Q1 2027 Lupin Ltd Earnings Call
Speaker #1: 27 earnings conference call. Thank you for your participation in the call today. Please note that all participants' line will be in listen-only mode. And there will be an opportunity for you to ask questions after the opening remarks.
Speaker #1: Please also note that this conference is being recorded. I now hand over the conference to the management. Thank you, and over to you, ma'am.
Speaker #2: Good afternoon, friends. I'm very pleased to welcome you to our Q1 fiscal year 27 earnings call. I have with me our MD, Nilesh, and our CFO, Ramesh, and a head of investor relations, Ravi.
Speaker #2: We look forward to sharing with you our highlights for the quarter, as well as the outlook for fiscal year 27. We are delighted to announce a record quarter, with total revenues from operations and EBITDA exceeding $8,000 crores and $2,400 crores, respectively, for the first time in our history.
Speaker #2: This quarter also marks a record 16th consecutive quarter of year-over-year growth for the company. While the U.S. has obviously had an exceptional contribution to this performance, I would like to highlight that the ex-U.S.
Speaker #2: organic revenue growth for the company has been a strong 20% plus year over year. And a strong double-digit growth in all AKI markets, including India, other developed markets, and other emerging markets.
Speaker #2: This geographically diversified business model combines with our unwavering focus on operational excellence, creates a sustainable foundation for future growth, even as we navigate the increased competition in some of our key generic products in the U.S.
Speaker #2: this year. Turning to individual business segments, our U.S. business sustained its positive momentum and delivered another quarter of robust sales performance. While we benefited from the higher volumes in base portfolio, and growth in products like toolbaptin, this was offset by increased competition in products like Mira background.
Speaker #2: For the full year, we expect the U.S. business to be in the $1.1 to $1.2 billion range, aided by growth in base business, our injectable launches, and contribution from Peckfield Graston offsetting the additional competition in products like Mira background and toolbaptin during the year.
Speaker #2: Going ahead, we remain focused on doubling the share of our complex products in our U.S. business, led by respiratory and complex injectables and augmented by biosimilars.
Speaker #2: In the next 3 years, we expect to launch 50-plus products in the U.S., with 10 exclusive first-of-files, 5 biosimilars, as well as 2 to 3 505B2s.
Speaker #2: We are planning to file more than 15 products this year, including at least 7 in the respiratory segment. We believe that all these initiatives should help in the U.S.
Speaker #2: getting back to its growth trajectory from fiscal year 28 onwards. Coming to India, our India business has grown 13.9% year over year in the quarter, with the core prescription business growing 15.1%, representing a 1.1 times growth against IPM.
Speaker #2: Volume growth was strong at 6.1% during the quarter. The chronic segment accounts for around 67% of our portfolio, up from around 65% in fiscal year 26, and we have set ourselves a target to increase the share to 70% in the next 5 years.
Speaker #2: Most of our key therapy areas outperformed their respective market growth, with anti-diabetes segment and cardiac segment growing 1.8 times and 1.2 times their category growth.
Speaker #2: I would specifically like to mention our diabetes segment, which grew at 31.8% year over year, a second consecutive quarter of 20% plus growth, led by market leadership in human insulin and successful launch of semaglutide injection.
Speaker #2: This segment is poised for continued healthy growth, with the expected launch of vial and oral dosage forms of semaglutide in the second half of this fiscal year.
Speaker #2: We remain confident that our India formulations business will continue to outperform IPM by 1.2 to 1.3 times, supported by our strong India prescription sales force of nearly 11,300 people and pipeline of more than 80 new product launches, over the coming years.
Speaker #2: We have set ourselves a target of novel proprietary products contributing one-third of our India revenues in the 10-year time frame. This innovative portfolio for India will come from in-house development, as well as in-licensed products leveraging our strong partnership track record, brand building, and development regulatory and clinical capabilities.
Speaker #2: Our other developed markets, Europe, Canada, and Australia, accounted for 14% of our revenues in this quarter, up from 11% in fiscal year 26. Sales grew 48% year over year in the quarter.
Speaker #2: Our European business continued its strong momentum with 83% growth year over year. We believe that we are under-indexed in Europe, and have set a clear pathway to grow this business with our complex generics biosimilars portfolio, as well as specialty acquisitions such as VizuPharma.
Speaker #2: Emerging markets delivered an impressive 52% year-over-year growth, led by Brazil, South Africa, and Philippines. Brazil continued the strong momentum of the last 4 quarters, growing 117% year over year, in local currency during Q1.
Speaker #2: Driven by successful commercialization of dapagliflozin and launch of empagliflozin. As mentioned earlier, we are starting to establish a presence in the diabetes metabolic space in the emerging markets, with DAPA serving as a strong start and the launch of Empine Brazil and South Africa, as well as semaglutide in South Africa later this year.
Speaker #2: Turning to R&D, our spend was $7.4% of sales, this quarter, with continued focus on complex and specialty platforms. We have over 50 active products in the pipeline, with near-term emphasis on respiratory complex injectables and biosimilars.
Speaker #2: We've also evolved a strong 505B2 pipeline in the last couple of years, and we'll start seeing product launches this fiscal year and ramping up in the next 2 years.
Speaker #2: We are also strengthening our India innovation portfolio through both in-house development and in-licensing of late-stage assets, as I mentioned earlier. Switching to compliance, we received EIRs for Ankleshwar and Somerset with VAI status from USFDA for both sites during the quarter.
Speaker #2: With regards to Peethampur Unit 2 facility, we have submitted our responses and remain on track with our remediation efforts. We are fully committed to maintaining the highest standards of quality and compliance across all our sites globally.
