Earnings Call Transcript - XNSE:GLAND 2026-11-06

Operator

Ladies and gentlemen, good day, and welcome to the Client Pharma Q2FI27 Earning Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Srinivash P. Dange from the Investor Relations team. Thank you and over to you, sir.

Srinivash P. Dange, Head of Investor Relations

Thank you, Sopnali. Good evening, everyone. We welcome you to GlandPharma earnings conference call for Q2 of FY27. I am Srinivash Dange from the Investor Relations team at GlandPharma. Today, we have Mr. Srinivas Sadhu, Executive Chairman, and Mr. Ravi Mitra, Chief Financial Officer from India Office. We will begin the call with Business and Operational Highlights from Mr. Sadhu, followed by Group Financial Overview by Mr. Ravi. Before we proceed, I would like to remind everyone that some of the statements made today will be forward-looking and are based on management's current estimates. These statements should be considered in light of the risk associated with our business. This call is being recorded. The playback and the script will be available on our website shortly. With that, I hand over the call to Mr. Sadu for his opening remarks. Sir, over to you.

Srinivas Sadhu, Chairman

Thank you, Srinivas. Good evening, everyone, and a warm welcome to all of you to Grand Pharma Surning's call for the second quarter and first half of fiscal year 2027. I will begin with a business and strategic overview, and Ravi will subsequently take you through the financial performance in greater detail. We are pleased to report another quarter of strong growth and execution. During Q2 FY27, we delivered revenue of Rs. 18,336 million, representing a growth of 23% year-on-year, while EBITDA increased by 53% year-on-year to Rs. 4,804 Adjusted with us, rupees 5,030 million, with margins of 27%, and profit after tax grew 58% year-on-year to rupees 2,908 million. Our performance, both in terms of revenue and profitability, reflects the continued strength of our business fundamentals, growing contribution from the CDMO business, robust demand across our critical injectable business, successful product launches, Improving operating leverage, and disciplined execution across the organization. More importantly, we are seeing increasing validation of a strategy to build GrandPharma into a leading global supplier of serial inductables and a strong CDMO platform. The momentum across customer engagements, manufacturing partnerships, capacity expansion initiatives, and development programs provides us with confidence in the company's long-term growth trajectory. The strength of our business is also evident in our first-half performance. Per H1FI27, revenues grew 21.4% year-on-year to Rs. 36,339 million. Adjusted EBITDA increased to Rs. 10,132 million with margins of 28%, and profit after tax grew 52% year-on-year to Rs. 6,071 million. These results reflect the growing scale of our operations. Increasing contribution from the CDMO business and continue to focus on profitable growth. The CDMO business continues to emerge as a key growth engine for Gland Pharma and remains one of the most important drivers of a long-term strategy. During the quarter, CDMO revenues grew 31% year-on-year to Rs.8227 million, contributing approximately 45% of total revenues. For the first half of FI27, CDMR revenues stood at Rs. 17,142 million, growing 25% year-on-year and contributing approximately 47% of consolidated revenues. Growth was driven by commercial supply of previously signed CDMR contracts, along with new launches from this segment, and revenue from development and manufacturing partnerships entered in the quarter. The market opportunity for high-quality sterile injectable outsourcing continues to expand globally and we are witnessing strong interest from innovators and specialty pharmaceutical companies seeking reliable partners with proven regulatory and manufacturing capabilities. Technology transfer activities of the various projects are advancing according to plan. Active discussions with several new global companies further strengthen our confidence in the long-term scalability of our CDMO platform. We continue to make progress on several strategic opportunities across complex injectables, specialty formulations, and differentiated manufacturing platforms. During the quarter, we expanded our capabilities in respiratory products and secured manufacturing contracts for both microspheres and respiratory products. Our CDMO opportunity pipeline remains robust with both the quality and scale of opportunities than ever, providing us with increasing visibility and confidence in our future growth trajectory. Turning to Senexi, we are advancing our transformation roadmap to strengthen the platform's long-term competitiveness.

