Orchid Pharma Ltd (NSE: ORCHPHARMA) Q3 2026 Earnings Call dated Feb. 12, 2026
Corporate Participants:
Manish Dhanuka — Managing Director, Executive Director
Sunil Gupta — Chief Financial Officer
Analysts:
Vishal Manchanda — Analyst
Loveleen Bagga — Analyst
Viraj Parekh — Analyst
Rahul — Analyst
Yash Mehta — Analyst
Rupesh — Analyst
Pankur Chaddha — Analyst
Neeraj — Analyst
Presentation:
operator
Sa. Sa. Good day and welcome to the Orkid Pharma Limited Q3FY26 earnings conference call hosted by Systematics Shares and Stocks Limited. 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 the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Vishal Manchanda from Systematics Shares and Stocks. Thank you. And over to you sir.
Vishal Manchanda — Analyst
Thank you, Anushka. Good evening everyone. On behalf of Systematics Institutional Equities, I welcome you to the Q3FY26 earning call of Orchid Pharma. We thank the Orchid Pharma management for giving us an opportunity to host the call. Today we have with us the senior management of the company represented by Mr. Manish Dhanuka, Managing Director, Mr. Mridul Dhanuka, Whole Time Director, Mr. Sunil Kumar Gupta, Chief Financial Officer and Mr. Kapil Daya King, Company Secretary. I now hand over the call to the company management over to you sir.
Manish Dhanuka — Managing Director, Executive Director
Thank you, Vishal. Good evening ladies and gentlemen. I am Manish Dhanuka, Managing Director of Orchid Pharma Ltd. And I welcome you all for our discussion on the results of third quarter financial year 26. First a brief about the financial performance for Q3. Our sales stood at 207 crores compared to 217 crores in the last financial year third quarter reflecting a decline of 5% year on year. On a nine month basis, sales stood at 574 crore versus 684 crore last year which is a decline of 16%. EBITDA for the quarter was at 6% versus 17% last year.
For the nine month period, EBITDA stood at 58 crore compared to 115 crore last year with a margin of 10% versus 17% last year. The year on year comparison reflects the continued stress in the global antibiotics market. On a sequential basis, volumes have improved compared to the previous quarter. However, pricing across key antibiotic molecules remains depressed limiting revenue recovery. On a nine month basis, the oral segment has experienced approximately 12% price erosion and 10% quantity erosion. This is not just product specific, it reflects broad industry pressure. Across all geographies, our oral to sterile mix has remained stable at approximately 2 is to 1 indicating there is no structural change in our portfolio.
Geographically, our regulated versus non regulated mix has historically been 1/3 regulated and 2/3 non regulated. However, for this quarter the split stands at approximately 1, 4 as regulated markets. This clearly indicates that regulated markets have not revived. The incremental sales that we have achieved in this quarter have largely come from price sensitive spot based business. While this has helped improve volume sequentially, it has exerted further pressure on the gross margins. In addition, we have consciously reduced our inventory during the quarter. While inventory normalization had happened largely in the last quarter, some impact on inventory devaluation has impacted gross margins.
We believe this correction would have largely been completed in this quarter. This has been a complete this has been a difficult profitability environment for us. The pressure is clearly pricing driven, not the operational, not the consequence of operational deficiencies. In response to this environment, we have critically reviewed our cost structure. Non employee costs on a nine month basis are down approximately 10% compared to the last year. We have trimmed discretionary spends and postponed certain expenditures without compromising on compliance or core operations. While we are optimizing the cost and expenses in all areas, we are not compromising with R and D investments which have increased to approximately 1.5% of sales compared to less than 1% last year.
These investments are targeted towards differentiated products, development of FDF for regulated markets and long term competitiveness. The development of these products will yield benefits when our FDF plant at Chennai becomes operational. Now a brief about xblsap While the base antibiotic environment remains weak, progress on differentiated products is building momentum. A binding term sheet has been signed in one of the key geographies. In addition, we have executed a non binding term sheet in a major regulated market. We are in advanced discussions with three to four large markets and expect to announce when these get to a definitive stage.
We believe in about four months after acquisition of asset. This is a significantly good progress in Europe. Sales have commenced in Spain and Italy. Compared to the last quarter, volumes have increased significantly On a small base, growth has been more than 200% which was expected as these markets opened up. Financial year 26 effectively becomes the first meaningful commercial year for Xblisap. With Spain and Italy ramping up, we expect a gradual uptick in volumes over the remainder of the year. In the GCC region, we have completed launches in United Arab Emirates and Kuwait. This marks the beginning of commercial presence of this molecule beyond Europe and India.