Speaker #2: In conclusion, while we have started the year on a strong note, as indicated earlier, we anticipate some moderation in performance during the remainder of the year, especially in the U.S.
Speaker #2: from increased competitive intensity on our 2 major products, so we are closing closely monitoring the potential headwinds from an uncertain geopolitical environment as well.
Speaker #2: We would like to reiterate our earlier guidance of high single-digit revenue growth for the organization, with EBITDA margins of around 25% during the year.
Speaker #2: Before I hand it over to Ramesh, I would like to say that we are optimistic on our future growth trajectory. We are on the path to strengthen our diversified business model, while we continue to evolve our business into higher-barrier generics, branded, as well as innovative products.
Speaker #2: Ramesh, over to you.
Speaker #3: Thank you, Vinita. And friends, I welcome you all to our Q1 FY 27 earnings call. I'm happy to report another record quarter of earnings, with total revenue from operations growing 32% year on year, to Rs.
Speaker #3: 8,277 crores in EBITDA excluding forex and other income, growing at strong 15% year on year, to Rs. 2,464 crores. This marks the 16th consecutive quarter of growth for the company, what is heartening is that the growth has been diversified and robust across our major geographies, be it the U.S., which grew by 43% year on year, India prescriptions, which grew 15.1% year on year, other developed markets, which grew 48%, emerging markets, which grew 52% year on year, and our GAB business, which grew 40% year on year during the quarter.
Speaker #3: As Vinita mentioned, our organic growth ex-U.S. was a strong 20% year on year, during the quarter, bearing testimony to the resilience of our business model.
Speaker #3: During the quarter, the U.S. business recorded sales of USD 366 million, up 30% higher than year on year in constant currency terms. This growth has been driven by higher volumes in base business, offset by additional competition in key products like Medabigron.
Speaker #3: Whilst we continue to benefit from our differentiated strategy on focusing on complex products, as indicated in our earlier interactions, the overall sales in the U.S.
Speaker #3: were impacted by competition in key products like Medabigron and Tolvapten this year. However, we anticipate the business to revert to its growth trajectory from FY 28, largely led by a rich pipeline of products, including exclusive first-to-files, biosimilars, and 505B2 products.
Speaker #3: In addition, we have an attractive pipeline of more than 60 products in injectables, and our respiratory products currently under development, which will augment our complex portfolio going ahead.
Speaker #3: India region: during the quarter, the India business recorded sales of 2,380 crores, growing 13.9% year on year. I would like to highlight that the co-prescription business grew 15.1% year on year, as against IPM growth of 13.5%, translating to 1.1x times IPM growth.
Speaker #3: This is offset by lower tender sales in our GAB business in India. Key segments like diabetes and cardiology handsomely outperformed their category growth at 1.8x and 1.2x times, respectively.
Speaker #3: This is offset by lower growth in respiratory segment, which grew 6.9%, as against category growth of 11.3%. Volume growth has been a healthy 6.1% during the year, and the chronic share in the mix has increased to 67 to around 67% from around 65% in FY 26.
Speaker #3: The share of in-licensed products in this quarter is around 6%, similar to the FY 26 levels. We have launched around 7 products in Q1 FY 27 and plan to launch about 20 products in FY 27 besides 15 products which yet launched in FY 26.
Speaker #3: We remain confident that our India formulations business will continue to outperform IPM by 1.2 to 1.3 times, supported by our strong sales force of more than 11,000 people and pipeline of more than 80 new product launches over the coming years.
Speaker #3: Including innovation in-house and in-licensed products. Other developed markets: for the quarter, our other developed markets, Europe, Canada, and Australia, recorded sales of Rs. 1,149 crores, growing 48% year on year, and accounting for 14% of our total sales, an increase of from 11% in FY 26.
Speaker #3: I would like to highlight that we have begun consolidating Visupharma in our financials from this quarter. As Vinita mentioned, we are focusing on various strategic initiatives to grow our business in this region, especially in Europe, going ahead.
Speaker #3: Emerging markets: for the quarter, emerging markets recorded sales of 990 crores, delivering an impressive 52% year-on-year growth, led by markets in Brazil, South Africa, and Philippines.
Speaker #3: Brazil, in particular, maintains strong momentum post the turnaround of the last few quarters, growing 117% year on year in local currency, driven by successful commercialization of dapagiflozin.
Speaker #3: Going on to the payroll: the other operating income, at Rs. 60 crores, as against Rs. 105 crores in Q1 FY 26, it has decreased 43% year on year, this is decreased primarily on account of lower export benefits from the PLI schemes during the year.
Speaker #3: Gross margins: coming to the profitability of gross margins, the upward trajectory continues, but this year this quarter was 74.6%, up from 71.3% in Q1 FY 26 last year.
Speaker #3: This 330 basis points year-on-year improvement is driven by multiple factors, which includes better product mix, higher profitability in India, increased volumes, and cost improvements, and efficiencies, which have undertaken over the last several quarters.
Speaker #3: Employee benefit expenses: for the quarter, employee benefit expenses stood at Rs. 1,383 crores, increasing 28% year on year, from INR 1,083 crores in Q1 FY 26, translating to 16.8% of sales, versus 17.6% last year.
Speaker #3: This change is largely attributable to higher costs due to regular annual increments and business growth during the period. Manufacturing other expenses: Q1 FY 27 manufacturing other expenses came in at Rs.
Speaker #3: 2,341 crores, which translates to approximately 28.5% of sales, as compared to 28.7% of sales in Q1 last year. The expenses were higher, mainly due to higher volumes in normal course of the business, higher SG&A expenses on account of field force expansion, license fee payments, and a part of settlement agreements.
