Hyderabad-based pharmaceutical major Aurobindo Pharma is navigating temporary losses at its China-based manufacturing facility but expects the plant to reach break-even point by the end of the current fiscal year, according to Chief Financial Officer S Subramanian.
Current Challenges and Future Projections
During an analyst call, Subramanian revealed that the China facility is currently incurring a loss of approximately $1 million in the present quarter. However, he expressed confidence that the plant would achieve financial stability between the third and fourth quarters of fiscal year 2026.
"China, as on date in the quarter, I will be incurring a loss of around maybe a million dollars, but probably we will be able to achieve the break-even between Q3 and Q4," Subramanian stated. "After that, China will start moving up in the overall contribution to the EBITDA growth."
Strategic Importance and Operational Progress
The oral-solid-dosage facility in China continues to scale up operations, progressing toward its full capacity of two billion units. This expansion is supported by significant regulatory approvals, including ten products receiving European approval and three local product approvals.
Subramanian emphasized that the site remains on track to deliver EBITDA break-even by Q3-Q4 FY26, reinforcing its strategic importance to Aurobindo Pharma's global network. The facility's contribution to the company's overall growth trajectory is expected to become increasingly significant once it surpasses the break-even point.
Domestic Operations and Production Capacity
On the domestic front, the company reported substantial progress in its Penicillin-G (Pen-G) production. During the second quarter, Aurobindo Pharma produced approximately 1,050 metric tons of Pen-G while operating at only 40-50 percent capacity.
This translates to an annualized production of around 6,000 MT. Subramanian noted that yields are consistently improving, and the company has joined industry peers in requesting government implementation of minimum import price measures.
"The implementation of minimum import price will support further ramp-up in achieving 100 percent capacity utilization," he explained. "This could potentially increase production to 15,000 MT in a very short term."
Global Business Outlook and Growth Drivers
The company's European operations continue to demonstrate robust revenue growth, highlighting the region's strategic importance and operational strength. Meanwhile, in the United States, the Dayton facility has transitioned into commercial phase with manufacturing already underway.
Subramanian revealed that packaging approval has been secured and product launches are scheduled from January, positioning the site to begin contributing significant revenues in FY27.
Looking ahead, the CFO identified several key growth drivers for the next two years:
- Ramp-up of Pen-G facility
- Commercialization of biosimilar portfolio
- Rapid progress in biologic CMO operations
- Continued improvement in injectable business
- Increasing supplies from China plant to Europe
- Additional contribution from new product launches
- Strengthened market position through Lannett acquisition in US
The company remains confident about sustaining its growth momentum and driving value creation across all business segments. Subramanian reaffirmed the internal margin target of 20-21 percent for FY26, underscoring management's confidence in the company's strategic direction and operational execution.
