Ladies and gentlemen, good day and welcome to the Quarter Three FY 2025 Earnings Conference Call of Dr. Reddy's Laboratories Limited. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. I now hand the conference over to Ms. Richa Periwal. Thank you and over to you ma'am.

Thank you. A very good morning and good evening to all of you, and thank you for joining us today for the Dr. Reddy's Q3 FY 2025 earnings conference call. We have with us the leadership team of Dr. Reddy's comprising Mr. Erez Israeli, our CEO; Mr. M V Narasimham, our CFO; and the Investor Relations team. Earlier today, we have released our results, and the same is also posted on our website. We will kick off today's call with MVN taking us through the financial highlights of the quarter. This will be followed by Erez, sharing his thoughts on business performance. Post which, we will open the forum for Q&A. Please note that today's call is a copyrighted material of Dr. Reddy's and cannot be rebroadcasted or attributed in press or media outlets without the Company's expressed, written consent. This call is being recorded, and the playback and transcript shall be made available on our website soon. All the discussions and analysis of this call will be based on the IFRS consolidated financial statements. The discussion today contains certain non-GAAP financial measures. For a reconciliation of GAAP to non-GAAP measures, please refer to our press release. Before I proceed with the call, I would like to remind everyone that the safe harbor contained in today's press release also pertains to this conference call. Now, I hand over the call to MVN.

Thank you, Richa. A warm welcome to all. We continued our growth trajectory and delivered consistent results with double-digit top-line growth and steady margins. While continuing to invest in our R&D, innovation, and commercial capabilities, this is the first quarter of consolidation of the acquired Nicotine Replacement Therapy business and this resulted in delivering again highest-ever quarterly revenues and EBITDA in Q3 FY 2025 for the company. Let's look at the financial performance of the quarter. For this section, all amounts have been translated into U.S. dollar at a convenience translation rate of Rs. 85.55, which is the rate as of December 31st, 2024. Consolidated revenue for the quarter stood at Rs. 8,359 crores, which is US$977 million, a growth of 16% on year-over-year and 4% Q-o-Q. This includes revenues from the acquired NRT business of Rs. 6,605 crores. Excluding NRT revenues, the underlying growth is at 7.5% on a year-over-year basis and a decline of 3% on a Q-o-Q. Consolidated gross profit margin stood at approximately 59% for the quarter, an increase of 19 basis points over the same quarter of the previous year and a decrease of 91 basis points sequentially. The year-over-year increase was primarily on account of improvement in product mix and manufacturing overhead leverage, partially offset by price erosion. Gross margin for Global Generics and PSAI were at 61.3% and 28.6% respectively. The SG&A spend for the quarter was Rs. 2,412 crores, which is US$282 million, an increase of 19% year-over-year and 5% on a Q-o-Q basis. The year-over-year increase was primarily on account of recently acquired NRT business, investment in the new business initiatives, building the capabilities, and higher logistics costs due to increased freight rates. The SG&A spend as a percentage of the sales was 28.9% and was higher by 82 basis points on a year-over-year and 15 basis-points Q-o-Q basis. The R&D spend for the quarter was Rs. 666 crores, which is US$78 million, an increase of 20% on a year-over-year and a decrease of 8% on Q-o-Q. The continued investment in R&D was primarily towards the development of complex generics and biosimilars. The R&D spend was at 8% of the sales and was higher by 25 basis points on a year-over-year and lower by 110 basis points on a Q-o-Q basis. We expect the investment to be in the range of 8.5% to 9% for the full fiscal. The EBITDA for the quarter, including other income was Rs. 2,298 crores, which is US$269 million, an increase of 9% on a year-over-year basis and flat Q-o-Q. The EBITDA margin stood at 27.5% and was lower by 176 basis points on a year-over-year and 95 basis-points Q-o-Q basis. The net finance expense for the quarter is around Rs. 2 crores as compared to net income of Rs. 96 crores for the same quarter last year, primarily on account of unfavorable FOREX impact and lower interest income post-NRT acquisition consideration payout. As a result, profit before-tax for the quarter stood at Rs. 1,874 crores, that is US$219 million, EBITDA as a percentage of revenues was at 22.4%. This includes profit before-tax from the acquired NRT business of Rs. 124 crores. Effective tax rate for the quarter was at 25.1% versus 24.5% in the base quarter. We expect our normalized ETR to be around 25%. Profit after tax attributable to the equity holders of the parent for the quarter stood at Rs. 1,413 crores, which is US$165 million, a growth of 2% on year-over-year and 13% Q-o-Q. This is at 17% of revenue. Reported EPS is Rs. 16.94. The EPS has been derived on the increased number of shares post the stock split and after non-controlling interest. Operating working capital as of 31 December, 2024 was Rs. 12,782 crores which is US$1.49 billion, an increase of Rs. 716 crores which is US$84 million over 30 September, 2024. CapEx cash outflow for the quarter stood at Rs. 709 crores which is US$83 million. Negative cash flows for this quarter was Rs. 209 crores which is US$24 million. We have a net cash surplus of Rs. 1,603 crores which is US$187 million as of December 31, 2024. Foreign currency cash flow hedges in the form of derivatives are as follows. U.S. dollar is hedged through structured derivatives US$285 million for the next quarter at US$83.9 and US$681 million maturing over the next financial year with a minimum production rate of Rs. 85.7 to the dollar, which also allows participation when USD strengthens. RUB 1,903 million with a minimum production rate of Rs. 0.9 to the ruble maturing in the next three months. With this, I now request Erez to take us through the key business highlights.