Speaker #3: R&D at Rs. 608 crores is 7.4% of sales in FY in Q1 FY 27, as compared to Rs. 498 crores in at 8.1% of sales in Q1 FY 26.
Speaker #3: For the full year, R&D is expected to be around 8%. EBITDA: EBITDA excluding forex and other income during the quarter was Rs. s. 2,464 crores, besides Rs.
Speaker #3: 1,641 crores in the same period last year, an increase of 50% year-on-year, with margins of 30%, besides 26.6% last year in the same period, an increase of 340 basis points over the last year.
Speaker #3: During the full year, as indicated by Vinita, we expect EBITDA margins to be around the 25% mark. Depreciation amortization at Rs. 453 crores, as compared to Rs.
Speaker #3: 299 crores in corresponding quarter last year. This increase is due to higher amortization of settlement agreements. The effective tax rate stood at 29.8% for the quarter, for the full year, however, we expect it to be in the region of 27 to 28%.
Speaker #3: In respect to balance sheet items, the operating working capital was Rs. 8,260 crores, as of 30 June 26, as compared to Rs. 7,132 crores, as of 31 March 26, which translates to 90 days of net working capital, as compared to 87 days recorded earlier.
Speaker #3: The net cash stood at Rs. 2,831 crores, as of 30 June, besides Rs. 4,636 crores, as of the 31 March quarter, largely due to closure of our Visupharma acquisition.
Speaker #3: Whilst we focus on increased cash generation for our business, we would like to highlight that we continue to explore strategic allocation of our capital to ensure the long-term mission of the company, including our specialty front.
Speaker #3: ROC for the company translates to 29.5%, besides 28.4%, as at end FY 26. On the ESG front, Lupin continues to advance steadily towards its 2030 Sustainability Goals, achieving approximately 41% reduction in greenhouse gas emissions, and 45% water recycling as our as of FY 26.
Speaker #3: Our efforts have been recognized externally through inclusion in the Time World's most sustainable companies 2026 list for the first time. With this, we will open the floor for discussions.
Speaker #1: Thank you very much, sir. We will now begin the question and answer session. Request that all the participants who wish to ask questions to raise their hands on the participant tab on the screen.
Speaker #1: We will wait for 30 seconds for the queue to assemble. Thank you. Thank you for your patience. We will take the first question from Damyanthi Kerai.
Speaker #1: Damyanthi, are you there?
Speaker #2: Yes. Yeah, hi. Thank you for the opportunity. My first question is on your opening remarks where you mentioned that U.S. sales should be back on gross trajectory starting FY 28.
Speaker #2: So just want to understand, this growth will be on the base of U.S. 1.1 to 1.2 billion number, which you mentioned for 27, or how should we understand this part?
Speaker #4: That's right. Over the 15 to 27 base.
Speaker #2: Okay. So you'll go on a base of 1.2 billion in FY 28. Okay. That's clear. My second question is, if you can update us on some of the key launches or key products in injectables and respiratory space, which will be meaningful from your U.S.
Speaker #2: sales perspective.
Speaker #4: Yeah. So multiple products across I'd say biosimilars, injectables, as well as respiratory. On the, you know, I'll say biosimilars and injectables, there's a lot of disturbance on this line.
Speaker #3: Damyanthi, you might like to.
Speaker #4: Mute yourself?
Speaker #3: Mute yourself.
Speaker #4: Yeah, thank you. So as I was saying, there are multiple products in the biosimilars, injectables, and respiratory front. Over the next couple of years, I mean, fiscal year 27 itself, we have yet to launch Pixel Grafton that is going to be an H2 product for us.
Speaker #4: We'll be expected to contribute very nicely into the second half. Then we have a 505B2 to Dalba Manson injectable, that is going to be a good-sized product for us for ourselves as well.
Speaker #4: And nasal sprays, like fluticasone nasal spray, you know, as well as injectable Sugamadex, epinephrine, Raltegravir, where we exclusive first-of-file. You know, Erebul injection, which is all, you know, it's fiscal year 27.
Speaker #4: Then fiscal year 28, we have products like I think Fulyur Impact of Pixel Grafton, we have Diazepam nasal spray, we have epinephrine nasal spray, as well as Epixaban 505B2, I mean, that is starting to look like a material opportunity for us.
Speaker #4: We're still sizing it up, but looking fairly interesting for us. Then Insecurus injectable, Saxenda, we have Evacafter, exclusive first-of-file, Midazolam nasal spray, and they're just a few of the products.
Speaker #4: We have other nasal sprays, as well as injectables in the pipeline that we will expect to bring to market in fiscal year 28. And then I'd say that in fiscal year 29, we should have more biosimilars.
Speaker #4: As Libor said, you know, Pixel Grafton on body. Dulera is expected you know, hopefully we can get it in fiscal year 28, but if not, for certain in fiscal year 29 on the market.
Speaker #4: And depending on, you know, what transpires from a P4 standpoint, we would expect also Spiriva Respimat we made good progress on that front. We expect to file it in this fiscal year.
Speaker #4: We should, you know, subject to what happens with the brand, you know, the P4. We could potentially be in the market on the Respimat front as well in fiscal year 29.
Speaker #2: Elaborate answer on this. My last question is, when you look at the tiotropium market share, it has been hovering around mid-30s. So do you have room to improve it further?
Speaker #2: And if you can talk a bit about your progress in the channel, in the incremental channels for this product? Thank you.
Speaker #4: No, it's kind of settled at that 38% level, and, you know, there is a good balance between what the brand has in terms of share and what we have.
