Thank you. We will now begin the question-and-answer session. Our first question comes from the line of Neha Manpuria from Bank of America. Please go ahead.
GLAND · FY2025 Q4
Gland Pharma Limited analyst Q&A
My first question, just a clarification, what would be the profit share milestone number for the quarter, you seemed to have missed that?
Hello. You want the absolute number?
Yes. The profit share and the milestone number, please.
So, it's about INR 145 crores. It's about 14% profit share. Milestone is 6%.
Okay, got it. If I look at the US business adjusted for these two, then it seems like we have been in that $70 to $75 million range per quarter in the US business, despite the fact that we have launched 31 new products in the year. How should we think about growth from the US business as we launch more products and gain more volume in terms of growth? What should this run rate be next year and the year after? And just an add -on question to the US market, given the noise around tariffs, what are we hearing from our customers in terms of the ability to absorb our cost on that ? Thank you. GLAND Gland Pharma LimitedMay 20, 2025
was INR 9,147 million. Working capital as of March 31st, 2025, was INR 21,683million. Our average cash conversion cycle improved to 172 days for the 12 monthsending March '25 compared to 173 days in the corresponding period of the previousfiscal year.Total CAPEX during the quarter amounted to INR 886 million and full year FY'25amounted to INR 3,938 million allocated to Gland’s Indian sites and Cenexi. In India,our growth CAPEX is focused on expanding a new bag line and increasing packingcapacity. We are also in the process of adding a new cartridge line at Suite 9, whichwill complement the existing cartridge line at our Pashamylaram site. As Alainmentioned, at Cenexi, we are investing in additional high speed and new lines and Lyosto enhance overall capabilities.With that, I would now like to request the moderator to open the lines for questions.Thank you.Thank you. We will now begin the question-and-answer session. Our first questioncomes from the line of Neha Manpuria from Bank of America. Please go ahead.Neha Manpuria:My first question, just a clarification, what would be the profit share milestone numberfor the quarter, you seemed to have missed that?Srinivas Sadu:Hello. You want the absolute number?Neha Manpuria:Yes. The profit share and the milestone number, please.Srinivas Sadu:So, it's about INR 145 crores. It's about 14% profit share. Milestone is 6%.Neha Manpuria:Okay, got it. If I look at the US business adjusted for these two, then it seems like wehave been in that $70 to $75 million range per quarter in the US business, despite thefact that we have launched 31 new products in the year. How should we think aboutgrowth from the US business as we launch more products and gain more volume interms of growth? What should this run rate be next year and the year after? And justan add-on question to the US market, given the noise around tariffs, what are wehearing from our customers in terms of the ability to absorb our cost on that? Thankyou.
Yes, from the US revenue perspective, from the new launches about 4% growth, which came from US. But there also, normally over the years it's been around 8 % to 10% growth which used to come from new launches. What happened also was the product, there were several key products where the material costs have gone down and the end market price also was reduced, the transfer price. So , the revenue came down, but the margin was intact. That's one of the reasons why actually the revenue didn't move that much compared to previous years. On the tariff side, it's too early to comment, but what we hear is for generics, it will not impact that much. And for us also, what we see is probably most of it will be passed on if there are any tariffs which are levied on Indian imports.
And from the US business, I was thinking about from the 70 million to 75 million that we are growing as of milestone and profit share, what should this number be over the next few years? Will the new launches now be able to reset this base higher, or what should drive this base higher?
Yes, it should contribute more looking at the historical numbers and also the type of products which are going to get approval in the next year or two, more from the complex side. And also, we are looking at as a business, we are looking at mid-teens as growth for the coming year.
This is for the US business or for consolidated business?
For consolidated business.
Okay, got it. And on the ROW business, it seems like the Saudi contract tender has been delayed for some time. So , what should drive the growth of the ROW business for us given that the Saudi contract is not coming? Are there any more drivers for us or is this the new base that Gland should be operating at?
So yes, you are right, but you know, what has also happened is the Saudi NUPCO, of course as you know there's a tech transfer going on right now where we are engaged a local partner to manufacture Enoxaparin, the volumes will come back, but what we are doing also is in play defining a non-Enoxa and non-heparin strategy. Okay, so we have clearly earmarked some high growth countries where we have a very portfolio approach, a targeted registration approach which will help us going forward. We have approximately upwards of around 500 registrations still pending, which will come over
Yes, from the US revenue perspective, from the new launches about 4% growth, whichcame from US. But there also, normally over the years it's been around 8% to 10%growth which used to come from new launches. What happened also was the product,there were several key products where the material costs have gone down and the endmarket price also was reduced, the transfer price. So, the revenue came down, but themargin was intact. That's one of the reasons why actually the revenue didn't move thatmuch compared to previous years. On the tariff side, it's too early to comment, butwhat we hear is for generics, it will not impact that much. And for us also, what we seeis probably most of it will be passed on if there are any tariffs which are levied onIndian imports.Neha Manpuria:And from the US business, I was thinking about from the 70 million to 75 million thatwe are growing as of milestone and profit share, what should this number be over thenext few years? Will the new launches now be able to reset this base higher, or whatshould drive this base higher?Srinivas Sadu:Yes, it should contribute more looking at the historical numbers and also the type ofproducts which are going to get approval in the next year or two, more from thecomplex side. And also, we are looking at as a business, we are looking at mid-teensas growth for the coming year.Neha Manpuria:This is for the US business or for consolidated business?Srinivas Sadu:For consolidated business.Neha Manpuria:Okay, got it. And on the ROW business, it seems like the Saudi contract tender hasbeen delayed for some time. So, what should drive the growth of the ROW businessfor us given that the Saudi contract is not coming? Are there any more drivers for usor is this the new base that Gland should be operating at?Shyamakant Giri:So yes, you are right, but you know, what has also happened is the Saudi NUPCO, ofcourse as you know there's a tech transfer going on right now where we are engaged alocal partner to manufacture Enoxaparin, the volumes will come back, but what we aredoing also is in play defining a non-Enoxa and non-heparin strategy. Okay, so we haveclearly earmarked some high growth countries where we have a very portfolioapproach, a targeted registration approach which will help us going forward. We haveapproximately upwards of around 500 registrations still pending, which will come over years. And so , there are 3 growth levers here. One is how do we push the current registration? How do we use our cost efficiency that we have to win tenders in some of the key tender markets? And how do we again have a very focused, in-country kind of strategy. So, we define and play in the country with a very strong portfolio. This quarter also what has happened was because of the US volume, we dedicated some capacities to ROW, but we are back on track. So that was during this quarter. But our long-term vision on ROW is the strongest. We internally have reasons to believe that this business can double over the next 3 to 5 years.
