Zydus Lifesciences Limited (ZYDUSLIFE) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Zydus Life Sciences' Earning Conference call for first quarter of FY27. Please note, all participants' line will be in listen-only mode, and there will be an opportunity for you to ask questions after management's opening remarks. Should you need any assistance during the conference call, please raise your hand from the participant tab on the screen. While asking questions, request you to please identify yourself and your company. Please note, this conference is being recorded. I now hand over the call to Mr. Ganesh Nayar, Director at Zyidhams Licenses. Thank you, and over to you, sir.

Good evening, ladies and gentlemen. It's my pleasure to welcome you all to our Post Results Telesonference for the first quarter ended June 30th, 2026. For today's call, we have with us Dr. Shavil Patel, Managing Director. Mr. Tushar Shroff, Chief Financial Officer, Mr. Arvind Bosra, Head of Investor Relations, and Mr. Aalok Garg from the Managing Director's Office. To begin with, let me talk about the key developments during the quarters. I am happy to report that we commenced FY27 with strong double-digit growth, building on the formidable base of FY26. This performance reflects the sustained momentum across all our key businesses, each of which contributed meaningfully to the overall performance during the quarter. With this, first of all, let me walk you through the financial performance for the quarter under review. We registered consolidated revenues of Rs. 80.2 billion, up 22% on a year-on-year basis. On the operating profitability front as well, our performance was robust with an EBITDA margin of 24.1%. Consequently, EBITDA for the quarter stood at 19.3 billion rupees, while net profit for the quarter stood at 9.4 billion rupees. Our net debt-to-EBITDA ratio stood at 0.7 times as on the 30th of June, 2026. Now, let me take you through the operating highlights for the first quarter of FY27 for our e-business segments. In the pharmaceutical space in India, our branded formulations business sustained market outperformance with a strong 20% year-on-year growth during the quarter. This business has, in fact, outperformed the market growth consistently over the last three financial years. Growth during the quarter was broad-based as we grew faster than the market in super-speciality, chronic, as well as acute segments. In terms of therapy performance, The business grew faster than the market in cardiology, dermatology, gynecology, anti-infectives, pain management, and in the super-speciality areas of oncology and nephrology. Our ranking improved in key therapies of cardiology, dermatology, and pain management, while on the super-speciality front, We continue to retain leadership position in the oncology therapy. Our large innovative brands led by Lipaglin continue to strengthen their market standing and improve their rankings quarter after quarter, underscoring the impact of our innovation on improved patient outcomes. Contribution of chronic and subchronic portfolio has increased consistently over the last several years. and stood at 54.2% as per AVAX MATH, June 2026, an improvement of 360 basis points over the last four years. International Markets Formulations business has delivered strong growth during the last several quarters and has established itself as a formidable growth pillar for the company. The business sustained the growth momentum during the quarter and posted revenues of 9.7 billion rupees, with a year-on-year growth of 34%. The growth was led by strong demand-driven performance across markets and supported by focused execution. North America business, comprising of the U.S. and Canada, exhibited resilience with revenues of 31 billion rupees during the quarter, up 5% quarter-on-quarter. The base U.S. business continued to gain share driven by sustained volume expansion supplemented by new product launches. On the U.S. generics front, we find five ANDAs received nine approvals, including four tentative approvals, and launched 11 new products during the quarter. Our U.S. speciality business achieved two important milestones during the quarter. First, we launched Nufemco Injection, which is René Vizouin, our first biosimilar in the U.S. market, marking a meaningful expansion of our speciality capabilities and laying the foundation for future participation in the growing biosimilar segment. Second. We completed the acquisition of Essertio Holdings, significantly strengthening our commercial capabilities, portfolio breadth, and market access in the U.S. speciality space. These milestones underscore our continued focus on building a robust specialty platform in the U.S. and advancing our transition towards a more differentiated, innovation-led business model. In Canada, we received two ANDS approvals and launched two new products during the quarter. Our consumer wellness business recorded revenues of 14.3 million rupees up 67% year on year. With this, the international business, including the Comfortplik portfolio, delivered A like-to-like growth of 25% while the domestic business grew 5% year-on-year. Within the domestic portfolio, skin and hair care and food and nutrition continued their strong momentum, delivering growths of 35% and 16% respectively. Seasonal brands, however, grew primarily due to the softer summer season. In the medical devices space, the business registered revenues of 2.8 billion rupees during the quarter. We are investing in enhancing our capabilities in the focus therapies, which offer long-term growth potential to create differentiated value. On the operations front, our injectable manufacturing facility at Zydis Biotech Park. Recently received an Establishment Inspection Report EIR with a voluntary action indicated VAI classification following a GMP surveillance inspection conducted in April and May 2026. During the quarter, we entered into a joint venture agreement with Sunshine Healthcare to establish a pharmaceutical manufacturing facility in Sri Lanka to strengthen local production and reduce Thank you,

