OneSource Specialty Pharma: Q2FY26 Performance Driven by DDC Momentum and Strategic Acquisitions

OneSource Specialty Pharma Limited, a prominent player in the Contract Development and Manufacturing Organization (CDMO) sector, has reported a robust financial performance for the second quarter and first half of the financial year 2026 (Q2FY26). The company's consolidated financial results underscore a period of significant growth, strategic expansion, and enhanced profitability, driven primarily by strong execution in its drug-device combinations (DDCs) and IP-led base business. This quarter's performance highlights OneSource's commitment to scaling its operations and solidifying its position in the global pharmaceutical landscape.

For Q2FY26, OneSource reported a revenue of INR 3,758 million, marking a commendable 12% year-on-year (YoY) growth. This strong top-line expansion was complemented by an impressive 37% YoY increase in EBITDA, which reached INR 1,065 million. The company's EBITDA margin expanded significantly by approximately 506 basis points YoY, settling at a healthy 28%. A notable achievement for the quarter was the shift in Adjusted PAT from a loss in the prior year to a profit of INR 449 million, translating to an Adjusted EPS of INR 3.9. The first half of FY26 mirrored this positive trend, with revenues of INR 7,030 million (up 12% YoY) and EBITDA of INR 1,950 million (up 37% YoY), maintaining a 28% margin. These figures demonstrate OneSource's operational efficiency and strategic focus on profitable growth.

¹ Adjusted PAT and Adjusted EPS excludes exceptional items and scheme-related intangible amortisation. ² Excludes one-time tax asset recognised.

The robust performance was underpinned by successful Master Service Agreements (MSAs) executions and strong sales from the company's IP-led base business. A key driver of future growth is the accelerated DDC capacity addition, which is crucial for supporting upcoming customer launches. OneSource is significantly expanding its DDC capabilities, with cartridge capacity projected to increase from 40 million to approximately 220 million, and pre-filled syringes from 38 million to approximately 50 million. This expansion is progressing ahead of schedule, with full readiness for over 200 million units of pens expected by the end of calendar year 2026, a full year earlier than previously announced. This proactive approach ensures the company is well-positioned to meet the anticipated demand from its growing customer base across key markets like Canada, Brazil, MENA, and India.

Strategic Acquisitions and Global Footprint Expansion

OneSource's strategic vision extends to global expansion through targeted acquisitions. The recently proposed acquisition of a European CDMO, a sterile fill-finish USFDA-approved site in Poland, and an integrated carbapenem (anti-infectives) facility in India (Steriscience JV) are pivotal to this strategy. These acquisitions are expected to bolster OneSource's capabilities and capacities, expand its global footprint, and strengthen its market positioning. The European site, with its multiple dose formats and long-term CDMO contract for a major anaesthetic brand, will enable the company to expand its DDC business in Europe, thereby de-risking its existing drug concentration at the flagship site. The Indian anti-infective business will enhance OneSource's addressable market with a global customer base. These combined entities are projected to deliver a strong first half, with a combined revenue of USD 29 million and an EBITDA of USD 11 million, translating into healthy margins of 38%. The regulatory process for these acquisitions is expected to conclude by December 2026, with consolidation commencing from the next financial year.

Biologics Business and Industry Tailwinds

The biologics segment is experiencing strong momentum, with the company's biologics funnel increasing approximately fourfold compared to FY25. This growth is fueled by strengthened sales and marketing efforts in the US, robust customer engagements, and supportive industry tailwinds. The easing regulatory pathways for biosimilar development by the US FDA and European authorities are creating new opportunities for agile and competitive Biologics CDMOs. Furthermore, the FY2026 NDAA bill, which incorporates elements of the BIOSECURE Act, is expected to generate meaningful opportunities for Indian CDMOs. OneSource is witnessing strong interest from innovators and established biosimilar players for integrated Drug Substance & Drug Product manufacturing and development capabilities, with its funnel including novel modalities, early-phase biologics, and biosimilars.

Outlook and Governance

Given the strong Q2 performance, accelerated DDC capacity, and strategic acquisitions, OneSource has raised its FY28 revenue outlook to over USD 500 million (INR 43,580 million). The company targets a FY25-28 Revenue CAGR of over 30%, a steady-state EBITDA margin of approximately 40%, a targeted Return on Capital Employed (ROCE) of over 50%, and a Net Debt-to-EBITDA ratio of less than 1.5x. Despite some near-term ambiguity regarding revenue recognition due to external regulatory factors, management remains confident in its preparedness and the inherent market opportunity. The company is also committed to stronger governance and improved disclosure practices, evidenced by its Inaugural Integrated Report (FY25), voluntary adoption of BRSR, and status as a United Nations Global Compact Signatory. OneSource is formulating a comprehensive ESG roadmap for FY26 and beyond, focusing on renewable energy adoption, supply chain accountability, and strengthening disclosures.

OneSource Specialty Pharma Limited's Q2FY26 results reflect a company in a dynamic growth phase, strategically expanding its capabilities and global reach. With a strong operational foundation, accelerated capacity expansions, and well-planned acquisitions, OneSource is poised for sustained growth and aims to deliver significant value to its stakeholders in the coming years.