic. There is no generic pill going to be available at least for the next eight, nine years because these are recent coming in. It’s going to be a significant patent protection for a very long time.
operator
Thank you. We have the next question from the Line of Sukriti Patil from Eyesight Fintrade Private Limited. Please go ahead.
Sukriti D Patil
Good morning to the team. I have two questions. My first question to Mr. Sharma is as one source expands its specialty formulations and crems business, how do you see the product mix and capacity utilization evolving over the next two to three quarters? In particularly how will backward integration automation in manufacturing and regulatory compliance process be applied to improve efficiency, reduce cycle time and strengthen the competitiveness in the global market? That’s my first question. I’ll ask my second question. Thank you.
Neeraj Sharma
Yeah, so I think you already mentioned that we continue to expand and invest in new Capex and as the commercial approvals come and the volumes ramp up, our supply for drug device combinations will increase and the capacity utilization will move in line with that. We’ll keep updating you as and when the new capacities come online to your feet. Question on how we are working on increased productivity, et cetera. I think we are very proud of the fact that we have a legacy and a DNA in sterile injectables going back almost two and a half decades.
And in that area we are really being pioneers in many ways. Whether it’s comes to how to develop trial injectables, how to manufacture. And we have a team which we are proud of both in development as well as manufacturing and quality with a very stellar compliance track record and we will continue to build on that for our customers.
Sukriti D Patil
Thank you. My Second question to Mr. Anurag is with strong cash flows and ongoing expansion, how do you plan to sustain EBITDA margins while funding new investments? From a financial point of view, how will you manage working capital cycles, Hedge forex, hedge forex exposure on export revenues and apply digital cost control initiatives to ensure return on equity remains strong and the balance sheet keeps on strengthening over the period of time. Thank you.
Anurag Bhagania
Hey Sukrit, thank you very much for that question. It’s, you know, it’s part of our inherent fabric that we have built over time. Looking at each of those dimensions that you talk about built around controls, built around process strengthening and you use of digital interventions across the board in our financial processes we are building a future business with very strong foundation and all of that is part of our process.
operator
Thank you. We have the next question from the line of mehul Panchwani from 40 cents please go ahead.
Mehul Panjwani
Good morning everybody. Thank you so much for the opportunity. My first question is about the comment about the two soft quarters. So can we expect complete normalcy to return to the revenue recognition after 2/4 or. That is my first question.
Neeraj Sharma
Yeah. So we have, you know, as Arun mentioned at the beginning and I reiterated that once we have visibility on the approvals coming in into the major markets and we start supplying, we are absolutely going to be having sequential improvement in quarter after quarter. So that’s exactly the plan as you highlighted.
Mehul Panjwani
So when would we know about the visibility on the pools?
Neeraj Sharma
We continue. So that’s what we have said. If you have seen our customers, especially what is in public domain, Dr. Reddy very clearly said that they are expecting approval coming in anytime between February and May. And that’s what the confidence level of our customer is on what we are also working towards.
operator
Thank you. The last question is from the line of Abdul Kadir Puranwala from ICICI Securities. Please go ahead.
Abdulkader Puranwala
Yeah, hi, thanks for the follow up. Just quickly on this new oncology contract what you had with one of the largest companies, could you help us understand what is the opportunity here and when the supplies actually start?
Neeraj Sharma
Yeah. So this is a product which is, as I mentioned, which has been approved through the NDA route. It’s a branded product. It’s a fairly unique opportunity. There is just one more company offering that product in the market. And this is a product which we should be launching in the next quarter. I mean it should be launched by our customer in the next one quarter.
Abdulkader Puranwala
Got it. And on, you know, just on SEMA approvals, I know that the timeline, you know, would be set by the regulator. But just to understand, you know, in terms of our supplies. So, you know, so if say, you know, one of your customer gets an approval in say Q4 or Q1, then by when should that exactly, you know, reflect into our numbers. That is why when the supply should begin for us.
Arun Kumar
So Abdul, we will, you know, as soon as approvals come because there are some aspects which will have to be put on the individual pen post approval. So it would be, you know, fairly soon after the approvals come that the supply will start. Of course the volume ramp up, you know, will take its time, but the supplies will start in very short order after the, after the approval comes. So whether it is in, you know, whether it is in Canada or any other market, very, you know, soon after the approval the customer should start putting the product in the market.
Abdulkader Puranwala
Okay. Okay. And a final one from my end. So we had previously, you know, announced the acquisition of the two injectable facilities. So where are we in that transaction right now?
Anurag Bhagania
Yeah. Hi, this is Anurag. The process is working very well. It has moved forward. When we, you know, spoke last, it was an application submitted to the stock exchange. There is discussion between the stock exchange and Sebi. You know, process is working very well. We anticipate, we anticipate us to be able to get the final all regulatory approvals in place by third quarter of F527.
operator
Thank you very much, ladies and gentlemen. In the interest of time, that was the last question for today. I now hand the conference over to the management for the closing comments.
Neeraj Sharma
Yes. Thank you very much, everyone for coming in on a Saturday morning and listening to us. We wish you a very pleasant long weekend. Thank you.
operator
Thank you very much on behalf of OneSource Specialty Pharma Limited. That concludes this conference. Thank you for joining with us today. And you may now disconnect your lines.