We expect launch announcements and agreement announcements to become more frequent going forward. Now brief about AMS Division the AMS platform continues to mature. The ETA drag has reduced significantly in the current quarter while the sales continue to increase steadily. This reflects improving operating leverage and better cost calibration as the platform scales up. A brief About Brief Update on the 7ac project the 7ac project continues to progress as per the device execution plan. All fermenters have been erected, a major milestone. Major equipment deliveries are underway and execution intensity has increased. To recover time lost in the earlier phases, we continue to target mechanical completion by September.
We are actively working to recoup last year’s delays and regain scheduled momentum wherever feasible. On the technical front, at the pilot scale, we have fully absorbed the fermentation technology and are achieving the targeted yield benchmarks. By the time we transition to commercial scale, we expect our fermentation performance to be further strengthened. This project remains strategically critical not just for Orchid, but also for our country. It will materially enhance backward integration and long term cost competitiveness. Once this becomes operational, our overall outlook remains positive. The core antibiotic market remains under pricing pressure for the last three quarters.
However, our past experience shows some cyclic nature in this business. This time the down cycle has been a bit longer. We are seeing some green shoots of recovery in January. However, it remains to be seen if this is sustainable or transient. However, differentiated products ramp up new geography. Launches, licensing agreements and cost discipline are expected to gradually improve revenue mix and medium term visibility. Financial year 26 continues to be a transition year. While the base market is weak, ORCHID today is strategically stronger and building assets that will change the earnings profile over the medium term.
In closing, I would like to thank our employees, partners and investors for their continued support. We are navigating a difficult industry cycle with realism and discipline while steadily building long term value. Thank you. I now welcome your questions.
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 their Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembled. Participants, a reminder to all in order to ask a question, you may press Star and one on your Touchstone telephone. We take the first question from the line of Loveline Magga from Systematics Institutional Equities.
Please proceed.
Loveleen Bagga
Thanks for the opportunity. Am I audible?
Manish Dhanuka
Yes, you are.
Loveleen Bagga
So for the quarter I ended this and 9 months ending FY26. Can you please share the revenue split between exports and domestic? Also within exports. How is it spread between regulated and another market?
Manish Dhanuka
Give us a moment, we’ll just share it. So domestic business is about 20% and 80% is export. And on the regulated versus non regulated markets. Our split which we have told is 1/3 is to 2/3.
Loveleen Bagga
And my next question is if you could share the split between sterile and non sterile API for the three months and nine months ending December 25th.
Manish Dhanuka
Yeah, for we’ve already shared for nine months the number was 1/3 is to 2/3 which is our long term average. No change there. I don’t have the data for three months specifically right now.
Loveleen Bagga
Okay. For sterile and non sterile is also 1,000 people.
Manish Dhanuka
That’s right.
Loveleen Bagga
Okay, thank you.
operator
Thank you. We take the next question from the line of Viraj Parekh from Karmielen Asset Management. Please proceed.
Viraj Parekh
Good evening. Semi audible.
Manish Dhanuka
Yeah, Viraj, go ahead.
Viraj Parekh
Yeah, so a few questions. I think Manish explained, you know in his opening remarks on the coal business. I just missed it. I think he said that in oral there was a 12% price erosion followed by that he said something with 10%. Can you please repeat that?
Manish Dhanuka
So 10% quantity erosion, 12% price erosion.
Sunil Gupta
This is on a nine month basis.
Viraj Parekh
Got it sir. And what would be the case for sterile?
Sunil Gupta
I think on a nine month basis look the quantity variation is about 10% and value basis is flat.
Viraj Parekh
Right. So we had a few molecules where we were confident of filing them in the US market. Deflaro and Avicaz, can you give me an update on both those products and their filings?
Sunil Gupta
Yeah, we are in the, you know discussion of, you know, you can say advanced stages of signing of a partner agreement for both. I’m sure before our next quarter call we may be able to announce some of the agreements. So the filing should happen this year for both the products or maybe early next year.
Manish Dhanuka
So like last time we explained after the time Abibactum we had filed there were some observations from FDA and we are seeking those clarifications how we can refile that submission. We’re still awaiting a feedback from them. Whereas for Teflaro we have signed a term sheet with their partner and we would be taking up the validation batches of API and FDFs.
Viraj Parekh
Right sir, so if you can just elaborate. I mean I think we’ve been, I think both these products were supposed to be filed a bit earlier. For whatever reason they’ve been delayed. If we can just, you know any potential for Teflaro was supposed to be close to Approximately, you know, 80 to 100 crores and Abica has approximately a 200 crore opportunity like you know as and when they scale up over 2 to 3 years period of time. Just wanted to understand the timeline as of now in terms of the current environment, what opportunity size we can see for both these products.
