Aurobindo Pharma Limited — Q2 FY26 earnings call

Call held 6 Nov 2025

Management summary

Aurobindo Pharma delivered a solid Q2 FY26, marked by 6% YoY revenue growth and 7% YoY EBITDA growth, driven by strong performance in US Formulations and Europe. The company is actively advancing its Pen-G plant operations and a robust biosimilar pipeline, with multiple filings and launches anticipated. While challenges remain in the US Injectable segment and initial losses in the China OSD facility, management expressed confidence in achieving its FY26 margin target of 20-21% and leveraging strategic investments for future growth.

Highlights

  • Consolidated revenues grew 6% year-on-year to ₹8,286 crores, reflecting sustained business momentum.

  • EBITDA stood at ₹1,678 crores, with a margin of 20.3%, demonstrating a 7% year-on-year growth.

  • The European business maintained a strong growth trajectory, delivering 18% year-on-year revenue growth amounting to ₹2,480 crores.

  • The Pen-G plant started operations, producing around 1,050 MT (annualized 6,000 MT) and is nearing breakeven.

  • Significant progress in the biosimilar pipeline, with EMA and FDA submissions planned for Denosumab, Omalizumab, and Bevacizumab in 2026, and a Phase 3 waiver for Tocilizumab from EMA.

Concerns

  • The Generic Injectable business in the US is still not back to pre-disruption levels, requiring another $5-10 million to reach that level.

  • The China OSD facility is currently incurring a loss of approximately $1 million this quarter, though breakeven is expected by Q3-Q4 FY26.

  • The reported tax rate appeared higher than usual (35%) due to not taking tax credit on losses from some businesses like Pen-G.

Key financials

  1. Consolidated Revenue ₹8,286 Cr +6%YoY
  2. EBITDA ₹1,678 Cr +7%YoY
  3. EBITDA Margin 20.3%
  4. PAT ₹848 Cr
  5. R&D Expenditure ₹414 Cr
  6. Gross Margins 59.7%

What they filed

Q1 FY27: revenue up 16.3%, net profit up 25.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue7,796 7,979 8,382 7,868 8,286 +6%8,646 +8%8,853 +6%9,150 +16%
EBITDA1,566 1,578 1,760 1,603 1,678 +7%1,773 +12%1,750 −1%1,880 +17%
Net profit817 846 903 824 848 +4%910 +8%921 +2%1,032 +25%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Formulation Business
    ₹7,325 Cr Revenue88% Share of Total Revenue10% YoY Growth
  • API Business
    ₹961 Cr Revenue12% Share of Total Revenue
  • US Formulation
    417 Mn Revenue
  • US Oral Solid (excl. gRevlimid)
    6% QoQ Growth
  • US Injectable Sales
    6% QoQ Growth
  • European Business
    ₹2,480 Cr Revenue243 Mn Revenue (Euro)18% YoY Growth
  • Growth Markets
    ₹882 Cr Revenue101 Mn Revenue (USD)9% YoY Growth
  • ARV Formulation
    ₹325 Cr Revenue37 Mn Revenue (USD)69% YoY Growth

Capital allocation

  • Capex $106 Mn
    • Enhancing manufacturing capabilities, strengthening compliance, and accelerating automation
    • Biosimilar capacity expansion (CuraTeQ bioreactors and filling line)
    • TheraNym mammalian bioreactor commercial scale facility ₹1,000 Cr
    • Additional 15kL mammalian bioreactor lines (Block 2) for MSD collaboration
    • Arrangement with global pharma major (milestone payments)
    • New warehouse and related things in US
    The Net CapEx for the quarter stood at $106 million, in line with our strategic priorities of enhancing our manufacturing capabilities, strengthening compliance, and accelerating automation. With respect to TheraNym, as you know, that is another CapEx investment for Aurobindo. As I told you, the company committed a capital investment of about 1,000 crore to establish 2X15 kL mammalian bioreactor commercial scale facility. TheraNym continues to make a steady progress on executing this project and I believe this project will be ready for inauguration sometime in June, July next year. During the last quarter we further strengthened the collaboration with MSD by signing a second product contract with them, to support this expanded scope two additional 15 kL mammalian bioreactor lines are being added as part of Block 2 in the same facility. So, that's another CapEx exposure that you will be witnessing.
  • Debt Debt disclosed Cost 4.7%
    Average finance costs declined to 4.7% compared to previous quarters, reflecting effective treasury and cashflow management.
  • M&A Lannett Acquisition · Pending regulatory

