Ladies and gentlemen, good evening, and welcome to the Quarter 4 and Full Year FY '25 Earnings Conference Call of Dr. Reddy's Laboratories Limited. I now hand the conference over to Ms. Richa Periwal. Thank you, and over to you, ma'am.

Thank you. Good morning and good evening to all of you. Thank you for joining us today for the Dr. Reddy's Earnings Conference Call covering the quarter and full year ended March 31, 2025. We appreciate your time and participation. Joining us today is the leadership team of Dr. Reddy's Limited, comprising Mr. Erez Israeli, our CEO; Mr. M. V. Narasimham, our CFO; and the Investor Relations team. Earlier today, we released our results, which are now available on our website. We will begin today's call with MVN presenting the financial highlights for the quarter and the year. Following this, Erez will share his thoughts on the business performance. We will then open the floor for the Q&A session. Please note that today's call is a copyrighted material of Dr. Reddy's and cannot be rebroadcasted or attributed in press or media outlet without the company's expressed written consent. This call is being recorded, and both the playback and transcript will be available on our website soon. All discussion and analysis in this call will be based on the IFRS consolidated financial statements. Additionally, today's discussion includes certain non-GAAP financial measures. For the reconciliation of GAAP to non-GAAP measures, please refer to our press release. Before we continue, I would like to remind everyone that the safe harbor provisions outlined in today's press release also apply to this conference call. Now I hand over the call to Erez.