Sunil Gupta
Yeah Viraj, so we’ve not shared in terms of rupee value. I’ve always shared only the US market size for both the products. So Teflaro continues to be about 125 to 150 million dollar product. And the good thing is for septazidemia bibactam the US market has significantly increased from about almost $200 million it has become more than 300, 350 so that’s a good thing. We are still within the launch window. I think we missed the 180, you know the exclusivity on day one. We have missed that last year but we should be ready to launch on 180 must day and for that we are within hopefully that partner agreement would also be, you know we reclude shortly and if our existing batches would work or not.
That’s a discussion we are having with us FDA or do we need to make fresh batches? That’s the question we have to answer yet.
Viraj Parekh
Got it sir, thank you. I’ll just move to the second part of my question which is related to XP set. You said that you know Spain and Italy are showing promising sales based just on your understanding. I know it’s very initial month, what kind of FY27 onwards based on your own internal estimates what kind of royalty income these are the trajectory of sales are we expecting from Johorup. And secondly in India if you could estimate last quarter you did share that we’ve been ahead of our internal estimates in terms of XTFAT sales in India. So if you can you know assign some kind of a, you know goal or timeline where we can achieve certain kind of sales in India as well for hdfad.
So both these numbers will be helpful.
Sunil Gupta
Sure. So on India sales overall we have caught up with our estimate by now One of the key laggards is we had estimated that the partner would penetrate some of the institutional business which is governed by the government like defense government, hospitals and things like that. The movement there has not happened. So the early advantage where we were running ahead of our projection we have kind of, you know narrowing towards that. We will know more in a couple of quarters but otherwise for rest of the regular business it seems on track. So that’s on India business.
For Europe we will not be able to share a country wide forecast because our agreements prohibited, you know all the licensees in their countries have their own commercial interests. But maybe in the next quarter once we come up with a New guidance on future. We will be able to share some better color on how we see this.
Viraj Parekh
Got it. The last question is kind of a question. If you can just help us understand the debt and the cash on hand as on the quarter end. And I’m assuming for our seven Inc project we will be utilizing the debt to the fullest in the interest subvention scheme. So if you can just give me an idea of when would that the debt would be fully utilized and what that number would be in the coming few quarters. Assuming we are targeting, you know, mechanical completion by September. Yeah, that would be helpful, sir. And just other thing, when you see this, highlighting his earnings score at the starting remarks that you know, more or less of the inventory has been absorbed the gross margin level.
So going ahead, what if you can just, I mean you always maintain 40% plus minus 1.2percent range for gross margin. Going ahead, if you can just give a similar kind of range as well would be helpful.
Manish Dhanuka
Yeah. So the gross margin this quarter was around 31% and that is largely contributing for the lower EBITDA and profitability. And that is also reflected in the fact that our regulated contribution from 1/3 has become 1/4 which is a reflection of higher margins in the regulated market. Basically our large concept of cepixin there is still, you know, the recovery is not that good. One of our larger markets is actually Russia. So because of this war probably Russian business has taken the biggest hit. That is one of the, I would say the largest and most important reasons for this downfall in the regulated market sales.
With respect to your question on the debt, we have planned a 450 crore debt on the 7 ACA project and the drawdown till now is 170 crores. We are not using any working capital limits right now. And we have cash in QIP and around 75 crore cash. We have in hand around 60 crore from QIP funds and 15 crore in FD. Capital are not used. That and working capital limits are unused.
Viraj Parekh
If you could just give me an idea of the gross margins which were expected. Is it going to be in the range of 30%, 35% going ahead given the current market environment.
Manish Dhanuka
Like I said, you see the non regulated margins are also much lower than what we traditionally face. So in January we have seen there is a slight improvement in non regulated markets. Even the raw material prices have slightly started improving. So what happens generally? In my experience, you know, when the prices go down, the customers generally slow down their buying, they delay their buying. Now that the prices have started improving, I would, I would find more interest in buying. The customers tend to reduce their inventory which situation will reverse. So definitely margins in non regulated would improve.
With respect to regulated markets, our margins remain between 50, between 40 to 65% I would say. But it generally depends. If in a particular quarter we get more percentage higher percentage of regulated sales, our overall margins improve. So this quarter particularly the sales of the regulated business is much lesser that is yielded in a lower margin.
Viraj Parekh
Thank you so much sir. All the very best. I’ll get back into you.
Manish Dhanuka
Thank you.
operator
Thank you. Before we proceed with the next question, a reminder to the participants in order to ask a question you may press star and one on your touchstone telephone. A reminder to the participants in order to ask a question, you may press star in one. Now we take the next question from the line of Rahul from swnco. Please proceed.
