Emcure Pharmaceuticals Limited (EMCURE) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q4FI26 Earnings Conference Call of M-Cure Pharmaceuticals Limited. As a reminder, all participant lines will be in the lesson only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then 0 on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Saurabh Paliwal. Thank you and over to you, sir.

Thank you. Good afternoon, everyone, and welcome to the Q4 F526 earnings conference call for MQR Pharmaceuticals. Thank you for joining us today. I am Saurabh Paliwal, and We'll begin today with brief opening remarks from the management, and then open the line for Q&A after the commentary concludes. Joining me today on the call are Mr. Satish Mehta, Managing Director and CEO, Mr. Tartj Sheik, Chief Financial Officer, Mr. Samit Mehta, Whole-Time Director, Mr. Vik Thapar, President, Corporate Development and Strategy and Finance, and Mr. Piyush Nahar, Executive Vice President, Corporate Development and Strategy. We hope you have had an opportunity to review the financial results, the results presentation, and the press release that was released earlier. Before we start, I would like to remind everyone that this call is being recorded. I also need to remind everyone about the safe harbor linked to today's call. Certain statements made during the call may be forward-looking in nature. These statements are based on our current expectations, assumptions, and management's view as of today. Actual results may differ materially due to a range of factors, including market conditions, regulatory developments, competitive dynamics, operational factors, and other risks and uncertainties. For additional details, please refer to our earnings presentation and press release. And now, hand us a call to Mr. Mehta to begin his opening remarks. Over to you, Mr. Mehta. Thank you, sir.

