Welcome to Aurobindo Pharma Q2 FY 2025 Earnings Call. Please note that all participants' lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the opening remarks. Please note that this conference is being recorded. I now hand the conference over to management for opening remarks. Thank you, and over to you, sir. Thank you, Vandeep. Good morning and a warm welcome to our second quarter FY 2025 Earnings Call. I'm Shriniwas Dange from the Investor Relations team. We hope you have received the Q2 FY 2025 financials and the press release that was sent out on Saturday. These are also available on our website. I would now like to introduce my senior management team on the call with us today, represented by Dr. Satakarni Makkapati, CEO of Aurobindo Biosimilars Vaccines and Peptide Businesses, and Director Aurobindo Pharma Limited, Mr. Yugandhar Puvvala, CEO of Eugia Pharma Specialties Limited, Mr. Swami Iyer, CEO Aurobindo Pharma USA, Mr. V. Muralidharan, CEO Europe Formulations Business, and Mr. S. Subramanian, CFO. We will begin the call with the summary highlights from the management, followed by an interactive Q&A session. Please note that some of the matters we will discuss today are forward-looking, including and without limitations, statements relating to the implementation of strategic actions and other affirmations on our future business, business development, and commercial performance. While these forward-looking statements exemplify our judgment and future expectations concerning the development of our business, a number of risks, uncertainties, and other important factors may cause actual developments and results to vary materially from our expectations. Aurobindo Pharma undertakes no obligation to publicly revise any forward-looking statements to reflect future events or circumstances. With that, I will hand over the call to Mr. S. Subramanian for the highlights. Over to you, sir. Thank you, Shriniwas. Good morning, all, and a warm welcome to our Q2 FY 2025 Earnings Call. I'm delighted to share with you that we have continued our growth trajectory during Q2 FY 2025. Our company recorded revenues of INR 7,796 crores, reflecting a YoY growth of 8% and QoQ growth of 3%. The growth was led by strong base product sales in the U.S., continued growth trajectory in Europe, and growth markets. During the quarter, we witnessed volume expansion, product launches, and stable pricing. Our EBITDA stood at INR 1,566 crores with a margin of 20.1% after observing higher R&D costs. EBITDA before R&D was 25.1% and stood at INR 1,954 crores versus INR 1,936 crores in Q1 FY 2025. Our net profit for the quarter increased by 8.6% YoY to INR 817 crores. During the quarter, we also completed our first-ever buyback with an outlay of $111 million. Now, let me take you through the business-wise highlights for the quarter. In terms of the business breakdown, formulation business in Q2 FY 2025 witnessed a growth of 11% YoY to INR 6,640 crores and contributed around 85% of the total revenue. API business remained flat YoY at INR 1,156 crores, contributing around 15% of the total revenue. The price erosion in the API business was offset by the volume gains and the improved asset utilization. U.S.A., during the quarter, US formulation recorded revenues of $421 million with a growth of 3% YoY and declined 1% QoQ. The price erosion on an overall basis remained neutral, driven by our well-diversified portfolio. Revenue from oral generic products in USA increased by 9% YoY to $289 million, driven by volume gains and new product launches. Revenue from the injectable and specialty business in the U.S. decreased by 11% YoY to $ 81 million, mainly due to supply chain challenges. The business is picking up as production is being streamlined. The total injectable and specialty sales globally stood at $ 121 million. We have a total of 227 specialty and injectable ANDA filings as of 30th September 2024, of which 170 have final approval and remaining 57 are awaiting final approval. During the quarter, we filed 10 ANDAs, received final approval of 8 ANDAs, and launched 14 products. The company as of 30 September has 848 ANDAs filed with US FDA on a cumulative basis, out of which 676 have final approval and 26 have tentative approval, and 146 ANDAs are under review. For the quarter, Europe formulation clocked a revenue of INR 2,105 crores and increased of 19% year-on-year. In constant currency terms, the Europe revenue was EUR 229 million against EUR 197 million in Q2 FY 2024. The strong performance was witnessed across all key geographies within Europe. Key growth markets. For the quarter, growth market revenue increased by 44% YoY to INR 812 crores. In US dollar terms, revenue grew to $97 million in Q2 FY 2025. The increase was mainly driven by sales across markets and expansion into new geographies. ARV. For the quarter, ARV formulation business decreased by 23% YoY to INR 193 crores or $23 million. This was mainly impacted by cut-off sales and spillover to next quarter. From the above, quarter consolidated numbers need to be seen in context with the low special product or transient sales during the quarter. The base business, excluding the transient sales, grew by 7% QoQ and is expected to continue the trajectory. During the quarter, the base business was impacted by higher R&D costs, higher freight costs, etc. Our long-term business, Penicillin G Production, which is focused on backward integration and capacity expansion or ramping up the production. Presently, we are incurring operational costs towards the above to the tune of around INR 80 crores in Q2 FY 2025. Post the significant ramp-up, these businesses are expected to contribute meaningfully. Excluding the transient and the long-term business-related impact, the base business margins