Sun Pharmaceutical Industries Limited (SUNPHARMA) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Sun Pharma's Q1-FY27 Financial Results 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. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Dr. Abhishek Sharma, Vice President and Head of Investor Relations and Strategic Projects. Thank you, and over to you, sir.

Thank you. Good evening and a warm welcome to our first quarter FY27 earnings call. I am Abhishek from the Sun Parma Investor Relations team. We hope you have received the Q1 financials, the press release, and the earnings presentation that was sent out earlier in the day. These are also available on our website. We have with us Mr. Kirti Ganurkar, Managing Director, Mr. Alok Shangvi, Chief Operating Officer, Ms. Jayshree Satgopan, CFO, and Mr. Richard Ascroft, CEO, North America. Today, the team will provide an update on financial performance and business highlights for the quarter, pipeline updates, and respond to any queries that you may have. We will refer to the consolidated financials during management comments. The call recording and call transcript will also be put up on our website shortly. We have recently noted that Organon has received a shareholder approval for acquisition by staff. The acquisition is subject to the satisfaction of remaining customary closing conditions and is on track to close by early 2027. Since Organon remains a public listed company, we will not be taking any questions today regarding Organon's business performance. The discussion today might include certain forward-looking statements, and these must be viewed in conjunction with the risks that our business faces. You are requested to ask two questions in the initial round. I also request all of you to kindly send in your questions that may remain unanswered today. I will now hand over the call to our CFO, Ms. Jayashi Satabo.

Welcome and thank you for joining us for the earnings call after the announcement of financial results for the first quarter of FY2027. The financials are already with you. As usual, we will look at the key consolidated financials now. During the first quarter of FY27, sales were at Rs. 151,836 million, registering a growth of 10.1% versus Q1 financial year FY26. Gross margin was at 80.5% for the quarter, higher than the same period last year, mainly on account of better product mix. EBITDA for the quarter was Rs. 44,177 million, an increase of 2.7% over Q1 last year. EBITDA margins came in at 28.9%. While EBITDA margins were slightly lower, Please note that Q1FI26 had some benefit from lenalidomide sales. Adjusted for that, EBITDA margins were higher year-on-year. Forex gain for the quarter was Rs. 1220 million, lower than Q1 last year. Reported net profit after tax for Q1 FY27 was Rs. 28,948 million, while registered net profit for the quarter was Rs. 30,894 million. EPS for the quarter was Rs. 12.10 per share. Exceptional items for Q1FI27 include a charge of Rs.1670 million towards Organon's acquisition-related costs. There would be additional charges on this account in the subsequent quarters. Since some of the costs are not yet fully crystallized, we are not in a position to guide to a full estimate at this point in time. However, these charges are somewhat back-ended, with a substantial part being accrued at closing. Effective tax rate for the quarter was at 27.8% versus 24.3% in Q1 FY26. Sun had a significantly lower tax rate in India, which is now getting exhausted, And with varying tax rates in our different jurisdictions, our ETR has moved up going forward, and until Organon's closing, we expect the tax rate to be in a similar range as in Q1. Balance sheet of sun continues to be strong, with a net cash of $3.4 billion at the consolidated level. With this, I hand over the call to Kirti, who will share the performance of our global innovative medicines business and India business.

Thank you, Jayashree. I shall first provide you an update on global innovative medicines. In Q1 FY27, our innovative medicine sales were up 12.8% to reach US$351 million. This business accounted for 21.9% of sons. The performance in innovative medicine business continues to be driven by growth across U.S. and ex-U.S. markets and across products, notably Illumia, Odumzo, and Seqvar. During the quarter, the company shared the updated results from locally advanced cutaneous from the pivotal trial of Unlock with more than one in four achieving complete tumor response and generally manageable. Sales of India formulations were Rs. 54,749 million for the 1% of total consolidated sales for the quarter. During the quarter, the company became No. 2 generic semaglutide injectable player. The company in India offering semaglutide auto-injector, and the device has received a positive feedback from healthcare professionals for enabling smooth initiation and significantly reducing needle phobia. SunFarma is ranked No. 1 and holds 8.5% market share in the over Rs. 127 billion Indian Pharmaceutical Market at 2026.