Rahul
Hello everyone. Hope I’m audible. So I have a quick question on the safety call, like are there any updates on the safety call in India? Or like when can we expect the federal in India?
Manish Dhanuka
Yeah. So the project is on stream. The project work is going on fine. The API is already manufactured. We would be able to start the production sometime in December.
Rahul
December 2026. Right.
Manish Dhanuka
December 26th. Right.
Rahul
Thank you.
Manish Dhanuka
There will be maybe five, six months of registration and we are hopeful we will get a.
Rahul
Important. Okay. And I have one quick question on the X Like any plans to expand the molecule beyond US and EU like. China and Latin countries like worldwide?
Manish Dhanuka
Yes, yes we are. We are talking all across the world for licensing. There are discussions going on in more than 10 countries right now.
Rahul
For more than 10 countries. And in the last quarter you have mentioned that you are in negotiation for a commercialization agreement for US market for exp. Is there any update? Like can you put some light on that?
Manish Dhanuka
There’s nothing that you know, we could disclose at this point of time. Like I said, if any definitive something is signed then we will announce like what we announced about the two term sheets.
Rahul
Okay. And do you have any planning to find the Ceftalazone Tazobacter in the US and EU generics?
Sunil Gupta
Can you repeat a question? Sorry, sorry. Can you repeat.
Rahul
Okay. Okay. Do you have any planning to file the Ceftalazone and Tazobactam in the US.
Sunil Gupta
And EU generic that’s under development. So launch timeline for that product would. Be in 31 or after that. So that’s under development right now. And of course we will be launching in U.S. okay.
Rahul
And what about the septazidim? And regarding U.S. and EU filing, are there Any updates?
Manish Dhanuka
Yeah, we had already filed in US there were some observations. We are in discussion with them how to correct those observations. Based on their feedback, we will decide whether we have to take the batches again or the same file can be presented once.
Sunil Gupta
And on the commercial deals also, we are close to signing commercial deals for this product across world many geographies. So once this product goes off patent, I think this is going to be a big win for Oculus.
Rahul
In the. U as well, right?
Sunil Gupta
Yes. Us, Europe, other geographies as well.
Rahul
Okay. Okay. Okay. Okay. Thank you very much and all the best for your future quarters.
Manish Dhanuka
Thank you.
operator
Thank you. We take the next question from the line of Yash Mehta from AART Ventures. Please proceed.
Yash Mehta
Yeah, thank you for the opportunity. So will you be able to provide. The sales data for Allegra? I think it was acquired in October 2025, right?
Manish Dhanuka
Yes, so we did not have any.
Yash Mehta
Okay, so are there going to be. Any sales From Elecraft in Q4FY26 then?
Sunil Gupta
So we have not acquired Electra. Just to clarify, we acquired the assets from Alexa. So the licensing works based on royalty. So whatever royalties come will come to Orchid. Bottom line, they will not be reflecting in our sales figures.
Yash Mehta
Okay, so has there been any contribution. In the bottom line of Orkit?
Sunil Gupta
Like Manit was explaining that the numbers are there, but it’s very small because Pain and Italy are large markets which have just started this quarter. There should be meaningful numbers in this. This year would be practically, you can say the first full year of commercial operations in Europe. And also the launch in UAE and Kuwait has also happened. So we should see some revenue coming in from GCC countries as well.
Yash Mehta
Okay, thank you.
operator
Thank you. Before we proceed with the next question, a reminder to the participants, in order to ask a question, you may press Star in one on your Touchstone telephone just to remind you. Again, participants please press SARAN1. Now we take the next question from the line of Rupesh Tatya from Long Equity Partners. Please proceed.
Rupesh
Yeah. Hi. Hi Manish, I’m Ridul. Thank you for the opportunity. I. I joined the call little bit late, so some of the questions might be repetitive. First, first question is Dhanuka Laboratories, where are we on the merger and can you give nine month revenue and EBITDA numbers?
Sunil Gupta
So on the merger, you know it’s like more like Tariq, Tariq. So from Jan we got a date of Feb. From Feb we got a date of March. Now so we are waiting for the courts to finally decide. It’s been a Long almost three year process. It will happen when the world bless I would say.
Rupesh
Okay. And nine month numbers. Rough, rough numbers.
Manish Dhanuka
The nine month sales is around 305 crore rupees as against 370 last year. So there’s a downfall here also. And margins EBITDA it remains in place 6%. Sorry, same what has been traditionally been between 5 to 8%. It’s in the same range.
Sunil Gupta
We don’t calculate actually. And it’s unlisted entity. Right. So these are very, very broad estimates at this point.
Rupesh
Okay. Okay. And. And on N meters or back term in, in first I mean they’re starting with Europe has now. Do we have now approval all across Europe, all 27 countries or there is still some, some filings to go.