And good afternoon, all of you. I would like to thank you for joining us to review MQS Q4 and the FY26 results. It means a lot that you have found time to join me. FY26 marks the start of our five-year strategy. Focusing on turning last year's operational changes into measurable outcomes. I am very happy to tell my investors that we crossed a major milestone this year, surpassing $1 billion in revenue and having a growth of 16.6% year-on-year increase, exceeding the guidance row that we have given to you. We also increased our base business EBITDA margins. By over 100 basis points, and our adjusted PAT grew more than 40%. I repeat, our adjusted PAT grew more than 40%. These outstanding results give us confidence that the investments we are making in our people, our people are very important, our processes. And I always keep telling, you know, whenever I have been on the call, that we take the pride in telling everyone that Incure has been built on science, technology, and innovation, and technology, including the adoption of AI across key functions, are obviously starting to deliver. I'm very happy to say that. Turning to key strategic highlights from the year. Let me now focus on portfolio expansion. That's the first thing I would like to take up. We strengthened our portfolio in core markets through in-licensing, M&A, and internal R&D. I would now like to highlight three notable partnerships that we had in the year that has ended. I'm focusing on in-licensing to begin with. The first part that we had with no one on this, we also spoke last time, and I'm very happy to inform my investors that N-Cure was selected as the exclusive India partner for Covista, a patent-paid R-DNA biologic semaglutide. The rest of the products that we are seeing in the market are synthetic. This is R-DNA biologic semaglutide, which I would like to emphasize. Strong exclusive global data and established device distinguishes from the generics which have been introduced. The initial update has been promising, especially after the price cut in April 2026. And I must say, you know, the pricing, you know, which has been done is very competitive, and we obviously have a story and strategy. We aim for steady growth through FY27. After new analogies, the second in licensing that I would like to focus on is Sanofi. We expanded our partnership to include their oral anti-diabetic brands, amaryl and cetaphim, boosting our position in cardiac and metabolic therapies. With this MQD is amongst the leading cardiac players, and thanks to Amaryl and Cetaphane, we also have now a reasonably good strong foothold in the metabolic space as well. The third partnership which has happened, and we virtually started billing, you know, from 1st of April, we signed a distribution agreement for select nephrology and transplant medication in India, which has widened our offerings in the therapy. As it will not be out of place to mention that we have a reasonably strong position in the field of nephrology. We are one of the top five companies, and to that extent, you know, this portfolio will obviously help us to augment our position in the field of nephrology going forward. These alliances with leading pharmaceutical companies demonstrate our strong commercial capabilities and scale in the India market. India market means a lot to us. Now, after having spoken about in licensing, I would now talk about M&A and portfolio consolidation. As far as Zowinders is concerned, we completed minority stake buyout for full consolidation and expect operational synergies to play out over a period of time. Globally, we acquired the Manx portfolio in the UK to grow our UK business and European business as well, and QtBate we recently acquired in Canada, enhancing our Dharma range along with MQt. Let me now focus on our R&D and pipeline updates. I spoke about in-licensing, I spoke about M&A and portfolio consolidation. Now let me turn on what has been happening in our R&D and pipeline and which we take a lot of pride. And put this in B remains the key near-term focus. We launched in select European markets in H2FY26 and intend expanding to Europe and rest of the world markets in FY27. For Viva Sismar Ophthalmic Biosimilar for WET AMD, we received endorsement from CDSEO Subject Expert Committee and we plan to launch in H1FY27 pending approval. The third important thing is in the field of HIV, where my company enjoys the pole position. We are one of the six global voluntary licensees for Gilead Lena Kapavir. We have filed EMF and expect to seek product registration in FY27. Our scientific advisory committee is shaping our long-term pipeline in four areas. Four areas. Let me focus on these four areas. One is complex injectables. Second is biosimilars. Third is new delivery routes for existing drugs. And something, you know, which we have been talking for last couple of calls as well is antibody drug conjugates. Now, having focused on in-licensing, Merger and acquisition, portfolio consolidation, and having given you some flavor about R&D and our pipeline updates, let me now turn my attention to business performance. As far as the year which has just ended, FY26, we grew by 16.6% to 9204 crores, 9204 crores, with a resilient domestic performance and strong international performance. Now, let me focus, you know, as far as business performance is concerned, to focus on domestic business, which is very close to my heart. Domestic business grew by 10% in FY26 to 4027 crores, led by women health, cardiac, CNS, and oncology. I mean, as far as Q4 is concerned, yes, I will admit, first person to admit, it was softer, mainly due to Soventus portfolio and team reorganization, causing higher attrition. As you know that we acquired the minority stake in Soventus, so there was attrition, but integration and new leadership hires have addressed these issues. And I'm very happy to say that as far as April is concerned, it's absolutely, as per the plan, it is on track, so nothing to really worry as far as Juventus is concerned going forward. New therapy areas about which, you know, we spoke last time as well, Dharma, Enquitex, Consumer Health, Diabetes, are scaling well. Omicra-Nova Knowledge partnership shows promising early uptake, especially after the price, you know, very price, so we are in soft spot, you know, as far as the pricing is concerned, and we do expect reasonable growth in FY27. I am very happy to inform that as far as the fuel productivity is concerned, it has gone up from 5.4 lakhs per medical representative to 7 lakh per person over a period of last two years, so obviously good things are happening. As far as international markets are concerned, I am very happy to inform that revenue grew by 22% to 5,177 crores in FY26. Europe's strong baseline business growth and successful launches with max integration. Canada posted solid growth of market share gains and new launches. Rest of the world, deliver healthy growth across non-ARV and ARV, with non-ARV supporting revenue diversification and ARV maintaining a strong order book. I think, as you know, non-ARV business is very important, and that's a function of the registration that we get in the various markets. So, we got reasonably good registrations. So, we are very bullish as far as the international markets are concerned going forward. EBITDA margins improved year-on-year due to operating leverage across both domestic and international markets. Now, having talked about, you know, the year which has ended, now let me focus on outlook and growth levels, you know, as far as FY27 is concerned. That's what I would like to focus, having spoken about the business, you know, for the year which has just ended. I talked about the first year of our strategic plan, where we have delivered the results, and we have been focusing on execution about whatever we decided in the beginning of the year. And now, as far as the second year of our strategic plan is concerned, I am very happy to inform my investors, and your presence means a lot to me, that MQR is very well positioned for strong performance going forward. Our goal drivers are at different stages. The first growth drivers is obviously going to be a domestic market. I'm very happy to say that we have a very strong team and portfolio which will drive better than industry growth, especially in cardio, diabetes, biologics, women, health, and new initiatives. I've been leading this domestic initiative for the last 30 years, and I feel good about the team which we have built up in the last few months, and I feel good about the domestic market going forward. Then the second lever of growth will be semaglutase partnership. Then MQTX, the derma product, you know, that we have launched. And of course, you know, the consumer business, Earth, which is showing, you know, good uptake. It's stabilizing reasonably well. Our initial stages of scale-up, and we expect returns from this to build over a period of next few years. And all these areas, you know, are growing areas, like as far as Dharma is concerned, that's a growing market of 14,000 crores. And there, because of the strategic initiatives that we are taking, we are bullish, and earth, of course, we are doing well under leadership of Manita. Then Canada and Europe, we expect growth to continue led by market share gains, new launches, and expanded portfolio. Canada and Europe will continue to grow. The fourth lever is Amphiturus in B, and we expect in the current year, Amphiturus in B should make significant contribution in FY27 on the back of registration flow that we are receiving from different geographies, both regulated as well as emerging markets. In the rest of the world markets, we expect sustained growth led by non-ARV pipeline and robust ARV order book. FY27, we project... Hello to mid-team revenue growth, and as I have been explaining in the last, you know, meet and a few calls that I have had the privilege of addressing to you guys, that EBITDA margin expansion will happen as committed between 75 to 100 basis points going forward, assuming. Stable regulations and macroeconomic conditions. I think this is based on the assumptions that there will not be a major upheaval or problems at the geopolitical level. So, I think, you know, overall, overall, we are quite optimistic, optimistic and bullish about the business as far as the second year of the execution of the plan is concerned. Thank you. I would like to tell my investors that our strong performance highlights our diversified business model, India-led manufacturing, scientific strengths focus on science, innovation, technology, and more than anything else, one area on which we are hugely focused is on execution. Because, so, that's one area where we will distinguish with, we will make a distinction when you compare, you know, or distinguish ourselves when we compare with other companies. The focus will be on execution going forward. Our priorities are clear, and priorities are absolutely well defined. Achieve sustainable, above industry growth, very important, both in domestic and other markets. The second idea, as far as execution, is going to play a very important role, is to expand margins. That is very important going forward, get the synergies on account of the scaling of the business role that is happening, and create long-term value for my stakeholders. It's very, very important that my stakeholders is at the core of the strategies that we'll be formulating, And I'm extremely conscious of the fact that you'll repose faith in me and my company. To that extent, that will always... ...remain at the back of my mind as we execute our policies going forward. Again, I would like to reiterate that the entire science-driven portfolio and record delivering complex products set us apart. We are different because we are focusing on technology, so our complex products will set us apart. Our ongoing investments will be in people, products, processes, and partnership positions, and partnerships that we have position us for growth and profitability across all geographies, as in India, Canada, Europe, and the rest of the world, as we progress through our strategic plan. So, I think, you know, as far as going forward is concerned, the focus will be on growth, growth, and growth, and obviously, you know, improving the margins. That's something that we have, and that's how, you know, we will go. Now, I would also like to thank you all and all my incurions for... All unstinted support, you know, they have given us, and we are very proud of that, and I would also like to thank all of our shareholders for reposing creativeness and partners, you know, for their absolutely unstinted support, which means a lot to me as an individual at this point of time in my career, and that's the biggest capital that I have, and I intend building on it for my shareholders and my partners going forward to deliver better results year after year. Thank you for giving me patient hearing. Your support means a lot to us, all of us. Now I will hand over to Taj, our CFO, to review the Q4 and FY26 financial. Taj, over to you.

