Marksans Pharma Limited (MARKSANS) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Marksons Pharma Q3F526 earnings conference call. As a reminder, all participant clients will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal from DAM Capital Advisors. Thank you and over to you, sir.

Thank you. Good afternoon, everyone, and a very warm welcome to Markson Pharma's Q3M26 earnings call, hosted by Dime Capital Advisors Limited. On the call today, we have representing Markson Pharma Management, Mr. Mark Salgana, Founder, Chairman, and Managing Director, and Mr. Jitim Di Sharma, Chief Financial Officer. I will hand over the call to the management team to make the opening comments, and then we'll open the floor for questions. Please go ahead, sir.

Thank you, Nathan. Welcome, everyone, and thank you for joining us for our Q3 and nine months FI26 earning conference call. We sincerely appreciate your interest and continued support for the company. I'm pleased to report that we have delivered a steady and resilient performance marked by healthy revenue growth, sustained margin expansion, and continued progress on our strategic priorities. Our QTFI26 operating revenue grew by 10.6% year-on-year and reached 754 crore, which is an all-time high for the quarter. The growth was supported by stable execution across geographies, robust order book in U.S., as well as a seasonal uptick during the quarter. The performance is despite a high single-digit price erosion in the Rx product segments. In the UK, we delivered an improved performance on quarter-on-quarter basis. The business is stabilizing after experiencing pricing pressures in Q1. This recovery is supported by new product launches and a favorable currency movement. Our product pipeline execution remains strong during the quarter. Our UK subsidiaries alone can receive the MHRA market authorization for multiple products included methanomic acid, tablets, and citrician oral solutions. In the U.S., Marks & Pharma, Inc. received the S&D approval for lipomide hydrochloride and enhanced our presence in high-velocity OTC categories. These approvals are alignment with our strategy of focus and repeat demand therapeutic therapies, particularly in pain, allergy, GI, and cough and cold segments. Strategically, we are taking measured but decisive steps to expand our global footprint. During the quarter, we incorporated Marksons Europe Limited in Ireland, Marksons Canada Inc. And are exploring further expansions. These will strengthen our platform for the future growth in the related market. Despite external volatility and pricing pressures in certain markets, our focus remains deeply rooted in execution. Our priorities are clear. Consistent market share gains, strong pipeline and filing acknowledges, disciplined cost management, and prudent capital allocation. We believe that this focus approach positions mass and farmer wealth to deliver substantial growth, healthy margins, and long-term shareholder value. With this, I'd like to hand it over to Jitendra for an update on the final show.

Thank you, sir. In Q3 of FY26, our operating revenues stood at Rs.754.4 crores, an increase of 10.6% on a YOI basis, compared to Rs.681.8 crores in the same quarter last year. Revenue from the U.S. and North American market stood at Rs.412.4 crores, an increase of 16.9% on a YOI basis. This was driven by volume and supported by signal demand. UK and EU formulation recorded revenue of Rs. 258.2 crores. Flat on YY basis as pricing pressure continued to persist. Australia and New Zealand market revenues stood at Rs. 61.4 crores, delivering 30.1% growth on a YY basis. The rest of the world revenues stood at Rs. 22.4 crores. We continue to remain cautious for this market given the macroeconomic challenges. Gross profit for the quarter grew by 14.3% YUI to Rs.438.2 gross with a gross margin of 58.1% compared to 56.2% last year. The gross margin expansion of 184 bits on a YUI basis is attributed to something of raw material prices, a favorable product mix, and also from benefits from foreign exchange movements. We recorded EBITDA of Rs.160.7 crores in Q3 of FY26, up 23.2% on YUI basis. The EBITDA margin for the quarter stood at 21.3%, an expansion of 217 basis points over Q3 of FY25, and 125 basis points over Q2 of FY26. EBITDA margin expansion was driven by operating leverage and improved cost efficiencies. Profit after tax stood at Rs.113.7 crores, an increase of 8.2% on a YOY basis. EPS for the quarter was Rs.2.5. Moving to 9 months of FY26 performance, our operating revenue stood at Rs.2094.8 crores, compared to Rs.1914.4 crores in the same period last year, an increase of 9.4% on a YOY basis. The U.S. and North American market recorded revenue of Rs.1,127.3 crores, up by 24.2% on a YY basis, and contributed 53.8% to our total operating revenue. UK and EU market revenue stood at Rs. 707.3 crores, contributing 33.8% to the revenue. Australia and New Zealand market recorded revenue of Rs. 179.7 crores. The rest of the world market recorded revenue of Rs. 80.6 crores. Contributions from these two markets stood at 8.6 and 3.8% respectively. The gross profit stood at 1,208.2 crores, up 10.3% on a YOY basis, with a gross margin of 57.7%, up by 43 basis points compared to last year. EBITDA for the period was at Rs. 405.4 crores, with EBITDA margin at 19.4%, compared to 21.2% in nine months of FY25, primarily reflecting the impact of weaker Q1, higher employee expenses, and costs associated with scale-up and integration. Although profitability improved meaningfully in Q2 and Q3, profit after tax was at Rs. 271 crores, and EPS for nine months of FY26 was at Rs. 6. In nine months of FY26, cash generated from operation amounted to Rs.263.2 crores, with the capex during the period being Rs.97 crores. Our working capital remained steady at 151 days. We invested Rs. 62 crore in R&D in nine months of FY26, which amounts to 3% of our consolidated value. We continue to remain debt-free, and the cash balance stood at Rs. 824.2 crores as of 31st December 2025. With this, I would like to open the floor for questions and answers. Thank you very much.

Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their digital telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Niradisha from Asika Stock Services. Please go ahead.

Yeah, am I audible? Yes, you are. Yes, ma'am. Hello, am I audible?

Yeah, yeah, you are audible. For a minute, you just cut off from there, but you are audible.

Yeah, okay. Thank you for the opportunity. I had a couple of questions. So, firstly, on the U.S. performance, we have benefited on the U.S. due to seasonal demand. Excluding the seasonality, are you also seeing improvement in volumes or customer traction that is supporting the growth beyond?

Yeah, we are. We are seeing that. And obviously, some seasonality does help during this. Normally, the third quarter is always the strongest quarter. So basically, it does help from all parameters. But overall, the product, all other products also, which are not season, have also shown a decent growth.

Okay, and on the U.S., on the U.K. business, we are seeing some kind of sequential stability also after a lot of rising pressures. So, is this stability sustainable?

Yes, it is sustainable unless something else happens geopolitically, but otherwise, right now, it is sustainable.

Any color on the entire U.K. business?

Pardon?

Any color on the entire U.K. business?

We are still very bullish. Obviously, we have done a lot of filings in the U.K., and we are receiving approves every quarter. So that is basically changing our product portfolio in that market, and it does help when there's a price erosion to stabilize the pricing pressure that one experiences. So we do see ourselves only growing stronger, and we do see a better quarter than the previous one.

So, last year on the employee cost, we have stepped up over the last few quarters, and that is really driven by the Goa facility and the broader wage changes also. So, what should we consider as the new normal for the employee cost?

I think what you're seeing is basically the one that.

So, there is an impact of 2.8 crore, you know, due to the new labor code accounting on Gratuity and YouPay. So, barring that figure, I think everything else, like, you know, will remain, like, you know, in terms of the overall employee cost.

Got it. That is helpful. Thank you.

Thank you. Thank you. The next question is from the line of Ahmed from Unify Capital. Please go ahead.

Yeah, thanks for the opportunity. Firstly, on the U.S. business, can you give some comments? How does the order book look like and what kind of growth you sort of see coming in the next few quarters? We have done fairly well, I think, in the first nine months and over the last few years. So how does the near term look like in terms of order bookings and the momentum and revenue growth?

Yeah, order books still stands at a very strong $220 million plus. We are still working towards our objective of going to the next milestone. So, we are optimistic on the market dynamics and, you know, the U.S. market by itself.

And if I see last year, I think you were commenting around $180, $190, a quarter value was similar to $20, sort of a thing. So does that sort of reflect that you should be able to grow at 20% odd in the U.S. in the upcoming financial year?

Yeah, very close to that, yes.

