Lupin Limited (LUPIN) Q1 2027 Earnings Call Transcript

Good evening, and welcome. Hello, good evening, and welcome to Lupin Limited Q1 FY27 earnings conference call. Thank you for your participation in the call today. Please note that all participants' line will be in listen-only mode, and there will be an opportunity for you to ask questions after the opening remarks. Please also note that this conference is being recorded. I now hand over the conference to the management. Thank you, and over to you, ma'am.

Good afternoon, friends. I'm very pleased to welcome you to our Q1 fiscal year 27 earnings call. I have with me our MD Nilesh and our CFO Ramesh and our head of investor relations, Ravi. We look forward to sharing with you our highlights for the quarter, as well as the outlook for Fiscal Year 27. We are delighted to announce a record quarter with total revenues from operations and EBITDA exceeding 8,000 crores and 2,400 crores, respectively, for the first time in our history. This quarter also marks a record 16th consecutive quarter of year-over-year growth for the company. While the U.S. has obviously had an exceptional contribution to this performance, I would like to highlight that the ex-U.S. organic revenue growth for the company has been a strong 20% plus year over year and a strong double-digit growth in all Aki markets, including India, other developed markets, and other emerging markets. This geographically diversified business model combined with our unwavering focus on operational excellence creates a sustainable foundation for future growth, even as we navigate the increased competition in some of our key genetic products in the U.S. this year. Turning to individual business segments, our U.S. business sustained its positive momentum and delivered another quarter of robust sales performance. While we benefited from the higher volumes in base portfolio and growth in products like Tolgapton, this was offset by increased competition in products like Mirabai Ground. For the full year, we expect the U.S. business to be in the $1.1 to $1.2 billion range, aided by growth in base business, injectable launches, and contribution from Peg Philgraston offsetting the additional competition in products like Mira Background and Tolvapton during the year. Going ahead, we remain focused on doubling the share of our complex products in our U.S. business, led by respiratory and complex injectables and augmented by biosimilars. In the next three years, we expect to launch 50-plus products in the U.S. with 10 exclusive first-of-files, 5 biosimilars, as well as 2 to 3 505B2s. We are planning to file more than 15 products this year, including at least seven in the respiratory segment. We believe that all these initiatives should help in the U.S. getting back to its growth trajectory from fiscal year 28 onwards. Coming to India, our India business has grown 13.9% year-over-year in the quarter, with the core prescription business growing 15.1%, representing a 1.1 times growth against IPM. Volume growth was strong at 6.1% during the quarter. The chronic segment accounts for around 67% of our portfolio, up from around 65% in fiscal year 26, and we have set ourselves a target to increase the share to 70% in the next five years. Most of our key therapy areas outperform their respective market growth, with anti-diabetes segment and cardiac segment growing 1.8 times and 1.2 times the category growth. I would specifically like to mention our diabetes segment, which grew at 31.8% year-over-year, a second consecutive quarter of 20%-plus growth, led by market leadership in human insulin and successful launch of semaglutide injection. This segment is poised for continued healthy growth with the expected launch of vial and oral dosage forms of semaglutide in the second half of this fiscal year. We remain confident that our India Formulations business will continue to outperform IPM by 1.2 to 1.3 times, supported by a strong India prescription sales force of nearly 11,300 people and pipeline of more than 80 new product launches over the coming years. We have set ourselves a target of novel proprietary products contributing one-third of our India revenues in the 10-year timeframe. This innovative portfolio for India will come from in-house development as well as in-licensed products, leveraging a strong partnership track record, brand building, and development regulatory and clinical capabilities. Our other developed markets, Europe, Canada, and Australia, accounted for 14% of our revenues in this quarter, up from 11% in fiscal year 26. Sales grew 48% year over year in the quarter. Our European business continued a strong momentum with 83% growth year over year. We believe that we are under-indexed in Europe and have set a clear pathway to grow this business with a complex genetics, biosimilars portfolio, as well as specialty acquisitions such as VisuPharma. Emerging markets delivered an impressive 52% year-over-year growth led by Brazil, South Africa, and Philippines. Brazil continued the strong momentum of the last four quarters, growing 117% year-over-year in local currency during Q1, driven by successful commercialization of Dapagliflozin and launch of Empagliflozin. As mentioned earlier, we are starting to establish a presence in the diabetes metabolic space in the emerging markets with DAPA serving as a strong start and the launch of Empire in Brazil and South Africa, as well as semaglutide in South Africa later this year. Turning to R&D, our spend was 7.4% of sales this quarter, with continued focus on complex and specialty platforms. We have over 50 active products in the pipeline, with near-term emphasis on respiratory, complex injectables, and biosimilars. We've also evolved a strong 505B2 pipeline in the last couple of years, and we'll start seeing product launches this fiscal year and ramping up in the next two years. We are also strengthening our India innovation portfolio through both in-house development and in-licensing of late-stage assets, as I mentioned earlier. Switching to compliance, we received EIRs for Ankhleshwar and Somerset with VAI status from USFDA for both sites during the quarter. With regards to Pitampo Unit 2 facility, we have submitted our responses and remain on track with our remediation efforts. We are fully committed to maintaining the highest standards of quality and compliance across all our sites globally. In conclusion, while we have started the year on a strong note, as indicated earlier, we anticipate some moderation in performance during the remainder of the year, especially in the U.S. from increased competitive intensity on our two major products. So we are closely monitoring the potential headwinds from an uncertain geopolitical environment as well. We would like to reiterate our earlier guidance of high single-digit revenue growth for the organization, with EBITDA margins of around 25% during the year. Before I hand it over to Ramesh, I would like to say that we are optimistic on our future growth trajectory. We are on the path to strengthen our diversified business model, while we continue to evolve our business into higher barrier generics, branded, as well as innovative products.