Speaker 4

Quarterly revenues were EUR41 million,

Srinivas Sadhu, Chairman

with EBITDA loss of EUR6 million, primarily due to planned annual shutdowns across facilities. The underlying operating trend remains encouraging. Improving capacity utilization, ongoing cost optimization, and increasing operating leverage are expected to restore profitability from Q3 onwards, in line with the positive performance of previous quarters. Our strategic objective remains unchanged to position Cenexia as an integrated CDMO platform offering specialty manufacturing capabilities with a broad range of development and manufacturing solutions. Our critically injectable business continued to deliver a strong performance during the quarter. Revenue stood at Rs. 10,109 million, representing growth of 18% year-on-year. For H1FI27. Revenues from this business stood at Rs. 19,197 million, also growing 18% year on year. Growth was supported by strong demand for our existing portfolio, contributions from recent launches, continued customer acquisitions, and higher volumes across key products and markets. We remain focused on strengthening our leadership position in serial injectables through portfolio expansion, commercial execution, supply reliability, and differentiated manufacturing capabilities. Coming to the geography-wise performance across the group, the United States remained our largest market and delivered an outstanding performance during the quarter. Revenues grew 42% year-on-year to Rs. 11,795 million. For the first half of FI 27, U.S. revenue stood at Rs. 21,605 million, representing growth of 37% year-on-year. Growth was driven by contribution from recent launches, increasing volume from existing products, And continued momentum in our CDMO programs. Our key products, including recent launches, continue to perform well in the market. During the quarter, we launched four products in the U.S. market and continue to see additional opportunities for portfolio expansion and market share gains. Revenues from Europe and other regulated markets grew 23% year-on-year to Rs.4,110 million. For H1FI27, revenues from Europe and other regulatory markets stood at Rs. 8,598 million, reflecting growth of 17% year on year. Growth was supported by increasing customer engagement, higher volumes from existing products, recent launches, and improving commercial traction across both CDMO and critical injectable business. Continue to center our market position through differentiated products, enhanced customer relationships, and focused execution. Revenues from the rest of the world markets stood at Rs. 2,044 million during the quarter. Performance was impacted by certain market-specific supply and tender-related dynamics, especially delay-off announcement of Nukko tender reserve from South Korea. However, demand fundamentals across our key emerging markets remain healthy, and we continue to see active long-term growth opportunities. Revenues from India stood at Rs. 387 million for the quarter. While India remains a relatively small part of our overall business, we continue to evaluate selective opportunities for portfolio expansion and market development. Now, let me take you through, of course, growth pillars. Quality and compliance remain a top priority for Gland Pharma and continue to differentiate us in the global marketplace. During the quarter, our WISAC oncology facility successfully completed a USFD inspection with zero observations, reflecting the strength of our quality systems, operational discipline, and compliance culture. Our clinical facility also underwent a USFD inspection during October and concluded with four procedural observations. Importantly, they were neither data integrity observations nor repeat observations. These inspection outcomes reaffirm the maturity of our quality systems and reinforce the confidence that customers and regulators place in Landforma as a trusted global manufacturing partner.

Ravi Mitra, CFO

We continue to invest proactively in manufacturing infrastructure to support our next phase of growth.

Srinivas Sadhu, Chairman

Capacity utilization across our facilities continues to increase, supported by increasing demand, higher volumes, and ongoing productivity initiatives. We remain on track with our previously announced Rs. 2000 crore capacity expansion program, which includes capacity increase for ophthalmic products, adding new BFS line, and enhancement of oncology and sterile manufacturing capacity with isolated technology. These investments are expected to expand our participation in complex and specialized product categories and support future growth opportunities. Additional bag manufacturing capacity installed during the year is awaiting USFD inspection, post which we could commercialize products from this line, thus de-bottlenecking the capacity constraint we have for the product supplies. To address the capacity constraint, we are anticipating for some of the product lines, due to the newer CDMO contract executed during the recent past, we are initiating a brownfield capacity expansion Thank you. The facility will initiate a house 3 isolator-based wire manufacturing lines to address incremental volume requirements. The total capex outlay is expected to be approximately Rs. 10,000 million, with commercial operations anticipated to come from FI30 onwards. We have also initiated a greenfield project at Vizac-SCZ, which would further strengthen our ability to support long-term growth across both our commercial and CDMO businesses. We have acquired land for this purpose and working on the project plan. We will see approval from the board for the additional capex towards its expansion in the coming quarter. Research and development remains central to our growth strategy. During the quarter, we spent rupees 1,077 million, that is 6% of our revenues on R&D, and have filed 11 ANDAs, received 10 appeals, and launched 4 products in the U.S. Our R&D efforts continue to focus on complex injectables, differentiated technologies, and specialty products where we can create sustainable competitive advantages and long-term value. We have signed term sheet to in-license another long-acting injectable product from China. This is the second product we signed in the past two quarters. We are actively evaluating multiple in-licensing opportunities of complex products that can further strengthen our future product portfolio. On the human capital front, we have recently strengthened leadership across both Landform and Cenexie. As previously announced, Landform's new CEO, Mr. Deepak Sapra, will join Landform on November 16th, while Mr. Ajay Sahani has joined earlier this week as President of Cenexie Operations and draft the next phase of its transformation and growth. We have also continued to strengthen our management team through key leadership additions and organizational enhancements. We have onboarded multiple key people across R&D and manufacturing in the last one year. In the recent quarter, to execute CDMO business contracts, we have strengthened our team and onboarded a new head of tech transfer, along with two senior people for project management. Also, we now have onboarded head of strategy and innovative medicines in India, and also business development head based out of China, to focus on bringing innovative and specialty products from China to India. To improve investments and M&A capability, we will be onboarding a Chief Investment Officer based out of China to focus on China-based opportunities. Together, these initiatives are expected to improve execution, enhance customer engagement, and support sustainable profitability improvement over the medium term. To summarize, we delivered other quarter and first half of strong growth, driven by increasing momentum in our CDMO business, solid performance from our critical injectables business, successful product launches, and continued operational excellence. We're strengthening our manufacturing network, expanding our technology capabilities, deepening customer relationships, and investing behind multiple long-term growth platforms. The opportunities before us are significant. The increasing global demand for serial injectables combined with growing outsourcing trends and our differentiated capabilities place us planform in a strong position to create sustainable long-term value. We remain highly confident in our strategy, our execution capabilities, and the long-term growth prospects of the company. Thank you for your continued trust and support. I will now hand over the call to Ravi for the financial review. Over to you, Ravi.