Good afternoon, everyone. I will take you through the key financial highlights for the fourth quarter and the full year, FY26. I will be discussing all comparisons on a year-on-year basis. Starting with the Q4 performance, revenue from operations for the quarter grew by 16.7% to 2,470 crores, up by 16.7%. The domestic business grew by 5.2% to 977 crores due to softness and juventus arising from the recently concluded minority stake transaction and related leadership changes and team and portfolio reorganization. International markets maintained their strong growth momentum with revenues growing 25.7% to 1,493 crores. Europe reported revenues of 538 crores, a growth of 35.8%. with Bayes Business, Manx, and Amphatrice & B scaling up being contributing factors. Canada reported a 28.6% growth with revenues increasing to 399 crores, led by market share gains and new launches. Emerging markets grew 15.5% to 556 crores, with both ARV and non-ARV seeing strong growth. Gross margins for the quarter stood at 59.4% versus 57.8% in quarter four of FY25, up 160 bps, because of a better business mix, especially new launches in international markets. EBITDA, excluding other income, grew 24.5% to 485 crores. EBITDA margins improved to 19.7% from 18.4% in Q4 of F525 and 19.5% in Q3 of F526, supported by operating leverage and productivity gain, being partly offset by Sanofi OED contribution. Depreciation and amortization for the quarter was 106 crores. Interest cost was 46 crores. During the quarter, we also booked an exceptional expense of 43 crores related to mantra earn-out being higher than initial expectation due to better performance achieved. This was partly offset by reversal of 12 crores due to reassessment of new lower court-related liabilities. Excluding the impact of exceptions, the effective tax rate stood at 25.4% for the quarter. Consequently, reported PATH for the quarter was 244 crores with a PATH margin of 9.9%. Existing PATH came at 279 crores, showing strong growth of 36% year-over-year with PATH margin of 11.3%, which was up 160 bps. Net debt as of 31st March 2026 stood at 1,054 crores. The increase in debt over the last year has primarily been because of payout for bank as well as interest minority stake acquisition. Moving to the annual performance for FY26, revenue from operations grew to 9,204 crores, a strong growth of 16.6%. Domestic business grew to 4,027 crores, representing a growth of 10%. International markets performed well, with revenues growing 22.2% to 5,177 crores, driven by strong performance across EU, ROW markets, and Canada. EU was the strongest performer, with revenues growing 25.5% to 1,850 crores. ROW market scaled up to 1,840 crores, delivering a 21.8% growth. Both ARV and non-ARV verticals contributed to the strong performance. Canada grew 18.7% to 1,487 crores through base business growth and new launches. Block margins for FY26 stood at 60.3%, up 20 whips. EBITDA for the year was at 1,789 crores, growing 21.8% from 1,469 crores in FY25. EBITDA margins improved 80 BIPs to 19.4%, reflecting improved utilization and productivity gains. The EBITDA margin improvement is despite increase in R&D investments during the year. R&D investments stood at 383.5 crores for F526, corresponding to 4.2% of revenue. This was an increase of 50 bps year-over-year. Depreciation and amortization grew to 415 crores from 384 crores in FY25. Excluding exceptional and one-time impacts, our effective tax rate for FY26 was 26%. Reported PAT was 941 crores with PAT margin of 10.2%. Pat's adjusted for exceptions was 1008 crores, reflecting a growth of 41%. Adjusted path margin stood at 10.9%, up by 189 bps. With that, I will now open the floor for questions.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and then 2. Participants, you are requested to use handsets while asking a question.

Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all, you may press star and then

one on your touchstone telephone to ask a question. We will take the first question from the line of Amai Chalki from JM Financial. Please go ahead.

Thank you so much for giving me an opportunity, and congrats to the management of good set of numbers. The first question I have on India business, we have delivered around 5% growth this quarter. I understand if there was a dividend impact. Is it possible to quantify this impact, and does it mean that since there is attrition and all what you mentioned, the next few quarters year-on-year growth could be affected on account of this restructure?