Speaker #4: And in terms of market share. So at this point, it should hover around that level.
Speaker #1: Hello, Damyanthi, can unmute yourself?
Speaker #2: Yeah, I'll get back in the queue. I'm done with my questions. Thank you.
Speaker #1: Thank you. Thank you for your question. We'll take the next question from Shyam Srinivasan.
Speaker #5: Hi, good evening. Thank you for taking my question.
Speaker #1: Shyam, are you there?
Speaker #5: Yeah, yeah. Can you hear me now?
Speaker #1: Yes, yes, we can.
Speaker #5: Yeah, yeah. Just trying to do math on your U.S. guidance, right? So we did 366 million this quarter, and we've talked about 1.1 to 1.2 billion for the full year.
Speaker #5: So that brings us, like, roughly 100 million lower per quarter in some of the quarters, right? So if I did I'm doing simple math.
Speaker #5: We're in 250 and 280 million, roughly, right? So you know, what is that big step down? Is it both the top two products that will likely see the step down, or is there an element of conservativism built into the kind of step down?
Speaker #5: So just want to get some qualitative sense of how we should why despite a very strong Q1, how are we looking at it?
Speaker #4: Yeah, so in Q1, you don't have any additional competition on Tolbaptin. And from Q2 onwards, you will start seeing the impact of Apotex and Teva.
Speaker #4: We also expect in September, we could potentially have one more entrant. So we expect to be you know, four players market. With Tolbaptin and we expect the market to grow as well for the molecule.
Speaker #4: Given that it is still 40% generic conversion, so far, but you know, given the additional competition, we expect pricing to come down. And obviously, also some share redistribution.
Speaker #4: So we expect you know, Tolbaptin to come down over the next couple of quarters. Mirabegron is already seen you know, pressure in the first quarter, and we expect that to be a full quarter impact from Q2 onwards.
Speaker #4: So you know, we expect you know, revenues to be anywhere between 250 to 280 million dollars a quarter over the next couple of quarters.
Speaker #5: Got it. Thank you. And when I look at your full-year margin guidance of what, about 25%, we did the gross margins of 75% for the current quarter, right?
Speaker #5: So what's a more normalized gross margin, please?
Speaker #1: So it is really going to be a function of, you know, how much of Tolbaptin sales and at what realization the kind of competition that you see out there.
Speaker #1: And more importantly, you know, the impact of, in fact, price increases that we have seen in the recent past, you know, post the year, you know, the cost increase that has because of, you know, the geopolitical tensions around.
Speaker #1: So the first quarter was not so hugely impacted because of the fact that we had inventories that we carried forward. But going forward, we will have to take that into account.
Speaker #1: So I think we are being a little more cautious when you speak about the fact that the EBITDA margins have been in the range of 24 to 25.
Speaker #1: And obviously, this would be a, you know, as a reduction of on the gross margins front as well.
Speaker #5: Got it. Thank you, Ramesh. All the best.
Speaker #1: Thanks, Shyam. We'll take the next question from Neha Manpuria.
Speaker #2: Yeah, thanks for taking my question. Vinita, in Tolbaptin, we have seen a quarter-on-quarter increase in market share. Would that be a fair assumption? And I think in one of your previous calls, you'd mentioned that despite additional competition coming through, we should be able to defend our market share in Tolbaptin Do you see that dynamic playing out, given you know, that we've been able to gain share over the last, you know, few quarters?
Speaker #4: Yes, we would expect the market share you know, the tail to be longer. Because of the fact that it's a specialty you know, pharmacy product as well as RM's program.
Speaker #4: But you know, we obviously will have to give some share as well to the additional entrants.
Speaker #2: Okay, understood. And in on Epixaban, how should we think about the opportunity? I know you mentioned, you know, you're still, you know, sizing it up.
Speaker #2: But how should we think about the 505 B2 launch and our ability to take market share you know, in case we launch it in '28?
Speaker #4: Yeah, so we are looking at the different channels. For the product, it's very large brand. Which makes it a very interesting opportunity. But given you know, the time we have prior to the other generics entering the market and fiscal year '29, we believe that a very targeted approach around a few channels is going to serve as well.
Speaker #4: So we are looking at ways and means of entering you know, a few of the larger channels where we can through our national accounts efforts as well as some incremental commercial efforts, be able to get strong access.
Speaker #2: Okay, understood. And do you think this should be as large as probably you know, Mira and Tolbaptin was for us? Could this be as large in your view?
Speaker #4: It could potentially get there.
Speaker #2: Okay. Okay. Last question on you know, biosimilars. You know, given let's take a you know, three-year time frame because you have a couple of launches coming in '29.
Speaker #2: How big can the biosimilars piece be for us you know, here as well as in Europe put together?
Speaker #4: Yeah, put together, it's a material opportunity for us. The US itself, you know, scores we have to deliver this year. But it's looking like a very interesting opportunity with Pixel Grafton Ranibizumab.
Speaker #4: We'll have to convert the market. I mean, there's really you know, the market has gone into the other products. So I think a little bit of a smaller opportunity compared to Pixel Grafton.
Speaker #4: But Ranibizumab looks like a big opportunity for us in Europe. In a few countries, direct. And also through our partnerships. With Sandoz as well as others.
Speaker #4: You know, now with Visio Pharma footprint that we have, across the ophthalmology you know, call point, we're going to leverage that as well for Ranibizumab.
Speaker #4: And then we have Aflibicept coming in fiscal year '29. And the Pixel Grafton OBI. And then fiscal year '30, of course, is a calendar '29, we'll have a turn of set.
