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Aurobindo Pharma Ltd
Earnings Call Analysis
Q1-2025 Analysis
Aurobindo Pharma Ltd
Aurobindo Pharma kicked off the first quarter of FY '25 with impressive performance, showing a year-on-year revenue growth of 10% to INR 7,567 crores. This increase was driven by strategic new product launches, expanding market share, entry into new geographies, and stable pricing across markets.
In the US market, Aurobindo saw its revenue hit USD 426 million, driven by volume gains, stable demand, and new product launches. Notably, the revenue from oral generics in the US grew by 12% year-on-year to USD 277 million, while the injectable and specialty business also saw a 12% increase to USD 102 million.
Europe showed a robust performance with revenues reaching EUR 221 million. The company is optimistic about reaching EUR 880 million in revenue for FY '25, bolstered by major launches planned throughout the year.
EBITDA margin for the quarter stood at 21.4%, supported by stable raw material prices and improved plant utilization. The net profit saw a significant jump of 61% year-on-year to INR 919 crores. The company maintains confidence in achieving an annual EBITDA margin target of 21%-22% for FY '25.
The API business contributed 14% to the total revenue, witnessing a 6% year-on-year growth due to higher volumes and better asset utilization. The formulation business excluding Puerto Rico saw a 15% year-on-year growth to INR 6,475 crores, accounting for 86% of the total revenue.
Aurobindo's gross margins were bolstered by steady raw material costs and reached 59.4%, up from 53.9% the previous year. The company faced nonrecurring expenses including remediation and production delays that impacted EBITDA and PBT by over INR 100 crores. However, these costs are expected to decrease in future quarters.
In Q1, the growth market revenue increased by 49% year-on-year to INR 709 crores. The ARV formulation business also showed a 14% year-on-year increase in revenue to INR 229 crores driven by a pick-up in volume.
Net CapEx for the quarter stood at $74 million. The company is set to continue its growth trajectory with volume gains, new product launches, and optimistic revenue projections from its Pen-G state large-scale commercialization starting October '24. The China plant is expected to be commercialized by Q3 FY '25 with ramp-up from Q4.
Aurobindo is making significant progress in its biosimilars and specialized product lines, with key clinical trials ongoing. Upcoming product launches in dermatology and respiratory segments are expected to further contribute to revenue and profitability.
The company plans its first-ever buyback of INR 750 crores at a price of INR 1,460, with cash outflows projected at INR 935 crores, providing a tax-efficient return to shareholders.
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Welcome to Aurobindo Pharma Q1 FY '25 Earnings Call. [Operator Instructions] 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, Vandit. Good morning, and a warm welcome to our first quarter FY '25 earnings call. I'm Shriniwas Dange from the Investor Relations team. We hope you have received the Q1 FY '25 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 Peptides 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 the 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 Q1 FY '25 earnings call. Before we get into the details of our Q1 performance, I would like to state that we have published our second integrated annual report for FY '24, which include details of our progress so far in terms of our business and financial performance and also touch us upon our strategic pillars and growth levers.
I am also glad to share that we'll be completing first-ever buyback of INR 750 crores in August '24 at a price of INR 1,460. The cash outflow for the company is expected to be around INR 935 crores against the FY dividend of approximately INR 264 crores and will provide tax-efficient return to our shareholders.
Now coming to our Q1 FY '25 performance. I am delighted to state that with our quarterly performance, reflecting in our top year-on-year growth of 10%, amounting to INR 7,567 crores. This growth is seen across markets driven by new product launches, market share gains, expansion into new geographies and stable price.
Our Q4 FY '24 base has been higher due to accounting of Q2 and Q3 FY '23/'24 income of approximately USD 20 million from Indonesian operations. Excluding the above additional revenue, the quarter-on-quarter growth was higher at 2%. U.S. recorded revenues of USD 426 million during the current quarter, marginally impacted by seasonality.
Europe market demonstrated a strong performance and has achieved a revenue of EUR 221 million. and on track to achieve EUR 880 million plus for FY '25. Further, overall growth market performance has been good during the quarter.