Sure. Thanks, Ahmed. So, I think just to give the context, right, as you know, we took over the Zventus in end of Q2, early Q3. We had got a new management team, and I think Q4 is when we did the restructuring of the whole team and portfolio out there. So, most of the slow growth that you are seeing is because of that. I think X of the Zventus impact for the full year, we would have been close to the 9-10% based business growth that we have been talking about, that we delivered even And then, first, nine months. So, the majority of the decline that you're seeing in Q4 was led by Zovintus. I think the restructuring was a mix of portfolio restructuring, team refocus, and which led to a high iteration. We don't think the impact lasts for the full year. For the FI27, what we do expect is we'll continue to be growing above industry. And as the CEO had mentioned, even in his opening statement, April, we are now recovering back on track. I think we lost some.

Due to no response from the current participant, we will take the next question. We have the next question from the line of Krishat Manudhani. Please go ahead.

Thanks for the opportunity. I'm an audible? Yes, you are. So as far as international market is concerned, if you could just share how much would have been the constant currency growth for each of the segments of Europe, Canada, emerging markets, that's my first question for the quarter.

Sure. So, I think overall, for the international market, the currency impact was about that 7% to 8% that we had. So, it was slightly higher, more about closer to 11-12% in Europe, while Canada in emergence was slightly lower.

Got it. So then considering, considering even if I say constant currency growth of growth, We've got, you know, almost 22% for the quarter, and then we have niche product scale up that's happening in Europe. So what kind of, you know, outtook one can think for next two years, 27-28? I was referring particularly for Euro, like even adjusting for the constant, the growth has been great with a good scale up in certain niche products. So just was trying to understand the outlook for 2728 for Euro market.

Yeah, so I think in the near term, the growth, we do expect it to be stronger in Europe, especially as Ampo gets launched up. But yeah, once it reaches the scale, so I think for the next two years, we do still expect mid-teens of growth in the Europe business, as I can go.

And that should help to get better gross margins as well. At least for Q4, it is not getting reflected compared to Q3, despite improvement in the overall international business perspective.

So, I think, so if you look at it, among the business itself, right, usually domestic is a higher GC business versus international. Now, if you look at it, despite the domestic being slightly softer in Q4, our overall GC has improved Q on Q. So, some of that is reflecting out. I think for the full year, we do expect the GCs to remain around that 60% point. So...

I understood. I understood. And just last year on the domestic play, what kind of industry growth do you think would be there for, say, FY27?

I think we continue to expect industry growth to be around that 8% to 9% odd. And for us, the target, as we said, the target for us is to grow faster than industry growth, rather than low double D. Understood.

Thanks. That's it, Mike.

Thank you. We will take the next follow-up question from the line of Amei Chalki from JM Financial. Please go ahead.

Yeah, I'm on a audible now. Thank you so much. I just have one follow-up question on Juventus. So what kind of operational synergies do you expect in Juventus? Like, will it improve our India margins? Are you going to consolidate our, like, a common molecule grants which are present in both the entities? Like, or the MR field force, are you going to cut it down so that that could improve the profitability? Any color on that would be helpful.

So basically, let me tell you that as far as we are concerned, we're going to see a different segment altogether. Just to give you a flavor, as far as MQR is concerned, essentially focuses on gynec, cardio, and metabolics. That's what we do as far as MQR.

Sorry to interrupt, sir, if you're speaking or not audible. Hello?

Yeah, I think we lost the CEO. Can you guys hear me? This is Vic.

Yes, I can hear you, sir.

Yeah, I'll try and take a stab until Satish is able to join back in. I think the synergies are going to be more in terms of how we're organized on the sales and marketing efforts. I think what Saphish was trying to highlight that given these two segments still cater to very different therapeutic segments, on the manufacturing synergies, it's less because we have plants that are catering to, you know, specific sets of products on both sides. But definitely on some of the sales and marketing and related support functions, that's exactly some of the restructuring efforts that are underway to be able to synergize and get some operating leverage in the sales and marketing aspects of the Zerventis business.

We have the next question from the line of Bansi from J.P. Morgan. Please go ahead.

Yeah, thanks. So just two questions from my side. Firstly, on India, if you can just help us understand slightly more in detail as to how the acquisition of minority stake, you know, affected the Zuvintas portfolio and the attrition. The second, you know, part to it is that, you know, of our total MR count, you know, what percentage of field force is for Juventus, and, you know, what is the kind of restructuring we saw there?

Sure. So I think what happened along with the minority stake, what we also had was the management, the big change in the management team, right? So Mr. Gua was leading that business since the inception. He stepped down and we had a new team coming in. And I think when the new management came in, we also had a relook at the whole portfolio, the team structure that we had. I think similar, something similar to what we did in the Cardio Diabeto when we took over the Sanofi where we structured the teams for which the division was going to which therapies, what is the focus, that is what we took over in Q4. That, I think, with the management change and all that restructuring, that is what led to a higher attrition in the field course. And as you know, Acute is largely a short-term treatment, right? So if you have a gap in the field course, it does lead to a much higher sales drop than what you would see in a normal chronic business. For coming to the question on the field course, about 40% of the field course is in Zoventus for us.

Okay, and what percentage of this 40% would have seen, you know, restructuring or, you know, change in MRs?

So, I think we structured the whole, so about, so difficult for number, but the attrition would have been, so normally if you look at it, attrition is about 20 to 30%. The quarter, we had a much higher attrition out there.

Oh, but having said that...