stood at comfortable levels of around 21%, reflecting a 200 basis points increase from Q1 FY 2025 to Q2 FY 2025, and absolute EBITDA grew by 13% QoQ. This reflects the strength and resilience of our diversified base business. As we progress into H2 FY 2025, we aim to achieve breakeven and streamline our long-term businesses and are confident of achieving our internally targeted EBITDA margins of 21%-22% for FY 2025. On other highlights, the raw material costs continue to be at benign levels and are in line with our previous quarter, supporting our gross margin, which stood at 58.8% against 55.2% of the previous. In absolute terms, gross contribution was INR 4,586 crores. Net CapEx for the quarter is around $ 80 million. The business has a net cash outflow of $ 235 million during the quarter, mainly due to buyback and increased working capital. As a result, the net debt position after investments at the end of September 2024 stood at $133 million. The increased working capital is expected to get released before the end of the year, leading to improvement in the net cash position. Average finance costs for the quarter were 5.8%. The average USD INR exchange rate is INR 83.8 in Q2 FY 2025 against INR 83.41 in Q1 FY 2025 outlook. So we remain confident in maintaining our growth momentum, supported by increased volumes, new product launches, and stable pricing dynamics. We expect the current pricing environment in the U.S. market to persist, providing a stable foundation for the performance. Europe and growth markets are anticipated to continue their positive growth. We are actively ramping up the capacities in penicillin G, 6-APA granulation, and China, which will drive further operational efficiencies and support our growth objectives in the coming quarter. We expect to achieve breakeven in the penicillin G product facility by Q4 FY 2025 and start contributing positively from FY 2026 onwards. Our commitment to R&D remains strong, with focused investments in developing a robust product pipeline that will fuel long-term and sustainable growth. We are on track to achieve our internal target of 21%-22% for the full year, which means effectively the second half should be better compared to the first half. We anticipate a normalization of our net debt position over the course of the year, further strengthening our balance sheet. This outlook reflects our confidence in the business and our ability to deliver strong performance in the coming quarter. This is all from my end. Now, our business leaders will give more clarity on any specific aspects in our Q&A session. We are happy to take over the session. Thank you. Thank you very much. We will now begin the question-answer session. Anyone who wishes to ask a question may raise your hand from the participant tab on your screen. Participants are requested to use headphones or earphones while asking a question. The first question is from Kunal Dhamesha. Can you hear me? Yes? Yes. Yeah. Thank you for taking my question, and thank you for providing details, Subbu sir. One question on the penicillin G front. Where are we in terms of what progress are we making in terms of taking commercial batches? And on the yield front, you suggested that you would provide some updates in quarter three call. Yeah. So we are now taking the commercial batches. We have taken around nearly 35 batches in Q2. Now, we have accelerated the entire thing, and we should be doing not less than 35-40 batches for the current month alone. And we will be accelerating this. And that is the reason we see while we have taken care of everything. And the headwinds which we have been facing is on account of the environment prevailing in the Indian climatic conditions, which we have understood very well and we have sorted out. And this will help us to accelerate the production ramping up in the coming quarters. That is the reason we said we are estimating to achieve a breakeven in Q4. And probably we may achieve off of it in the current quarter. Sure. And, sir, whatever we are producing currently are also being used within our products, or we are still to use those? No. Whatever we have produced so far, we have been converting into 6-APA comfortably without any hiccups. Okay. And then it is going into our products? Yeah, it's going into our products. We are also giving samples to third parties, which we have been taking their feedback and then doing the various tests relating to the products. Okay. Okay. Perfect. Thank you, sir. And one more on the U.S. business, while you suggested that the core business has kind of done well and the pricing remains kind of neutral. On the volume growth that we are seeing, can you maybe quantify what type of volume growth is it like in low- single digit range or mid-single digit range on volume growth? And are there any particular pockets of therapies, etc., where we are seeing this growth, or it's more broad-based? Any particular channel that has opened up to us which was not there earlier? Sorry? Yeah. I'll take this question, Subbu. Thanks, Kunal, for this question. U.S. business has grown in terms of volume. We have touched certain good milestones this quarter. And there has been growth quarter to quarter and, of course, on an annual basis. So the major reason for the volume increase is due to the introduction of newer launches. And, of course, in our base business also, we have seen some traction. So these are two major factors. Sir, but this is because some players are moving out. What are you seeing on the ground as of now? Is it some players moving out, creating the vacuum, or are we moving to new channels? Yeah. So now, primarily, I don't see players moving out as being the reason because that's been there. It's been there even one and a half years back. Some major