Detailed Narrative
Q3 FY26 Financial Performance Overview
Aurobindo Pharma reported a consolidated revenue of ₹8,646 crores for Q3 FY26, marking an 8.4% year-on-year growth. EBITDA for the quarter stood at ₹1,773 crores, with a margin of 20.5%, reflecting a 9% YoY growth. The net profit was ₹910 crores, after accounting for a one-time📎 cost of ₹65 crores related to a labour code amendment. The gross margin for the quarter was strong at 59.7%, supported by favorable raw material prices and business mix.
Segmental Business Highlights
The formulation business was the primary growth driver, achieving a 10% YoY increase with revenues of ₹7,683 crores, contributing 89% to the consolidated revenue. The API business contributed 11% of the total revenue, amounting to ₹963 crores. The European business demonstrated exceptional growth, with a 27% YoY revenue increase to ₹2,703 crores (€261 million), and is on track to exceed €1 billion in annual revenue by the end of FY26. US injectable sales also saw a significant 17% YoY growth, while US oral formulation revenue (excluding gRevlimid) was stable at USD 420 million. Growth markets remained flat at ₹865 crores (USD 97 million).
Pen-G Plant and API Business Outlook
The Pen-G manufacturing facility is progressing well with its ramp-up, expected to produce over 10,000 metric tonnes annually over the next 12 months. Yield levels are consistently improving, and the facility has already achieved break-even, contributing slightly to profitability. The Government of India's new policy introducing a one-year CIF on minimum import price for Pen-G, 6 APA, and Amoxicillin is anticipated to be a significant positive catalyst, addressing the current predatory pricing in the 6APA market and improving margins from Q1 FY27.
Biosimilars and Specialty Pipeline Development
Aurobindo Pharma is actively advancing its biosimilar and biologic strategy, with recent milestones including the first Canadian approval for Dyrupeg and four biosimilar approvals in the European Economic Area. Bevqolva (Bevacizumab biosimilar) has launched in the UK, and Dazublys (Trastuzumab biosimilar) in the Baltics. The company aims for comprehensive coverage in Europe, LATAM, and Canada, with 2029 projected as the inflection year for its biotech business. Validation campaigns for Omalizumab and Denosumab biosimilars are underway, with filings expected from June/July in Europe and the US.
Capital Allocation and M&A Strategy
Net capex for Q3 FY26 stood at USD 79 million, aligned with strategic priorities of enhancing manufacturing capabilities and accelerating automation. The Lannett acquisition is progressing, with regulatory approval from the FTC expected by early Q1 FY27, and management anticipates no negative surprises regarding overlap. The company is not pursuing major greenfield projects, except for the TheraNym biologics facility, which has seen USD 120-130 million in capex over the last seven quarters. Inorganic growth opportunities are continuously evaluated based on strategic fit and price.
Regulatory and Operational Updates
The Eugia III inspection resulted in procedural observations, with no data integrity issues or production stoppage, and the company is confident in its response to the USFDA. The OSD China facility is steadily progressing towards an annual capacity of 2 billion units, with EU approval for 10 products and 3 local product approvals, and is expected to achieve EBITDA break-even in Q4. The Vizag injectable facility has 3 products filed and 10 more under filing, with slow commercialization anticipated in FY27 and full benefits from FY28.