OneSource Specialty Pharma Limited reported a robust start to FY27, with first-quarter revenue surging 37% year-on-year to INR4,490 million. This growth was fueled by the successful semaglutide commercial launch, new MSA contracts, and customer wins. EBITDA also saw a significant increase of 39% year-on-year. The company highlighted its expanding capacity, including a new sterile line, and reaffirmed its FY28 outlook for $400 million in organic revenue and 40% EBITDA margins.
Strong Q1 Performance Driven by Growth Initiatives
OneSource Specialty Pharma Limited has announced a strong performance for the first quarter of FY27, with revenues reaching INR4,490 million, marking a substantial 37% increase compared to the same period last year. This impressive growth is attributed to key strategic initiatives, including the commercial launch of semaglutide, the securing of new Master Service Agreements (MSAs), and the successful acquisition of new customers across its various business segments.
EBITDA and Capacity Expansion
The company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) also demonstrated significant upward momentum, growing by 39% year-on-year to INR1,233 million. Sequentially, EBITDA increased by 34% from the previous quarter, aligning with the company’s projections for consistent quarter-on-quarter growth. A key highlight for the quarter was the meaningful step-up in semaglutide commercialization in Canada, a significant off-patent market. The company also noted that over 40% of the generic pens market in India, launched on day one, are manufactured at their site, showcasing strong market penetration.
Strategic Outlook and Future Growth Pillars
Looking ahead, OneSource Specialty Pharma is focused on expanding its capabilities and market reach. The company is progressing with its first phase of a $100 million capex investment, with a second cartridge line set for commercialization this quarter, doubling its sterile days for production. This expansion is aimed at supporting not only existing partners but also multiple new countries opening up. Furthermore, the company is adding new customers, with a new GLP customer onboarded last quarter and another line expected in FY27, positioning it as a global CDMO with comprehensive end-to-end capabilities.
The strength in complex peptide development and drug device capabilities was highlighted by two customers achieving first-to-file status in the US for tirzepatide. The biologics business, identified as a key future growth pillar, has seen the addition of another marquee global biotech major, Formycon, enhancing its integrated manufacturing capabilities. The RFP funnel for biologics has grown significantly, nearly quadrupling in the past year, indicating strong future potential.
The company reported nine new launches and added six new logos this quarter, expanding its customer base. Compliance remains a strong suit, with 12 successful inspections this quarter, including two surprise FDA audits. OneSource Specialty Pharma reaffirms its FY28 outlook, projecting $400 million in organic revenue and 40% EBITDA margins.
Soft Gelatin and Injectables Business
Addressing the soft gelatin business, the company explained that while new capacity has come online, it takes time for tech transfers. However, they are confident in the business’s long-term growth, with capacity expected to be fully utilized within 12-15 months. A greenfield initiative for further capacity expansion has also been initiated. For the injectable business, a focus on scarcity play products like penicillin, for which they are FDA-approved, continues. New capabilities in pre-filled syringes and lyophilization are being added, which are expected to contribute significantly to FY28 numbers.
Capacity Utilization and Capex
Capacity utilization for Drug Device Combination (DDC) and injectables is reported as complete, with demand exceeding current capacity. For soft gelatin, new capacity is being added to serve the growing CDMO demand, with tech transfers underway. The company anticipates utilizing this site fully over the next two years, with a potential need for a greenfield site thereafter. Capex for the current year and next is expected to be lower than the significant investment made in DDC, with future expansions in biologics requiring additional capex but at a lower level than DDC investments.
Market Outlook and Geopolitical Factors
Regarding the response to generic weight loss drugs, the company noted that demand significantly outpaces supply, with generics providing access to latent demand. While Canada’s market is still early, India’s market has seen rapid growth. Geopolitical issues are impacting freight and container supply, leading to longer routes and increased costs, though the impact on OneSource, with its ex-works contracts, is muted as these costs are borne by customers. The company anticipates no long-term harm from recent US administration announcements.
Source: BSE