Ramesh, over to you. Thank you, Vinita. And friends, I welcome you all to our Q1FI27 earnings call. I'm happy to report another record quarter of earnings, with total revenue from operations growing 32% year-on-year to Rs. 8,277 crores, and EBITDA, excluding Forex and other income, growing at strong 50% year-on-year to Rs. 2,464 crores. This marks the 16th consecutive quarter of growth for the company. What is heartening is that the growth has been diversified and robust across our major geographies, be it the U.S., which grew by 43% year-on-year, India prescriptions, which grew 15.1% year-on-year, other developed markets, which grew 48%, emerging markets grew 52% year-on-year, and our GAB business, which grew 40% year-on-year during the quarter. As Vinita mentioned, our organic growth ex-US was a strong 20% year-on-year during the quarter, bearing testimony to the resilience of our business model. During the quarter, the U.S. business recorded sales of USD $366 million, 30% higher than year-on-year in constant currency terms. This growth has been driven by higher volumes in base business, offset by additional competition in key products like Merabigron. Whilst we continue to benefit from our differentiated strategy on focusing on complex products, as indicated in our earlier interactions, the overall sales in the U.S. will be impacted by competition in key products like Mira Background and Tolvaten this year. However, we anticipate the business to revert to its growth trajectory from FI28, largely led by a rich pipeline of products, including exclusive First 2 Files, Biosimilas, and 505b2 products. In addition, you have an attractive pipeline of more than 60 products and injectables and respiratory products currently under development, which will augment our complex portfolio going ahead. India region. During the quarter, the India business recorded sales of 2,380 crores, growing 13.9% year-on-year. I would like to highlight that the co-prescription business grew 15.1% year-on-year as against IPM growth of 13.5%, translating to 1.1x times IPM growth. This is offset by lower tender sales in our JV business in India. Key segments like diabetes and cardiology handsomely outperformed their category growth at 1.8x and 1.2x times, respectively. This is offset by lower growth in the respiratory segment, which grew 6.9%, as against category growth of 11.3%. Volume growth has been a healthy 6.1% during the year, and the chronic share in the mix has increased to around 67% from around 65% in FI26. The share of in-licensed products in this quarter is around 6%, similar to the FI26 levels. We have launched around seven products in Q1, FI27, and plan to launch about 20 products in FI27, besides 15 products which we have launched in FI26. We remain confident that our India Formulations business will continue to outperform IPM by 1.2 to 1.3 times, supported by a strong sales force of more than 11,000 people and pipeline of more than 80 new product launches over the coming years. Including innovation in-house and in-license products. Other developed markets for the quarter, other developed markets, Europe, Canada, and Australia, recorded sales of rupees 1,149 crores, growing 48% year-on-year, and accounting for 14% of our total sales, an increase from 11% in FI26. I would like to highlight that we have begun consolidating Visu Pharma in our financials from this quarter. As Vinita mentioned, we are focusing on various strategic initiatives to grow our business in this region, especially in Europe going ahead. Emerging markets. For the quarter, emerging markets recorded sales of 990 crores, delivering an impressive 52% year-on-year growth, led by markets in Brazil, South Africa, and Philippines. Brazil, in particular, maintains strong momentum post the turnaround of the last few quarters, growing 117% year-on-year in local currency, driven by successful commercialization of dapajiflozin. Going on to the P&L. The other operating income at Rs. 60 crores is against Rs. 105 crores in Q1 FI26. It has decreased 43% year-on-year. This decrease is primarily on account of lower export benefits from the pay-lash schemes during the year. Gross margins. Coming to the profitability of gross margins, the upward trajectory continues, but this year, this quarter was 74.6%, up from 71.3% in Q1 FI26 last year. This 330 basis points year-on-year improvement is driven by multiple factors, which includes better product mix, Higher profitability in India increased volumes and cost improvements and efficiencies which we have undertaken over the last several quarters. Employee benefit expenses. For the quarter, employee benefit expenses stood at 1,383 crores, increasing 28% year-on-year from INR, 1,083 crores in Q1FI 26, translating to 16.8% of sales versus 17.6% last year. This change is largely attributable to higher costs due to regular annual increments and business growth during the period. Manufacturing and Other Expenses. Q&FI 27 Manufacturing and Other Expenses came in at 2,341 crores, which translates to approximately 28.5% of sales as compared to 28.7% of sales in Q&FI last year. The expenses were higher, mainly due to higher volumes in normal course of the business, higher estranged expenses in account of field force expansion, license-free payments, and a part of settlement agreements. R&D at 608 crores is 7.4% of sales in Q1 Fi27 as compared to Rs. 498 crores at 8.1% of sales in Q1 Fi26. For the full year, R&D is expected to be around 8%. EBITDA. EBITDA excluding Forex and other income during the quarter was 2,464 crores. We serviced 1,641 crores in the same period last year, an increase of 50% year-on-year, with margins of 30%, we serviced 26.6% last year in the same period, an increase of 340 basis points over the last year. During the full year, as indicated by Vinita, we expect EBITDA margins to be around the 25% mark. Deposition amortization at 450 crores is compared to 299 crores in corresponding quarter last year. This increase is due to higher amortization of settlement agreements. The effective tax rate stood at 29.8% for the quarter. For the full year, however, we expect it to be in the region of 27 to 28%. In respect to balance sheet items, the operating working capital was 8,260 crores as of 30 June 26, as compared to 7,132 crores as of 31 March 26, which translates to 90 days of net working capital as compared to 87 days recorded earlier. The net cash stood at 2,831 crores as the 30th of June, besides 4,636 crores as the 31st of March quarter, largely due to closure of our Bishu Pharma acquisition. Whilst we focus on increased cash generation for our business, we'd like to highlight that we continue to explore strategic allocation of our capital to ensure the long-term mission of the company, including on the specialty front. ROC for the company translates to 29.5%, we service 28.4% as at FI26. On the ESG front, Lupin continues to advance steadily towards its 2030 sustainability goals, achieving approximately 41% reduction in greenhouse gas emissions and 45% water recycling as of FI26. Our efforts have been recognized externally through inclusion in the Time World's Most Sustainable Companies F2026 list for the first time. With this, we'll open the floor for discussions.