Thank you, MVN. And very good morning and good evening to everyone. We have delivered another steady quarter with double-digit top-line growth and EBITDA margins of 27.5% and a return on capital employed of 28%. We remain committed to our stated strategy of strengthening our core generic business while also investing in our future growth drivers primarily in three areas: consumer healthcare, access to innovative products, and biosimilars. We are focused on driving productivity in research and development, scaling our manufacturing and commercial capabilities, and leveraging our market access to capture opportunities while operating efficiently. Following the completion of the acquisition of the Nicotine Replacement Therapy business in September, we are now focusing on its seamless integration, which will happen in a phased manner starting April 2025. During the transition period, the seller will provide distribution and related services across all markets. In Q3 FY’25, we saw the first quarter of consolidation of NRT's business and financials. Let me take you through the other key highlights for the quarter. One, double-digit growth in revenue at 16% with EBITDA margins at 27.5%, a net cash surplus of $188 million. We launched Toripalimab, the first and only immuno-oncology drug approved for the treatment of nasopharyngeal carcinoma; and Elobixibat, a first-in-class drug to treat chronic constipation under the brand name BixiBat in India. These launches are in line with our strategy to address issues of availability and accessibility of affordable innovation in India through in-house and collaborative efforts. We also made progress on our biosimilar journey. We secured the marketing authorization for rituximab in the UK and denosumab has been filed in both U.S. and Europe. On the regulatory front, in November the U.S. FDA completed GMP inspection at our facility CTO-2 in Bollaram, Hyderabad and issued a Form 483 with seven observations, we have responded to the observation within the stipulated timelines. We have integrated sustainability into our business operations and continue to be recognized for our focused efforts in ESG. We have replaced five globally renowned pharma companies in S&P Global CSA for 2024 with an ESG score of 79 out of 100. We continue to be members of the BGEI World Index for the second year in a row along with DGSI Emerging Markets Index for the ninth year in a row. MSCI ESG rating has been upgraded to ‘A’ in December. We continue to feature among Nifty 100 ESG sector leaders. Further, Science Magazine named Dr. Reddy's in their Top 20 Global Pharma Employers for the third consecutive year. Our North America generic business recorded revenue of $401 million for the quarter, which was flat on a year-to-year basis with a sequential decline of 10%. The benefit from volume growth and new launches was offset by price erosion resulting in year-on-year growth. Sequential decline was on account of lower sales from a few products, including Lenalidomide. We launched four new products during the quarters and we closed the full year with 15 to 20 launches. Our European Generic business segment includes NRT financials from the quarter. Europe recorded revenues of $134 million this quarter, a strong year-over-year growth of 142% and sequential growth of 114%. Excluding the NRT, the segment recorded a year-over-year growth of 22% and Q-o-Q growth of 5%. We gained from the growth in our existing products and new product launches, which more than offset price erosion. During the quarter, we launched a total of nine products across markets. Our emerging market business recorded revenue of Rs. 1,436 crores in the quarter with year-over-year growth of 12% and a decline of 1% on a sequential basis. The year-on-year growth was on account of new product launches in Russia and the rest of the world markets and was further aided by higher base business volumes. Within this segment, the Russia business grew by 20% on a year-on-year basis in constant currency. The India business recorded revenue of Rs. 1,346 crores in Q3 with a double-digit year-on-year growth of 40% and sequential decline of 4%. We benefited from the growth in our broad portfolio, including the in-licensed vaccine portfolio and new launches. We launched six brands this quarter. Our IPM rank continued to be at 10, and we're outperforming the IPM with MQT growth of 10.3%, while IPM growth was at 7.4%. However, excluding the in-licensed vaccines portfolio, our growth was at 5%. While many of our brands outperformed their respective categories, selected brands in cardiac and gastrointestinal therapy areas witnessed a slower pace of growth. We are poised to return to the market-leading growth in these therapy areas in the coming quarters. Our PCI business recorded revenue of $97 million in Q3 of FY2025 with a year-over-year growth of 3% and a sequential decline of 3%. The year-over-year growth was primarily on account of new product launches and improved volumes. We filed 23 drug master files globally this quarter. We invested 8% of our revenues to strengthen our R&D capabilities. Our R&D investment this quarter stood at Rs. 666 crores, and we are increasingly focusing on the development of our complex generic pipelines, including promising GLP-1 assets and biosimilars. We are also building commercial capacities, enhancing our manufacturing and commercial capabilities, and investing in new technologies to capitalize on growth opportunities. We remain committed to sustainability, quality, and operational excellence. We continue to invest in the three areas of strategic focus, which are consumer healthcare, innovative products, and biosimilars to build a solid foundation for future growth. Our strategic investment in R&D, recent acquisition, and CapEx put us in a position of strength in this journey. We are excited about the opportunities ahead and remain steadfast in driving sustainable growth. With this, I would like to open the floor for questions and answers.