Our next question comes from line of Bino Pathiparambil from Elara Capital.
Hi, good evening. Just a follow up. Did I hear right that you said next year you are looking at mid-teen growth at the overall level?
That's correct.
Okay, that includes Cenexi? The consolidated revenue?
That's correct, yes.
Okay, got it. And apart from the improvement in Cenexi margins, are you looking at improvement margins in the rest of the business as well?
So, the rest of the business actually it's been pretty good. I mean, stabilized around 37%-38% if you have seen the last 2 quarters. So, we continue to maintain around that margin level.
Got it. And from your presentation, I can see that you have 27 Para 4 filings in the US. Out of which, how many would be of any first file exclusivity?
We can come back to you on that to give you precise data.
Sure, sir. One more, I'm looking at any big exclusivity launch expected in the next couple of years, '26 or '27, as of financial year.
Yes, we'll come back to you on that.
Our next question comes from the line of Ashish from EverFlow Partners. GLAND Gland Pharma LimitedMay 20, 2025years. And so, there are 3 growth levers here. One is how do we push the currentregistration? How do we use our cost efficiency that we have to win tenders in someof the key tender markets? And how do we again have a very focused, in-country kindof strategy. So, we define and play in the country with a very strong portfolio. Thisquarter also what has happened was because of the US volume, we dedicated somecapacities to ROW, but we are back on track. So that was during this quarter. But ourlong-term vision on ROW is the strongest. We internally have reasons to believe thatthis business can double over the next 3 to 5 years.Moderator:Our next question comes from line of Bino Pathiparambil from Elara Capital.Bino Pathiparambil:Hi, good evening. Just a follow up. Did I hear right that you said next year you arelooking at mid-teen growth at the overall level?Srinivas Sadu:That's correct.Bino Pathiparambil:Okay, that includes Cenexi? The consolidated revenue?Srinivas Sadu:That's correct, yes.Bino Pathiparambil:Okay, got it. And apart from the improvement in Cenexi margins, are you looking atimprovement margins in the rest of the business as well?Srinivas Sadu:So, the rest of the business actually it's been pretty good. I mean, stabilized around37%-38% if you have seen the last 2 quarters. So, we continue to maintain around thatmargin level.Bino Pathiparambil:Got it. And from your presentation, I can see that you have 27 Para 4 filings in the US.Out of which, how many would be of any first file exclusivity?Srinivas Sadu:We can come back to you on that to give you precise data.Bino Pathiparambil:Sure, sir. One more, I'm looking at any big exclusivity launch expected in the nextcouple of years, '26 or '27, as of financial year.Srinivas Sadu:Yes, we'll come back to you on that.Moderator:Our next question comes from the line of Ashish from EverFlow Partners.
Good evening to the management. So, my first question was, what sort of growth could the GLP drug be for us in the coming year and over the next 2-3 years? Would they meaningfully accelerate our growth trajectory?
So GLP right now, our position is around 40 million cartridges. Next year , we will be one of the top tier cartridge capacity companies with 140 million. Now GLP as you know, in many markets , is going off -patent. So, this is really a fill-and-finish opportunity that we are looking at. And our initial success is giving us all the strength to go further and block all the capacities in the coming time . How will the market behave on the demand side, on the patient pricing side is something that partners would answer. But there is only encouragement, there's only good news around GLP. The volumes are, the kind of volumes the partners are discussing are very, very high. So , we feel that this market will explode by volumes at least in coming years.
Could you please quantify the growth over the next 2-3 years for our business given the product pipeline and base business?
So next year, we said about mid-teens, subsequent 2 years to be low-20s.
Our next question comes from Aditya Pal from MSA Capital Partners.
Just wanted to quickly understand the thought process on Cenexi. So , what I can understand is Cenexi is largely a generic CDMO business. But I do not understand why the employee benefit expenses are 60%, 65% of revenue and have we over-invested in people where now that we scale up from here, the margin will flow to directly the bottom-line? So that is question one from my side.