companies have started moving out. And later, some more companies also moved out a few products. We have been seeing it, but it's nothing dramatic. The major reason, of course, we mentioned earlier, maybe about four or five months call prior to this, that we have planned to launch 40 products. We were bang on 40 products we launched. And those are all getting converted now into volumes and sales. That's one. Some of our existing business, we have been able to get a little more business because of reliability of supply, thanks to our deep manufacturing ability and supply chain. And, of course, the U.S. team has done very well in terms of converting these to orders. So these are the primary reasons. And in terms of different forms, you see, if we talk about the tablets, we don't talk about the liquids or anything else in terms of tablets, not so much. We just take that as one unit. So there's no change due to that for the different form of presentation. Sure. And if I may, one last one. The specialty injectable sales, which has kind of declined 11% roughly from $102 million to $81 million. I think Subbu alluded that there was a special product which kind of did not do well in this quarter. So one, what are our expectations from quarter three? And also, you alluded to the supply chain issues. So is it related to a rebooting of Unit 3, or there is something else which is going on here? And when can we expect the supply chain issues to resolve? So see, as far as the injectable is concerned, Yugandhar will answer. I was not sure you are referring to the branded. He's talking about Eugia. Eugia. Okay, so Yugandhar will answer. Yeah. Kunal, I think you asked the question. We also answered it. So it is, you're right. We are scaling up Unit 3 back to the normal levels. And it's already coming to the stabilization phase. Quarter one and quarter two, both quarters, we were actually taking a lot of corrective actions. That's why the supplies were a bit lower than the normal levels. That's why we had to have this bit of a degrowth. It's mainly related to the supply chain issues from Unit 3. Okay. So there's $102 million falling to $81 million. Is it a factor of the supply chain issue, or there is also the issue of the lumpy product or the special product? No. It is a combination of both because, obviously, we cannot really do quarter-to-quarter management of that lumpy product. So Q2 and Q3 is expected to be lower for the sterile product, whereas half of it is mainly related to Unit 3 supply issues. Okay. Great. Yeah. Thank you, Kunal. Yeah. Thank you. We request participants to restrict to two questions and then return to the queue for more questions. The next question is from Shyam Srinivasan. Yeah. Hi. Good morning. Thank you for taking my question. Just two quick ones. First is on the R&D cost, INR 410 crore, kind of jumped up like 80-100 basis points. So I just want to understand what is driving the higher R&D. And you could also split us out maybe based on the different segments on where is this incremental spend going to. That's question one. And just question two is on Subbu's ETR for the quarter was kind of high. So is there something that's happening there that we need to be aware of? If you could give us a full year ETR guidance as well. Thank you. Yeah. First question will be answered by Yugandhar, and I'll address the tax later. I'm not Yugandhar. I'm sorry. Dr. Satakarni. Yeah. So hi, Shyam. With respect to the escalation of the R&D costs that you guys witnessed in our quarterly update, the majority of these costs are a result of the phase III clinical trial expenditure for four of our biosimilar products. As you know, we have denosumab, a biosimilar to Prolia, which is in phase III clinical trials across multiple countries in Europe. We have omalizumab, a biosimilar to Xolair, which is also going through an active phase III clinical trial recruitment in chronic urticaria patients. So that's critical spend for us. Then we have an oncology product, a biosimilar to Avastin, which is closing on the recruitment milestone. I think we just have about another 70 subjects out of 650-odd subjects that we have to recruit. And then we have an ophthalmic product, which is also in phase III clinical trial across India, Europe, and CIS countries. So when the programs are reaching their logical end in terms of the clinical trial recruitment, that's when, based on the milestone payments that we decide with the clinical CROs, you tend to spend more. And we are in that phase. And the guidance on this pattern of spending will continue for about at least four quarters before the clinical study reports and the filings would happen in the regulated markets. So you will see this pattern of spend, at least for the four quarters, Shyam. Does that answer your question? Yeah. Yeah. Thank you, Dr. Satakarni. Thank you. Subbu's on the ETR. On the ETR front, Shyam, as Satakarni explained in detail on the R&D cost, increased R&D cost, the R&D costs are being incurred in a company called CuraTeQ, which is a 100% subsidiary of Aurobindo Pharma. We are not taking the deferred tax asset on the expenditures as of today being a little bit conservative. And that is the reason you can see the effective tax rate has gone up. The impact of it alone is around 4% for the quarter. And we believe over a period of a year, this year, we'll be effective tax rate will be around 30% type. That is what we are thinking. Subbu, 4 percentage points, you mean? Yeah, 4 percentage point. Yes. Understood. Understood. Okay. Helpful, sir. Thank you, all the best. Thank you. The next question is from Damayanti Kerai. Hi. Good morning. I hope I'm audible. Yes, please. Okay. Good morning. So my first question is again on generic injectables in the U.S. So you