And coming to the Teva facility, I mean, we're supposed to launch a lot of new products and different formulations. How is that shaping up in our order book? And how does the utilization look like in the current quarter which went by? And in terms of outlook, the incremental revenue, does it sort of get captured from Teva facility and hence we have some operating leverage coming in?

Yeah, operating leverage is very visible because of the demo facility. We are trending around, you know, 560 to 600 odd crores from the demo facility. Our objective was to rate about 800 odd crores. So we are getting there. Obviously, the product mix has to grow. You know, as and when we get new businesses, it is looking healthier. But it is adding tremendous, it is a tremendous value on, you know, operating leverage per se. So, it is very visible on our standalone numbers also.

And in terms of the new markets, Europe and Canada, I think we have incorporated subsidiaries. We have had some comments last quarter. Would you like to provide some sense what sort of progress we have made? And in terms of the sort of contribution coming from those businesses, how far we are as of now?

So, obviously, we are quite far where organic is concerned because we just started operations in Germany. We had the first two employees join us literally on the first offer. Ireland, we formed a company. Canada, we formed a company. Market authorizations, you know, I think are being put in place so that we can start marketing. I mean, we need on sale licenses, you know, we need, we need. All these other tools to basically make us so that we can sell. So it will take a couple of months. We are also exploring, as we've always repeated in the last couple of concours, we are exploring M&As in these markets, in various markets out there in Europe. We are in advance dialogue to try to push that across. We are optimistic that we will see tremendous progress in the next three to five years in Europe, which will contribute decently for the company per se.

That helps. And lastly, in terms of both the sort of deal which happened, obviously it doesn't affect us in terms of tariffs, but in terms of the environment and the conversation, has there been any change in your conversation with your key customers, be it Walmart and so on? And secondly, would you like to give some sort of a spin as a blended as a whole? This year we have done very well in U.S. and some of the other markets in U.K. have been sort of a flat-ish. So, as a blended as a whole, what sort of growth rate is practical to achieve in an exponential year.

Yeah, so basically, Darif, it's a very valid question, and you're right. Although we were not impacted by tariffs, but there's been a – I think it has basically put an ease to the uncertainty that prevailed, you know, in customers or consumers' or clients' minds, right? So that is a big plus point that one could take away from this. The trade deal has cleared the uncertainties and the questions that surrounded the trade war that one saw in the last six months out in the U.S. So it is beneficial for the industry, beneficial for doing business out there, and we have seen that traction happening, the outlook from the client perspective also, they are thrilled that all these uncertainties are put to rest. So definitely that's a plus for a market like US. From a growth standpoint of view, we are still working towards our objectives. Our next milestone is 4,000 crores, so we are working towards that, and then once we cross that, then we can talk about the next 5,000 crores. So, we are, we still do believe that, you know, we are on track where that is concerned.

And that should be ideally two to one half years? Will that be a fair timeline?

Yeah, I mean, you know, anywhere between two to three years is what we should rate our first month, so. Sure, sure. Thank you so much.

Thank you. The next question is from the line of Ishika from Purpurchity Ventures. Please go ahead.

Yeah, hi. The cash from the books is around 824 CR. Is this just in India or is this placed in any subsidiaries in US or UK as well?

So, Ishika, this is spread across our subsidiaries. So, broadly, I think almost 50% is in India books, and Another 40% is in our UK books, and this is spread across US and Australia.

Okay, thank you so much. Thank you.

Thank you. The next question is from the line of Dipesh Sancheti from Mania Finance. Please go ahead.

Hi, I'm Aadabal. Yes, you are. Okay, congratulations on the set of numbers. I wanted to understand from you what will be the effect of Trump RX program? Whether it will affect any of our products in the prescription technique?

No, it's not going to affect any of our products. We don't fall in that category. And again, our Rx portfolio is relatively very, very small compared to our overall revenue. So, it has no significant impact on us.

Going ahead, when we are trying to double our revenues from U.S., will that portfolio be affected?

No, no, no, it won't.

Okay. Now, you gave a strategic roadmap about the 3,000 crores. I'm sure you'll be able to achieve that in this year. Going ahead, you mentioned in the last con call that 5,000 crores by 530 is a possible figure. Do you still maintain that?