Thank you, Kirthi. Let me share the performance highlights for our U.S. business. Overall, the U.S. business reported sales of $427 million U.S. dollars for the quarter, declining by 9.7%. Our innovative medicines portfolio continued to grow, and this was offset by lower sales in the generic business, largely due to linoleumide erosion, but also due to additional competition in certain products. It will keep quarter-over-quarter decline in the U.S. is due to a decline in generics and also some seasonality in Lebulon. The U.S. accounted for 26.6% of consolidated sales for the quarter. We also launched five generic products in the U.S. Now let me provide some updates on the Lexalvi and Aloxa launches. We're seeing good momentum in Lexalvi with prescriptions and the number of prescribers expanding each month. In the month of June, we surpassed 1,000 prescribers, and we also delivered our strongest month since launch, demonstrating increased adoption and growing confidence in the brand. Unlocked it was launched earlier this year. The early feedback from healthcare professionals, including oncologists and dermatologists, continues to be positive, really highlighting the balance of durable efficacy and safety resonating exceptionally well. Largely due to unlocks its differentiated mechanism of action. Similar to Luxelby, we continue to see month-over-month growth as more cancer centers and integrated health systems add unlocks it to their formularies. I now hand the call over to Elok for updates on our other businesses.

Our other businesses. Our formulations revenues in emerging markets, $111 million, up by 19.4% of the total consolidated revenue in emerging markets, Romania, and the rest of the world for the quarter was U.S. $218 million, quarter won last year.

We continue to invest in building an R&D pipeline for both global generics and innovative medicine businesses. Consolidated investments towards R&D for Q1 FY27 stands at Rs. 8,264 million or 5.4% of sales. Innovative R&D accounted for 30% of our total R&D spent. Recently, our partner Philogen has resubmitted Needlegy for marketing authorization in Europe. The updated data for resubmission is due to be published soon in a major journal. Coming to Organon Transaction, the process of filing for regulatory approvals in various markets have been completed. We have already received approvals in certain countries. Shareholders of Organon have also approved the transaction recently. We expect the acquisition to be completed in Q4 of financial year 27, and an integration management office has been working on day 1 preparedness.

Operator, thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask the question may press star and then 1 on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to use hand fits while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Your first question comes from the line of Amai Chalti with JM. Please go ahead.

Thank you for taking my question and cognizance on good set of numbers. I have first question on the speciality medicine. Thank you. There seems to be some deceleration of growth in this segment. Is it possible for the management to give color on reasons for slower growth in one year?

We would like the innovative business to continue to grow at a healthy rate. We are expecting healthy growth to continue for innovative business in the US, driven by new launches, as you know, unlocks it, product-wise revenue and growth at this moment.

So, but any product in this quarter particularly where you saw some impact which could have affected the growth this quarter?

That's what I said.

I can comment on the U.S. as I shared in my comments. You know, we do see seasonality with Levilon, our product for ectinic keratosis. So, as I had shared previously, we did see that seasonality this past quarter. We would expect to see similar next quarter.

Sure. That's helpful. Second question I have on semaglutide. It is quite visible that semaglutide could become a meaningful revenue driver for us, both in India and ROW. In light of this, I just wanted to understand our preparedness of the supply chain, how much supply we have been able to secure in terms of pens for the full year of FY27. Thank you so much. I will join.

Yes, Semaglutide, now we are selling in India from March 26 onwards. South Africa, we got approval. We are preparing for the launch in Brazil through our partners. We will meet the market demand, so we are well prepared for this launch. We have API manufactured in-house formulation, also we do in-house, and we are tied up with all the people who are supplying the components for device. So, I think we are a well-equipped opportunity in South Africa and Brazil. And India, as I said already, we are number two players among the all-generic players.

Thank you. Your next question comes from the line of Damianthi Thirai with HSBC. Please go ahead.

Hi. Thank you for the opportunity. My first question is on cross-margin. So, very strong trend. And this is despite the loss of the resume sales. So, in your opening remarks, you indicated product mix is the main factor to drive cost margin. So, if you can elaborate a bit, like, which regions or which segments are really driving the growth, and are these levels sustainable? Thank you.

As I was mentioning, we have seen growth mainly driven by product mix. We've seen good growth in our branded generics business as well as our innovative medicines business. Both of these have resulted in a healthier margin profile for the quarter.

So, on a year-on-year basis, does contribution rent-up from both branded generates and innovative medicine at the gross profit table?

Yeah, the share of business to the overall revenues have gone up, and therefore, you would see the reflection also coming in the gross margins.