Our EBITDA margin remained at 21.4% and is in line with our expectation. EBITDA margins are supported by stable raw material prices, operating leverage due to incremental plant utilization. This was partially offset by higher OpEx from newly commercialized plants, including Pen-G, higher SG&A expenses on account of few nonrecurring expenses including remediation and associated production delays that effectively reduced the EBITDA and PBT by more than INR 100 crores. This is likely to come down significantly further in the future quarters. This, coupled with the Pen-G ramp-up is expected to further support the EBITDA margins in the upcoming quarters.
At a full year level, we are confident of achieving our overall internal EBITDA margin target of around 21% to 22%, as mentioned during the last earnings call.
Our net profit for the quarter increased by 61% year-on-year to INR 919 crores.
Now let me take you through the business-wise highlights for the quarter. In terms of the business breakdown, Formulation business, excluding Puerto Rico in Q1 FY '25, witnessed a growth of 15% year-on-year to INR 6,475 crores and contributed around 86% of the total revenue. The revenues are mainly supported by growth across markets of the U.S., Europe and growth markets.
For the quarter, the API business contributed around 14% and revenue increased by 6% year-on-year to INR 1,092 crores. The growth in the API business is mainly driven by higher volumes on account of improved asset utilization.
During the quarter, U.S. Formulation grew by 12% year-on-year and recorded a revenue of $426 million. The growth was mainly driven by volume gains, stable demand and new product launches, while on an overall basis, price erosion remain neutral due to the off-season Q-on-Q revenues dropped slightly.
During the quarter, we filed 8 ANDAs received final support for 10 ANDAs and launched 10 products. Few of our key approvals in the recent quarters, including [indiscernible] Isotretinoin and Estradiol Inserts, et cetera, will be reflected in the coming quarters. Revenue from the oral generics in U.S.A. increased by 12% year-on-year to USD 277 million, driven by new launches.
Revenue from the injectable and specialty business in the U.S. increased by 12% year-on-year to USD 102 million. The total injectable specialty sales globally increased by 16% year-on-year and stood at $141 million.
We have a total of 224 specialty and injectable ANDA filings as on 30th June. And out of which, 170 are final approval and the remaining 54 are awaiting final approval. The company as on 30th June has 838 ANDAs filed with the U.S. FDA on a cumulative basis. Out of which, 668 have final approval and 26 have tentative approval. 144 ANDAs are under review.
For the quarter, European formulation clocked a revenue of INR 1,982 crores, an increase of 8% year-on-year. In constant currency terms, European revenue was EUR 221 million against EUR 205 million of last year Q1. For the quarter, growth market revenue increased by 49% year-on-year to INR 709 crores. In U.S. dollar terms, the revenue grew at USD 85 million in Q1 FY '25. The increase was mainly driven by sales across markets and new geographies.
For the quarter, ARV formulation business revenue increased by 14% year-on-year to INR 229 crores or USD 27 million. This was supported by a pickup in volume, partially offset by price erosion to some extent.
Now going to other highlights. The raw material costs continue to be at the benign levels and are in line with the previous quarter, supporting our gross margins, which stood at 59.4% against 53.9% of the previous year. In absolute terms, gross contribution was INR 4,494 crores. R&D expenditure for the quarter stood at INR 339 crores, which is 4.5% of the revenue. Net CapEx for the quarter is around $74 million.
The average USD-INR exchange rate is INR 83.41 against INR 83.04 in Q4. The average finance cost is around 6.5%. The business has a net cash inflow of $89 million during the quarter. As a result of the net cash position, including investments at the end of June 2024, improved significantly to $101 million. The gross debt stood at $833 million.
We expect to continue our growth trajectory backed by volume gains, new product launches and stable pricing. We are on track with respect to Pen-G state large-scale commercialization and are hopeful to ramp up significantly from October '24.
With the expected volume pickup in the U.S. markets and ramping up of newly commercialized plant, benefits are expected to accrue to the top and bottom line in the coming quarters. We expect the current pricing scenario in the U.S. market to continue.
European growth markets are expected to continue the growth momentum. We are confident of achieving our internal EBITDA target margin of 21%, 22% for the year FY '25.