mentioned in first and second quarter, already corrective steps are taken, and now things are broadly stabilizing. So in terms of numbers, if you can say how much recovery we have seen compared to predisruption level, and should we assume it to normalize, say, by fourth quarter? And do you maintain your guidance for global Eugia sales for this year? Hi, Damayanti. Yeah. We have taken the hit in Q1, Q2. And in fact, if you see it, we have increased our sales from Q1 to Q2 and expect Q3 and Q4 to be even better from a pure generic injectable basis. So we are bang on in terms of Q4 is expected to be the best quarter. That is our expectation at this point of time. And the worst is over with respect to Unit 3 is concerned. So we expect the production level should come back to, and also, we have completed all of our remediation actions. So we expect the production levels to come back to normalcy by Q4. Sure. And just want to understand, do you need another inspection by the FDA, or it's broadly from your end, remediation is done, and then things can go back to normal level? From a perspective of continuing to supply existing products, it's over in terms of we don't expect any further thing required from Unit 3 management. And we already had a detailed discussion with FDA on this. Existing products will continue to be supplied without any disruptions going forward as well. And we never had issues. It was our voluntary decision to slow down production, but FDA never asked us to do anything. And for the approval of new products, we feel new inspection is required. FDA has asked us, as and when we are ready, we can invite temporary inspection. Okay, so very broadly, when do you plan to invite FDA? Probably next year, around Q3 levels. 3Q of this fiscal year, right, by December? Not Q3 of FY26. Okay. 3Q of FY 2026. Okay. And my second and last question is for Mr. Swami Iyer. Just want to understand, what are your expectations on U.S. business after the presidential election in the U.S.? So very broadly, what are you hearing, and how do you think a company like Aurobindo can see more business because focus is again on the affordable healthcare medicines? Yeah. Sure. We feel at this point, maybe it's a little early to say what's going to happen, but we do not see any issues as far as any change in policy is concerned. For example, we have a very good manufacturing base in India, and we are able to meet the requirement. We'll be one of the low-cost manufacturers. So that way, we have the ability to grow our business in case there are any cost considerations. Now, as far as the manufacturing in U.S. is concerned, if that becomes a requirement for some kind of products, or if there is any norm that comes up from the government, we are ready to meet that too because we have a facility in the Dayton, which is scalable. And then we also, as you know, a facility in Puerto Rico that can be quickly brought online, and then we can start commercial production. So we do not foresee a problem, but it will be better not to speculate and wait for the next two, three months to get a better understanding. Sure. Thank you. I'll get back into it. Thank you. The next question is from Yash Parikh. Hi, Yash. Requesting you to unmute. Yeah. Am I audible? Yes. Thank you for the opportunity. Just a few questions. As far as the employee expenses, there are various particular concerns. There has been a huge increase in those expenses. Do you see this as a normal rate of expenditure, or it will be reduced? Yash, can you repeat because the? It's just me asking about employee expenses, Subramanian. No, employee expenses is normal because, Yash, if you really see, the European currency has moved up, and when we translate the existing things, it appears to be more, but it is normal only. It's in line with our plan too. Hi, Subbu. Your expenses? Your line is not clear. I'm audible. Yeah, you're audible, but somehow it is not very husky. Yeah. Yes, can you repeat the question? It's not audible. Other expenses? Oh, other expenses, we talked about it in the call itself. We have talked about it. One is R&D expenses are higher to the tune of around INR 70 crores. We have an increased carriage outward to the tune of INR 30 crores on account of the Red Sea-related issues. So we need to move quickly to avoid any penalties, etc. We have to move the material through air. And because of the overall climate, I mean, overall environment prevailed in the Red Sea, the entire cost has gone up, which we think it will come down now between this quarter and next quarter, it will come down. That's the main thing. So you do expect it to reduce given the. Yeah. As Dr. Satakarni has said, R&D costs likely to continue for another three, four quarters. In terms of the freight cost, it is expected to slow down in this quarter and the next quarter, right? But let's see. I mean, there is a change in overall approach. Let's wait and see what's going to happen. Okay. Another question. You discussed the other income. So the other income in June was around INR 221 crores, which is now reduced to somewhere around INR 136. Is this a normal run rate of other income? No, you take the normal run rate around. I think if I am right, this quarter we incurred around INR 1,900 crores. You can take anywhere between INR 1,850-INR 1,900 crores. In terms of the other income, that is also around INR 120-INR 125 crores will be there. But it will go down slightly because, really, the interest rates have been coming down, so both our interest expenditure will come down, and the other income also will come down because the other income predominantly represented by the deposits, interest income on the deposits we made in U.S. and Europe at the time. Thank you, sir. And just a bit of NG plans. Is it