Yeah, hi. Good evening, dear friends. It gives me great pleasure in welcoming you all for our investor meet, including the people who have joined us online. Apologies for the slight delay, but it's great to have you all here and welcome again. On the dais today, we have Vinita Gupta, our CEO, Nilesh Gupta, our Managing Director, and Ramesh, our Global CFO. I'm Ravi Agrawal, Head of Investor Relations at Lupin. We have a small AV, which we will run for you, and then we will get into a presentation, and then after that, we'll follow it up with Q&A. Over to you for running the AV to start the meet.
Not very clear.
No.
Everyone has the right to a healthier tomorrow, access to the medicines they need, and the quality care they deserve. At Lupin, we're pioneering that brighter future today by putting science into action. It's a commitment to having the best people creating the best treatments the best way. It's ensuring those treatments reach millions of families, and it's delivering relief to those who need it most. It's a better, healthier tomorrow powered by people who care. We are Lupin. We catalyze treatments that transform hope into healing.
Yeah, can we just start the presentation now? If you could just roll over to the second slide, please, with the safe harbor statement. Yeah, one slide after this. The next slide, please. Yeah, before we start, I think the safe harbor statement, information provided during this presentation, may contain some forward-looking statements. These statements are based on current expectations, forecasts, and assumptions that are subject to risk and uncertainties, which could cause actual outcomes and results to differ materially from those statements. The company disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by applicable law. I'd now request Vinita to come and just start the presentation for us, please.
Yeah, you could go from here.
Thank you, Ravi. If you can hear me, I'm likely going to do it from here because the acoustics there seem OK to me. Yeah? Great. It is a real pleasure to meet all of you here today in person. I know we haven't done a face-to-face meeting for a good number of years. The last time I recall we met, it was, I think, in 2022, when, thank you, when we were just coming out of COVID, we had gone through a number of challenges that had impacted our performance. From there, in 2022, with the efforts that we worked upon, I think about it, number one, execution of new product launches, in particular in the US, to turn around the US business, leveraging our complex generic portfolio to build other developed markets, growing India and other emerging markets on a consistent basis.
At the same time, focus on cost optimization, whether it's footprint rationalization or broad efficiency measures. Third, our quality and compliance efforts that enabled us to work through our OAI site, three sites in particular, have really enabled us to turn our business around over the last three years. We're very pleased that fiscal year 2025 has been a stellar year for the organization, where we have continued the momentum, the growth momentum, as well as continued to evolve our strategic growth drivers and capabilities to continue to grow in the future. We look forward to sharing with you our performance this far and our plans going forward. Before that, I'll just start with where Lupin is today. When you look at our company globally, we are the 12th largest generic company by revenues.
Had a great year with $2.7 billion in revenue and $625 million in EBITDA, delivered by a very strong group of Lupinites. When you look at our presence across our key markets, we have a leadership position in all our key markets, starting with the U.S., where we are the third largest company by prescriptions dispensed. India, where we are the eighth largest, primarily organically. I mean, there are companies that have done acquisitions that have gone above us. But from an organic growth standpoint, we have consistently grown our India business. Other markets like Australia, where we are the fourth largest company on the generic front, and South Africa, where we are the eighth largest company on the generic front. Really a substantial position in all our critical markets, driven by a very strong pipeline of generics, branded drugs, as well as complex generics.
If you look at our business globally for this past year, it's very well diversified. You look at the developed markets and the emerging markets. The U.S. and other developed markets are roughly 50%. India and other emerging markets are roughly 50%. When you look at the nature of the business, the Indian emerging market is primarily branded business. The U.S., other developed market, is primarily a generic business. Very well diversified business geographically. Very pleased with the progress we have made on the ESG front. It's been a stellar year for us, not only from a financial perspective, building on the growth momentum, but also growing sustainably as an organization. This is our current footprint around the world.
In particular, on the manufacturing front, we have a very strong footprint that supports our generic business globally, with 15 manufacturing sites around the world, four in the Americas, two in the U.S. in particular, that give us tremendous capability and flexibility to be able to manufacture more in the U.S., if it made sense, based on the tariff considerations and also the economic incentives that the government puts in place. If it's attractive, we will have the flexibility to manufacture more in the U.S. You look at our R&D centers, seven R&D centers around the world, including four in the Americas again, and two in the U.S., as well as in Mexico and Brazil, and then one in the Netherlands, the Nanomi Long-Acting Injectable R&D Center in Nanomi.
Tremendous capabilities on the R&D and manufacturing front to drive our growth going forward have certainly contributed significantly to our growth so far as an organization. You look at our manufacturing plants, in particular for the U.S., we have 12 plants that serve the U.S. market. I'd say 11 right now because the Pune Biotech facility is yet to be approved by the FDA, but have multiple manufacturing sites that are approved by the FDA, as well as other regulators that enable us to build our generic business. If you look at our major pillars of growth, first, our purpose. You saw our purpose statement that we take a lot of pride in.