No, as I mentioned, in the next 2-3 years, it's 4,000-odd crores, you know, 5,000 crores. But, yeah, then after that, obviously, we will go to the next milestone, which will be 5,000-odd crores. So, we are working towards those two milestones that, you know, that we have set ourselves up to.

So, 4,000 crores by FY28?

In the next 2-3 years, yeah.

Okay, thank you. Yeah, 528 or 529. Right. And what is the order book right now?

It's 220 plus. 220 plus.

Okay, great.

Thank you. Yeah, for the U.S., for the U.S. All right.

No, I'm talking about the overall as the order book.

Oh, well, there are different markets. It becomes difficult to know which market and what order book. So, normally we always talk of the order book for the U.S. market, because that's where the growth outline is.

Right. Because last time you mentioned that it will be around 5-5-20 years, we are expecting 300 million order book.

That's for the U.S. For the U.S., yes. Great.

And the new subsidiaries which we have here in Ireland and Canada, how big is the market which you feel? Will it be bigger than the Australian market? I mean, what are we doing in the next one or two years? Yeah, Europe.

So, Europe by itself is a huge market. It is bigger than the UK market also because it's a cluster of many countries. It's not one country. So, it's a cluster of many countries. Canada is relatively a smaller market, but definitely it will add value to our business. But, I mean, here by itself, hopefully, maybe in the next five plus odd years, it could be a very prominent contributor to the company.

So, with this EU deal signed, will it affect or it doesn't have any ramifications on our sales?

No, it does not.

It does not.

Okay.

And going ahead, what CAPEX we are looking to do?

So, it's basically, so we normally spend our regular capex of 50, 60-odd courses on, you know, automizations and everything of that stuff. But if we are going to look at... If we are going to look at a new block or a new manufacturing plant, depending on how well our order book shapes up and the demand creeps up, and, you know, for us to go to another level altogether, then obviously the capex could be anywhere between 150 to 200 or close. But as of today, we have not yet reached that benchmark to trigger that off.

Okay, and the UAE acquisition which we did, I mean, has it fruitified or we have not invested anything else on it?

No, we have not invested much, but we have done a lot of filings out there, so those returns, those approvals and returns have to yet come in. But it's a standalone profit-making business, and it's still the return on investment has already, we've already got the return on investment on what we've initially invested in that company. So, are you looking at any other bigger acquisitions, especially in York or something? Yeah, we are. We are looking at York actively.

Oh, that's very, very smart. Thank you so much. Thank you. Thank you.

Thank you. The next question is from the line of Aditya Pal from MSA Capital. Hi, an audible?

Yes, you are. Thank you so much for the opportunity. Good set of numbers. Just wanted to double click on the US performance. So, even though we've grown at both double digit revenue, but there has been a deceleration of growth. So, is this growth a new normal, or is this just a pause before we come back to our older growth rates? And more importantly, is it because of a base effect?

No, I think, yeah, I think, you know, 2025, there was a lot of geopolitical uncertainties that evolved around the U.S., right? So, technically, you're looking at, you know, the tariff uncertainties. You look at different other angles. So, it was challenging for six months, let's put it this way, until gas settles. So, we are quite optimistic that it will come back to its normal growth rate, and we are seeing that difference happening once a trade deal has been signed and everything like that. So, we are quite optimistic that that is concerned.

Perfect. And some question to this would be that you said that $220-odd million of autobook. And if I look at 400 flows of Q3 revenue, that is a $1,600-odd flow of analyzed revenue revenue, which is roughly $175-$177 million. So how should we think of the $220 million in terms of?

Yeah, you'll see it in the next financial year, because when we talk about the order books, once you get an award, it takes us about anywhere between five to six months to commercialize those awards. And that's where there is a bit of a lag that goes on. But I think by the first or second quarter, you should see that trending happening to that.

Understood. And on your Europe and Canada operations, when can we expect reviews to be visible from both these geographies? More importantly, from the European geography because that seems like a much larger pie and it looks like an inflection point for the company.

Yeah, so Canada, you may see it trickling maybe in the next financial year. It's not trickling in because we've done a lot of filings out there. Europe is a bit more complex because it's a cluster of many countries, and starting from set up to everything has to be put in place. I've been getting a wholesale license that should be put in place, especially when you're doing certain greenfield startups. But that's it and done. I think Europe will make up for some lost time with some M&As and some platforms that we plan to acquire. So that will help us. But once it crystallizes, I think you'll have a better shape and color on that.