Ravi Mitra, CFO

Thank you, Mr. Sadhu. Good evening, everyone, and thank you for joining us today as we review our financial performance for the second quarter and first half of financial year 2027. As the executive chairman highlighted, we delivered another quarter of strong growth, demonstrating the resilience of a business model, the growing contribution of a CDMO business, and the continuous strength of a critical injectable business. Our performance reflects the benefits of strategic investments made over the past several years in manufacturing capabilities, technology platforms, product development, custom relationships, and operational excellence. Importantly, we continue to deliver profitable growth while simultaneously investing for the future through increased R&D spending, capacity expansion initiatives, and differentiated technological capabilities. This balanced approach positions as well to sustain growth and create long-term shareholder value. For the second quarter of FI27, our consolidated revenues stood at Rs. 18,336 million, representing a growth of 23% year-on-year. The growth was driven by strong momentum across our CDMO business and critical engineering business, Supported by recent product launches. Higher volumes from existing products, continued customer demand across geographies like US and Europe, and increasing contribution from strategic manufacturing partnerships. From a business mix perspective, the increasing contribution of the CDMR segment continues to improve the quality and visibility of our revenue base. During the quarter, CDMR revenues grew 31% year-on-year to INR 8,227 million. While revenues from the critical injector business grew 18% year on year to INR 10109 million. The continued expansion of the CDMO business is particularly encouraging, as it not only supports revenue growth, but also enhances customer stickiness, long term visibility, and the overall strategic positioning of the company. Let me also briefly touch upon our revenue performance for the first half of FY27. We have delivered a strong first half performance reflecting continued momentum across our businesses and successful execution of our strategic priorities. For H1FI27, consolidated revenue stood at Rs. 36,339 million, representing growth of 21% year and year, compared to Rs. 29,925 million in the corresponding period last year. The increasing contribution of the CDMO business remains particularly encouraging. During H1A527, CDMO revenues increased 25% year and year to Rs. 17,142 million, contributing approximately 47% of consolidated revenues. The critical injectables division delivered revenues of Rs. 19,197 million, growing 18% year and year. Overall, the first-half performance demonstrates the strength of our diversified business model, increasing contribution from higher-value opportunities, and our ability to deliver sustainable growth while continuing to invest for the future. Our first margin of the quarter was 63%, and the first half it was 64%, same as the corresponding period last year. While we continue to invest in future growth opportunities, our focus on productivity improvements, manufacturing optimization, alternate sourcing, and yield enhancement initiatives continues to support margin resilience. A notable highlight during the quarter was our continued investment in innovation and pipeline expansion. R&D expenditure increased to rupees 1077 million, representing 6% of revenues, compared to 772 million in the previous quarter. For the first half of FI27, cumulative R&D expenditure stood at Rs. 1,849 million, representing 5% of revenue. During the quarter, despite the significant increase in R&D investment, we delivered an EBITDA margin of 26%, demonstrating the strength of the underlying business, the benefit of operating leverage and discipline cost management. Our R&D investment remains focused in complex injectables, such as suspension, peptide, hormones, and ophthalmic solutions, along with other differentiated technology platforms that can support sustainable long-term growth. Reported EBITDA for the quarters stood at 4,804 million, representing EBITDA margin of 26%, compared to approximately 21% in the corresponding quarter of the previous year. Adjusted for non-cash ESOP expense of Rs.226 million, adjusted EBITDA stood at Rs.5030 million, translating into adjusted EBITDA margin of 27%. The substantial improvement in profitability was supported by stronger revenue, increasing CDM of contribution, a favorable business mix, operating leverage benefit, and ongoing efficiency initiative across our manufacturing network. Our ability to expand margin despite significantly higher R&D investment reflects the strength and scalability of our operating model. EBITDA for the first half stood at Rs. 9,734 million with EBITDA margin of 27%. Adjusted EBITDA stood at Rs. 10,132 million, translating into an adjusted EBITDA margin of 28%, compared to adjusted EBITDA of Rs. 7,092 million in H-1 F-526. Other income stood at rupees 690 million during the second quarter and rupees 1302 million during the first half. Primarily comprising interest income earned around cash balance and FX gain. While other income for Q2FI27 increased as compared to previous year, it reduced as compared to Q1FI27 largely due to change in FX gain loss. The effective tax rate for the quarter stood at approximately 33% and that for the first half stood at approximately 30%. Since losses of Senexi is not eligible for current or deferred tax benefits, the higher tax rate was largely attributable to increase in losses incurred at Senexi during the quarter arising from planned annual summer shutdown activities. As Senexi's operating performance improves and profitability returns from Q3 onwards, we expect normalization of the overall effective tax rate going forward. Profit after tax for the quarters stood at Rs 2,908 million, representing growth of 58% year-on-year, despite the impact of significant higher R&D investment and temporary profitability pressure of Senexia rising from the annual shutdown period. Pat margin for the quarters stood at approximately 16%. Profit after tax for H1 FI27 stood at Rs 6,077 million, reflecting robust growth of 52% year-on-year. Compared to Rs 3,992 million in the corresponding period last year, Pat margins stood at 17%. The strong growth in profitability reflects increasing scale, stronger operating leverage, growing contribution from the CDMO business, and disciplined execution across the organization. Our balance sheet continues to remain strong and provides significant flexibility to pursue both organic and inorganic growth opportunities. As of September 30th, 2026, cash-in-cash equivalents to debt Rs. 34,412 million. After adjusting for debt, the company maintained a robust net cash position of approximately Rs. 32,216 million. This strong financial position provides ample flexibility to support ongoing capacity expansion initiatives, invest in differentiated technology platforms, Evaluate strategic business opportunities and pursue discipline capital allocation priorities. Cash flow from operations during the first half of FI27 stood at Rs. 6,027 million, reflecting strong operating performance and disciplined working capital management. Cash generation continued to remain healthy during the period. Working capital days improved to 158 days, driven primarily by inventory optimization initiatives and enhanced inventory management practices across the business. We remain focused on improving working capital efficiency while maintaining high service levels and supply reliability for our customers across global markets. Our capital allocation framework remains disciplined and focused on long-term value creation. As mentioned previously, we continue to execute our capital expenditure program aimed at supporting future growth across commercial products, CDMO partnerships, and differentiator technology platforms. Across India operations, investment continue in wild capacity expansion, ophthalmic capabilities, BFS infrastructure, hyposomal platforms and other specialized manufacturing technologies. We are also supporting future growth through additional bag manufacturing capacity, development of advanced isolator-based capabilities for oncology and ophthalmic products, ground field expansion plan at Pashmeraram and the advancement of plans for a green field project in VISAG-SUZ. These investments are being undertaken considering the demand for capacity and reflect our confidence in the growth outlook across both CDMO business and critical inductability business. At Senexy, planned investment including the new vial and lifelighting block at BLA and the high-speed entry line at Fontaineble remain on track and expected to strengthen the platform's competitiveness and future growth potential. Turning specifically to Synexi during the quarter, Synexi reported revenue of Euro 41 million, increase from previous year 40 million Euro and EBITDA of approximately negative Euro 6 million. Performance largely reflects the impact of planned annual summer shutdown activities undertaking during the quarter. Excluding this temporary effect, the underlying business It just continues to move in the right direction. Capacity additions, cost optimization initiatives, customer engagement effort, and integration activities are progressing well. With a strengthened leadership structure and integrated customer offering, ongoing restructuring initiatives, and multiple business development opportunities under discussion, we remain confident in Senex's trajectory and its long-term strategic value to the group. To conclude, the first half of FI27 reflects sustained momentum across a business. Strong execution of our strategic priorities and continued progress in strengthening the quality of our earnings. We are delivering growth while simultaneously investing in R&D, manufacturing infrastructure, advanced technology platforms, and future capacity creation. The increasing contribution from the CDM business together with the expanding global manufacturing footprint and strong balance sheet further enhances our long-term growth profile. With a net cash position of Rs.32216 million, healthy cash generation, disciplined capital allocation, and multiple growth drivers in place, we remain well positioned to capitalize on future opportunities and deliver sustainable long-term value. With that, I would now request the moderator to open the line for questions. Thank you.

