Alivus Life Sciences Limited (ALIVUS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Alivus Life Sciences Limited, formerly Glenmark Life Sciences Limited Q4 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Soumi Rao from Alivus Life Sciences. Thank you, and over to you, Ms Rao.

Good morning, everyone. I welcome you all to the earnings call of Alivus Life Sciences Limited for the quarter and year ended March 31, 2025. From Alivus Life Sciences, we have with us Dr. Yasir Rawjee, our MD and CEO; and Mr. Tushar Mistry, our CFO. Our Board has approved the results for the quarter ended March 31, 2025. We have released the same to the stock exchanges and updated it on our website. Please note that the recording and transcript of this call will be available on the website of the company. Now I'd like to draw your attention to the fact that some of the information shared as part of this call, especially information with respect to our plans and strategies, may contain certain forward-looking statements that involve risks and uncertainties. These statements are based on current expectations, forecasts, and assumptions that are subject to risks, which could cause actual results to differ materially from these statements depending upon the economic conditions, government policies and other incidental factors. Such statements should not be regarded by recipients as a substitute of their own judgment. The company undertakes no obligation to update or revise any forward-looking statement. Our actual results may differ materially from those expressed in or implied by these forward-looking statements. With that, I invite Dr. Yasir Rawjee to say a few words. Thank you, and over to you, Dr. Rawjee.

Soumi, thank you. Good morning, everyone, and welcome to our Q4 and FY '25 earnings call. Before we get into the company's performance for the quarter, let me briefly touch upon the broader industry landscape. So the global industry continues to evolve around structural changes because of ongoing supply chain shifts, geopolitical tensions and regulatory reforms in U.S. drug pricing and also the rising demand from emerging markets. Our growth is supported by increasing outsourcing, rising demand for specialized APIs and efforts to diversify supply chains. Additionally, the industry is making meaningful strides in adopting sustainable manufacturing practices and next-generation technologies. So coming to Alivus and our quarter performance, we've made pretty strong progress this quarter, reporting revenues of INR 650 crores, which turn -- which is a year-on-year growth of 21.1%. So Q4 witnessed broad-based revenue growth coming from all regions. Now GPL and non-GPL business grew at 31% Y-o-Y and 19% Y-o-Y, respectively. The generic business posted a growth of 22.6% Y-o-Y, while the CDMO business also grew 22.6%. From a geographical perspective, growth was well distributed with India, Europe, Japan and ROW, all playing a significant role in this growth. Moving on to our profits for the quarter. Our EBITDA margin for the quarter was 32.1%, up 520 bps Y-o-Y and 80 bps Q-o-Q, primarily driven by a more favorable product mix, coupled with product launches, especially in the ROW markets. Coming to our full year performance, GPL grew by 8.8% Y-o-Y whereas non-GPL business grew 6.3% Y-o-Y. Sales revenue growth, excluding other operating income, remains at 7.1%. On an overall basis, we reported revenue of INR 2,387 crore, reflecting a Y-o-Y growth of 4.5%, in line with our FY '25 guidance. Notably, we were able to maintain margins at 30% Y-o-Y despite the absence of PLI benefits this year, a testament to the overall resilience and efficiency of our business. From a geographical standpoint, India, Europe, ROW and Japan, like I said earlier, contributed to full year growth, with Japan, in particular, recording a remarkable growth, although it is on a small base. That said, we expect this positive momentum to continue. Another encouraging development is the headwinds in the Lat Am market have started easing gradually with early signs of improvement now visible. On the other hand, the U.S. market is experiencing a slower-than-expected growth owing to a bunch of challenges externally as well as a little bit of destocking with our customers. So we believe that this will turn around in FY '26. Our CDMO performance remained soft during the year, primarily because of the cyclical nature of demand in this segment. Project number 4 is gradually gaining traction, and the fifth project is expected to commercialize in the second half of this year. I'm also pleased to share that our Ankleshwar plant received the EIR following the routine GMP inspection by U.S. FDA at the end of January this year. Our pipeline remains robust with 561 DMF and CEP filings globally. As on March 31, 2025, the high potent API portfolio remains on the development path with 24 products now in the active grid, representing a total addressable market of $49 billion. Of these 7 products that are validated, 5 products are in advanced stages of development, and the remaining 12 products are progressing through various stages in lab development. Looking ahead at FY '26, we expect volume growth in mid-teens. However, given the pricing pressure, we expect the revenue growth to be in the high single digits as it stands. The Q1 FY '26, as we see now, are -- Q1 FY '26 trends, as we see now, are encouraging from a growth perspective, so we will take stock of the whole year performance on a quarterly basis as things develop. We would like to reiterate that margins will continue to be in the 28% to 30% band in the foreseeable future. With this, I now turn the floor to our CFO, Mr. Tushar Mistry, who will walk you through a detailed financial performance for the quarter.