Yes, the average cost of manpower in Europe is around 40. So comparatively, a bit more manpower is higher at the Cenexi. I think that's an issue where we need to address. But it's also related to how much revenue we are getting and how efficiently we can manufacture there. So , with the investment we are making on the CAPEX, so we are installing more efficient lines, that will give us a large throughput. At least two sites have demand, which is more than what we are able to supply today with the new lines which are adding up that should cover the revenue loss that we are having today. From the strategy perspective, you see the branded generics is one, the solid business. If you look at the customer base and the volume base what we have, we know it's been very consistent over many years. That's the nature of the business. Second, also
Good evening to the management. So, my first question was, what sort of growth couldthe GLP drug be for us in the coming year and over the next 2-3 years? Would theymeaningfully accelerate our growth trajectory?Shyamakant Giri:So GLP right now, our position is around 40 million cartridges. Next year, we will beone of the top tier cartridge capacity companies with 140 million. Now GLP as youknow, in many markets, is going off-patent. So, this is really a fill-and-finishopportunity that we are looking at. And our initial success is giving us all the strengthto go further and block all the capacities in the coming time. How will the marketbehave on the demand side, on the patient pricing side is something that partners wouldanswer. But there is only encouragement, there's only good news around GLP. Thevolumes are, the kind of volumes the partners are discussing are very, very high. So,we feel that this market will explode by volumes at least in coming years.Ashish:Could you please quantify the growth over the next 2-3 years for our business giventhe product pipeline and base business?Srinivas Sadu:So next year, we said about mid-teens, subsequent 2 years to be low-20s.Moderator:Our next question comes from Aditya Pal from MSA Capital Partners.Aditya Pal:Just wanted to quickly understand the thought process on Cenexi. So, what I canunderstand is Cenexi is largely a generic CDMO business. But I do not understand whythe employee benefit expenses are 60%, 65% of revenue and have we over-invested inpeople where now that we scale up from here, the margin will flow to directly thebottom-line? So that is question one from my side.Srinivas Sadu:Yes, the average cost of manpower in Europe is around 40. So comparatively, a bitmore manpower is higher at the Cenexi. I think that's an issue where we need toaddress. But it's also related to how much revenue we are getting and how efficientlywe can manufacture there. So, with the investment we are making on the CAPEX, sowe are installing more efficient lines, that will give us a large throughput. At least twosites have demand, which is more than what we are able to supply today with the newlines which are adding up that should cover the revenue loss that we are having today.From the strategy perspective, you see the branded generics is one, the solid business.If you look at the customer base and the volume base what we have, we know it's beenvery consistent over many years. That's the nature of the business. Second, also technology is what Gland do not have; they do have. They do make syringes of oncology products, they also have hormon al products, they do vaccines, and some biologic products as well. So , from a technological perspective, they have additional things, that's the logic we have accepted. And of course, de-risking ourselves from our business in the US, most of our business was in the US, and to enter Europe, we need to have this kind of business. So, there are several reasons why we acquired it. But yes, from efficiency perspective, that's where we are focusing currently because like you rightly said, the manpower cost as a percentage to revenue is quite high compared to the other companies in Europe.
Sir, a couple of questions, both are interlinked with each other. In your presentation, you said that we are planning to spend close to 60 odd million euros over the next three years in Cenexi. So one is that when will we achieve a double -digit EBITDA margin in this business, that is Cene xi and what will be the ROCE of this business? Because if we are investing 60 million euros over the next three years, and the base business can do a 25%-26% ROCE comfortably, and if you are not able to achieve that, it does not make sense to judiciously use the cash flows in investing for a land-based business. So that is the thought process that I want to understand from the management.
Yes, so basically this CAPEX is an investment for the long term, and we are increasing the capability and capacity. We have sufficient visibility of the pipeline and the business interest. There's a strong funnel we have with the customers. So , we will be spending this money in the next 2 to 3 years in building, as Alain mentioned and we spoke about it is , one is of course adding a new pre-filled syringe line in Hérouville Site which will entail a much better realization per unit sales than what currently we do. And then in the Belgium site, we are adding one additional vial line and Lyos that will significantly improve the capacity of high value business and there is already tied up in the business and contracts for that . So , we are looking at breakeven in this December quarter. And then next year we should improve the EBI TDA margin significantly. There's a high operating leverage there. And we should be getting, reaching the almost, the earlier double-digit EBITDA in the next year after that.
So just one last question from my side. To the early participant, you mentioned that we are aiming to grow at mid-teen growth for the entire business. So how should one look at it from an overhead perspective? So, do we see the overheads, that is what the Cenexi at the basement is increasing with lockstep with the average growth or is there some room for operating leverage now? GLAND Gland Pharma LimitedMay 20, 2025technology is what Gland do not have; they do have. They do make syringes ofoncology products, they also have hormonal products, they do vaccines, and somebiologic products as well. So, from a technological perspective, they have additionalthings, that's the logic we have accepted. And of course, de-risking ourselves from ourbusiness in the US, most of our business was in the US, and to enter Europe, we needto have this kind of business. So, there are several reasons why we acquired it. But yes,from efficiency perspective, that's where we are focusing currently because like yourightly said, the manpower cost as a percentage to revenue is quite high compared tothe other companies in Europe.Aditya Pal:Sir, a couple of questions, both are interlinked with each other. In your presentation,you said that we are planning to spend close to 60 odd million euros over the next threeyears in Cenexi. So one is that when will we achieve a double-digit EBITDA marginin this business, that is Cenexi and what will be the ROCE of this business? Becauseif we are investing 60 million euros over the next three years, and the base businesscan do a 25%-26% ROCE comfortably, and if you are not able to achieve that, it doesnot make sense to judiciously use the cash flows in investing for a land-based business.So that is the thought process that I want to understand from the management.Ravi Mitra:Yes, so basically this CAPEX is an investment for the long term, and we are increasingthe capability and capacity. We have sufficient visibility of the pipeline and thebusiness interest. There's a strong funnel we have with the customers. So, we will bespending this money in the next 2 to 3 years in building, as Alain mentioned and wespoke about it is, one is of course adding a new pre-filled syringe line in HerouvilleSite which will entail a much better realization per unit sales than what currently wedo. And then in the Belgium site, we are adding one additional vial line and Lyos thatwill significantly improve the capacity of high value business and there is already tiedup in the business and contracts for that. So, we are looking at breakeven in thisDecember quarter. And then next year we should improve the EBITDA marginsignificantly. There's a high operating leverage there. And we should be getting,reaching the almost, the earlier double-digit EBITDA in the next year after that.Aditya Pal:So just one last question from my side. To the early participant, you mentioned that weare aiming to grow at mid-teen growth for the entire business. So how should one lookat it from an overhead perspective? So, do we see the overheads, that is what the Cenexiat the basement is increasing with lockstep with the average growth or is there someroom for operating leverage now?
There's ample room for operating leverage. As we mention, the overhead in typically injectable capacity is about 80% or more fixed and the workforce which they have currently is sufficient to take care of the additional line we are adding. We are not going to hire new people for that. And it's inside the same facility. So , the electricity and other overheads will remain the same. So as and when the revenue ramps up, we would see the margin expanding.
The next question comes from the line of Tushar Manudhane from Motilal Oswal Financial Services..
Out of the three anticipated approvals from the in -house complex pipeline, could you just share the market size and let's say the competition that can come up at the time of launch by Gland, without naming the product maybe?