Sunil Gupta
So in terms of filing there is only one which is already there. So the license partner which is Advanced. Their plan is largely focused on Western Europe through, in Eastern Europe they will start discussions with you can say a B2B basis with other partners. So we are not privy to their internal discussions. The focus right now is on Western Europe big five countries and some Nordic countries.
Rupesh
But is there approval in all those EU five plus Nordic three?
Manish Dhanuka
So the regulatory approval is universal across the EU countries. But they have to, you know every country has a health care system so they have to get an entry, get the product entered into the healthcare system so that you know doctors get recommendation to prescribe and then the reimbursement from insurance and all that happens. So that is, that has to be worked through every individual country. That is what is taking time to launch country to country.
Rupesh
Okay. Okay. So there is no approval barrier. It’s just you have to work through insurance and every country. Okay. And Eastern Europe I didn’t understand B2B partnerships.
Sunil Gupta
I didn’t understand Advanced in its own does not have the strength to launch. It will go through some like for example Orchid has license to CIPLA for India market along with Orchid. So advance will probably give a sub license to other people because they don’t have their own presence in Eastern Europe.
Rupesh
And when is that likely to get finalized and we can see some sales starting.
Sunil Gupta
We don’t have any visibility on their business plans.
Rupesh
Okay. Okay. And I mean any sort of two, three year projection from advance based on you know, market research. They feel confident about anything you can share.
Sunil Gupta
Next quarter we’ll be coming out with the future guidance, hopefully with the merged business how it’s going to look overall. Then we talk about some of the segments in the future guidance.
Rupesh
Okay. Okay. And then coming to us. I mean where are we any, any tentative timeline? You can say that in six months we will see some positive outcome or in 12 months we’ll see some positive out licensing outcome.
Sunil Gupta
Yeah. Hopefully we should be signing us deal within this year. That’s the target. Last quarter I reiterated we take about 12 months. US is the biggest market and the deal is expected to take some time because they will do due diligence of the entire dossier and things like that. So we are in advanced discussion with several companies. Hopefully within this year this will be closed.
Manish Dhanuka
There are discussions going on with three parties. So let’s hope we can maybe move faster with our negotiations.
Rupesh
Okay. Okay, that is good to know. And then how about row, how are we looking to target row markets?
Manish Dhanuka
Yeah. So that, that is a big change in our strategy. That was in my opinion that was one of the flaws in Alicra strategy. We are talking across Latin America, Southeast Asia, North Africa, Russia. So we, I, we are very hopeful. Maybe every quarter at least one or two announcements should happen.
Rupesh
Every quarter one or two announcement in some countries.
Manish Dhanuka
Yeah, we are talking at least five, six regions other than the U.S. hopefully we should materialize, they should materialize one by one.
Rupesh
Okay. Okay, that’s, that’s good to know. And, and, and seven ACA I I, I September is mechanical completion. Can you give the timeline? When, when can we see water trials? When can we see first commercialization?
Sunil Gupta
So September is mechanical completion and then first commercial should take a quarter or two from that water trials in one quarter and commercial production and the next.
Rupesh
Okay, okay. And, and we’re on track. Everything, we are on track in terms of everything. Funding, pilot, pilot quantity, silent runs, all that. We’re on track. Yeah.
Sunil Gupta
Yeah. Man explained in his call on the pilot. We fully absorbed the technology and we are on target of what we expected.
Rupesh
Okay. So we hope. And did I hear that we are already producing API?
Manish Dhanuka
Yeah, we produce the API, we have put it on stability. But the finished formulation is only that we are going to sell. So that will only happen in December when the plant is ready.
Rupesh
So if my number, if I remember right, formulation, we’re looking at 1 million vials. Right. So we have API capacity to support that entire 1 million wise.
Manish Dhanuka
That’s right. That’s right.
Rupesh
Okay. And formulation, we still expect like a December 1st for sort of product and then six months registrations after that.
Manish Dhanuka
That’s right.
Rupesh
Okay. Okay. And base business next year, you, you feel confident we will get to let’s say 10% type of margins? FY27. Yeah.
Manish Dhanuka
I, I, I don’t have any reason to believe that this down cycle will continue for so long. But I mean given the current, you know, geopolitical situation, honestly speaking, you don’t know. I mean one of our large markets, like I said, Russia for Civic Zim. There are three large brands in Russia and all three of them use our product. But with all the sanctions and all, we don’t know what to say. Iran is such a big market. Bangladesh is a big market. Egypt is a big market. So these are factors beyond anybody’s control.
Rupesh
So I don’t know how large is Russia or cis.
Manish Dhanuka
Russia is a big market. It’s the largest European country by population.