Thank you very much. We will now begin the question-and-answer session. Our first question comes from Kunal Dhamesha at Macquarie. Please go ahead.

Hi, good evening and thank you for the opportunity. The first one on the India business, so we have grown at around 16% year-on-year, but if we just look at the core business, how has that performance shaped up? We have also mentioned that there is some weakness in the cardiac and gastrointestinal segments, lower volume pickup. So is it transitory in nature, or is there something more to be taken into account here?

Yes. So indeed, if you take out, so all the other categories outperformed the market and actually all of them grew up besides these two segments. As for both of them, there are solutions or in terms of, let's call it, the actual execution of the way we do sell the marketing as well as the product performance per se. Specifically to gastro, I have no doubt that it will come relatively soon. Cardiovascular may take an additional quarter as we need some more adjustments to do. In both cases, we are investing more in both businesses in order to grow there faster. So we are very much focused on that. Other than that, the business in India did pretty well.

There is one more question on our biosimilar foray now. We have already filed Rituximab now with denosumab also filed, but with partner. If you could throw some light on the economics here for denosumab. And in terms of, let's say, when you will launch, can we assume that this would be the second product after Rituximab and then followed by another one, abatacept, is the way we should look at it?

Yes. That’s how we should look at it. So denosumab is actually supposed to facilitate the abatacept launch because the two products are going for the same segments and give or take to the same type of doctors. So it was also the strategic rationale of why to license the product. We wanted to create the team and the capability in the marketplace and to be able to then gain more or faster market share on abatacept. So this was also the rationale. In terms of timelines, normally in the U.S., it takes about 12 months, give or take for approval. So as we submitted it in December, give or take, this is where we should expect a launch in Europe, it’s a bit slower. We submitted in October, so likely we normally take around 14, 15 months to get all the approvals. So that’s also where the time we are supposed to launch denosumab. And yes, it will be after rituximab in Europe.

Sure, sure. And with your permission, last one for MVN, the Rs. 1,240 million of NRT PBT that we have suggested, would it include any allocation of interest expense or just the amortization?

Only amortization, no interest.

Okay. Okay. Thank you, and all the best.

Thank you.

Thank you. The next question comes from Neha Manpuria from Bank of America. Please go ahead.

Yes. Thanks for taking my question. Erez, on the U.S. business you mentioned that a few products have seen moderation quarter-on-quarter, including Revlimid. While Revlimid we understand there’s lumpiness, but what is the reason for the decline in the base business excluding Revlimid? Because have we lost market share? Is the pricing erosion higher than we were expecting? Any color there?