So, from a pipeline perspective, we have total 71 ANDAs in the pipeline with a TAM of around $5.71 billion, of which our genericized portfolio has around 40 ANDAs covers a TAM of around $1.24 billion. In the next 1 to 3 years, our pipeline, we have 5 ANDAs with a TAM of around $2.12 billion. And beyond 3 years, our investment that we are making with co-development partners, the 505(b)(2), ANDA, we are targeting a TAM of around $2.34 billion market. So, if you see from an R&D standpoint, this year there are also 33 launches in the US. Our new launches give more gross margin than the average gross margin. For example, we have 72 % as the gross margin only from the new launches as compared to the company average of 58%. And therefore, we are very focused on what to launch going forward. And yes, we are a manufacturer. So, from a demand standpoint, we do get forecasts and all from the partner company. So, we are looking forward to a similar kind of revenue contribution from new launches in the coming year.
Sure, sir. How much would be the contribution from Enoxa and Heparin for 4th Quarter and FY25 across the geographies.
About 14%.
14% for the quarter as well as FY'25?
14% of the total revenue.
There's ample room for operating leverage. As we mention, the overhead in typicallyinjectable capacity is about 80% or more fixed and the workforce which they havecurrently is sufficient to take care of the additional line we are adding. We are notgoing to hire new people for that. And it's inside the same facility. So, the electricityand other overheads will remain the same. So as and when the revenue ramps up, wewould see the margin expanding.Moderator:The next question comes from the line of Tushar Manudhane from Motilal OswalFinancial Services..Tushar Manudhane:Out of the three anticipated approvals from the in-house complex pipeline, could youjust share the market size and let's say the competition that can come up at the time oflaunch by Gland, without naming the product maybe?Shyamakant Giri:So, from a pipeline perspective, we have total 71 ANDAs in the pipeline with a TAMof around $5.71 billion, of which our genericized portfolio has around 40 ANDAscovers a TAM of around $1.24 billion. In the next 1 to 3 years, our pipeline, we have5 ANDAs with a TAM of around $2.12 billion. And beyond 3 years, our investmentthat we are making with co-development partners, the 505(b)(2), ANDA, we aretargeting a TAM of around $2.34 billion market. So, if you see from an R&Dstandpoint, this year there are also 33 launches in the US. Our new launches give moregross margin than the average gross margin. For example, we have 72% as the grossmargin only from the new launches as compared to the company average of 58%. Andtherefore, we are very focused on what to launch going forward. And yes, we are amanufacturer. So, from a demand standpoint, we do get forecasts and all from thepartner company. So, we are looking forward to a similar kind of revenue contributionfrom new launches in the coming year.Tushar Manudhane:Sure, sir. How much would be the contribution from Enoxa and Heparin for 4th Quarterand FY25 across the geographies.Srinivas Sadu:About 14%.Tushar Manudhane:14% for the quarter as well as FY'25?Srinivas Sadu:14% of the total revenue.
For the quarter as well as FY'25?
FY'25 is about 14%. And the quarter is about 16%.
Secondly, this milestone as well as profit share, if you see last couple of quarters, this quantum has increased on an absolute basis as well. While it was difficult to predict per se, but how to think about this maybe for next few months? Are there any good products which can still sustain such a kind of income for us?
The milestone actually in the last quarter is lower than before because it will not be consistent in the quarter -on-quarter. It depends on w hat milestone we hit in that particular quarter. Some are signing milestones and some are when is it filing or if it's a tech transfer then is it close to validation batches. So, the timing will be different but on an overall annual basis if you see it is more consistent. So , I would say milestone you have to look at on a yearly basis. Profit shares depend on how many launches we have made and how they have increased. If you see the launches what we have done in Q3 were more than I think 13 products we launched in Q3. So that will contribute to higher profit and that's the reason why we got a higher profit share in Q4.
So, are GLPs also contributing for this milestone income or profit share?
No. It has nothing to do with GLP.
And just lastly on this biologic front, while one contract is expected to start revenue in FY'26, but broadly, if you could share how much overall we can expect in FY '26, is it like, $ 25 million-$30 million to start with in biologic business or will it be still a gradual scale up in this segment?
Yes, for F Y2'6 it will be about Rs 100 crores, I would say. Then it will gradually increase.
The next question comes from the line of Shyam Srinivasan from Goldman Sachs.
Sir, when I look at the overall US revenue annually around Rs. 3,000 crore, INR 350 million and I am just trying to tie it up with the growth guidance. At least US needs to go at least 15 % given the size. So, we are looking at an additional $50 million in revenue. So just want to understand how is Fiscal '26 is different from 25? I thought we had that similar ambition to grow. So, the launch track record has been very strong.
For the quarter as well as FY'25?Srinivas Sadu:FY'25 is about 14%. And the quarter is about 16%.Tushar Manudhane:Secondly, this milestone as well as profit share, if you see last couple of quarters, thisquantum has increased on an absolute basis as well. While it was difficult to predictper se, but how to think about this maybe for next few months? Are there any goodproducts which can still sustain such a kind of income for us?Srinivas Sadu:The milestone actually in the last quarter is lower than before because it will not beconsistent in the quarter-on-quarter. It depends on what milestone we hit in thatparticular quarter. Some are signing milestones and some are when is it filing or if it'sa tech transfer then is it close to validation batches. So, the timing will be different buton an overall annual basis if you see it is more consistent. So, I would say milestoneyou have to look at on a yearly basis. Profit shares depend on how many launches wehave made and how they have increased. If you see the launches what we have donein Q3 were more than I think 13 products we launched in Q3. So that will contributeto higher profit and that's the reason why we got a higher profit share in Q4.Tushar Manudhane:So, are GLPs also contributing for this milestone income or profit share?Srinivas Sadu:No. It has nothing to do with GLP.Tushar Manudhane:And just lastly on this biologic front, while one contract is expected to start revenue inFY'26, but broadly, if you could share how much overall we can expect in FY'26, is itlike, $25 million-$30 million to start with in biologic business or will it be still agradual scale up in this segment?Srinivas Sadu:Yes, for FY2'6 it will be about Rs 100 crores, I would say. Then it will graduallyincrease.Moderator:The next question comes from the line of Shyam Srinivasan from Goldman Sachs.Shyam Srinivasan:Sir, when I look at the overall US revenue annually around Rs. 3,000 crore, INR 350million and I am just trying to tie it up with the growth guidance. At least US needs togo at least 15% given the size. So, we are looking at an additional $50 million inrevenue. So just want to understand how is Fiscal '26 is different from 25? I thoughtwe had that similar ambition to grow. So, the launch track record has been very strong. So is that what is going to be driving this 15%-16%-17% growth in the US, which we have not seen so far, but maybe comes in '26. So , what gives us that comfort on guidance?
