Q1 2027 GlaxoSmithKline Pharmaceuticals Ltd Earnings Call
Speaker #1: By participating in this event, you consent to the recording, distribution, and publication of this event. Kindly note that this call is meant for investors and analysts only.
Speaker #1: All participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation from the management concludes.
Speaker #1: I now hand the conference over to Mr. Bhushan Akshikar, thank you, and over to you, sir.
Speaker #2: Thank you very much, Darwin. As always, I once again thank each one of you for joining us on this call. Just over a month ago, we had our 101st AGM, and today we've ve again got together as is the last few quarters.
Speaker #2: We just finished our Q1 results. We had our board meeting and here we are, to share the updates with each one of you. We'll move to the first slide.
Speaker #2: Just to restate our priorities, as many of you may have followed, GSK Globally is further strengthening its resolve to evolve as a biopharmaceutical major, and in this pursuit, we have three clearly identified priorities for us, both as a global organization but more importantly as a localally listed entity here in India.
Speaker #2: And those remain anchored around growing our top line relentlessly in terms of the focus on growing the top line growth. The second one is accelerating our pipeline: how and how quickly can we launch our innovative assets in markets like India from the global pipeline?
Speaker #2: And third, but most important, simplification in terms of really using not only technology but challenging some of the processes so that we are able to pull out more inefficiencies from the system.
Speaker #2: So those three remain the guiding stars for us in terms of our overall priorities. With that, we'll get straight into how the external performance was.
Speaker #2: So externally, the first quarter, for the industry, grew at roughly about 13.5%, and after a long time, we've seen this kind of sustained double-digit growth.
Speaker #2: What's more heartening is this growth, as you would see in the first table on the left-hand side chart, was fairly balanced between volume price and new introductions.
Speaker #2: After a long time, the pharma industry in India has seen almost a 2% volume growth for the first quarter. I think what was also relevant is the mix between acute and chronic, as many of you know we have our portfolio heavily skewed towards the acute side.
Speaker #2: However, the foray that we've been making in the last three, four years in terms of really launching new assets which play out in the chronic segment have also played to our strengths.
Speaker #2: So I think the balanced growth that we've seen externally in terms of both acute and chronic has played to our advantage. In terms of the therapy areas, the we all know the top therapy areas in the Indian pharmaceutical industry now, while we may be conspicuous by our absence in some of the big therapy areas like cardiology or diabetes, however, the therapy areas where we have a significant presence, including anti-infectives, pain respiratory, nutritional supplements, vitamins, dermatologies as well as hormones and vaccines, have all grown double-digit.
Speaker #2: And I think that's been a great start of the financial year. In terms of our represented market, clearly where GSK operates, across all the therapy areas as well as the sub-therapies, we've grown better than the external market.
Speaker #2: So all in all, it's been a balanced quarter and a great start for us in Q1. What's more important is these growth has been fairly balanced for us, both in terms of geographies so our growth has been balanced both from the metros and the Tier 1 cities as well as the Tier 2 and the rural markets where we have continued presence and in all types of geographies.
Speaker #2: And last but not the least is the balance from specialists super specialists and general practitioners. So I think all three have helped GSK sustain the momentum and grow better than the market for the first quarter.
Speaker #2: I can move to the next slide. Specifically moving to the competitive performance for our three businesses, as we all know, we are one of the most comprehensively diversified healthcare company operating at both ends of the spectrum.
Speaker #2: In terms of disease prevention, with vaccines, both in pediatrics as well as adult segments, and then a large general medicines business which touches everything from the primary care setting with products like Calpol right up to quasi-specialists like dermatology.
Speaker #2: And of course, the specialty area on the last, which is really the unlocking that we're doing with the accelerated launches of products from the global pipeline.
Speaker #2: So if you see all three pillars, we've had a competitive performance, strong competitive performance. So if you look at the syndicated market research done by IQVIA for Q1, all the brands you have in the GenMed business have grown better than the market our EIs are 105, 106 across the board.
Speaker #2: And this tells you the strength of the business, underlying business has been quite robust. So that's the clear turnaround on the GenMed side. On the vaccines front, except for a couple of vaccines where we've had a phasing issue in terms of availability, which we will correct in the in Q2, overall the vaccine business has held its market leadership in the private segment as well as the adult vaccine segment where all the hard work that we've been doing over the last two, three years in terms of building the adult vaccination ecosystem is now coming to roost.
Speaker #2: We had a significant quarter for Shingrix with not just the number of prescribers but the brand growing by almost 60, 65 percent for the quarter alone.
Speaker #2: So that's the vaccines business for us. And the third, which is the newest growth platform over the last two, three years, is the speciality one and other spectrum is the respiratory portfolio, both Nucala and Trelegy Ellipta, two innovative assets that we have from our global pipeline have continued to make significant impact in terms of new patient uptake and that's really helped us galvanize the support from respiratory physicians.
Speaker #2: The last one almost a year ago we launched last year in Q2, we launched around September, we launched our oncology portfolio. And very happy to share the progress that we've made with our oncology portfolio month after month.
Speaker #2: For the quarter alone, with the two products that we have in our portfolio namely Jejula for ovarian cancer and Jempoli for endometrial cancer, have done well.