Mr. Nayak, and good evening, ladies and gentlemen. It's a pleasure to have you all here today on our call. FY27 is off to a great start with a strong performance across the key businesses. More importantly, we continue to advance our transformation into an innovation-led organization. The share of our branded portfolio in the total revenues has steadily increased over the last several quarters. It accounted for over 55% of our total revenue in the first quarter of this year. As our branded business continues to gain scale across markets, we expect their share to exceed two-thirds of our overall revenue over the medium term. I'm confident that the strategic choices that we have made over the last several years will build strong growth pillars for us in the long term. With our innovation efforts translating into commercial opportunities, a growing branded portfolio, and disciplined execution across businesses, we are well positioned for our next phase of growth. On the pharmaceuticals front, our strategy for India Formation business is working favorably. The branded business delivered a formidable 20% growth during the quarter. In fact, the business has been consistently outperforming the market growth over the last several quarters. A key driver of this outperformance is our chronic portfolio. These therapies continue to gain share and significantly aid to our overall growth momentum. This is further supported by the strong uptake of our innovation and differentiated portfolios. In addition, our brand-building initiatives and a stronger execution focus are delivering clear results. We remain fully confident in our ability to outpace the industry growth and growing sustainably. Our international market formulation business continues to deliver strong growth and has emerged as a formidable growth pillar for the company. While our therapy-led strategy continues to drive momentum in the emerging markets, portfolio expansion and deeper market penetration in Europe are supporting this sustained growth momentum across the business. We have steadily strengthened our position in the U.S. generics market through a diversified portfolio, a stronger execution, and a resilient supply chain. This is reflected in the sustained prescription growth market share gains and improved market rankings, reinforcing our position as a trusted generics player in the U.S. I am pleased to report that our branded business in the U.S. now contributes 10% of our revenue in the U.S. We expect the share of this segment in the U.S. to continue to increase as our speciality and innovation-led business gains scale. The growth drivers are firmly in place vis-à-vis the orphan and rare disease franchise, a growing portfolio of 5RB2 products, the recent acquisition of Rodadon, and an NDA submission to the USFB of Saragutasar, our first internally developed innovation in the US. Collectively, these businesses position us for a sustained shift towards the most differentiated and specialty-driven US portfolio. In the consumer wellness business, we continue to build a future-ready portfolio through innovation, disciplined execution, and data-driven decision-making. Our investments in analytics and digital capabilities are enabling sharper consumer insights, improving resource allocation, and sustainable profit flow. In the medtech, we continue to strengthen our presence across the orthopedics, cardiology, and nephrology while building a scalable platform for long-term growth. Leveraging Amplitude's orthopedic portfolio and the proprietary anti-robotic surgical system, we are expanding access to advanced solutions. At the same time, we are broadening our cardiology offerings and establishing a high-end dialyzer membrane facility to address growing global demand in nephrology. With this, let me share some material developments on the innovation effort during the quarter. On the NCE research front, the USFPA granted priority review to our new drug application of saroglitazomagnesium for the treatment of triglyceride balearal cholangitis. Recently, we received also a regulatory approval in India to initiate a phase 3 clinical trial of decidustat in patients with sickle cell disease. The study will be conducted in collaboration with ICMR. Decivistan represents a potentially first-in-class therapeutic opportunity for the treatment of sickle cell disease. On the biotech R&D space, we initiated a phase 3 clinical trials in India for our second ADC of Biosimilar. This development further strengthens our deep and differentiated biologics pipeline and underscores our capability in developing advanced biologics. It further enhances the long-term growth potential of a biologics franchise. On the R&D front, on the vaccine's R&D, we completed our phase 2 trial of the bivirin-tifoid conjugate vaccine and also initiated a phase 1 trial of our chicken gunia vaccine in India. On the global development front, we submitted our dossier of the MR vaccine to WHO. The dossier has been accepted for review. Thank you. And now we can start with the Q&A session. Over to the coordinator for the question and answers.