Operator

Thank you, sir. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

Operator

A reminder to all, you may press star and 1 to ask a question.

Operator

We have the first question from the line of Sai Mukherjee from Nomura. Please go ahead.

Sain Mukherjee, Analyst — Nomura

Thank you for taking my question. In the first half, we have seen almost 21% revenue growth with good traction in U.S., Europe, but other markets, and as you mentioned, there was an issue. So, assuming the currency remains at the current levels, what's the full year expectation, and how you see the U.S. revenues, can it sustain, improve from here, and also the rest of the world, if you can ride the full year?

Ravi Mitra, CFO

So, Sain, difficult to predict on the currency part, but as you mentioned earlier, our guidance for the full year growth remains same as 15% on constant currency basis. We have to see how the currency rate will impact that. So, the growth will be overall, as you have seen for this quarter as well, like across Europe and US market, and we expect the R&W market to also improve.

Sain Mukherjee, Analyst — Nomura

So, you expect the U.S. to sort of sustain at least, you know, there is no one-off or bulkiness in the revenues and how do you can improve? Is that what you're looking at for the second half?

Ravi Mitra, CFO

Yeah, so U.S. growth for this quarter has been driven by the new product launches and new acylamour business. So, this should continue. There's no lumpiness.

Sain Mukherjee, Analyst — Nomura

Okay, thank you. And my second question is on CAPEX. So, you mentioned 2,000 crore CAPEX over the next four years. Now, this is, I believe, would be a brownfield facility. You also talked about a greenfield capacity at WISAC, which will also come up over the next four years. So, including that, what would be the total capex, expansion capex, and from a capacity standpoint, how much would that increase from current 1.7 billion unit capacity that you have after all the expansions are done over the next four years?