Speaker #2: And more importantly, we've been able to touch the lives of more than 260, 270 patients thereby creating a new paradigm of patient care for not only those patients but also the caregivers and the families who get impacted with these types of cancers.
Speaker #2: So that's on the business front. I think what's heartening and you will see in the financials the innovation portfolio or the freshness index that we keep talking of in terms of the new products that we have launched have contributed almost seven, seven and a half percent for to the overall top line.
Speaker #2: So these products didn't exist three years ago and that's really the story is the base business coupled with the growth platforms that have created this trajectory for us.
Speaker #2: On top of all of this, we've continued to work relentlessly on the omnichannel side. So whether it is supplementing and complementing our frontline reps with digital ways of working, we've continued to have touchpoints with HCPs, healthcare practitioners apart from the face-to-face detailing.
Speaker #2: We've invested significantly in this quarter in activities including some pathbreaking initiatives especially in the areas of oncology, adult vaccination as well as pediatric vaccines.
Speaker #2: So all in all, a quarter of investment so that we are able to front-end this financial year and continue and sustain the growth momentum.
Speaker #2: I'll hand over to Ron for the financials and we'll open it up for questions. The next slide, please.
Speaker #1: Thanks, Bushan. So hi, good evening everyone. I'll be talking to the standalone results for the first quarter ended June. So the overall theme for the quarter is we are delivering strong growth, profitable growth, and we saw continued portfolio transformation.
Speaker #1: Moving us towards specialty and innovation. So sales for the quarter was at 924 crores. Up 15 percent versus the same quarter last year. A bit of growth was running slightly ahead of sales.
Speaker #1: So two percentage points ahead of sales and it grew 17 percent. A bit of margins also improved by 50 bits versus the last year.
Speaker #1: Our profit after tax for the first quarter was at 253 crores, growing 24 percent with good margin expansion, 200 basis points taking our PAT margins to 27.6 percent.
Speaker #1: So our overall sales growth, as Bushan mentioned, reflects continued strong execution on all elements of our strategy, driving the expected portfolio transformation. So not only are we building scale on innovation, but we're also holding ground on our established products, our general medicines business, which remains material to us and this portion also grew well.
Speaker #1: So just to call out, we do have a favorable base effect from last year. You know, as a result of the CMO disruptions, which we and we saw some supply issues at this time last year.
Speaker #1: So that soft softer base did improve our headline growth by roughly four, five percent. So on a comparable basis, the our sustainable growth was about nine to 10 percent for the quarter.
Speaker #1: Now moving on to our drivers of growth, I'll first talk about the innovation portfolio. Bushan already alluded so these are our when you say innovation portfolio, these are our intellectual property, IP protected assets, and in this quarter, innovation sales reached seven percent of our total revenues, right?
Speaker #1: As a comparator, the same portfolio last year was about four percent of our overall sales. So that's almost a doubling of contribution. In fact, this is now materially contributing to growth.
Speaker #1: So about four percentage points of our headline growth came from these innovation products. As we continue to build momentum with oncology, new respiratory, and our adult vaccines portfolio.
Speaker #1: Moving on to our general medicines business, which is so no, previous slide, please, Tor. So the I was talking to about our general medicines business that remains alliance share of our business that also grew well in double digit.
Speaker #1: In pediatric vaccines, we continue to be the leaders in the private pediatric market. And finally, in Shinrix, in the adult vaccine segment, we actually delivered 65 percent growth for the asset driven by HCP engagements and our to shape the category.
Speaker #1: Moving over to the beta the driver for our margin improvement this quarter was basically gross margin improvement and this was helped by pricing and product mix.
Speaker #1: So our gross margins improved by about 150 bits we did see some hardening of costs on our imported purchases as the rupee depreciated, but net net, there was a it was a we did improve our margin profile.
Speaker #1: This was also a quarter you will see which we were heavy on investment. And our spend to sales ratio was up about a percentage point.
Speaker #1: Now all of this investment is product focused investment, direct marketing spends behind our new launches, but also behind our base business and our core brands and gen meds.
Speaker #1: And finally, to touch on our bottom line, our PAT improved 200 bits important to call out. There is a one-off item which is in the here in the standalone.
Speaker #1: We had a dividend payout from our 100 percent subsidiary Biddle Sawyer. Which improved to the parent, which improved our PAT growth. And that's driving the growth to 24 percent.
Speaker #1: If you exclude that one-off PAT growth would have been about 17 percent. Earnings per share for the quarter was at 14 rupees 95 per se.
Speaker #1: We maintain our strong cash position and we continue to focus further on optimizing our balance sheet. Next slide, please. So we've been showing this slide for several quarters now.
Speaker #1: You know, it captures quite well the execution of our strategy and you know, the track record for the management team. So the first block to the left is our portfolio transformation, you know, to be towards a more innovative, a more specialty led business.
Speaker #1: You know, these are IP protected, higher ground, higher growth, higher quality of sales assets, strongly differentiated. And these are launches remain on track. You can see upcoming launches which will come through in the next potentially in the next 18 to 24 months.
Speaker #1: And importantly, we're re doing this portfolio transformation profitably, maintaining our current margin profile. The top right chart shows how we are consistently growing our beta margins.
Speaker #1: And finally, on the bottom right, it shows how we continue this is our market shares and our general medicines business. And this shows how we continue to protect the cash engines of today.