So, FY'26, overall, we are seeing 15 % growth. It's a combination of some growth coming from Cenexi because the numbers will improve that. You have already seen that in the last two quarters. So, some growth will come from there. Some growth will come from the new launches. And some with the tech transfer projects what we started, some dry powder contracts what we have done contribute about 60 crores -70 crores. About 60 crores-70 crores from that. Then biologics will contribute around 100 crores So there are different levers which ar e contributing to this combination of also if you see our volume growth in US is substantial while the prices have come down because of the overall material cost . So the top 10 has kind of from the transfer price wise it's stabilized Now the volumes have gone up even if you look at our top 10 product that has actually grown around 24% in terms of volumes So there's a lot of uptick in terms of top products, especially even if you consider Heparin and Enoxa not just these two, but there's several products where we got some newer contracts. So added to that, what's happening is what we have invested into the line time and also some of the R&D investments have gone into lifecycle management of products. That has helped to reduce our costs and that made us more competitive and that's the reason why our volumes have increased. And also, while the prices have come down, still we are able to maintain that EBITDA margin. So that kind of consumes some of our line time, which has actually, what you call, mitigated some of our business growth in ROW. So that will also now come back because we have 3 new lines added this year. So that will be coming on track.
Yes. That helps me to understand. So, despite all this volume growth, thinking pricing or whatever transfer pricing correlated pressure has been high. How would you quantify that for say fiscal 25 and what gives us the confidence that pricing will not even worsen in '26?
When I say the financial, the end pricing has not changed, what we said is the transfer price has gone down because they have reduced our material costs and changed our suppliers to be more competitive in the market , we get more contracts, that's why the volumes have increased. At the same time, we are able to maintain margins.
The next question comes from the line of Dheeresh Pathak from WhiteOak. GLAND Gland Pharma LimitedMay 20, 2025So is that what is going to be driving this 15%-16%-17% growth in the US, which wehave not seen so far, but maybe comes in '26. So, what gives us that comfort onguidance?Srinivas Sadu:So, FY'26, overall, we are seeing 15% growth. It's a combination of some growthcoming from Cenexi because the numbers will improve that. You have already seenthat in the last two quarters. So, some growth will come from there. Some growth willcome from the new launches. And some with the tech transfer projects what we started,some dry powder contracts what we have done contribute about 60 crores -70 crores.About 60 crores-70 crores from that. Then biologies will contribute around 100 croresSo there are different levers which are contributing to this combination of also if yousee our volume growth in US is substantial while the prices have come down becauseof the overall material cost. So the top 10 has kind of from the transfer price wise it'sstabilized Now the volumes have gone up even if you look at our top 10 product thathas actually grown around 24% in terms of volumes So there's a lot of uptick in termsof top products, especially even if you consider Heparin and Enoxa not just these two,but there's several products where we got some newer contracts. So added to that,what's happening is what we have invested into the line time and also some of theR&D investments have gone into lifecycle management of products. That has helpedto reduce our costs and that made us more competitive and that's the reason why ourvolumes have increased. And also, while the prices have come down, still we are ableto maintain that EBITDA margin. So that kind of consumes some of our line time,which has actually, what you call, mitigated some of our business growth in ROW. Sothat will also now come back because we have 3 new lines added this year. So that willbe coming on track.Shyam Srinivasan:Yes. That helps me to understand. So, despite all this volume growth, thinking pricingor whatever transfer pricing correlated pressure has been high. How would youquantify that for say fiscal 25 and what gives us the confidence that pricing will noteven worsen in '26?Srinivas Sadu:When I say the financial, the end pricing has not changed, what we said is the transferprice has gone down because they have reduced our material costs and changed oursuppliers to be more competitive in the market, we get more contracts, that's why thevolumes have increased. At the same time, we are able to maintain margins.Moderator:The next question comes from the line of Dheeresh Pathak from WhiteOak.
Sir, how much have you spent on that 100 million pen line?
So, this cartridge line is due to be installed this year. The overall cost would be about INR 120 crores, everything together, only for this cartridge.
Okay. Does Cenexi also have cartridge lines?
No, only syringe lines, no cartridge. But the syringe line can also handle cartridges but restricted to sterile cartridges. They can't do bulk cartridges. The syringe line can be used to fill sterile cartridges.
Okay. Sir, just on Cenexi, we paid 250 to 300 million Euros, and we are spending another 60 to enhance the capacity, then another 30 -40 is loss funding. We ended up spending 350 million Euros, even if we do 200 million revenue, double digit EBITDA, barely making and then if you add on that tax and maintenance CAPEX this looks like a very, even if you get to that milestone of double digit, how much you have spent and the bandwidth and all that it has taken seems like a very poor capital allocation. Is this a business even worth pursuing based on whatever obviously benefits of hindsight and whatever your understanding is currently? Is it a business worth pursuing?
So, the Cenexi, the investment thesis is taking longer than what we estimated for sure. But now that we have that on track, so with this additional capacity which we are adding to this CAPEX, this will take our revenue to not 200, but 300 million in 3 years' time. And then we are looking at EBITDA of high teens as a percentage. And there is also strategic lever which we have not yet been able to get the benefit out of it simply because we are currently focusing on getting the things housed in order. For example, we are looking at cross -selling to each other's customers. We have not looked at that aggressively yet.