Thank you, Dr. Yasir. Good morning, everyone. Welcome to our Q4 and FY '25 earnings call. I would like to briefly touch upon the key performance highlights for the quarter and year ended 31st March 2025 before opening the floor for questions and answers. For Q4 FY '25, our revenue from operations stood at INR 650 crores, a growth of 21.1% year-on-year and 1.2% on a sequential basis. The gross profit for the quarter was at INR 367 crores, up 23.2% year-on-year and 2.9% sequentially. The gross margins for the quarter stood at 56.5% driven by better product mix. EBITDA for the quarter was at INR 109 crores, up 44.2% year-on-year and 3.8% sequentially. EBITDA margin for the quarter was at 32.1%, up 550 bps year-on-year and 80 bps sequentially, driven by higher gross margins, coupled with new product launches. And the PAT for the quarter stood at INR 142 crores with PAT margins coming at 21.8%. Moving on to the full year numbers. Revenue from operations for FY '25 was at INR 2,387 crores, a growth of 8.8% in GPL and 6.3% in non-GPL business, which led to an overall sales growth of 7.5% normalizing for the PLI impact. Gross profit for FY '25 was at INR 1,306 crores, and gross margins were at 54.7%. EBITDA was at INR 717 crores, with EBITDA margin at 30%, maintaining steady margin throughout the year. PAT was at INR 486 crores with PAT margin of 20.3%. Looking at the therapeutic mix. CVS and CNS continued to lead the growth during the year with both therapies contributing 55% to the top line. R&D expenditure for FY '25 was at INR 81 crores, which was 3.4% of our sales for the quarter. It was at INR 24 crores. Touching up on the balance sheet and cash flow statement starting with cash conversion cycle. Working capital was higher during FY '25 at 192 days due to increase in debtor sales. As indicated earlier, GPL credit days have increased as per the agreement. The skewness of GPL business towards the second half of the year results in higher debtor days at the end of the year. We believe this trend should continue going forward. Coming to capital expenditure. CapEx for the quarter was at INR 47 crores, while for FY '25 was at INR 166 crores. We plan to incur about -- we have a carryforward of about INR 190 crores of CapEx, as we had indicated earlier that we have about INR 300 crores to INR 350 crores of capital layout incurred in FY '25. So we have a carryover of about INR 190 crores. Thus, additionally, we are planning to incur another INR 350 crores to INR 400 crores in the current year, for which we have the CapEx approvals from the Board. These CapEx include the greenfield expansion in Solapur, expansion in Ankleshwar, Dahej as well as the new R&D center that we are planning near Mumbai. We continue to remain as a debt-free company, and I'm happy to inform you that we have generated strong cash flow from operations of INR 233 crores in FY '25 with cash and cash equivalents, including short-term investments, of INR 549 crores on the books as of 31st March 2025. In conclusion, I would like to reiterate that we remain optimistic about our future trajectory, supported by a favorable demand environment and a healthy order book. With that, let us open the floor for Q&A.