Speaker #1: So you know, our general medicines business, which is a significant proportion of our sales, which continues to grow and gain market share. Where we are investing.
Speaker #1: So to sum up, in combination, the market share gains, the portfolio transformation, plus the profitability gains, puts us in quite a strong position as we enter the next quarter of the year.
Speaker #1: Thanks.
Speaker #2: Thank you very much, Sean. So Darwin, that's about it. That's the end of our presentation, but more than happy to start the Q&A.
Speaker #3: Thank you. We will now begin the question and answer session. You can choose to ask your questions in two ways. The first is on video.
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Speaker #3: Ladies and gentlemen, we will now wait for a moment. While the question queue assembles. Our first question comes from Gokul Maheshwari from Auriga Capital Advisors LLP.
Speaker #3: Gokul has a text question for us. Sir, we have three questions from him. Would you like all three at the same time?
Speaker #2: Sure.
Speaker #3: Your parent has announced a restructuring with a strong focus on specialty segment. Does this hamper your growth and ability to invest in India given we have a general medicines heavy portfolio?
Speaker #3: His second question is, you were impacted for the supply of Calpol due to the issues at your CMO end. Can you indicate how much of lost sales we have recouped?
Speaker #3: Is winning lost market share difficult now? And the third one is, some of your peers are taking services of firms like GoAptiv to deepen their reach or in tier three or tier four towns or typing up with domestic Indian firms to distribute them.
Speaker #3: How are you ensuring you that your brands reach deep within India and get their right share from the market?
Speaker #2: Thank you very much, Darwin. First of all, Mr. Maheshwari, thank you very much for asking as always brilliant questions. Yes, we had our Q2 results for the global PLC announced last week.
Speaker #2: I think the more important part in that announcement was almost 60 plus clinical trials for assets, which will really unlock value for us as an organization up to 2031.
Speaker #2: Restating and reaffirming our commitment to cross that 41 billion pound top line forecast for GSK PLC. I think as a part of that, we announced a program in terms of unlocking inefficiencies improving some of the ways of working.
Speaker #2: And that cuts across functions, cuts across geographies. So we'll see how that will play out. Now clearly your question around will that affect us because given the fact that we are heavily gen med dependent, I think we are one of the few markets where we still have double digit growth for a general medicines business.
Speaker #2: As we all know, our products are still relevant, they still create tremendous value for patients at large. And they are not only brands here, as I always say, they are trust marks in terms of the value that we bring in.
Speaker #2: So we'll see how that plays out. I think for me the most important thing is the fact that in a matter of the last 18, 24 months, we've been able to get many global clinical trials into India and therefore reduce the lag for the drug launch timelines in India is a true reflection of the alignment with that strategy.
Speaker #2: To give an example, we're going to launch our antibody drug conjugate for second line refractory relapse multiple myeloma. Very soon in the next few months.
Speaker #2: And that's a significant unmet need in terms of the progression free survival rates if you see the impact that it will have on almost 19, 20,000 new patients who come into multiple myeloma as a disease.
Speaker #2: As a type of hematological malignancy, it's a significant data. So I think that's exactly how we see this aligning more. Last point on the first question was you already gone through several restructuring programs on our own in the last few years.
Speaker #2: So right now I think we are suitably structured is the way I would put it. Your second question around supply chain yeah, I think it's safe to say that the worst is behind us.
Speaker #2: I think we learned we've used those learnings from the unfortunate incident that we had at one CMO to stress test the entire supply chain.
Speaker #2: So yeah, I think that's one of the reasons you heard from Ron even the underlying adjusted growth. We still double digit, which is what the intent has been for us for the last two or two, three years.
Speaker #2: So I think that's on the supply chain front. We continue to send them our business continuity plans so that we are able to cater to the unmet needs and serve patients in the coming quarters as well.
Speaker #2: The last one was around new operating models, new go-to-market models. And I think you may be aware that we also have an arrangement where the partner that you mentioned does work as a super distributor for our tail end products.
Speaker #2: So we have some part of our portfolio which is managed through a super distributor, namely the one that you mentioned. That allows us to gain access to some official interiors and ensure that many of these brands which are iconic as well as well known continue to be available and be accessible in the interiors.
Speaker #2: So I think that's where we are on all three questions. Thanks always for asking these three. Back to you, Darwin.
Speaker #3: Thank you. Our next question is a text question from Ronak Chedha with Auriga Capital. Q2 quarter is the main season for the acute. In the last two years, the acute drug season has been weak.
Speaker #3: What are the trends for the current season?
Speaker #2: You're absolutely right, Mr. Chedha. Typically we always see Q2, so which means July to September is a peak season for the pharma industry. Just as a frame of reference, you must have seen on my slide as well, even today as much as the chronic segments are significantly growing, acute segments still contribute 60% of the overall pharma market in India.
Speaker #2: Where we primarily have some significant presence. Going by what we've seen right from the month of June, the trends have been tracking well in line with our expectations.
Speaker #2: Given the broad nature of the seasonal upswing that we've seen, at least in the last four to six weeks, we have every reason to believe that Q2 this year will be pretty much in line with the expectations.
Speaker #2: I think some data points that we've seen for the month of June, July, are clearly indicative of that direction. So that's how I would answer it.