Is there any timeline, if you would like to say?

I think 2026 will be a turning point where that is concerned. We have quite hopeful that 2026 BVC couple of everything is happening out there.

Understood. Just a couple of bookkeeping questions. So, when I look at your employee benefit expenses, so one thing, does it take into consideration the European and Canadian team that we would have hired, because of which this number is looking elevated?

No, no. See, the Canadian, Canada, we haven't hired anyone as of now, and so we will be doing hiring this year, and for Germany also, we right now have just two employees, and we may have more in coming quarters. So, that way, it will increase to the extent of new employees and newer geographies. But so far as our current operations are concerned in EU and in India specifically, we don't see any significant increase in our hirings.

And the reason that I'm asking this is because if I look at your EBITDA margin, it has come to a good level of 21%, but majority of the pull has come from an increase in gross margin. So I'm just trying to understand that when will our employee benefit expenses streamline and we will come back to our old 13-13.5% of revenue.

I think we should be able to see that number pretty soon, maybe by the second quarter of next financial year. And, you know, we don't see any incremental hiring, but of course, you know, the annual increments. And, like, you know, the wage, the minimum wage, again, like, you know, are increasing across the geographies, you know, everywhere in UK, in US, even in India also. So there is a pressure on employee cost, for sure. But at least in terms of the headcount, we don't intend to increase it further. And we will, if we see some better numbers out there, maybe from the second quarter of next year.

Perfect, perfect. Wishing you and the team all the very best. Again, very good service numbers.

Thank you.

Thank you. A reminder to all participants, anyone who wish to ask a question, may press star and one on their touchstone telephone. The next question is from the line of Riddhansh from Unify AMC. Please go ahead.

Yeah, hi, Tim. Tim, two questions. You know, in the third quarter, especially for UK, could you call out how much of the proportion was on account of, you know, attributed to new launches, how much of the stabilizations occurred because of the currency tangled, and how much came because of the base portfolio recovery, actually? Yeah.

So, see, new launches have started contributing, definitely, and so as the currency also have helped. But again, I don't see that, you know, having a significant impact during the quarter. It should, you know, keep giving us better numbers in coming quarters. Specifically, new launches, again, taking market share, it will happen gradually. So, we will see, you know, incremental revenue coming from new launches on a quarter-on-quarter basis, but again, nothing significant per same one quarter, and so far as the foreign exchange is concerned, you know, we definitely have, like, you know, some better, you know, Thank you. No, sir, as we get into the next quarter, I think, you know, definitely that the end of the depreciation will help. But let us see, the level should sustain. So if these levels sustain, then definitely we will have better numbers in coming quarters.

Understood. So, sir, thanks for that. So is it a fair assessment that there is recovery in the base portfolio and the price erosion that we have witnessed is bottoming out in the UK? Is that a fair concern? Yes, definitely. Okay. Done, sir. Thanks so much and all the best. Thank you. Thank you.

The next question is from the line of Etendra Pradhan from Maximal Capital. Please go ahead.

Yeah, so my question is, like you guys called out this percussion product, you know, the pipe erosion that is happening in both the U.S. and U.K., but your gross margin has stayed intact, so what has, you know, contributed to your gross margin?

I mean, it does have an impact. Obviously, our portfolio is very small in the US, so the impact is slightly lesser, but in the UK, it is much larger. The RX portfolio is much larger, but price erosion does have an impact both on the top line as well as the bottom line, but it just depends on the geography we are talking about.

And, sir, what is our, like, in the UK market, what is the strategy to navigate that? Are we launching?

Yeah, new product, that's what we explained in the first half, that new product launches are absorbing some of them. It's too early for it to contribute bid time, but it is absorbing some factors out there, and as new products do get approved, it will just get healthier, you know, quarter-on-quarter basis.

Okay, sir. And, sir, the milestone or the target that you discussed earlier is 4,000 CR. So, that is only for our current portfolio or that is including our like EU, Canada and all those companies as well? No, it's for our current portfolio right now. Okay. Okay. Thank you, sir.