Srinivas Sadhu, Chairman

So, there are two parts, Sian. The 2,000 crores is the additional lines we are investing into, what we have announced earlier also. Another brownfield project, we just got approval today. So, additional building, another block we're going to build in the facility because at least the liquid vials, we are running out of capacity. We're already in 92% capacity utilization for that, and next year we're in. They're anticipating like close to one or two percent, so we don't have enough capacity for that. To meet the additional demand what we have and also the contracts for the signing, which will commercialize in two years, we need to get this capacity quickly done. So if we, while we announced last quarter that the greenfield project we have initiated, but that will take four years. So, we have to do quickly with this brownfield project so that in two years we have enough capacity. So, additional thousand crores are going to invest into this brownfield project where three additional lines will be installed, which will be useful for us for our contracts that we have signed in the recent past and for what we are discussing with different customers from FI30 once this gets commercialized. The Greenfield project, we still let the project... We have not yet come out with a full capex amount. Probably next quarter we'll announce that, but that would be like a four-year program.

Speaker 11

Okay.

Sain Mukherjee, Analyst — Nomura

So, I mean, if I were to add all of that, so maybe we are talking about around 5,000 crores of capex over the next four years, right, including the greenfield. So, 2,000 plus 1,000, and I mean, if I assume another 2,000, would that be a right assessment?

Srinivas Sadhu, Chairman

Correct. If the greenfield project, if you exclude that, it's about 3,000. Of course, and with this 3,000 crores, we probably will add another 300 or 400 million units of capacity.

Speaker 11

3002. Okay. Okay. Thank you.

Operator

Thank you. We have the next question from the line of Dhavalkut from Jeffries. Please go ahead.

Dhavalkut, Analyst — Jefferies

Hi, thank you for taking my question. So, in the earlier comments we mentioned about hiring a CIO in China. So, what are we trying to sort of, you know, aim with this? Are we trying to acquire a plant over there? Or is it about companies that can do development work for complex product? Or is it just more about in licensing of products? How should we think about this new role?

Srinivas Sadhu, Chairman

This is a combination of what all you mentioned. One is, of course, as you've been saying, you want to acquire something in the U.S. on the biologic side. And this person not only is limited to acquiring assets from China, but it's a global acquisition. But he has the knowledge. He's been working out of China also for many years. So he has know-how of different countries as well. So, he also will be involved in licensing some complex products as well as some technologies from China. So, it's a global role, but based on China because he has knowledge of the China landscape and the technologies there, as well as access to different markets.

Dhavalkut, Analyst — Jefferies

Okay. So, that means we'll have two people in China.

Srinivas Sadhu, Chairman

So, one business development person and one CIO.

Dhavalkut, Analyst — Jefferies

Okay, got it. And there's one more comment when you mentioned that, you know, you want to sort of bring products from China to India. So did you mean that, you know, you want to sort of in-license products for your Indian plants for global markets? Is that the correct interpretation or is it about targeting Indian markets?

Srinivas Sadhu, Chairman

So, primarily, the idea is how to expand our business in India. Today, we don't have much presence here. And we don't want to enter with the generic products. It's very difficult to compete. And so, the idea is to get innovative products to Indian market. It has started. Now, some companies are already doing it. And we have access to Fosun's subsidiaries as well as several other companies. And it's easier and less investment if actually if you just focus on India, especially the big pharma will license products for the larger markets. And the investments are higher compared to Indian market. So you have to build a base in India also and then grow business in India. So that's the idea of in licensing this innovative products.

Dhavalkut, Analyst — Jefferies

Got it. And just one small question. What's the, you know, milestone and profit share for the quarter?

Srinivas Sadhu, Chairman

Overall, milestone is about 95 crores and profit share is about 202 crores, 11% and 5%.

Dhavalkut, Analyst — Jefferies

Okay, thank you. That answers my question.

Operator

Thank you. We have the next question from the line of Dushar Manudhani from Motila Loswar Financial Services. Please go ahead.

Dushar Manudhani, Analyst — Motilal Oswal Financial Services

Thanks for the opportunity. So, first, if you could share some more light on the contracts with respect to microsphere products, what size, over what period of time.

Srinivas Sadhu, Chairman

We have just taken one of the projects and there are two more in line. But as you know, these projects are time-consuming. So initially, a couple of years, it will be more tech transfer revenue we get. But once we get, these are royalty-based contracts which are signed. So the development work will also be done at the manufacturing side. So there are three projects which are signed up. So the revenues will be post-29-30.

Dushar Manudhani, Analyst — Motilal Oswal Financial Services

You got it. And so, secondly, with respect to the growth, say, in USO, while the existing products might face competition, so if you could share some more color in terms of what other products are we anticipating, apart from products like Dalbert Enzyme, which will help sustain the growth or build further growth in US?

Srinivas Sadhu, Chairman

So, some of these products got launched the last couple of quarters. So, these will be annualized. And also, we have just announced we got approval in methyl penicillin suspension also, which is a generic of Medrol from Pfizer. So, that's also a large product. And we have a bunch of CDMO projects which will

Speaker 11

be launched, including GLP-1 projects as well.

Operator

Got it.

Dushar Manudhani, Analyst — Motilal Oswal Financial Services

And lastly, on Synexy, while we had like 11% growth in Eurotowns for FY26, but first of its largely flat. So how should one think about Synexy growth prospects?

Srinivas Sadhu, Chairman

So actually, like I always said, the growth, you know, the focus is on making it more efficient and profitable rather than the top line. There will be minimum growth from revenue perspective. But that is to make it more profitable. And that's the reason, actually, while the rest of the business is growing faster, but we're keeping lesser on the Senexy side on the revenue growth perspectives. But as a consolidated company, we think the 15% is the growth. So the rest of the business will grow at a faster rate compared to Senexy.