Thank you, Richa. Hello everyone, and I hope you are all doing well. I am happy to share an overview of our financial performance for the fourth quarter and full year of FY 2025. This fiscal year was another significant year for our organization, highlighted by strong financial results. We reached record revenue of over USD 3.8 billion and surpassed USD 1 billion in EBITDA for the first time. Both revenue and EBITDA experienced double-digit growth this year. For your reference, all figures are translated into U.S. dollars using the exchange rate of INR 85.43 as of March 31, 2025. In terms of revenue performance, our consolidated revenues for Q4 FY '25 were INR 8,506 crores, which is about USD 996 million, showing a year-over-year growth of 20% and a sequential growth of 2%. For the full year, our revenues amounted to INR 32,554 crores or USD 3.8 billion, reflecting a 17% growth. These results include contributions from our acquired consumer healthcare business focused on nicotine replacement therapy, which added INR 597 crores in Q4 and INR 1,202 crores for the entire year. This overall revenue growth can be attributed to this acquisition and our generic portfolio across different markets. Excluding the NRT sales, revenue growth was 12% year-over-year for both the quarter and the year, and 2% sequentially for the quarter. Regarding gross margin, the consolidated gross profit margin for Q4 was 55.6%, reflecting a year-over-year decline of 300 basis points and a sequential decline of 312 basis points. This decline was primarily due to reduced manufacturing overhead leverage and higher milestone income recognized in the previous period. The gross margins for the Global Generics and PSAI segments were 59.3% and 26.3% for the quarter. For the full fiscal year, the gross margin remained stable at 58.5%, consistent with FY '24, while the margins for Global Generics and PSAI stood at 62% and 27.1% respectively for the year. In terms of selling and general administrative expenses, SG&A expenses for the quarter were INR 2,406 crores, which is USD 282 million, marking a 17% year-over-year increase and remaining broadly flat quarter-over-quarter. SG&A as a percentage of sales was 28.3%, showing a decline of 63 basis points year-over-year and 57 basis points sequentially. For the full year, SG&A expenses totaled INR 9,382 crores or USD 1.1 billion, an increase of 22% year-over-year, largely driven by the recently acquired NRT business in Consumer Healthcare, investments in commercial activities, and rising logistics costs. We are committed to maintaining a disciplined cost structure while strategically focusing on strengthening our existing business and exploring new growth opportunities. Research and development is critical for our long-term growth, and we are enhancing our internal R&D efforts through strategic collaborations for innovation. R&D spending for the quarter was INR 726 crores, equivalent to USD 85 million, representing a 6% year-over-year increase and a 9% quarter-on-quarter increase. As a percentage of revenues, R&D investment was 8.5%, down by 118 basis points year-over-year but up by 57 basis points sequentially. For the full year, R&D expenditures reached INR 2,738 crores, or USD 320 million, reflecting a 20% year-over-year increase, primarily focused on building a diverse pipeline, expanding small molecules, biosimilars, complex generics, and novel oncology assets. Regarding other financials, we faced an impairment loss of INR 77 crores in Q4 and INR 169 crores for the full year. This impairment is related to certain product-related intangibles from our core portfolio and other product-related intangibles tied to our global generic business in India and Europe due to challenging market conditions. Our operating income was INR 247 crores in Q4 compared to INR 66 crores in the same quarter last year, and for the full year, it was INR 436 crores, up from INR 420 crores in FY '24. The increase in Q4 is primarily due to the reclassification of foreign exchange gains from overseas operations. Following the divestment of the Freeport Manufacturing Facility, the net benefit to the P&L from this foreign exchange translation reserve reversal, after addressing severance costs and other one-time expenses, amounts to INR 121 crores. Ending EBITDA for the quarter was INR 2,475 crores, or USD 290 million, achieving year-over-year growth of 32% and quarter-over-quarter growth of 8%. The EBITDA margin was 29.1%, an increase of 267 basis points year-over-year and 160 basis points quarter-over-quarter. For FY '25, EBITDA reached INR 9,213 crores, or USD 1.1 billion, reflecting a growth of 11% year-over-year. The annual EBITDA margin was 28.3%, down from 29.7% in FY '24, showing a decrease of 143 basis points. Regarding finance income and profitability, net finance income for Q4 was INR 235 crores, compared to INR 102 crores the previous year, and INR 400 crores for the full year versus INR 399 crores last year. The year-over-year increase is attributed to net foreign exchange gains. Profit before tax was INR 2,005 crores, or USD 235 million in Q4, which is a 25% increase year-over-year and 7% quarter-over-quarter. For the year, profit before tax totaled INR 7,678 crores, or USD 899 million, marking a year-over-year growth of 7%. The profit before tax margin was 23.6% for both Q4 and FY '25. This includes INR 89 crores for the quarter and INR 101 crores for the full year from the NRT portfolio. The effective tax rate was 20.8% for Q4 and 25.4% for the full year. The lower quarter tax rate is due to the reversal of previously recognized tax provisions from prior years, and the transfer to income statement is not taxable. The full-year effective tax rate is higher than the previous year, primarily due to the reversal of previously recognized deferred tax assets related to land indexation and the recognition of previously unrecognized deferred tax assets on operational tax losses compared to March 31, 2024. We anticipate the effective tax rate for FY '26 will be similar to this fiscal year's. Profit after tax attributable to equity holders was INR 1,594 crores, or USD 187 million in Q4, up 22% year-over-year and 13% quarter-over-quarter, resulting in a margin of 19%. For the full year, profit after tax reached INR 5,655 crores, reflecting year-over-year growth of 2% and a margin of 17%. Earnings per share were INR 19.1 for the quarter and INR 68.1 for the full year. Based on our performance, the Board has recommended a dividend payment of INR 8 per equity share of face value of INR 1 each. This represents 18% of the face value for the year ended March 31, 2025, pending approval from the company's members. In terms of cash flows and the balance sheet, operating working capital as of March 31, 2025, was INR 12,590 crores, a decrease of INR 192 crores compared to December 31, 2024, largely due to improved management of receivables. Capital expenditure was INR 767 crores for the quarter and INR 2,699 crores for the full year. Free cash flow for the quarter was INR 1,110 crores and for the full year INR 1,332 crores before any acquisition-related payouts. At the end of the year, the company maintained a net cash surplus of INR 2,454 crores after the NRT acquisition payout in October. As of March 31, 2023, we executed foreign currency cash flow hedges through derivative instruments, hedging USD 786 million with structured derivative contracts maturing over the next financial year. These contracts provide a minimum production rate of INR 85.9 for the U.S. dollar, while also allowing for potential gains in the event of U.S. dollar appreciation. We also hedged INR 2,500 million with a minimum production rate of INR 0.91 for the Russian Ruble, with these contracts set to mature within the next three months. With that, I will now hand over the call to Erez for key business highlights.

