Shilpa Medicare Ltd Q4 FY2025 Concall Summary

Key Takeaways

• Earnings quality improved, not just headline growth: Gross margin expanded 200 bps to 69% while interest costs fell 38% YoY, so the 15% EBITDA growth was built on a structurally better P&L.
• The biologics platform is crossing from promise to proof: EUGMP approval for the biologics facility, a first biosimilar launch in India, and a long-term microbial CDMO contract signal that years of investment are beginning to convert into revenue.
• Licensing income fell, but that is the right problem: Licensing revenue dropped from ₹34 cr to ₹24 cr because products are commercializing and revenue is shifting to the recurring sales line, a transition management flagged as lumpy but healthy.
• The Unicycive delay is a real setback: The PDUFA date was missed because the original manufacturing facility had USFDA issues; registration batches are now being done at a new facility, pushing the revenue timeline into FY27.
• What to watch next quarter: Whether the USFDA surprise inspection of the formulation facility actually arrives and resolves the overhang, the pace of Albumin clinical trial starts, and any visibility on Unicycive's new approval pathway.

Biologics Platform: The Inflection Argument

• EUGMP approval unlocks the CDMO door: The biologics facility received EUGMP certification, a credential held by very few Indian biologics plants; management expects this to open CDMO services with European and global partners.
• First biosimilar is already commercial: Adalimumab launched in India, sales are doing well, additional indications were approved, and the company expects to double sales in FY26.
• The pipeline is filling behind it: Aflibercept clinical studies are ongoing with a filing targeted in FY26; nivolumab and pembrolizumab have completed R&D-scale development and preclinical studies are underway, with human studies expected to start in FY26.
• Two CDMO biologics projects are revenue-generating this year: Phase 1 supplies are expected to start or preclinical work is ongoing, and management expects to add more products in FY26.
• A long-term microbial contract is locked in: A binding contract spanning more than five years covers development of both drug substance and drug product, with commercial supplies committed for a minimum of three to five years.
• MAbTree deal adds an NDA asset: Shilpa will exclusively develop the asset for partners, with cell line delivery expected in H1 FY26 and the customer expecting to start an investigational trial in FY26.

Keshav Bhutada: "if you see in India, there are very few companies who are having both development and manufacturing platform like Shilpa because we can do small molecules, we can do peptides, we can do polymers, we can do biologics, we can do ADCs, we can do injectables, we can do oral solid, we can do PFS."

Recombinant Albumin: The Big Bet, Still Pre-Revenue

• The therapeutic opportunity is uncontested: No recombinant Albumin product is approved globally for therapeutic use, and Shilpa is targeting that specific application through its Orion partnership for Europe.
• Orion deal covers Europe only: Shilpa retains rights for excipient grade, the US, RoW, and India markets, so the partnership does not cap the asset's geography.
• Clinical timelines are firming up: European scientific advice response is expected in Q1 FY26, with clinical studies to start in FY26; India Phase III permission is received and supplies for the study are planned to start in FY26, though the timeline may move by one to two quarters.
• Manufacturing readiness is near: The Albumin facility is expected to be commissioned this year, with scale-up and registration batches completed in the current financial year including supplies to clinical trials.
• Nontherapeutic applications are exploratory for now: Samples have been sent to various customers for testing, but management will only provide a clearer picture in the next financial year; the majority of capacity is earmarked for therapeutic applications.
• Cost competitiveness is asserted, not quantified: Management declined to disclose cost-per-gram or realization figures, stating only that Shilpa is competitive versus larger players like Albumedix.

Keshav Bhutada: "currently with recombinant Albumin, where specifically, the application, which we are targeting is a therapeutic use, where currently recombinant Albumin globally, there is no approved product for therapeutic use."