Okay. My second question is on your R&D spend. So, we understand there is variability quarter on quarter, but how should we look at the spend on a full year basis? And you have given the pipeline as well and indicated 30% is for innovative medicine. So, where is the rest of 70% spend happening? Yeah, that's my second question.

No, I think it's a time gap between what you call stopping some of the trials and starting some of the new indication trials. So, I think don't look at the R&D spend this quarter. We've already guided from the annual number, and I think we should be able to meet those numbers.

Okay, and the remaining 70% spend is what?

That would be generics as well as products for India.

Okay. I have more questions. I will get back in the queue. Thank you.

Thank you. Thank you. The next question comes from the line of Kunal Damesha with McQuarrie. Please go ahead.

Hi. Thank you for the opportunity. First one for Rick on Lexelby and Unlock said, while it has received good response from the prescriber, How is the access aspect of these two molecules moving on? Let's say, where would you want to be versus where you are currently, and how long this journey would take from improving the formulary access?

Yeah, great question. Maybe I'll start with Lexelvi because the access is different given the different kinds of products that we have. So from a payer access, which is what's most important for Lexelvi, we continue to grow. In fact, we added an important plan just this past quarter and improved the overall access. We do already, for Lexel, we now have the majority of the covered lives available to us. And Locked is a bit different because it's primarily administered in the healthcare setting. So there, we're very focused on formulary access at the cancer centers, as well as the large integrated delivery networks within the U.S. And similarly, we have progressed quite rapidly, actually, in terms of getting the product added on those formularies. I think really in recognition of the differentiation that the clinicians see, it's a different mechanism of action. And so you have this durable efficacy, but what's quite interesting about UnlockFit is you don't see the typical immune-mediated adverse events, particularly the grade 4 and 5, which is why the product is being added to formularies.

And, Rick, just for the understanding for UnlockSet, who is the decision maker? Is it doctor who makes the decision, or is it the cancer center which will have a few PD-1 or PD-L1s on their formularies, and then doctor needs to prescribe from that list? How does it work?

It's a bit of a combination. In most of the centers, there is a formulary, But that formulary is heavily influenced by the clinicians and what products they want to use on the formulary. So we're working directly with the administrators of those institutions as well as oncologists so they can ensure they have access to the product.

And, again, this would be Medicare Part B heavyweight because this is generally seen in aged individuals?

It is. It's a Medicare Part B product.

Sure.

I should add, though, we also have good commercial coverage as well. But, yes, due to the age of the population, they tend to be Medicare beneficiaries, and because the product's infused, it is a Part B as in boy product.

Sure. Second question is for ma'am on other expenses. I think we had suggested that other expenses would come down and it has come down on sequential basis. But from here on, you know, how should we look at for the rest of the year, especially with the lens of, you know, now unlocks it and XLV, probably the launch costs are behind us. So, yeah, how should the progression happen in the other expenses?

So, the other expenses have two, three components in it. One, obviously, is the launch cost that we had indicated early on last year for these two products, which is Lex LV and Unlocks It. But during the year, as we mentioned, the products in the initial years, as they go through the commercialization, there would still be certain costs, and we need to continue to incur that. The second one we should also be aware is that this is a correct element that is also contributing to the expenses last year to this year when we translate. I think that's something that we need to bear in mind. And in the current quarter, just as you would have heard us a little while ago, the R&D expenses have tracked a bit lower. That will get normalized in the I think we need to look into all these three aspects as we analyze other expenditure.

Sure, man.

And I want to just add a bit from the U.S. perspective, since we're in the middle of launches, I think it's a bit of a misnomer to think there's a one-time expense on launch, and then that expense goes away. It's a sustained investment to ensure you have a successful launch.

So, I think the understanding was like some part of the launch expense would continue, which is what you are referring to, right?

Correct.

That's correct. Okay, okay, perfect. And lastly, on the overall top-line growth guidance, we suggested for high single-digit growth versus this quarter, we have done almost 11% kind of a growth. So, do you see an upside here from the full year perspective, or we will stick to the high single-digit growth guidance as of now?

I think we should stick on to the high single-digit growth for the full year. Also, we should be a little mindful of the exchange-related impact that will come across all the line items and the P&M.

That should be overall positive, right? The translation effect would be positive on the revenue growth?

Yeah, it would be possible.

So then, is it conservative?