As much as the attrition, it's also restructuring of a couple of the divisions and the products. So I think it's not just the attrition aspect. It's also, you know, being repurposed. So there's a little bit of disruption related to that that happens normally as part of any such exercise. So I think all in all, what we're trying to highlight is that that was something carried out towards the end of Q3 and in Q4, but it's starting to pay us dividends in the sense that for April, as the CEO mentioned, we are right on target in terms of our own internal expectations for Zaventa. So we're very happy with the progress that we're seeing. Particularly over the last 45 to 60 days.

All right. Just if you can call out what is our MR strength as of today?

2,000. Yeah.

So what? Yeah. Close to 4,000.

Close to 4,000.

Okay. The reason why, you know, I asked these questions is that, you know, at least with, you know, some of your peers, what we've seen is that on the acute side, you know, when we see such restructuring, you know, of, you know, field force, it does take a while, you know, for the productivity to show up because as you highlighted, you know, this is, you know, short-term treatment, you know, a lot of it is based on your relationship with doctors, et cetera. So, you know, that is the reason why, you know, I was trying to check, but, you know, it's good to know that, you know, you're mentioning that you're already seeing improvement in the month of April. So, we basically should not expect this to sustain, right, in terms of impact going into the next quarter.

Yeah, we'll be back on track. And again, the other thing that I would like to say, that as Juventus is concerned over a period of time, we have built some very strong brands. So that should also take us through. Though we are in equity, but at the same time, some very strong brands. So I think that's how Vic was mentioning sometime back, right from April onwards, we are on track. And every reason to believe that things will get better by the day.

All right, and second question, just on our employee expenses, you know, this year we've probably grown at about 7-odd percentage. Should we assume this run rate to continue?

Yeah, we expect it to be around 10 percent next year.

Understood. Understood. I'll get back in the future.

Thank you. We will take the next question from the line of Dheeraj Pathak from Vaito Capital. Please go ahead.

Yeah, thank you. So just carrying forward on domestic growth. So for April, can you confirm like with Zoventus, the growth is in line with the market or it is still below market growth, including Zoventus in the month of April?

So, Diresh, I don't think we'll comment on monthly growth and all, but as the CEO mentioned, right, I think versus what we had targeted out, we are fully on track to that. I think once we have a quarter, that's when we talk about the full year, the quarter growth.

Okay, and Q4, did you say that X of Zventus, the growth was high single digits? Did I hear that, right, or something like that?

I think, what we said is X of Zventus, for the full year, we would have been that high single digits growth.

The full year, and in Q4?

Q4 would have been about 7-8%.

7-8%, alright, okay, thank you.

Thank you. We will take the next question from the line of Beano from Ilara Capital. Please go ahead.

Hi, Dr. Noob, just a quick question. You had recently licensed these Nefro brands from Roche. Could you give a sense of what is the annual revenue run rate for those brands and also what sort of upfront payment have you made?

So, you know, there's no upfront payment that we have made for this, right? I think similar to all the other enlightening we have done, there is no upfront payment out here. The portfolio is smaller, so it will be less than 50 CR analyzed. Understood.

And fortunately, we have a reasonably strong presence in nephrology. We ourselves are in a strong position, so it should help Roche, it should help us.

Got it. And a key question on your guidance of low to maintain growth. What sort of currency assumptions have you made? Does that include the benefit of depreciation of INR?

So, I think the currency assumption what you're building is a currency of, average currency of 92 USD INR.

92 USD INR. Okay. Yeah. Got it. Thank you.

Thank you. We will take the next question from the line of Siddharth Neghandi from CWC. Please go ahead.

Well, thanks for taking that question. You mentioned about certain AI initiatives that are beginning to show results. If you could provide some color on that, that's question one. Second is in terms of market share in your covered markets, how did that pan out in Q4 and in the full year? And the third is in the semaglutide part that you're talking about, right? Have you seen ketchup? Post you taking down the pricing in the month of paper. Given the launch of Gendrix, are you seeing your market share clawback? Those are the three questions.

Yeah, so let me start on the AI front, and I can have my colleagues join in. I think the AI initiative, it's very early days, and obviously AI landscape keeps changing by the day, but what we are trying to do is really champion it across the company. So in places like R&D and manufacturing, we are seeing definite benefits in terms of some of the speed of research and development of some of the products in the pipeline that we're working on, as well as in manufacturing, looking at how to obviously get better efficiencies or throughputs using AI to study our own, you know, batches being produced, et cetera. Then across the organization, I think whether you talk of support functions like legal, HR, finance, I think we are starting to adopt AI in different ways and means to be able to make our workforce a lot more productive. Even on the marketing side, whether it's, you know, analysis of sales force effectiveness and... Related, you know, sales and marketing initiatives like, you know, graphics design or brand plans, etc. These are all areas where, you know, we're seeing some adoption of AI bearing some fruit. But we're very excited because I think the real benefits of that will accrue over the next two or three years as we become more and more well-versed in using it more holistically across the organization. I think to your second question around some aglutide, I'll let my colleagues also answer, but certainly, you know, we wanted to be aggressive in terms of the post-generic entry in terms of offering a very robust price point while still offering the innovator brand, and so we are starting to see some green shoots of that as well. I will pause and let Bhuj or Satish comment on some glutathione as well as the last question that you had. Thank you.