[Operator Instructions] First question comes from the line of Ahmed Madha with Unifi Capital.

Firstly, on the capital allocation and CapEx. Obviously, we had very high payouts in last year. And the change in ownership is obvious. We'll focus on growth. So in that context, could you give some idea on how are we thinking about CapEx for the next 3 years? Also, it seems we have pushed out 2 60 -- 2,650 KL capacity line from FY '27 to FY '28. Wouldn't it be more logical to fasten up the CapEx, your thoughts, please, sir?

Okay. So basically, let me take the last part first, right? As far as pushing out the volume expansion, see, we've always been calibrated, okay? With respect to -- so while we thought we would need around 2,600 KL by FY '27, we feel now that we can push it out. And the reason for that is that we have done a lot more brownfield expansion, especially on pharma capacity, both in Dahej as well as Ankleshwar, which will be completed this year. So given that kind of pharma capacity, we'll have a pretty good runway for the next couple, maybe even 2 years -- 3 years going forward. So then what happens is that our 3-year plan basically has to be done largely completed this year, which, as Tushar just explained, is a carryover from FY '25, but then it will be pretty aggressive in FY '26 to complete these brownfield expansions plus the Solapur first phase. And then hopefully, we'll get our R&D center built out as well. So that should give us a pause to have an aggressive expansion because Solapur will give us sufficient capacity on the intermediate side, plus we can trigger an inspection by taking some validations of some key APIs. But then on the commercial side, we can expect both the Ankleshwar as well as Dahej to continue to service the business.

So is it fair to assume that CapEx will be INR 560 crores to INR 400 crores, INR 450 crores in that range?

No, it will be upwards of INR 550 crores. So you add INR 190 crores to INR 350 crores, INR 400 crores. So we are around INR 550-ish crores -- INR 550 crores to INR 600 crores.

Okay. Got it. And could you explain how our product pipeline is shaping up for FY '26? Any new major product launches in the pipeline? Also, our [ HPA ] pipeline is building up nicely, as you explained in the presentation. So can we expect anything major to come out of this and contribute to revenues in the next 1, 2 years?

To see the launches that we have seen in FY '25 as well as what is coming up in FY '26, our products that we sort of developed and seeded with customers about 4, 5 years ago, okay? This was keeping in mind the patent expiration dates, okay, in various markets. So that is coming along as expected, right? As far as this portfolio that we are developing goes, patent expiries are sort of starting off from calendar '27 onwards. So we should see, in FY '28, the launches from this pipeline should start from FY '28 onwards. But then there will be launches like we had this year, that we had last year that we're going to have this year and so on. So those will keep coming because we've had -- we've been developing the pipeline now pretty aggressively for the last 6 years since the company became independent from split up from basically from Glenmark.

How do you assess the impact of changes happening at the industry level in the near term, specifically the tariffs from U.S.A.? What is your judgment? And in this context, are we being conservative seeing high single-digit growth? Or is it fair to expect that similar to FY '25, '26 will be high single-digit revenue growth?

Yes. So like we said, we are already seeing a volume growth of mid-teens, right? That is very clear that we are seeing that. But then there is erosion, right, in the market. So depending on how we are able to manage that erosion, right, we should be in the -- definitely in the high single digits, right, to be able to drive the growth as well as the good news is that Q1 is also looking pretty promising. So the momentum that we've had in the last 2 quarters continues. Okay. As far as the industry goes, right, except the U.S., things are pretty much where they were last year. So on May 7, 3 large industry organizations. This is the Pharmaceutical Research and Manufacturers of America, the Biotechnology Innovation Organization and the Association of Accessible Medicines. These are 3 large industry bodies in the U.S. that made a representation on May 7 to the U.S. government. This is an invitation. So this was solicited by the Commerce Secretary, okay? And so they've made a pretty strong case for basically not having tariffs because they have argued, I think, pretty successfully that it would basically entail a big supply chain risk to the pharmaceutical supply chain and would put R&D investment also on the back burner. So with all this plus -- so they've also made an alternative suggestion to the Trump administration, right, on having, in place of tariffs, other incentives, right, that would help to drive local manufacturing in the U.S. So let's see. It's still out there, right? The jury is still out there in terms of how the U.S. government takes it, right? But given the fact that there is a fairly strong internal push by industry bodies in the U.S. itself, not to have tariffs, right? We think that the outlook from the U.S. will remain quite positive. So yes, maybe it will lead to a small upside, but that remains to be seen.