Speaker #3: Thank you. The next question is a text question from Vishal Manchanda with Systematics. Can you talk about our key innovative assets? Shingrix, Nukala, in terms of year on year growth and can you also call out the number of doses of Shingrix sorry, Shingrix that we have been able to sell in Q1 FY27?
Speaker #2: Sure. Mr. Manchanda, thank you very much. Yeah, I think three years ago we said one of our principal strategies was to create new arrowheads for our growth.
Speaker #2: And that was in the form of launch of innovative assets like Shingrix. So with every passing quarter, we've only been gaining not in terms of not only in terms of our confidence, but I think this whole setup of an adult vaccination ecosystem so be it the practitioners, clinics, be it hospitals, you will find clearly that unmet need of adults asking, seeking opinion, and therefore getting vaccinated only improving with every passing month.
Speaker #2: Shingrix had a very good quarter. It grew by 65% for the quarter. In isolation, we are selling upwards of 45, 50,000 doses now on a quarterly basis.
Speaker #2: And that goes back to what we had said a couple of years back. Given India's demographic, given the large number of 50 plus adults and underlying with underlying comorbidities, especially cardiovascular comorbidities, including areas like diabetes mellitus, I think we see an incredible future in the coming months only to build on this trend.
Speaker #2: So that's the first part around Shingrix. We certainly see the forthcoming quarters adding to that. Second question was around Nukala and Trelegy Ellipta, some of these innovative assets.
Speaker #2: So month after month, again, we've been doing extremely well. So just to give you a frame of reference, we were touching about 50, 60 new patients every month exactly the same quarter last year.
Speaker #2: This year, for Q1, that number has doubled. So we touched almost 100, 120 patients every single month. So you can imagine the impact that we are making with an innovative treatment like a monoclonal antibody and mepholizumab for patients who suffer from severe eosinophilic asthma.
Speaker #2: So that's the second one. And I think again, the next two quarters will be important for us to sustain that momentum. Trelegy Ellipta, in spite of the generic launches of the immiclinidium molecule, the Ellipta device per se continues to be an innovation.
Speaker #2: And I think that's where we are putting all our energy. We still continue to grow. Not only in terms of units, we still hold at 10, 12,000 units on a monthly basis.
Speaker #2: So we still have a significant market share in spite of the 10, 12 generics that have got launched. So all in all, I think that's where we are on the innovative assets that are already on the market.
Speaker #2: Where we are going to see the next wave of a clear upswing is the oncology business. So we have Jenperly and Jejula already launched.
Speaker #2: As I said, in the next eight weeks, latest, we should have our molecule, Belantamab, mefoditil, for the treatment of refractory relapse, multiple myeloma. Second line indication.
Speaker #2: So I think that's a big one for us. Followed by, we already got the marketing authorization for RxV, which will be the first adult vaccine for preventing respiratory synchyl virus.
Speaker #2: So clearly we have a new innovative assets lined up in the coming two to three months.
Speaker #3: Thank you. Vishal also has a follow-up question. Is Shingrix a 100 crore plus brand for GSK currently?
Speaker #2: Answer is yes. On a math basis, we've crossed that number.
Speaker #3: Thank you. The next question is from Yash Doshi of Unified Capital Private Limited. Is the investment in OPEX a one-off or will this run rate continue for the rest of the year as a percentage of turnover?
Speaker #4: So the simple answer
Speaker #2: is there is a concentration very conscious and deliberate concentration of investment in this quarter. So the ratios are investment ratios are higher this quarter, but we expect them to moderate and go back to our historical trends in the following quarters.
Speaker #2: So just as a just to elaborate, we did a lot of focused activity. We had some targeted HCP so nearly 3,800 HCP events, international speaker meets, all deliberately concentrated in this quarter.
Speaker #2: Which is just before our biggest quarter of the year, which is the September quarter. Which is why the there's a bit of a spike in investment.
Speaker #2: Just to reiterate, this is all good investment which will which is more a phasing than deliberate front-ending of investment for this year.
Speaker #3: Thank you. The next question is from Yash Doshi again of Unified Capital Private Limited. What is the status on commercialization of Belantamab and bepiroversin?
Speaker #3: Whether it will be commercialized in FY27, 28? What is the status on commercialization of other trial products? And the second question is what is the current medical representative MR productivity and given the company's field force of around 2,000 MRs, which therapy areas does management intend to strengthen through incremental hiring?
Speaker #2: Sorry, Darwin, I didn't understand the last part of the question, but I think I'll start answering the question. So first of all, Mr. Yash Doshi, thank you very much for asking this.
Speaker #2: I think I answered part of your first question on Belantamab. So we've got the marketing authorization. We've got the approval from the serious CEO.
Speaker #2: So the CGI's office has approved the launch of Belantamab. And I think the most significant news is that our approval is for early lines, which is second line, refractory relapse cases.
Speaker #2: As I said, when you look at the incidence, which is the number of new cases that come into the multiple myeloma segment, almost 19,000 new patients come into multiple myeloma.
Speaker #2: And a rough cut of that, if you see the number of patients for second line, roughly anywhere between 7 to 8,000. So obviously, it's a massive opportunity for us.