Thank you very much, sir. We will now begin the question and answer session. Request that all the participants who wish to ask questions to raise your hands on the participant tab on the screen. We will wait for 30 seconds for the queue to assemble.

Thank you. Thank you for your patience.

We'll take the first question from Damianthi Karai. Dammit, are you there?

Yeah. Yeah. Hi. Thank you for the opportunity. My first question is on your opening remarks, where you mentioned that US sales should be back on growth trajectory starting FY28. So just want to understand, this growth will be on the base of US 1.1 to 1.2 billion number, which you mentioned for 27, or how should we understand this part? That's right. Over the fiscal year 27 base. Okay, so... You will grow on a base of even 1.2 billion in FY28. That's clear. My second question is, if you can update us on some of the key launches or key products in injectables and respiratory space, which will be meaningful from your U.S. sales perspective.

Yeah, so multiple products across, I'd say, biosimilars, injectables, as well as respiratory. On the, you know, I'll say biosimilars and injectables. There's a lot of disturbance on this slide.

Gamente, you might like to mute yourself.

Yeah, thank you. So, as I was saying, there are multiple products in the biosimilars, injectables, and respiratory front over the next couple of years. In fiscal year 27 itself, we have yet to launch Peg Philbraston. That is going to be an H2 product for us. We'll be expected to contribute very nicely into the second half. Then we have a 505B2 to Dalba Vansin injectable that is going to be a good-sized product for ourselves as well. And nasal sprays like Flutigazone nasal spray, you know, as well as injectable, Sagamadex, Epinephrine, Raltigravir, where we are exclusive for us to file, you know, Erebulin injection. Which is all, you know, it's fiscal year 27. Then fiscal year 28, we have products like, I think, Fulier Impact of Pecfilgrastim. We have Diazepam nasal spray. We have Epinephrine nasal spray, as well as Apexaban 505B2. I mean, that is starting to look like a material opportunity for us. We're still sizing it up, but looking fairly interesting for us. Then Ion Sucrose Injectable, Saxenda. We have Evacaftor, exclusive first to file, Midosolam nasal spray. And there are just a few of the products. We have other nasal sprays, as well as injectables in the pipeline that we'll expect to bring to market in fiscal year 28. And then I'd say that in fiscal year 29, we should have more biosimilars, Aflibraset, Unipetfulgrastim on body. Dulara is expected, you know, hopefully we can get it in fiscal year 28, but if not, for certain in fiscal year 29 on the market. And depending on, you know, what transpires from a P4 standpoint, we would expect also Spiriva Respimat. We've made good progress on that front. We expect to file it in this fiscal year. We should, you know, subject to what happens with the brand, you know, the P4. We could potentially be in the market on the Respimat front as well in fiscal year 29.