Last question from my side. There is a slight receivable bump up in -- at the end of March balance sheet. Any comments on that?

Yes, Ahmed. As I explained in my opening remarks, Glenmark Pharma has the increased number of days as per the agreement. So the entire INR 200 crores that you see as a bump up is all on account of that. We don't see any challenges as far as the non-GPL business is concerned, that remains steady.

Could you elaborate more on the agreement? What will be the number of days for the GPL business?

That will be upwards of 150 days of -- as per the agreement. But also what happens is since the GPL business is more skewed towards second half, the end of the year looks a bit skewed as far as the number of days is concerned for GPL also.

[Operator Instructions] Next question comes from the line of Dileep, an individual investor. Mr. Dileep, please go ahead with the question. Dileep, please unmute yourself and go ahead with the question. Since there is no reply from the line of Mr. Dileep, let's move to the next. The next question comes from the line of Tarang Agrawal with Old Bridge.

Congratulations on a very strong Q4. Just a couple of questions. One, what was the volume growth for FY '25? And second, from an FY '26 standpoint, does the OAI on Glenmark Indore impact your business?

Tarang, just repeat the last part, please, again?

From an FY '26 impact, does the Glenmark Indore OAI impact your volumes?

Okay. So we'll just come back to you on the volume growth. It's been 10%. The volume growth in FY '25 has been 10%. And with regard to the OAI status of the Indore site for GPL, I don't think it's likely to impact us in any way, okay? I mean because we supply pretty uniformly to all the GPL sites, and I'm sure GPL will be working to sort this out, but it has no impact on demand for our APIs.

Okay. Just one more question, Doctor. I mean, in your initial address, you did talk about some softness in the U.S. in terms of pricing. But I mean the broader sense that we are picking up is it's a fairly buoyant market currently, especially the generic space. So where is the disconnect? And what's driving your slightly somber outlook on the U.S?

It's a good question. But I mean, look, there's a mix, right, of things here, right? I mean one is, see, when I talk about softness, I'm particularly talking about our portfolio because it's a higher end. There are newer molecules that we are launching. And so there is a fair chance of more erosion, right, on those set of molecules from our customers. That's what I'm sort of referring to, right? I do agree with you that on an overall basis, things have pretty much bottomed out, right? But so far, so good. I mean we've had -- we're okay, right. But on pricing, we do expect a little bit of push from our customers.

Got it. And then the last question, I mean, from an overall CapEx standpoint, how much is your budget for the R&D center specifically? And will it all be -- I mean how confident are you to deploy the commitment that you've laid out in FY '26 itself for the overall CapEx numbers that have been outlined?

Yes. So on the R&D center, we should be spending somewhere between INR 70 crores to INR 80 crores to build that out. Okay. On the overall -- yes, it's a bit challenging, but then most of the projects have started off. So the brownfields in Ankleshwar, the brownfield in Dahej is well underway. Solapur is also coming along pretty well. And these are the 2 -- the 3 big items on the manufacturing side that consume the CapEx, right? And then like I said, R&D will be about INR 70 crores to INR 80 crores. So we should do most of this INR 550 crores, right? And we need to, really. It needs to happen.

Got it. And sir, last question. I know this is many of my last, but definitely last. If you could give us a sense on what's happening on [ items so close for you ]?