Dushar Manudhani, Analyst — Motilal Oswal Financial Services

Sir, but this business is already at a very high gross margin, and still we are at sort of at a lower profitability, which means that in a way we will require higher revenue to get more profitable. Correct me, I am wrong.

Srinivas Sadhu, Chairman

No, so the gross margin is not a real way to look at what are the expenses there if you look at the cost. I'm very high. So that's where the efficiency will come out. So we need to, we are having a plan to reduce people and also, like I said, we've been investing into faster lines so that, you know, it will reflect in the operational efficiencies. So it's a combination of that because there will be a transition time when you put in new lines. There will be some shutdown times, shutdown periods and all that. So the revenue growth may not be that high, but the focus is how to reduce our costs.

Operator

Got it. Thank you.

Operator

Thank you. We have the next question from the line of Neha Manpurya from Bank of America. Please go ahead.

Neha Manpurya, Analyst — Bank of America

Yes, thanks for taking my question. I think you mentioned that, you know, for some of the capacities, you know, for some of the business companies are running high capacities or very high capacity levels. And therefore, the Karsha will be brownfield. Do you think we run the risk of probably, you know, sort of losing out on revenue through the business of this?

Srinivash P. Dange, Head of Investor Relations

Your voice is not clear, Neha.

Neha Manpurya, Analyst — Bank of America

Am I audible now?

Srinivash P. Dange, Head of Investor Relations

It's better.

Neha Manpurya, Analyst — Bank of America

Okay, let me come back. Let me come back. Sure.

Operator

Thank you. We have the next question from the line of Sajal Kapoor from Anti-Fragile Thinking. Please go ahead.

Sajal Kapoor, Analyst — Anti-Fragile Thinking

Yeah, thank you. Congratulations, team, on another strong quarter. The operating cash generation in particular remains very strong. I mean, H1 operating cash flow of 600 crores. Kind of almost matches the profit and net cash is still kind of is today about 3,200 crores for funding the capex that we have planned. So my first question is on that capex itself. How much of the planned growth capex, right? So, 2,000 crores for the Lions, 1,000 crores brownfield, and then the Visec greenfield over four years for 5,000 crores. So, in general, how much of the growth capex is backed by, you know, take or pay minimum volumes or customer co-funding kind of arrangement? Or is it just based on a soft signal of demand from the customer? I'm just trying to get my head around in terms of our conventional capital allocation mindset. I mean, do we put capex ahead of demand or only when there are signals either concrete or soft on the demand side? That's my first question. Thank you.

Srinivas Sadhu, Chairman

So generally, our policy has been if you reach a stage of 20% ideal capacity, then we'll go for additional line. That used to be our normal plan. But because of the recent ups and downs, we kind of slowed down on that. But again, we have seen that the structure is shifting even in the marketplace where the demand is high. And our own decedium of business is growing faster than what we anticipated. And as we speak, you know, we are actually struggling for a couple of... Whether it's ophthalmics, whether it is bags, you know, even now, liquid vials, they're struggling for capacities. So we actually, they're supposed to take shutdowns a couple of lines, but we're not taking because we don't have capacity to fill if we take shutdown. So that's the situation we are in. Now, from a business perspective, we have signed several CDMO contracts, which we need this capacity in, you know, in two years from now, because the transfer time takes that much time to get approvals. So while some may have take-off pay, some may not have take-off pay, but we do have contracts where it's getting transferred from sites which are already commercialized. So we have pretty good view of the volumes and the forecast, what they've given and what they're selling today. Considering all that, we are making these investments. This is in respect to the 2000 pros and 1000 pros. But the greenfield project is more like looking at, you know, the whole business environment. And, you know, we need, because the current plans will be running out of capacities in that, so we need to have additional plan to build that. So, that's why we are still working out a plan and how much we have to invest in initially and then how to expand that. So, not everything will be invested in the new greenfield project at a time, but like what we have done earlier, it will be in a phase manner. So, for the 3,000 crores, I think the contracts are in place or at least the forecast for those contracts are in place.

Sajal Kapoor, Analyst — Anti-Fragile Thinking

So that's helpful, very reassuring. Thank you for that. And second question is on, you know, Senexy is still loss-making. Three years after you bought it. And so before you buy a U.S. biologics business, what did Senexy teach you? And what limits on deal size, if any, will you set going forward for any planned or, you know, potential U.S. biologics acquisition, maybe next year or whenever? Thank you.

Srinivas Sadhu, Chairman

Of course, the size also matters. I mean, how much we want to do it and how much margin company you want to acquire. One thing is probably not be looking at a loss making or a very low EBITDA asset when you have to pay a little higher, but we'll go with a profitable asset. That's one. Second, how many contracts are there which are getting commercialized in year or two? And I think the important thing also is the team which is running it. And overall, we see that it's more easier to run a U.S. plant than a European plant. So the focus is not to buy anything in Europe.

Sajal Kapoor, Analyst — Anti-Fragile Thinking

So on Senexi, to reach the last quarter's guidance of 200 million at a high single-digit margin, H2 naturally means it has to come in around 111 million euros with a pretty high 18-20% kind of margin, well above anything Senexi has delivered recently. So, does that guidance still stand? And if not, what's a more realistic FY27 number as we stand today?

