Aurobindo Pharma Ltd
NSE:AUROPHARMA
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
989.8
1 568.05
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Aurobindo Pharma Ltd
You don't have any saved screeners yet
Ladies and gentlemen, welcome to Quarter 4 FY '22 Earnings Conference Call of Aurobindo Pharma Limited. [Operator Instructions]
I now hand the conference over to Ms. Deepti Thakur. Thank you, and over to you.
Thank you, Aditya. Good morning, and a warm welcome to our fourth quarter FY '22 earnings call. I'm Deepti Thakur from the Investor Relations team. We hope you have received the quarter 4 FY '22 financials in the press release that we were sent out yesterday. These are also available on our website.
I would like to introduce my senior management team today on the call with us, represented by Mr. P.V. Ram Prasad Reddy, Chairman, Aurobindo Pharma USA; Mr. K. Nithyananda Reddy, Vice Chairman and Managing Director of Aurobindo Pharma Limited; Mr. Santhanam Subramanian, CFO; Mr. Yugandhar Puvvala, CEO of Eugia Pharma Specialties Limited; and Dr. Satakarni Makkapati, CEO, Aurobindo's biosimilars, vaccines and peptide businesses.
We will begin the call with 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 limitation, statements relating to the implementation of the 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 development and results vary materially from our expectations. Aurobindo Pharma undertakes no obligation to publicly revise any forward-looking statements to reflect future events or circumstances.
With that, I would hand over the call to Mr. Santhanam Subramanian for the highlights. Over to you, sir.
Thank you, Deepti. Good morning, and welcome to all of you for joining this earnings call. This year has been very challenging due to various factors, namely COVID, steep crude price increases, global inflation in second half, geopolitical issues, et cetera. Despite these issues, we have delivered a good set of results in this fiscal year. We will now discuss the results for the fourth quarter of fiscal year FY '22, declared by the company. We'll be discussing ex-Natrol numbers throughout the call.
For Q4, the company registered a revenue of INR 5,809 crores, with a decrease of 3.2% quarter-on-quarter. The EBITDA before ForEx and other income declined by 23.6% year-on-year and declined by 4% quarter-on-quarter to INR 974.74 crores. EBITDA margin for the quarter was 16.8%, and for the year, 22%; for FY '22, was at 18.7%. However, EBITDA margin before R&D is 24.2% for the quarter against 23.5% of last quarter. Net profit decreased by 28.1% year-on-year and 4.7% for quarter to INR 576 crores.
In terms of the business breakdown, Formulations business in Q4 FY '22 witnessed a decline of 1.9% quarter-on-quarter to INR 4,896 crores and contributed around 84% of the total revenue. API business contributed around 16% and clocked a revenue of INR 913 crores for the quarter, registering a growth of 15% on a Y-on-Y basis, led by improved demand for some of our key products and decline of 9.6% quarter-on-quarter.
For the quarter, the revenue from the US Formulations decreased by 4.5% year-on-year to INR 2,728 crores and 0.6% quarter-on-quarter. U.S. revenue during the quarter is USD 363 million in absolute terms. We have received final approval for 3 ANDAs and large 4 products in the quarter under revenue. We have filed 14 ANDAs including 3 injectables during the quarter. The total number of filings at the end of March '22 is 727.
Revenue of Aurobindo USA, the company marketing order products has decreased by 5% year-on-year for the quarter. Revenue of AuroMedics, the injectable business, increased by 4% year-on-year to USD 70 million for the quarter. We have a total of 175 injectable ANDA filings as on 31st March '22, out of which 119 have received final approval and the balance 56 are under review or have tentative approval. The company has, on 31st March '22, 727 ANDAs with the U.S. FDA on a cumulative basis, out of which [ 500 ] are final approval and 33 are tentative approvals, including 8 ANDAs which are tentatively approved under PEPFAR and the balance 189 ANDAs are under review. For the quarter, European Formulations revenues clocked INR 1,541 crores, a decline -- a decrease of 0.8% year-on-year growth.
For the quarter, the growth market witnessed a growth of 28% year-on-year to INR 391 crores. For the quarter, ARV business registered a 51.5% growth quarter-on-quarter at INR 236 crores, a degrowth of 52% Y-on-Y on a high base of last year. R&D expenditure is at INR 431 crores during the quarter, which is 7.4% of the revenue. The average raw material cost increased by about 9% during the quarter, and the freight costs are more than 10% on year-end report. The average raw material cost increased by 18% year as a whole and the freight cost by 42%.