Elaborate answer on this. My last question is, when you look at the Tyotropium market share, it has been hovering around mid-30s. So do you have room to improve it further? And if you can talk a bit about your progress in the channel, in the incremental channels for this product.

Thank you. No, it's kind of settled at that 38% level. And, you know, there is a good balance between what the brand has in terms of share and what we have in terms of market share. So at this point, it should hover around that level.

Hello, Damit, you can unmute yourself.

Yeah, I'll get back in the queue. I'm done with my questions. Thank you.

Thank you. Thank you for your question. We'll take the next question from Shyam Srinivasan.

Hi, good evening. Thank you for taking my question. Yeah, yeah. Can you hear me now? Yeah, just trying to do math on your US guidance, right? So we did 366 million this quarter. We've talked about 1.1 to 1.2 billion for the full year. So that brings us like roughly 100 million lower per quarter in some of the quarters, right? So if I did, I'm doing simple math, we're into 50 and To 80 million roughly, right? So, you know, what is that big step down? Is it both the top two products that will likely see the step down? Or is it is there an element of conservatism built into the kind of step down? So just want to get some qualitative sense of how we should why despite a very strong Q1, how are we looking at it?

Yeah, so in Q1, you don't have any additional competition on Tolbaptin. And from Q2 onwards, you will start seeing the impact of Apotex and Teva. We also expect in September, we could potentially have one more entrant. So we expect to be, you know, four player market with Tolbaptin. And we expect the market to grow as well for the molecule, given that it is still 40% generic conversion so far. But, you know, given the additional competition, we expect pricing to come down and obviously also some mass share redistribution. So we expect, you know, Tulbapton to come down over the next couple of quarters. A mirror background has already seen, you know, pressure in the first quarter, and we expect that to be a full quarter impact from Q2 onwards. So, you know, we expect, you know, revenues to be anywhere between $250 to $280 million a quarter over the next couple of quarters.

Got it, Vinita. Thank you. And when I look at your full year margin guidance of about 25%, we did the gross margins of 75% for the current quarter, right? So what's a more normalized gross margin, please?

So it is really going to be a function of, you know, how much of Tolvapton sales and at what realization, the kind of competition that you see out there. And more importantly, you know, the impact of impact price increases that we have seen in the recent past that, you know, post the cost increase that is because of, you know, the geopolitical tensions around. So the first quarter was not so hugely impacted because of the fact that we had inventories that we carried forward. But going forward, we will have to take that into account. So I think we are being a little more cautious when you speak about the fact that the EBITDA margins would be in the range of 24 to 25. And obviously, this would be, you know, as a reduction on the gross margins front as well.

Got it. Thank you, Ramesh.

All the best.

Thanks, Shom. We'll take the next question from Neha Manpuria.

Yeah, thanks for taking my question. Vinita, in Tolvapton, we have seen a quarter-on-quarter increase in market share. Would that be a fair assumption? Yes. And I think in one of your previous calls, you'd mentioned that despite additional competition coming through, we should be able to defend our market share in Tolvapton. Do you see that dynamic playing out given that we've been able to gain share over the last few quarters?

Yes, we would expect the market share, you know, to be longer because of the fact that it's a specialty, you know, pharmacy product as well as REMS program. But, you know, we obviously have to have to give some share as well to the additional entrants.

Okay, understood. And on Apixaban, how should we think about the opportunity? I know you mentioned you're still sizing it up, but how should we think about the Firefly B2 launch and our ability to take market share in case we launch it in 28?

Yes, so we are looking at the different channels for the product. It's a very large brand, which makes it a very interesting opportunity. But given the time we have prior to the other genetics entering the market in fiscal year 29, we believe that a very targeted approach around a few channels is going to serve us well. So we are looking at ways and means of entering a few of the larger channels where we can, through our national accounts efforts, as well as some incremental commercial efforts, be able to get strong access.

Okay, I understood. And do you think this should be as large as probably, you know, Mira and Tolvapton was for us? Could this be as large in your view? Uh, it, it, it, uh, it could potentially get there. Okay. Uh, last question on, um, you know, biosimilars, um, you know, given, uh, let's take a, you know, three-year timeframe because you have a couple of launches coming in 29. How big can the biosimilars piece be for us, uh, you know, here as well as in Europe put together?