Thank you, MVN. Good morning and good evening, everyone. Dr. Reddy's achieved another strong year with record annual revenues and profits. The fiscal year 2025 saw double-digit growth in all business segments. During this time, we focused on strengthening our core generic businesses while investing in our three strategic growth areas: consumer health, innovation, and biosimilars. We remain dedicated to improving operational efficiencies, enhancing our pipeline, and boosting organizational capabilities. Simultaneously, we are pursuing valuable acquisitions to support our organic growth strategy. I will now outline key financial figures for the fiscal year and notable updates from the fourth quarter. We maintained our momentum with impressive double-digit revenue growth of 20% in Q4 and 17% for the full fiscal year. EBITDA margins remained strong, exceeding 29% for the quarter and finishing the year at over 28%. Our return on capital employed reached 27.7%, highlighting our commitment to capital efficiency and value creation. We ended the fiscal year with a net cash surplus of USD 287 million, enhancing our financial flexibility to support future growth initiatives. Our biosimilar strategy made significant strides this quarter through strategic partnerships. We secured exclusive commercialization rights for the daratumumab biosimilar candidate from Henlius in the U.S. and Europe, strengthening our oncology portfolio. We signed an agreement with Bio-Thera for the commercialization of ustekinumab and golimumab biosimilar candidates focusing on the Southeastern Asia markets. The U.S. FDA accepted the filing for our partner's denosumab biosimilar, marking an important milestone in our investment in regulated biosimilar markets. The integration of our newly acquired nicotine replacement therapy business is progressing as planned. We successfully integrated the United Kingdom at the start of the month and we are on track to complete the integration of the Nordic region next. We are committed to bringing innovation to India and improving healthcare access through strategic partnerships. We have extended our collaboration with Sanofi to introduce Beyfortus, a new drug aimed at preventing RSV. Alongside ALK-Abilog, we launched an immunotherapy product for allergies induced by house dust mites. We have also started participating in the Government of India General Ashwani program with one of our products. Additionally, we divested our Shreveport Manufacturing Facility in Louisiana, United States. On the regulatory side, our API manufacturing facility in CTO2 in Bollaram, Hyderabad received VAI status from the U.S. FDA after a successful GMP inspection in November 2024. We continue to excel in sustainability, receiving several accolades for our environmental, social, and governance initiatives. Our EcoVadis score improved to 73%, placing us in the top 15% of assessed companies globally. We also received the Climate Action Program 2.0 Degrees award from CII in the top resilient category for the manufacturing sector. We were recognized for leadership in the Indian Corporate Governance Scorecard 2024 by Institutional Investor Advisory Services. Next, I will discuss key business highlights from the quarter and the full fiscal year, with all figures presented in their respective local currencies. Our North America Generic business generated revenue of $418 million in the quarter, demonstrating a year-on-year growth of 7% and a sequential growth of 4%. For the full fiscal year, revenue reached USD 1,727 million, a 10% increase over the previous year, driven by higher volumes in key products and successful new product launches, though partially offset by pricing pressures. This quarter, we introduced seven new products, totaling 18 for the fiscal year, and we anticipate continued momentum into FY '26. Our European Generics business saw revenues of EUR 140 million for the quarter, signifying a year-on-year growth of 142% and a sequential increase of 4%. For the fiscal year, revenue was EUR 395 million, representing a 73% growth compared to the previous year, driven by the NRT business, increased volumes from our established products, and gains from new product launches, which helped mitigate pricing pressures. Excluding contributions from the NRT business, the European generic sector achieved a 29% year-on-year growth and an 11% quarter-on-quarter growth in Q4, with full-year growth of 15%. This quarter, we launched 10 new generic products in Europe, totaling EUR 39 million for the fiscal year. Our emerging markets generic business brought in revenues of INR 1,398 crores in Q4, yielding a year-on-year growth of 16% but a sequential decline of 20%. For the full fiscal year, revenue reached INR 5,477 crores, reflecting a 13% year-on-year increase, primarily driven by higher volumes and new product launches, despite some unfavorable foreign exchange effects. We launched 26 new products in various emerging market countries this quarter, totaling 85 for FY '25. Within this market, our Russia business exhibited a year-on-year growth of 27% in constant currency for the quarter, although it faced a sequential decline of 13%. On a full-year basis, the Russia business grew by 24% in constant currency. The India business reported revenue of INR 1,305 crores in Q4, showing a double-digit year-on-year growth of 16% and a sequential decline of 3% for the quarter. For the full fiscal year, revenues were INR 5,373 crores, representing a 16% year-on-year increase. Excluding the in-licensing vaccine portfolio, the business achieved a 6% growth in Q4 and for the full year, primarily driven by successful new product launches and favorable pricing. According to IQVIA, we have maintained our position as one of the top 10 largest players in the Indian Pharmaceutical Market, slightly outperforming the sector with a moving annual total growth of 8.4% versus the market's 8%. In addition to the Sanofi and Nestle portfolio, we launched 23 brands throughout the fiscal year. Our PSAI business recorded revenues of USD 112 million in Q4, reflecting a year-on-year growth of 13% and a sequential growth of 15%. For the full fiscal year, revenue was USD 401 million, representing a 12% growth compared to the prior year, primarily driven by increased volumes from new API launches and growth within our complex development and manufacturing sector. During the quarter, we filed drug master files, including 7 for the United States, totaling 111 filings for the year. We remain committed to investing in our pipeline for future growth, supported by strategic collaborations focused on innovation. Our R&D investment for the quarter was INR 726 crores, representing a year-on-year growth of 6%, with a growing focus on complex assets, such as GLP-1 and biosimilars. Additionally, we completed 95 global generic filings, bringing the total for the fiscal year to 249. In FY 2026, we plan to continue expanding and strengthening our core businesses, driving value through effective portfolio management, growing our presence in consumer healthcare, innovative therapies, and biosimilars, leveraging our commercial reach, seeking value-added acquisitions and partnerships, and maintaining financial discipline to build a sustainable future. I would now like to open the floor for questions and answers.