In the current quarter, obviously, it is positive, but we have to see how it translates for the rest of the year. Therefore, I would suggest that we should look at holding on to the overall guideline that we have shared with you earlier on.

Sure. I have more questions. I'll go on back the two.

Thank you.

Thank you.

Thank you. Your next question comes from the line of Neha Manpuria with Bank of America Securities. Please go ahead. Neha, ma'am, we are not able to hear you. Neha, ma'am, we are not getting any audio from your line.

Okay, what do you think?

We could hear you now, but the line was breaking a lot.

Okay, let me dial back.

Ma'am, we can hear you now.

Okay, thank you so much. Rick, on the U.S. generic business, there seemed to be a very sharp step down in revenues, just roughly if I look at the numbers. You know, I know you did mention some additional competition in certain products. Is that the only reason for the sharp decline in the U.S.? Is this the new base for the U.S. business, U.S. generic business?

Yeah, the largest part of the decline is linolidamide.

No, I mean, quarter on quarter?

Slight decline based on the base business due to competition on a few products. I mean, year over year, it's definitely linolidamide.

All right. And how do the U.S. make this from here? I mean, I know we've been launching products, but, you know, we really haven't seen too much traction there. So when do you think we start seeing the U.S. business turn the corner and actually contribute, you know, more meaningfully to growth?

Well, I think we do continue to see both Lexalbi and Loxic contributing to our results. You know, as you know, we don't give product-wise specific targets, but as I said before, I think if you look at the inputs of number of prescribers, if you look at the market research and what we're hearing back from clinicians, all of this gives us very strong confidence in both of those two products.

No, sorry. I was talking about the U.S. genetic vision of the headache, sorry.

Oh, I'm sorry. Yeah, we just launched five new products, which, of course, will contribute to growth this past quarter, towards the end of the quarter, and we have new launches this quarter as well.

But, Neha, we are not guiding to the growth for – Understood, understood.

That's clear, I'm sure. And my second question is on the emerging market business. I think in the last two quarters, you know, if I were to look at the USD growth, they were pretty strong, like high teens, 20%. This quarter seems to be 4%. Is there any timing issue in supplies or anything that I need to be, you know, cognizant of in the quarter?

So, I think emerging markets are a combination of both.

Sorry to interrupt. Neha, ma'am, your audio is breaking once I leave. Ma'am, still the audio is not coming clearly. If you can repeat the question once again. Thank you. Ma'am, you can rejoin the queue once again. Thank you. Before we take the next question, a reminder to all the participants, you may press star and then one to ask the question. The next question comes from the line of Shashank Krishnakumar with MK Global. Please go ahead.

Hi, thanks for taking my question. My first question is again on the U.S. generic piece, more from a strategy standpoint. Most of our global generic players as well, when they've made this transition from race to race, some part of their specialty R&D has also been funded by the U.S. generic piece. I think in our case, it's the strong domestic franchise which is doing a bit of that heavy lifting, but given that we're still continuing to invest in generic R&D, we have 100 plus ANDAs, can this business again go back to a stage where we can start generating cash flows and potentially this business could also contribute to some of our future growth drivers? I was just trying to understand how you are looking at it. I understand that in the middle of an adverse regulatory cycle, but how are you looking at a sustainable turnaround in this business? When can we sort of expect that?

I think what you are seeing, because we split the businesses into different geographies, but many of the products that we also registered for the U.S. are also sold in other geographies, like approval of semaglutide in all the geographies. It's because that's being developed for the U.S. So, I don't think that when I look at our overall investment in R&D, we are not able to leverage this currently in the U.S. for many products. But otherwise, I think we are creating a basket of products which will help us continue to grow globally.

What it's on. And secondly, on Lexelby, I think we've mentioned in the past that we could potentially look at other indications with which other JAK inhibitors are also targeting. I think incrementally, we're also seeing data. I think one of our competitors has seen positive data in Vitalik was there. So, when are we planning to sort of also try and target some of these other indications, and is the addressable market size also within these indications as meaningful as alopecia is, for instance? How are you looking at attacking some of those indications with Lexilvy?

I think Lexilvy is a very, what I would call, good product in terms of its ability to significantly down-regulate some of the important cytokines, which are, what you call, involved in multiple autoimmune conditions. So, we have to prioritize and identify areas where we can differentiate and register the product, where when we come to the market, it's not very competitive. Whenever we initiate any study, I think we will keep that updated, and we will keep people updated about the progress of the disease. Both Lexilvy as well as Unloxet are potentially important opportunities for us to expand the current indications.