Net organic CapEx for the quarter is around USD 65 million. The average ForEx rate is INR 75.09 in Q4 FY '22 and INR 74.82 in Q3 FY '22. The average finance cost is at 0.8% mainly due to availing multiple currency loans. The business generated a free cash flow of USD 38 million during this quarter. The net working capital for the quarter has been reduced by about USD 98 million and USD 126 million for the year, mainly due to reduction in inventory. Inventory alone, we are reduced by USD 200 million for the year. As a result of the strong cash flows generated during the quarter, the net cash position, including investments at the end of March '22 improved to USD 333 million. With this, we'll be funding the PLI 1 project mostly out of internal accruals. Also, we reduced the gross debt significantly USD 313 million from USD 499 million end December '21. We have been reducing the gross debt quarter-on-quarter, and we'll continue to do so.
In a nutshell, despite the hostile global environment and peak R&D expenditure, we were able to maintain our margin and also generated significant cash for future projects. This is all from our end, and we are happy to take your questions now.
[Operator Instructions] First question is from [ Nimish Patel ].
Sir, my question is, what is your guidance for the future? Does it remain intact? I mean -- or is there any change? Or what is basically your guidance for the future?
Subbu?
Yes. As a policy, we don't give any guidance, [ Nimish ]. However, while the detailed questions are being asked, we will try to give -- we'll try to give, I mean, direction as and when it is required.
Next question is from Neha Manpuria.
Sir, my first question is on the gross margins. We've seen quite a bit of improvement quarter-on-quarter despite the fact that some of our lower-margin businesses have done well in this quarter and the overall solid business has sort of deteriorated. So if you could give us some color on the gross margin trends. And is the full impact of the cost inflation that we are seeing factored into this quarter you expect this to moderate going forward?
So, Neha, last quarter itself we have answered this query. When we had 54.3% last year gross margin, it is mainly on account of the business mix skewed towards API in a significant manner, by which around 1.25% is on account of the business mix, basically on API. This quarter, API business clocking around INR 900 crores. So it comes to the -- I mean, normal position by which around 1.25% got released.
The balance around 1% is on account of the product mix as well as the geographic mix between the various continent, that is the main reason. And we have factored in all the cost at whatever we have been buying. I mean we believe these are all the peak, and probably it may continue for a couple of quarters. And this is the position as of date. And we are trying to see how to improve upon it. Anyway, internally as a process, we work on that continuously.
Okay. So basically, from what I understand, the mix has changed back to its normal level, and there has been some geographical mix, which has helped margins?
Absolutely, you're right.
Sir, on the API front, have you been able to pass on the cost increases that we've seen in the last few months to our customers, or API margins have come down over the last year?
In terms of the domestic industry, we are able to pass it on at least some significant portion of it. But for...
For total sale, 55% of the sale is the -- in our Formulations sale transferred to Formulations, 55% is the outside. Whatever the 55% of the outside sale is we are able to do at least 60%, 70% of the price increases we pass on. Still we pay some amount. But the in-house one, everything we absorb through the oral division.
Got it, sir. And sir, on the second question on U.S. There has been some commentary from our peers about portfolio rationalization. We have seen moderation in the oral solid business even though injectable has improved. So if you could, one, give us color on what we are seeing on the oral solid business in terms of price erosion. Has it sort of has been flattish? Has it deteriorated from last quarter? And injectables, how should we look at growth from injectables given we are now getting closer to the pre-COVID levels?
The injectable part, my colleague Yugandhar can explain. I can tell about the overall business and other businesses in the U.S. And we saw the price erosion is continuing and a little bit -- we felt that the Q4 will become -- there won't be much price erosion. But to our surprise, the Q4 price erosion is -- average in the whole year, it is 9% and Q3 suppose around 9.5%, in Q4, it is 11.5%. Another 2% was increase in Q4.
And so the overall impact either price erosion or shelf stock adjustment, together, it is around 11%, 11.5%. And only price erosion is, in Q4, is around 10%. Between Q3 to Q4, around 2%, 2.5% was for the erosion. And we expect this may not stop here. But in a matter it may be in slow pace, it may be next 2 quarters, this situation will continue. That is what we are expecting.