Our China plant is expected to be commercialized from Q3 FY '25 and the ramp-up is expected from Q4 FY '25. With our focus on strategic investments in R&D, we continue to develop strong product pipeline. Our biosimilars and complex products are progressing, the clinical trials are advancing. Dr. Satakarni, our CEO, will elaborate on that. This is all from me.
Now our business leaders will give more clarity on any specific aspects in our Q&A session. We are happy to take your questions. Thank you.
[Operator Instructions] The first question is from Kunal Dhamesha.
Congratulations on good set of numbers. One for Subbu, sir. On the EBITDA margin guidance of 21% to 22%, since adjusted for some of the one-offs that you highlighted this quarter, we would be at roughly 22.7%, and we expect -- we also said that this is kind of seasonally slightly muted quarter from the U.S. perspective. Also, we have baked in all the Pen-G related commercialization expense. Shouldn't the run rate from here on should improve? And is there any possibility of raising the EBITDA margin guidance at this point?
Kunal, you're absolutely right. But if you recall it in the last earnings call, I said very clearly, we will revisit the EBITDA guidance in the earnings call of November, that is the second quarter call, we will be looking into that and then reply accordingly.
Sir. And in terms of Pen-G plant cost, we have baked in for the full 3 months in this quarter?
Yes. I think the 3 months, we didn't have much sales at all because of the various reasons in the Pen-G plant because the equipments are with ready for the mechanical integration and we have synchronized the power and boiler, we lined up all the utilities together, and we encountered teething problem in the last quarter when we were trying to scale it up mainly due to the different operating environment compared to some of the foreign countries. So we are expected to do around approximately around 20 batches this month, followed by another 30 batches in the next month. If this too goes well, I think we will more or less able to ramp up in a significant manner starting October.
Sure, sir. But my question was more on the operating expenses side. Is it already baked into our P&L?
Yes, it has been already....no, it had everything got into the P&L.
Sure. And depreciation of INR 400 crores plus also reflects.
That includes all the plant depreciation, everything.
Sure, sir. And one for Satakarni, sir, if you can provide any incremental updates on our biologic/biosimilar business over quarter 4, it would help.
So with our biosimilars initiative, we are making the intended and steady progress with our clinical trials as well as our review of our filings. Our pipeline now extends up to 2032, and I'm reasonably convinced about the progress we are making.
With the first wave of biosimilars, I'm pleased to state that we have achieved an important milestone in May of completing recruitment of all patients as part of our Denosumab trial in European sites. The clinical study closure will be in June next year, and we will be on track to filing this product with both European Medicines Agency and the FDA in the second quarter of the next year.
Now as you guys know, Denosumab is my first foray into immunology segment. Likewise, an important product of ours is the biosimilar to Omalizumab, which I have been continuously updating in these earnings calls. The product fits well into our dermatology portfolio with some use in chronic spontaneous urticaria. Also with the treatment for accidental food allergies now approved for this product in the U.S. We are confident of the broader scope of treatment that Omalizumab can offer across respiratory asthma, accidental food allergies and chronic spontaneous urticaria. We have completed a successful Phase I study in Australia in healthy volunteers for this product. This I have updated about. The product is now being studied in a large Phase III clinical trial, comprising of more than 600 chronic urticaria subjects in Europe.
Separately, a small study also is being conducted in respiratory asthma patients in India. So the Indian clinical study to give you guidance will be completed by the end of this year, allowing the product to be filed in India and in emerging markets by Q3, Q4.
The large European study will be completed by the mid-next year, and we hope to file the product in Q3 next fiscal with EMA and the FDA. So with both these immunology assets, which is a departure from the oncology assets that we are already in, we are hoping to file both these products with EMA and FDA next year.
Then as you know, there are 2 more products of ours in Phase III clinical studies, and they are progressing okay. The pace of recruitment could have been better with our ophthalmic product, but that's the nature of the ophthalmic trials, it's going pretty slow, but I'm confident of completing the trial for ophthalmic product in '26, but the oncology product, we have completed about 80% of the recruitment, and I hope to complete the recruitment in Europe by the end of this year for this product and also probably we [indiscernible] filing in next year.
Now with respect to our current product filings that are with EMA, they are going through the review process. I expect us to be able to meet the requirements within the clock stop period we are in right now. And hopefully, in 2 quarters' time, we will be able to see these approvals starting to trickle in for these 3 products, one after the other providing there are no regulatory uncertainties.