    Strengthen market position, expand portfolio, adds ADHD products

    We expect continued improvement in Injectable business driven by continued supply ramp-up, increasing supplies from China plant to Europe, additional contribution from a robust pipeline of new launches and the Lannett acquisition in the US, which will further strengthen our market position, expand our portfolio and drive medium-term growth. As far as US is concerned, we have a prescription of about 10.2%, which is the largest. So, that tells you the coverage. It's very fairly large across all segments and we have been growing. We have been growing. Now, this quarter we have seen some momentum in terms of seasonality, so that has also helped us. That's as far as the US is concerned. And when you talk about Lannett specifically, Lannett has a number of products which are good additions to our portfolio like the ADHD products and we are very excited to have those products in our portfolio once the merger is done. We are still awaiting the FTC approval, as you may be aware, and that's a process we have to go through.
  • Liquidity Liquidity disclosed
    We generated net cash inflows before dividend $57 million during the quarter resulting in an improved net cash position, including investment of $170 million as of September 30th, compared to $140 million as of 30th June'2025.

Guidance & targets

Margin

  • Internal Margin Target Margin · FY26 · High confidence 20%-21%
    Last but not least, we are confident of achieving our internal margin target of 20%-21% for FY26, as communicated earlier.

    — S. Subramanian

  • Pen-G Gross Margin Margin · once fully operational · Medium confidence May cross 60%
    And the last one is once the Pen-G comes, the gross margin will be very high because the major cost apart from the raw material is the coal. So, you will be able to see a slight increase in the gross margin once the Pen-G plant comes full operational. Once it's operated fully, probably we may cross 60% also.

    — S. Subramanian

Revenue

  • European Annual Revenue Revenue · end of FY26 · High confidence 1 billion
    With consistent performance across all major markets, we are firmly on track to comfortably support the 1 billion annual revenue milestone from Europe by the end of FY26.

    — S. Subramanian

  • China OSD Facility Turnover Revenue · next 2-3 years · Medium confidence Triple digit turnover
    And going forward what we are trying to see is that in the next three years we should be able to take the turnover to triple digit. Generally, the productivity there is high and the margins will be good. So, we are trying in 2-3 years' time we will be able to achieve triple digit turnover number.

    — S. Subramanian

Profitability

  • China OSD Facility EBITDA Profitability · Q3-Q4 FY26 · High confidence Breakeven
    The OSD facility in China continues to ramp up advancing towards the capacity of 2 billion backed by European approval of 10 products and 3 local product approvals. The site is on track to deliver EBITDA breakeven by Q3-Q4 FY26, reinforcing its strategic importance to the global network.

    — S. Subramanian

Capacity Utilization

  • Pen-G Plant Capacity Utilization Capacity Utilization · very short term · Medium confidence 100%
    Like other companies, we have made our representation to the government to implement the minimum import price, which will support the further ramp-up in achieving 100% capacity utilization, taking the production to 15,000 MT in a very short term.

    — S. Subramanian

Product Launch

  • US Dayton Facility Revenue Contribution Product Launch · FY27 · High confidence Significant revenues
    In the US, Dayton has transitioned into the commercial phase with manufacturing underway, packaging approval secured and product launches scheduled from January, positioning the site to start contributing significant revenues in FY27.

    — S. Subramanian

Biosimilar Filings

  • Denosumab Biosimilar EMA Submission Biosimilar Filings · April 2026 · High confidence April 2026
    So, April is when the European submission for this biosimilar will happen, and the FDA submission we think that we can be able to do it in the July quarter of 2026 Calendar Year.

    — Dr. Satakarni Makkapati

  • Denosumab Biosimilar FDA Submission Biosimilar Filings · July 2026 · High confidence July 2026

    — Dr. Satakarni Makkapati

  • Omalizumab Biosimilar EMA Application Biosimilar Filings · June/July 2026 · High confidence June/July 2026
    I believe that we will be ready to submit the European Marketing Authorization application in June, July ‘2026 and a quarter later in the US. So, we are on track with this product.

    — Dr. Satakarni Makkapati

  • Tocilizumab EMA Submission Biosimilar Filings · July 2026 · High confidence July next year
    We believe we will be able to submit this product also in the July quarter next year with the European Medicines Agency.

    — Dr. Satakarni Makkapati

  • Bevacizumab EMA Submission Biosimilar Filings · April 2026 · High confidence April 2026
    We are planning to submit this file in April'2026 with Europe.

    — Dr. Satakarni Makkapati

Biosimilar Commercialization

  • EU Supply Continuity Biosimilar Commercialization · from March 2026 · High confidence Continuous supply
    At the same time, we are also actively aligning our manufacturing and supply capacities so that from March’2026 we will be able to supply continuously to our European partners.

