Aurobindo Pharma: Q2 FY26 Sees Robust Growth Driven by Formulations and Strategic Pipeline Progress

Aurobindo Pharma Limited has reported a strong performance for the second quarter of fiscal year 2026, showcasing sustained business momentum across its key segments. The company's consolidated revenues climbed to ₹8,286 crores, marking a 6.3% year-on-year growth. This expansion was primarily fueled by robust contributions from its US, Europe, and Growth Markets. The reported EBITDA stood at ₹1,678 crores, reflecting a 7.1% year-on-year increase and maintaining a healthy margin of 20.3%, underscoring the company's operational efficiencies and stable gross margins. Profit after tax (PAT) for the quarter reached ₹848 crores, a 3.8% rise compared to the previous year, with a reported EPS of ₹14.61.

The overall Formulations business emerged as a significant growth driver, contributing approximately 88% of the total consolidated revenues with a 10% year-on-year growth to ₹7,325 crores. The US Formulations segment, excluding gRevlimid, demonstrated a healthy 6% quarter-on-quarter growth, with revenues reaching $417 million. This performance highlights the strength and resilience of Aurobindo's diversified portfolio, supported by increased volumes and new product launches. The European business maintained its strong growth trajectory, delivering an 18% year-on-year revenue growth to ₹2,480 crores (€243 million), firmly positioning the company to achieve a €1 billion annual revenue milestone from Europe by the end of FY26. Growth Markets also contributed positively, with revenues increasing by 9% year-on-year to ₹882 crores, driven by strong volume growth and a resilient commercial footprint. The ARV Formulations segment experienced a notable 69% year-on-year growth, reaching ₹325 crores, fueled by higher volumes and new tender wins.

However, the API business faced headwinds, with revenues declining by 17% year-on-year to ₹961 crores, primarily due to prevailing market dynamics and pricing environment. Despite this, the company's gross margins for the quarter improved to 59.7% from 58.8% in the previous quarter, supported by favorable raw material prices and an improved business mix. Excluding gRevlimid, sales increased by approximately 7%, gross profit by 10%, and EBITDA by 14% quarter-on-quarter.

Strategic Initiatives and Pipeline Progress

Aurobindo Pharma is actively pursuing several strategic initiatives to drive future growth. The Pen-G plant commenced operations on July 1, 2025, after receiving necessary regulatory approvals. The plant produced approximately 1,050 MT at 40%-50% capacity, equating to an annualized production of 6,000 MT. The company is working towards achieving 100% capacity utilization (15,000 MT) and has made representations to the government for the implementation of a minimum import price (MIP) to support this ramp-up. This initiative is expected to contribute significantly to profitability. The China OSD facility continues its ramp-up, targeting a capacity of 2 billion units and is on track to achieve EBITDA breakeven by Q3-Q4 FY26.

In the biosimilars segment, Aurobindo has made substantial progress. Three biosimilar products, including trastuzumab, have received approval from the European Commission, while four biosimilar products, including bevacizumab and trastuzumab, have been approved by MHRA, UK. The BP16 (Prolia biosimilar) successfully met Phase 3 endpoints and is slated for regulatory submission in the next quarter. The BP11 (Xolair biosimilar) is on track to complete Phase 3, and the BP01 (Avastin biosimilar) has completed Phase 3 recruitment, with readout anticipated in CY26. The company plans to file at least three immunology and oncology biosimilars through FY27. An important development is the fast-tracking of Tocilizumab, an immunology product, with a Phase 3 clinical study waiver from the European Medicines Agency, targeting submission in July 2026.

Financial Prudence and Future Outlook

The company's net capital expenditure for the quarter stood at US$106 million, primarily allocated towards capability enhancements and new business developments, including capacity expansion in filling and bulk drug substance manufacturing. Aurobindo generated net cash inflows of$57 million before dividend, resulting in an improved net cash position of approximately US$170 million as of September 30, 2025. The average finance costs declined to 4.7%, reflecting effective treasury and cash flow management. The company remains confident in sustaining its growth momentum and driving value creation across all businesses, underpinned by expected volume expansion and a reasonably stable pricing environment. Management has reiterated its internal margin target of 20%-21% for FY26 and anticipates continued improvement in the injectable business, driven by supply ramp-up, increased supplies from the China plant to Europe, new product launches, and the Lannett acquisition in the US. The next two years are expected to see growth driven by the Pen-G facility ramp-up, biosimilar portfolio commercialization, and progress in biologic CMO activities. This strategic clarity and disciplined execution position Aurobindo Pharma for sustained performance in the coming quarters.