Samit, would you like to talk about some glutathione? Samit, go ahead. So that's something, you know, that is very close to your heart.

I mean, Wistrad is obviously a lot going for that brand. A, it's an innovative brand. B, it's an RDNA, biologic versus the synthetic generics that have entered the market. Now, with this price reduction, I think we have a real sweet spot in terms of the pricing vis-a-vis the generics. And, of course, across specialties, there's, you know, close to 1,000 sales reps that are actively promoting this product. So we believe that, you know, all this should get us very good traction over the short to medium term as well.

The other thing I would like to add is only some time back, we got also permission for hash. That's one thing that is happening, newer indications. Then in addition to that, you know, SEC has cleared summit, so it should be coming any time. In addition to that, you know, what really happens that in the price war, you know, that is going on with so many generics in the market with absolutely correct pricing strategy, thanks to no non-risk and reach and penetration and having got some head start, you know, because we started promoting the product from December onwards. So, I think, you know, going forward, I'm quite optimistic about, you know, we should do well on the back of, you know, the clinical data that we have. As I know is concerned, we have access to 40 clinical trials that have done all over the world, and Samit rightly alluded to, you know, ours is our DNA, the rest of the products are synthetic. So I think, you know, on the back of, say, science and technology that we'll be talking, we'll distinguish ourselves, you know, from the competition, and let's see how it plays out. But at the same time, you know, as I'm talking to you, I'm quite optimistic. And third one, which is the Q4, covered market share.

I think overall, given the 20th impact that we had in Q4, a covered market share would have probably been flattish for the year.

Thank you. Thanks for the detailed responses. Thanks.

Thank you. We will take the next question from the line of Ankhush Mahajan from Sanctum World. Please go ahead.

Sir, thanks for the opportunity. My question is related to the India business. So, if you see there are different parts in India, India business, like base business, semi-glutide, and snobby business. So, despite all these parts, our growth is just a 5%. So, I just try to understand what kind of a growth we have seen in this business and other business also. Thank you. What we are, as compared to previous questions, we are realizing that the peers, those who have an acute portfolio are facing such problems, like there's a restructuring of a team and all. So the growth is almost delayed for a few quarters. So would you throw some more light on that part?

So, I think as you mentioned, so, yes, the restructuring had an impact on Q4. What we are seeing at least in the last 45 days, 40 or 35 days odd of the year, the revival and the business performing as per plan. So, I think for us, we don't expect the impact to last a very long time for us.

No, but as I explained, you know, some time back, I'm sure, you know, you must have listened, that we have problem only in Zoventus. As far as other businesses are concerned, like IB, where we are strong in gyne, cardiac and metabolic flow, that continues to perform as per our expectations. Then our onco and nephrology also is performing as per our expectations, and because of change in management and restructuring that PIC so eloquently explained, we had a bit of a setback, you know, as far as Zventus is concerned, but as I told, you know, in my opening remarks, right from April onwards, you know, we are on track.

So nothing to worry, really. I would like to just clarify one point. You know, the acquisition of the minority stake and the departure of Mr. Guha happened in the month of October. So this is not a recent departure, and therefore we're concerned about the lagging effect of that over the next two, three quarters. What we're trying to highlight is some of this started already in, let's say, end of our Q3, carried into predominantly Q4, where we took the efforts over the prior three months in Q4 to have a lot of that restructuring take place. And now we're seeing the green shoots of that. So from our perspective, we think that Zeventus is more or less tracking back on track, starting in Q1 itself, as opposed to being concerned that this is going to be a, let's say, two, three additional quarters lag. We're already about four or five months into that entire process.

My assessment is that we almost lost 80 to 90 growth of our business in the first quarter. Sorry, in the last quarter, Q4 of our quarter from the Juventus side. So, on behalf of that, we have grown in the semi-glutide side and others also. So, this growth should be on the higher side.

Fush, did you follow the question?

So I think for which the semaglutide side is still ramping up, right? So it's not a big driver for a big contributor to growth at this point. As you know, I think what we talked about even last time, the initial few months, it was more about market shaping and building the business and all. And then March onwards, there was anticipation of generics coming in, so there is a price cut. So Q4, we didn't have that much of a semi-glue type delta in the business out there. I think what it's highlighting is X of Zovendus, if you look at it, our domestic business is growing at that high single-digit, low double-digit rate. On an organic basis itself.

Thank you, sir. Thank you very much.

Thank you. We will take the next question from the line of forum, Parikh, from B.O.B. Capital. Please go ahead.

Thank you for the opportunity. My first question is on the domestic side. If you can quantify the contribution of these in-licensing products to the domestic business.

So the in-licensing make up for the domestic, about 15% of our sales.

Okay, and are we still scouting or are we still interested in doing more such in licensing deals in the near term?

Let me, I'll take that question. So, ma'am, we are concerned, you know, the entire focus will be on organic growth, build, you know, our own brands and take them to the next level, also launch the products, you know, from our R&D, but at the same time, you know, suppose if something comes in in licensing, we are obviously pretty open. Because let me tell you, getting the portfolio, Kandiyo portfolio from Sanofi has obviously, you know, given a fillip to our products as well. That has worked out well. And as far as metabolics are concerned, you know, we hardly had any presence before we got, you know, metabolics portfolio as in Amaryl and Cetaphine, you know, from Sanofi. And what really happened on the back of this portfolio, my own products, you know, with good GC have also started doing well. So, I think, you know, while the emphasis will be obviously on organic growth and focusing on our big brands becoming bigger, but at the same time, as I mentioned, you know, in the early part of my, my, my, this will, you know, address, in licensing will continue to be part of our strategy going forward. Wherever it is going to be accretive and going to add value, you know, to our current portfolio.

