ADHD, Cardio, Contrast Media to Drive Growth by FY29: Supriya Lifescience CFO

Supriya Lifescience’s profit after tax for FY25 stood at Rs 188 crore, with a growth of 57.8% compared to Rs 119 crore in FY24. The PAT Margin stood at 27.0% in FY25, compared to around 21% in FY24. The company delivered an EBITDA of Rs 261 crore with a margin of 37.4% as per the Mumbai-headquartered company’s official release. Here are the edited excerpts.

FE CFO, in conversation with the company’s CFO Krishna Raghunathan, discusses his key focus areas in FY26, strategies that would manage margin risks and tariff shocks, if they arise, and the next phase of growth. The edited excerpts.

Q: Analysts believe India is on the path to becoming a global pharmaceutical powerhouse. How realistic is that ambition, and what are the challenges we still face?

I would break this into two parts.

On the pharma chemistry side, especially in APIs, we’re competing directly with China. This is pure chemistry and I believe we’re in a relatively strong position here. Our synthetic chemistry skills, and even some enzyme work, are on a better wicket compared to China.

But when it comes to biology, particularly biosimilars and biologics, we still have a long way to go. The biological sciences ecosystem in India isn’t as advanced, and most companies are still focused on replicating existing biosimilars rather than innovating new biologics. That’s a capability the country needs to develop if we want to be seen as true global innovators.

Then there’s the issue of scale. Whether in chemistry or biology, China has an edge in manufacturing capacity in sheer volume, tonnage, and cost efficiency. That scale gives them a huge pricing advantage. We’re not quite there yet, even though the Indian government is supporting the industry through PLI schemes like in pharma, technology and telecom.

Yes, we’ve seen some high utilisation under PLI, which is encouraging. But if we want to compete head-on with China and truly become the pharma capital of the world, we’ll need to scale up significantly in both infrastructure and innovation.

Q: How are you viewing recent reports of a potential 200% tariff on Indian pharma exports under a possible Trump-led U.S. administration? How are you assessing your exposure to the U.S. market?

Fortunately, Supriya’s exposure to the U.S. market is around 5% to 6% of our total turnover. That gives us a bit of cushion.

That said, if you have a strong cost position, you can still stay competitive even if tariffs rise significantly. A 100% tariff sounds extreme, but ultimately, it’s the buyer in the U.S. who would absorb that cost. There’s only so much room for cost reduction on the Indian side we can’t operate at a loss just to meet pricing pressure. That’s non-negotiable.

If such a scenario unfolds, one possible workaround would be exporting APIs to a third country with lower tariffs, where formulations can be developed and then exported to the U.S. again. Indian businesses are highly adaptable and alternative plans will emerge once the situation becomes clearer post-August 1.

Producing domestically in the U.S. would significantly raise costs. Just look at reports that show how Apple’s iPhones local manufacturing could push the cost to $3,500 per unit. A similar cost challenge would exist for pharma. At the end of the day, the U.S. healthcare system, especially insurers, cannot sustain such spikes. It would be counterproductive.

Trump is a shrewd businessman. I don’t believe policies that directly hurt American patients or the insurance ecosystem would be the endgame here. Like everyone else, we’re watching August 1 closely to see what unfolds and whether pharma even makes it to the final list.

Q: Are there any key launches, backward integration plans, or therapeutic segments you’re betting on to drive Supriya’s next growth wave beyond FY26?

In the near term, our focus is on expanding our portfolio in the anesthetics segment, where we already have a strong foundation. We launched one product last quarter and plan to add more soon. These are expected to begin contributing meaningfully over the next year.

Also in FY28–29, therapeutic segments like ADHD, cardiovascular, and contrast media will become the next wave of growth for us. But immediate efforts are centered around anesthetics and a few other products we've discussed earlier.

Q: Supriya has historically enjoyed EBITDA margins above 30%. With pricing pressures, input cost volatility, and export headwinds, how are you planning to preserve or even expand margins over the next 12–18 months?

Our strong margin profile is at the back of deep backward integration. This gives us strong control over costs.

For future margin preservation, we are adding more molecules to our backward integration portfolio. Product selection at Supriya includes a key parameter: whether we can add value through backward integration. 

We are gradually moving into the CDMO (Contract Development and Manufacturing Organisation) in formulations. Our Ambernath facility should become operational in the next couple of months. Once it’s online and clears the necessary regulatory approvals, we expect it to add a new stream of income to the company. 

It will house not only manufacturing but also formulation R&D for internal and external clients bringing in contract research revenues as well. These initiatives will help us manage margin risks and tariff shocks, if they arise.

Q: In your investor presentation, you mentioned plans to reduce customer concentration by expanding into newer geographies and increasing product registrations. What are the specific markets or product strategies you’re prioritising for FY26?

Key priority is pushing more of our existing products into the U.S. market. Europe remains a stronghold for us, but even there, we see untapped pockets where our presence is limited. We're working to deepen our penetration in those areas.

Additionally, we’re gradually building a dominant position in Latin America (LATAM) for several products. Our broader strategy typically starts with launching a product in Southeast Asia without backward integration. Once the product proves successful there, we begin full backward integration and file for regulatory approvals in regulated markets like Europe, LATAM, and the U.S.

This allows us to reduce product costs significantly and improve margins, especially once approvals come through. At that point, the product becomes mature from both a regulatory and cost perspective. While we used to do this in an ad hoc manner, we now follow a more scientific, process-driven approach. Each year, we aim to add 3–4 products to the pipeline and mature another 3–4. Within the next couple of years, this cycle should stabilise and help improve our overall margin profile alongside contributions from our formulations business.

Q: What is your capex guidance for FY26?

For FY26, we’re looking at a capital outlay of around Rs 75 to Rs 120 crore. 

Most of our large capex programs are nearing completion. The Ambernath plant should go live in the next couple of months. Beyond that, capex will be limited to routine requirements and one additional project API block at Lote Parshuram (Module E Production Block at Lote Parshuram, boosting our capacity by over 55%, increasing it from 597 KLPD (kilo liters per day) to 932 KLPD). The remainder will be largely maintenance or replacement-based.