Thank you, sir. We will now open the call for Q&A session. We will wait for a few minutes until the queue assembles. We request participants to restrict to two questions and then return to the queue for more questions. Please raise your hand from the participant tab on the screen to ask the question. The first question is from Kunal Damesha.

Hi, good afternoon. This is Kunal from Macquarie. Thank you for the opportunity and congratulations on strong set of numbers. Dr. Shervil, with quarter one suggesting strong top line growth, would we be kind of looking at a much higher growth than what we have guided for FY27, which is currently a double digit is what we have said. So, yeah. That's the first question.

So, thank you for the wishes, and I think we continue to stay with our guidelines that we will deliver strong double-digit growth for the year, starting with the first quarter. I think our India business is poised to deliver significantly good traction, better than market, at least by 300 to 500 basis points. So, we see mid-teams growth continuing for that business. So is our international markets and US being around a single liquid growth. So looking at that, we will still see good growth for the coming year in Canada.

Sure, sure. And for the India business, I think last time we shared the share of the progressive brand, I believe that with a strong growth, has that gone up meaningfully in this quarter? And should we expect that momentum of progressive brands to kind of continue at that level?

Yes, I think we have seen more than expected exceptional strong growth on our innovative portfolio, which has beaten our current expectations. Also, on our value-based biosimilar, we have seen a very significant uptake on all brands. So that has seen a very significant uptake also. So I think both of them have significantly aided to this momentum. At the same time, which has also led to an improvement in our chronic basket and growth booster brand. So I would say the all-around performance across, but better than expected on the innovation and biosimilars, and also the scaling up of vaccines.

And the last question that I have is, you know, on the overall, some of these new growth drivers, right, in the medium term, we suggested that the branded pieces will become more than two third of the revenue. Right? Would you say most of this new drivers, you know, would aid to our profitability over medium term?

Yes, so I think if I break down into businesses, India and EM, I agree with what... With the improvement in our portfolio, branded as well as chronic, we'll see better profitability. On the US, I would say the only scale-up that we need to do is SARO, which will require investments. But if we take our other portfolio, which is our central, it's already profitable and broken-even and profitable, and we continue to aid to profitability. We are seeing our portfolio on the PirePire V2 also becoming profitable from now and growing. And as I said, today it's only 10% of our business and probably by the end of the year it will cross 15% or more. And we can only see that increasing meaningfully.

Sure. Thank you and all the best.

Thank you. The next question is from Neha Manpuria.

Thanks for taking my question. My first question is on the increase in the operating costs that we have seen in the current year. You know, given that we'll have the full impact of Assertio as well as Saro spend, how should we think about, you know, both the employee cost as well as the SG&A cost? When should we start expecting the incremental Saro cost to flow through? And, you know, just an update on our guidance, margin guidance. Are we still maintaining the 24 plus percent margin guidance that we'd indicated?

So, sorry, there is already certain costs that have started, but we will see an increase in the second half of the year. And owing to that meaningful increase that we will see in the next second half, we are still riding towards the 24% kind of margin.

In that case, sorry, sir, go ahead.

Yeah, so our current run rate of about, you know, 1,900 to 2,000 crores, I think that kind of a run rate, I think we should assume as a part of the other expenses, excluding R&D on a quarterly basis.

And this is despite us increasing the spend on SARO?

Yeah, it's all inclusive.

Okay, and the increase that we have seen quarter on quarter so far is essentially on the back of, you know, what would, you know, this increase, like Sir mentioned, Saro is one of them, but what is the other reason for the sharp increase that we have seen in costs, you know, quarter on quarter?

So it's all, you know, equation driven, the impact that we see on increasing the other expenses, largely I would say that almost like, I would say that about 80% is increase in the cost is driven by acquisitions that we had in last one year.

That I understand, sir. Year on year, I understand. But even if I look at this number, quarter on quarter, you know, it seems like a fairly steep increase.

Anxiety debt associated and the freight expenses.