So we don't talk about products, Tarang, particularly, right? But since you asked particularly, it's being reviewed. So it's under review.

Next question comes from the line of Nitesh Dutt with Burman Capital.

Sir, you mentioned that you have visibility of mid-teen kind of volume growth. But because of erosion, you see value growth at, say, high single digits. So are you seeing more than 5% to 6% erosion year-on-year? And has it accelerated recently? And how is the overall competitive scenario in your set of products? Is it leading to more erosion as of late?

See, typical, Nitesh, we see about 4% to 4.5% of erosion on our pipeline. Now competition is there, right? But then because we are operating largely in the regulated market space, right, that competition is not an immediate problem, right? It could become a problem 1.5 years to 2 years out. So on the newer products, we expect to see some erosion, but not very significant. So it would be in this 4.5% kind of range.

Got it. And secondly, you expect mid-teens kind of volume growth going forward. FY '25 was at 10%. So this incremental delta, fair to understand it will mainly be driven by newer products, right? What kind of visibility and conviction you have that volume growth can get accelerated by this amount?

I'm not sure I got the question on the acceleration. If you don't mind, could you please repeat the question?

I'm just asking volume growth, our typical volume growth. Sorry, for FY '25, it was 10% you mentioned. And going ahead, you are guiding for 15% kind of volume growth. So just wanted to understand where this delta will be driven from. Is this mostly from new products? Or do you expect your existing set of products also to grow faster than the current 10% odd?

So it's both, Nitesh, okay. I mean the new product, like I said, we've had quite a few launches in this last year. But then not all markets opened up last year. So we expect a few more markets to open up in FY '26 that will drive volume, plus we have a few more launches also new launches in FY '26. So yes, the incremental volume will come from the newer launches. But our base business is also pretty solid. And that continues to have a pretty nice volume growth as well. So we are pretty confident that we'll get to this 15% volume growth.

Got it. And sir, what's the outlook for your CDMO business? And any guidance there as well?

So see, CDMO, like we've explained in the past also, right, it's -- there's these 3 commercial products that continue to drive volume. The fourth product got started off with commercial business in Q3 of last year. But it's on a slow offtake, right? We expect to sort of get to full potential by the end of this year, right? And so that should kick in pretty nicely, the fourth project, right? And then the fifth project, we expected approval in H1, regulatory approval in H1, but it's more likely to come in H2. So again, it will be kind of back-loaded this year, the CDMO, but hopefully, by the time we close this year, right, we'll see a pretty good CDMO growth as well.

Got it. Sir, last question on margins. This quarter, we are at 31%. When we started the year, we were at 26%, 27% because of PLI, onetime employee expenses, et cetera. So going forward, again, what kind of normalized margins do we expect? Is 30%, 31% the fair range of margins?

Yes, we're expecting between 20% to 30% kind of margin range going forward.

Next question comes from the line of Nitin Agarwal with DAM Capital.

Dr., On the generic API business. Now you talked about the single -- the late double -- mid-single-digit growth for F '26. But on a structural basis, do you still see a possibility of this business being early double-digit growth on a more 3-, 5-year view? Or this is the new normal for the business given the way things are?

I think there's definitely an upswing, right? Now when that will kick in is the $60,000 question, right? But given the fact that, see, basically, a lot of the new products are kicking in now, right? And we saw it in FY '25, we'll see this in FY '26 as well, right? So we are pretty confident, right? What happens is that our expectation on the volumes for new launches is driven by the number of tie-ups that we have, right? So that is a sort of surrogate marker for us, but it has done much better this year, right? And that's also reflected on the margin side, right? So coming back to growth, your question on growth, yes, I think we would be going up from here, but I won't predict. You know, Nitin, right? I -- you always say I'm conservative, right? I'd rather be that way. So let's see.

Yes, fair enough. And secondly, on the CDMO business, now beyond the 4 contracts scaling up, I mean if you can give us some color on the kind of conversations that you've been having. And is there any change, any acceleration in inquiries, RFPs, which you witnessed and which -- probably implications of that if you take again a slightly long view beyond '26?