So nothing major happened. The products that were declined were the famous products that we got the competition like the lenalidomide. The competition entered, some of them nine months ago, some of them six months ago. So there was certain continuation. This happened also before. Nothing major happened in per share, against that most of the growth that compensated for it was primarily market share, let’s say less about new products and more about market share.

Just to get this correctly, we have lost market share in some of these products and hence the decline. So that’s the business the new base we need to work with. Is that understanding, right?

It’s a combination of market share and prices.

Understood. Okay, got it. And my second question is, on the consumer healthcare business, on the NRT transaction, given that Haleon is still running the business for us till the time the integration happens, how should we look at investments in the business and the ramp-up in the NRT pool? Would that happen only after the integration is done? Is that fair to assume that in the next 12 months the focus would be naturally integrating and then probably the business would go into an investment phase?

No, we do have an agreement with them on investments, an increase of even investment in certain areas. I would say, in this is a business that actually is now gaining momentum. It is growing actually for the second year in a row. And we want to continue that momentum. So there is a certain agreement of gross-to-net how much market expenses we should put at the time. Once, of course, the market will come to us. We don’t need to pay that fee anymore to Haleon. So it will save that amount of money. We are paying a certain amount of money for the services they are giving us as we speak. And it will allow us, of course, to accelerate this process. In terms of priority, absolute integration is a priority, but also to grow the business. So to grow the business, to build the capabilities to, there is a lot of innovation that was not done there and to introduce it. The real growth will come post this integration, but we are going to invest more also in this 12 months to 14 months during that time. You are not waiting for them.

Okay. And that investment will flow through our P&L in the SG&A cost. That’s a fair assumption.

Yes.

Yes, absolutely, absolutely.

Okay. Thank you so much.

Thank you. The next question comes from the line of Amey Chalke from JM Financial. Please go ahead.

Yes. Thank you so much for taking my questions and congrats to the management on a good set of numbers. So first question I have is on Semaglutide. We understand that Reddy is one of the players who have filed for the Canada market, when the patent expiry is expected somewhere early next year. At present, there are two to three players for this market. By the time we would be launching this product in this market, do you expect the players to increase or what will be the competitive scenario at that point of time? Also, if you can also explain Canada market, how similar is it with respect to U.S. when it comes to price realization, market share gains, etc.? How easy or difficult it is to gain market share in Canada particularly, because we have seen in case of Revlimid, there were a lot of players who had filed for this product even for Canada, but ramp-up had not been very encouraging. So if you can give some color on the Canada market with respect to Semaglutide opportunities.

Sure, I'll go and do my best. First, the product, if I recall correctly, in January 2026 is where the patent expiration will happen for Ozempic. And this is the product that the generic version of it is expected to be launched. People will get approval. I believe we are positioned well to get approval for that period of time. And naturally, it is a very important market for us. Normally, between the time that you submit the product to the Canadian authorities until you get approval, it's 12 to 14 months. So people will have to – if they want to be in January of 2026, they had to already file it to be there on time. Anyone that filed after that date is likely to get approval only after that. So what you're going to see is probably a sequence in which people will get approval and we hope to be the first one in the pack. And of course, but for that we need to get the approval. Second, it's a product that all the patent role, but it's not easy to make the API. It's not easy, and it's as you know, you need to make the auto-injector, the pen. And it requires a capacity to align through that. The way you take market share in Canada is in that respect similar to what you're familiar with in the United States or in the UK in which you are collaborating with the main distributors and retailers to gain market share. They normally share this product. In this respect, you should look at it like it's a retail product and that's probably what you do. The reimbursement mechanism in Canada is different. Every product that is coming is taking by law the reimbursement price down. So in terms of the pricing versus the reimbursement pricing, naturally the more competition comes, the price will go down accordingly. This is very normal in Canada. So potentially it could be that in the earlier times there will be more limited competition. And of course, it will intensify over time as more people join and reimbursement price will go down. But to put scenarios, time will tell who will get approval, we will not get approval, at least we believe that we have good chances, let's see.

Sure. I have one more question regarding Semaglutide. Given the high demand, which is anticipated when generic competitors enter the market globally, I think there may be constraints on supply, particularly with both the active pharmaceutical ingredient and the manufacturing assembly lines. How are we planning to improve our execution in this area? Are we reserving capacity for both manufacturing and the active ingredient? How will we manage this situation?