Okay. Okay. Understood. My second question is on the CAPEX. You know, we see a pretty sharp increase in CAPEX this quarter as well. If you could give us some color in terms of where we are spending in terms of, you know, CAPEX and what the guidance for the full year would be.

So, from the CAPEX point of view, I think a meaningful part of it, obviously, is setting up of the facilities SEJet 3, which is coming right now, the completion of the expansion that we have done in our existing facilities for higher capacity, including Muraiya, Bua, Baddi, and then Unit 2, Unit 3, and SEJet. We are also building a new R&D center for formulation development, which has happened. There is a one-off investment in wellness for a larger land acquisition for future facility, which is a little exceptionally for one-time kind of investment. And then it's a new CAR-T facility that we built for Biologics, a new Vaccines DS facility. So, there are multiple things that have led to this increase, including some investment that continues in Xylida also. So, it's a whole host of many things. So, it's not one particular thing that is a large item other than the wellness land acquisition, but multiple investments in increasing scale and capacity in existing and new capabilities.

And for the full year, what would this number be in that case?

So, we are right now lighting for around 1,500 to 1,600 pro of CapEx.

Understood. And for Saro, you know, based on, you know, given that we have the TAD coming in the later part of this year, you know, how should we think about, you know, the ramp up of market share there? You know, if you could give us some color to help us understand in terms of what the sales opportunity could be?

So on Saro, I mean, we are building for a next FY28 launch right now, so April launch, and we are investing for that. The first year, first three years, I mean, first two years will be just a buildup of this. So we won't see any significant revenue in the first year, large, but as we move into second and third year, we will see the revenue mark buildup. So I think it will, first two years will look more from an investment point of view as to how much we're investing. On the market point of view, obviously, if you see the recent guidance from both our, both the competitors in the current segment. They are seeing better traction than their earlier guidance, and they have upgraded some of their guidances, and that is led from higher patients, bigger patient pool and more patients wanting to access this indication. So, we are seeing a positive in terms of market, being a bigger market than expected. So, we are only seeing some positive signs in terms of how this market formation is happening, and so, we are quite excited with that opportunity.

Noted, sir. And any indication that we would want to give on target market share or, let's say, peak sales that we expect from this product?

So, as I always said, on our conservative side, we are looking at a 200 to 300 million range. And maybe more optimistic, we can cross the 400 plus million range.

Understood. Okay. That's helpful. So, thank you.

Thank you. Next question is from Sayan Mukherjee.

Hi, thanks for taking my question. On the U.S., you mentioned, you know, currently we have 10% of revenues coming from branded. So that would mean roughly, let's say, $130 million, $35 million, right, of revenues on an annual basis. How is that, like, you know, the rare disease would be like 40-50 million, and if you can throw some light, what are the other constituents, and whether SSHU is a significant number in this?

So, currently, in this quarter, which is 10%, we don't have any assertion or made number. Last year, we sent around 60 million, which is the ultra rare disease business. And I think we'll start adding from the coming quarter. That's why we said the numbers from the analyst point of view will go up towards 15%, because those numbers are still to be baked in.

So, you're saying rare disease is around $60 million, and the remaining $60-$70 million is like 505 B2 products. Would that be a right way to think about it?

Yeah, they have a cluster of 55 B2 products.

Okay, okay. And, sir, this assertio acquisition, We're all with on sales. How should we think about the contribution this year, next year? What's the expectation there?

So, I think we have just begun. So, it seems to be on track. We are looking at around 50 to 20 million per quarter run rate.

And this will, we would see that from next quarter, right? Yes. Understood, understood. And sir, on the India business, we have seen good growth here. If you can, you know, I mean, what's really driving, if you can give some color, of course, you mentioned about innovation asset, maybe, you know, how, how is semaglutide done? If you can give some color here, I'm just wondering, what's the sustainable number, let's say? If I take a two, three-year horizon, how should we think about the growth for India business?