Speaker #2: We already have our team in place. Undergoing training, undergoing everything that's required to really launch this product and make it the best-in-class launch. So I think, as I said, we clearly see blend rep as an arrowhead of our oncology strategy.
Speaker #2: And that's something that will happen definitely in the next two months, two to three months latest. So yes, the answer is it will happen in this financial year.
Speaker #2: Most probably in Q2, if not Q2, Q3. Our plans are on Hipsago, which is bepiroversin. The first potential functional cure for hepatitis B, chronic hepatitis B infection, is also underway.
Speaker #2: So as you may be aware, we are launching this asset in some markets globally. Fortunately, India was a part of the global clinical trial called B-Well.
Speaker #2: B-W-E-L-L. And the results were presented at the European Association of the Society of Livers, the ESEL. And the first readout clearly spelled out the kind of impact that this molecule can potentially make.
Speaker #2: So yes, we are on that roadmap. We are on that pathway to see how and when we can launch. If all goes well, we should have this product launched in India in the next three quarters latest.
Speaker #2: So that's on both the assets vendor rep and Bepi. Third question you asked was around the productivity. So I think if you look at the blended obviously, when you have a small team like oncology already doing 10 crores a month, it's a completely different productivity.
Speaker #2: But I think if you given the nature of that treatment, given the cost of treatment, but when you look at the blended average between GenMed, speed vaccines, or established vaccines, Shingrix and roughly we have an average productivity in the range of 15 to 16 lakhs per rep. So I think that's where we are currently.
Speaker #2: Productivity has only improved 5 to 6% this quarter as well. So I think that's the question on productivity. I didn't hear the last part of your question, Darwin.
Speaker #2: I couldn't hear what he asked.
Speaker #3: Yes, I will repeat that to you, sir. Which therapy areas does management intend to strengthen through incremental hiring?
Speaker #2: So I think, as I said, we are getting into so I think we have as I said, during my when I was going through some of those data points, we continue to be a broadly diversified healthcare company.
Speaker #2: And I think the advantage of really having a strong foundation in general medicines and established vaccines is really a place of strength for us.
Speaker #2: We do believe that the 2,000 people that we have on the ground in GenMeds as well as the 200 people that we have in established vaccines are the right numbers.
Speaker #2: So as and when there is the need, we will definitely look at improving that. The new headcount, the recruitment will happen largely in areas where we have little or no presence.
Speaker #2: We did that with medical oncology. For solid tumors, last year, we just done that with hematology. A few weeks ago, and I think moving forward, areas like liver disease, we'll certainly be important for us to keep investing so I think that's the way I see us evolving.
Speaker #3: Thank you. Our next question is from Pranav Chavla with JM Asset Management Company. Sir, can you help us understand, does GSK stand to benefit for India, EU, FDA, do you plan to manufacture in India in the future?
Speaker #2: Mr. Chavla, just to commit, we already have our manufacturing set up in Nashik. So if you look at the roughly 4,000 crores that we delivered last year in the last financial year, clearly bulk of our general medicines business is locally manufactured.
Speaker #2: Both in our own factory in Nashik, in MIDC Nashik, as well as 20 contract manufacturers who manufacture for us for the rest of the portfolio.
Speaker #2: So everything in GenMeds is manufactured locally. I think the EU FDA or even the UK doesn't have an immediate bearing for us. I think because you always had a local for local model I think as an appropriate measure as and when the future is there opportunities for us to see opportunities.
Speaker #2: The local global supply chain will keep looking at opportunities. But as of now, I don't see us locally manufacturing anything beyond what we already have in our portfolio.
Speaker #3: Thank you. The next question is from Rajat Srivastava with Tata Asset Management. We have guided for 8,000 crore of top line in four to five years.
Speaker #3: That means we should be growing at least 13 to 14% CAGR, do you think this will be achieved from the current portfolio or is it dependent on more innovative products coming to India from the parent?
Speaker #2: Thanks a lot, Mr. Rajat Srivastava, for that question. If you recall seeing the slide that was presented by Rananjit with the transformation graph that we had in terms of how for us, I think the fact that we play at both ends of the spectrum, we have a large established business of general medicines and vaccines.
Speaker #2: That will still continue to be relevant. That will still be continuing to be creating value for us. And in that part of the business, we'll still need to continue to grow anywhere between 8 to 10%.
Speaker #2: I think the as I said in the beginning, the arrowhead of this 13% growth, as you rightly picked up, would be the new launches.
Speaker #2: Many of the assets that we are launching operate in high growth, high value segments. As you may be aware, for Q1 alone, the Indian pharma industry had oncology as the fastest growing segment, growing by 27% when you look at the industry average of 12 and 13%.
Speaker #2: That's where the bulk of the growth came from for Q1 at least. And that's exactly how we will unlock. So the idea is clearly bolt on this strong foundation that we have of established medicines and vaccines, bolt on all the growth platforms, and really make three or four of these assets the arrowheads of our growth strategy.
Speaker #2: So that's how the 2X vision still remains intact and undiluted.
Speaker #3: Thank you. Our next question is from Vamsi Krishnahota of Ask Investment Managers. The first of two is basis your assessment, can you please provide details around incidents or number of patients annually being diagnosed with the indications to be treated by Gymperly?