The first question is from Neha Manpuria from Bank of America.

My first question is about tariffs. Since you communicate with policymakers and customers, what is your understanding of how far tariffs could be implemented on generics? Could this also apply to APIs? Could KSM be included? Additionally, considering that Reddy's does not manufacture in the U.S., what mitigation strategies are we considering if tariffs are imposed on generics?

Thank you. First, obviously, I wish I knew how much tariff will come. We are preparing ourselves for the scenarios, and we're obviously watching carefully the information as it will come. At this stage, the main effort is to ensure sustainability of supply. So the main activity, as we speak, is to work closely with our customers and see what is the need in terms of inventories, future inventories, as well as new product demand, identify products that may have supply disruption and try to help them to address it. We are all waiting to see what will follow the new policies, and accordingly, we will address. If it's the API, if the country of origin will be based on API or pharma, I don't know. Most people believe that it's for API, but we need to wait and see for formal communication in that respect. As for the production footprint in the U.S., I don't think that at this stage the generic industry is facing a short-term issue here. As a company, we would love to have a footprint in the United States. It just has to be the right asset, and we are always looking for an asset, but we are not going to initiate specific activities to build our footprint. It is more about if the right opportunity arises, we will be more than happy to engage it.

And based on your conversations with customers, would they be open to absorbing an impact of any potential tariffs depending on how much it is? What's your sense of who will bear the burden in case of the tariffs?

My sense is nobody wants to absorb the tariff. At least, I did not find any player that said yes, I would love to take it on. I think what will happen is there will be a certain adjustment period in which people will have to work together to see what to do with it. So it is primarily about working together. What I want to emphasize is that under any scenario, we will not create a shortage of supply or supply disruption to the U.S. market. This is very important to us. We want to stay in the United States for many years, and that's something that was also clarified in all of our discussions with our customers.

Understood. My second question is on our cost base. And given that our cost base has ballooned quite a bit, even though our margins are great, as we look at the Revlimid patent cliff in Q3/Q4, how much flexibility do we have to actually reduce this cost once Revlimid goes away? So just trying to understand how we can maintain a 25% margin. I know you have a lot of products, which will come through. But from a cost perspective, how much flexibility do we have from an R&D and SG&A perspective to reduce costs?