So I think, I mean, I did, I'll try and maybe summarize a little better. I think there are two, three things. One is overall chronic part of our business is growing, I mean, at more than 20%. And if you look at even July numbers that have been reported by the AAVACs, we're seeing strong traction on the chronic side of thysiotherapies and growing very meaningfully in terms of that growth. The second is, we are seeing a very, very meaningful uptake on star 1 DC. Which is adding quite meaningfully almost 30-45% kind of growth in this business. So that's also adding very meaningfully and scaling up and we see that traction continuing. The other third is our biologics have seen extremely traction on three or four brands, which have also very, very significantly scaled after genericization also. So we are seeing very strong momentum on those. And Sema is just the beginning, so it is a small contributor. We are third, fourth in market share today in our own brand, but overall we are largest as a Sema Groupite innovative generic that we have launched. So that also is adding to the momentum. So I would say it's just the whole differentiated pipeline and the chronic business both helping this growth and we see that sustaining going forward.

I understood. So, you know, the 6,500 crores of revenues that was booked last year, how much would be biologics, innovation, and vaccine in that, if you can give a rough percentage?

So, we're not given any breakup because it's all in different divisions which have multiple brands, both chronic and this. So, we don't track them separately. But as I said, oncology portfolio is the fastest growing and then followed by the chronic portfolio. And then vaccines is obviously a very different business, which is, you know, I've always said that we want to achieve the 300 to 400 kind of crore mark, and we are on track to achieve that.

Understood. So if I can ask one last question, which is on the international formulation, you know, we have crossed $100 million of revenues this quarter, and the growth has been exceptionally strong. I would appreciate if you can give some granular color on this, either in terms of geographic segment or product segment. Which is driving this. And again, the question is around, you know, sustainability of very strong double digit growth from, let's say, next two, three years perspective.

So, I think three things. One is our poor existing markets have delivered on the emerging market front delivered. They continue to do better than last year and are growing very strongly. The second is Europe, which used to be a little difficult business for us in terms of growth, has done as two things have changed. Both are poor old markets. The France and Spain have significantly delivered on growth and they continue to see a very strong traction on that. And a new market entry of UK has been scaled up much faster than expected and is also becoming a very important business for us. So that international part in terms of EU has started doing extremely well in terms of the revenue. And the third is we entered new geographies. And those geographies we are seeing are innovative pipeline or first generic kind of launches in many markets, which is seeing a good, healthy interaction in terms of commercialization. So I think all in all, all these three things are helping. Core markets, the Europe doing much better, and the new markets meaningfully scaling up.

Great. Thank you very much.

Thank you. The next question is from Vino. Hello. And you know, are you able to unmute yourself and ask the question? Yeah, we might move to the next. The next question is from Vamsi.

Hi, sir. Am I audible?

Yes.

Thanks for taking my question and congrats on the good set of numbers. So my first question is in terms of the 5i B2 portfolio that we have. So of the 20 assets, if I'm not wrong, close to 5 have been commercialized. So how do you expect the overall portfolio to ramp up in terms of the launches that are going to schedule, which are scheduled for the rest of the year? And in terms of the steady state sales, I remember in one of the calls, we have guided that, you know, some of these assets could hit a $50 million kind of mark each. So how is that kind of panning out at this point of time?

So, on our FIFI V2, we have a good mix of our own products and licensed products also. So, we have about 19 products that we have from our in-house and own pipeline creation. We have our partner products, which are about eight that we're working on in different areas. We have commercialized four plus products now, as we said. And we have more products in the pipeline. So, I think it's a pipeline that we're trying to develop for the markets. From the current point of view, I would say most of them are doing better than expected. I think the going on Beals Ray is lower than what we had expected, and we hope in the next financial year we will see a bigger scale-up. But beyond that, the other 2-3 products that we have launched are doing extremely well. At the same time, RollerDone will add meaningfully to that business going forward. And then the biosimilars launched, initial launch of NABWMAP and with the... PFS coming next year, and also for the product, we will see good uptick on that, and also the specialty rare disease business on Sentinel, which has meaningfully started to do well. So, all in all, I think that's doing well, and it's growing well.

Thank you, sir. If I just may also ask a couple of questions around the Likmitz portfolio. So currently, how big is this in terms of the overall contribution? And, you know, how many of the overall PIO5B2 assets within the Likmitz portfolio have already been commercialized?

So we have around seven launches, I think, and we have 10 plus approvals, and we continue to create a larger pipeline.

Understood, sir. And lastly, also, any update in terms of, you know, our China partner launching it in the Chinese market and how the ramp up is happening there? And how big of an opportunity do you think it could be over the next couple of years?