Speaker #3: Zejula, Omjara and Aravik C. Specifically for the line of treatment, they are indicated to treat? Additionally, any indication of launch timelines of the assets which haven't been discussed yet?
Speaker #3: And his second question is, how many onco or respi or vaccine MRs do we have? How long do you anticipate for these MRs productivity to ramp up and reach co-level?
Speaker #2: So many questions but I'll try to go one by one. Thank you very much, Mr. Vamsi Krishna, for asking those questions. I think first and foremost, as I said, the indications that we currently have for Jejula is maintenance in ovarian, first line maintenance in ovarian.
Speaker #2: The indication approval that we have for Gymperly is first line endometrial cancer. We are pursuing the rectal cancer indication, but as of now, this is off-limits because we still don't have the approvals.
Speaker #2: The trials are ongoing. So for Jejula and Gymperly, right now, it is these two indications, namely ovarian maintenance, first line, as well as endometrial first line.
Speaker #2: When you look at the incidence of endometrial cancer, specifically, it's again in the range of 40,000 new patients, 40,000 patients undergoing treatment at any point of time.
Speaker #2: And anywhere between 70 to 19,000 new patients coming into the basket in terms of diagnosis, getting diagnosed for endometrial cancer. So that's the market available for us.
Speaker #2: I think what's important is when you distinguish in endometrial cancer between proficient MMR and deficient MMR, I think that's where the pivot lies for us.
Speaker #2: And I think the next couple of quarters, you will see clearly GSK building from strength to strength in endometrial cancer. RXC is an adult vaccine to prevent respiratory synthial virus.
Speaker #2: Like the shingles vaccine, which is indicated for anyone who is more than 50 years, with comorbidities, if you look at the sheer universe available to us in India, if you look at Surrogate markers, there are more than 10 to 12 million adults or 50 plus who have the relevant disposable income who can potentially be benefits from adult vaccination.
Speaker #2: So that's the kind of market that's available for adult vaccine. Again, it's a new category creation. So given the fact that this is also a respiratory illness, we have we'll have to build the category.
Speaker #2: We'll have to work extra hard to really gain some amount of fundamental understanding around what RSV is. I wouldn't hazard a guess and say that all 12 million suddenly queue up to take the RXV vaccine.
Speaker #2: But the opportunity is massive. So that's how I would see the RXV. I think those are the three four products that you mentioned. But again, as I said, each of these growth platforms, we'll follow a different curve.
Speaker #2: You asked a question around the number of people that we already recruited. So we have roughly about 40 people already up and running in our oncology business, 40, 45 people to be precise.
Speaker #2: Both medical oncology and hematology. And in a matter of less than 11 months, the team is right up there in terms of productivity. So I think in oncology, it's never about the money.
Speaker #2: It's never about the value. It's about how many patients you are impacting because as I said in the beginning, we touch the lives of 263 patients for Q1.
Speaker #2: So it's not just these patients. It's this families who get impacted, the entire caregiver, ecosystem that gets sucked in to treat difficult cases like endometrial cancer, ovarian cancer.
Speaker #2: So I think that's the ambition for us. How can we have more and more patients who can benefit in terms of the immunotherapy that we have, which is Dostalimab, which offers both progression-free survival as well as overall survival benefits as the only immunotherapy approved for first line endometrial cancer.
Speaker #2: That's the way I would see the future evolving.
Speaker #3: Thank you. Our next question comes from the line of Vishal Manchanda. Vishal, please accept the prompt on your screen and mute your audio and video and proceed with your question.
Speaker #4: Yeah, hi. Good evening and thanks for the follow-up. On Bepiroversin, I wanted to get your views on how patients who so there are patients who would get cured and there are patients who might not get cured because it doesn't offer a 100% cure.
Speaker #4: So for those who don't get cured, would they need to kind of take the therapy lifelong?
Speaker #2: So it's a great question, Mr. Manchanda. And as I said, if you just go and take a look at the readout that happened at the European Association for the Study of Liver, which is called the EASL Congress, this the Bepiroversin was really touted as one of the big breakthroughs because the concept of functional cure is almost non-existent in chronic hepatitis B.
Speaker #2: Now when you look at a country like ours, apart from some other countries in Asia, the burden of disease is the highest here. I mean, we have more than 40 million patients who have chronic hepatitis B.
Speaker #2: Now again, as we speak, we are still putting together the roadmap and the patient funnels in terms of clearly articulating at which point is the maximum benefit that the patient will get.
Speaker #2: So I think I would give you more details in the coming months because we are currently doing some fundamental work at our end so that we have the best-in-class launch, not just from a commercial success, but really working closely with diverse stakeholders, including government agencies, to see how we can unlock significant value in this area.
Speaker #2: So all this was this space and we'll definitely share more in the subsequent quarter. It'll still be about three to four quarters away at least for us in terms of launch.
Speaker #2: So I think as we share the results on Q2, I will definitely answer this question in more detail.
Speaker #4: Is it right to assume it would become a chronic therapy for those who don't get cured and for those who get cured, it might be an acute therapy?
Speaker #2: Fundamentally, yes. But that's what we want to test that hypothesis in a country like ours.
Speaker #4: Okay. And then like commercials, would be challenging because for those who get cured, the clinical benefit is higher, but they really would pay only for the short term, while those who don't get cured, the clinical benefit is lowered, but they would pay for life-long for the therapy.