Speaker #4: So I think you know, we are looking at biosimilars ramping up in the next three years for to a couple of hundred million dollar you know, scale business across these key markets.
Speaker #2: Thank you so much, Vinita. That's very helpful.
Speaker #1: Thank you. Neha, we'll take the next question from Surya Patra. Hello, Surya?
Speaker #5: Hello, I'm hearing.
Speaker #1: Yeah.
Speaker #5: Yeah, thanks for the opportunity, ma'am. See, my first question is on the respiratory portfolio. See, how big is the respiratory portfolio's contribution to the overall business for Lupin right now?
Speaker #5: And in terms of the US business, if you see, what would be its share currently, ma'am?
Speaker #4: So in the base business, I'm just going by memory here, it's over 20% right now. With really two main products, you know, Teotropium as well as Teotropium and yeah, Albuterol as well as Openex.
Speaker #4: So you know, a little bit more than 20% even. And as we look at you know, our pipeline, we have Dulera that is filed.
Speaker #4: We have multiple products that we are now making progress on. Like Respimat, we have made significant progress over the last quarter. And we should we are in a position to file this fiscal year.
Speaker #4: We also have been successful with Breo. So very pleased to get the Lipta franchise also started from a pipeline perspective. And we would expect to file the ANDA later this fiscal year.
Speaker #4: We have Green Propellants you know, the Luforbec new propellant filed in Europe in the last quarter, in fact. And multiple pipeline programs also making progress for Europe.
Speaker #4: So really pleased with the progress now that we're making on the respiratory pipeline, both with MDIs, DPIs, you know, our Respimat Ellipta as well as MDI products and Green Propellants.
Speaker #5: Sure. So in fact, from the Albuterol side, which the market share which has to some extent subsided from the level of 19, 20% to 16% currently in positive, we have already reached the peak potential of the Teotropium So here in the midterm till the time that the pipeline products are getting launched in the US, so whether it is fair to believe that the respiratory portfolio in the US is likely to remain flattish or kind of a moderating like that?
Speaker #4: Well, this is a hard to predict for certain, you know, but right now the Albuterol market has stabilized. It has you know, 15% share and the relative positions of competition have kind of stabilized based on the supply situations from the different competitors.
Speaker #4: You know, so and on Teotropium, we know how difficult it has been for us. So we you know, we haven't really heard of any imminent approvals and launches.
Speaker #4: So we would expect that you know, the baseline should be stable as Dulera nasal spray products in the next year. You know, and then the new products Respimat as well as others come to market.
Speaker #5: Sure, ma'am. My next question is on the Europe business, which has been doing great for us. And that is visible even in this quarter.
Speaker #5: But I'll just going through the kind of a higher rebate policy initiated by Germany. Wherein they are kind of doubling the rebate requirement. So given that, what would be your reading about the either profitability or the pricing pressure, what we can see in the European market?
Speaker #5: Or let's say, if it is Germany, then even if we restrict that policy to Germany, then what implication that overall Europe portfolio that can see because of this?
Speaker #4: Yeah, so it's very interesting the dynamics in all of the European countries that we're realizing. You know, and even in Germany, on the one side, you see the increase in rebate on a part of our portfolio.
Speaker #4: But in others, for example, in our biosimilars, you know, in particular for Ranibizumab and Aflibicept, we're finding that is not part of the AOK tenders.
Speaker #4: Anymore. So it becomes a nice branded opportunity. You know, overall, we're seeing all of the major European markets really struggling with the overall health care budgets, the overall drug spend budgets.
Speaker #4: And they are struggling to really bring more innovative products into the fold, you know, and not making enough products available for unmet needs for patients.
Speaker #4: So we're starting to see like in countries like France, we have recently noticed that they are really doubling down on biosimilars, just given how important the biologics LOE is over the next you know, right now, it's like 100 plus billion dollars worth of biosimilars that go up in over the next 5 to 10 years.
Speaker #4: So you know, more incentives for substitution of biosimilars that we have seen to be able to reduce some of the drug spend so that they can make room for innovative products.
Speaker #4: And I think if that model works for France, we will see very soon the other countries following a similar model to be able to afford innovation.
Speaker #4: While making you know, the generic side and the biosimilar side of the business more you know, substitutable to be able to get efficient access to medicines.
Speaker #4: So we actually are very optimistic, very hopeful that Europe is going to increasingly become more important geography for Lupin. For certain, just given our portfolio of respiratory products, biosimilars on overall as well as the ophthalmology biosimilars, as well as the specialty portfolio.
Speaker #4: We have tremendous headroom to be able to build in Europe.
Speaker #5: Sure, ma'am. Just last one question from my side regards the biosimilars. Two points specifically here. How important and or let's say, how sizable this two opportunity first two product opportunity in US for us?
Speaker #5: Because Pegfil or even the Ranibizumab, if you consider both are kind of a partner product and the prices for these product for biosimilar prices has already corrected to the tune of 85 to 90%.
Speaker #5: So considering that, how sizable this could be? That is the first point. And secondly, given the kind of a price erosion SARP that has happened already in the US market, how I mean, how is the European product prices there in biosimilars compared to that of the US?
Speaker #4: Yeah, so we're finding actually even with Pegfil Brastem, you know, as I mentioned earlier, also the last couple of quarters, we've been pleasantly surprised with the opportunity that we see.
Speaker #4: Right now, you know, and of course, we'll want to deliver that in the next this fiscal year to be able to gain that confidence operationally.
Speaker #4: But as we look at our you know, partners forecast and what we can do in the current fiscal year, it's a really good size opportunity for Lupin.