So, yes, I think we have achieved the milestones of getting it approved in China now. We have supplied now APIs for formulation manufacturing in the market. With the time, this product is... It's nationally reimbursed in the drug list, so obviously we need to get an approval in the NRDL to gain major part of the share, but having looked at that, you know, there are 120 million CKD patients in China, so it's a very, very large market, and the prevalence of anemia is very strong in that market. So, looking at all of that, and looking at how the peers have done in this space, we see it as a good opportunity, but first, we need to go through the registration and making sure it is available through the... To the whole reimbursement phase, and once the reimbursement phase goes through, then we can see an uptick in that business. So, maybe in a couple of quarters, we can give more highlight, but we see this being a decent opportunity, a long-term opportunity, but we'll have to wait for another two to three quarters to make sure that all the important approvals go through and the access to the monitor is created in the list.

Understood, sir. Just one last question. So, given that it's an NCE asset, you know, and I presume that, of course, it will also be under patent protection in the Chinese market. So, if not as big as SARO in comparison, like how much of steady-state sales would this asset generate once it reaches its, let's say, three to four years down the line? What kind of, you know, top-line contribution could be coming from this product from the China market?

See, the property is very difficult to say right now. We have not factored in any meaningful scale in terms of our current year. But as we get experience in terms of it getting reimbursement through, then we can see it importantly doing well. Because the other molecule is doing very well, which is already launched. And I think they are doing about 200 plus million dollars in the Chinese market. We can see it also being a meaningful contributor to us.

Thank you, sir. Thanks for answering my questions, and all the very best.

Thank you. The next question is from Kunal Damesha.

Hello. Can you hear me?

Yes.

Yeah. Dr. Sherwin, one question on Saroglitazar. So for the incremental addressable patient pool, when do we need to do additional studies? If yes, what would be the size, scope, and duration of that study? With, let's say, initial indication we already applied, would we be going for an expedited process here?

SARO is already being granted priority review by the FDF for its first indication in TBC, so that is on track, and as I said, we are building for pre-launch capabilities on that. This will be a continuing trial because we have to follow the patients through and do a rolling phase 3, so that will continue. We are also adding a marginal ALP trial to start-off for certain patients who have marginal ALP issues. So that will also expand the opportunity size of the market, which that trial is about to start. So those are the updates on the key trials.

And the duration, if you could share, like, you know, there's, let's say, expanded indication, can it be a near-term opportunity or would take, let's say, two to three years? How should we think about it?

No, it's not. The expanded indication is not a near term. It will take two to three years.

Okay, sure. And any update on USNO class for ALS indication? When is the readout that we expect for that?

You know, so, you know, USNOPLAS, as I said, we have a couple of trials that we are doing. One is a phase 2, we initiated a phase 2B in the US for ALS, so that is ongoing. The study is going to enroll 240 patients against the placebo, so that is the way it is moving on. We see it as a FY28 kind of timeline, when we can see some data coming out of that, so end up. Uh, FY20, I mean, late calendar year 28, 28 or only 29. So that's when we see the data come out. On the ulcerative colitis lab, we are also looking at that as a potential opportunity also. We are seeing good phase 2A data and we hope we can, in India, and we hope to move that obviously in India in the next phase 2, year 3, and also potentially evaluate it in the U.S., which is under evaluation right now.

Yeah, thank you.

Thank you. The next question. The next question is from Damian TK.

Yeah, hi. Good afternoon, and thank you for the opportunity. My first question is for Dr. So, for these, what kind of spend you foresee, whether it's towards the SG&A or building up team for speciality, et cetera?

We were not able to hear your question, if you don't mind repeating it.

Yeah, sure. So my question was regarding the kind of spend which you foresee for scaling up some of your newer initiative, whether it's medtech, speciality, biosimilars. And this is also related to how should we see spend required to reach the medium-term goal of getting two-thirds of revenue from branded products, as you indicated.

So, we have already invested in biologics and vaccines, so that investment has already gone through. Also, Medtech is a business, or running and growing business, which we have, which we acquired, and which we have also launched in India, in the Kharbeva civil side. So, these businesses are already invested in, and are baked into our current margin guidance.

So as these businesses scale up and no major incremental spend, it's safe to assume we will be seeing margins moving up from the level which you indicated for FI27.

FI 27 divided for a 24% plus rate. 24% so that is what we speak to.