So even though the Revlimid patent cliff is expected to occur in January 2026 based on our current modeling, we continue to project double-digit sales growth and maintain an EBITDA ROCE of 25% or higher at this time.

But in terms of R&D and SG&A costs, would it still be at similar levels?

Yes, yes, R&D and SG&A will be in a similar zone. I think the SG&A now is like somewhere 28% of the sales, R&D 8.5% would be in a similar zone.

So Neha, the main way to achieve this is by accelerating sales growth at a faster rate than expenses. This is our primary strategy, and we have the tools to implement it across all relevant markets. Additionally, we plan to focus on achieving growth while retaining margins by significantly increasing our base growth compared to expenses, along with implementing various productivity measures on costs. It's important to note that this is not about cutting costs but rather enhancing productivity. We also expect to have some strong products on the market, including semaglutide and the anticipated biosimilars. Furthermore, we intend to continue with business development and are engaging with numerous promising opportunities. Overall, I believe this combination will support our growth, mitigate potential declines from lenalidomide, and help maintain our margins.

Understood. And when you say double-digit growth, I assume that excludes Revlimid?

Yes, we believe that FY '26 double-digit growth is possible, as well as maintaining the margins.

Next question is from the line of Kunal Dhamesha from Macquarie Group.

The first question is on the gross margin, which has changed quite dramatically on a Q-o-Q basis, and we have highlighted the reduced operating leverage. But as far as I see, like our revenues have grown, right? So I kind of fail to understand how the operating leverage has worked against us. So if you can provide some more color on that, it would be great. That's my first question.

Thank you, Kunal. This quarter's one-off costs are included in our manufacturing overhead. According to our policies, this has had a negative impact. For instance, in the Freeport plant that we divested, we incurred a severance cost, which is a one-time expense affecting the manufacturing overhead. Additionally, as I mentioned earlier, our out-licensing income is lower compared to Q3 and Q4, which will directly affect the gross margin. We estimate it to be about 300 basis points lower this quarter, but we believe this is a one-time occurrence and expect to return to our normal levels.

Can you please quantify the severance cost one-time impact for this quarter?

We are not able to provide an exact figure right now, but it is not a trivial amount. Specifically, if I were to estimate it, it would be around one plus another accounting provision out of 300 basis points of manufacturing overhead. Overall, it has resulted in an impact of 0.8% out of those 300 basis points.

That's the severance cost. And then maybe another 50 basis points...

It is not the severance cost alone. There are other costs also.

Okay. 80 basis points is one-off. And then the proprietary product milestone not coming is incremental to that 80 basis points?

Yes, that is the one. And then like a little bit on the inventory also, there is an overhead. Overall put together, I think that all happened in one quarter. That's why you see there is 300 basis points.

Sure, sure. And just a related question. If I look at the NRT business, the PBT margin between the 2 quarters has a meaningful delta of around 500 basis points, right? So is there a seasonality? And when we look at this business on a full-year basis, how should we think about this business? Because based on 2 quarters, it's really challenging to understand.

Overall, for this business, our EBITDA margin remains around 25%. I'm not sure about the fluctuation between Q3 and Q4; there are significant integration costs that have impacted this. Generally, when modeling EBITDA, you can expect it to stay around 25%.

Okay, sure. And one question for Erez. If you could provide an update on our GLP-1 or let's say, generic Semaglutide product across various markets and also the abatacept product?

We are preparing to launch it in 2026 in all the markets where the IP landscape allows. Our preparations are going well. For abatacept, we are deep into Phase III, and the timelines appear to be on track. We plan to submit the product by the end of this year, 2025, to be ready to launch the IV as soon as the patent expires. The subcutaneous version will follow a year later due to patent issues. We will launch it as soon as the IP landscape permits. Everything is progressing well.

Next question is from the line of Madhav Marda from Fidelity.