Srinivash P. Dange, Head of Investor Relations

Thank you.

Sajal Kapoor, Analyst — Anti-Fragile Thinking

So, we were talking to Sajal. Sajal, so are your questions answered? Yeah, there was one quick clarification that I wanted on Senexy. So previously we guided for 200 million FI27 number at a high single digit margin. As we stand today, that means H2 will have to come in around 111 million. At a margin of anywhere from 18 to 20% so that we get to that previous guidance of high single digit overall margin for FI27. And does that old guidance that we gave in Q1 still holds or do we need to change that FI27 number overall for Senexy? Thank you.

Ravi Mitra, CFO

Typically, you know, this quarter, lower number is already planned and considered in the estimate. We will, of course, go by the earlier estimate, which is on track, and we will update if there is any change later on. As of now, we are working on the same right answer. Okay.

Sajal Kapoor, Analyst — Anti-Fragile Thinking

Thank you so much. All the very best. That's all.

Operator

Thank you. We have the next question from the line of Abdulkader Puranwala from ICSA Securities. Please go ahead.

Abdul Kade Puranwala, Analyst — ICICI Securities

Yeah, hi. Thank you for the opportunity. So, three questions. First is pertaining to your current quarter and H1. So, what is the constant currency revenue

Speaker 11

growth for the quarter and the first half?

Ravi Mitra, CFO

It's exactly very difficult to quantify how much is the constant currency. I mean, you also know how the extension is moved. But we have not 100% going to export and exactly on the date of invoice, it's not exactly quantifiable that way. But you see the profitability side also, you know, most of the import is also in dollars. So, maintaining the same thing. The same logic also applies. So instead of looking at the exact number, I would say that you can be guided on the basis of how generally the rate has moved. And typically, our 80% is our export.

Abdul Kade Puranwala, Analyst — ICICI Securities

Sure. Understood. And the second question is with regards to your current capacity. So, while, you know, your long-term outlook on contracts and the criticals and growth metrics is quite well understood, but if I have to look at it from a FY28 perspective, I mean, if you could provide some color as to what would be your growth drivers across both the segments, it would be very helpful.

Operator

Sir, did you interrupt? Sir, did you try to speak an odd article?

Speaker 12

Hi, let's give us a moment.

Srinivas Sadhu, Chairman

So the CDMR growth is growing faster than the normal business. If you see first half also, I think the regular business has grown by 18% or something, where the CDMR has grown at a higher rate. And moving forward, even I think that segment will grow faster than the regular business. From growth drivers, of course, generally about new launches will contribute about 6-7%. And the rest is growth of the products, the earlier products, what you're saying, new contracts in the U.S. and other markets. So from capacity perspective, a few lines we are 100% occupied, or I would say, and these new lines which you're adding will help us ease out those capacity issues. And the entire plan of CapEx is based on the current demand as well as what we're going to commercialize in next year or two.

Abdul Kade Puranwala, Analyst — ICICI Securities

Got it. And last one on the R&D spend, which was a little higher in this quarter. Anything specific you would like to call out in this particular quarter?

Srinivas Sadhu, Chairman

No, actually, the more and more complex products we're investing into, and some, like we said, we're also in licensing some products where the technologies, one product will be transferring technology to India. So we're going to invest into that as well. And so, I think overall, there will be a slight increase in the R&D spend over a period of time because of the nature of products we are working on today compared to previously. But still, the margin levels, we will make sure that it's intact as we have today.

Abdul Kade Puranwala, Analyst — ICICI Securities

Understood. Thank you, Nisho. All the best.

Operator

Thank you. We have the next question from the line of Karan Boda from Goldman Sachs. Please go ahead.

Karan Boda, Analyst — Goldman Sachs

Thank you for taking my question. My first question is with respect to the U.S. business. So can you highlight what is the U.S. business growth excluding Cenex C also in the current quarter as well as in the base?

Speaker 11

Okay, base business, U.S. business.

Srinivas Sadhu, Chairman

So, almost 42% growth, just for the U.S. Okay.

Karan Boda, Analyst — Goldman Sachs

So, basically, it's the same as including Cenexie and excluding Cenexie. The growth is very similar.

Srinivas Sadhu, Chairman

Yeah, almost same, yeah. And the first half is 37%.

Karan Boda, Analyst — Goldman Sachs

Okay, got it. And so just trying to understand your slightly basic question, but when we have now in the last two quarters started giving out the split between CDMO and critical injectables, what is exactly that we record in CDMO? So how, which kind of contract is recorded in CDMO versus which kind of, you know, arrangement is recorded in injectables? Can you give some color on that?

Srinivas Sadhu, Chairman

Injective is basically all the products what we develop and either we out-license or we sell on our own in India and a few other markets. So basically product developed by Gland and supplying outside. The CDMO is basically what others, it belongs to other customers and they're transferring to our sites or we do a co-development program with them. So we do some development and also manufacturing here. So that's the segment.

Karan Boda, Analyst — Goldman Sachs

Okay, so basically the ANDS which we own or we kind of have it in our name, that goes in critical injectables, not in GDM, right?