We are working on this project including capacity for the last 10 years. It’s not that 10 years ago, we knew that the product would be that big; this is obviously information that came over time. But if you see the level of R&D and CapEx, you can assume that a big portion of it went for this activity. By the way, it's not just the API, it's the API for both the synthetic as well as the semi-synthetic. It's about both internal as well as external options for manufacturing. It is about having access to the relevant devices. We have been working on it for quite some time and indeed not everybody will have to be able to cater to this magnitude. I agree with it. But I'm assuming that the product is so attractive that eventually it will be a very competitive marketplace, but at least in the initial days people will have to build a certain level of capacity and market access to make it happen. I just want to make sure that full transparency is not just about specific markets like Canada; there are about 80 markets that can be opened for 2026 because the product is in demand in all the markets in the world. But certain markets in which the innovative products do not even come to it, we believe that it's also a nice opportunity in its own merit.

Sure. Just last question on the SG&A spend. I believe because we have the Revlimid opportunity at present, which is giving us a good cushion to spend more, there is a good amount of discretionary spend happening at present. So is it possible for the management to give some visibility on how much of the spend is discretionary at present, which could reduce post-Revlimid or do you think, because of the Semaglutide kind of opportunities, it might continue?

We feel very comfortable with a 25% EBITDA, which enables us to provide significant returns to our shareholders and invest in our operations. We took advantage of the past few years of generic Revlimid to increase our investments. This allowed us to acquire the NRT business and increase our capital expenditures. Our previous investments include semaglutide, and we plan to continue investing in the future, focusing on growth not just for the immediate years like 2026 and 2027, but also for 2028 and 2029. We aim to maintain our presence in the market for a long time. If we face lower revenues, we have the capability to adjust, as many of our expenses, especially in SG&A and R&D, are discretionary. It's essential for us to uphold our philosophy of remaining profitable.

Sure. Thank you so much. I will join back.

Thank you. The next question comes from the line of Bino Pathiparampil from Elara Capital. Please go ahead.

Hi. Good evening. A couple of questions from my side. Could you give some color on the iron sucrose filing that you have done? Do you expect approval in time here soon?

So we filed it actually a long time ago. We recently got a CR on the API side, which we are planning to address. So we thought that it’s a good opportunity to launch it in this coming month. This is right now will be delayed because we need to answer this year.

Got it. Second on abatacept, some of your competitors have tried in the past, but it seems it’s a difficult product and some of them seem to have given up. What gives you the confidence that your product can see through the FDA approval process?

We have a very successful Phase 1 and so far and normally when you pass Phase 1, you have a good chance to, of course to be very successful in Phase 3. And also so far, the rollout and the fact that we even finished the rollout of all the patients is very encouraging. We did it in actually very, very good timing. We have a very – we believe in our clinical and I hope that we will be able to submit sometime next year.

Got it. And last one question, if I can on lenalidomide. Going into FY2026 in Q4 that is in January 2026, the kind of settlement with volume restrictions are coming to an end. So how should we look at lenalidomide? Will it continue a rough quarterly estimate smoothly till Q3 of next year and then drop off or do you think it will get front-loaded in the next year?

I don’t know exactly how the quarters will be because this is a decision normally by the customers. It’s not that we are planning that way. We are serving the customer in a way they want to be served. But yes, we – likely that we will not sell at this level of pricing, let’s say, post-summer, September, maybe October of calendar 2025. Now what exactly how it will work, I don’t know, but post that period of time, unlikely that it will come because of the normal, what we call shelf adjustment stuff like that. So give or take, until that period of time, you should see similar behavior of the product as you saw in the last couple of years.

Got it. Thank you. I’ll join back the queue.

Thank you. Participants are requested to ask not more than two questions at a time and to rejoin the queue in case of incremental queries. We’ll move on to the next participant. The next question comes from Surya Narayan Patra from PhillipCapital. Please go ahead.

Thanks for the opportunity, sir. First question is on the NRT portfolio acquisition. See, while we have indicated that the SG&A cost this quarter had seen a kind of uptick post this acquisition and integration, and given – even after that, the PVTE percentage of NRT portfolio, around 21% looks interesting. So how to think about the profitability of this acquired asset going ahead because the current quarter is anyway seeing the support of Haleon. At the same time, we are also thinking about spending more on building the portfolio and franchise. So while it looks interesting in terms of the profitability compared to our base business, how should we think in terms of the synergy benefit at the margin and profitability level for this acquired asset?