Yes. I mean that is ongoing. That -- I mean, as far as pipeline goes, we continue to have quite a few discussions in the pipeline. We -- that's going on. I mean the thing is, like I've explained before, CDMO is like a step function, right? It doesn't -- it's not a slope. So the moment something qualify, we get qualified in something, and once we start validation supplies is when we know it's coming. Until then, it's a 0, right? But once you make validation supplies, then it's a 1. So that's why we are not talking about beyond fifth, but there are quite a few irons in the fire, right, with respect to trying to bring more CDMO projects into the pipeline. So probably in late FY '26 or in early FY '27, we'll be able to give better color on this.

But qualitatively, are you -- I think currently, if you just sort of extrapolate, our ranges are about INR 50 crores to INR 60 crores per contract is the kind of CDMO work we are working on. But in the future negotiations that you're having, are you -- is there an upscale on the size? Or this has pretty much remain a sweet spot on the CDMO business?

No. I think, on average, you're right. I mean it will be around the INR 50 crores to INR 60 crores, right? That's where it would be because, see, the space that we are targeting again is on the life cycle management and on the 505(b)(2), right? So that gives us that sort of $7 million, $8 million kind of opportunity.

Next question comes from the line of Harshal Patil with Mirae Asset Capital Markets.

Sir, just I have 2 questions more from an outstanding perspective. So sir, just one thing. We did see the initial comments that there is some bit of destocking also a part of visible on a few of our clients. And then we are talking about 4%, 4.5% of our price revision. So my question, therefore, is to understand that is there any destocking-led postponement or delays that we are kind of envisaging more towards the U.S. market or any other markets in specific?

Yes. So see, I particularly referred to some of our U.S. customers, right? And this is on the CDMO side, right, not anything else. So overall, we've got pretty solid demand that continues. There's no sign of talk of it. But the reason we had a soft CDMO performance, right, for the year was because of this phenomenon. And then we are sitting on a pretty small base, right, of only 3 projects in commercial and the fourth one, like I said, is kicking in, but it's going to sort of get to full potential in about a year's time.

Sure. Sir, so going then towards FY '26, '27, would we see these things kind of improving, like precisely in the first half of '26? Or do you see the phenomena still continuing out there?

Like I said, CDMO, it will still be a little bit backloaded in terms of this year's performance.

Okay, sir. Sir, second thing is with respect to the tariff things that you just explained. So definitely on the U.S. representation thing is quite clear. But sir, there were also some news going around between some deal getting in between U.S., China and stuff like that. So sir, do we really see any impact basically on the Indian CDMO players or Indian players into the U.S. markets because of that kind of tariff link getting into place? Any qualitative inputs from your side would be helpful, sir.

Very difficult to tell here. But at least whatever we are able to tell, I mean, even our government is working, right? So I mean, the thing is that this could sort of cut either way. But again, it's pretty standard, I think, I mean. I don't know if someone's going to get hit more than someone else, right? I mean that's the point.

Next question comes from the line of V.P. Rajesh with Banyan Capital.

I joined a little bit late, so this may have been already answered, but just was curious, what is the kind of margin we have from our largest customer, given they are increasing the working capital, et cetera? Are we getting good margins compared to our company-wide margin?

So Rajesh, the margin from our largest customer will be in the same range as other businesses, though it would be slightly less than the overall business because it also has a factor of product mix. And the largest customer would have more products, which are older products with lower margin, but also has a good set of new products, which has a good margin as well. So overall, I would say it is not very off from our overall other business margins.

I see. So basically, you're saying it probably is more closer to 28% than 30% range that you provided?

We can assume that.

Right. Okay. And in terms of the CapEx that we talked about, should -- what is the kind of asset turnover we are looking for? Is it going to be same or better than what we have historically done?