USFDA Overhang: One Facility Resolved, One Still Waiting

• API facilities are cleared: Unit 1 and Unit 2 successfully finished USFDA inspections; Unit 1 received an Establishment Inspection Report with Voluntary Action Indicated status.
• Formulation facility remediation is complete: Remediation work is done and the company is waiting for the agency's response; management expects a surprise inspection in the current financial year but cannot give a date.
• The margin unlock is not from stopping CMO payments: The cost of third-party manufacturing is not significant; the real improvement will come from increased CDMO revenue and approvals for existing products once the facility regains US approval.
• Unicycive delay is a direct consequence of facility issues: The original batches were made at a facility that had USFDA problems; registration batches have now been completed at a new facility with a new partner, and this new facility will be put into the application.

Keshav Bhutada: "No, that approval doesn't remain on track. However, we are expecting approval in this financial year. But we have to observe this with time how it will evolve."

Formulation & API: The Base Business Accelerates

• Formulation revenue grew 38% YoY: Driven by Nilotinib in a new geography with limited competition and a significant ramp-up in RoW markets where tenders and registrations are converting to commercial sales.
• API business is turning a corner: After a period of flat or declining revenue due to a large-customer issue, growth is expected in FY26 driven by captive products (Nilotinib, Nor-UDCA), UDCA with a CEP, and Tranexamic acid with expanded capacity; mid-teens or higher growth is possible.
• Nilotinib enjoys a first-mover window: Shilpa is currently the only generic in the market; management expects some competitors to enter in coming quarters but not a sudden flood of more than ten players, and a pipeline of differentiated follow-on products is being built.
• Bortezomib has a competitive edge: Shilpa is the only company with subcutaneous approval for the ready-to-use formulation, which management believes will open the market quickly.
• Three US NDA approvals are now launched: Pemetrexed, Bortezomib, and an oral liquid product have all completed commercial launches, with revenues to be realized in FY26; Pemetrexed ramp-up was slower due to an existing competitor.

Keshav Bhutada: "we are the only company having the subcutaneous approval right for the RTU. I think that will really open up market quickly"

CDMO & NCE: The Pipeline Is Broadening

• A landmark NCE milestone was reached: The first NCE molecule for an innovator customer completed Phase III clinical studies; the customer received breakthrough designation for bladder cancer and described the results as very promising.
• Two new CDMO contracts were signed in Q4: One is a commercial product site transfer, the other an NCE molecule for an Australian client.
• A Phase II molecule is advancing: The customer received clearance for Phase II clinical studies, material has been supplied, and studies are expected to start in Q1 FY26.
• The polymer vertical is gaining traction: A \$4 million order was received from a US customer, commercial supplies have started, and revenue is expected in FY26; a second complex polymer project is in partner trials.
• CDMO revenue visibility is improving: Management expects to segregate and show CDMO revenues separately in the next financial year, though it declined to quantify expected revenue from specific engagements.

Keshav Bhutada: "we understand from the customer that the results are very promising"

Financial Quality & Capital Allocation

• Gross margin improved 200 bps to 69%: This happened despite lower contribution from licensing income and CDMO revenues, underscoring the profitability of the underlying business model; management expects margins to remain in a similar region with potential improvement from a better business mix.
• Interest costs fell 38% YoY: Driven by repayment of high-cost NCDs from QIP proceeds and refinancing; the balance NCD of ₹75 cr is expected to be repaid by mid-August 2025, generating further savings.
• The effective tax rate dropped from 41% to 36%: This resulted from converting loans given to subsidiaries into equity, which reduced tax expense.
• Operating expenses are largely steady: Some small portion may have one-offs like write-offs, but OpEx is expected to remain in the ₹70-75 cr per quarter range; R&D spend is expected to stay at ₹30-35 cr per quarter.
• Capex is tapering: Management stated that capex for FY26 will not be significant compared to last year, and the board declared a 100% dividend on the back of improved performance.

Keshav Bhutada: "as a company, we are very focused on monetizing the assets and whatever assets which Shilpa has invested over years, we will ensure that we get revenues from each one of them"

Guidance & Commitments

Key Metrics