We put a lot of effort in crystallizing that statement and are very proud of catalyzing treatments, both across innovative medicines as well as affordable medicines to serve the communities and the patients that we provide drugs to. When you look at our major pillars of our business, the U.S. in particular has come a long way for the organization, evolving our portfolio from the simple products to complex generics, in particular on the inhalation front, very soon on the injectable front as well. Fiscal year 2026 is going to be a material year on the injectables front and biosimilars, which is an opportunity that is emerging now for us. There's been a lot of back and forth on the biosimilars front over the last couple of years.
Given the change from a regulatory perspective, the FDA reducing the requirements for interchangeability studies, as well as the private label model appearing in the US, the US is emerging as an attractive biosimilars market, of course, with selective portfolio choices. We also continue to operate our legacy business of oral solids, ophthalmic dermatology, and leverage product opportunities that differentiate us, like you've seen Mirabegron, Tolvaptan, that is going to be a material contributor in fiscal year 2026. The US is on a very strong foundation, a very strong trajectory from a growth perspective in the next couple of years.
Other developed markets, especially Europe, Canada, Australia, leveraging our portfolio in the US, the platforms in the US, complex generics are the largest part of growth in our other developed markets and allow us to really build both on our capacities, manufacturing, as well as R&D capabilities to gain operating leverage across the globe. In India, we continue to focus on delivering growth above the market. The last five years, the last 10 years, we have consistently grown above the market. We'd like to grow 1.2-1.3 times the market, and we have done that in many years. The last couple of years, with the loss of exclusivity in licensed products, the growth has been a little below that, but it's still been above market growth over the last many years.
Our strategy is both innovative products as well as a pipeline that we have built internally, as well as licensed through partners, as well as acquisitions. You saw recently we acquired the insulin brand from Lilly, which enables us to really gain the end-to-end economics on the product. We will continue to look at acquisition opportunities to bolster our portfolio in the India business. Simultaneously, we also are expanding our footprint. We have done pretty well in terms of Salesforce expansion over the last couple of years and continue to focus on expanding our footprint as a business within India. Also, you have seen us getting into strategic adjacencies that enable us to go beyond the pill, beyond the prescription medicine, into diagnostics, digital OTC products that enable us to bring a full solution to the patient as opposed to just the prescription.
We are starting to see the benefits of the strategy. We are starting to see the impact of the strategy on our prescription business, and we'll continue to evolve these areas to be able to both strategically contribute to our position in the marketplace as well as build value through these efforts. Other emerging markets, in particular South Africa, Brazil, Mexico, Philippines, we have strong local businesses that are pretty self-sustaining. All of them tend to really run the business on a positive cash flow, growing profitably, primarily through their own pipeline developed internally or in-licensed. Also, where possible, integrate with Lupin's pipeline, in particular in the key areas like respiratory, CNS, biologics as well. In the emerging markets, we also have a strong position in institutional business with our TB portfolio, which is the company's legacy business.
I'm very proud that we are continuing to maintain a leadership position in this segment. On the API front, we have built substantial scale, and it's enabled us to really build very strong reliability of supply on the generic side of the business. It has been a critical piece of discussion in the U.S. conversations very recently, where the U.S. would like to bring API manufacturing in the U.S. if possible. We, as an organization, have more than 50% of our generic portfolio vertically integrated through our own APIs that enables us to really have a very strong cost position as well as reliability of supply that we've been able to leverage to ensure that we beat the market requirements on a consistent basis. We also have leveraged the API business and capabilities to build a CDMO business, as you saw.
This past year, we have made significant progress there in terms of the teams and capabilities, and we'll continue to evolve our CDMO business based on this API capabilities to be able to build value with this vertical. Multiple growth drivers in the organization give us the confidence of consistent growth going forward. When I look at the journey over the last five years, many areas to highlight. On the commercial front, the turnaround of the U.S. business was a material event for us over the last couple of years that enabled us to get back to consistent growth and, more importantly, profitable growth for the organization, evolve our EBITDA margins on a consistent basis over the last 10-12 quarters. On the complex generic front, we were the first Indian company to launch a DPI in the U.S.
We were very proud of with Spiriva to be able to get that approval in 2023 and launch it as a sole generic. We are still the only generic in the marketplace. It took us long, five years from filing to get FDA approval. It has enabled us to build respiratory as a major vertical for our business in the US. When I look at our MDI and DPI business in the US, right now it is one-third of our US portfolio from a revenues perspective. It is a material contributor to our business in the US as well as globally, and also differentiates us as an organization. In India, we have expanded our position with 11 new divisions.
Field Force up from it was 5,000, I think, five years ago to 10,000 plus at this point, so significant expansion that has enabled us to grow above the market growth rate in the country. If you look at our chronic share in India, so this is, again, we're very proud of this accomplishment. Five years ago, the picture looked very different. Our chronic share was sub 50%. Today, it's 64% chronic, so more sustainable, more profitable business. When we compare ourselves with our peers, we actually are one of the best mix of chronic versus acute as an organization in India.