Our Trastuzumab U.S. filing that I told in the last quarter in the earnings call that we'll be filing this quarter, slightly got delayed by a month. We are still on track to filing it, and I hope to file it in the next 4 to 8 weeks with FDA. I have completed a Type 4 meeting with the FDA. So the decks are now fully cleared from the U.S. FDA based on the Type 4 meeting to file Trastuzumab with the U.S. FDA.
So in all, I think we are progressing well. Our Trastuzumab biosimilar, which is another immunology asset, which is catering only to India and emerging markets, they have completed a Phase III clinical trial in India, and I hope to file this product in the next 3 to 4 months' time, but this is India and emerging market product only.
So in a nutshell, we are reasonably convinced about how our biosimilars business is shaping up. And I think our products will start to reach the intended markets next year onwards.
Sure, sir. And I don't know, if you can quickly also update on the Biologics business, May I know where are we in the process of putting the 30,000 liter capacity, et cetera?
As you know in the last earnings call, I have talked about us being optimistic about closing the deal with MSD Singapore entity. And after 3 days of the earnings call, we have signed on the dotted line. Now we have entered into a definitive agreement with MSD, and we have 1 product schedule as well with them. The definitive agreement means that the civil work of the facility have now gathered pace. And I hope to complete the project by 2026, which allows the engineering batches to be or water runs to be conducted. From 2027 onwards, I expect the stockpiling process to begin for this product and the revenues to trickle in. So the facility is progressing well, and I'm basically confident of executing the project on time in 2026 for the engineering batches to be taken within the facility. So I don't see any showstoppers there, the thing is progressing well Kunal if that answers your question.
Yes sir. Good luck.
Thank You.
[Operator Instructions] The next question is from Amey Chalke.
Congrats to the management on good set of covers. First question I have, is it possible for management to guide how the Revlimid sales have moved from quarter 4 to quarter 1?
We are not specifically talking about Revlimid as a separate sales segment but our run rate continues to be in a similar way when we launched the product, and we expect to continue in a similar way.
Sure. I don't want a quantification, but qualitatively, is it possible to guide or...
Qualitatively, at this point of time, yes, the pricing remains constant. We don't see any decline. And we are trying to -- as best as possible to schedule it in such a way that like every quarter, we have a decent set of numbers. Except for the 1 or 2 quarters, we expect the similar run rate to continue.
Sure. And should we assume that this year, we should book higher sales compared to last year? Or it should be similar?
It will be like 10%, 15% here and there, but it will be similar.
Got it. Second question I have is on the Europe and China revenue potential considering both China plant and Vizag plant are being operational in FY '25. So if you can give us some outlook on both the geographies.
You want China plant? Hello?
Vizag. I think you are talking about Eugia Vizag plant.
Yes, that Eugia Vizag plant.
Let me just talk about Eugia Vizag, then probably Subbu, you can take care of China. Eugia Vizag plant, it is up and running. We started capitalizing the plant last quarter itself, and our European audit has done, and we will be hopefully starting filings from next quarter because we are waiting for the GMP certificate to come from European authorities. Once we receive the GMP certificate, we will start filing products for the Europe. And our U.S. filings are also on track. And hopefully, like we should do around 3 to 4 filings this year. So I expect revenues to start from FY '26 onwards.
Yes. So in terms of the China, we are planning to start a small volume in the month of November, December, and we expect it to ramp it up in the period between January to March quarter of next year. And the full fledged volumes will start going only in the next fiscal year. So in fact, because of this, also, we are trying to do some filings for China as well as for U.S. also, we are trying to do that. So all this will take the China [indiscernible] China revenue potential up in the coming years. This year, we'll see only a small little volume and value.
So if I may add Subbu -- something to what you said. In China, we have also shipped the first commercial product for BFS through our JV partner. So we -- as you know, we have a JV there. So that is something I just wanted to add.
Thank you. The next question is from Neha Manpuria.