In terms of the injectables, as you can see, like the price erosion continues. It is not that -- it is -- injectable business doesn't have a price erosion. It does have, but like we do have a good portfolio of launches, which is actually like will offset some sort of a price decline. And I do expect the growth momentum of injectable business to continue, mainly the specialty business overall, both oncology, hormonal and the general injectables all put together. We do expect a double-digit growth going forward into the next year.
Also, in the overall business, overall, our volume has increased around 6%, and we know that the price or pricing pressure is continuing. There is no end of for this and maybe another 2 quarters. And we have a good number of products, even though it is a medium-level products, we won't tell it is. We have to file our exclusive products or something. We have third-party products subject to some client approvals also. So we hope in coming quarters, after 1 or 2 quarters, things will stabilize in the volume and the price.
[Operator Instructions] Next question is from Tarang Agrawal.
Four from my side. First, between [indiscernible] intangibles under development, which translates to roughly about INR 4,000 crores, about 40% of company's network seems to be on track to be capitalized. Over what period should we see this getting capitalized? And how is management's revenue visibility on these assets?
Out of the INR 3,000 crores which you are seeing, Tarang, at least INR 1,500 crores is pertaining to both -- I mean, injectable as well as the oral plant and derma plant in U.S. And oral and derma likely to be commissioned by before FY '23 end, and injectable probably may spill over to next year.
And in terms of the other things, it is more of a brownfield -- I mean another big one is Auro Cure. Auro Cure is the Vizag injectable facility, which the installation is more or less complete and the exhibit batches will take place. And probably Yugandhar will explain it a little bit more. And other things are more of brownfield -- I mean, brownfield expansion, small, small expansions, et cetera, which it will get capitalized over the course of time.
So, Yugandhar, would you like talk about Auro Cure?
Yes. Tarang, you want to ask something else?
Yes. So would it be fair to presume that over the next 15 to 18 months, we should see a large proportion of that getting capitalized?
Yes.
Tarang, in terms of the injectable plants, we have 2 new injectable plants, one in Vizag and one in U.S. And we do expect the filing to start in FY '23. And in case, if everything goes well, FY '24 onwards, we will start generating some revenue from Vizag and New Jersey, both. But in worst case, it might spill over to FY '25 first quarter.
Okay. The second question to you, Mr. Puvvala, what's the global generic injectable sales for FY '22 and the split between North America and others? Second, do you still stick to your earlier guidance of about $650 million by FY '24? And if so, can you give us a more calibrated pathway in terms of number of launches that could help us get there over the next 2 years from this business?
Tarang, let me, again, I think I did correct last time as well, and I will continue to correct until the time your questions start changing from injectables to specialty. Yes, it is a specialty business, including oncology oral solids, hormonal oral solids as well as the entire sterile business, that is what it is.
And we -- on a pro forma level, we closed around $438 million in FY '22. And we expect the double-digit growth to continue into FY '23 and '24. And we stick to our guidance of $650 million to $700 million by FY '24 for the specialty business.
Sure. In terms of number of launches that we could see in...
Yes. In fact, this year, in FY '22, we had 11 launches. And in FY '23, I expect 15 to 20 launches. And from a filing and launches perspective, our target is 25 and 20 launches every year. Okay. That is what is going to be the trajectory.
Got it. And, sir, how should we see the CapEx intensity of Aurobindo as a whole going forward? I mean, a reasonable amount of capacity is created capital deployed. How should we see that going forward over the next 2, 3 years?
Tarang, like I'll just take on in terms of the injectable portion of it. I think injectables, most of the CapEx has been spent. And as I said, we have 4 commercial plants. And the 2 plants which are coming up and where already the CapEx has been spent. Other than the normal general capacity enhancements within the plant, I don't expect significant investment in capacity for the specialty business.
Subbu, would you like to take on the other side of the business, please?
Yes. Aurobindo, as a whole, including the specialty injectable business, we expect around 125 million type of CapEx. See, already we have got a commitment of around 400 million, including the PLI project, which is the PenG project. So we expect this to be spent over the period of 2 years, right? So we expect -- other than the PenG product, I don't think we'll be beyond 100 million to 125 million. But however, I like Mr. Ram Prasad Reddy or Mr. Kambam Reddy to...
There is not much CapEx we are not seeing in this and around 250 million -- 230 million to 240 million is the PLI, balance is 120 million. 130 million is the other 1 or 2 API plants. And in the oral formulation side, there is not much CapEx. Maybe in U.S. side, in the Puerto Rico, we may require some CapEx. Otherwise, almost next 2 years other than the already approved CapEx, not yet spend around 375 million or so. And it may be another 120 million in the CapEx side, not more than that.