completely operational, or will it be by? It is already operational. We are doing ramping up in a phased manner, which is expected to accelerate this quarter and next quarter. Okay. Thank you. Thank you. Thank you. The next question is from Neha Manpuria. Yeah. Thanks for taking my question. Subbu, on the pen G plant, now that we accelerate the ramp-up, is it fair to assume that the captive consumption and the gross margin improvement should be meaningfully higher in the second half, or would that be visible probably mostly in fiscal 2026? See, Neha, as I explained in my original speech, we have incurred around INR 80 crore loss, which is expected to come down partly in the coming quarter and should be fully break-even by March quarter. So you can start seeing the contributions from this plant from next year onwards. External sales would be even later? Yeah. See, if you really see, external sale is predominantly converting the penicillin G into 6-APA and selling it in the market. And the penicillin G sales also, we have effected, and we have given the batches to various two, three companies. I mean, I don't know how many number of companies. We have given it to outside company, external party. They will be giving the feedback based on that. The ramping up will take place for the external sales directly at penicillin G. Okay. So you are planning to sell penicillin G directly also because I thought the original. Yeah. We will sell it as penicillin G. We will sell it as 6-APA. We will also sell it as some amoxicillin trihydrate and other products also. Okay, and you're saying both of these, the captive consumption and external sales, will be fiscal 2026? Yes. Yes. No, captive consumption already taking place. Okay. Okay. Got it. Got it. Okay. Captive consumption already taking place. Oh, okay. Got it. And my second question is on the European business. Muralidharan, we're already clocking close to the EUR 900 million mark that you mentioned last quarter. Last quarter and third quarter, we'd seen a clawback tax. So should we factor in something like that in this quarter also? And from this $900 million base, if I think about fiscal 2026 and 2027, what do you think are the growth drivers that I should build in for the European business scaling up from the current level? Yeah. Neha, good morning to you, and good morning to everyone. And thank you for raising this question. Yes, our revenue rates at present, as you are able to see, we are well on course for the $900 million for the current FY. And also, the growth drivers for the subsequent two financial years are going to be more launches. Some of them are peptides, day-one launches. We are gearing up for three to four products there minimum. Some of them are risk-based. Still, we are assessing, but this is going to contribute. Plus, the standard set of new launches new to that country at the same time, which will add to the portfolio. In addition, of course, the Eugia 3 launches, which are substantial in the year two. And also, we are keenly looking forward to the peptide launches coming up. So this will be the main growth drivers. At the same time, already we are pushing a $1 billion mark, and we will be going well past that in the coming years. The $1 billion next year itself, or should I take that as? Yeah. I meant billion dollar. We are already at EUR 900 million, which is almost at the doorstep of. Okay. And so in terms of the growth rate, next year would be similar to the growth that we have seen this quarter or usual the 5-ish percent that we see for a European business? Yeah. See, the European business growth is rather muted. It is in the flat or low- single digit, whereas we'll be always tracking towards high- single digit or double digit marks. We are confident of that. Is there a clawback impact, sir, in the third quarter this year? There is no exceptional clawback. We are already provisioning it. The main clawback is arising from France. More details are needed, Subbu can explain. But we are provisioning it, and we are fully prepared. All right. At the same time, our two litigations are going on for the previous years. Still, they shouldn't not arrive yet. So only on the positive side, we may get some claim back. All right. Got it. This is helpful, sir. Thank you so much. Thank you. Thank you. The next question is from Jigar Valia. Yeah. Thanks for the opportunity. So with the regulated revenues, we expect in black and white too, we expect to meet the old $100-$600 million overall for injectables. Yeah. Including regulated, we have seen we planned around $600 million. But based on Q1, Q2 slowdown of production, there can be a plus or minus to that $600 million, 5% here or there. Okay. But largely, we are in the ballpark. Got it. And any overall guidance for the second half for sales of EBITDA? Sales and EBITDA are expected to be much better than the first half in the second. Got it. One question, if I can take for Mr. Satakarni. So in case of total CapEx, which is now being done in Mahabubnagar City right now, and if at all there is something around in terms of an EBITDA margin or a value type of perspective from a slightly longer-term perspective, we can throw in here. Hello, Jigar. I don't know if I understood your question well, but with respect to the CapEx in the TheraNym Biologics or CDMO arm, we alluded to around 1,000 crore as guidance before, and that remains the guidance with the current capacities that we are projecting around two 15KL mammalian cell culture bioreactor lines and associated purification line. But there is also a thought process that we would like to maximize our capacity footprint in that site by addition of two more 15KL bioreactor lines. So that decision is yet to be taken. If that decision is taken, then it would add to the