Srinivas Sadhu, Chairman

Correct. Whatever we develop, it comes into our own business, what other companies develop, or we do a co-development. So, sometimes... They do a preliminary work and then we do the full development at our lab and then file from a plant and then do it. So the IP belongs to them many times. That's the CDMO business.

Karan Boda, Analyst — Goldman Sachs

Got it. So then in that case, will our critical injectable margin be higher than CDMO? Can you give some color on what could be the margin split in critical injectables and CDMO? Any rough number is also fine if you're not comfortable sharing the exact numbers.

Srinivas Sadhu, Chairman

I would say CDMO business margin is a little better compared to our own business. Because our own business also includes revenues from India and also ROW, so where the margins are lower, not just the US market. CDMO is mostly to the regulated markets we have. So the margins are better, probably 5% better, 5 to 10% better in CDMO.

Karan Boda, Analyst — Goldman Sachs

Okay, got it. And this last clarification, so Senex C 100% goes into CDMO, right? Correct. And still CDMO margin is higher. Okay, got it. Okay, thank you.

Operator

Thank you. We have the next question from the line of Mollick from 361 Capital. Please go ahead.

Speaker 4

Yeah, hi, sir. Thank you for the opportunity. I had two questions. Firstly, sir, are we expecting any contribution from GLP products in this year, in FI27?

Srinivas Sadhu, Chairman

Some revenue from the tech transfer projects we get. So, we have also signed up one more project recently. So, a lot of exhibit batches and those are happening. So, we will get some milestone income and tech transfer fee. And maybe some launches will happen in the first quarter or the second quarter of next year.

Speaker 4

Okay. Will we be able to quantify how much would that contribution be? Any guidance or drop numbers?

Srinivas Sadhu, Chairman

No, we are not giving guidance for JLF.

Speaker 4

Okay, okay. And also, just on bookkeeping question, our gross margin on a sequential basis has declined, so from 65% to 63.5%. Any reason or any color on understanding that?

Ravi Mitra, CFO

Yeah, this is because of Senexy's lower revenue. Senexy has a higher gross margin.

Speaker 4

Okay, okay, got it.

Srinivas Sadhu, Chairman

And this we cannot compare with the previous quarter because of the shutdown, one month shutdown in the MXT, the revenues are lower. Okay. So we need to compare with that last year, last quarter, last year quarter.

Speaker 4

Got it, got it, got it, sir. Okay, thank you so much.

Operator

Thank you. We have the next follow-up question from the line of Davalkut, from Jeffries. Please go ahead.

Dhavalkut, Analyst — Jefferies

Hi, sir. Can you give some color on the second in-license product from China? Like, what are the commercial timelines? Is it currently patented? And, you know, what's the current market size for the markets that we are targeting?

Speaker 12

Give me a second. It's a $2 billion product, still under patent.

Srinivas Sadhu, Chairman

The timeline will be three years. So the product, this product, unlike the first one, the first product what we signed last quarter is like $800 million product. That will be transferred to India and we're going to manufacture that. But this product will be completely be manufactured in China. But the clinicals and everything will be done by us.

Speaker 11

Okay, so we are just a commercial partner.

Dhavalkut, Analyst — Jefferies

Is that correct to understand? And the API will come from China?

Srinivas Sadhu, Chairman

So we will do the clinicals as well. We will do the clinicals and we will be the commercial partner. The development will be done by them. Formulation development is done by them. But we will do the clinical and then we will take to the market.

Dhavalkut, Analyst — Jefferies

Okay. So, between these two, is there a significant difference in terms of the commercial opportunity for us, one being significantly higher than the other?

Srinivas Sadhu, Chairman

The markets, I mean, there are two completely different categories of products, I mean, different therapeutic areas, but both are long-acting injectors and both are under-pipet.

Dhavalkut, Analyst — Jefferies

Okay. So, the revenue potential for us- will be substantial and comparable between the two products. Is that correct statement to say?

Srinivas Sadhu, Chairman

This is a larger market, what we signed recently compared to the previous, like I said, that's 800 million and this is like a 2 billion dollar product.

Speaker 11

Okay.

Dhavalkut, Analyst — Jefferies

And any timeline for the Saudi contract? Will it, you know, sort of bring back growth in our ROW market?

Srinivas Sadhu, Chairman

Yeah, so we still, you know, we are just hoping every week we think they'll open the tender. So we're pretty confident of several products, almost 13 products we've participated in. Like before, we have won several products in that segment. So, hopefully this quarter should happen.

Speaker 11

Okay.

Dhavalkut, Analyst — Jefferies

Okay. Thank you.

Operator

Thank you very much. Ladies and gentlemen, we will take that as a last question. And with that, we conclude the question and answer session. I now hand the conference over to Mr. Srinivar Stange for the closing comment. Thank you and over to you, sir.

Srinivash P. Dange, Head of Investor Relations

So, thank you everyone for joining us today. We appreciate your participation in the question and answer session during the call. If you have any follow-up questions, please feel free to reach out to us. We are forward to connecting with you again next quarter. Thank you.

Operator

Thank you, members of the management. On behalf of Gland Pharma, we conclude this conference. Thank you, everyone, for joining with us today, and you may now disconnect your lives.