Emcure Pharmaceuticals Limited (EMCURE) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the M.C.O. Pharmaceuticals Limited Q1 FY27 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Saurabh Paliwal, Head of Investor Relations.

Thank you, and over to you, sir.

Thank you, Darwin.

Good afternoon, everyone, and welcome to Q1F527, a news conference call of employer pharmaceuticals. We'll begin today's session with opening remarks from the management, followed by Q&A session. Joining me today on this call, I'm Mr. Satish Mehta, Managing Director and CEO, Mr. Taj Sheikh, Chief Finance Officer, Mr. Samit Mehta, The whole time director and COO, Mr. Rick Thapar. President, Corporate Development Strategy and Finance, and Mr. Piyush Nahar, Executive Vice President, Corporate Development Strategy. We hope you had the opportunity to review the financial results, the results present in the press release, which was released earlier this afternoon. Before we start, please note that this call is being recorded. I also need to remind everyone about the safe harbor related to today's call. Certain statements made during this call may be forward-looking in nature. These statements are based on apparent expectation, assumptions, and management's views as of today. Actual results may differ materially due to a range of factors, including market conditions, regulatory developments, cooperative dynamics, operational factors, and other risks and uncertainties. The detailed disclaimer accompanying the results presentation and the press release applies to the starting call. I will now hand over the call to Mr. Mehta, to begin talking remarks. Over to you, sir.