It includes the PLI also, around 250 million.
Plus the PLI.
Next question is from Mr. Tushar. [Operator Instructions] Next question is from Kunal Randeria.
Sir, just on the U.S. price erosion, you did share some numbers. Sir, would it be possible for you to share some trends on how you are seeing price erosion in orals and injectables?
What is that? Can you repeat?
The price erosion trends, how do they differ between oral solids and injectable products?
I can tell about the oral. My colleague Yugandhar will tell about the injectable. As I told in the last 4 quarters, average is around 9% and last quarter is 11%. But 11% include the shelf stock adjustment and price erosion together between the third quarter to last fourth quarter, around 2%, 2.5% is the price erosion. So such way we expect -- maybe we expect in lower terms in the next few quarters.
And vice versa, the shelf stock also will come along with the price erosion. Already, the price is a lot of -- not much is reduced. Now we are not expecting there is a big, if at all, further price going down. So I don't know how the market will react. Either some people will -- some of us will drop some products or some price increases may happen. Anything can happen afterwards.
It is in the similar trajectory. It is in the high single digits, not much different. But yes, we do have significant launches coming up. So that is what will take care of the future growth. But in terms of the price erosion, it is -- continues to be in the similar range like orals. It is 1% here and there, but it is in the similar levels.
Got it, sir. Sir, just one more. So you are starting to build up a nice cash file now. But given the challenges in developed markets, does it make sense to keep acquiring there? Or are you sort of -- you could say maybe build a bigger cash file for some domestic acquisition in the future?
At present, our -- we are not very much big acquisitions. We want to complete the existing projects. It is because the project completion is not the end. That is the beginning. Again, operationally, it has to become breakeven and profitable. That will take another 2, 3 years. So we have to protect the cash to the pending -- existing approved pending projects as well as the completion of the existing projects as well as the projects completed operationally breakeven and profitable price.
There are almost 6, 7 projects at various stages are there. And like biosimilars, like vaccines and the China plant and where we are filing. Typically, we have a lot of hope. And Puerto Rico plant, like that also. We are not going to start any more new plants. That is what we wish in injectable, 2 plants, those things.
Sure, sir. So then we assume that there will be no big bang acquisition in the future, either in the U.S. or in India?
Not at all. At least in next 2, 3 years, that may not happen.
Next question is from Surya Patra [Operator Instructions]. We will take the next one from Kunal Dhamesha.
So the first one again on the U.S. price erosion. Have we done any withdrawals from the market? And if yes, how many? If no, what are the some of the key metrics that we look at? And how frequently do we look at our product portfolio, whether to do withdrawals or not?
We're very closely monitoring. As of today, we don't have it on any product. And based on the situation over the next 1 or 2 quarters, we will keep you informed if anything is there. We hope that situation may not come because nobody will sell the product under the loss. But we have seen a few examples, less than the cost of production means less than the plant cost. Also, we are not able to cover in few products. So in such a scenario, a drop may happen. But as on today, such scenario is not there.
Sure. And second question, when we now say that our injectable business is basically specialty business. So even the biosimilars part will be included in that specialty business? Is that the way to think about it?
No. Biosimilars is an independent business. Biosimilars and vaccine is an independent business.
The next question is from Surya Patra. [Operator Instructions] Next question is from Vishal Manchanda.
Can you talk about the capacity utilization for your oral solid manufacturing units at a consolidated level?
Yes. No. We -- it's still in U.S. plants. Nothing was started production anyhow. Yes, we have a New Jersey U Block, B Block in the overall plant that is going to start production in the end of this year. And dermatology and MDIs and patches is the plant, which we are starting. We already started filing in a few products, and some more products we are filing before 31st March.
And consequently -- and the Puerto Rico one, we are doing approximately in 2023, and we will start our products. Overall, in the capacity utilization in the major, I can tell oral plants approximately 70% of the -- in the India side, 70% of the capacity we have achieved. Because I don't know the injectable, Yugandhar can tell, my colleague. Otherwise, overall, it is 68% to 70% in the India formulation plants.
So the point is like unless we kind of reach to full capacity utilization, we won't be thinking about dropping products which are unprofitable at -- including overhead. So basically, you would continue to manufacture as long as they cover the fixed cost. And that would keep the prices low, basically.