Speaker #4: And as I mentioned, you know, I will not size up each and every product, but if I look at the next three years, between US and Europe, with these three or three products or so, we have a couple of 100 million dollars worth of opportunity on the biosimilars front.
Speaker #5: And price difference in US and Europe?
Speaker #4: So in Europe, we have found you know, the pricing on our products is fairly stable. And like I mentioned, we also starting to see new developments like in Germany, these products are not part of tenders.
Speaker #4: So more of a branded opportunity on the ophthalmology front. In France, new measures to you know, that will likely enhance biosimilar adoption and ease market access for us.
Speaker #4: All of which that gives us this optimism on the biosimilars front.
Speaker #5: Okay, sure. Thank you, ma'am. See you all the best.
Speaker #4: Thank you.
Speaker #1: Thanks, Judea. We'll take the next question from Bino Pathiparampil.
Speaker #6: Hi, good morning and good evening. Vinita, just a follow-up question on a couple of products which you mentioned. You mentioned first of all, exclusivity in FY27.
Speaker #6: I didn't get the name, but is that is that a sole exclusivity?
Speaker #4: Oh, I'll take it away. Yes, I mentioned that.
Speaker #6: Sorry, which one?
Speaker #4: Yeah.
Speaker #6: Okay. Second, in FY28, which is the one you mentioned, a sole exclusivity?
Speaker #4: I think I mentioned diazepam, epinephrine, Effie. That is two nasal sprays. Givacaftor is another. And yeah, those would be the main ones. Suflave is another exclusive first of all.
Speaker #4: Next year.
Speaker #6: Got it. And last question on Spiriva Respimat. How is the market compared to the DPI?
Speaker #4: It's moved more towards Respimat.
Speaker #6: Okay, if you could give some rough size idea. Sure.
Speaker #4: I don't have the exact numbers of off the top of my head.
Speaker #6: Great, thank you. I'll jump back to you.
Speaker #4: Yeah.
Speaker #1: Thank you, Bino. We'll take the next question from Kunal Damesha.
Speaker #5: Hi, thank you for the opportunity. The first question is on the India business that you shared that we are planning to derive one third of the revenue from innovative products.
Speaker #5: So can you elaborate more on this strategy? What would be the kind of required investment here, both from balance sheet and P&L perspective? And the usual impression is such in licensing deals, are not very accurate to profitability.
Speaker #5: Right? So what are we going to do differently? And from therapy perspective, do we do we stick to our key therapies of cardiac anti-diabetic, or we look at a more high growth therapies like oncology?
Speaker #5: That would be the first question.
Speaker #6: Sure. So I think there's three avenues of proprietary products. One is an internal pipeline. So we're building those internally. Another is in licensing deals, as you talked.
Speaker #6: And the other the most important and what would be the biggest will be pure innovative NCs that we would bring to market. Products like Bufanglutide that we announced a little while ago, which is now in the clinical development path.
Speaker #6: And in the next couple of years, we should be able to bring to market. So we've we've allocated the capital for for this. It's actually you know, just purely India.
Speaker #6: It's not that expensive from overall licensing or a development perspective. Obviously, you need to have the entire suite of capabilities. So you do need to have the ability to assess a new chemical entity at an early stage, do the clinical development, and bring it to market.
Speaker #6: And in a market like India, you know, how do you build ability to do you know, over a period of time, 30, 40, 50 assets at a time?
Speaker #6: The goal of a billion dollars or one third of our business to come from innovative products is and is an aspiration for the next 10 years.
Speaker #6: But I think if you break it down, it basically means to be able to do 10, 15 products every year. And in the next you know, I think it's coming together quite well.
Speaker #6: So in the next three years, we should start bringing those products to to market and really build that pipeline. Obviously, key interest would be in our key therapy areas.
Speaker #6: So which are you know, products in respiratory, in cardiology, in diabetes. From an innovation perspective, obviously, you know, 50% of what you would see as assets would be in areas like oncology, where we're not strong.
Speaker #6: There, we would cherry-pick and we would pick assets that we feel can be really you know, first-in-class so that it can make a real difference in the market.
Speaker #6: You know, we've started the journey. I think we've started it with you know, putting strong capability together as well. And we'd love to keep updating you as the pipeline develops.
Speaker #5: So we are suggesting like 80 launches in India in the next three years, right? So how many of that you think you know, would be from from this bucket?
Speaker #6: No. So over a period of the next 10 years, we're looking at 60 to 70 launches of the innovative products. In the next three years, you know, very small fraction.
Speaker #6: I would say not even you know, three, four of these would be truly innovative products.
Speaker #5: Sure. And in terms of profitability, we know would you would it be similar to our India business whenever it scales up or how should we think in the longer run?
Speaker #6: I mean, certainly similar, if not better, actually. So we would expect that. I think you've already pointed to the point on you know, how much is the actual burn on the clinical trial pattern.
Speaker #6: But I think the entire model looks really good. And in the next few years, you'll start seeing positive returns coming from it.
Speaker #5: Sure. And the next question from for Vinita ma'am. Given that we have now, you know, established track record of selling both DPI, MDI products in US, how is it helping us in terms of you know, clearing or you know, like developing the next phase of respiratory products in terms of development cycles in your view?
Speaker #5: How is how the development cycles are shrinking and what are some of the learnings which would help you bring this next wave of products to the market, you know, efficiently?
Speaker #4: I'd say that you know, the different platforms, the complexities are different. So on the MDI front, it's going to be a significant year of filings you know, on the respiratory MDI products this year.
Speaker #4: I'd say on the ellipta platform, that was likely a more challenging platform. You know, we've been working on it for multiple years. And I'm very pleased to finally be able to get a positive PK.