Got it. That's helpful. Thank you. Thank you.

I might just add, we are conducting in the United States investor data-initiated trials, and those, of course, can inform what Mr. Shingi just said.

Thank you. Our next question comes from the line of Bino Patti Parampit with Ilara Capital. Please go ahead. Hi.

Good evening and good morning. Because of the specialty business, the revenues, you know, we launched two big products in the last six to nine months. But if I look at the global specialty revenue over the last three quarters, it has been flat or even slightly coming down. You know, these two, and these two are pretty big products, big product launches. So what am I missing here, or is that the kind of ramp up to it?

Rick, you're responding, or?

Yeah, I'm happy to respond. So, you know, both of these products are still pretty early in their growth curve, including an oncology product that just launched a few months ago. So I think, you know, give it time to be able to see the larger contribution. But we do continue to see good growth across the rest of our portfolio. I think, you know, for this quarter, as we mentioned, at least with one of our products, we do have seasonality, which is having a bit of an impact on the growth rates. But other than that, I think we have seen generally pretty strong growth out of the rest of the portfolio. I understand.

And just a repetition question on the generic part of the business. You know, to one participant, I believe you mentioned that there is some statisticality in the business which led to a down quarter compared to the March quarter. At the same time, you also mentioned to somebody else that there were competitors, extra competition in some products. So, are both these reasons or is one a more important reason?

Let me take that, Rick. I think we know there are two different things we're talking about. The seasonality was on QOQ basis for Levulan, not to do with generics. and the additional complex.

Understood. So, there is no cyclicality in the generic side of the business? No. Okay. Thank you. Sorry, if I can add one bookkeeping question. You know, like the other exceptions that come from Q2, depreciation and optimization cost equals to come down.

The last portion of your question was not clear, Bino, sir, if you can repeat it once again.

Yeah, is my voice clear now?

Yes, sir. This is much better. Thanks.

Okay. Like the other expenses have come down QOQ compared to March quarter, the depreciation and amortization cost have also come down compared to March quarter. Is there any particular reason and what can we expect going forward?

There is no specific reason for this.

Okay.

Thank you.

Thank you.

Your next question comes from the line of Saiwan Mukherjee with Nomura. Please go ahead.

Yes, thanks for taking my question. From the domestic market, we have seen good growth in the recent past. If you can explain what's driving that, and also on semaglutide, various reasons being forwarded for some sort of slowdown after the initial, you know, spurt that we have seen. How are you seeing that market and opportunity, and the dynamics in India versus some of the other emerging markets that you are launching, how do you read that? Is that very different? And if you can give any comments based on the experience so far.

I cannot pinpoint only to one thing which is driving the growth. It's like all the business units are doing good. And we are also focusing on generating on new prescription and brand building. So the entire part of that is also helping us to grow the business in tier two, tier three tier. Put together, I think. Coming to your second question, we said in our redoubt also, we have become number two among the generic companies to continuously grow above the market and gain market share. I think there were some articles about semaglutate generics inventory being increased in the market. We are doing well both on a prescription side and also on the value side and the unit growth. We see this is a very exciting and important opportunity, which is available in a format which is auto-injector, and which is also a very unique format in terms of use by the patient, finding it quite user-friendly.

And any comment on the emerging market opportunity, any dynamics there? Yeah, the question was on the semaglutide, because you got approval in Brazil, South Africa. So, how are you seeing the opportunity in emerging markets? Just one other question on UnlockSafe and Lexilvy launches. It appears from your comment that initial traction is good. You're getting formulary access as per expectations. But in terms of, you know, the revenue contribution, it might not be very significant. So for both these products, what's the timeline for, you know, really seeing traction in revenues? What's the, you know, the two, these are two different products. What if you can guide us in terms of how long you think it'd take for really the traction on revenues to come through?

Yeah, we don't provide product-wise guidance that way. I would just say we expect to continue to see growth based on all of the indicators that we have today, whether that's increasing access, whether that's increasing the prescriber base, whether that's increasing repeat prescriptions. So we do anticipate we'll continue to grow. But in terms of giving you a specific timeline, we're not in a position to do that at this time.

And is it like one product, like Lexilvy or UnlockFit, is the dynamics different in terms of how quickly the traction can evolve, or both of them is kind of more or less takes or take equal amount of time to get the traction?