Thank you, sir. Good afternoon to all of you. This is Satish Mehta, CEO of MQR, and I am absolutely pleased to speak to you post-publication of our Q1 results, which I believe you must have seen it by this time. Before I start talking about the performance of the quarter which has ended, I would like to share. Some important board and organizational updates. Some important details I would like to share with all of you. Number one, our three months, Burjit Visai, and Burjit Visai is associated with me for more than three decades, has been appointed as Member of National Commission for Minorities. Member of National Commission of Minorities. He has been appointed. It's a full-time employment of government of India. As a result of this particular appointment, but this is going to step down, which is going to step down from the boards of all listed companies. So, obviously, as far as Brzee's design is concerned, he will retire from the board of directors of N-Cure at the conclusion of our AGM annual general meeting. As I told some time back, Brzee and myself, we have been working together more than 35 years, and he has been very much responsible in shaping the value system and culture of the organization. And immense guidance and contribution he has given to incur. Obviously, being a stalwart and a very eminent lawyer in his right, he has helped in terms of improving the government standards and institutional processes of the company. And we will obviously continue to whatever years we have jointly built over the period of last 35 years and take it to the next level. Anyway, the entire management of MQRM, HLV MQRM, is absolutely grateful to Burjeej for the contribution that he has given to the company in the last 35 years, and things wouldn't have happened, but for his active participation. With the recommendation of the board, I will now take on the role of chairman in addition, Satish Mehta will take on the role of chairman in addition to my existing role as managing director and CEO of the company, post the conclusion of the coming annual general meeting, post the conclusion of coming annual general meeting. In a weird way, you know, I feel happy about the development because I jokingly keep on saying, you know, that I started my journey in early 80s, and I still vividly remember the first year's turnover of the company was less than 10 lakhs. At that time, also, I was Manishire director and CEO, and now, you know, I've got promotion after 40 years, you know, more than four decades of services to the organization. Now, you know, I'm the chairman and CEO of the company because of the support that I received from you all. I assure all of you that company strategy, operations, execution, everything remains absolutely unchanged. In terms, you know, this new position that has been interested to me, I feel humbled, and I'm committed to give more than what I've done so far, and I will work very closely with the board, senior management team, and each and every Enquilion to take the company to the next level. So the first thing I told you about Varjeet Suno stepping down from the board of the company for after having been appointed as member of the Minority Commission. The second important announcement I would like to make is that Sameed Mehta now takes over as Chief Operating Officer of N-Cure, as COO of N-Cure, and as well as Sameed is concerned, as you all know, as I told you in the beginning, is extremely passionate about science and technology. He has done his MBA from Wharton, and he has spent, you know, more than two decades with the organization. And he has also been involved in giving a lot of innovative products, you know, and has worked very closely, you know, with the R&D and manufacturing. And now, you know, going forward, he will have a broader oversight of group R&D operations licensing activities. And I have every reason to believe that Summit will play a bigger role, not necessarily in the areas, you know, where it is directly involved, but overall strategic inputs, you know, they will get from Summit as it's getting, you know, getting committed to the next generational leadership change, you know, that will happen in the organization. So, that's a very important development that has taken place that Summit is going to become the COO. We will get more and more involved in the management of the company and clear signals to everyone about the way forward. The third important thing that has happened, that we have just recently acquired 12% minority stake in Genova. And now, you know, Genova happens to be completely, completely owned, 100% owned subsidiary of venture. So with the strategic platform, the strategic control of our biological platform will obviously ensure that we have a very sharp focus on biosimilars and obviously adjacent therapeutic platforms. So, the another thing, you know, that we have done, and biosimilars, you know, is very close to my heart. In fact, you know, we began the journey 15, 16 years back. So, there, you know, as far as Samit is concerned because of his passion for science and technology, apart from being, you know, chief operating officer of NQR, he also becomes chief executive officer of Genova, our biotech arm's only own 100% subsidiary. And he will obviously be focusing on taking Genova biosimilars and other, you know, technologies to the next level because I personally believe the way the things are happening at the global level, a lot of things are happening in the field of biologics, and obviously Sunnish leadership to Genova will ensure, you know, that we will have a robust product pipeline going forward because biosimilars and biologics are going to play a very important role. The Genova consolidation now allows us full control of our India and foreign subsidiaries, because all subsidiaries, Genova, Juventus, now everything is 100% owned by the parent company, giving us a very simplified and aligned group structure that ensures strategy coordination across all businesses. So, I talked to about three major events, Darjeet Shiro stepping down, I assuming the role of chairman of the company. The second thing I talked about, you know, Samit becoming COO of Encure, very clear signal about the way forward. The third thing I talked to, you know, is obviously about Genova. Minority is taking, acquired 12.06, and now each and every company under the NQR umbrella is 100% owned by current company. Having discussed about these three major events, now let me focus on our quarterly performance, which I believe Mustafa has seen. So, as far as our FY27 first quarter is concerned, it's the second year of our five-year plan, and I'm very pleased to say that we have started on a very strong footing, and Q1 gives a very, very encouraging early signal. The Q1 FY27 deflected strong all-round performance with broad-based growth across revenue, profitability, and earnings. Let me tell you what has happened. As far as the resume of the quarter is concerned, it grew by 22.8% year-on-year, 22.8% year-on-year, to 2,580 crores, 2,580 crores, I repeat, supported by momentum across geographies. As far as the data is concerned, it has grown by 25.8%, 25.8% to 508 crores, 508 crores. And margin has improved, margin has improved to 19.7 percentile points, 50 basis points more, and reflecting the productivity gains and operating leverage that has happened in this particular quarter. As far as PAC is concerned, profit after tax has gone faster at 36.2% to 292 CR, 292 CR, underlining the strength of co-operating performance, enormous amount of excess control has been exercised in operating parameters and operating performance. So, again, outstanding performance. As far as the second year of the five-year strategy plan, which I talked last time, we have obviously begun on very, very strong footing. With that, let me turn to the performance of what has happened in India. As far as India business is concerned on year-on-year basis, it has grown by 10.2%. We have done 1095 CR. Returning to double-digit growth, double-digit growth over the quarter of previous year, Q1 of previous year, and if you compare with Q4 of 26, if you compare with Q4 of 26, I repeat, we have grown by 1%. And so, the performance is concerned. If we can line with our plan and line with our expectations. I must say that all of the leading brands, all of the leading brands in CNS, archaeology, and gynecology have showed very good traction, very good growth. We have also seen, we have also seen improvement in Zoventus following the changes which I have taken in the previous. In the previous quarter, as I told you last time, there was a bit of problem in Zoventus, but now we are moving towards stability, because what really happens, there are three areas on which we have been working, stability, consolidation, acceleration. So