    — Dr. Satakarni Makkapati

Biosimilar Business

  • Inflection Point Biosimilar Business · 2027-2028 · High confidence 7 approvals in Europe, couple in US
    The ‘27-’28, which I always told, will be the inflection point in the biosimilar business where I expect about 7 approvals in Europe and possibly a couple of approvals in the US on the upside.

    — Dr. Satakarni Makkapati

What to watch in Q3 FY26

Eugia III reinspection outcome

Next 8 months (from Sept 25th)
Current Requested FDA end of Q2 FY26, confirmation received Sept 25th
Target FDA reinspection completed

Why it matters

Crucial for launching new injectable products and reaching pre-disruption levels in the US Injectable business.

Yeah. Eugia III, like we have already requested FDA in the end of Q2. And now we have the confirmation from FDA granting a reinspection for Eugia III. So, we received the official letter from FDA on 25th of September saying that they have accepted our request for reinspection. So, as per GDUFA III guidelines, normally it is any time from now till for 8 months, okay. So, they can come in any time for the reinspection.

Risks & concerns

  • Delay in Eugia III reinspection

    medium

    Majority of new injectable launches are tied to Eugia III clearance, and the reinspection timeline is 'any time from now till for 8 months'.

    Analyst acknowledged

  • Pen-G profitability dependent on Minimum Import Price (MIP) policy changes

    medium

    While the Pen-G plant is nearing breakeven, its full EBITDA contribution and ramp-up to 100% capacity utilization (15,000 MT) are contingent on government policy changes regarding MIP, which are currently under review.

    Management acknowledged

  • Competitive intensity in biosimilar market

    medium

    The goalpost for biosimilars has shifted from being first-to-launch, with many players developing products. However, management believes scientific and analytical expertise remains a high entry barrier, and Aurobindo aims to be cost-competitive.

    Analyst acknowledged

  • FTC approval for Lannett acquisition

    low

    The Lannett acquisition, intended to strengthen market position and expand the portfolio, is still awaiting FTC regulatory approval.

    Management acknowledged

Q&A highlights

6 direct
US Injectable business recovery and pipeline Direct
still we are not back to the pre-disruption levels. I think we still have another 5-10 million dollars to go to reach that level. But it is mainly driven not because of existing products growth but because we don't have the new products to offset the single-digit price decline.

Clarifies that despite QoQ growth, the US Injectable business has not fully recovered to pre-disruption levels and needs new product launches to offset price erosion.

Asked by Damayanti Kerai

Eugia III reinspection timeline Direct
we received the official letter from FDA on 25th of September saying that they have accepted our request for reinspection. So, as per GDUFA III guidelines, normally it is any time from now till for 8 months, okay. So, they can come in any time for the reinspection.

Provides a clear timeline for the critical Eugia III reinspection, which is tied to new injectable product launches.

Asked by Damayanti Kerai

Pen-G plant breakeven and MIP impact Partial
we are nearing the breakeven from the current operations, etc. We have been doing around 6,000 tons per annum. See, we are doing 500 tons per month. I can increase it to 800 immediately, not a big issue, right. Once I touch 800, certainly it will contribute to the EBITDA. But having said that, we also need to look at it at what price we need to take that and move on. So, that is what we are looking for the policy changes.

Management indicates Pen-G is nearing breakeven and can scale up quickly, but full profitability and EBITDA contribution are dependent on policy changes like Minimum Import Price (MIP), which they cannot disclose.

Asked by Neha Manpuria

US market price erosion trends and competitor issues Direct
when we take it as a basket, we think we are close to neutral. We have a little bit of erosion with very low single digit, I would say it's closer to 1 for the quarter. And this is based on an overall basket of products.

Provides insight into the current pricing environment in the crucial US market, indicating stability despite some opportunistic product pricing.

Asked by Neha Manpuria

Sustainability of Europe's mid-teens growth Direct
now we are well on track for billion euros. And, yes, as you have seen in the last 3 years, QOQ we are demonstrating growth and considering my all major countries contributors - France, Portugal, Netherlands and Germany continue to demonstrate this growth trajectory. I am very confident in the coming quarters and period as well there will be sustained growth.

Reaffirms confidence in continued strong growth in the European market, a key revenue driver, and confirms reaching the billion-euro mark.

Asked by Tushar Manudhane

Biosimilar pipeline updates and regulatory streamlining Direct
FDA released a new draft guidance aimed at streamlining and simplifying the biosimilar approval process. Now, the way I read the guidance, the draft guidance, is the key regulatory shift, the language is important, please read the language that I am talking about, the key regulatory shifts include reducing the reliance on comparative efficacy studies.

Highlights significant regulatory tailwinds for biosimilar development, potentially reducing costs and timelines, and provides specific timelines for multiple biosimilar filings (Denosumab, Omalizumab, Tocilizumab, Bevacizumab).