My first question is on the U.S. business. I thought we were supposed to see improvement in the U.S. business with the resumption of the facility in the quarter. Could you give us some color on what's happening to that? Should we expect the improvement in the injectable business to be a little more slower versus our initial expectation? And just an extent to that question, we've seen another facility get an OAI for the injectable business. How are you thinking about compliance for the injectable business, given that's a key for our growth momentum in that, in new year?
Thanks, Neha. Yes, you're right. In fact, we thought last year, Q4, we have taken the hit. But because we wanted to be robust enough in terms of our remediation action, so it continued in Q1 as well. So our overall manufacturing was not to the fullest extent what it used to be. So Q4 and Q1, 2 quarters, I have taken the hit in terms of the remediation actions for the Eugia 3 plant. So I'm cautiously optimistic that from next -- this quarter onwards, that is Q2 of FY '25 onwards, our regular injectable business should move up. I'm quite confident of that.
Coming to the second plant, which is our Bhiwadi plant near Delhi which got to add, we are working with FDA. And I'm confident that, that can be resolved. That's a lesser evil than the Eugia 3 and we feel like whatever perceived issues what FDA has in next 1, 2 months, we should be in a position to clear that. So I'm -- as I said, like, I'm cautiously optimistic at this point of time of resolving the FDA-related issues. At the same time, the sales momentum going up from Q2 onwards.
And does that make us confident to be able to gain the lost market share for these injectable products because I can see that we have lost market share in some of the products in the injectable side?
Yes, I think at this point of time, what, the way I see it is I don't think we have lost too much of market share on any of the molecules. It is mainly the supply constraints that we created on ourselves. And that is what has taken a bit of a beating in terms of Q4 and Q1. That's why once we start ramping up and which is -- we are already on the way, I'm sure like we will gain the sales, we haven't lost too much of market share in any of the molecules.
Got it. And my second question is on Europe. A particularly strong quarter. I know Subbu sir mentioned in his opening remarks that this will be north of EUR 880 million for the full year. Could you give us some color, the reason for the step-up in the quarter and why we believe this will be sustainable going forward?
Murali?
Yes. Good morning, Neha, and good morning, everyone. Murali here to take this question. Yes, Europe has been a contributor, silent contributor to the global revenue of Aurobindo in the region of 25%. And of course, we are having certain plans for new launches, and if you take the Q1 performance on a straight line basis alone, we'll be touching EUR 880 million but also, we have a couple of major launches coming up during the year. So we are quite confident and bullish that we'll be able to go north towards of EUR 850 million -- towards EUR 880 million, EUR 900 million.
The next question is from Damayanti Kerai.
My first question is on remediation-related costs. So in your opening remarks, you mentioned there were some additional costs which you incurred in first quarter due to this remediation charge, et cetera. So can you quantify that? And how much of that could be seen in this current quarter, second quarter also?
Damayanti, we have in Q1, we have spent around $9 million in the remediation cost of Eugia 3 and we expect the Q2 to be only a very fraction of that $9 million. I think hopefully like it will be around $2 million, and we have completed all the remediation, and we don't expect anything more than what we have already spent. So like Q1, yes, it is $9 million plus, and Q2 would be around $2 million plus. That's what is our expectation.
Okay. So majority done and now maybe a few related to Bhiwadi plant which you might...
Bhiwadi like we have -- we don't need any remediation there. It is not only a clarification. So like it is going to be more about clarifications of this, absolutely, there's no remediation in Bhiwadi. It is only Eugia 3, where the remediation was required, and we have -- to our best of our effort, we have done that particular piece, and that's over.
Okay. And you just mentioned 2Q onwards, you expect the generic injectables sales to move up and then maybe you'll back to the pre-disruption stages?
That's right, Damayanti.
And you maintain your guidance for global specialty, like Eugia sales, which you had given some time back.
Yes. In fact, for this year, I've already guided that we will do around $600 million plus. I think we still are optimistic about touching the $600 million.
Okay. And my second question is on your Indonesia operation. So you mentioned $20 million sales -- sort of sales you have booked. So what kind of ramp-up you see in that market? Are you optimistic about ramping up this significantly?
No. Damayanti, what I was mentioning here is in the Q4, we have accounted the Q1 and Q2 sales because Q3 sales because we did the closing sometime by December 20th or something. So the entire thing at the net economic benefit has flown into the quarter 4. That is the reason why it has come there. Otherwise, we have been traditionally doing around $8 million per quarter, and we will continue to do that at least for the year.