stability we have achieved, we are almost in the process of completing consolidation, and now we are obviously moving towards acceleration going forward, having achieved the first two objectives that we have set for ourselves. Then, again, as for the products, you know, from Sanofi, Roche, along with Covista from Novo Nordisk, the semaglutide from Novo Nordisk, the performance complemented the performance of our own brands and broadened our presence in relevant therapy areas. I mean, it's a matter of happiness that through Covista, we have a very solid presence in obesity market, which I believe is going to go forward. I'm also happy to inform that we have entered a consumer business who has a wholly owned subsidiary, and that is also getting traction. In fact, you know, one of the product bitter drops that we have is showing early signs of scalable growth going forward. It has been very well received, you know, by the consumer. It is showing, you know, good traction, you know, going forward. And I'll keep on telling you about the performance of bitter drops as we go forward. We remain confident of continual growth in India as we strengthen sales teams and portfolio gain traction. I see, you know, going forward, whether it is Q2, Q3, Q4, we will see the northward movements as far as the Indian business is concerned. As I told you last time, as far as Indian business is concerned, there is a lot of, you know, what I would say, overseeing of the performance from senior management are included, and obviously this particular part of the business is very close to our heart, and you will see positive movement quarter after quarter as far as Indian business is concerned, because as I told you some time back, I think the process of consolidation is behind us, and now, you know, we will obviously move towards actual innovation. Having said that, now let me turn my attention to international market. As far as the international business is concerned, it delivered a very, very strong and robust growth as far as the portfolio itself. With revenue of 1,485 crores, 1,485 crores, recording a growth of 34.2%. Growth was supported by this business ramp of new launches. And obviously, you know, we had telegrams because of currency. All regions contributed to this strong performance. All regions contributed to this strong performance. Just to recap, as far as Europe is concerned, Europe grew by 32.8% to 537 crore. It grew, growth led by a strong base business performance. And obviously, you know, enhanced contribution from liposomal anglo-anthotericene, enhanced contribution from anthotericene D. As far as Canada is concerned, Canada grew in the first quarter by 24.6%. To 427 CR, with continued growth in the base business, while rest of the world, while rest of the world grew by 44.8% to 522 crore, led by very strong performance in ARV, exactly business. Now, having spoken about the performance of international market and also, you know, getting back on the growth, the track, you know, as far as the domestic businesses concerned, let me spend a few moments, you know, on the R&D and the pipeline that we have. During the quarter which ended, we received 15 plus product approvals across developed and emerging markets. Across developed and emerging markets, we received 15 product approvals. These approvals provide visibility for continued business growth across market, because as far as the international markets are concerned, the growth is driven by the quality of filing, you know, that we have, what type of products that we find, and how many approvals we get. That plays a very important role, and it's a matter of happiness to inform my investors that we got 15 approvals in the quarters, you know, that have just ended. As we discussed previously, we continue to build differentiated capabilities across biologics, complex injectables, novel delivery systems, especially focus on liposomal platform where we have a reasonably good understanding. So, I think, you know, we are going to focus on the technology-driven differentiated products. That is going to be the core strategy that we will be pursuing as far as the emerging markets and Europe and Canada is concerned. Again, something interesting has happened as in the month of July, as part of government... Technology transfer, as part of government technology transfer, government-led technology transfer, ICMR license, ICMR license, a novel anti-HPV candidate, a novel HPV candidate for cervical mu plus 3R. This particular product, you know, will have to go through various phases, and we are very excited because this is NCE, and the development is also part of our women's health care portfolio. As you know, that is the women's health care portfolio, gynecology is one segment, you know, where we are doing well, and this is part of that particular segment. Now, again, as far as July is concerned, we signed a royalty-free, non-exclusivity, voluntary licensing agreement with Merck, Sharp, and Doom to make and sell a generic version of experimental once-a-monthly oral HIV pill in 129 low and lower middle-class income penalties. Thank you. Ali Matavir, a pre-exposure prophylaxis or PRTP candidate is currently in late-stage development. As I told you, we do exceedingly well as far as the ARL segment is concerned. So last time, you know, we spoke about manapapazine, the molecule, you know, which has been licensed by Gilead. And this is one more feather in our cap getting MS3 product, you know, which is also a path-breaking molecule, oral pill, once per month. So obviously, you know, as we go along, as far as where the portfolio is concerned, that also we are consulting, that's what is going on. Now, in conclusion, I would like to tell that as far as FY27 is concerned, strong start to the second year of our five-year journey, we deliver the broad-raised course, saw improvement in India over the Q4 of FY26, consolidation as far as Juventus is concerned. We have continued with our strong international momentum, acquired full ownership of Genova, and deepened our leadership bench. Now, as far as we are concerned, our priorities are absolutely very defined. The emphasis going forward will be on execution, execution, execution, that is key to success. I believe very strongly on that. Second thing, you know, acceleration and improvement as well as the Indian domestic market is concerned. We'll keep on doubling down on the international business, where scale is also going to play an important role, where getting, you know, technology-driven differentiated products is going to play an important role. We'll keep on focusing on that. And we also will work to advance the differentiated pipeline and convert groups into operating leverage. If you recollect, you know, last time, you know, I very specifically mentioned that we as a company, you know, as far as the strategy is concerned, we'll double down on whatever we are doing, make the big brands bigger. That's one thing. The second thing, you know, is also we ensure, and we're very proud of the R&D that we have built up to keep on getting, you know, products from our R&D. Even today when I'm speaking to you, all the products, you know, which have come from our R&D, like Ferris Ascorbet, Roe for XT, or Roe for FCN, or PAWS, or for that matter, you know, all carried with your compounds. They are doing exceedingly well, so do expect, you know, R&D to contribute to the growth of the company, make big brands bigger. And the third, obviously, important vertical that we have as part of the strategy is to work on e-licensing from Balkan National, We will also look out for products from ICMR, and look out for products from early stage of development. That's the strategy we will follow. I am very happy to say that impudence has shown a lot of resilience. That is something, you know, which has happened. I mean, if you look at the global environment, you know, what's happening in West Asia, Middle East, or even for that matter, you know, what's happening with Russia and Ukraine, and with so much of uncertainty, impudence, you know, has shown a lot of resilience, and everyone is absolutely committed to the growth of the company. And that is something, you know, which means a lot to me. And that's what we are doing. And I think, you know, With the very diversified and geographic presence, you know, in various geographies, the fourth vertical that I talked to you, I think, you know, going forward, the performance is going to be upwards, it's going to improve quarter over quarter, and all of us at NTR, you know, we are very positive about the direction, you know, that company is taking, and obviously, we'll be counting on your support as we move forward. Okay, with that now, I will complete my this one opening remarks.