Thank you. The next question is from the line of Mithel Latia from Frax and Capuchin. Please go ahead.

Yeah, thanks for the chance.

The employee cost question has been asked a couple of times already, but I just want to understand one thing. In FY23, we were at 13% of employee cost to revenue, and since then our sales have grown at a healthy click, while employee costs have moved to almost 15% of revenue, what should we keep in mind that would have led to that sort of an increase?

Well, to see, so far as the new facility at Goa is concerned, you know, we have done, you know, maximum hiring, and the capacity utilization right now we are still at around 50%, and that's where, like, you know, when the capacity utilization goes up, we don't see, you know, as a percentage, the employee cost will start coming down. So, that's what I have said earlier, that by the 10 quarter of next year, we will definitely see a reduction, you know, in terms of the employee cost percentage you face.

Thank you.

The next question is from the line of Mihi, Confident EMT. Go ahead.

Yeah, hi. So, I have one question. Your R&D spend seems to have been very elevated this year. So, this year, in the first nine months, you spent more than what you spent in F525. Almost 3% of your total spends are towards R&D. However, do not feel...

Yeah, the R&D spend has gone because we are doing quite aggressive filings in the UK. We are working on a portfolio for Europe also, so as when we talk of new geographies, we have to spend on development based on countries' respects, but UK, we are literally filing four or five products every month, so it's quite a, we've taken an aggressive approach looking at dynamics that we are seeing. But this is, again, based on our objective of what we expect the UK market to perform in the coming year.

Should it be fair to say that the 3% R&D sales will remain there for additional in the next year?

Yeah, I mean, it will probably be between 2.5 to 3%, you can say, for the next year.

And second is, you highlighted a couple of times that you are looking at closing out two acquisitions in the European region. Would you also like to quantify the amount because there is a difference between acquiring an acquisition of 100 crores versus 800 crores and you have a substantial amount of cash show. Combined acquisition, what can be the net outgo which you are expecting?

Again, it just depends on the target company. So, I mean, if you're looking at a company which is... Which has a pan-Europe because, you know, Europe is not a country. It's a cluster of various countries. So having distribution all over Europe is always a challenge. Those companies are much more premium and much more bigger, larger in size. There are more patients out there. But if you look at clusters of our countries, then basically, again, it just depends on what deals we close. It's difficult to give a number right now. But because we are in... We are in talks, and, you know, once we come through them, we'll have a better understanding as to what amount of money would be spent in M&A's out there in Europe. Maybe in the next three to four months, we'll have a better visibility on that.

Got it. And just one bookkeeping question.

There seems to be a reclassification of around 8 crores from other income to other expenditures. In the base water.

So, can you highlight what exactly has happened there? I think, yeah.

Yeah, you're right. So, basically, it is just a reclassification of, you know, the mark to market provision on foreign exchange, which we do. So, earlier, like, you know, it used to go into other income or other expenses. So, we have done a bit of reclassification, and now we are netting it off in other income itself. So, due to that, you know, that impact you have seen. And that is appearing in the note also. In the results, we have, you know, specifically shown that number separately in the notes.

Got it. Okay. Thank you. And all the best.

Yes. Thanks. Thanks.

Thank you. The next question is on the line of Aditya Paal from MSA Capital Limited. Please go ahead.

Hi. Thank you so much for taking up the thing of the follow-up. Just wanted to double click on the previous participants' question on eucleography. A couple of quarters back, or even last quarter, you had mentioned that the new products that we are introducing in UK market have higher gross margins than our current base company margins. Just wanted to understand, this 58% of gross margin that we have today has come in because of long-term crisis happening. But now that we are introducing, launching new, higher-margin products, how should we think about gross margins, say maybe 18 to 24 months per process, and could the result in event time?

Yeah, so, when everything is going normal, it would have been a much more easier question to answer. However, these better products, obviously, we've just launched a couple of them right now, so it has to take shape, need some time to take shape, but you are right, the profitability and the margins are much better on the products that we are launching. It is not so much from a top-line point of view. It's more from a bottom-line point of view. However, that gets negated if there's a price erosion and volatility at the other part of the portfolio, which is obviously a much more larger part of it, right? So it just depends on how the market dynamics plays out for maybe a quarter or two that, yes,

the price erosion has stopped, And now we see some correction or we see at least some stability on the price erosion happening so that

we basically then you can define what the new products are actually contributing. But historically, if there is no price erosion or no predictability of price erosion, then obviously the profitability would have improved substantially.