Rupesh
Okay. Okay.
Manish Dhanuka
Sorry. Even Fuse Goyal does not know whether he will be able to sign the TT with us tomorrow or it will fall. So what can I say about, you know, international business?
Rupesh
Okay. And then the final question is can you give some update on the hospital. Hospital segment. Where are we and how do you. What do we hope to achieve in FY27 in that segment?
Manish Dhanuka
Yeah. So the sales have stabilized and we are seeing month on month growth in the sales. As of now the biggest challenge is getting the right manpower. I mean our sanction strength is much higher. We are not able to do enough hiring. Otherwise we would have achieved more than our targets. Besides our already cef, we have also launched another product which is the first generic. It’s the Teflaro generic we have launched in India. So that is another good. I think that will be a good contributor to our revenues of AMS division. Because other than Pfizer we are, we are the only generic.
We launched this in, in the month of November.
Rupesh
So FY 2750, 60 crore from hospital segment. Is that a fair number to pencil?
Manish Dhanuka
No, it doesn’t grow that fast. I mean I’ll be happy if they do 20 crores. But this is a, I think this is a launch platform for Sapidro call once we sign the commercial licensing with the Garpi and Shinogi. So this we are creating a launchpad for self withdrawal. That that will be a significant business of injectable formulations.
Rupesh
Okay. Okay. Thank you. Thank you for answering my questions and all the rest.
operator
Thank you. Before we proceed with the next question, a reminder to the participants. In order to ask a question you may press Star in one on your touchstone telephone. We take the next question from the line of Viraj Parekh from Karn Lian Asset Management. Please proceed. I would request Mr. Viraj to unmute and then speak.
Viraj Parekh
Hi, am I audible hello.
Manish Dhanuka
Now you are. Yeah.
Viraj Parekh
So in your opening remarks. So I missed it. I think you said for XP Web you signed a binding term sheet in one of the EM market and a non binding term sheet in a regulated market, is that correct?
Sunil Gupta
That’s correct.
Viraj Parekh
Okay, and the second question is on a call I believe sir stated that in December 26th we should have commercial operation commissioning for the facility. In a previous phone call you said that in H1FY27, I think you get a clearer idea whether a waiver for your Indian market will be granted by the government or else you’ll have to, you know, go to the trial for the product. So any color on that and how long would, if you don’t get the waiver then how long would the commercialization take in India?
Manish Dhanuka
Yeah. So there was a notification that depending on the need of the country, if the product is internationally approved, the DCGI can give a product waiver, will give a clinical trial waiver and we have experienced that we got a clinical trial waiver in our orally CEF also. So we are confident, however, if the clinical trial has to be done then Garpi is going to do the clinical clinical trial. That is in their domain. But I think together we’ve had multiple discussions. We are confident considering the AMR situation now that the Prime Minister himself talked about AMR in his monkey bath.
So I think DCGI will be cognizant of this issue and the problem that cepidrofol can address about serious inspections. So we should, we are confident we should get a clear. It would be, I would say too much of an injustice to the patients if they, if their access to cepotrocol is delayed.
Viraj Parekh
Got it, sir. Thank you so much.
operator
Thank you. We take the next question from the line of Loveleen Bagha from Systematics Institutional equities, please proceed.
Loveleen Bagga
Yeah, thanks for the follow up. I wanted to ask what are your views on Peninsula Green minimum import price and how would this impact you imminently? Also does it also have a readout for 7 ACAs?
Manish Dhanuka
So minimum import. See our majority business is exports. Minimum import price does not apply for the exported goods. You can still import freely penicillin G if you’re exporting the goods manufactured out of that. So I don’t see much impact for us largely it is for I believe it will impact largely the domestic business of vectors who make amoxicillin.
Loveleen Bagga
Okay, thank you. And my second question is what are we in terms of capacity utilization for sterile and non sterile.
Manish Dhanuka
So in last few years we had increased the capacities significantly. While I would say till two years back we were at 80% utilization. Now would have come down to 60. We can generate turnover of more than 1200 crores.
Loveleen Bagga
And the next question is, can you share the end sales of Xplus app in Europe?
Manish Dhanuka
No, that we are bound by confidentiality.
Loveleen Bagga
Okay, no problem. And so we do. Do we expect to get upfront payments for the licensing deal that we sign on ML?
Manish Dhanuka
Yes, yes.
Sunil Gupta
You know, and the Live store, the piece are linked to some of the milestone events. It’s not just upfront. For example, we have received one major milestone payment on the launch in UAE and Kuwait. So the visa structured that there would be some upfront, some milestone linked to various items going on. So there would be lots of.
Loveleen Bagga
And while the sales quantity for the nine months is reduced, was it also for the current quarter or did we. Did we see the volume growth?