Thank you.

Thank you.

Just, you know, I would like to reiterate my confidence in venture to deliver low to mid-team revenue growth in FY27 as told you, you know, quarter out to quarter, you know, there will be not four moments, positive moments, and we discussed in the past, as we discussed in the past, we are committed to these 7,200 basic points, which is point of every time margin expansion. So, very bullish about the business. With that, you know, I will request my C.A. GoTaz to give it a more color and run through the financials before we open the call.

Good afternoon, everyone.

I will now walk you through our financial performance for Q1 FY27. Understated otherwise, all growth numbers in my remarks are on a year-on-year basis. Devening from operations to 22.8% to INR 2,580 crores, reflecting strong distribution across both domestic and international business. Growth was broad-based, with international markets continuing to be the bigger growth driver, while the domestic business delivered a resilient performance. Domestic revenue grew 10.2% to 1,095 crores, led by strong performance across key therapies, including CNS, cardiology, and women's health franchise. International business grew 34.2% to 1,485 crores, continuing to be a key growth engine for the company. Europe grew 32.8%, supported by Ampere to this in scale-up and steady institution in the base business. Canada grew 24.6%, led by new launches and market share gains. Emerging market stress of the world delivered strong growth of 44.8%, supported by robust growth in the ARV segment and continued momentum in the non-ARV segment. Gross profit stood at 1,507 crore, up 16.1%. Gross margin was 58.4%. Margins declined year-over-year, led by increased exports and also a function of products and business mix. R&D investments were in R$90,000, representing 3.5% of revenue. R&D investments are expected to pick up in the remainder of the fiscal year to support our full-year plans. EBITDA grew 25.8% to R$508,000, reflecting the benefits of scale, operating leverage, and continued productivity initiatives. EBITDA margins improved to 19.7% of 50 BIPs, supported by operating efficiencies and disciplined cost management. Depreciation and monetization grew to 110 crores from 99 crores in Q1 of the 526, interest cost was 32 crores. Effective tax rate for the quarters stood at 25.6%. Profit after tax grew 35.4% to IMR 292 crores, with tax margin improving 110 BIPs. This is to collect strong operating performance and include cross-headability. Gross debt as on 30th June stood at 1,291 crores, with cash and cash equivalents at 189 crores. Net debt stood at 1,103 crores. Net debt is expected to increase in the next quarter, reflecting the mantra and Genova payouts completed in July. Looking ahead, we remain focused on sustaining growth across our domestic and international businesses, improving operating efficiencies, and driving steady margin expansion over the medium period. With that, I will open the floor for questions. Thank you. We will now begin the question and answer session. To ask a question, please click on the Raise Hand tab. When the operator announces your name, please accept the prompt on your screen to unmute your microphone, and then proceed with your question after introducing yourself and your company name. Our first question comes from Kunal Runderia. Please accept the prompt on your screen to unmute your audio and go ahead with your question after introducing myself. Hi, Kundalj Andhira here from Access Chatterjee. Good afternoon, sir. Sir, first question in the India business, good to see that the growth has passed down the gates as you got in in the last quarter. Is this a clean growth? I mean, is there any element of channel filling over here after Q4? Or is this how the growth should be going forward also? So, there is no challenge feeling in this conal. This is a normalized growth that we have. And I think as the CEO mentioned, we expect growth to improve further from these levels that we have seen in the coming quarter. Right, right. And this improvement and growth would be, I mean, I know CSO said a few things about the existing bands, the therapies are doing well. But is, I mean, how much of your revenue contribution would be coming from some of these in-licensed products? Are they growing in line with the company average, below that or above that? Some color would be excellent. So, I think most of the enlightens are growing in line with the industry. I think that's what we talked about even when we taken over the portfolio, they will continue growing in line with industry growth. But where we're talking about partial industry growth, that will be driven more by our own brands across women's health, cardio, CNS, oncology, those segments. Right. Got it. Got it. Second question is on the ROW business. You are coming off a very high base of last year with a 42% growth. Now you have 45% growth driven by the ARV business. What would be the ARV contribution? And I mean, would that mean that FY27 base would be higher than 28 could be a bit subdued? No, sir. I think we're seeing growth in both our ARV and non-ARV segments. So, I don't think we're looking at that FY27 will be abnormally high than it happens out. Yeah, ARV is higher in the current quarter. So, I think about two-thirds of the business in ROW will be ARV this quarter. But for the full year, we do expect we end up at about that 50-55%. Got it. Got it. And just one more, if I can. I guess the gross margin decline has been lower to the geographic mix of the business. But is there any level for gross margin

