Orchid Pharma , a prominent player in the antibiotics market, reported its Q2 FY26 results, revealing a challenging quarter amidst a global downturn in the antibiotics industry. The company's performance reflects the broader market conditions while highlighting strategic moves to position itself for future growth.

Key Financial Highlights

• Revenue: INR 194.00 crores, down 13% year-on-year
• Gross Margins: Compressed to 32% from 43% in the previous quarter
• EBITDA: INR 9.30 crores, down 75.46% from INR 37.90 crores in Q2 FY25
• Net Loss: INR 5.70 crores, compared to a profit of INR 27.20 crores in Q2 FY25

Market Challenges and Company Response

The global antibiotics market is experiencing one of its most prolonged and broad-based slowdowns in the past decade. Orchid Pharma's management cited several factors contributing to this downturn:

1. Inventory overhang from previous years' strong growth
2. Reduced demand in both domestic and export markets
3. Efforts to curb antibiotic misuse in some countries
4. Geopolitical factors affecting key markets like Russia

In response to these challenges, Orchid Pharma has:

• Focused on liquidating higher-priced inventory
• Increased sales in emerging markets, albeit at lower price realizations
• Maintained a cautious approach to volume and pricing strategies

Strategic Developments

Enmetazobactam Acquisition

A significant development for Orchid Pharma is the completion of its acquisition of global rights to Enmetazobactam (branded as Exblifep). This move gives the company full control over the regulatory and commercial strategy for this innovative antibiotic worldwide.

• European Market: Price approvals in the five largest EU markets expected by the end of the calendar year
• Global Expansion: Discussions underway for licensing opportunities in multiple markets, including Latin America and Southeast Asia
• India Performance: Over 15,000 patients treated and 200,000+ vials sold through partnership with Cipla

Domestic Market Performance

The company's brand Orblicef, in partnership with Cipla, has shown strong performance in the Indian market:

• Exceeded one-year target
• Growing acceptance among prescribers
• Positioned as a stable and growing segment in the Indian hospital antibiotics space

Ongoing Projects and Future Outlook

1. 7ACA Project:

   • All fermentals erected, a critical engineering milestone
   • Targeting mechanical completion as previously announced
   • Expected to strengthen API manufacturing base and reduce import dependency

2. Cefiderocol Project:

   • Building structure nearly complete
   • Equipment deliveries have begun
   • On track for production readiness by Q4 FY26

3. Antimicrobial Stewardship (AMS) Division:

   • Continues to expand engagement with hospitals and clinicians
   • Focus on responsible antibiotic use and AMR awareness
   • Expected to break even by next year

Management Commentary

Manish Dhanuka, Managing Director of Orchid Pharma, stated, "While persistent volume and price pressure in antibiotics continues to weigh on revenues, our priorities remain clear. We are focusing on finalizing licensing deals for Exblifep in new geographies, ensuring fast-track progress on our projects, and maintaining our frugal management strategy."

Conclusion

Despite the current market headwinds, Orchid Pharma's strategic acquisitions, strong domestic performance, and ongoing projects position the company to navigate the short-term challenges while preparing for long-term growth. The successful integration of Enmetazobactam and the expansion of its hospital-focused initiatives could be key drivers for the company's future performance in the evolving antibiotics market.

Investors and industry observers will be closely watching how Orchid Pharma leverages its new assets and navigates the challenging market conditions in the coming quarters.

Orchid Pharma Limited has submitted its monitoring agency report for the quarter ended September 30, 2025, detailing the utilization of Rs. 400 crore raised through a Qualified Institutional Placement (QIP). The report, prepared by CARE Ratings Limited, highlights both progress and challenges in the company's key projects.

Revised Fund Allocation

Following shareholder approval at the Annual General Meeting on September 20, 2025, Orchid Pharma has revised the allocation of QIP proceeds among its project objectives. The revised allocation is as follows:

Project Implementation Status

Jammu Manufacturing Facility

The company has utilized Rs. 73.02 crore out of the allocated Rs. 135 crore for the Jammu project. Land acquisition challenges have been cited as the primary cause of delay. Out of the identified 203.8 Kanal (25.475 acres) of land, registration for 164.50 Kanal has been completed. The company expects to complete the registration of the remaining land by December 2025.

Despite the delays, Orchid Pharma reports progress in construction activities:

• Boundary construction has been completed
• Major building construction is in an advanced stage
• Equipment installation has commenced

Alathur API Facility

The project for setting up a new API facility block in Alathur, Tamil Nadu, has seen minimal progress. Only Rs. 0.36 crore has been utilized out of the revised allocation. The company attributes this delay to the project's dependency on the Jammu 7ACA project.

Fund Utilization and Deployment

As of September 30, 2025, Orchid Pharma has utilized Rs. 278.10 crore of the QIP proceeds. The unutilized amount of Rs. 116.44 crore has been deployed as follows:

The monitoring agency report indicates that there have been no deviations from the stated objectives of the QIP. However, the implementation delays in both the Jammu and Alathur projects are noteworthy, with the extent of delays not precisely ascertainable at this point.

Orchid Pharma's management has stated that the delays in the Jammu project are primarily due to the complexities involved in land acquisition from multiple farmers and the required Change of Land Use (CLU) processes. The company is working with a land aggregator to address these challenges.