Yes, if you look at the customer base of Cenexi, they have big CDMO players whom actually we don't have access to. Also, these players also sell in the rest of the world markets, and they are looking at increasing that market, getting products out of India. So, a lot of other benefits we looked at when we actually invested in this asset. But currently the focus is on making it a bit more efficient to get that on track and then work on the synergies because there are too many things you can't do at the same time. So, from long term perspective, that was the basis and still there, know, there several opportunities where we can use this, you like I said, the control substances, you can't
Sir, how much have you spent on that 100 million pen line?Ravi Mitra:So, this cartridge line is due to be installed this year. The overall cost would be aboutINR 120 crores, everything together, only for this cartridge.Dheeresh Pathak:Okay. Does Cenexi also have cartridge lines?Srinivas Sadu:No, only syringe lines, no cartridge. But the syringe line can also handle cartridges butrestricted to sterile cartridges. They can't do bulk cartridges. The syringe line can beused to fill sterile cartridges.Dheeresh Pathak:Okay. Sir, just on Cenexi, we paid 250 to 300 million Euros, and we are spendinganother 60 to enhance the capacity, then another 30-40 is loss funding. We ended upspending 350 million Euros, even if we do 200 million revenue, double digit EBITDA,barely making and then if you add on that tax and maintenance CAPEX this looks likea very, even if you get to that milestone of double digit, how much you have spent andthe bandwidth and all that it has taken seems like a very poor capital allocation. Is thisa business even worth pursuing based on whatever obviously benefits of hindsight andwhatever your understanding is currently? Is it a business worth pursuing?Ravi Mitra:So, the Cenexi, the investment thesis is taking longer than what we estimated for sure.But now that we have that on track, so with this additional capacity which we areadding to this CAPEX, this will take our revenue to not 200, but 300 million in 3 years'time. And then we are looking at EBITDA of high teens as a percentage. And there isalso strategic lever which we have not yet been able to get the benefit out of it simplybecause we are currently focusing on getting the things housed in order. For example,we are looking at cross-selling to each other's customers. We have not looked at thataggressively yet.Srinivas Sadu:Yes, if you look at the customer base of Cenexi, they have big CDMO players whomactually we don't have access to. Also, these players also sell in the rest of the worldmarkets, and they are looking at increasing that market, getting products out of India.So, a lot of other benefits we looked at when we actually invested in this asset. Butcurrently the focus is on making it a bit more efficient to get that on track and thenwork on the synergies because there are too many things you can't do at the same time.So, from long term perspective, that was the basis and still there, know, there severalopportunities where we can use this, you like I said, the control substances, you can't make it from India and sell in the US. There are very few players who supply those products, but Europe can supply them. So, they also manufacture a few products to other players who supply them to the US market. And we actually are restricted in that. The idea was we can actually develop some products in India and then transfer this and supply it to the US in terms of control substances. So, there are several other areas of synergies what we looked at when we acquired this asset.
My point, my limited point, sir, is that even at 300 in high teens, it will not be like the best of, return on capital investment. It just looks like doing this kind of CDMO work in Europe is, I mean, assuming that when we get to high teens, we will be among, in terms of operating efficiencies in terms of top quartile in the European assets . With this kind of asset price, at least doing this kind of business in Europe does not look attractive unless you say that we can scale up even much higher than this. That's my limited point; I'll leave it at that. But thank you so much for clearing.
Our next question comes from the line of Harsh Bhatia from Bandhan Mutual Funds.
So, two quick questions. One is in sort of a relation to a comment you made earlier. So, in terms of capacity expansion, again, related to the Cenexi part, so multiple line items and expansions, including ampoules and lyophilization, is there a situation right now where we are not able to take incremental business because of high level of capacity utilization or some other reason, which is why we are going so aggressively for this capacity expansion plan? I mean, I am just trying to sort of piece together?
Yes, at least 2 sites, I think we are not able to cater to the demand because I would say, lines or inefficient lines, I would call. So one is, of course, replacing the current lines in one of sites. The other is adding new capacities because of the demand for Lyo products. One is for the current products, what you have commercialized, and also the pipeline, what you have. And moving forward, Lyo, as you know contributes more in terms of margin. So, we need to invest into those. That's the reason why we are making these investments.
Sure. What would the order book look like for Cenexi as such?
We have to come back to you. Give us some time. GLAND Gland Pharma LimitedMay 20, 2025make it from India and sell in the US. There are very few players who supply thoseproducts, but Europe can supply them. So, they also manufacture a few products toother players who supply them to the US market. And we actually are restricted in that.The idea was we can actually develop some products in India and then transfer this andsupply it to the US in terms of control substances. So, there are several other areas ofsynergies what we looked at when we acquired this asset.Dheeresh Pathak:My point, my limited point, sir, is that even at 300 in high teens, it will not be like thebest of, return on capital investment. It just looks like doing this kind of CDMO workin Europe is, I mean, assuming that when we get to high teens, we will be among, interms of operating efficiencies in terms of top quartile in the European assets. Withthis kind of asset price, at least doing this kind of business in Europe does not lookattractive unless you say that we can scale up even much higher than this. That's mylimited point; I'll leave it at that. But thank you so much for clearing.Moderator:Our next question comes from the line of Harsh Bhatia from Bandhan Mutual Funds.Harsh Bhatia:So, two quick questions. One is in sort of a relation to a comment you made earlier.So, in terms of capacity expansion, again, related to the Cenexi part, so multiple lineitems and expansions, including ampoules and lyophilization, is there a situation rightnow where we are not able to take incremental business because of high level ofcapacity utilization or some other reason, which is why we are going so aggressivelyfor this capacity expansion plan? I mean, I am just trying to sort of piece together?Srinivas Sadu:Yes, at least 2 sites, I think we are not able to cater to the demand because I would say,lines or inefficient lines, I would call. So one is, of course, replacing the current linesin one of sites. The other is adding new capacities because of the demand for Lyoproducts. One is for the current products, what you have commercialized, and also thepipeline, what you have. And moving forward, Lyo, as you know contributes more interms of margin. So, we need to invest into those. That's the reason why we are makingthese investments.Harsh Bhatia:Sure. What would the order book look like for Cenexi as such?Srinivas Sadu:We have to come back to you. Give us some time.