expansion beyond the geographic mix?

I think broadly it is due to the geography mix. We obviously continue to look for ways and means to improve some of the activities around procurement or COGS improvement, so that should continue as an ongoing basis, but by and large, I think we have been guiding historically to about a 50% plus gross margin, but given the strength we're seeing where we're outperforming on the international piece of the business, I think where the gross margin is coming in at or somewhere in that ballpark 59% or 59% to 60% is what one would assume if we continue to see this trend of the international business outperforming. Perfect.

Thanks, Rick. Thanks, Peyush, and all the best, and congratulations to Sam.

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Our next question is from Alankar Garude. Please accept the prompt. Unmute your microphone and go ahead.

Hi. Good afternoon, everyone, and thank you for the opportunity. Satish Bhai, you spoke about domestic growth picking up year on. Just trying to understand where are we in the Juventus restructuring journey. Maybe in some sense, if you can quantify it, maybe we are 60% there, 70% there. Some sense on that would be useful.

As you said, I made a very interesting statement before you got it. There are three phases. First, I told you about stability, consolidation, and acceleration. These are three very specific terms I used. So, as I told you, in the last quarter, we had a problem. We had exuberance as well. So, now the stability has come back. Normalization has taken place. Consolidation has also happened. And now, you know, we are moving towards acceleration. So, as far as exuberance is concerned, I think, you know, most of the job has been done. And we are moving in the right direction. So, Zoventus is no more my worry. It's a question of, you know, putting it on high growth, you know, that's the basic objective at which, you know, we are working. And we have a very good team in place. All new people, you know, they are also fairly well trained. And going forward, you know, you should see good traction as for a Zoventus is concerned.

Sure, got it. Maybe a follow-up there will be, if we look at the IPM growth, it's clearly picked up over the last two, three quarters. And in context of that, NQR's domestic growth, because of the challenges we've seen on the Juventus front, has been lower. So, would you like to call out when exactly would the company be back to growing at par with the market?

So, I think from next quarter onwards, you will start seeing that. So, if you look at even last year, 2H, we had seen a bit of impact on slowdown now. So, that base effect will also start playing off on 2H this year. So, I think from second quarter onwards, you'll start seeing that more in-land with the industry, and then second half will be more faster than industry, too.

Second half in Malanka will be much better. As far as this quarter is concerned, you know, we think, you know, we should be in line with the industry group. And again, you know, as far as Q4 is concerned, if you compare the Q1, you know, Q4, we have grown by 12.2 percent or 12.3 percent. So it's all moving in the right direction.

Got it. The second question is again on domestic growth. I mean, if you strip off the Sanofi diabetes portfolio, if you strip off Roche, Nefro, and Bovistra, would you like to give some range as to where the domestic growth was in the first quarter?

I think if I strip off the Sanofi OED and the Roche, it will probably be about 600% growth in the quarter.

Got it.

So, Insta effectively is a new brand that we are launching out.

Got it. And so, basically, when you talk about growing at par or maybe outperforming the market, you are including, you are looking at it at an aggregate level. You are not just looking at the organic growth.

So, next quarter onwards, if you look at it, OED will be in the base. Roche is a much smaller business, so it doesn't move in too much.

Got it. The final question before I come back in the queue with Satish Bhai to you is, if you look at the traction in semaglutide, Povistra, not just specifically on Povistra, but in general for the market, we've seen quite interesting trends over the last few months. It's maybe some media articles say that the pickup has been slightly slower. There is inventory in the channel. There are companies who say that more or less the traction has been in sync with expectations. What is your view as far as the pickup is concerned, and how should we expect the market to evolve maybe over the next three to six months?