I think they're quite different products, and they are for quite specific patients as well, right? So there is a training component. There is a patient identification component. And then there's adding to new treatment protocols component. But I would say they're similar in terms of the level of differentiation and what we've seen from the market research. So, for instance, on Luxelby, when we do market research positions, they clearly see the benefit of the speed and the overall efficacy versus our competitors from a market research perspective. And similar with Unlocksit, typically in terms of both the durable efficacy, we mentioned that we had shared new data just at ASCO this past June, as well as the safety profile. So all of those give us good reason to believe that the growth will continue.

All right.

Thank you. Thank you. Before we take the next question, a reminder to all the participants, you may press star and then want to ask a question. Your next question comes from the line of Shyam Srinivasan with Goldman Sachs. Please go ahead.

Yeah, good evening. Thank you for taking my question. Just the first one on the domestic piece again, 16% growth. If you could kind of disaggregate that into, you know, just the split of the growth in volume and new price, new product and price as well, please.

All in the readout and also market in terms of volume and new products. So if you buy, buy set the growth into, then the 50% of our growth is coming from volume and new products. So it is quite easy, which also indicates that we are generating new prescription in the marketplace. And which is way ahead of the IPM growth in terms of volume.

Perfect, sir. So, just want to also get your view on what is happening to the industry or your theory on, you know, we have seen a step up in growth for the industry as well, right? And it's not only on new product, but we're also seeing the base business kind of volume growth also improve. Any theory that you have, I know it's probably just maybe one or two quarters now, but your sense of what is driving higher industry growth as well?

I saw particularly in the month of June, the industry growth was much higher than what it used to be usually, but very difficult to point out where this growth is coming from and whether it's sustainable going forward.

Got it. Helpful, sir. Just a second question on the comment about the tax rate, the ATR being higher. Ma'am, is it now like standalone Sun 28, 29% is what we are assuming? Sorry, I missed the absolute percentage.

So, we don't give standalone numbers. What I discussed about was primarily the console number for Sun, and given that we have presence in various geographies, and the tax rates in each of these geographies could be different, the overall ETR for this quarter was about 27.8%, and we expect this range to sort of continue for some time, Until we have the organon transaction completed, our endeavor, obviously, would be to look for areas to optimize the ATR, but we should look at this as a range.

Helpfully. Thank you, and all the best.

Sure. Thank you.

Thank you. Your next question comes from the line of Surya, Nara, and Patra with Philippe Capital India Private Limited. Please go ahead.

Yeah, thanks for the opportunity. My first question is on the global innovative business. If you can talk about the progress that you are witnessing on the global innovative business outside of the U.S., what is the current share in the overall mix currently, and what is likely to be given your aggressive activities that is visible by launching the specialty products outside of the U.S.?

Yeah, we don't provide the breakup, Surya, for the innovative business by geography.

Okay, but the point that I was trying to dive is we have seen some moderation in the growth. So I was thinking that with the newer contribution or newer revenue stream contributing from the non-US market, the growth should have been better. So, that is why.

Both US as well as international markets continue to grow for us. We are not seeing a challenge in terms of overall innovative medicine growth.

My second point is about, let's say, our pipeline, the innovative medicine pipeline. The MF2, where we are talking about looking for partnership. So, any thought process here, just curious about it, that, okay, if we are having a great part, it is portfolio, successful in the various market. Any reason that we are thinking it for the MM2 for partnership?

As you know, MM2 is a potential product which can be orthopedic pain, that is, knee joints, basically. These are the products which will be prescribed by orthopedicians and maybe rheumatologists. Today, if you see our U.S. business, we don't have any commercial presence to cover agents in this therapeutic.

Sure. Just one observation from myself, in the last few quarters, what we have observed that the people cost is rising ahead of the revenue growth what we have been reporting. So, and in recent past also, we had mentioned that we have no major plan of workforce expansion or something like that. So, what is leading to this kind of growth for employee cost versus our revenue growth?

Let me put it in a slightly different way. There are two or three elements that actually impact the people costs or the salaries and comp and bend, right? One is the year-on-year increment that you get to see in the first quarter of every financial year. So if you do a year-on-year, there is an annual increment that normally comes in and impacts. The second one is also relating to additional FIFOs that we have to employ, especially for our two new launches, which was not there last year, but it is there in current year. Similarly, we have also seen some FIFOs increase that has happened in some of the other markets other than U.S. as well, where we are promoting our innovative medicine products. The third one is also a bit of the forex impact that would also show as a higher cost this year. So, if one were to look at it, the reality is there is going to be a merit increase that happens. The additional feel for, especially for innovative medicines, which is, which is necessary for growing the new products, and Forex is not in our hands, depends on all the market needs.