current capital expenditure guidance by another $40-$50 million. With respect to the revenues and the margins and EBITDA, as I told before, I hate to give guidance, which is about three to four years from now. But we see the first set of stockpiling effort for the customer coming in from late 2027, which means the revenues will start to clean. And we expect the consistent flow of revenues to happen from 2028 calendar year onwards. And right now, what I expect is this CDMO business would not be less than a 50% margin business. I would like to leave it there and not speculate too much, Jigar, if that is okay with you. Thank you so much. Thank you so much. I'll come back with you. Thanks. Thank you. Thank you. The next question is from Tarang Agarwal. Hi. Good morning. Just a couple of questions on Unit here. On Unit, two questions. I mean, first, sir, if we look at Unit last quarter, which is Q1 of FY 2025 and Q4 of FY 2024, we were impacted by anywhere by about $15 million-$20 million on a quarterly basis because of Unit 3. It was widely anticipated that this quarter, much of that impact will be averted. So has that been averted to a large extent? Yeah. In fact, Q2, we continued to have similar issues like Q4 and Q1 current. But now we are back to the original levels. But Q2 also, I have taken the impact of supply chain. Okay. Sure. So would therefore be safe to presume that the $15 million-$20 million continues up till Q2, and then from Q3 onwards, hopefully, things should be all right? That's right. Okay. Second, on Vizag, how should we look at the ramp-up of the Vizag plant? I mean, are we waiting for more approvals to kick through? How should we build that in? So I think Vizag, you should look at it in actually three different buckets. One is what are the terminally sterilized lines? What are the aseptic lines? What are the special lines what we are putting up? So we have the approval of all the terminally sterilized lines from U.S. FDA and European approval also for all lines. Whereas aseptic products, we have piloted, and we expect inspection for aseptic lines going forward. After that, we have all the GLP-1 products like semaglutide, liraglutide, and all that cartridge line, PFS line, and we are putting some ophthalmic lines. That will be the third phase. So the Vizag is in three phases in terms of the overall capacity build-up at Vizag. We expect decent revenues in FY 2026, but the actual ramp-up will happen from FY 2027 onwards. Got it. That's helpful. Thank you, sir. On Europe, sir, fantastic execution, almost 12% constant currency growth for H1. What is driving this? I mean, are there any one-offs specifically? Say if I look at Q2, 16% constant currency growth has not been seen in this part of the world or for you also. So any specific drivers, or is there a one-off that's at play? How would you look at it? Currently, I will only talk about injectables, and I will leave it to Murli for the overall guidance. Europe, we have seen a significant growth. In fact, let's put it as if I see from H1 of last year to H1 of this year, it's almost we had 20% plus growth in injectables. I think it's driven by various factors with respect to supplies from other suppliers. It's nothing to do. There's no one-off in Europe for injectable business. Murli, would you like to guide on the other things? Yeah. On the oral solids, first of all, thank you, Tarun, for raising this and for your appreciated words. Yes. On the oral solids, I would attribute it to the very careful management of the inventories, right products at the right time, and looking at the opportunities and making full use of it. And in the process, Malta has also been very supportive in timely release of the products to the destination countries. So it's a combination of some of these. The commercial teams have been working in tandem to identify the opportunities and service the market. So definitely, we are bullish and confident. Overall, guidance is simple. There is no one-off for this growth. I think we will leave it there. Yeah. Yeah. Sure. And last question on the U.S. business. What would be, in your view, a good base for the oral solid? Because that seems to be flat at the $25 million. We are at a very high level of dollar value and even volume. We are at 2 billion tablets a month, a little over 2 billion, actually, a month, and we are number one. The next, in terms of prescriptions, the next competitor is probably 33% lower if I see the, in terms of prescription. This is not even considering the private labels. The reason why I'm telling you this is we have a fairly large base, and adding substantially to this base requires new product, new form of presentation. We are working on it, so I wouldn't want to speculate, but I think we are moving towards the future with a much more diversified portfolio. We have a global manufacturing infrastructure. And then the strength of our overall portfolio, including some of the newer presentations that we brought about. These would help us on track to achieve better growth. And I would say that we will establish the base as we go along. But today, we are on a fairly high base. Okay. And there's no one-off, so to say, driving this business also, right? I mean, it's all a function of the portfolio. There is no one-off which is anything significant. You always have those marginal ones. You have some OTBs. You have some stuff, but there's nothing significant which is one-off. Okay, and the OTC business? Okay. I'm sorry. Yeah. OTC business, we have been monitoring the OTC business very closely because that is one area where the growth has been very flattish. But I'm happy to say that this has been a decent quarter for OTC, and we have, I think, laid the foundation for OTC business in terms of awards and in terms