We are also thinking how to increase our overall sales and ramp it up because this is the existing business. So now the challenge is how to increase it, how to ramp it up to the next level, which we are working on.
The next question is from Shyam Srinivasan.
Just the first one, again, on the European business. You talked about EUR 850 million for the full year kind of run rate. So I just want to understand how is the underlying profitability of this business now tracking? Have we moved past that double-digit into mid-teens in terms of the margin profile?
I think, Shyam, in terms of the Europe business, I think they have been doing it extremely well in the last 2, 3 quarters. They have been gradually increasing their overall revenue, overall margins. And I think the margins have already moved to nearly mid-teens level. And with the way Murali has communicated, and this is expected to be sustained, if not improved.
Well said Subbu. I agree with you. Yes.
Murali, just in terms of the integration, where we have tried to move to some of our local plants, how far are we on the journey? And how much more can be done incrementally for us integration for the European business?
When you talk of local plant in Europe, we have only the plant Generis Portugal. But if you're referring to the expanded facilities in India, the unit has been has undergone expansion and which is clearly helping us in creating the market. And despite Q1 being months, which is still impacted by Red Sea issues, the production and dispatches from India has really helped us in time-to-market being achieved. So we are doing fine. And when China plant starts feeding us, all the more we will be able to supply clearly to the market better.
That's helpful. Just quickly on the second question, if I were to look at the Pen-G plant has all the CapEx now done. Subbu sir in terms of what CapEx we had to do, and in terms of the ramp-up for this particular business, you talked about cost being there? When are the likelihood of the revenue starting to kick in for this plant?
Letting into CapEx, Srinivasan. We have expected -- we have more or less incurred around 95% of the CapEx. Any 5% is depending upon what is the requirement, while we are ramping up what are all the new requirements coming, that is what we will do. So more or less the CapEx is stable.
The second question is we didn't have any revenue flown -- any significant revenue flown last quarter. This quarter, we are planning to do good set of batches as a process of ramping up and which is expected to give some revenue during this quarter. But next quarter onwards -- one, these 2 months are very critical, August, September. Once we achieve that next quarter, we'll be going towards 80% of the ramp-up. We are working towards that. So we will be able to tell better -- in a better. We'll be able to give better clarity during the second quarter earnings call.
But I just want to add, Shyam, we have taken some good number of operating expenses because we didn't have the sales during the quarter. And once the ramp-up, et cetera, comes, and not only it helps in overall growth of the company, increasing the EBITDA margin, the existing operation expenses cost, which we have incurred during the period of stabilization will not be there.
The next question is from Bino.
A couple of questions on U.S. products. There was this product generic Emflaza.
We can't hear you, Bino.
Bino, your voice is little less.
Is this better?
No, still the same. It's very low.
Hello. Can you hear me now?
A little better. Subbu sir, can we...
Yes. Go ahead and ask the question.
First question regarding this product, generic Emflaza, which we have launched in the U.S. a few months back, how is it doing? Are we only the player in the markets still?
That is Deflazacort.
Yes, Deflazacort -- yes we have launched this product. At this point, I think we are the only player. That is for the tablets.
Okay. And do you expect that situation to continue for some time?
We can't predict that. But, we have strengthened this product. So we think that we continue to do well.
Okay. Second, there's lifitegrast ophthalmic solution for which you have an approval already. Is that the product we can expect in the next 12 to 18 months? Or is it far away?
No, I couldn't hear what you're saying.
Actually, like it's quite far away because we have already. Bino, this lifitegrast is not going to be anytime soon. We have a final approval, but we also have a settlement with the innovator. Based on that, I can tell you that it is not a 12 to18 months period product.
Understood. And finally, on Mirabegron where there is some litigation going on, some people have launched, do you have plans to launch near term?
No. Bino you have raised this question at least twice in the past, and we responded to you. We have a settlement in place. So whatever the 2 companies which have launched have branched, I understand at risk. There's a case that's ongoing and the hearing is expected. The final hearing expected sometime in October or end of this year. We'll have to watch. But all that I want to tell you is that we haven't a settlement -- based on the settlement, we cannot launch now.