It should continue to be profitable. So we are absolutely going to finance the additional investment with growth and we are planning to keep it profitable. There is no plan to go for, let’s say two or three years of investment and then take it from there. The idea is to indeed spend more, but to keep it for sure the 20-plus digit on EBITDA should continue on this asset.

Okay. My second point is on the Nestlé JV and the domestic business put together. I am asking this question, so how long will it take for the Nestlé JV to really contribute meaningfully to the growth of the domestic business? That is one. And the second part of the domestic business question is while we do anticipate this is the business segment, which should be growing the fastest among all of the business segments for Dr. Reddy over the next few years. But right now it is not even matching the industry growth momentum. So how should one think and what will start contributing incrementally to the anticipated so that it can reach the anticipated growth rate?

So the question on Nestlé, this will absolutely take time. The reason for that is that we need to bring the products to India and we need to invest behind brands that are not today recognized in India. So it's not that we're investing behind something that is already known. And as I'm sure you know well, it takes time to build brands that both Nestlé and us are very much aligned to that. By the way, so far, the business is going even ahead of our expectations. So I'm very happy about it. But in terms of significant contribution to the growth, it will take a couple of years. As for what you commented about the India business, I mentioned it with the previous questions. Actually, the business is doing well. We do have two segments that underperformed, which we mentioned also the GI and the cardiovascular. We have a plan to bring on track. But the business is actually doing well. What we believe really will drive the business, I'm saying it for quite some time now. We believe very much in introducing innovation to India rather than, I strongly believe, I’m emphasizing also today that the branded generics growth will decline over time because of various reasons that we discussed in the past. And I believe that the right products to bring to India are technologies that are addressing unmet needs that are with patent protection. And that's what we are building on. I am very, very committed to what we discussed in the past. We are going to grow and become profound in India.

Okay. So the momentum accelerated growth will be seen in the domestic side starting next year onwards, sir? Or is it 2027 onwards?

No, we are going also today. We are doing it both organic and inorganic. We are growing at 15%, 16%. For me, growth is everything, and we are growing faster than the market. The market is growing at 7% and we are going to grow about 15%. This will continue. This will continue. What we do not take into account at this stage because of valuation is, of course, major acquisition that we discussed in the past. Right now, at least the multiples in India are too high for us and we are trying to do it organically. This is why it's taking more time. But we are very bullish and India is a very, very important focused market for us.

Okay. Even the vaccine portfolio should see…

May we request you return to the queue for questions?

Yeah, yeah. Okay, thanks.

The next question comes from Damayanti Kerai from HSBC. Please go ahead.

Hi. Thank you for the opportunity. Erez, my question is again on Semaglutide. So, what kind of addressable market are you looking at outside of the U.S.? You mentioned a lot of markets will open up starting 2026 and with the kind of capabilities which we have built on API or on the device front, what kind of market share are you looking for yourself?

So, the markets will open in a certain sequence in 2026. The most notable markets will be Canada, India, Brazil. The equity markets that we are discussing are primarily markets in which there were no patent protections. These are markets primarily in emerging markets like in Asia, Africa, and Latin America. Much smaller markets in Asia, but cumulatively and demand-wise, it can add a very nice growth to that. We are working both B2B and B2C. We have global partners in which they are licensing our products that have great presence in those markets. Some of them we are going to do it by ourselves. So, it's a combination of selling APIs, selling finished goods, and, of course, marketing as a product. And we are going for all the products, Ozempic, Wegovy, and the oral products. So overall, it's something that will come in multi-markets. This specific product, as you know, in the U.S. and Europe will come later into the year.

Okay. But any size indication, which you are targeting, say, for the bigger addressable market?

It’s hard to tell market share because we don’t know yet, who is going to compete in which one of these markets, etc. But naturally, in all the markets that we will be sourced. We have high expectations of performance, obviously, from the market. But any number that I indicate to you will be wrong. Time will tell. It’s not the flaring. We really don’t know.

Okay. Thank you.

Thank you. The next question comes from Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead.

Yeah. Thanks for the opportunity. Sir, just on abatacept for the timeline to file the product I missed in the comments, if you could repeat?

Timelines to file, sorry?

Abatacept biosimilar?

So if everything will go right, we should submit it in December of 2025.

December of this year?

December 2025. Yes.