Okay, and on the biosimilars portfolio where you just launched your big product there. So there also what kind of timeline we should Assume to see meaningful sales build-up happening.

Biosimilars is already a meaningfully scaled business for us and very profitable. So it is not a new business for us.

No, I was specifically asking for the US part. India, obviously, I think you have a very well-stepped presence, EM as well.

Yeah, US is more like a 29 kind of timeline when we will see that business scale-up. We will have a couple of products before, but really meaningful scale-up will come in calendar year 29.

Okay, that's helpful. Thank you. Thank you.

The next question is from Beano.

Hi, good evening, all of you. Can you hear me? Yes. Okay, great. I was looking at the U.S. trajectory over the next three, four years. So this year, we have mirror background going on, plus Osiguat should come in. Next year, also, partly, we have mirror background, and Palbosiclip should come in. But beyond that, do you think there could be a dip in US revenues, even if it is a temporary one?

No, we are currently, we still have a growing pipeline of products beyond these valuable products in the market. In fact, we recently also launched Inversign on Green, where we got 180-day CTT exclusivity. So, we have a future pipeline of products which are in the 55B2 and... Ready-to-use formats and other areas which will all add to meaningful business. So, we do not see that kind of a fall in the U.S. revenues.

Understood. Thank you. And one bookkeeping question, if I look at the depreciation number consolidated, it has sharply gone up starting 4Q of last year and 1Q also again has gone up. So part of it could be the acquisitions and related amortization. Is there anything else into it? And is this the level at which it will continue?

Yeah, so I think, largely, it is on account of this, the acquisition. This amount also includes, you know, the licensing amortizations that we had, because of the Mirabha Varon settlement. So, that will be up to the first quarter of FY27-28.

Do you mind calling out that number? Roughly at least.

We have not called out that number specifically because of the confidentiality.

Anyway, it will end in the second quarter of FY28, correct? Yes, that's correct.

Thank you.

Thank you. The next question is from Sian Mukherjee.

Yeah, thanks for the follow-up. Just, you know, you mentioned about the brand part of the business becoming two-thirds or more in the medium term, and this year has been more of an investment, you know, year for you. So with that business mix changing towards brand, From 24% EBITDA margin today, where should you expect, let's say, from an FI 30 perspective, when you achieve those targets, your EBITDA margin to settle at?

So, I think, from the planning point of view, yes, if... When we are able to scale up a branded business towards two-thirds, then we should see an improvement in EBITDA volumes. Obviously, the first couple of years now, you'll see an investment base on Staro and some of the other portfolio, and also some improvement increase in R&D. But ideally, we would want to be improving our EBITDA volumes to the 28-30% range as we move closer to the five-year period.

Okay, thank you.

Thank you. The next message is from Rashmi Shetty.

Yeah, thanks for the opportunity. Am I audible?

Yes.

Yeah. So just one bookkeeping question on assertio, whatever consideration amount, how are you allocating to, how much are you allocating to goodwill, intangibles or anything in gross block?

So I think, so we have a window of 12 months to finalize in terms of what should be the purchase price allocation of this entire consideration. But, you know, the large part of this will be towards, towards the brand, as well as, you know, the platform that we have, we have got from the commercial platform that we've got from this particular, particular acquisition. So large part will be towards intangible.

Okay, and amortization and all has not come in in quarter one, right? For this quarter?

Yes, that's correct.

Okay, and on your ComfortClick business, how do you see, you know, growth for this piece in FI27 and going ahead?

So, we are seeing good, strong double-digit growth for the business, and that way we see that happen for this year.

Okay. And for the entire consumer business also, you see a strong double-digit growth only, right?

Yeah, we are looking at a double-digit growth.

Okay. And how many launches are planned for the US business for this year?

Between 30 to 40, depending on multiple scenarios, but at least 30 plus launches.

Okay, and this includes the speciality launches also, right? Hello. Yes. This includes the speciality launches also, right?

Yes.

Okay. Okay. Thank you. That's it from my side.

Thank you. Thank you. The next question is from Surya Patra.

Yeah, thanks for the opportunity, sir. Sir, in fact, first question is about the gross margin. Sorry if I am repeating the question because I slightly late joined the call. See, gross margin this quarter had seen a kind of a dip, both sequentially as well as YOY, despite of the fact that there would be some currency tailwind that would be there. So, how should one understand this? Is it entirely due to the kind of royalty or the commission that we are paying to?