Sunil Gupta
Sorry.
Loveleen Bagga
While quantity for the nine months has reduced, was it only for the current quarter or did we see the volume growth?
Sunil Gupta
So for the current quarter, three months on the overall products we have recouped some of the sale. In fact we’ve grown by about 10% in terms of volume, not in value. On sterile, I think we are roughly flat. That’s why on overall volume basis we are only down by 10% as explained by Mr. Manish earlier.
Rupesh
Okay. And my last question is, are we trying to diversify our product mix from our traditional products? Considering the steepen pricing pressure?
Sunil Gupta
Yes, we are continuously working on launching new products. For example, Mr. Manish talked about ceftaroline launching in India through our AMS. So we are already producing the API septa AVI. We are of course the first launcher in India. Plus we are now supplying to other markets seeding now globally where the patent has expired. And we are in advanced discussion for partnership in countries where patent is still valid. And we should be the first few too long. So the idea is always to focus on newer products while the older products will continue to remain the backbone.
Largely because older products are easier to prescribe. But sterile product is orchid strength. And our focus will remain there.
Loveleen Bagga
Okay, understood. Thank you. All the best.
Sunil Gupta
Thank you.
operator
Thank you. A reminder to the participants, in order to ask a question, you may press Star in one on your touchtone telephone. We take the next question from the line of Pankur Chaddha, an individual investor. Please proceed.
Pankur Chaddha
Hello.
Sunil Gupta
Yes.
Pankur Chaddha
I just wanted to ask you if in this quarter also we had some inventory pricing adjustment which led to margin compression or that was dealt with last quarter only.
Manish Dhanuka
There was some impact I would say some impact during this quarter, but mostly it would have been taken care of. Last quarter was a significant impact this quarter.
Pankur Chaddha
Okay. And like, are you still seeing a lot of competition from the Chinese suppliers?
Manish Dhanuka
Yeah, when there’s a downturn in international market, the biggest competition you face is from the Chinese only. And as you know, the Chinese economy has not done too well either, so they tend to dump product internationally when their local demand is down. So, yes, there are some headwinds from China as well.
Pankur Chaddha
Okay. But now, like, you know, the Indian rupee has depreciated by almost 10% in the last six months against the Chinese yuan. So does that help. Help Orchid’s case and Indian suppliers case a little bit in the international market?
Manish Dhanuka
I think that has been very helpful. Yeah, it has been helpful because our imports are much lesser than our exports. So rupee depreciation helps us in terms of getting, you know, more rupees for the same dollar.
Pankur Chaddha
Okay. And like, in terms of your raw material, like, most of it is imported from China of, like, other countries, A.
Manish Dhanuka
Significant portion is imported, yes.
Pankur Chaddha
So, like, in terms of what percentage of your raw material is imported and what is, like, from India.
Manish Dhanuka
It would be around, I would say, out of total raw material, maybe 30 to 40% would be okay.
Pankur Chaddha
And a big part of that is 7 ACA, is that correct?
Manish Dhanuka
That contributes a large part of our imports, probably the last.
Pankur Chaddha
So now, like, because the rupee has depreciated, and if the 7 ACA is coming from China, which is let’s say now 10, 12% more expensive compared to it was earlier, and the economics of our 7 ACA plant, which is coming up in next few months, that would have improved by a proportionate amount. Right. Like, your margins from that 7 ECA project would go up by whatever, 8, 10% because of this repeat depreciation. Is that correct?
Manish Dhanuka
Although. Although, honestly, we have not worked out. Yeah, it’s a very valid argument. It will definitely be beneficial to us. It will definitely beneficial.
Pankur Chaddha
And in terms of supplying this philosopher in players in India. So there is us. Who else is there?
Manish Dhanuka
So right now There are only 2, 3 players in cephalosporins, ourselves, Aurobindo Pharma and a company called Covalent Labs.
Pankur Chaddha
And like on all of them, they are importing their raw material from China, the 7 ACA, right?
Manish Dhanuka
That’s right.
Pankur Chaddha
And we’ll be the only one producing our own 7 ACA going forward. Or are they also putting up their plants?
Manish Dhanuka
As of now, we don’t have any news of anybody else. Setting up a plant.
Pankur Chaddha
Okay. So that means that kind of makes us the lowest cost producer of cephalosporin by next year.
Manish Dhanuka
Yeah, that is our objective.
Pankur Chaddha
Okay. Okay. I think that’s it for me. Thank you.
operator
Thank you. We take the next question from the line of Neeraj, an individual investor. Please proceed.