So see, right now, we are in an investment phase. As we mentioned, there's a good amount of capital outlay that we have planned. So in the near term, the asset terms will have an impact, it should be lower compared to what we have seen in the past. Also, past was higher because the capital investment was not as high, and we were really struggling with our capacity. So that's the reason why the asset turns were higher. But from a new capital investment perspective, the asset turns, initially, there will be a slower tick off, but gradually, it should reach within that 2x range for a period of time.

Next question comes from the line of Alankar Garude with Kotak Institutional Equities.

You spoke about the strong representation by the industry groups against tariffs. But say, assuming tariffs get announced, in the backdrop of the generic API industry having seen pricing pressure for quite a few years now, do you think the generic API industry can absorb any further price cuts?

It's very difficult to say. Actually, see, I mean, the push is coming from within the U.S. also, right, pretty strong push. And it's a fairly integrated supply chain between the U.S. distributors and the Indian and other foreign suppliers into the U.S. So difficult to tell. See, the other thing, no, Alankar, is that there'll definitely be a difference between API and those, okay, front end. I don't think that it's going to get a similar treatment. Because if API gets a similar treatment, right, then there is no difference between a U.S. supplier and an Indian supplier because both will have to sort of pay the tariffs before or after, right? So I don't know. I mean, it's very difficult to speculate at this point. As far as the pricing environment and so on, right? I mean somewhere in the chain, someone is going to have to absorb this, right? If it's not going to be the consumer, I don't know. Very difficult to tell at this point. But the good news is that the industry associations are making a pretty strong push in the U.S. itself.

Have there been any discussions, conversations with clients already on tariffs and the impact of pricing?

Not us. We have not had anything, neither with our U.S. customers nor with our global generic players who are largely Indian, right?

Got it. The second question. Does the funding environment have any impact at all on the CDMO order book for us?

No. Because, again, we are largely concentrated in the life cycle management space, right, which is an ongoing business for the big pharma. And they're just moving to a better cost base to basically protect themselves against generic entry, right? That is one element, right? The other element is a specialty element again, right? And here, because these are sure-shot therapies, it's only a question of enhancing the therapeutic benefit, right, in a 505(b)(2) kind of scenario. So our CDMO sort of the projects that are in the pipeline are not being impacted at all by any kind of funding.

Okay. Sir, just one follow-up on that. In terms of the macro, right, there is uncertainty, both for the innovators as well as to an extent for the generic companies, your clients. Is that something which can be a risk over the next, say, 1 or 2 years as far as our CDMO order book is concerned?

I will very confidently say no.

Okay. Sir, that's reassuring. And one final thing. Sir, in the previous call, you had spoken about working on 2 differentiated platforms. And you have said that there are plans to add more platforms in the coming months. Is it possible to provide any update on this, please?

Alankar, we'd rather speak about it when we get to a sort of mature state. I mean work is on, okay? We've got some collaborations going. Work is on. But probably around second half or towards the end of this year, we'll be able to give you some color in terms of what we are looking at. But work is on, and it's pretty -- it's going well. I mean that's all I can say.

Next question comes from the line of [ Niraj Shah with Perpetuity ].

Actually, I wanted to ask that you are mentioning your generic API business that you have mentioned that you would persist against those opportunities with generic players. So can you please elaborate what is this? And what are you -- can you explain this part?

Okay. So basically, when we enter into a customer's file, right, this happens before they get approval. So that's when we are usually the first source, right? So while the ANDA player is sort of developing the dossier and filing, and we partner with them at that stage, then we are the first source. But then when the ANDA player already has approval, but is looking for another API source, that's when we go in as a second source or an alternate source. So that's the difference.

Okay. Got it, sir. Any debt you're planning for FY '26, '27?

Could you please repeat that, Niraj?

Are you planning any debt for FY '26 '27?

Debt? No, no, no. We are not planning any debt.

Next question comes from the line of Ahmed Madha with Unifi Capital.