Just a follow-up to the previous question. Could you help us maybe understand the sizing of the generic semaglutide opportunity for us in markets such as Canada, Brazil, and the other larger emerging markets where it goes off patent next year? We obviously have invested in capacity for generic semaglutide. But looking at penetration rates in, let's say, Canada or Brazil, it is severely underpenetrated because supply was short and obviously, it was at a much higher price point. So as some of this product supply comes through and prices go down, how do we see the volumes expanding for this product, let's say, in Canada and Brazil? If you could give us some sense there, that would be great.

Yes, Canada is one of the markets that will open early. The launch is currently impeded by exclusivity ending in early January 2026. According to marketing reports, the product is experiencing significant growth. Based on data from IQVIA and financial reports, the market value is approximately $1.8 billion, which implies around 10 million pens being involved. This creates a very appealing market opportunity. The compound annual growth rate (CAGR) is quite substantial, with estimates ranging from 28% to 39%. This indicates a high growth potential. Additionally, when we compare the prevalence of the disease and its treatment in Canada to other markets, it appears there is still significant room for growth in terms of volume. We find this market intriguing, and once the intellectual property landscape permits us to launch, assuming we receive the necessary approvals, we aim to be among the first companies to enter the Canadian market. We have similar plans for India, Brazil, and other markets, in line with the regulations surrounding intellectual property.

Okay. So the 10 million pens that you mentioned, that's the Canada market size today, right? Did I understand that right?

Yes. What I quoted to you were the relevant reports about Canada.

I was trying to understand that this is at a much higher price. Do you have any insight regarding the 10 million pens? Considering the obese or diabetic population in Canada, the size and potential market could be three, four, or even five times larger. Can you provide us with some insight on how the market might grow?

Yes. I heard 5x, but my knowledge is not different than yours. They probably read the same report. The prevalence is still high. The use relative to the prevalence is still low. Now if it's 3, 4, or 5x, I don't know eventually what will happen. But clearly, it is going to be an important product for Canada. And obviously, we are very keen on it.

Next question is from the line of Amey Chalke from JM Financial.

The first question I have, there is a gross margin drop, but there is also reasoning given that there was price erosion, and one of the reasons for the gross margin drop. So is it possible for the management to give us some understanding of what is the U.S. business price erosion for the year? And how the U.S. business has done for the year for FY '26, excluding Revlimid?

So this gross margin, the price erosion is like on a year-over-year basis. And in the U.S., I think the price erosion is very stable. That's what we have put it in the press conference. We do not see any challenges, in fact, the price erosion is much lower during FY '25 as compared to FY '24.

Sure. How has the U.S. business performed this year? It has grown.

The U.S. business grew. It grew very well. It was primarily due to the usual new launches, and market share gains. And just to make sure that in addition to what MVN said, the price erosion that was in the U.S. was relatively low, primarily as most of the products kind of exhausted the potential of price erosion. So it's normal. When there is no price erosion in the United States, it is not always a good sign. But in our case, it was a very low single-digit price erosion within the fiscal.

Sure. Second question I have on Revlimid. In FY '26, I understand that January would be when the exclusivity ends. But if we consider the quota-related quantities which we would be booking before January, how should the distribution be expected over the next few quarters? Is it evenly distributed? Or do you think that the first half of FY '26 we should expect Revlimid sales to be booked?

So obviously, it's in accordance with the demand of the customers. But likely, we will finish what we can sell a few months before January to ensure that our customers will not be holding goods on the shelf in order to avoid the price adjustments. So it is likely that we will stop a few months before that.

Sure. Just last question, if I can squeeze in. We spoke on the Canada market related to semaglutide. However, traditionally, we have seen generics capturing the branded market where the prescription is typically marketed by the innovators. However, here, the market is severely underpenetrated. Do you think there would be any need for you to market the product even despite being a generic?

We believe that the demand from customers will be strong enough that we don't need to actively market the product or introduce it to the market. What I believe can happen is that as the product becomes much more affordable and some of the use may be without reimbursement. So I believe it will create additional demand. But no, we are not planning to actively market the product as a brand.

Next question is from Bino from Elara Capital.

Just following up on Revlimid, Erez, are you seeing any significant price erosion in Revlimid compared to 6 months back?

