Akums Drugs & Pharma reported flat quarterly results for Q2FY26, with revenue at INR 1,018.00 crores, down 1.5% year-on-year. The company faced challenges as EBITDA margins declined to 9.3% from 11.7% in Q2FY25, primarily impacted by continued API price declines and higher overheads from new facilities.

Key Financial Highlights

Factors Affecting Performance

• API Price Decline: The company experienced an 8% decline in API prices, which significantly impacted the top line and EBITDA margins.
• New Facility Overheads: Higher overheads from newly operationalized facilities contributed to the margin pressure.
• Volume Growth: Despite challenges, the CDMO business witnessed a healthy volume growth of over 7%, outperforming the flat IPM (Indian Pharmaceutical Market) volume growth.

Strategic Developments

1. Zambia Joint Venture: Akums Drugs & Pharma announced a joint venture with the Zambian government to set up a USD 45.00 million manufacturing plant in Lusaka. The facility is expected to commence production in CY 2028 and will cater to various therapies in the region.

2. European CDMO Contract: The company secured European CDMO contract approvals, with commercial supplies to Europe expected from 2027. This marks a significant step in Akums' international expansion strategy.

3. European Market Entry: Akums Drugs & Pharma dispatched its first commercial supply of Dapagliflozin tablets to Switzerland and expects to supply Rivaroxaban tablets to Europe in Q3.

Segment Performance

• CDMO Business: Revenue stood at INR 804.00 crores, a slight increase from INR 799.00 crores in the previous quarter. EBITDA for this segment was INR 84.00 crores, showing a decrease of 31.3% year-on-year.
• Domestic Branded Formulations: Revenue increased by 5.3% year-on-year to INR 122.00 crores, with EBITDA at INR 26.00 crores, showing a 28.2% year-on-year increase.
• International Branded Business: Revenue declined by 14% year-on-year to INR 22.00 crores, affected by seasonal factors.
• API Business: Revenue decreased to INR 44.00 crores from INR 59.00 crores year-on-year, with the company focusing on higher-margin molecules.

Management Commentary

Sandeep Jain, Managing Director of Akums Drugs & Pharma, commented on the results: "While our revenue remained flat, margins saw a dip as API prices continued their downward trend. Our CDMO business witnessed a healthy volume growth of over 7%, even though the IPM volume growth was flat."

Future Outlook

The management remains optimistic about long-term growth prospects, citing the following factors:

• Expected benefits from the Zambia joint venture and European market expansion
• Continued focus on improving the product mix and operational efficiencies
• Anticipated growth in domestic business driven by stricter regulatory enforcement and a strong product pipeline

Akums Drugs & Pharma maintains a strong balance sheet with a cash surplus of INR 1,649.00 crores, providing leverage for both organic and inorganic growth opportunities.

Investor Meeting Announcement

The company also announced its participation in the JM Financial India Conference 2025, scheduled for November 20, 2025, in Mumbai. This event provides an opportunity for investors to gain further insights into Akums' strategies and future plans.

As Akums Drugs & Pharma navigates through the current challenges, the company's focus on diversification, international expansion, and operational improvements may position it for potential growth in the coming quarters.

Akums Drugs & Pharma , India's largest Contract Development and Manufacturing Organization (CDMO), announced its financial results for the second quarter, revealing a decline in revenue and profitability.

Key Financial Highlights

Segment Performance

The CDMO segment, which is the company's primary revenue driver, faced challenges in the quarter. Despite the overall decline, Akums Drugs & Pharma has managed to outpace industry volume growth in its CDMO vertical.

Margin Pressure

The company's profitability was impacted by various factors, including the overall market conditions and potentially falling API (Active Pharmaceutical Ingredient) prices.

Future Outlook

As Akums Drugs & Pharma navigates through this challenging period, investors may closely watch how the company manages to improve its margins and capitalize on its market position in the coming quarters. The company might need to focus on cost optimization, improving operational efficiency, and exploring new growth opportunities to address the current trend.

It's important to note that quarterly results can be influenced by various factors, and a longer-term view may be necessary to fully assess the company's performance and prospects.