Sure. Lastly, on the cartridge capacity, one could presume that lot of that capacity, as seen today, at least at the 40 million level, and possibly the incremental 100 million, a lot of that would already be booked to that extent. So, in terms of the pricing part, if you could throw some more color as well as is there some element of take or pay because obviously your sales would depend on regulatory approvals depending on market-to-market. Obviously, you will not be able to, you will not be selling based on where the client is selling, but irrespective, maybe some points on the pricing part as well as the take or pay on the regulatory aspect?
So, this is more a fill and finish CMO kind of job work. We are speaking to four kinds of customers. Indian players who want to launch the GLP in global market. Indian players who want to launch the GLP in India market. Global player who wants to launch the GLP in India market and global players in global market. On fill and finish standpoint, I'll give you a range, the range is between $1 to $2. That's the range of fill and finish, and as we are preserving some capacities to give it to the best partner so that the whole business is sustained. We did the deal with the Indian Company for the global market. So, this is what the sense is.
Lastly, by best partner, you mean a customer who is able to give you good visibility in terms of volumes and capacity bulk up. That would be the right thing?
Exactly. A customer who has a strong presence in that country of launch and a customer who is very serious about making this a good product in that country.
But you could say for the next 1-2 year period, let's say very broadly put, maybe at the India level or at a global level, there could be certain supply constraints in terms of fill- finish, the cartridge capacity, as well as the pen assembly . Maybe these two components could have some level of supply constraint at India level or the global level?
It depends on how this market plays out, but time will tell for example, you know, one of the proprietary companies has launched Sema in a vial, they are GLP in India, okay. It really depends on how this market plays out. But the volumes are encouraging. And we are getting prepared, we are prepared. At 140 million as I said earlier, we will be one of the top-tier cartridge capacity companies in the country.
And there was a question about order book for Cenexi, it is around Euro 100 million.
Sure. Lastly, on the cartridge capacity, one could presume that lot of that capacity, asseen today, at least at the 40 million level, and possibly the incremental 100 million, alot of that would already be booked to that extent. So, in terms of the pricing part, ifyou could throw some more color as well as is there some element of take or paybecause obviously your sales would depend on regulatory approvals depending onmarket-to-market. Obviously, you will not be able to, you will not be selling based onwhere the client is selling, but irrespective, maybe some points on the pricing part aswell as the take or pay on the regulatory aspect?Shyamakant Giri:So, this is more a fill and finish CMO kind of job work. We are speaking to four kindsof customers. Indian players who want to launch the GLP in global market. Indianplayers who want to launch the GLP in India market. Global player who wants tolaunch the GLP in India market and global players in global market. On fill and finishstandpoint, I'll give you a range, the range is between $1 to $2. That's the range of filland finish, and as we are preserving some capacities to give it to the best partner sothat the whole business is sustained. We did the deal with the Indian Company for theglobal market. So, this is what the sense is.Harsh Bhatia:Lastly, by best partner, you mean a customer who is able to give you good visibility interms of volumes and capacity bulk up. That would be the right thing?Shyamkant Giri:Exactly. A customer who has a strong presence in that country of launch and acustomer who is very serious about making this a good product in that country.Harsh Bhatia:But you could say for the next 1-2 year period, let's say very broadly put, maybe at theIndia level or at a global level, there could be certain supply constraints in terms of fill-finish, the cartridge capacity, as well as the pen assembly. Maybe these twocomponents could have some level of supply constraint at India level or the globallevel?Shyamakant Giri:It depends on how this market plays out, but time will tell for example, you know, oneof the proprietary companies has launched Serna in a vial, they are GLP in India, okay.It really depends on how this market plays out. But the volumes are encouraging. Andwe are getting prepared, we are prepared. At 140 million as I said earlier, we will beone of the top-tier cartridge capacity companies in the country.Shyamakant Giri:And there was a question about order book for Cenexi, it is around Euro 100 million.
The next question comes from the line of Alankar Garude from Kotak Institutional Equities.
Hi, thank you for the opportunity. Sir, firstly, with the two contracts on GLP-1, how much of the 40 million capacity is booked out?
That will be most of it will be consumed. So that's the reason why we have invested in the second line. Because I think it will be in a phased manner, in the next few years. So, the second line will be up and running by the end of this year. So, this 40 million will not be enough for the new partnerships what we are going to enter.
Got it, Sir, and you spoke about this $1 -$2 for the CMO fill and finish on the pricing front, is there any annual reprising clause?
Yes, it's always there. All the contracts will be there depending on the cost structures and all that. Yes, it's always there. And also, there will be, especially the CMOs, there are two types, right? One is, of course, the tech transfer that happens on product, and the other, pure CMO. So pure CMOs always have these clauses based on the volumes. The pickups of the volumes will be rising, and lower volumes will be higher pricing. So, this is a tier pricing.
Understood. The second question you mentioned is about passing on most of the tariffs to your clients. Have you had any conversations with your clients on this front and what has been the initial feedback?
While there is no real concern from our partners because if you really see the tariff is on the transfer price not on the end price . So, the impact will be less and there are couple of conversations, but it is very clear that it will be passed on.
Got it and one final clarification. Did you mention double digit EBITDA margin in the next year in FY'27 or FY'28?
FY'27.
We will be taking one last question from the line of Mr. Vivek Agarwal from Citigroup.