Got it. One final question on MSD if I can push it. The deal, would it be for manufacturing of products also for the U.S. and European markets or would be more for the emerging markets?
Bino, right now, the markets are still under discussion. But it will be -- a majority of the markets with probably Europe also coming in. But owing to the confidentiality nature of the discussions that are unfolding between my team and the MSD. I would not be able to provide any more update on this now. But as and when things get more clearer, I can provide you an update.
The next question is from Jigar Valia.
My first question is now with this unit 3 classification also kind of getting out of the way things getting resolved. You or the Board probably planning to go back to the proposed spin-off or IPO listing for Eugia.
So Mr. Jigar, we have last year, I think if I'm right, in the month of August, the Board has decided to evaluate to explore various options. And we put it on hold subsequently because the inspection for the Eugia business have started all over the -- all the units have started -- got the inspector. So now that the inspections are over, we can revisit it. And some of the bankers are also approaching it. So we have to decide it. But as an on your firm decision taken and we are going to implement, we will certainly inform the market as per the compliance.
So one question is on the margin. You mentioned about INR 100 crores one-off this quarter, which gradually will reduce with the operating scale and the business ramp-up. But, is it right that -- but as the business scales up, it will take, I -- mean it will take its time to come to the company-level margin. So overall, we maintain at 21%, 22%, while in absolute terms it will definitely ramp up.
Mr. Jigar, my colleague, Mr. Yugandhar has clearly articulated that. We had a ramping up remediation costs of around $9 million plus, which is expected to come down to $2 million this quarter. That itself is clearly shows that we are going to cut it down during the quarter.
Absolutely. So the absolute EBITDA is -- will be more reflective and as the size...
More reflective. Yes, more reflective. At least this OpEx will not be there.
Understood. Sir, the last question is with this Board change and now the new Chairman, et cetera, is there anything different on the Board meetings or other things.
No. No, we have been conducting the Board meeting with the highest standards always. And with the new Board Chairman comes, he is bringing his own set of ideas and things which we are implementing, and we have also strengthened the Board by having one more executive -- I mean, one more on -- I mean, one more independent Director by named Dr. Deepali Pant and also Dr. Satakarni also joined the Board to strengthen on the R&D side and science side. So Board is now really a lot of new things are happening in the Board meetings.
The next question is from [ Ankush Mahajan. ]
Sir, my question is related to the injectables. If I just taking run rate of the G Revlimid than the other business in the injectables has show -- either these plants are showing some declining the reason that you have explained also. I just try to understand what was -- how is the price erosion in the base run? How is the price erosion in the injectables if I deducted G Revlimid part?
The price erosion is low single digits.
The next question is from Kunal Dhamesha.
Subbu sir on the effective tax rate this quarter, we have like around 30%. If you can provide the outlook for FY '25 and what is driving this higher ETR for other?
So what -- see some of the units like biosimilar company Lyfius which is the Penicillin G company, where we are incurring the OpEx loss, we are not taking the deferred tax credit, right? Once we started tax credit, obviously it will fall down. And in terms of the year as a whole with the Lyfius plant expected to do well by fourth -- third and fourth quarter et cetera. Probably we may come to more than a breakeven scenario by which the tax rate and the tax credits will be taken. The tax rates will come down. Overall, I think we will be somewhere around 27%, 28% is what my feeling at this particular point of time.
Sure, sir. And, one for Yugandhar sir on Revlimid. We said that generic Revlimid contribution this year would be 10% to 15% higher than last year. But this time around, we'll also have a full year impact of Revlimid, right, versus the half year impact for last year. So shouldn't the contribution be higher?
Frankly, like I never wanted to say anything about Revlimid because we never said like we never announced what is the Revlimid sales, whether it is last year or this year. I already just generally guided. And it is also, like, as you know, not like it is about settlement with peers. Some can have an overlapping effect on some other periods. So I think it is better to leave it there.
[Operator Instructions]
The next question is from Tarang Agrawal.