Speaker #2: Absolutely. So that's why I said please hold this question for sure. I will answer it in more detail in Q2.
Speaker #4: Got it. And I'm just if you would have numbers as to how many hepatitis B would be currently treated with a drug in India, like would you have a number as to how many get treated?
Speaker #2: So that's why I said the burden of disease is 40 million. Now again, when you split that between adults, children, so there you can take a lot of you can splice and dice that data in many ways.
Speaker #2: This area is still nascent in terms of because there's never been any functional cure to begin with. So that's why I'm not wanting not to answer you, but it's just that I want to be absolutely sure that we've done our bit.
Speaker #2: Before I come back and answer the specifics to you in the next quarter.
Speaker #4: Got it, sir. And just on the pneumococcal vaccine, the 24-valent pneumococcal vaccine, will that be an FI29 launch?
Speaker #2: So if you saw the announcement that we made in terms of the pneumococcal vaccine I mean, the vaccine portfolio, we talked about having a flu MRNA in the investor meeting that happened globally.
Speaker #2: Right now, I don't see that as one of the key priorities for us, at least in the Indian market.
Speaker #4: You mean the pneumococcal vaccine?
Speaker #2: Yeah, we don't have a key. So we're not a part of the global trials as well. So as of now, I think the focus is clear on the ones that I mentioned.
Speaker #4: Okay. But I could see a trial for the pneumococcal vaccine going on in India at 24-valent.
Speaker #2: I don't know which company. Maybe you need to double-check.
Speaker #4: GSK only.
Speaker #5: Hello.
Speaker #2: Definitely. Sorry, are you still waiting for my answer or?
Speaker #4: No, I just thought I said I saw a trial going on in India for the pneumococcal vaccine, 24-valent vaccine going on in India.
Speaker #2: For me, for us right now, the key priorities remain clearly around those two or three antigens that we spelled out. I think we've just we've just talked about even the mRNA platform for flu.
Speaker #2: So I think those are some of the bigger opportunities for us that we would go after.
Speaker #4: Got it, sir. Got it. Thank you very much. Thank you.
Speaker #3: Thank you. Our next question is a text question from Gokul Maheshwari with Auriga Capital Advisors LLP. Can you help break up the growth in pricing and volume for Q1?
Speaker #3: Post West Asia war, are we facing any pressure on RMs? How do you plan to offset this pressure if any on our margins?
Speaker #2: You want to take the second question?
Speaker #3: Yes. Yeah. No, go ahead.
Speaker #2: So on the first question, Mr. Gokul Maheshwari, clearly you asked two elements to the question. So the second one was I'll take the second one first and I'll come to the first one.
Speaker #2: So in terms of you heard from Ronajit that some of the we've seen some of the cost hardening but I think given that we have a well-embedded supply chains globally, we don't see any of that translating at least in the immediate here and now.
Speaker #2: So I think whether it is the raw material packaging material, I think there's been enough work done so we don't see any of the external externalities impacting us in the immediate here and now.
Speaker #2: The first question was on can you repeat the first question?
Speaker #3: The first question is, can you help break up the growth in pricing and volume for Q1?
Speaker #2: Thanks. Thanks a lot. I just lost track. So yeah, our volume growth was about three, three and a half percent for the quarter and that's a blended across the entire business.
Speaker #2: We did have a so we baked in all the price hikes where possible. As you may be aware, our GenMeds portfolio almost 44, 45 percent of our GenMeds portfolio is under price control.
Speaker #2: So obviously, whatever is possible there. But otherwise, it's a good blend. For the first time, we also have new introductions. So you just heard me and Ron talk about 7 percent of our contribution now coming from the innovation portfolio.
Speaker #2: And to give you a sense, oncology didn't even exist there a year ago. Shingrix has grown by 65 percent. So that should tell you it's been a good blend of both price, volume, and and so it's value, volume, and new introductions for us.
Speaker #2: All three levers have kicked in well. Three, three, three and a half percent on volumes about 6 percent on price. The balance is all new introductions.
Speaker #3: Thank you. The next question is a text question from Yash Doshi of Unify Capital Private Limited. Yash has three questions. Shall I give you all three questions, sir?
Speaker #2: Sure.
Speaker #3: Could management provide an update on scale-up of GemPriority and Jejula? Qualitatively, how has the response from oncologists been since launch? And approximately, how many patients have been initiated on these therapies to date?
Speaker #3: The second question is, why has there been a sudden rise in OPEX by 36 percent year on year? What is the nature of investment in new products and existing brands?
Speaker #3: And the third question is, considering newer drugs are expected to achieve higher growth rate with our target of increasing mix of innovative portfolio, how should we look at EBITDA margins?
Speaker #3: Are they sustainable considering that these drugs are imported at comparative lower margin contribution? Vis-à-vis legacy brands produced locally?
Speaker #2: All great questions, sir. So I think I'll go sequentially. The first question was on Jejula GenPriority. So every month, we have success stories in terms of patients being in complete remission.
Speaker #2: So now we have examples where there are patients who are on 12 and 13 cycles of GenPriority. So patients who are in stage four endometrial cancer and who have been prescribed they have several examples where again, I'm quoting from the examples that we've seen from healthcare practitioners where patients are not only in complete remission, but they that's eventually the whole goal of having minimal residual disease, which is MRD zero, and that's the end goal for us.