Thanks for the opportunity. So, my question is about US business. So, this year in FY'25, overall growth was almost flat. So, is it possible for you to give some color how
The next question comes from the line of Alankar Garude from Kotak InstitutionalEquities.Alankar Garude:Hi, thank you for the opportunity. Sir, firstly, with the two contracts on GLP-1, howmuch of the 40 million capacity is booked out?Srinivas Sadu:That will be most of it will be consumed. So that's the reason why we have invested inthe second line. Because I think it will be in a phased manner, in the next few years.So, the second line will be up and running by the end of this year. So, this 40 millionwill not be enough for the new partnerships what we are going to enter.Alankar Garude:Got it, Sir, and you spoke about this $1-$2 for the CMO fill and finish on the pricingfront, is there any annual reprising clause?Srinivas Sadu:Yes, it's always there. All the contracts will be there depending on the cost structuresand all that. Yes, it's always there. And also, there will be, especially the GMOs, thereare two types, right? One is, of course, the tech transfer that happens on product, andthe other, pure CMO. So pure CMOs always have these clauses based on the volumes.The pickups of the volumes will be rising, and lower volumes will be higher pricing.So, this is a tier pricing.Alankar Garude:Understood. The second question you mentioned is about passing on most of the tariffsto your clients. Have you had any conversations with your clients on this front andwhat has been the initial feedback?Srinivas Sadu:While there is no real concern from our partners because if you really see the tariff ison the transfer price not on the end price. So, the impact will be less and there arecouple of conversations, but it is very clear that it will be passed on.Alankar Garude:Got it and one final clarification. Did you mention double digit EBITDA margin in thenext year in FY'27 or FY'28?Ravi Mitra:FY'27.Moderator:We will be taking one last question from the line of Mr. Vivek Agarwal from Citigroup.Vivek Agarwal:Thanks for the opportunity. So, my question is about US business. So, this year inFY'25, overall growth was almost flat. So, is it possible for you to give some color howPage 22 of 24 the existing products have made as far as the volume growth is concerned, as well as the new launchers, and how the pricing have behaved?
Yes, so Vivek, as I told you, if we in the US, FY'25, the volume growth has been plus 9%, the price has been minus 5%. On the new product front, for the full year, the new launches in the US contributed 6% of the overall revenue. The new product’s gross margin is 72% for the full year. So yes, these are data that is around the US.
Understood. And for the next year, you are giving a kind of mid-teen kind of growth at the consolidated level. But how to look at growth in the US , because I think you need to file in the US in order to achieve that kind of growth that is what my understanding is. Or, for example, it is the other markets you are thinking of filing? Thank you.
So, if you see, Vivek, in the US market, our top 10 molecule revenue grew by 26%. You know, so we are really preserving our top business in many ways. And because growth is a function of new launches, new approvals that will come on average, we launched 33 products this year and we intend to continue that momentum in the coming year. So, it will be a combination of new customer acquisition, and it will be a combination of new customer acquisition plus value expansion with new A NDAs and all of that with existing customers.
So, US, the estimate is next year, 18%, 12 % of the products and 6 % from the CMO projects to the US. So, it's about 18% expected.
And lastly, actually, if you can answer, going into front end in the US, so is it still there on the platter or the plan has been dropped?
Still evaluating, I mean, like you said, everybody is paused. So we are looking at how this tariff thing works out and how it's going to impact and all that. But it's not out of the data yet. We are still looking at it.
Ladies and gentlemen, we will take that as the last question. I will now hand the conference over to Ms. Runjhun Jain for closing comments.
Thank you everyone for joining us today. We truly appreciate your insightful questions and engagement throughout this session. Should any further questions arise, please GLAND Gland Pharma LimitedMay 20, 2025the existing products have made as far as the volume growth is concerned, as well asthe new launchers, and how the pricing have behaved?Shyamakant Giri:Yes, so Vivek, as I told you, if we in the US, FY'25, the volume growth has been plus9%, the price has been minus 5%. On the new product front, for the full year, the newlaunches in the US contributed 6% of the overall revenue. The new product’s grossmargin is 72% for the full year. So yes, these are data that is around the US.Vivek Agarwal:Understood. And for the next year, you are giving a kind of mid-teen kind of growthat the consolidated level. But how to look at growth in the US, because I think youneed to file in the US in order to achieve that kind of growth that is what myunderstanding is. Or, for example, it is the other markets you are thinking of filing?Thank you.Shyamakant Giri:So, if you see, Vivek, in the US market, our top 10 molecule revenue grew by 26%.You know, so we are really preserving our top business in many ways. And becausegrowth is a function of new launches, new approvals that will come on average, welaunched 33 products this year and we intend to continue that momentum in the comingyear. So, it will be a combination of new customer acquisition, and it will be acombination of new customer acquisition plus value expansion with new ANDAs andall of that with existing customers.Srinivas Sadu:So, US, the estimate is next year, 18%, 12% of the products and 6% from the CMOprojects to the US. So, it's about 18% expected.Vivek Agarwal:And lastly, actually, if you can answer, going into front end in the US, so is it still thereon the platter or the plan has been dropped?Srinivas Sadu:Still evaluating, I mean, like you said, everybody is paused. So we are looking at howthis tariff thing works out and how it's going to impact and all that. But it's not out ofthe data yet. We are still looking at it.Moderator:Ladies and gentlemen, we will take that as the last question. I will now hand theconference over to Ms. Runjhun Jain for closing comments.Runjhun Jain:Thank you everyone for joining us today. We truly appreciate your insightful questionsand engagement throughout this session. Should any further questions arise, please don't hesitate to reach us. We look forward to connecting with you again next quarter. Thank you.
Thank you. On behalf of Gland Pharma Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. This transcript is provided without express or implied warranties of any kind and should be read in conjunction with the accompanying materials published by the company. The information contained in the transcript is a textual representation of the company's event and while efforts are made to provide accurate transcription, there may be material errors, omissions, or inaccuracies in the reporting of the substance of the event. The transcript has been edited wherever required for clarity, correctness of data, or transcription error. The company takes no responsibility for such errors, although an effort has been made to ensure a high level of accuracy . GLAND Gland Pharma LimitedMay 20, 2025don't hesitate to reach us. We look forward to connecting with you again next quarter.Thank you.Thank you. On behalf of Gland Pharma Limited, that concludes this conference. ThankModerator:you for joining us. You may now disconnect your lines.This transcript is provided without express or implied warranties of any kind and should be read in conjunctionwith the accompanying materials published by the company. The information contained in the transcript is atextual representation ofthe company's event and while efforts are made to provide accurate transcription, theremay be material errors, omissions, or inaccuracies in the reporting of the substance of the event. The transcripthas been edited wherever required for clarity, correctness of data, or transcription error. The company takes noresponsibility for such errors, although an effort has been made to ensure a high level of accuracy.