Cohance Lifesciences

“Based on the visibility we have today, we continue to expect H2of FY 2027 to deliver year-on-year growth on both revenue and EBITDA.”

“Given the performance of legacy Agrochemical products and the continuing generic pressure, we now expect Specialty Chemical revenue to decline year-on-year in FY27.”

“Overall, higher revenue conversion, better utilization, and an improved business mix is expected to support EBITDA growth in the H2.”

“The key drivers are scheduled small molecule deliveries and reloads, continued resilience in our API+ platform, Sapala growth, approaching breakeven in NJ Bio, and progressive improvement across the broader portfolio.”

“That is correct.”

“This includes strengthening bioconjugation, building a more integrated ADC payload linker capability, and enhancing our R&D infrastructure across payload linkers, APIs, and specialty chemicals.”

“We are working on additional capital programs that, over the next few years, will build adjacent capabilities in ADC payload linkers and bioconjugation.”

“While we remain disciplined in deploying capital, with investments phased against customer visibility, the objective is to address a larger part of our customer value chain, improve program conversion, and create a more integrated development to manufacturing proposition.”

“We also have a broader capital program directed towards growth capabilities as well as quality, safety, sustainability, and maintenance.”

“Targeted automation and environmental upgrades at our multipurpose Agrochemical facility, together with a dedicated R&D laboratory, are intended to speed up new customer qualification process.”

“Our bioconjugation capacity expansion remains on track for commercial availability by early FY2028, further strengthening our end-to-end ADC offering.”

“Our energy is therefore focused on using the existing network more effectively and adding capability where required to support scale-up and larger customer programs rather than creating standalone capacity.”

“Since we had added capacity about two years ago, we have normalize the capacity within our network to support this additional business as well.”

“In small molecules, the order and reload position for Q3and Q4has improved. We have also secured two new commercial programs and one late-stage program with large global pharmaceutical customers”

“We have received multiple reload orders across existing commercial programs, providing better visibility into Q3 and Q4, as well as next year.”

“Looking to the H2, we have improved order visibility across both APIs and Formulations.”

“Nevertheless, one of the molecules that was not part of that second node, that had been approved maybe a few years ago and that is still under patent protection, has received very good reloads for end of FY27 and also for FY28, and we are in discussion for more coming forward.”

“First of all, those are two products that are patent protected and have been launched or are being launched as we speak.”

“our focus is on improving utilization and operating performance at NJ Bio, with a clear objective of moving the business to breakeven.”

“Pharma CDMO led our sequential recovery in Q2, with revenues growth of 34.5% quarter-on-quarter, primarily driven by a higher contribution from small molecules.”

“We are also progressing a customized payload program for a large pharmaceutical customer through scale-up, which could generate higher potential in the coming fiscal year.”

“Sapala, on the oligo, maintained strong momentum, growing 33.6% year-on-year in Q2 and 83% in H1.”

“API+ reported revenue of INR2,671 million in Q2, representing a growth of 5% year-on-year and contributing 56% of the consolidated revenue.”

“In ADCs, we are seeing encouraging signs of development funnel, with improving order activity and visibility, particularly towards the second half.”

“Importantly, Q2 growth was achieved without contribution from early phase III supplies, supported by healthy demand for specialized nucleotides, amidites, and other building blocks for newer nucleic acid technologies.”

“We are seeing a broader range of RFQs across payload and linkers, including opportunities that can potentially be developed and manufactured from India.”

“We are seeing a good traction in new opportunities on the formulation business, driven by geographical diversification across E.U. markets.”

“On profitability, higher raw material prices affected select API products during the quarter.”

“Selective price pass-throughs are helping mitigate part of the pressure. Importantly, despite a challenging global environment, our year-to-date material margin percentage remains ahead of last year.”

“In fact, if the product is already off-patent, the pricing which we get from innovators is slightly premium to what is typically in the general generic space.”

“But on the generic API side, we do not see too much of price increases happening. At the same time, we also do not see too much of price decreases happening. The environment in the market is relatively stable.”

“Both volumes and an adverse product mix impacted the quarter and the first half. Higher raw material prices affected product margins, while selective pricing and procurement actions are also underway.”

“Cash and liquid investments were close to INR2.9 billion against borrowings of around INR2.3 billion.”

“Inventory, however, increased to about INR7.3 billion from about INR5.6 billion.”

“A significant portion of this is supported by the continuous business requirements and the expected H2 orders scheduled in the second half of the year.”

“Turning to the balance sheet, Cohance remains cash positive at the end of September.”

“Receivables improved materially during H1.”

“We have also secured a new extension of a key product in the emerging markets and are advancing further opportunities in pellet, modified release formulations, and differentiated products.”

“Commercial manufacture and initial dispatches have begun for a crop protection program with two new Japanese innovators.”

“Registration progress for new AI with an existing innovator is progressing according to plan, and we are expecting commercial launch from H2CY2028.”

“We continue to develop opportunities in OLED and electronic-related chemistries, including early discussion around semiconductor applications.”

“It is a privilege to speak with you all today on my first earnings call at Cohance.”

“We do not anticipate any further cost in the second half of the year on account of these transactions, which were done in the last 30-60 days.”

“At this stage, we are also assessing any further impact from the Suryapet closure order.”

“we are deeply saddened by the loss of our colleague following the incident at our Suryapet facility, and our thoughts are with his family and loved ones. We take this incident extremely seriously and have initiated the necessary corrective and preventive action.”

“On quality and compliance, we have completed USFDA inspections at Pashamylaram, Shamshabad, and Jaggayyapeta and submitted our comprehensive responses.”

“Turning to ADCs, H1 performance was affected by continued customer destocking across two established commercial programs.”

“Our performance during the quarter was significantly impacted by a heavy audit schedule across our facilities, which disrupted operations and affected the timing of certain customer shipments.”

“Revenue increased 13% sequentially to INR4767 million, while adjusted EBITDA increased to INR458 million, with the adjusted EBITDA margin improving to 10%.”

“Niche technologies contributed 13.7% of revenue in Q2 and 14.4% in H1. At Cohance standalone, commercial revenues remained healthy at around 78% of sales.”

“Our phase III programs stood at net 11, and our commercial products moved to 19.”

“During Q2, NJ Bio successfully delivered two ADC GMP campaigns, including one program that progressed through the full development lifecycle, from early R&D and process development through toxicology studies and GMP manufacturing.”

“Adjusted PAT also returned to positive territory during the quarter.”