Core Insights - Eli Lilly and Company is investing over $1 billion (approximately ₹8,900 crore) to establish new contract manufacturing facilities in India, marking one of the largest investments in the Indian pharma sector in recent years [3] - The investment decision was influenced by Telangana's favorable ecosystem, including skilled manpower, infrastructure, and government support, despite competition from other states [1][3] - The new hub in Hyderabad will enhance Eli Lilly's manufacturing and supply capabilities, supporting its evolving portfolio and leveraging India's talent pool [1][3] Investment and Expansion - Since 2020, Eli Lilly has committed over $55 billion globally to build, expand, and acquire facilities [2][3] - The new facilities will focus on developing and manufacturing medicines for conditions such as diabetes, obesity, Alzheimer's disease, cancer, and autoimmune diseases [2][3] - The company plans to begin immediate recruitment for various roles at the new hub, including engineers, chemists, and quality control professionals [2][3] Job Creation and Local Impact - The investment will not only expand Eli Lilly's manufacturing and global medicine supply capacity in Hyderabad but also create job opportunities for local youth [2][3] - The Telangana government confirmed that all investments will be made entirely within the state [2][3]

Core Insights - Eli Lilly is making a significant investment of over $1 billion to enhance its contract manufacturing capabilities in India, aiming to expand its global supply chains and improve access to innovative medicines for patients worldwide [1][10] - The company has committed more than $55 billion since 2020 to build, expand, and acquire facilities globally, indicating a strong focus on growth and capability building [5][10] - Lilly is preparing to launch an oral version of its experimental weight loss drug orforglipron, which is part of its strategy to expand its diabetes and weight loss portfolio [7][10] Investment and Manufacturing Expansion - The investment in India is part of a broader strategy to scale up manufacturing and supply capabilities to meet the growing global demand for Lilly's medicines [6][10] - A new manufacturing and quality hub is planned to be established in Hyderabad, which will enhance technical capabilities and oversight for Lilly's contract manufacturing network in India [9][10] - The company is focusing on potential new medicines for diabetes, obesity, Alzheimer's disease, cancer, and autoimmune conditions, preparing for future medicine developments [5][10] Market Focus - India is identified as a key region for Lilly's weight loss and diabetes portfolio, with the anti-obesity drug market in India valued at approximately ₹752 crore [7][10] - Regulatory submissions for chronic weight management and obesity are expected by the end of this year, with potential approvals in many countries anticipated in the second half of 2026 [8][10]

Financial Data and Key Metrics Changes - The company reported a compound annual growth rate (CAGR) of 16% in revenue and 21% in earnings over the past ten years, indicating strong growth compared to the contract manufacturing industry [9][105] - For fiscal year 2025, the company expects revenue to be up approximately 18% compared to fiscal year 2024 [9] Business Line Data and Key Metrics Changes - The optical communications segment accounts for over 70% of the company's business, with datacom and telecom roughly split [6] - The datacom business has been growing well, while the telecom business has recently shown strength [6] - The gross margin has been in the range of 12% to 13%, with operating margins around 10% to 11% [13][14] Market Data and Key Metrics Changes - The company has seen a significant increase in demand for 400 ZR products, which now represent about 10% of overall revenue [72] - The telecom revenue has rebounded to approximately $406 million, recovering from a previous low due to inventory digestion [70][71] Company Strategy and Development Direction - The company focuses on being a pure play contract manufacturer without its own products, which allows it to maintain strong relationships with customers [8][96] - The strategy includes expanding capabilities in optical subsystems and components while maintaining low costs and high margins [14][17] - The company is also exploring opportunities in co-packaged optics, which is expected to be additive to existing business [60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the stability of the macro environment, noting that the products manufactured are primarily for infrastructure projects, which are less susceptible to consumer sentiment [24] - The company is closely monitoring tariff impacts but has not seen significant effects on operations [25] - Management believes that the telecom business will continue to grow, driven by system wins and the recovery of baseline business [80] Other Important Information - The company has a layered hedge structure for foreign exchange risks, primarily related to the Thai baht [101] - The tax rate is expected to remain stable, with no significant increases anticipated [82] Q&A Session Summary Question: What makes Fabrinet unique versus others? - The company emphasizes its specialization in a few key areas, maintaining a strong reputation and executing well for customers, which builds trust and leads to more business [94][96] Question: How do you expect your tax rate to change? - The company operates at a mid-single-digit tax rate and expects to maintain this due to ongoing tax benefits in Thailand [82] Question: Can you elaborate on the systems wins with Cisco, Sienna, and Amazon? - The company has secured significant wins with Cisco and Sienna, and is optimistic about the relationship with Amazon, which spans multiple revenue categories [84][48] Question: What is the current state of inventory levels across the industry? - Inventory levels are improving but have not returned to pre-COVID levels; the company is seeing a downward trend in customer inventory [88][87] Question: How does the company maintain its margin structure? - The company focuses on controlling costs and maintaining a stable margin structure despite short-term headwinds from product ramps [104]