Asked by Shyam Srinivasan

China OSD plant breakeven and sales potential Direct
I think the plant started invoicing since April this year. We will be able to achieve the breakeven in the first year itself. And going forward what we are trying to see is that in the next three years we should be able to take the turnover to triple digit.

Provides financial targets and timelines for the new China OSD facility, indicating its potential to become a significant contributor.

Asked by Kunal Randeria

Comfort level with large M&A (e.g., $4 billion payout) Partial
No, see, Zentiva also, if you really see, assuming $4 billion, we have not given any number, assuming $4 billion the interest coverage will be more than 2 times, 2.5 times, right, even assuming 100% leverage. So, it all depends upon the case to case and Zentiva is a very unique case, that's what I've been telling.

While not committing to a specific deal, management indicates financial capacity for large acquisitions, provided the strategic fit and financial metrics (like interest coverage) are favorable, suggesting openness to significant inorganic growth.

Asked by Kunal Randeria

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Detailed narrative

Q2 FY26 Financial Performance Overview

Aurobindo Pharma reported a consolidated revenue of ₹8,286 crores for Q2 FY26, marking a 6% year-on-year growth. EBITDA stood at ₹1,678 crores, reflecting a 7% YoY increase and achieving a margin of 20.3%. The company's PAT for the quarter was ₹848 crores, with R&D expenditure at ₹414 crores, representing 5% of total revenue. Gross margins improved to 59.7% from 58.8% in the previous quarter, supported by raw material prices and business mix.

Formulations Business Drives Growth Across Key Markets

The overall Formulation business grew 10% year-on-year, contributing approximately 88% of total consolidated revenues with ₹7,325 crores. US Formulation revenues reached $417 million, with US Oral Solid (excluding gRevlimid) growing a healthy 6% QoQ and US Injectable sales also up 6% QoQ. The European business maintained strong growth of 18% YoY, amounting to ₹2,480 crores (€243 million), and is on track to achieve a $1 billion annual revenue milestone by FY26. Growth markets also saw a 9% YoY increase to ₹882 crores.

Pen-G Plant Progress and Profitability Outlook

The Pen-G facility commenced operations on July 1, 2025, producing around 1,050 MT at 40-50% capacity, equating to an annualized 6,000 MT. Management stated the plant is nearing breakeven from current operations and can quickly ramp up to 800 tons/month, which would contribute to EBITDA. The company is seeking Minimum Import Price (MIP) policy changes from the government to support achieving 100% capacity utilization of 15,000 MT, which is expected to significantly boost gross margins to over 60% once fully operational.

Biosimilar Pipeline Advancements and Regulatory Tailwinds

Aurobindo provided significant updates on its biosimilar pipeline, including successful Phase 3 outcomes for Denosumab and Omalizumab. EMA submissions for Denosumab are planned for April 2026, and FDA in July 2026. Omalizumab EMA application is set for June/July 2026, with the US a quarter later. Notably, the company received an EMA Phase 3 clinical study waiver for Tocilizumab, with submission planned for July next year. Management highlighted that recent FDA draft guidance aims to streamline approvals by reducing reliance on comparative efficacy studies, potentially shrinking timelines and investment.

Strategic Investments and Capacity Expansion

Net CapEx for the quarter was $106 million, focused on manufacturing capabilities, compliance, and automation. Biosimilar-related CapEx includes commissioning 2x 2,500L mammalian bioreactors at CuraTeQ this quarter and a vial filling line by June/July next fiscal. The TheraNym project, a ₹1,000 crore capital investment for a 2x 15kL mammalian bioreactor commercial scale facility, is expected to be ready by June/July next year. Additionally, two more 15kL bioreactor lines are being added as part of an expanded collaboration with MSD.

China OSD Facility and Lannett Acquisition Progress

The China OSD facility is ramping up towards a 2 billion capacity, with 10 European and 3 local product approvals. It is on track to achieve EBITDA breakeven by Q3-Q4 FY26 and aims for triple-digit turnover (potentially $150 million) within the next 2-3 years. The Lannett acquisition, currently awaiting FTC approval, is expected to strengthen Aurobindo's market position and expand its portfolio, particularly with ADHD products, contributing to medium-term growth.

Outlook and Margin Targets Reaffirmed

Aurobindo reiterated its internal margin target of 20-21% for FY26, driven by sustained business momentum, volume expansion, and a stable pricing environment. The company expects continued improvement in its Injectable business, supported by supplies from the China plant to Europe, new launches, and the Lannett acquisition. The period of 2027-2028 is anticipated to be an inflection point for the biosimilar business, with several approvals expected in Europe and the US, further solidifying future growth.

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