I don't know what this is about, my dear, because, you know, as far as we are concerned, we are marketing innovation, and what has really happened, you know, that apart from marketing Covistra quite aggressively, one good thing that has happened from our point of view that last, actually, 15 days back, you know, Covistra was clear, or Semagutide of Innovative was clear for MASH. So that's one area where we see the growth, and that's one area where we will possibly have a poor position. But to really copine, you know, what's happening in the agricultural market, the jury is out. Wait for three to six months, you know, before we know what's really going on. Because I am given to understand almost 40-15 banks are being lost. So how much is channel stopping and how much is real, you know, what I would say consumption, I wouldn't be able to hazard against. I can only talk about what's happening at other level. And I can only say one thing, you know, as a whole side concern, month over month, you know, we are growing.

And if you can comment on the acceptance levels both among physicians as well as patients in any instances which you can highlight wherein which give you confidence that things will pick up going forward.

No, because what happens to that is our DNA molecule, number one. Then secondly, you know, this part of the public domain, the two major, you know, Indian players, you know, they had a recall. And the third thing, you know, as far as this particular product is concerned, being, you know, biologic, I think, you know, what it happens to be absorption or even for that matter, the solubility is also a really major challenge. And since, you know, the innovator, Novo Nordics, and of course, MQ, you know, we took a decision to make the pricing, you know, very, very competitive. I have really reason to believe that eventually, you know, we will emerge, you know, or we will do better than most of the brands, you know, because first of all, innovation, second thing, you know, massive data that we have, then more and more, you know, publication of clinical trials, you know, which is happening because of the association with the innovator. So things will work out, you know, very well because the generics, you know, got launched only sometime in the month of March. So there is a lot of noise, a lot of brands. So let's see how it plays out. But it's a question of, you know, survival of the fittest and that's what will happen over the period of time. And we are actually, you know, we need to do a very smart thing by getting associated with the innovator.

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Our next question comes from Alok Dalal.

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Good afternoon, and thank you for taking my question. On the export side, what is the constant currency growth for the quarter? I think for the overall company level, the product impact was about 6% or 6% or 7%. So, the interaction would have been about 12% odd.

Okay.

Thank you. And for growth in Europe and Canada over the coming years, will it be more broad-based growth or will it be driven by one to big product opportunities like Amphu, for example?

I think they will continue to be big hitters, you know, that will contribute and continue to be in momentum with the Stanford, some of the other filings that... We are expecting approval for shortly. But that said, you know, we have a portfolio approach depending on the market. Say, for example, in UK, we also have a retail presence. So there's a large number of plain vanilla generics as well, which contributes meaningfully. So I think that mix will continue to happen. Of course, one or two big products will, you know, contribute more than some of the others.

I think it's a little bit different for the two geographies. So if you look at Europe, multiple countries, I think it's going to be a little bit more concentrated in terms of some of the high-profile pipeline products that we're working on. For Canada, however, single market, I think that's a fairly broad-based growth. There's no sort of big-hitter product as such driving concentration in that market.

Thank you, Vik. So, is M4 now introduced in all countries of Europe, or is it just a few ones today?

It's pretty much in all the countries, and there also, you know, we are ramping up supplies, so the order book across the different countries should also go up in line with the supplies.

So, I don't know what's happening. Although we have introduced the product, but again, most of them are tender-based and they'll have their procurement cycles.

So, it should pick up in the coming quarters is what you're trying to suggest.

Okay. And last question is on semaglutide for Canada. I saw in the presentation there is a filing lined up for it. So, what could be the timeline that we are looking at?

I think we'll be filing in the current quarter.

In the next quarter? Next week once. So then, Piyush, you will be in the second wave. Do you still feel there is upside once you are able to get approval and launch the product? I think it will be a decent product, but as you said, Canada, we are not banking on one product which will be a meaningful growth driver. So it will be one of the portfolio products that we have.

And since…

This is, I mean, the product, it was known that it was going to go off patent, and company has a relatively stronger positioning in Canada versus others. So, what could be the reason why you are in the second wave as compared to first wave?

Yeah, so, you know, we were looking at chemaglutide as a global development, so it was tagging along, you know, whether it was Canada or some of the emerging markets with our domestic development, and then with whatever discussions were ongoing, there was, you know, some delay in terms of looking at expanding that or progressing that, and that's why most of these other markets, which also had, I think, expiring, it's going to be more a second wave filing than in March when it expired.

All right. Okay. Thank you for taking my questions.