So there is price erosion, and there is also an increase in quantity. So it's a combination of both. I will not be able to tell you exactly the amount, as you know. But yes, there is a certain level of price erosion.

Okay. I just want to confirm what I heard earlier. I believe you mentioned that for the financial year 2026, you can achieve double-digit growth while maintaining the EBITDA margin at the same level as in fiscal year 2025. Did I understand that correctly?

Yes, that's what I said.

Okay. And once the Revlimid cliff happens, which may be FY '27, the margins may settle down back to your long-term target range of around 25% or so. Is that how we should look at it?

Yes. We always said that 25% is an indication of the place where we feel comfortable to be, giving enough total shareholder return, but also allowing us to invest in the future. So we will continue to aim for that amount. It may fluctuate from quarter to quarter; sometimes it will be above, sometimes below. But yes, we are planning to be in this neighborhood also in the future and post the lenalidomide era.

So largely, the major CapEx is going in two fronts. One is for the peptides, both for creating infrastructure for both API and formulations, and also for creating the biosimilar facilities. Largely, these two are major investment driving factors. Apart from that, certainly, since we are in the complex molecule journey, there are product-specific investments as well. So that's where I think overall CapEx is directed. And then you're asking for FY '26, we believe at this point in time it would be in the similar range for FY '26 as well.

Next question is from Quantum Mutual Fund.

Could you talk about the India bit...

Sorry to interrupt you, but you're losing your audio. The line from the participant has been dropped. We will go on to the next participant. Next question is from Tushar Manudhane from Motilal Oswal.

Sir, for the Europe market, FY '25 was a great year. If you could sort of elaborate on the growth prospects for this region excluding NRT for FY '26 and FY '27, maybe?

I agree with you. Europe is growing for us. We are planning to expand into more countries and launch additional products, primarily by utilizing our pipeline for the United States. We intend to introduce biosimilars in Europe, including rituximab and bevacizumab, and we are also planning to grow the NRT business. So indeed, Europe will be an important growth area for us.

Noted, sir. Sir, as far as semaglutide is concerned, it can be manufactured using biological routes as well as synthetic routes. Any color if you could share in terms of at least the initial countries like India, Canada, would they be okay to approve the synthetic route and the competitive dynamics would be different if that happens? Or do you think the competitive dynamics would be similar even if it is approved either through a synthetic route or a biological route?

Yes. We believe that the synthetic route can be approved for the injectable, for the pens. And the semisynthetic route is going to be used for the oral product. And that's what we are planning to do: synthetic for the injectables and semisynthetic for the oral.

So likewise, the price erosion basis competition would be higher for the synthetic route?

It, of course, depends on how many people launch the product in each one of the markets. So it's not so much because of the synthetic versus non-synthetic; it depends on who has access to capacity at least at the beginning and who is going to obtain approval. So in terms of competition, I believe that in some of the markets, they may have some advantage for those that will have at least for a short period of time or a longer period of time, depending on the scenario, less competitive, maybe less players that will play in the market. And thereafter, it will be very competitive because many companies are having this product, and they will compete for market share. At the same time, the product will grow. So we are preparing ourselves for the scenario in which we believe that we have a chance for relatively limited competition, but also prepare ourselves for the scenario of high volume, low price, very competitive landscape, and we are gearing for both.

The next question is from Abdulkader Puranwala from ICICI Securities.

So my first question is on your India business, where you talked about 6% growth, excluding the vaccine business. So how should we see this portfolio ramp up happening next year? Any areas where you think the growth was a little lower this year and then next year, how should we model this business for?

We're expecting to see similar growth in India next year. This year, we achieved a 16% growth, and we anticipate maintaining that level in FY '26. I want to emphasize that while we discussed both inorganic and organic growth, the majority of our growth in India will be inorganic. We're focusing on licensing products, acquiring them, and introducing innovations. Therefore, our growth will mainly come from introducing products that enhance the standard of care, rather than solely relying on existing products. Many of our established brands previously saw double-digit growth. However, we experienced lower performance in cardiovascular and gastrointestinal sectors. We have plans to improve this by increasing our marketing efforts and managing the product lifecycle more effectively. With the combination of new products, innovation, and addressing the underperformance of certain brands, we believe we will achieve high double-digit growth in India next year.