See, the question of dropping -- there is no connection between the capacity and dropping the products because still we have good amount of capacity. Another 20%, we can -- and we may not fill up at least in the next 1, 2 years in the capacity side because in the afterwards, we are getting our Puerto Rico plant coming into the hand. So we don't think -- once we lost, margins have come down. Then only we will take that extreme step. But we are not expecting that.
Anyhow, we will continue wherever there is a positive contribution. As long as the positive contribution is there, we will continue. But we are losing, then definitely, we will -- we'll keep you informed every quarter. As on today, that situation has not come across. Maybe a few strengths and few SKUs maybe. But in -- but if it is the same way around 11% next year, also 10%, 11% was the price erosion, then definitely will happen, price drop, product drop.
Sir, on R&D, do we -- FY '23, would this be around -- so we are at 7.5% ballpark of sales this quarter. Would we be at the same levels for FY'23?
I think, FY '23 going forward, no, because this quarter is a very big quarter in -- I mean, throughout the Aurobindo's [ tenure ]. I think, going forward, we may not be having this much a percentage. It will be anywhere between -- we expect around 6% type is what we are expecting.
Okay. And any color on the ARV business? So will that bounce back to the FY '21 levels?
No.
At this juncture, we expect the business to be maintained at the same level. We will strive towards the improvement. There's not much -- we will maintain the same level last quarter. The last quarter is there. Here and there, we'll maintain the same level.
Okay. Okay. And on the PenG facility that you are putting up, so is this -- would your customers need to kind of switch the supplier in their DMF files to procure from you? Or they can directly start procuring without any changes in their file.
In the antibiotics, the DMF, the regulatory quantity, very miniscule, not much. Maybe CEP Europe or something, they may change. And we are not much -- initially, we are not going to file the DMF -- U.S. DMF from that plant.
What I mean -- so you won't be looking at the U.S. markets?
No, that is very small. 5% -- or 3% of the capacity of the plant is U.S. market.
Okay. And so the customers who might be procuring from China, they can directly switch to your product without any lag basically? So would this require some regulatory process for someone to change their source...
Very minimal regulatory changes. We are not expecting any big change. There may not be a requirement.
Next question is from Nishid Shah.
Yes. Congratulations on very good set of number when I compare with some of the peers, especially who are operating in the U.S. market. So first of all, congratulations, Mr. Reddy and his team for splendid set of numbers. My first question is, which I have been asking for almost last 2 years, what is the status on the depot injections? Are we now at the stage of filing? Or what is the status there?
Nishid, we are at least 1 year away from filing. We will be doing the exhibits sometime in FY '23 for all the depot products. And depending on bio-studies and other stuff, it will be an FY '24 filing in the best case.
So I want to know the reasons for the delay because this -- actually, I go back to the 2-year transcript also. It was supposed to be done in 1 year's time. So what has led to the delay and why we are every time I'm talking about 1 year or later?
Nishid, if it would have been so simple, everyone would have filed it. Okay. Obviously, it is complex. Nishid, let me just finish. It is complex. When we take batches, we do see some issues, and we redo the batches. And so it is a journey of continuous improvement in depot products. It's not a simple straightforward development and execution.
We might have felt that like, yes, we have -- more grounded and we are ready to take the batches and we have taken batches. But when we see -- find some issues, we do redo the batches. So like now we feel more than 90% confident that whatever we'll be taking in FY '23 will give us a good set of results, and that is when we will start the bio-studies for these products.
And this is what is our best guesstimate at this point of time, Nishid. Again, I might have a different answer 6 months down the line or 12 months down the line, okay. But these are complex products.
So again, why I'm again raising this issue is that some of the large peers in India have failed to do this product. That is why it is important to elaborate and explain. If you are able to do it, then it is a very big milestone. So that is why I am again asking that are we now closer and how confident we are on doing this?
See, I think we are closer than before and we have more than 80% confidence at this point of time. But in these complex injectables, unless you fully succeed, the success cannot be announced. The reason is they are complex.
Okay. I appreciate this. Now the second question is to the -- to Mr. Reddy on the -- we have heard it in the past, and we have seen several reports that we are trying to restructure the injectable business and bring in partners in this business. What is the status on that? If you can elaborate to the extent you can elaborate on this subject?
So at this point, my colleague, Mr. Subbu Subramanian, he will inform because he had a better response on this. Subbu, can you explain?