Okay. A couple of questions on Eugia and then on the U.S. business. Over the last 2 years, how is your market share moved in the U.S. injectables business? Because there's been quite a lot of movement in the marketplace specifically. So just wanted to get a pulse on how the market share has moved, one?
And second, what's the dollar impact of revenue, say, in Q1 because of the remediation activity happening in Eugia 3?
Yes. In injectable business, mainly the specialty portion of the U.S., it is steady -- I will not say like we had too much of growth because of, in fact, last year, I was expecting that we will move very well, but Eugia 3 hit us in Q4 because of that Q4 and the impact continued in Q1. So in general, I can say is it is stable. Obviously, we could not grow too much because of Eugia 3 impact. And what's your second question, Tarang?
Dollar impact revenue because of the Eugia 3.
Revenue impact, I told you like last quarter, that is Q4 of FY '24, we had a $20 million revenue impact. And Q1, we had around similar $15 million to $20 million impact, okay? And we hope that's the end of it.
Okay. That's quite helpful. Sir, now in the U.S., Swami, sir, is it possible for the [ OS 3 ] business to breach $300 million quarterly run rate anytime soon, purely from a product perspective in terms of market approvals and from a capacity perspective on the patent?
Yes Tarang. I'll not give a specific number, but I can generally talk about it. So the U.S. business, as you have seen, has been doing well. We have made major strides in building on our past success. And our business is right now demonstrating very strong momentum. And we found that our volume-based strategy with global capacity and the talent pool that we have has helped us to grow into this kind of large generic company. So these are the basic factors and that factor remains and it really gets strengthened.
We also have a number of new launches. Last year, we guided that we are going to have a few launches that we would be coming in. This year also, we expect a good amount of launches, somewhat similar to last year. And we are getting products from the JV in China. And we're also expecting commercialization sometime in the near future for the U.S. oral solid. So overall, I feel fairly optimistic and we believe that U.S. oral solids will do well. As far as the number is concerned, we have made a good amount of -- we had a good amount of growth in the recent past. And if this continues, we should be close to that number or achieve that number sometime soon.
Sure. And specifically on the OTC business for this quarter saw some softness, is there -- is it just a quarterly aberration or there's something happening there?
Yes. So OTC business was soft in this Q1. There are a couple of reasons. One is that seasonality, definitely, this was not the season. And we have, despite that, it should have been better that I agree. But we are optimistic. We have some new awards that is going to start sometime this quarter. And I think that will get ramped up sometime during the year. We believe that we will see some progress in the OTC business going forward, at least from Q2. That is our expectation. And we also have the OTC branded business. That's given us a separate company. We have recently had restructured in the last 1 year of the leadership team, and we have got a new strategy. We are very optimistic about the future of that business too. Overall, we think we will see better times for OTC going forward.
Okay. And just last two. Any update on Ryzneuta? I mean how is that product shaping up?
Yes. Ryzneuta, unfortunately, there was some problem with the CMO. We were due to launch in the Q2 of this year. The problems are being resolved, and I think there could be a delay and the launch would be probably in the last quarter of the current fiscal at this point of time.
Okay. And the last question on Europe. Given that the business has achieved almost EUR 900 million -- EUR 850 million to EUR 900 million run rate and the margins have moved to mid-teens levels, are there possibly more levers in the business from the point of view of margin expansion? Or just wanted to hear your thoughts there. Or we should expect it to remain at these levels now from your overall?
No, Tarang. Thank you. Yes, obviously, we expect to move upwards of course, on the oral solid businesses, which is predominantly the contributor as of date for the European revenues. We are trying to do our very best. But we also have very clearly explained by Dr. Satakarni in initial elaboration. We are keenly looking at the launch of some of these biosimilars in the upcoming period, and that would contribute to increasing the EBITDA margin substantially.
Similarly, also, we are looking at the Vizag plant of Eugia to start feeding us which will be enabling us to participate better in the tenders, in the process, put up our revenues and margins. So the brighter period is ahead of us. We are keenly looking at it. Thank you.
As this was our last question, I now hand the conference over to management for closing comments.
So thank you all for joining us on the call today. If you have any of your other 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.
On behalf of Aurobindo Pharma, that concludes this conference. Thank you for joining us, and you may now disconnect your line and exit the webinar. Thank you.