Got it. And my next question is with regards to the recent updates coming from the U.S. in terms of certain concessions on the regulatory front being offered by the U.S. agencies as well as them talking about increasing the intensity of surprise inspections for plants based out in India and China. So would love to hear your take on the developments coming from the U.S. market.

Yes. So it's not new. Just this year, the inspections that we had in CTO 3 and CTO 6 were unannounced inspections. Our facilities are ready for it. This has always been the guideline in the United States for years, and it's unannounced. So all our facilities are prepared for that. That actually has been the guidelines for a while. And it will require people that are not ready for that maybe to upgrade their systems, but we are ready for it.

Next question is from Surya Patra from Philip Capital.

My first question is on the R&D spend front. What we have seen in the last two-year period, sir, there has been kind of a back-to-back around 20% growth annually on the R&D spend front that we have witnessed. So could you give some visibility about the kind of work that we would have done on the pipeline buildup front and the likely investment in those fronts on the R&D side going ahead? And what buildup that we would have created so far as the future pipeline for us?

So here, of course, the R&D investments have been increasing in biosimilars, like let us say, abatacept is in Phase III. Certainly, the investments are substantial. And then in the case of our generics, we are continuously focusing on all the GLP-1s. I think these are all complex molecules and require a lot of investment. It is also earlier spoken about abatacept, once we file it, the revenues will start in calendar 2027 somewhere. So you will just see revenues from all the efforts that we are making now certainly a little later. It is not very far off, I think, but definitely in the near term, I think you will see some of the products starting to show up in revenues.

Next question is from Shashank KrishnaKumar from Emkay Global.

I just wanted to check with respect to Revlimid, given the import alert that has been issued to the Viatris facility. So could you see any meaningful benefit, particularly in the first half of this year? Or is that largely a non-event given that there are volume restrictions in place?

I don't think there will be any impact on us.

Next question is from Shrikant from Nuvama Wealth.

In the Canadian Semaglutide market, there are four players who have filed. If you can talk about our approval timelines? And do you think that all the four players would be there in the Canadian market when the opportunity opens up?

I obviously don't know who would come or who wouldn't, but we are planning to be there on the date that the market opens.

And the approval timeline for us?

Approval timelines will likely be a little before the date. So sometime toward the end of this calendar.

Ladies and gentlemen, this will be the last question from Quantum Mutual Fund.

Yes. Just quickly, when I look at the European revenue for us, it sounds like the U.K. has grown very faster. Is it because we started selling NRT out there, and the NRT number, which you gave out INR 1,200 crores, can I double that just to get the whole revenue for the full year?

Yes, certainly, give or take, that would be the range.

And when we start selling in the U.K. all by ourselves, will it be next year?

Yes, yes. Currently also, we are selling in the U.K., and then going forward also, we'll continue to sell in the U.K.

Right. And if I can just add one last point. Regarding the recent GLP launch in the U.S., considering the involvement of new players, do you think a similar situation could unfold with [indiscernible] when it launches in the U.S.? I understand [indiscernible] just received approval or has launched. Is it likely that the market will see a limited number of competitors, like 2 or 3 major players such as Victoza, or will there be a larger number of participants?

We believe that the landscape of semaglutide will be very competitive. It could be a situation at the time of launch or around the time of launch, there will be people that may get later the approval or have later access to the supply chain. So it will evolve. And those players that may come before and be there on day one may gain a first launch advantage. But overall, it's going to be, we believe, a very competitive market, and we are preparing ourselves in terms of cost and supply for a high-volume, low-cost type of product over time.

Participants, we'll take one last question from the line of Saion Mukherjee from Nomura.

Am I audible?

Yes, we can hear you now. Sir, the line for the participant dropped. With this, I now hand the conference over to Ms. Richa Periwal for closing comments.

We appreciate you joining us for this evening call. If you have any further questions or require clarifications, please feel free to reach out to the Investor Relations team. Once again, thank you on behalf of Dr. Reddy's Laboratories Limited.

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