Sure. And on this Provestra brand, how should we look at it? I mean, despite the competition, but then we had a price cut and we had some encouraging results out of it. So do we see it becoming a meaningful contributor in the next couple of years to the domestic sales?

I think so, you know, because what really happens, you know, thanks to Nordisk, the pricing, you know, is very competitive. And as the market, you know, crowds and most of the people will be talking about, say, price, what is going to happen in times to come. But as far as we are concerned, you know, we'll talk about the, say, the merit of the product, you know, which is our DNA product, not synthetic, backed up by a lot of clinical data. So we'll be differentiating ourselves and on the back of science, you know, we'll be talking to the doctor. To that extent, as I am talking to you, every reason to believe, you know, that this product should do well going forward for us.

I was just going to add that, as you already mentioned, as the indications of use continue to widen and more and more specialists become comfortable riding the brand, that's where we think we will continue to gain momentum with this brand as well.

Sure. My second question is on the R&D pipeline towards ADC. So if you can just explain what part of the ADC are we having and when do we see this getting commercialized? How long is it, you know, for the commercialization?

So, there are two parts to the ADC program. One will be a biosimilar ADC, and the other will have some element of innovation in it, especially the linker around which we have our own IP. So the linker and payloads will be in-house. The conjugation will be done in-house. For the MAP, since it's a crowded market with available drug substance, we are partnering with a company to work on the MAP. So in that context, the Biosimilar ADC should have a shorter approval pathway. And, you know, the Innovative ADC, of course, will be slightly longer, but, you know, we're seeing some encouraging results in terms of identifying some potential lead candidates.

Okay, so when do we expect commercializing these products? Is it in the near couple of years' time?

So, the biosimilar ADC, the only reason, you know, I'm not giving out a very specific timeline is because the regulatory landscape in India itself is evolving. You know, many countries globally have done away with phase three trials, which are typically the most expensive, you know, studies, which have the longest timeline as well. So if there is some regulatory pathway that is similar to these countries, then it could take away a significant portion of the development timeline. So there's no point in trying to guess where and at what time these paths will coincide, but it could make a significant difference in the approved timelines with and without a phase three. So it will not be accurate to give out a timeline, but obviously the biosimilar will be earlier than the novel one.

Okay. And lastly, on the CAPEX front, if you can just give us the CAPEX expected for FY27.

I think there we can give you a guide around that 400 crores rough number. I think we'll broadly be in that range of 400, 425-ish crores.

Sure. Okay. Thank you, Dago. Thanks a lot.

Thank you. We will take the next question from the line of Kunal Raderia from Axis Capital. Please go ahead.

Yeah, hi. Good afternoon. So my first question is around the assumptions on your guidance. So you said barring any geopolitical events, but as we speak, you know, there are geopolitical events afoot that might just push up the prices or would have already pushed up the prices of some raw materials. So, how much of it, you know, some of the pricing, a post increase would be already based in their guidance?

So, Konal, I think a couple of factors, right? One is, I think, given the nature of the business and especially some of the markets we are in, for most of the markets, we do have between one to two quarters of inventory. So, at least for the next couple, I think for next one or two quarters, we are, we don't see much of an impact coming through. I think post that, obviously, we'll have to see if this price elevation lasts across raw material and how much we can pass it on to the customer side. So you would have seen even in the domestic market, the IPA has reached out for price highs. I think we are also looking at what we can do in the international markets. So it's still an evolving phase. At this point, we don't think unless it deteriorates further, it should not be a major impact, but we'll have to see as it evolves.

Kunal, one more point that I would like to add. Industry-wide problem is not necessarily restricted to one company. And the advantage, you know, that we will have, that we are not in a purely generic, generic market, you know, because we are having differentiated products. So to that extent, our ability, that's what I presume, I don't know how it plays out, will be better in terms of, you know, asking for higher price, you know, going forward. And as far as India is concerned, this industry-wide problem, IP has very proactively taken up, you know, with the government, and we are also involved in the negotiations. So let's see how it plays out, you know, going forward. It's an industry-wide problem.

Understood, sir. The second question is, I think you are looking to file for Semagra in Canada. Now with a couple of approvals, it might be a bit late, I guess. So what is the path ahead? Would you be kind of now partnering with someone, you know, maybe as a marketing partner? What's the path ahead?

Would you like to take that?

Yeah, I can take that. So, in fact, in Canada, as you know, both Apotex and Redis did get the approval very recently. You'll be happy to know that our Mantra subsidiary in Quebec has partnered with Dr. Redis and will be launching the product hopefully sometime in Q2 and then ramp up from there. We are obviously filing our own product in Canada as well for addressing, I think, the more, you know, midterm opportunity for throughout Canada. But we're very, very excited about, you know, our partnership with Dr. Reddy to be able to capture, you know, a decent market share in the Quebec market where we anticipate that the pricing dynamics will be more favorable there relative to even the rest of Canada. And it just shows you the strength of our team that DRL has chosen to partner with us for trying to capture that early mover advantage in the Canadian market.