of creating the infrastructure. We believe we would see tangible results starting from Q4 in OTC. And I also think there will be no looking back for OTC from here. Sure. Thank you, sir. All the best. Thank you. Thank you. The next question is from Nitin Agarwal. Good morning. Thanks for the question. Sir, on the peptide business, I think we heard some comments in the presentation. If you can just probably give us some more color on the thought process, I hope you. We can't hear anything. I don't think we can hear anything. Yes. Nitin, you are on. Can you hear me now? Yeah. Yes. So, sorry. I'm assuming on the peptide business, you've given some color on that in your presentation. Can you just give us some thoughts on what opportunities do you see in this business going forward? Are you talking about the API business or formulation business, Nitin? Sir, both, if you can, in terms of you've talked about 14 DMFs. There is mention of GLP additional capacities. So what kind of opportunity do we see here for both the segments? I would say. Dr. Satakarni, please. Yeah. So, Nitin, good morning. In peptides, as you know, for over a decade, at Aurobindo, we have carefully nurtured capabilities in both solid state and liquid phase peptide synthesis. We have filed about 14 DMFs, out of which I think five of them have translated into successful ANDAs in the U.S. We continue to streamline our portfolio with more focus on oncology and primarily the diabetes market. Right now, our pipeline has three glucagon-like peptide-1 receptor agonists, with us now investing in expanding our manufacturing capacity footprint. Right now, we have about five manufacturing lines which can do gram quantities to a kg quantity of the product. But considering the anticipated demand for the GLP-1 products, we have initiated constructing or commissioning a phase I of the new GLP facility, which I believe would be ready by the end of next year. And this would catapult us into a minimum of 100 kg capacities, the scope to expand it in phase II and phase III to another 400 kg of GLP-1 APIs that we can produce. Likewise, we are also starting to make some foray into the domestic market with peptides. We have received an approval for a first-in-class linaclotide peptide, which is used in irritable bowel syndrome. So we are going to do that to Indian patients very soon through a partner. So you will see some traction in peptides, a paradigm change in how we look at emerging markets, primarily the domestic market, and also an investment in the API manufacturing capacity footprint side of things. Hope this answers your question, Nitin. Sir, if I can just take a little further, sir, from your ability to then participate in the emerging market opportunity, which is going to open for semaglutide and for liraglutide, which is going to open a little quickly, how are you placed in terms of would you be in the first wave of launches for liraglutide globally and for semaglutide? For the emerging markets, we are still forming up our strategy, especially in markets like India. For regulated markets, I would let Yugandhar and others take the call. But we still have a window of opportunity in the emerging markets for semaglutide. And we also are very keen to bring in Liraglutide into India. And so secondly, on the biosimilar business, you talked about the various trials which are going on, the global phase III trials. But in terms of meaningful commercial impact of these projects, by when do you start seeing that happening? With respect to our biosimilars initiative, as I told, we have four products in the global phase III clinical trials. We are on track to complete our denosumab phase III clinical study in women with postmenopausal osteoporosis by May or June 2025. In fact, we completed the recruitment of all 436 patients across Europe. I think denosumab would be commercial in the calendar year 2026 in Europe. And in India, we strive to make it commercial to the Indian and make it available to the Indian patients in the next year itself. Likewise, with our biosimilar to Xolair, which is omalizumab, I must admit that our recruitment has been slower by three to four months than anticipated. This is expected in the dermatology setting sometimes, depending on how the sites operate in Europe. But we are confident of completing the recruitment of all patients by February, March 2025. This means, based on my earlier guidance, we can still have a chance of filing this product by the end of next year with EMA and also with the FDA. This product, as you know, Nitin, will be a very interesting opportunity for us, considering its use in chronic urticaria, respiratory asthma, and accidental food allergies. As I told in one of the earnings calls before, I am looking at a market opportunity in both Europe and FDA, where I would be one of the three or four players for omalizumab. Again, the commercial impact of this product will be felt starting 2026. In India, we plan to launch it next year. But in Europe, it will be 2026. The three other biosimilars that we have already filed in Europe, I'm expecting them to be commercialized. If there are no other regulatory hiccups, I'm expecting them to be commercialized in the next six to seven months' time in Europe. You will see a commercial impact of our first set of biosimilars starting 2025. From 2026, you will see the key products, which is the denosumab, the omalizumab, etc., coming into the market. 