Yes. So Nishid, we had [ COID ] made, and then evaluated options and then appointed advisers. So we been aiding them through the restructuring process. If and when we reach restructuring first stage that deserves to be announced, we will certainly do that. See, the evaluation process in today's context is very volatile environment and they are taking into consideration all the material aspects and also taking cognizance of the current environment. So it is being in the process initiated, and the business is not looking -- I mean the business irrespective of the restructuring are not the business is committed to achieve that, and that's what you can get us just a few minutes back explained actually.
Next question is from Nitin Agarwal.
Sir, my question is on the margins. So if your margins have come off a fair bit in this quarter, so how should we look at a margin improvement from these levels as we go through the next couple of years? I mean, what are the levers for margin improvement for us? And can we go back to the earlier levels that we've done in FY 2021?
We cannot tell at least in next 2 quarters where we are, and we want at least another 2 quarters to answer your question because margins are still in some areas, it is falling. Some areas, it is stable. And very few areas, it is increasing. And we are waiting and see how the things will change in the next 1 or 2 quarters. So we can tell a better answer after 2 quarters, after a quarter or 2.
And sir, on that point, in the past, you were expecting that the inventory liquidation process will get over by Q3. Obviously, this has not happened and pricing erosion will sort of reverse. But what has led to this -- has 2 things. One is, is the inventory liquidation still going on? And if it is, what else is driving the price drops then?
As far as the oral products, we are hearing from the distributors and all that. Their inventory also come to the normal level. And also, the U.S. companies, their inventory also came normal level because it is already 1 year, 1.5 years. So either it will become normal level or it is expired and restructured.
So where the issue is there, the huge stocks of API and intermediates in some products. So those things has to become normal. In some areas, because otherwise, that will impact in the -- especially those products, the basic API intermediates. Other than that, majority of the stock issue is past. That's what I feel. And we are hearing the same thing from wholesalers also.
Okay, sir. And sir, lastly, on -- can you probably just help us understand what is happening in the vaccine business? And what's the outlook for the vaccine business, especially the pneumococcal vaccine, how should you look at that?
[ So, Kambam ]?
Yes. So Nitin, in terms of our vaccine business and the bacterial vaccine that you have spoken about, we have concluded a Phase III 3 plus 0 trial in India. And we are in the process of analyzing the clinical samples. We will be able to provide more commentary on this program once we complete the clinical analysis and initiate the regulatory process in India. In all likelihood, the regulatory process in India will be initiated in Q3, Q4 of this year.
In terms of the other vaccines, there are at least stage of development. With one viral vaccine, potentially, I would not say animal study, but potentially moving forward to a proof-of-concept stage, preclinical, and then moving to a possible Phase I in the Q4 of this fiscal year.
Next question is from Kaushik Poddar.
You just announced your foray into the domestic formulation, I mean what is the status of that? And what are the future plans for the next 3 to 5 years?
No. The domestic one now only we are completing the transaction. The integration is just in the last 1 or 2 days only. The -- what, Subbu, the transaction has come?
The transaction is closer, and we have been integrating all the people, et cetera.
We are integrating this last week only. We have closure and integrating. But first, let us stabilize the existing and study the whole thing, then we can take some decision what will be the next thing.
Next question is from Tushar Manudhane.
So just on the inventory part, there has been significant reduction in the inventory part. And considering that raw material prices have been on the rise at the same time, so how do you look at it for next couple of quarters on the [indiscernible]?
Tushar, I mean, we explained we have been focusing on the inventory in the -- if you recollect in the August call itself, and we are significantly reduced in the last 2 years. And given the nature of the prices going up and the availability of stocks, right, et cetera, et cetera, we may not be reducing anything significant going forward.
Apart from this, the value of the materials itself has gone up. So whatever we are maintaining is equivalent to at least 1.1x or 1.2x of what we have been holding it previously. So we may not be doing anything significant reduction going forward.
Next question is from Tarang Agrawal.
Just wanted to get a sense on, Dr. Satakarni, on the biosimilars business, if there is an update, if you could give us an update there. And second, on the bacterial vaccine, you said that the regulatory process submission should start from Q3, Q4. If it were to happen, how should we then anticipate the eventual launch of the vaccine in terms of time lines?