Yeah, put together, it's a material opportunity for us. In the U.S. itself, you know, of course, we have to deliver this here, but it's looking like a very interesting opportunity with Peckville-Graston. Ranibizumab, we'll have to convert the market. I mean, there's really, you know, the market has gone into the other products. So I think a little bit of a smaller opportunity compared to Peckville-Grastin, but Ranibizumab looks like a big opportunity for us in Europe, in a few countries direct, and also through our partnerships with Sandoz as well as others. You know, now with the Busy Pharma footprint that we have across the ophthalmology, you know, call point, we're going to leverage that as well for ranibizumab. And then we have Aflibrocept coming in fiscal year 29 and the Petrograst OBI. And then fiscal year 30, of course, and some calendar 29, we'll have Aternacept. So I think, you know, we are looking at biosimilars ramping up in the next three years to a couple of hundred million dollar, you know, scale business across these key markets. Thank you so much, Vanita. That's very helpful.

Thank you, Neha. We'll take the next question from Surya Patra.

Hello, Surya.

Hello, I'm here. Yeah.

Yeah. Thanks for the opportunity, ma'am. See, my first question is on the respiratory portfolio. See, how big is the respiratory portfolio's contribution to the overall business for Lupin right now? And in terms of the US business, if we see what would be its share currently, ma'am?

So, in the base business, I'm just going by memory here, it's over 20% right now, with really two main products, you know, Teotropium, Albutrol, as well as OpenX. So, you know, a little bit more than 20% even. And as we look at, you know, our pipeline, we have Dolera that is filed. We have multiple products that we are now making progress on. Like Resfimat, we have made significant progress over the last quarter, and we are in a position to file this fiscal year. We also have been successful with a pivotal PK on Brio. So we're very pleased to get the Lipta franchise also started from a pipeline perspective, and we would expect to file the ANDA later this fiscal year. We have green propellants, you know, the Leuferbeck new propellant filed in Europe in the last quarter, in fact, and multiple pipeline programs also making progress for Europe. So I'm really pleased with the progress now that we're making on the respiratory pipeline, both with MDIs, DPIs, you know, Respimat, Ellipta, as well as MDI products and green propellants.

Sure. So, in fact, from the albuterol side, which the market share, which has, to some extent, subsided from the level of 19-20% to 16% currently in. Possibly we have already reached the peak potential of the theotropium. So here in the midterm, till the time that the pipeline products are getting launched in the U.S., whether it is fair to believe that the respiratory portfolio in the U.S. is likely to remain flatties or kind of moderating like that.

Well, it's hard to predict for certain, you know, but right now, the agricultural market has stabilized. It has, you know, the 16% share and the relative positions of competition are kind of stabilized based on the supply situations from the different competitors, you know. So, and on Teotropium, we know how difficult it has been for us. So we, you know, we haven't really heard of any imminent approvals and launches. So we would expect that, you know, the baseline should be stable as Dualera nasal spray products in the next year, you know, and then the new products, Respimat as well as others come to market.

Sure. My next question is on the euro business, which has been doing great for us. And that is visible even in this quarter. But I'm just going through the kind of a higher rebate policy initiated by Germany, wherein they are kind of doubling the rebate requirement. So given that, what would be your reading about the either profitability or the pricing pressure, what we can see in the European market? Or let's say, if it is Germany, then even if we restrict that policy to Germany, then what implication that overall Euro portfolio that can see because of this?

Yeah, so it's very interesting, the dynamics in all of the European countries that we're realizing. You know, and even in Germany, on the one side, you see the increase in rebate on a part of our portfolio. But in others, for example, in our biosimilars, you know, in particular for Ranibizumab and Afliberset, we're finding that it's not part of the AOK tenders anymore. So it becomes a nice branded opportunity. You know, overall, we're seeing all of the major European markets really struggling with their overall health care budgets, their overall drug spend budgets, and they are struggling to really bring more innovative products into the fold, you know, and not making enough products available for unmet needs for patients. So we're starting to see like in countries like France, we have recently noticed that they are really doubling down on biosimilars, just given how important the biologics LOE is over the next, you know, right now, it's like 100 plus billion dollars worth of biosimilars that go up in over the next five to 10 years. So, you know, more incentives for substitution of biosimilars that we have seen to be able to reduce some of the drug spend so that they can make room for innovative products. And I think if that model works for France, we will see very soon the other countries following a similar model to be able to afford innovation while making the generic side and the biosimilar side of the business more substitutable to be able to get efficient access to medicines. So we actually are very optimistic, very hopeful that Europe is going to increasingly become more important geography for lupin, for certain, just given our portfolio of respiratory products, biosimilars overall, as well as the ophthalmology biosimilars, as well as the specialty portfolio. We have tremendous headroom to be able to build in Europe.