Speaker #4: On the first product, now would want to get the next major is getting Trelegy right. Which our team is working upon. And they're going to apply the learnings they have from Breo onto that product.
Speaker #4: And then on the Spiriva front, on the Respimat Spiriva, that was more of a device challenge that we faced. That now that we have cleared it and we'll file the product this year, the the follow-on products become easier for us.
Speaker #4: So I'd say different level of complexity across the different platforms. But a lot of learnings over the last couple of years that the team will leverage to be able to expedite the filings as well as potential approvals that you know, given that these products are either CGT or you know, have no competition in the marketplace.
Speaker #4: The FDA is also looking to expedite these approvals. So I'm going to look forward to leveraging that. In addition to that, a number of these products are you know, some are out of India, some are out of our facility in Coral Springs.
Speaker #4: We'll also want to leverage the Coral Springs domestic manufacturing in the US. For expedited review of these products you know, that the FDA is the agent the administration is focused on to get more onshoring of products in the US.
Speaker #5: And just one you know, aspect of this. Let's say if you have an MDI line, for one product, can it the capacity becomes fungible for another MDI or it does not?
Speaker #5: It does. Okay. Okay. Great. And lastly, on the Apixaban 505 B2. So from here, what are the key monitorables for you? And and what's the what's the duration advantage that we will have vis-à-vis the generics?
Speaker #5: I think which are slated to enter early part of FY 29, I believe.
Speaker #4: Yeah. Just for the 29. So you know, we are as I mentioned, we are sizing it up. But like material brands. So you know, we'll be one first monitorable you know, thing that one can track is the approval.
Speaker #4: We have a goal date of September. We are hoping that we get approval in September. And then simultaneously, we're building up launch quantities. And we expect to start having material you know, commercial quantity start in January of 2007 calendar.
Speaker #4: And we would expect somewhere in the summer that we should launch. And hopefully get 10 to 12 months before others enter.
Speaker #5: Okay. And lastly, can you share which plant is it filed from?
Speaker #6: Kunal, can we request you to get back on the quick?
Speaker #5: Sure. Sure. Yes.
Speaker #4: I'll just quickly respond to that though. It's Somerset.
Speaker #6: Please, please.
Speaker #5: Yeah. Okay.
Speaker #4: That's being cleared recently.
Speaker #5: Yes. Thank you and all the best.
Speaker #4: Thank you.
Speaker #6: Thank you, Kunal. We'll take the next question from Tushar Manudhane.
Speaker #2: Yeah. Hello. Thanks for the opportunity. Ma'am, in the opening remarks, you alluded to fluticasone nasal spray. So which first of all, which dosage have you filed and like where are we in terms of the approval process?
Speaker #4: Yeah. So we filed both the you know, the RX as well as OTC. We would expect the RX approval to come in this year.
Speaker #4: And OTC in the next year. Fiscally 28.
Speaker #2: And all like formulation as well as API being manufactured in-house or how is it?
Speaker #4: The formulation is all in-house. The API is not.
Speaker #2: And the device is from the from the.
Speaker #4: In-house.
Speaker #2: Okay. Device is also in-house.
Speaker #4: No. Device I mean, we chose the device, of course, through a device manufacturer.
Speaker #2: Got it.
Speaker #4: And it's also in Somerset.
Speaker #2: Okay. Okay.
Speaker #6: Thank you. Thank you, Tusha. We take the pardon me. Hello. Tusha, you there?
Speaker #2: Sure. Yes. I am there. Just one more question if I may. Ma'am, you referred to Apixaban 505 B2, right?
Speaker #4: That's right.
Speaker #2: If you could just like qualitatively help understand what's the differentiation this product is going to bring compared to what the innovators product is.
Speaker #4: Well, you know, well, maybe share that closer to the launch date.
Speaker #2: Okay. Okay.
Speaker #4: Yeah. We're sizing up the opportunity and we'll be in a better position to share that over the next couple of quarters.
Speaker #2: Sure. Sure. I was trying to just understand the value addition compared to the innovator product, not so much like in terms of pricing. It was more in terms of the value addition compared to an innovator product.
Speaker #4: Right. It definitely would be a you know, made a unmet need for patients that we've targeted. But let me come let us come back to you with thoughts around it over the next couple of quarters.
Speaker #2: Sure. That's it from us. Thanks. Thanks a lot for your response.
Speaker #6: Thank you, Tusha. We'll take the next question from Vivek Agarwal. Hello, Vivek. Yeah. Yeah. Can you hear me?
Speaker #3: Yeah. Yeah. Thanks. Just a couple of questions on the cost base. If you if you look at your staff cost and other expenses have gone up meaningfully.
Speaker #3: So just if you can help us understand how to look at these lines going forward and what is driving these cost lines significantly. Thank you.
Speaker #6: The cost lines are essentially because of you know, increments there of course you know, based again on the needs of business, including India region.
Speaker #6: We have also been recruiting people and the like. And there's also an FX impact. You know, at least we saw as the previous year.
Speaker #3: Understood. So so is it fair to understand, right, before you launch a major product that is Apixaban and in between couple of major products you are seeing incremental competition, there may be few quarters where your Appenda margin can fall even below 20%.
Speaker #3: Is there a possibility?
Speaker #6: there would be volatility between quarters for sure. The magnitude is something that we can't actually speak about at this stage. But you would also do well to understand that our R&D expenditure is at least a tad above the competition.
Speaker #6: Firstly, and secondly, we also have the impact of adjacent season and so on, which have been captured. There's still evolving some of them are still making losses, which though of course I think it will come down over time.