Sure. Yeah, that was thank you. Thank you. Thank you very much. Thank you all the best.

Thank you. Before we take the next question, a reminder to all the participants, you may press star and band 1 to ask a question. Your next question comes from the line of forum, Parikh, with B.O.B. Capital Markets. Please go ahead.

Thank you for the opportunity. My first question is on ROW market. In USD terms, we see it constant around $218 million for the second quarter in a row. So, I assume this could be because of the Middle East war. So, until the sustenance of this war can be expected, this kind of runway to continue for the upcoming quarter.

What guidance for any particular? You should look at our overall revenue growth guidance that we have given for the year for the company.

Okay. My second question is on the emerging market. So, here in the opening remarks, it was said that innovative products are doing good globally. However, our growth rate has come down to 4%. So, can we assume pricing pressure in the generic business? If you can give some color on the generic business of the emerging market. And last question, if I may, you know, add. So, the last one is on the domestic side. I see that the diabetes therapy growth rate in the IPM has increased to about 15% post the GLP launches. So, any color here would be helpful that how should we see the diabetes therapy growth, you know, once the GLP sales is in the base? For the next year, how should we see the diabetes therapy growing in the IPM?

I think how it will grow in IPM is difficult to comment, but what I can say is that there are a lot of new products being launched in the last 2-3 years. I mean, other than GLP-1, I am saying like HLT-2 inhibitors. So, the diabetes as an area, there are a good number of new products being launched as an individual product and also in the combination. And as you know, the incidence of diabetes also in India is increasing. So, all of these factors are helping the market to grow. But how much it will continue to grow in IPM in coming court is very difficult to comment.

Sure, no problem. Thank you. That's helpful. Those were my questions.

Thank you. The next question comes from the line of Abdul, Kadeh, Puranwala with ICICI Securities. Please go ahead.

Yeah, hi, sir. Thank you for the question. Just one question from my end. In terms of, you know, the outlay what we had previously talked about on the two innovative medicines for the U.S. market in terms of the marketing costs. So, you know, when we are planning that kind of an outlay, typically, what is the kind of payback or the, you know, the break we even, you know, we are kind of budgeting when we kind of outlay that kind of spending in our numbers?

Typically, don't comment on this. However, as we look into any asset when we want to do in licensing, all these costs are factored in part of the overall business case.

Okay, sure.

Thank you. The next question comes from the line of Vishal Manchanda with Systematics. Please go ahead.

Good evening, everyone. I have a question on UnlockSet. So, can you provide what share UnlockSet would have in terms of the various PD-L1 enumators among the new patients that get into the therapy?

I'm not in a position to do that right now, partially because from a claims data perspective, the claims data is lagged. So it's always going to be a few months behind what is reality.

And second, on Odomzo, are we seeing any supply issues? Because what we see is a decline in the prescription on a QOQ and YY basis. So any supply issues there?

No, and I don't believe that's accurate in terms of year-over-year as well as Q-over-Q performance for Adamso.

Got it. Okay.

Thank you. Thank you. The next follow-up question comes from Kunal Damesha. Where's the McQuarrie? Please go ahead.

Hi. Thank you for the opportunity again. One for Chitri Bhai on domestic market. Would you internally be tracking prescription data for some of the key therapies? And based on that prescription data and the value growth you would have in some of the key therapies, are those kind of, you know, aligning very closely, you know, in recent months?

I can talk on Sun Pharma, that's what I, to the volume growth. If there is a volume growth, then there is a prescription growth which is coming. So, our volume growth and the new prescription coming from new product is 60% of our total. So, 40% from new products. So, that clearly indicates that we are growing in a prescription.

Kunal, we look at this thing and...

Okay, perfect. Thank you so much.

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

Thank you, everyone, for joining us at this late hour. If you have any questions which remain unanswered, you can reach out to the Investor Relations team. We'll be happy to take your questions once again.

Thank you, members of the management. On behalf of Sun Pharma, that concludes this conference. Thank you, everyone, for joining us, and even now, disconnect your lines. Thank you.

Thank you. Thank you.