It's a good question. So I will start with answering the part one of your question related to the biosimilars. In the Q4 of the last fiscal, our second oncology biosimilars has been filed with the EMEA, so -- which is as per expectation. We are having 3 more biosimilars, out of which 2 of them are oncology biosimilars at different stages of our Phase III large licensure clinical trials.
One of the oncology biosimilars, we should be completing our 600-plus metastatic cancer patient recruitment probably in a month or 2, which positions us to evaluate the efficacy and safety of this product potentially by Q4, which then leads to a series of filings in regulated and semi-regulated countries in Q4 2023 or starting Q1 of the next fiscal year. What is also important to note in terms of our biosimilars for some of you following the business closely is that, as you know, that we are stronger in our pipeline with oncology and immunology biosimilars.
An interesting update for all of you would be, right now, our focus has been on oncology, but we have advanced one of our very important immunology assets into Phase I clinical trial in Australia and New Zealand in the Q4 of the last fiscal year with the potential of it moving into a global Phase III immunology trial by Q3, Q4 of this year, which means that we will be probably in the top 3 to take this product by '24, '25 with a $4 billion potential market opportunity when it opens up in Europe and U.S. So we remain on track with the development of other biosimilars in our pipeline, and I'm quite excited with the sort of development we are seeing and the progress we are seeing in the biosimilars space. Does that answer your first question?
Yes, sir. Just a follow-up on that. As you said, 3 more biosims oncology in different stages of Phase III, one of which you should probably get some evaluation done by Q3, Q4. What about the balance, too, in terms of how should we see you actually filing for these products in terms of time lines?
So that's -- so out of the 3 biosimilars, which are in global Phase III clinical trials, 2 of them are oncology assets. The first oncology assets I have given you guidance on when we are expecting the data review to happen and the filing procedure to begin with. The second oncology biosimilars is also in a global Phase III trial right now. We expect the filing to be towards Q4 of the next fiscal year, which essentially means that we expect the large trial to take some time to conclude.
But having said that, we are discussing with certain regulatory agencies on the basis of our clinical data accumulated so far. We wanted to approach and push the regulatory barriers and file a bridge to clinical pathway. And when that happens, we will provide you guidance on what's happening on that product. But expected to be filed towards the late 2023 or early 2024 because the nature of this clinical trials are very extensive and take longer duration.
With respect to our third biosimilars, which is in a Phase III global trial, we have just begun recruiting subjects and dosing them in the last quarter in the Q4 of the last fiscal. It's a shorter clinical trial. We expect the clinical trial to conclude in '23, '24 with the expectation of filing either in Q4 '23, '24, or if things go well, maybe the filing procedures would start as early as Q3.
But again, as you know, the business of biosimilars, we had COVID headwinds over the last 1.5, 2 years, a major COVID headwind is on the clinical recruitment rate and the site preparedness, so that caused delay not just towards, but across the clinical trials of biologics and biosimilars players. Can you take me through the second question one more time?
In case of your bacterial vaccine, you suggested that the regulatory filing should probably start by Q3, Q4 of FY '23, depending on the analysis of Phase III. If that were to happen, typically, how much time would this process take? And how should we see that product actually coming to market if all goes well?
Okay. So we are currently in the final leg of analyzing our Phase III licensed trial samples with the bacterial vaccine. So we look forward to reporting the pivotal clinical data in Q3 of this fiscal, leading to necessary submission requirements to the Indian authorities either Q3 or Q4 of this fiscal year. Now what this means is there's a queuing procedure with the regulatory agencies. And if the queuing procedure is 3 months leading to a review from the regulatory authority in India, then it would take another 3 months to have a final approval on this product. If the queuing procedure is, say, 4 weeks or 6 weeks, then the review procedure is again, 90 to 120 days. So we are looking at a window of anywhere 4 to 6 or 4 to 7 months before the final approval happens. So in 2023, Q1, I expect if everything goes well, Q1 would be a potential launch into the Indian market if all the procedures go well at the best possible speed that we expected to.
Next question is from Shyam Srinivasan.
Just wanted some update on the Europe business. We have seen it come off sequentially. So just -- and what's the kind of outlook here? How are you looking at the different markets, even from a price erosion or a tender perspective, if you could share something on the Europe business, please?