Got it. So and then assuming 12 to 15 months’ timeline to the regulatory review cycle, right?

Like I mentioned, we hope for the best. Normally, it’s about 12 months, so let’s hope. But let’s say for patent point of view, January of 2027 will be a great timeline if we can achieve it.

Understood. And will this product be manufactured completely in-house as in drug product as well as drug substance?

Correct. We will make both DS as well as DP.

Sorry, I didn’t get your comment, we will manufacture...

You are correct. We will make both drug substance as well as drug product.

Understood. And just one more, if I may squeeze in, with respect to semaglutide, while the addressable market size seems too difficult to highlight. But broadly, given that the ex-North America market, let’s say Canada, India, Brazil market, can this product do as much as Revlimid has done for us in North America?

I wish it’s – we – I don’t see. First of all, the product has the potential to be big but let’s see. We need to see what will be the prices, what will be the market share, etc. But there is a potential for something significant. We – like I mentioned before, we are not – it’s not a product replacing one product. The growth post-Revlimid will come from four elements that I mentioned. First of all, the growth of the base products. We have about Rs. 30,000 crores sales that are growing double digits in base business, including, of course, the new products that will be launched that are not the big. Second one, we discussed we are aligning our expenses to the relevant revenues that we have. And creating that level of productivity as well. Number three, we have those special products like semaglutide and abatacept. And number four, we have DP, we have all the time doing DP. So all four elements will grow. It’s not one silver bullet. We highlighted specifically the Sema at this time because of the timing in which this product is going to affect, and I’m happy that you guys picked it up, but it’s not that Sema will replace lenalidomide. It’s all the business leaders will have to grow and this should allow us to continue to grow the company also post the arrangement of Revlimid.

Got it. Thank you.

Thank you. The next question comes from Saion Mukherjee from Nomura. Please go ahead.

Yes, hi. Thanks for taking my question. So just one question on semaglutide. Is the oral formulation available for launch in 2026 in India and the other emerging markets? Or will it just be injectable and oral would come sometime later? If you can highlight the timelines for different formulations.

Oral will come later. In some places, there are also patents on the oral and the formulations. So in most of the markets, it will come between 12 to 18 months after the Ozempic. But we are planning to be day one in all the places that we can with this product.

So in calendar 2027, you will see oral launches?

In some markets, it can be 2027 and some markets will be 2028.

Thank you. The next question comes from the line of Foram Parekh from Bank of Baroda Capital Market. Please go ahead. Ms. Parekh, your line is unmuted. Please proceed with your question.

Yes. Am I audible now?

Yes, you're audible. Please go ahead.

Yes. Thank you for the opportunity. My question is on the European market. So ex of NRT, the European market has grown at 22%. So how sustainable is this growth rate going forward? And if you could explain the reason for this kind of growth? Thank you.

Yes, first of all, it is sustainable. We are launching products. So the main, of course, is normal, we are the leaders in primarily in five countries that we are operating. Today, we are working primarily top five, but we are expanding also to five more. And so it's a combination of new products, volume growth in the project that we launch in the new market. So it's absolutely sustainable.

Sure, thank you.

Thank you. The next question comes from the line of Anubhav Agrawal from UBS. Please go ahead.

Yes, thank you. Two questions. One is for MVN, sir. Just trying to understand the selling expenses in this quarter, so do they include any selling expense for NRT or they don't?

Yes. It includes the NRT business SG&A.

So just trying to understand if SG&A. Sequentially December over the September quarter, selling expenses excluding amortization is up like Rs. 50 crore – Rs. 60 crore, whereas NRT itself should have selling expenses of Rs. 150 crore-plus. So what else has gone down that the net increase is only Rs. 50 crore – Rs. 60 crore for us?

So if you look at just maybe to recap our last quarter discussions, I think there was one exceptional expense of stamp duty amounting to Rs. 52 crores in the previous quarter. And this quarter, we have full NRT expenses, so if you look at then, I don't know you'll get the right map.

Okay, sure. Second question is on – you guys have earlier mentioned that you have two good products in the U.S. You talked about Iron Sucrose as an API. What about the other? Is there any query or inspection or anything pending for it or do you still expect approval for the other product until now?

So there were no other queries that came recently. As for inspections, yes, we do expect inspections in all the sites that were not expected for quite some time. So we do have about five or six sites that need to count that you should see inspections. Of course, those inspections will come at the time that the FDA will choose to do, but there are no pending activities that are set, so all the rest is business as usual.