Speaker #2: I think again, plays out with the fact that DostarliMab is the only approved immunotherapy which targets both oral survival progression-free survival in first-line endometrial cancer.
Speaker #2: So I think that's where GenPriority is really playing out. As I said, currently, we have the approval only in endometrial cancer for GenPriority. We have concurrent trials going on in several other indications like rectal cancer.
Speaker #2: And I think that's all for the down the road. I think in the next two or financial year or the first quarter of next year, we should hear more on that.
Speaker #2: On Jejula, in a very fragmented market where you have PAP inhibitors, Jejula is already among the top five PAP inhibitors in terms of the impact that it's had.
Speaker #2: So if you add up both the brands, we are touching almost 600, 700 patients for the first six months of this calendar year, almost 250, 300 patients on a quarterly basis.
Speaker #2: So I think that gives us the conviction that we are on the right path. I think the confidence of healthcare practitioners the confidence of patients and the caregivers and families in terms of reaching the end goals that the physicians and the patients both have in mind.
Speaker #2: So I think that's where we are. Your question, second question was around the 36 percent hike in the OPEX and you heard Ronajit talking about it that there was a clear intentional strategy of front-loading activities.
Speaker #2: So we've had a lot of incredible differentiated activities, including getting some top-notch medical oncologists coming to the country doing speaker programs. So I think it's all about evidence generation, it's all about dissemination of science and knowledge.
Speaker #2: So that's where we've invested. We do see a measured next few quarters. It won't be this kind of a spike as we see it in the next few quarters.
Speaker #2: The last question you asked was about new launches and therefore, as you would expect, many of these are completely innovative, differentiated assets. So I think that's where the balance between our established portfolio and the new assets in terms of driving both the growth and the bottom line will play out.
Speaker #2: And eventually, our focus is not only on EBITDA. I think EBITDA is an outcome. Our focus is to deliver that top-line growth. I think that's the single-minded focus that we have.
Speaker #2: The double-digit growth that I've talked about for the last few years is the single-minded objective we have. And in doing so, obviously, we'll remain focused on hopefully sustaining these margins.
Speaker #2: So that's how I would put it. Please go ahead.
Speaker #1: Yeah, yeah. Just to add on and just to add some color. And I think we talked about the OPEX growth being a bit of a blip.
Speaker #1: But two additional comments which might help. One is that while the OPEX investment and all of this is direct promotional and marketing, direct marketing investment was deliberate, we are also managing our P&L responsibly.
Speaker #1: So you will see that despite this, EBITDA growth was faster than sales growth. So EBITDA grew 17 percent versus sales growth of 15 percent.
Speaker #1: EBITDA margins expanded. The other comment, which is just to put it in context for your modeling, is that we expect our SGN ratios to normalize to historical as you move through the year and EBITDA margins to be roughly what we were at last year.
Speaker #1: So in 34 percent kind of range. So both these taken into account should kind of help us land to a responsible P&L. As Bhushan said, our primary objective now is to drive growth, maintaining our current levels of profitability.
Speaker #1: And we've got a number of levers at play to help us to do that.
Speaker #3: Thank you. The next question is from Vishal Manchanda. Vishal, please accept the prompt on your screen. To unmute your audio and video and proceed with your question.
Speaker #4: Thanks for the follow-up. On Newkala, can you share how many patients you would have active on the therapy?
Speaker #2: So as you would imagine, patients who suffer from severe eosinophilic asthma are the ones where we have the indication for Newkala. As I said in the earlier part, we are almost tripling our number of patients from the last year.
Speaker #2: So as we speak, we have at least 600 patients at any given point of time, who are on active treatment. So I think that's the base that we have created for Newkala.
Speaker #4: Okay. And this is so the base is much larger than the previous year base you would have on active therapy.
Speaker #2: Significant. Significantly. I mean, we are almost doubling the business for Newkala. That's the way I would see it.
Speaker #4: Okay. Okay. Thank you. Thank you.
Speaker #2: Thank you, Mr. Manchanda.
Speaker #3: Thank you. Our next question is from Yash Doshi of Unified Capital Private Limited. What is sustainable growth rate on top-line considering base was small for this quarter?
Speaker #3: Should we expect low double digits or aspire to achieve low to mid-teens growth considering our target of 8,000 crores in the next four to five years?
Speaker #2: So Mr. Yash, as I always say, we don't I don't generally give forward-looking guidance. But having said that, it's our intent. And our objective not only to create value for our shareholders, but to grow this business and take it to its next level.
Speaker #2: As a company that's already completing 102 years in India, our endeavor is to ensure that we are able to unlock value with all these innovative assets and make them the arrowheads of our growth strategy.
Speaker #2: So I think that's the primary objective for us. How do you sustain this double-digit momentum in the coming quarters will be the only overriding objective.
Speaker #3: Thank you. We have no further questions, ladies and gentlemen. On behalf of GlaxoSmithKline Pharmaceuticals Limited, we conclude this conference. Thank you for joining us.
Speaker #3: And you may now disconnect.
Speaker #2: Thank you very much to everyone. Thank you for joining us.
Speaker #1: Thank you.