Europe business is very stable. But in one or two countries where we bought the Apotex licenses, we took addition to write up those products. So that actually -- that made some provision. It became a little more prudent than normal. So that is what it was. Some extent it went in someone -- this is the one, at least, European country. They're not doing well from the beginning when we bought the Apotex, these all Apotex businesses. So finally, we took the addition to write off this -- the stocks and all these things. We hope the business stability in the existing 11% stability issue, but we are working very hard. There are many products we are going to file, and we are hoping reaching the 15% is our -- a lot of people. We all are working very hard to improve around 10%, 11% to 14%, 15% EBITDA.
Okay. How many of our products have been moved to the Vizag plant, if I recollect? And do we think fiscal '23, it's possible to reach this mid-teens EBITDA margin?
Simply changing that we can change, up to some extent only we have to change another 20, 30 products. But still around 38% of the products will continue to be in Europe that we do -- there is no point in changing those products because of the volume and all these things. But the newer products where we filed around 60, 65 products, we expect some -- because in each country, there are -- each product, there are 2 to 4 countries. So those things, it comes, then the Vizag plant also. Now Vizag plant, we are doing around 325 million tablets or capsules per month. And we will reach next year to another 100 million. Then we are confident this our EBITDA has to increase in Europe.
Got it. Helpful. Second question is a little bit more philosophical. Aurobindo is always known to be a manufacturing powerhouse. So if I were to step back and look at your manufacturing footprint now, it's quite well diversified. I'm unable to get a specific message. So for example, when we closed down a recent plant in the U.S. and you just see area, you're talking about the Puerto Rico plant. So is there some unified vision in terms of will we continue to divest certain nonperforming plants versus open now? And are we optimum there? I know you gave some sense about the utilization levels. But just from an overall perspective, are we done in terms of how our footprint should look? Or is there more divestments, stoppages?
No, because we already covered India plants around 70%. And because there are so many products where we bought some ANDAs and some of the 5 products once the -- so all these things come as a safe side, we kept the -- recently, we bought the Puerto Rico. Otherwise, the New Jersey plant where we closed down that we have not closed it because of the leakage in the roof where it is a 50-year old plant.
And in the recent typhoon, there is lost a year back. So these leakages are there in 1 or 2 places continuously. We're not able to control. So we are removing the floor and we are reflooring the thing. That is the reason we stopped this one because that will take around 8, 9 months.
So in the same area, we have a B Block that will be ready in December. There, we will do around our 21 products of C2 products that we are going to manufacture one after another. Other than that, we don't have any intention to expand in the oral side, at least next -- at least next 3 years.
Got it. Last question. I know you didn't share any guidance at the start, but we are [ certain ] if there is some way we could think about the revenue growth going forward. So we have had a flattish kind of a year this year. But when is there likely to be a step change in growth? When can we likely see double-digit growth for Aurobindo?
And next, you take -- we can see the other divisions or other plants or something, it will take another 2 to 4 quarters.
So given that your earlier comments on price erosion being high for the next -- so the next 2 quarters are where the visibility is lowest? And then...
Yes, the price erosion is high. Maybe there is a possibility because I cannot tell that there is no price erosion. We felt in this fourth quarter, there is no much price erosion. But the actual thing happened. Other way around, it happens. So let us wait and see. We are taking a chance. We are taking a reasonable margin next 1, 2, 3 quarters. It will go -- how it will change.
We will take the last question from [ Vikas Sharda ].
I have one question on the specialty business. For the full year, how does the margin profile looks like? I suppose the full year margins are 18.5% for the company, how would you split it, say, between specialty and non-specialty?
I think it's at a pro forma level. But in terms of the gross margins, we continue to be in the 65% to 70%. And in terms of EBITDA, it will be around 35% to 40%. But it is still at a pro forma level not at a specific set of numbers, but that is what is going to be the range.
Understand. So just a follow-up to Mr. Subbu, then. I mean when you look at the overall ROE of the company, say, in the mid-teens. And then -- I mean the non-specialty business, I mean, what kind of returns does it make? And how would you look at that kind of -- that business in terms of return profiles?
Vikas, just how Satakarni has explained, we have a great future from the biosimilars business, which is expected to deliver well. Even if the specialty business is -- I mean, without the specialty business also, the biosimilars will step in and improve the overall ROE.
I would now like to hand the conference over to Ms. Deepti Thakur for closing comments.
Thank you all for joining us on the call today. If you have any of your questions unanswered, please feel free to keep in touch with Investor Relations team. The transcript of this call will be uploaded on our site www.aurobindo.com in due course. Thank you, and have a great day.
Thank you. On behalf of Aurobindo Pharma Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.