Professor, that's good to know. So, would it be like a profit share kind of an agreement or more of a marketing margin kind of a, you know, fixed marketing margin kind of an agreement?

Yeah, so I don't want to specifically comment on the deal dynamics. I think it's early days. But, you know, I think it's a decent opportunity for us, for specifically the Quebec region. And I think only time will tell how lucrative that can become. But obviously, you know, at the same time, I must say that early days, there was a lot of numbers being thrown around for the Canadian market. Obviously, some of the pricing has corrected a bit, so we think it's still a decent opportunity for us looking at the dynamics of the deal, as well as longer term when we anticipate entering at some point in the future with our own product to address the remainder of the market.

Got it. Got it, sir. Thank you and all the best.

Thank you. We will take the next question from the line of Avnish Burmal from Vekaria. Please go ahead.

Yeah, hi. Good evening.

Thanks for taking my question.

My first question is in continuation with the previous participants' question on the impact of business because of the Middle East conflict. I just wanted to know whether, are you facing any constraints in terms of, you know, container availability or raw material or even cheaper than your factory? Is there any impact on the business because of that?

So, I don't think we're seeing any supply issues right now. I think the impact that we have is largely more on the pricing front. Supplies have not, we have not seen any impact.

No, again, supplies in the sense, in a limited sense, what is really happening, the solvents, you know, of the prices are short up. The solvents are not available that we require, you know, for active pharmaceutical ingredients, and that is industry-wide problem, you know, that we are facing. And even for that matter, you know, it will be, one must admit, you know, the insurance cost and the freight cost has also gone up because of a longer route, you know, which is required to be taken. But at the same time, it's difficult to open, you know, what is the impact as of now. As P.U.S. rightly mentioned, you know, some time back, we are carrying inventory everywhere. And if the war continues, you know, for a few months, I think the entire industry or the entire industry, you know, not necessarily pharma, all of us are going to be impacted.

Right. So, for example, costs like you mentioned, freight and insurance costs and all, I mean, these are inventory independent. So, in these kind of cost increases, are you able to pass it on, or are you taking it right now in your P&L?

So, I think it's a mix. I don't think, I think the guidance, what we are writing out, includes the current what we are seeing in terms of the pricing. Okay.

And as far as your, for your domestic business, if you have any CMO partners in India, are you facing any bottlenecks from those partners? No. As of now, no. Okay, okay. My second question is on this. The FDA announced some development on the biosimilar fund where they reduced the R&D for the development of some biosimilars. Just your opinion on, you know, how does it impact the new entrants or the incumbents differently, if you can just talk about that a little bit.

I think, you know, many companies will now find it a little more lucrative to enter the biosimilar space because, like I was previously mentioning, Phase 3, which is essentially an efficacy study, you know, for a lot of biosimilars could possibly be waived off, and that was the largest component in terms of both cost as well as elongating the timelines. And so, you know, once that goes away and we see more approvals coming through that have been filed without the pastry or with the waiver, then, you know, definitely those biosimilar space will heat up a little more. And that said, that's where a company like Encoach Genova will have the advantage, given that we have been in this business for quite a long time and have developed strong expertise on both the mammalian as well as the bacterial platforms, of which most of the biosimilars are anyway produced. So, in terms of maximizing or optimizing the titers, the yields, the cogs, we are there. So, you know, even with competition being very intense and cogs playing a major role, we should be able to thrive in the market going forward.

Understood. Thanks, sir. I'll get back in with you.

Thank you very much. Ladies and gentlemen, we will take that as the last question for today.

And with that concludes the question and answer session. I now hand the conference back to the management for closing comments.

Okay. I mean, this is Satish Mehta. Thanks, Sanu, for very active participation. I would like to reiterate, you know, that we have delivered strong growth in FY26. Hi, which has exceeded our initial guidance. I understand your concern about Zoventus, but I would like to again reiterate we are in good shape. April has been as per our expectations, and I believe, you know, we will deliver, you know, the growth as per what the guidance, you know, which has been given by the company. Nothing to worry as per the domestic business is concerned. With our diversified business model, as we kept on talking about the poor position that we have in Canada, Europe, and emerging market, I believe we are very well positioned to continue our growth trajectory. And as Piyush mentioned, and as I also mentioned in my initial remarks, low to mid-team growth with continued EBITDA margin expansion in FY27 will keep on working. That is something which will happen. And as we mentioned, the entire focus will be on execution, processes, and people. And growth will be fairly well diversified because the company and the business that we have built, we have very strong four verticals as a domestic market, which I love. We should keep on doing better and better as we go along. But at the same time, excellent position in Canada, Europe, and emerging market that we have. So to that extent, business is in good shape, and we should deliver results as per the expectations of the market going forward. So thank you very much for giving patient hearing and looking forward to interacting with you from time to time. And if you have any follow-up questions, kindly feel free to reach out to us and we'll be more than happy to answer. Thank you very much.

Thank you, members of the management. On behalf of MKR Pharmaceuticals Limited, that includes this conference. Thank you all for joining with us today, and you may now disconnect twice. Thank you.