Understood. So my thought, my thinking is that there are two levels that we are playing with at this moment. One is our new product launches, which have better margins, and the other is the operating system, which will come in once legend growth normalizes, and the U.S. market sees it again as high as you say, for now. Perfect. Thank you so much for this. Thank you so much. Thank you.

Thank you. The next question is from the line of Nitin Agarwal from Dam Capital. Please go ahead.

Thanks for the question. On the Canada and the EU geographies that you can do enter now, here the product portfolio is going to be largely OTC driven or this is going to be Rx driven business like the UK?

So, in Canada, it will be more like a similar strategy of the US part of it. So, it would have probably 80, 20, 80 OTC, 20 RX, but in Europe, it will be the prime of AC 90 RX and maybe 10 OTT.

And why would you go in for a primary Rx strategy for Europe, given any driver for that?

Yeah, it's just country-specific. We have to adapt to, like in Rome, we do as a Roman rule, right? So we have to adapt to based on different geographies in different countries, and if you look at certain countries, They are very tender-prone, very tender-driven. They do not have those retail outlets like how you would have in the U.K. or U.S. They don't have chains that, you know, you could play that private-label game. So they are very insurance-driven, more on Rx, and very fragmented Thank you.

And secondly, on the R&D, if you can give us some more color on any specific areas where you're spending more in R&D, what are you focusing on R&D going for?

Well, actually, our increase in spending has happened mainly in the filings or the focused filings of UK, where we have up our filings per month. And the number of products we are developing, basically the products that we are developing in the pipelines that we are developing for the UK market, which we plan to leverage a decent amount for the Europe also. Take into consideration that we are looking at, you know, Europe from a short term to a medium point of view. So we are looking at really focusing on... Developing a lot of niche and complex molecules for the geography by itself.

And how are you thinking about portfolio expansion for the U.S.?

U.S. portfolio, that goes on, you know, that goes on continuously. We find about, you know, 7 to 18 days a year. So that continues going on. We do different dosage forms. We are looking at different dosage forms for the U.S. market also, trying to differentiate ourselves. But I think U.S. is pretty much on track where our strategy is concerned. Like I said, 2025 was a bit of a weird year because right from April onwards, this geopolitical uncertainty of tariffs came into play. But otherwise, everything else in the U.S. is looking okay.

And if you can take one last one, on the US, this whole, there has been something going around that President Trump has been looking to push more substitution of OTC products. I mean, does that in any way influence change the strategy for the US market? Does that change the product development strategy in any form?

It does not, actually. He comes up with statements every day. It's difficult to keep a track of what he says, but it does not. Okay. So honestly, I don't see the impact on that.

Thank you.

The next question is from the line of Mead from Equius PMS.

Yeah, thanks for taking my question. Sir, I just wanted to understand whether there is any seasonality factor present in our UK business in Q4 and considering that prices are now stabilizing, can we expect a healthy GOQ growth in UK business in Q4?

Oh, well, yeah, I mean, we are, we are, we are. Expecting a stabilized performance in Q4, let's put it this way. Seasonality, obviously, does help. We do have a lot of cough and cold items in the UK, too. So, seasonality does help in cough and cold and in pain the segments. But that said and done, we are seeing a bit of leveling out in the price erosion part of it. So, I don't know, maybe geopolitically with the trade deal happening in so many countries, I think a bit of... Stability and markets are opening up, so people are not focusing on, you know, a certain market or different geographies, so I think if that happens, you know, predictability will be much better.

Okay, okay.

Got it. Yeah, that's all from my view. Thanks.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.

I would like to take this opportunity and thank everyone. I know it's late in the early part of the evening or late for those who are traveling. Please be safe and thank you once again.

Thank you. Thank you. On behalf of Ram Capital Drivers, that concludes this conference. Thank you for joining us, and you may know with Connected Lines. Thank you.