Just I – sorry, my question was very specific to a product. So you guys have mentioned two approvals. One, you talked about Iron Sucrose. Second is another product. Do you still expect approval of the other product anytime now, or is that pending some queries or anything else?

I don't know which other product you are referring to, but I'm expecting approvals of 15 to 20 products in the U.S. in addition to Iron Sucrose.

Sorry, Erez, you mentioned this last quarter call…

Yes. I also said we will get we just mentioned because answering your question that we will be seeing our approach.

Okay. Thank you very much.

Thank you. The next question comes from Vishal Manchanda from Systematix. Please go ahead.

Hi, thanks for the opportunity. Hope I'm audible.

Yes, please.

Yes. Will you be filing both the ID and the other application in December 2025?

The answer is yes, we do but the time of launch is not the same because there is additional patent up to 10 years, which takes us if I remember correctly to the beginning of 2028.

So, up to 10 years will be beginning of 2028.

This is the – what we believe is the time to enter the market as there will be our IT people.

Thanks. And second on the semaglutide filing in Canada, are there any device statements that can block your version as a substitutable version to the innovator copy?

We don't think so.

And is your device identical to the innovator device or do you have a different device?

We have a great device.

Sorry.

We have an amazing device.

Got it. Okay. And just one final one, whether we should expect your SG&A expenses to stay at current levels, 28% of sales going-forward?

Yes, around this level.

28%.

Yes.

Okay. Thanks. That's all from me.

Thank you. The next question comes from Shashank Krishnakumar from Emkay Global. Please go ahead.

Yes. Hey, thanks for taking my question. First one was just wanted to get your sense on the broader U.S. biosimilar landscape. Given that our incremental investments are being directed to our biosims, we are increasingly seeing PBMs launching their own private labels. I think starting this year, several Humira biosimilars will also face formulary exclusions. So how do you see the overall U.S. biosimilar landscape shaping up given that we have several products in the pipeline?

So I'm assuming it's more of a strategic question. First of all, a lot of products, if you go, will come gradually, but for the next decade will be of patents, many, many products and many bispecific as well. So, in that respect, it creates an opportunity. Second, there will be products that will be more crowded and therefore very high level of competition, and you will have products that will be less crowded in that respect. Absolutely, we are going to see private labels. We are going to see all kinds of phenomena related to pain for the product. So, we are preparing for a very competitive landscape. And like I mentioned in the past, we are not going broad; we are selecting certain products that we believe that we can make the difference and add value to the respective market. We are trying to go for limited number but with hopefully less competition-type of products, and hopefully we will be right in the way we select it. So far, I believe that the products starting from Vasostrict are meeting this criteria.

Thanks, that's helpful. And secondly, just had a question on DFD-29. Are we also eligible for sales-based royalties here given that the product has now been approved?

Yes, we do.

Got it. Thank you. That's it from me.

Thank you. The next follow-up question comes from Bino Pathiparampil from Elara Capital. Please go ahead.

Hi, just quick housekeeping questions. One, the depreciation and amortization rate this quarter. Is this quarter a good benchmark to project it forward?

No, this quarter for amortization includes NRT business amortization. It will continue.

So this rate is a stable rate to look forward to.

Yes, this quarter I think if you see in constant currency and INR, both 19% and 20%, not much difference in both INR and ruble terms.

Thank you.

Thank you. The next follow-up question comes from Surya Narayan Patra from PhillipCapital. Please go ahead.

Yes, just a clarification. Thanks for this. In case of the Semaglutide opportunity, what is the level of integration that we are having in terms of our manufacturing capability to the level of advanced intermediate, intermediate levels, or is it API and the formulation?

So we are fully integrated for all the stages of the API. We are making the websites from the basic building blocks as well as the formulation. We are buying the device.

And it is for both solid state as well as liquid state, as you mentioned, the entire value chain?

The entire value chain. Yes.

Okay. Sure, sir. Yes. Thank you. Thanks for this.

Thank you. Ladies and gentlemen, we take that as our last question for today. I now hand the conference over to Ms. Richa Periwal for closing comments.

Thank you all for joining us for today's evening call. In case of any further queries or clarifications, please get in touch with Aishwarya or myself. Thank you once again.

Thank you. On behalf of Dr. Reddy's Laboratories Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.