So, Surya, on a gross mining perspective, on a quarter-on-quarter, there is, you know, because of this Meera-Bagran settlement, we have the higher cost associated with that because of the arrangement that we had with the innovator. So, that is impacting on a quarter-on-quarter basis. Yeah.

Okay. So then is it fair to believe that, sir, then see this Mira Vigran issue would be there in the first half. Second half onwards, it would be subsiding substantially. So then second half gross margin scenario will go back to the normalcy situation, excluding for the kind of whatever special situation product opportunity that is there with us. Is that understanding right?

No, I think maybe you can contextually think differently. Meera Vidron is a very good profitable driver. So it's not a negative to the business. In fact, in spite of whatever royalty agreements we have, it still has very strong profitability. So I don't say Meera Vidron is not the negative side of the story, but the positive side of the story. Because it continues to be semi-exclusal. And in factoring for all of that, we have to guide it for a 24% of the time.

Okay, okay. So kind of a balanced kind of a margin trajectory for the all of the quarter that we are indicating that way. Sure.

Yeah, that is what we are guiding for.

Second question is about the Saroglitazor US plans, the launch plans, if you can talk about, and the associated cost, along with that, the likely timeline,

what one should think, whether it will kind of have an initial cost impact in FI28,

or how should one think, if you can just...

So as I said, SARO is an FY28 launch, so we can give you better in the last quarter when we are coming here to launch. The first two years will be a build-out phase for the investment that we make. So even this year and the coming year, we will see uptick in investment and post. So that's what we are building for. And that's how we are also guiding in terms of our margins, assuming that there will be investment on SARO.

Okay. And regard to the domestic business piece, see, in fact, as you mentioned in the call itself, that your performance was one of the best in the semi-glutate side because of your own brand as well as the kind of a partnership route what you would have adopted. But whether this is a sustainable kind of a trend, even in the subsequent quarter, or it is the initial benefit of channel filling and all that, what the street would have seen for everybody. So, hence, whether it is a likely sustainable trend, hence the growth in the domestic market should remain elevated and stronger. How should one think about this semaglutide boosting the kind of growth momentum here in India?

So, on SEMA, yes, it is a sustainable momentum, but having said so, our 20% growth is not factored around SEMA. SEMA is a very, is a contributor, but a small contributor to that. Our growth has come from our other products rather than SEMA gluten.

Okay, just last one point. See, we know that this year you have mentioned about a kind of a sustaining, some single digit kind of a growth for the US business, but because of the Mira Vigron impact, but going back again to 28, FY28, if we talk about, given the pipeline and given the kind of the Ibran's products exclusivity that is there. So again, can we think about double digit kind of growth in the US business?

I mean, there are all things that we're doing with, obviously, on the generic as well as on the branded side scaling up. So, obviously, we'll see a better profile versus this.

Sure. Yeah. Yeah. Those are the questions. Thanks for the, taking my, all my questions.

Thank you. The next question is from Vishal Manchalda.

Hi, thanks for the opportunity. Would you be able to share some color on Appli Bursep biosimilar launch? Because you were the first one to launch that in India. So is that shaping up well? And can that be large?

Yeah, I think the initial traction is good for us. We are seeing it's a very, you know, critical product with high quality specs that is required for this and we are seeing good results on the launch of the bio-cellular. So, from the ophthalmology side, this will be a meaningful product for our business.

And that's picking up traction well, so based on your initial assessment? Yes. Okay. And I also saw like you also in license the innovative product also in the same category. Is that right?

You mean the generic biosimilar of that, right?

No, the Innovator brand as well is something you have in-licensed for the... So, Aylia, which is the Innovator brand, has either been licensed that as well?

We cannot license the Innovator brand.

Okay, okay. Thank you. That's all for me.

Thank you.

We will wait for the queue to assemble. If anybody wishes to ask the question, please raise your hand from the participant tab on the screen.

I don't know if I can laugh at all, but I don't know if I can do it. Good morning, everyone.

Thank you very much to Zydus Life Sciences Earning, Zydus Life Sciences Management Team. Ladies and gentlemen, on behalf of Zydus Life Sciences, that concludes today's conference. Thank you for joining us, and you may now disconnect your line and exit the webinar.