Sure, ma'am. Just last one question from my side regards to biosimilars. Two points specifically here. How important or let's say how sizable this two opportunity, first two product opportunity in the U.S. for us because PIGFIL or even the. So Ranibizumab, if you consider both are kind of a partner product and the prices for this product for biosimilar prices has already corrected to the tune of 85 to 90%. So considering that how sizable this could be, that is the first point. And secondly, given the kind of a price erosion SARP that has happened already in the US market, how is the European product prices there in biosimilars compared to that of the US?

Yeah, so we're finding actually, even with Petrobras, Tim, you know, as I mentioned earlier, also the last couple of quarters, we've been pleasantly surprised with the opportunity that we see right now, you know, and of course, we'll want to deliver that in the next, this fiscal year to be able to gain that confidence operationally. But as we look at our, you know, partners forecast and what we can do in the current fiscal year, it's a really good size opportunity for Lupin. And as I mentioned, you know, I will not size up each and every product. But if I look at the next three years between U.S. and Europe with these three products or so, we have a couple of hundred million dollars worth of opportunity on the biosimilars front.

And price difference in US and Europe.

So in Europe, we have found, you know, the pricing on our products is fairly stable. And like I mentioned, we're also starting to see new developments like in Germany, these products are not part of tender, so more of a branded opportunity on the ophthalmology front. In France, new measures that will likely enhance biosimilar adoption and ease market access for us, all of which that gives us this optimism on the biosimilist front. Okay, sure.

Thank you, ma'am. See you all the best. Thank you.

Thanks, Suleya. We'll take the next question from Vino Padiparambil.

Hi. I think you can mute. Yeah. Hi. Good morning, and good evening. Vinita, just a follow-up question on a couple of products which you mentioned. You mentioned Post-to-File exclusivity in FI27. I didn't get the name, but is that a sole exclusivity?

On Raltigrever, yes. I mentioned that.

Sorry, which one?

Raltigrever. Okay.

The second, in Fi28, which is the one you mentioned, as sole exclusivity?

I think I mentioned diazepam, epinephrine, Effie, that is two nasal sprays. Evacaftor is another. And yeah, those would be the main ones. Suflav is another, exclusive first of all, next year.

Got it.

And last question

on Spiriva Recipe Mat, how is the market compared to the DPI?

It's moved more towards the Recipe Mat.

Okay, if you could give some rough size idea.

We'll just get back to you with that. I don't have the exact numbers off the top of my head.

Great.

Thank you, Aljan. Thank you.

Thank you, Binom. We'll take the next question from Kunal Damesha.

Hi, thank you for the opportunity. The first question is on the India business that you shared that we are planning to derive one third of the revenue from innovative products. So can you elaborate more on this strategy? What would be the kind of required investment here, both from balance sheet and P&L perspective? The usual impression is such in licensing deals are not very accurate to profitability, right? So what are we going to do differently? And from therapy perspective, do we stick to our key therapies of cardiac anti-diabetic or we look at a more high growth therapy like oncology? That would be the first question.

So I think there's three avenues of proprietary products. One is an internal pipeline. So we're building those internally. Another is in licensing deals, as you talked. And the other, the most important and what will be the biggest will be pure innovative NCEs that we would bring to market. Products like bofanglutide that we announced a little while ago, which is now in the clinical development path. And in the next couple of years, we should be able to bring to market. So we've allocated the capital for this. It's actually just purely India. It's not that expensive from overall licensing or a development perspective. Obviously, you need to have the entire suite of capabilities. So you do need to have the ability to assess a new chemical entity at an early stage, do the clinical development and bring it to market. And in a market like India, you know, how do you build the ability to do, you know, over a period of time, 30, 40, 50 assets at a time? The goal of a billion dollars or one third of our business to come from innovative products is an aspiration for the next 10 years. But I think if you break it down, it basically means to be able to do 10, 15 products every year. And in the next, you know, I think it's coming together quite well. So in the next three years, we should start bringing those products to market and really build that pipeline. Obviously, key interest would be in our key therapy area, which have, you know, products in respiratory and cardiology and diabetes. From an innovation perspective, obviously, you know, 50% of what you would see as assets would be in areas like oncology, where we're not strong. Then we would cherry pick and we would pick assets that we feel can be really, you know, first in class so that it can make a real difference in the market. You know, we've started the journey. I think we've started it with, you know, putting strong capability together as well. And we'd love to keep updating you as the pipeline develops.

So, we are suggesting like 80 launches in India in the next three years. How many of that you think would be from this market?

So, over a period of the next 10 years, we're looking at 60 to 70 launches of the innovative products. In the next three years, you know, very small fraction. I would say not even, you know, three, four of these would be truly innovative products.

Sure. And in terms of profitability, we know, would it be similar to our India business whenever it scales up or how should you think in the longer run?

I mean, certainly similar, if not better, actually. So we would expect that. I think you've already pointed to the point on, you know, how much is the actual burn on the clinical trial pattern. But I think the entire model looks really good. And in the next few years, you'll start seeing positive returns coming from it.