Speaker #6: Next year, for example, we believe the diagnostics business will do very well. You know, it will be breaking even for sure. And I would say the same thing of other businesses.
Speaker #6: You know, our digital business is evolving extremely well. You could say that of the OTC business as well. And and CDMO. But I think you would do well to remember that all of these are at this stage loss making.
Speaker #6: And therefore is impacting EBITDA margins and of course our overall EPS at this stage. But clearly that would you know, be a thing of the past in in quarters to come.
Speaker #3: Understood. So is it possible for you to quantify what kind of the losses in terms of percentage hit on EBITDA margin these adjacencies are contributing at this point of time?
Speaker #6: Overall about the percentage, percentage and a half I would say.
Speaker #3: I understood. And one question, one product specific question I have. You have one product, one FTF that is Xivo. So is it FY2930 type of product or is it like FY30 or beyond?
Speaker #4: Yeah. It's a FY33 product for us.
Speaker #3: Understood. Thank you. That's from my side.
Speaker #6: Thank you so much, Vivek. We'll take the next question from Saurabh Kapadia. Hello, Saurabh.
Speaker #2: Yeah. Yeah. Thanks for the opportunity. Just one question on the other developed market and India. What could be the sustainable you know, growth in this market over next couple of years?
Speaker #2: And secondly, you know, with the kind of growth we are seeing, how the profitability or the margins in the key market have moved over last you know, three, four quarters?
Speaker #4: So I mean, we we are looking at potentially double digit growth. You know, in some years higher than in others. But anywhere between 10 to 20% over the next couple of years.
Speaker #4: And the margins also just given the scale of the business is growing you know, we've been subscale. And so far and you know, with the additional portfolio as well as you know, the expansion with the pipeline, we expect margins to continue to expand as well.
Speaker #2: Okay. And just secondly, do we need incremental investment to be made in any of the geography or any potential you know, inorganic opportunity which we we could seek in any of these specific countries?
Speaker #4: Yes. We would expect you know, for us to really maximize the biosimilars business, we are going to make you know, small but commercial investment in particular in the US.
Speaker #4: Even for the 505(b)(2) of Apixaban, you know, and our strategy on the 505(b)(2) front because we have other products that we have targeted as well.
Speaker #4: We'll likely make a small commercial investment as well.
Speaker #2: Okay. Thank you. Welcome.
Speaker #6: Thank you, Saurabh. We'll take the next one last question from Chintan Seth.
Speaker #5: Hi. Am I audible?
Speaker #4: Yes.
Speaker #5: Yeah. Thank you. Thank you for the opportunity. I I have a question on the US side of the business where we you know, we have put out the numbers in terms of upcoming pipeline of 50 FTFs, 21 exclusive ones.
Speaker #5: If you can I I know product specific will be very hard for you to to to provide. But if you can cumulatively provide some indication on on the market size of those and how should one look at you know, monetizing those over over the course of next three three to five years as as you explained few of the products already.
Speaker #5: But if you can cumulatively understand help us understand how how should those numbers can contribute to our incremental revenue from the in the US markets.
Speaker #4: Perhaps what we can do is get back to you offline to take you through the overall brand revenues and the relative products where we have limited competition.
Speaker #4: Overall, you know, we are looking at our portfolio from the complex generics doubling. Over the next three to five years. And that in itself you know, along with the fact that we believe you know, with the pipeline we have we should be able to grow our business in the next three to five years.
Speaker #4: You know, with the inherent growth out of these pipeline plus the fact that we are increasing from a complexity standpoint, we are you know, looking at a potential expansion in margins.
Speaker #4: Of course, we'll make investments as well. As I mentioned in maximize the these opportunities. But maybe our team can get back to you offline on you know, looking at the overall market size and the like.
Speaker #5: Got it. And also on the EMEA side and I I believe the growth is coming because of the Visufarm acquisition for last four quarters.
Speaker #5: The base of Q2 kind of bakes in the Visufarm. How should one look at the growth in that piece EMEA business going forward?
Speaker #4: Yeah. So like I mentioned that we're looking at anywhere from 10 to 20% level in Europe. So splitting out Africa, South Africa, separately. It's a little bit lower in South Africa.
Speaker #4: Just given the scale we are at. With the pipeline portfolio that we have and the opportunities Europe should grow at that 10 to 20% level.
Speaker #5: Got it. And ROW markets in any any color on the growth?
Speaker #4: Also the double digit growth.
Speaker #5: To continue.
Speaker #4: Yes.
Speaker #5: Okay. Got it. I'll I'll I'll kind of touch base with with the team offline to understand the pipeline better. Yeah. Thank you. Thank you.
Speaker #5: That's all from me.
Speaker #6: Thank you, Chintan. Thank you very much. I now hand the conference over to the management for their closing comments.
Speaker #4: Well, thank you friends for all your questions and hopefully we've been able to answer majority of them. But if not, the team will connect and clarify any open questions you have.
Speaker #4: We as I mentioned are optimistic about a near-term opportunity as well as long-term opportunity. Both in the near term to be able to navigate our the near-term challenges with the opportunities we have from a portfolio perspective.
Speaker #4: Evolving in areas that we've invested for the last many years. And in the longer term as Nilesh mentioned also you know, as we evolve innovation innovation in India, innovation in our specialty business in Europe as well as the US we look forward to delivering you know, long-term growth as well as return for all our stakeholders.
Speaker #4: Thank you again and we look forward to connecting with you in the future.
Speaker #6: Thank you. Thank you, ma'am. Thank you, sir. On behalf of Lupin Limited, that concludes this conference. Thank you for joining us and you've been now exit the webinar.