2026, 2027 would be the years that I think the supply chain would get stabilized, and you will start to see how this impacts the overall numbers of the company. So if I can just push a little forward also from whatever that you've discussed, is it fair to say that most of our opportunity in the initial years is going to be around India and Europe? US will probably begin to contribute a little later in a meaningful way. I think that is a fair assessment of the business. The initial opportunities will come from India, Europe, and the rest of the world. U.S., I'm expecting my first filing. In fact, I told you that the first filing will be done in this quarter, which I think we are still on track to filing our first product, which is a trastuzumab biosimilar, this quarter in the U.S. And if that gets approved, and you know how things happen with the U.S., it takes its own sweet time. Then you can see even commercial impact in the U.S. kicking in from late 2025 calendar year or 2026. But I would exercise some caution with how the U.S. FDA reviews and of the GMP facilities and the dossier goes in. So, along the lines that you have stated, the initial opportunity would essentially come from Europe and India and the rest of the world, with the U.S. taking a back seat. But U.S. would also kick in. That's where the business is, hopefully in 2026, 2027. Sir, if I can take one last one, sir, on the CMO business, what is the thought process for adding additional capacities, and what will drive the decision for you to go ahead or not go ahead with it? We would like to add additional capacities in that facility, Nitin, to essentially give us more flexibility so that in case there is a ramping-up requirement from the customer, then we are not caught up napping. Because it takes about two, two and a half years to build capacities of this scale in mammalian cell culture. And as I told before, this will be the largest capacity that will be available in India. No one had done anything over 10,000 liters mammalian in the country. We thought instead of reacting to a requirement maybe two, three years down the line, why not add capacities as we build the block one of this facility that we are already building, and hence be ready for any opportunities that come our way starting 2028. That's the reason why we are thinking about adding capacities there, Nitin. Okay. Thank you so much, sir. Thank you. Thank you. The next question is from Ankush Mahajan. Hello. Yes, Ankush. Sir, my question is related to the Eugia 2. What kind of a price erosion was in the existing products? And sir, what is the strategy for the new launches from the Eugia 2 now? Sorry, is this the question on Eugia business, Ankush? Yes, sir. Yes, sir. So what is the price erosion in the existing products, and what is the strategy for the new launches from the Eugia 2? Yeah. It says price erosion is a low single-digit. That's been the trend for the last few quarters. And launches are a bit low this year, but we expect things to ramp up from H2 onwards. But there are no meaningful launches in the next six months or next one year. So it is more about supplying from our existing molecules and see how things pan out in the next six months. Thank you, sir. Thank you. The next question is from Amey Chalke. Hello. Am I audible? Yes, Amey. Yeah. Thank you so much. Most of my questions are answered. Just one thing on the branded specialty U.S. business, if management can highlight plans here or any milestones in the near term for this business and what growth should we assume? Thank you. I'll take that question. You're talking about the branded business? Yes. The Spectrum portfolio which we have acquired. Right. Right. We have given an indication earlier that Acrotech is studying the $25 million-$30 million range that we are talking about. We don't see any immediate change to it. We also indicated the strategy behind this. We are not going for any big bang investments now in terms of brands. That's where we are. We will be steadily maintaining the business, or there could be some minor improvements, but nothing significant that we are looking at immediately in the short term. Sure. Sure. The second question I have is on margins. I might have; this might be repeated. I was not there in the opening part. But like margins, we have seen impact of higher R&D, Pen G losses, and also the revenue on the specialty product lower sales. Despite that, our margins have been a bit healthy, around 20%. Is there anything which management wants to highlight or supposedly wants to highlight? Should we consider this 20% as a base going ahead? No, I think I explained it very well at the beginning itself. Even though the YTD stuctural margin is around 20.7%, we are still maintaining our cadence of around 21%-22%. Right? We expect the second half will be better than the first half, including all businesses. As Yugandhar rightly explained on the Eugia and penicillin G, it's expected to move forward with their better operations, this one, contribution. Like that, with all these things, we still maintain the 21%-22%. Sure. And sir, on the working capital, it might have gone up on account of maybe some opportunity in the U.S., also the buybacks, etc., the debt level as well. So we expect going ahead, working capital to normalize and the debt also to normalize in coming quarters. Yeah, that is what we expect. Yeah. That's what we exactly expect. By end of the year, we'll see an improvement because good sales have happened in both the U.S. and Europe this quarter, coupled with the fact we had certain reimbursements we obtained from the government, which are all expected to happen this quarter, next quarter. Sure. Sure. Thank you. I will join that. The last question, I would request management to give their closing remarks and close the call. Okay. Thank you all for joining us on the call today. If you have any of your questions unanswered, please feel free to keep in touch with the investor relations team. The transcript of this call will be uploaded on our website, www.aurobindo.com, in due course. Thank you and have a great day.