Sure. And the next question for Vinita, ma'am. Given that we have now established track record of selling both DPI, MDI products in US, how is it helping us in terms of clearing or developing the next phase of respiratory products in terms of development cycles in your view? How is how the development cycles are shrinking? And what are some of the learnings which would help you bring this next wave of products to the market efficiently?

I'd say that, you know, the different platforms, the complexities are different. So on the MDI front, it's going to be a significant year of filings, you know, on the respiratory MDI products this year. I'd say on the Ellipta platform, that was likely our most challenging platform. Now, we've been working on it for multiple years, and I'm very pleased to finally be able to get a positive PK on the first product. Now, I would want to get the next major is getting Trilogy right, which our team is working upon, and they're going to apply the learnings they have from Brio onto that product. And then on the Spiriva front, on the Respimat Spiriva, that was more of a device challenge that we faced, that now that we have cleared it and we'll file the product this year, the follow-on products become easier for us. So I'd say different level of complexity across the different platforms, but a lot of learnings over the last couple of years that the team will leverage to be able to expedite the filings as well as potential approvals that, you know, given that these products are either CGT or, you know, have no competition in the marketplace, the FDA is also looking to expedite these approvals. So I'm going to look forward to leveraging that. In addition to that, a number of these products are, some are out of India, some out of our facility in Coral Springs. We'll also want to leverage the Coral Springs domestic manufacturing in the U.S. for expedited review of these products that the administration is focused on to get more onshoring of products in the U.S.

Just one aspect of this. Let's say if you have an MDI line for one product, can the capacity become fungible for another MDI or it does not? It does. It does. Okay, great. And lastly, on the Pixaband 505B2. So from here, what are the key monitorables for you? And what's the duration advantage that we will have vis-a-vis the generics, I think, which are slated to enter early part of FY29, I believe.

Yeah, fiscal of 29. So, you know, we are, as I mentioned, we are sizing it up, but like material brands. So, you know, we'll be one first monitorable, you know, thing that one can track is the approval. We have a goal date of September. We are hoping that we get approval in September. And then simultaneously, we're building up launch quantities. And we expect to start having material, you know, commercial quantities start in January of 27 calendar. And we would expect somewhere in the summer that we should launch and hopefully get 10 to 12 months before others enter.

Okay. And lastly, can you share which plant is it filed from?

Kunal, can we request you to get back on the queue? Sure.

I'll just quickly respond to that though. It's Somerset. That's been cleared recently.

Yes. Thank you and all the best.

Thank you.

Thank you, Kunal. We'll take the next question from Tushar Manudhani.

Yeah, hello. Thanks for the opportunity. Now, in the opening remarks, you alluded to Flutica's own nasal spray. So which, first of all, which dosage have you filed and like where are we in terms of the approval process?

Yes, so we filed both the, you know, the Rx as well as OTC. We would expect the Rx approval to come in this year and OTC in the next year, fiscally 28.

And all the formulation as well as API being manufactured in-house or how is it?

The formulation is all in-house. The API is not.

And the device is from the... In-house. The device is also in-house.

No, device, I mean, we chose the device, of course, to a device manufacturer. And it's also in Somerset.

Thank you. Thank you, Tushar. Pardon me. Hello. Tushar, you're there? Yeah, yeah, please, please.

Yes, I am there. Just one more question, if I may. Ma'am, you referred to Apixab and 505b2, right? That's right. If you could just like qualitatively help understand what's the differentiation this product is going to bring compared to what the innovators product is.

Well, maybe share that closer to the launch date. Okay. Yeah. Okay. We're sizing up the opportunity and we'll be in a better position to share that over the next couple of quarters.

Sure, sure. I was trying to just understand the value addition compared to the innovative product, not so much like in terms of pricing. It was more in terms of the value addition compared to an innovative product.

Right. It definitely would be a, you know, meet an unmet need for patients that we've targeted. But let me come, let us come back to you with thoughts around it over the next couple of quarters.

Sure.

That's it for us.

Thanks. Thanks a lot for your response.

Thank you, Tushar. We'll take the next question from Vivek Agrawal.

Hello, Vivek?

Hello.

Yeah, yeah. Thanks. Just a couple of questions on the cost base. If you look at your staff cost and other expenses have gone up meaningfully. So just if you can help us understand how to look at these lines going forward and what is driving these cost lines significantly. Thank you.

The cost lines are essentially because of, you know, increments that, of course, you know, based again on the needs of business, including their region, we have also been recruiting people and the like. And there's also an effects impact, you know, at least we saw as the previous year.

And so is it fair to understand, right, before you launch a major product, that is a pizza ban, and in between a couple of major products, you are seeing incremental competition, there may be a few quarters where your EBITDA margin can fall even below 20%. Is that a possibility?