Neeraj
Thank you for the opportunity, sir. I joined a bit late, so apologies if the questions are repetitive. You may choose to skip it. I can go through the replay for any updated thoughts on what is happening at a macro level in our industry because it never went through such pain. So are you seeing any signs of recovery? That’s question number one.
Manish Dhanuka
I am not sure if I agree completely. In my experience, API business has remained cyclic all through these years. And once the prices fall, which can have multiple reasons. Right? From lower demand to reduction in raw material prices. Every time that happens, the people try to reduce their buying, they try to reduce inventories. So it happens almost every two, three years. So I’m not very surprised with this. This time it has been a bit longer, but I don’t think it is sustainable. The only, the only risk that we carry is if some alternate class of antibiotics start replacing cephalosporin. Thankfully that has not happened as of now. And we have the largest range of cephalosporine. If any antibiotic has to sell, we have that in our portfolio.
So as long as there are infections, I don’t see any long term threat to our business.
Neeraj
As of now we don’t see any signs of recovery. Or do you have any expectations maybe by that?
Manish Dhanuka
I said I don’t see any threat to our business. Any long term threat with respect to recovery. I’d said that in the month of January we have seen some, you know, 3, 4% improvement in the prices in domestic market. So there is a possibility that things might improve in the next quarter. But we have to see whether sustainable or not. That is to be seen.
Neeraj
Thank you. And next question was around, you know, now that we own the entity wherein, you know, we sold the rights regarding royalty, any status on that? Are we receiving the royalty? Any line of sight over there?
Sunil Gupta
Yeah, so we’ve answered this question. You can go through the transcript, there’s an extensive discussion around royalty.
Neeraj
Thank you. And maybe just the last question, you know, around, around our various projects. So any timelines, any updated timelines on when those projects will be, will be commissioned?
Manish Dhanuka
Yeah, that, that is also already discussed actually.
operator
Thank you. We take the next question from the line of Vishal Manchanda from Systematic Shares and Stocks Limited, Please Proceed.
Vishal Manchanda
Hi sir. Sir, I have a question on this follow up question on the Pengi minimum import price. So I wanted to understand like. So my understanding is epic scene is made from gcle and GCLE is made from PNG is my understanding. So like the one, the company that you procured GCLE from is buying PNG from China. So would would that still would that minimum import price apply in that situation? Or you can that it’s not you that is directly importing png, it’s your supplier that is importing Benji from China which and that your supplier is supplying to a domestic company.
Manish Dhanuka
Yeah. So there’s a process called advanced authorization. When we export Cefixin, we give advanced authorization to our GCLE suppliers and they can use that advanced authorization to import penicillin G without MIP restriction.
Vishal Manchanda
Understood.
Manish Dhanuka
We get that license from DGFT and then we can give sublicense to them for importing duty free and MIT free.
Vishal Manchanda
Got it sir. And sir, just is can Sefixim be made from 7ac or Pen G is the most efficient route to do it as of now.
Manish Dhanuka
PNG is the most efficient route. Yeah, but there is a possibility made from 7ac also.
Vishal Manchanda
Okay. Okay. And like are we seeing any down improvement in the Peng pricing for us? Because like lately the PNG pricing has moved down. So has it helped us on margin so far or because of the inventory at higher prices? It’s not helped us on margins as of now.
Manish Dhanuka
So I would say till December there was no such improvement. But generally like I said, I’ve seen improvement in. The Chinese have also started quoting higher price. But this is the normal trend before their new year holidays. So difficult to predict. We will know once they come back from the new year holidays. But the Sifixin prices have definitely improved in the month of January, February.
Vishal Manchanda
Okay. And so just one final one. On branded formulation you said you you may be able to do 20 crores next year. Is that the right number?
Manish Dhanuka
I heard I said I would be happy if I do 20 crores.
Vishal Manchanda
Okay. So including NMET as a bacterium, we would still kind of. It would still not be a 20 crore business then next year.
Sunil Gupta
So Nvidia is a vector is divided into two pieces, right? We do 15, 20%, 80% business is done by Cipla. So that club is not part of this.
Manish Dhanuka
Yeah, I’m talking about only our own market marketing business. Not. Not surplus business.
Vishal Manchanda
Okay. So that profit share and supply revenues is. Is something different.
Manish Dhanuka
Is that is completely different.
Vishal Manchanda
Got it sir. Thank you very much.
Manish Dhanuka
Our brand marketing is what I was talking about.
Vishal Manchanda
Understood. This is helpful. Thank you very much.
operator
Thank you. As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.
Manish Dhanuka
Thank you. Ladies and gentlemen. I would like to thank you for your active participation. We remain committed to build long term value for our investors and we are working hard to achieve that goal. Thank you. Once again.
operator
Thank you on behalf of Systematic Shares and Stocks. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.