Hello. Before we proceed, may I request you to please announce your company name as well?

Yeah, yeah. Sure. So, I'm from Jefferies, India, private limited.

Thank you. Our next question comes from Tushar Manudaniya. Please accept the prompt on your screen.

Unmute your audio and proceed with your question after announcing your company name as well.

Yeah, my name is Tushar from Motivata Lushwal, Cementary Services. So, personally on gross margin, while there has been currency benefit as well, What has led to the lower of the cross-margin both year-on-year as well as quarter-on-quarter basis? I'm not sure if you have already covered this in your comments.

Vishal, I think it's largely driven by the business and product mix, right? So with zero-up and ARV being higher, that leads to a slightly lower GC. Effectively, I think how we've probably talked about in international market that certain businesses where it's more B2B model. So probably GC is lower, but at EBITDA level, they are more effective.

Okay, so as this sort of Europe business scales up, or even the Canada business scales up with Quebec, so where do you see this gross margin sort of settling maybe at by 27, 28?

I think 27 will probably be around 59%. Yeah, I think if I can just add a little bit of color here.

I think at the start of the year, our overall guidance was that overall top line will be growing somewhere in the low to mid-teens, and we expect the gross margin profile of the entire business to be somewhere in the 60 or 60 to 61 sort of frame. Given our strength of performance in Q1 and visibility we have, particularly on some of the order book on the ARB segment, et cetera, we think that in terms of the overall top-line guidance, we're more comfortable being at the higher end of the guidance that we had given at the start of the year. Having said that, that will obviously then, as a mix of that piece being a bit higher, impact the gross margin. So that's why I think Fuchsia's guidance of closer to 59% as an overall mix would be about right on a higher end of the guidance on the top line.

And secondly, on the India business side, it was way down growth into price volume new launches.

Yes, sir. I think if you look at it, the new launches would have been about 1% to 2%. The rest of it is largely price and volume. That's a lot.

And within that, how much will be volume?

So, I think price is about 5% for us. 4% to 5%.

That's it. That's it for me. Thank you.

Thank you. Our next question is from Ankush Mahajan.

Please accept the prompts, unmute your audio, and proceed with your question.

Thanks for the opportunity.

So my question is related to the Povzitra. How is the response from the market? Because it's an innovative product when we compare it with the generic products. And what kind of market share we are building in this product now?

As I told some time back, you know, we are getting traction month after month. So, early days, as I told some time back, you know, very recently approved, you know, for MASH. So, we are also approaching hepatologists and gastroenterologists. So, let's see how it plays out. But having said that, you know, I think there is a lot of California, a lot of noise, you know, because so many brands are being...

So, my second one is related to the very strong growth in the rest of world business. So, what are the reasons behind it?

No, no, as far as the rest of the world is concerned, as we think, you know, I think there's some time back, as far as emerging markets are concerned, I mean, as far as the current market is concerned, it's driven by ARB, though, if you look at the full year, there will be both, you know, ARB and the rest of the business should be 50-20. And as far as the European market is concerned, that is also being driven by the differentiated technology-driven product that we are launching, and even for that matter, you know, we are also getting traction because of the whole-power acquisition that we did in the UK in the form of banks that is also adding to the business, but most of the products are now commercialized, and obviously, as far as Canada is concerned, we have a very strong base. And Canada, again, what it happens, you know, that we have a very strong product pipeline. So it's a very rounded strategy, you know, that the company is following in terms of, you know, solid growth and getting a lot of approvals and that we continue to drive the business in these three geographies.

Thank you, sir. Thanks. That's from my side.

Ankush, maybe have your company name as well, please.

Yeah, I'm from the Centum World.

Thank you. Our next question is from Forum Palik. Please accept the prompt, unmute your audio, and proceed with your question after introducing yourself at your company name.

Yeah, thank you for the opportunity. My name is Pauram Parekh. I'm from VOB, Bank of Baroda Capital Markets. My first question is on the net debt. So in our opening remarks, we mentioned about net debt going up in the next quarter, while it is also going up in this quarter. So, if you can talk about our strategy of debt repayment or by when can we expect to become net cash?

So I'll answer your last question first. Probably by the end of FY28, we should be net cash. And on the question on the debt going up, first few ventures, first I'll answer the one why it won't go up in the next quarter. We have made these payments for acquisition of Mantra and also the Genova minority stakes. So that will take up my debt by close to around 450 to 500 growth. On your question on why the debt went up from Q4 to Q1, yes, my working capital went up a little bit, but that's now stabilized in this month, so that will come to normal thing in this quarter. So by the end of next quarter, we should have a net debt of close around 1450 floors. From what today, I see at 1560 floors.

