Surya Patra

Surya Patra asked about the importance and revenue contribution potential of the Aurigene CDMO opportunity, given its qualification as an exclusive supplier for two innovative APIs. He also inquired about the tail-end opportunity for lenalidomide and the net Forex impact on the financials for the quarter.

Answer

CEO Erez Israeli stated that Aurigene CDMO is currently a small business but is expected to contribute over $100 million in growth over the next two to three years, providing sustainable capabilities. For lenalidomide, he advised assuming the old arrangement from Q4 is zero for clarity, treating it as another generic molecule. CFO M V Narasimham noted a net positive Forex impact on EBITDA margins, but it was not considered significant enough to quantify precisely.

Surya Patra asked about the significance and revenue contribution of the Aurigene CDMO opportunity, the tail-end opportunity for lenalidomide, and the net foreign exchange impact on the quarter's financials.

Answer

CEO Erez Israeli described Aurigene CDMO as a small but growing business, expecting over $100 million in growth over the next two to three years, crucial for sustainable capabilities. For lenalidomide, he advised assuming the old arrangement from Q4 is zero for clarity, though the product will continue to be sold as a generic. CFO M V Narasimham and CEO Erez Israeli stated the net foreign exchange impact was positive but not very significant, and they did not quantify it.

Surya Patra from PhillipCapital Inc. asked for visibility on the US biosimilar pipeline, the potential impact of sanctions on the Russia business, and the growth profile of the acquired NRT portfolio.

Answer

CEO Erez Israeli outlined the US biosimilar pipeline, starting with abatacept in early 2027, followed by denosumab, pembrolizumab, and daratumumab. He stated that sanctions on Russia are viewed as an opportunity, not a risk, as the company operates freely there. Regarding the NRT business, he noted there is no seasonality and that while they model for mid-single-digit growth, the acquisition has so far exceeded expectations.

Surya Patra noted the significant growth in R&D spending over the last two years and asked for visibility on the resulting pipeline buildup and when the investments would translate into revenues.

Answer

CEO Erez Israeli explained that the increased R&D investment is focused on complex areas like biosimilars (e.g., abatacept, currently in Phase III) and GLP-1s. He indicated that while these are long-term investments, revenues from these efforts are expected to materialize in the near term, with some products like abatacept potentially generating revenue starting in calendar 2027.

Surya Patra from PhillipCapital India Private Limited inquired about the investment and purpose of the new Origin biologics facility, whether the company has seen the contracted volume share increase for Lenalidomide, and the significance of the recent spike in freight costs.

Answer

CEO Erez Israeli explained the new facility is for the biologics CDMO business, representing a CapEx of a few hundred crores, and is backed by contracts for early-stage innovator projects. He confirmed Lenalidomide is growing exactly as per the contract. He also noted the freight cost increase, around INR 50-60 crores, is due to the Middle East conflict but is not the largest part of the SG&A increase, which is mainly driven by strategic investments.

Surya Patra asked about the sustainability of pricing for generic Revlimid, the long-term revenue mix for the domestic formulation business, and the rationale for the biosimilar strategy given challenges in the U.S. market. He also sought confirmation on the R&D spending guidance.

Answer

CEO Erez Israeli declined to comment on specific pricing for Revlimid but stated it will remain a meaningful product. He outlined a long-term ambition for the India business to become a top-5 player, potentially reaching INR 12,000 crores by FY'30. He confirmed the R&D guidance of 8.5%-9% of sales. He defended the biosimilar strategy by highlighting its global focus (U.S., Europe, EM) and its aim to be among the first to market for chosen molecules, mitigating U.S.-specific risks.