Yes. So I had a question on the price erosion, which you spoke about. Is it specific to a few specific products in just U.S.? Or is it broad-based?

It's not -- price erosion doesn't happen on every product. But typically, when there is a bigger volume offtake, right, especially when launches happen, we do see a bit of price erosion there. On the base business, there is a relatively lower price erosion because things have kind of steadied or bottomed out or whatever you want to put, however, you want to see it, right? So if I had to classify it, it's more on the newer set of products that see erosion.

And in terms of molecule concentration, product concentration, could you spell out the number top 5, top 10 products?

Top 5 products would contribute about 35% of our revenue. I'm making an educated guess, okay. We can come back to you on the exact number. Yes, but it will be around 35%, top 5.

Okay. Got it. And just last, in the presentation, we disclosed quarterly therapy-wise revenue contribution. And this presentation, we have annual numbers, and I'm just trying to work out the quarterly number for Q4. And what I see is there is slight change in the mix between others and CVS. Is it fair understanding? And would you like any comment on that, just to understand the change in the therapy mix?

See, at the quarterly level, it's quite wavy, Ahmed. It's not a...

I understand, but it's still at the annual level of so there is slight change. So just wanted to understand any products where there is significant erosion as there is any new addition or something like that? If there is anything else as such.

Yes. So we have a pretty good traction on our urology segment, okay? That's doing pretty well, right? And that's picking up pretty nicely, the urology segment. There are a few molecules here and there on pulmonary fibrosis and stuff, right, that are also doing pretty well. But I mean, overall, right, it's difficult to sort of, at the quarter, to -- it's vary, I mean, that's all I can say.

[Operator Instructions] Next question comes from the line of Nitesh Dutt with Burman Capital.

I have a follow-up question on CDMO. Sir, you used to guide last year that in 4 years or so, you target to make this CDMO business 4x of FY '24 size. So do you think we are still on track for INR 500 crores, INR 600 crore kind of number by FY '28 also?

FY '28 might be a bit challenging to get there. But yes, I mean, see, the traction is pretty good, okay, on these. And I answered in the earlier -- to an earlier question that -- how CDMO is picking up. We have a number of projects in the pipeline, okay? And like I said, right, they are in the range of around $7 million to $8 million on average, but they can be even higher. Some of them are even higher. But it's a matter of us locking in another 5, 6 projects, and I think we should be there.

Next question comes from the line of [ Sanjay Dute ], an individual investor. [Operator Instructions]

Yes. I have 3 questions. First is, what is our exposure to U.S. market? Secondly, around 1 or 2 years back, we had entered into some CDMO MOU with an innovator from Japan. So what is the status of that? And thirdly, all other 3 expansions at Solapur, Dahej and Ankleshwar, they are expected to go onstream in, what, H2 or in Q3, Q4? That's all.

Okay. So in terms of exposure to U.S., right, I mean, I don't know how to -- I mean the thing is we've got a pretty good business in the U.S., right? It's about 25% -- 25%, 30% of our overall business, right? So I mean, when you say exposure, it gives it a different connotation, but I'll just take it as positive. We have a 25% to 30%. Right?

Yes, yes. [indiscernible]...

Yes. No, it's a pretty stable, solid business, right? Okay. As far as the CDMO with the Japanese client, this is our fifth project, which is under regulatory approvals. And like I said, we expect that we will -- they will get regulatory approval to use us as an API source in the second half of FY '26, okay? That's the fifth project that I was telling -- I was talking about earlier. Okay. As far as the expansion in brownfield goes that we will see coming online by early second half of this year. So around November-December time frame, we should see that kicking in both in Dahej as well as in Ankleshwar, okay? And on Solapur, it would be more like Q4 Phase 1 Solapur with 300 KL would come in Q4.

Thank you. Ladies and gentlemen, due to time constraints, we have reached the end of question-and-answer session. On behalf of Alivus Life Sciences Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.