There would be volatility between quarters for sure. The magnitude is something that we can't actually speak about at this stage. But you would also do well to understand that our R&D expenditure is at least a tad above the competition, firstly. And secondly, we also have the impact of adjacencies and so on, which have been captured. They're still evolving. Some of them are still making losses, though, of course, I think it will come down over time. Next year, for example, we believe the diagnostics business will do very well. It will be breaking even for sure. And I would say the same thing of other businesses. Our digital business is evolving extremely well. You could say that of the OTC business as well and CDMO. But I think you would do well to remember that all of these are, at this stage, loss-making, and therefore is impacting EBITDA margins and, of course, our overall EPS at this stage. Clearly, that would be a thing of the past in quarters to come.

Understood. So, is it possible for you to quantify what kind of the losses in terms of percentage hit on EBITDA margin these adjacencies are contributing at this point of time?

Overall, about a percentage, percentage and a half, I would say.

I understood. And one question, one product specific question I have. You have a one product, one FTF that is Zyvao. So is it a FI29-30 type of product or is it like FI30 or beyond?

Yeah, it's a FI33 product for us.

Understood. Thank you. That's from my side.

Thank you so much, Vivek. We'll take the next question from Saurabh Kapadia.

Yeah, yeah. Thanks for the opportunity. Just one question on the other developed market and India. What could be the sustainable growth in this market over the next couple of years? And secondly, with the kind of growth we have seen, how the profitability or the margins in the key market have moved over the last three or four quarters?

So, I mean, we are looking at potentially double-digit growth, you know, in some years higher than others, but anywhere between 10 to 20 percent over the next couple of years. And the margins also, just given the scale of the business is growing, you know, we've been subscale in so far and, you know, with the additional portfolio as well as, you know, the expansion with the pipeline, we expect margins to continue to expand as well.

Okay. And just secondly, do we need incremental investment to be made in any of the geography or any potential, you know, inorganic opportunity which we could seek in any of these specific countries?

Yes, we would expect, you know, for us to really maximize the biosimilars business. We are going to make, you know, small but commercial investment, in particular in the U.S., even for the 505B2 or Apexaban, you know, and our strategy on the 505B2 front, because we have other products that we have targeted as well, we'll likely make a small commercial investment as well. Okay, thank you.

You're welcome.

Thank you, sir. We'll take the next one last question from Chintan Seth.

Hi, am I available? Yeah, thank you. Thank you for the opportunity. I have a question on the US side of the business where we, you know, we have put out the numbers in terms of the upcoming pipeline of 50 FTFs, 21 exclusives ones. If you can, I know product specific will be very hard for you to provide, but if you can cumulatively provide some indication on the market size of those and How should one look at, you know, monetizing those over the course of next three to five years, as you explained a few of the products already, but if you can cumulatively understand, help us understand how should those numbers can contribute to our incremental revenue in the U.S. markets.

Perhaps what we can do is get back to you offline to take you through the overall brand revenues and the relative products where we have limited competition. Overall, you know, we're looking at a portfolio from the complex genetics doubling over the next three to five years. And that in itself, you know, along with the fact that we believe, you know, with the pipeline we have, we should be able to grow our business in the next three to five years, you know, with the inherent growth out of this pipeline, Plus the fact that we are increasing from a complexity standpoint, we are, you know, looking at a potential expansion in margins. Of course, we'll make investments as well, as I mentioned, and maximize these opportunities. But maybe our team can get back to you offline on, you know, looking at the overall market size and the like.

Got it. And on the EMEA side, I believe the growth is coming because of the VisuPharm acquisition for last four quarters. The base of Q2 kind of bakes in the VisuPharm. How should one look at the growth in that piece, EMEA business, going forward?

Yes, so like I mentioned that we're looking at anywhere from 10 to 20 percent level in Europe. So splitting out Africa, South Africa separately is a little bit lower in South Africa, just given the scale we are at. With the pipeline portfolio that we have and the opportunities, Europe should grow at that 10 to 20 percent level.

Got it. And ROW markets, any color on the growth? Also the double-digit growth.

To continue?

Yes. Okay. Got it. I'll kind of touch base with the team offline to understand the pipeline better. Yeah. Thank you. That's all for mine.

Thank you, Chilfil. Thank you very much. I now hand the conference over to the management for their closing comments.

Well, thank you, friends, for all your questions. And hopefully, we've been able to answer majority of them. But if not, the team will connect and clarify any open questions you have. We, as I mentioned, are optimistic about a near-term opportunity as well as long-term opportunity, both in the near term, to be able to navigate the near-term challenges with the opportunities we have from a portfolio perspective. Thank you again, and we look forward to connecting with you in the future.

Thank you. Thank you, ma'am. Thank you, sir. On behalf of Lupin Limited, that concludes this conference. Thank you for joining us, and you can now exit the webinar. Thank you.