That's helpful. My second question is on our domestic organic growth, which was mentioned at 6% to 8% growth. So if you can give us some color, why is the organic growth, you know, growing at a slower pace, and how do we see organic growth facing, you know, going forward? Will it come at par with the IPM?

Yeah, I don't know if you were able to capture it. I think the CEO had answered that if you look at year-over-year quarter, part of that, let's say, mid-to-high single-digit growth for organic was impacted by some of the, you know, consolidation happening at Zeventus level. I think as we look for the rest of the year, our guidance is that we'll be in line for the Q2 and, in fact, faster than industry growth as we accelerate, you know, Zeventus back to kind of a... What we have seen off of the lower base of last year for the second half of this year. So we're confident in terms of the overall guidance that even the organic business should be growing at par or faster than the industry growth when you look at the full year.

Sure, that's helpful. Thirdly, on the R&D side, we mentioned that R&D expense is also likely to go up. So some guidance, if you could share, what is the number that we should be working for FY27, the contribution?

R&D, I think what we talked about for the full year will be between that 4% to 5% range. So I think we continue to maintain that out.

Sure. And lastly, is it possible for us to give the segmental constant currency growth for the international market?

I don't think we break that out, but broadly, as I said, for the overall corporate level of about 6% product impact, international level of 12-13%.

Sure. Thank you. That's all from my side. And all the best.

Thank you. The next question is from Alankar Garude. Please go ahead.

Hi, thank you for the follow-up. This is Alankar from Kutak Institutional Equities. Sir, you were earlier planning to launch semaglutide in Quebec via your partnership with Reddy's in the second quarter, the current quarter. Post the issue faced by Dr. Reddy's, what are the revised timelines?

I think Arangal will defer to readies on this whatsoever. So, whenever we have a product with us, we will be able to launch it out. But I think for timelines, I will probably readies will be the right.

Okay. No, so just checking there, I mean, they have mentioned about a relaunch possibly in November. Earlier, there was a lag between the launch in Quebec and the rest of Canada. So just checking whether that lag will be there at the time of the relaunch as well, or you'll be launching it in Quebec at the same time as Reddy's launches in Canada, rest of Canada.

I think it will depend on how the supplies from Reddy shape up and how much supplies you can get.

Fair enough. Okay. And the other question was historically, if you look at the domestic market, there are some of these metrics like covered market and number of brands prescribed per doctor where NQR has been lower than most of your relevant peers. So as you do more of licensing deals apart from new launches, how should we expect this to move as you progress on your five-year roadmap?

Now, of course, I put a domestic is concerned very close to our heart, and we should be not only on par with the industry, we should do better than them. That is the strategy on which we are working, and that's what I was telling some time back, as a domestic is concerned, there are three levers on which we'll be working. We'll try and make big brands bigger. We have some real jewels in the armory. The second thing, you know, we'll obviously be working with multinationals and other in-licensing products. That is number two. And as I told, you know, some time back, more than 30 to 35% of my sales are coming from the products which are developed by R&D. Whether you are talking about ferrous ascorbate, ferric carboxyl, maltose, or 11-fair, caramid, or compound so that my company has given all 10K plays, you know, for both stroke and MI. So that journey will continue. So, obviously, you know, as I was telling you some time back, the process of consolidation phase is over. We are moving towards acceleration, and you will see a lot of, what I would say, good news, you know, as far as the domestic market is concerned going forward. Personally, I'm very bullish about this.

So, guys, if I could just add, I think the whole rationale we've been highlighting for some of these in-licensing deals is these are, in some cases, very strong legacy brands that come with strong pen habits of the doctors, And so we believe that, you know, with the complementarity of M-Cure's portfolio, we obviously want to leverage the co-prescription along with those writing habits. So that is indeed, you know, the overall strategy to see that the co-prescription. It should go up as we, you know, handle some of these licensing assignments, along with our portfolio that we continue to build.

That's quite helpful, Satish Bairi and Vic. That's it from my side. Thank you, and all the best.

Thank you. Ladies and gentlemen, if you wish to ask questions, you may please click on the raise hand tab or icon on your screen.

As we have no further questions, I would now like to hand the conference over to the management for closing comments. Over to you, gentlemen. Thank you, Dorgan.

Thank you, everyone, for joining us today. In case you have any further questions or need any qualifications, please do get in touch with us. With this, we conclude the conference talk. Have a wonderful rest of the day.

Thank you. On behalf of N-Cure Pharmaceuticals Limited, that concludes this conference. Thank you all for joining us. You may now disconnect.