We have continued to focus on commercial excellence in areas that we felt needed dedicated focus, like the trade generics business that we recently spun out into a wholly owned subsidiary with the idea of really focusing hard on driving that business, given the growth of the trade generics business in India. Lupin Manufacturing Solutions, which, again, as I mentioned in the previous slide, on the API front, allows us to leverage our capabilities on the API, R&D, and manufacturing to build a CDMO business. We have also had strategic acquisitions over the last five years. Zopenex in the US enabled us to get into the brand side of the business. When Synovian was looking to get out of the market, we thought it was a strategic opportunity for us to have a foot into the brand business on the respiratory front in particular.
The product has grown since we acquired with very limited promotion efforts. We are looking at how we can build further on this start. Medisol in France enabled us to get into, we did not have a presence in France until we acquired Medisol, gave us a very nice injectables portfolio that enables us to build our internal pipeline on top of this to build our business in France. Southern Cross in Australia allowed us to almost double our business, has been a significant contributor to growth in the Australian market, and has enabled us to get to that position of fourth largest generic in the Australian market.
If you look at the material product launches over the last five years, Suprab from Somerset, Albuterol from India, Spiriva that I just mentioned, our first dry powder inhaler in the U.S., Mirabegron, material contributor in the last fiscal year and continues to be this fiscal year as well. In India, we were very pleased to launch differentiated product like Difisma and Vilfero, unique, novel respiratory products that enable us to differentiate our product offering with the pulmonologists. In Europe, Nuforbec, which is a Foster generic, has enabled us to really double our business in Europe, so significant contributor to growing our business in Europe that has done extremely well over the last three to five years. Namuskla, our first orphan drug, our first brand in Europe, has grown very nicely over the last five years as well.
We actually, in the process of the second indication, we started with the NDM indication, which is a smaller DM indication, is much larger. We are going through a phase three study at present for the DM indication in Europe as well as the U.S. that will enable us to maximize this brand globally. Lastly, Etanercept, which has been a material contributor to our business in Europe as well as other parts of the world, Japan, Southeast Asia, Latin America. We are very pleased with how things are evolving in the U.S. and will determine how we commercialize this product in the U.S. in the years ahead. 2029 is when the patent goes off in the U.S. If you look at the impact on the financials, we have improved our gross margins from 64% five years ago to 69%. Look at our EBITDA margins, gone from 16% to 24%.
We are a zero-debt company at this point, have strong cash flows, and have considerably improved our ROC from the 10% level to 20%. Very pleased with the financial results of all of the efforts over the last many years. On the compliance front, we have made material strides, getting three of our sites, Pithampur, Goa, Somerset, out of warning letters to a VAI status. I am confident if the FDA was to visit the two pending sites, Mandideep as well as Tarapur, our sites are ready to receive them. We do not have any pending products from the sites, so they do not have any hurry to come in to and inspect these sites. I am confident in the near future, we will get those sites cleared as well. The last couple of years, it has not been quiet.
We've had multiple inspections across all of our different facilities, and we have sailed through each of them. Looking forward to continuing that strong trajectory going forward. You can see the impact of all of these efforts over the last five years. I just mentioned the financial results, but as you can see from the chart, the last three years has been a really strong trajectory for us and has also reflected in the shareholder value that has built over the last few years. For fiscal year 2025, you've already seen the numbers, so I'm not going to reiterate them. It's been a stellar year from a revenue growth standpoint, from a margin growth standpoint, and that income standpoint. We are very pleased that all our markets, all our regions grew this past year. The majority of them grew double-digit.
If you look at India, grew at 14%. America, North America grew at 16%. US per se grew at 17%. EMEA grew 22%. They have a stellar year in EMEA. APAC grew 5%. LATAM grew 10% after a Mexico facility came back up last year. It is now back to the pre-closure levels. Very pleased with the growth there as well. The rest of the world, along with our GIB business, the tuberculosis TB tender business, grew 11%, and our API business grew 3%. A stellar year for us as an organization. I want to switch from there to a couple of the trends in our industry. As we are looking at the industry, certainly a lot happening in the US, but also multiple other trends that pose both challenges as well as opportunities for us as an organization.
If I look at the geopolitical situation, a lot of things happening around the globe that really put India in a very strong position. In particular, as countries and regions are de-risking from China, the U.S. in particular is very focused on de-risking from China. India, I think, is very well positioned to leverage that opportunity on multiple fronts. Tariffs are certainly going to shape the trade relationships between countries. The U.S. is every day, every week in the news about tariffs on China, tariffs on other countries, tariffs on India.
We are hopeful that based on the bilateral trade negotiation between India and the U.S., the importance of the Indian pharma sector in the U.S., given 50% of the prescriptions in the U.S. come from India, that we are going to be able to convince the stakeholders to have either zero tariff or limited tariff on drugs from India. Certainly, there has been a statement from the Trump administration on that front in the last couple of weeks that sounded promising. Fingers crossed on that front. There is a paradigm shift in the U.S. healthcare industry with all of the changes the new administration has made. A number of areas that are impacted so far. Many healthcare programs have been impacted. A lot of research funding has been impacted in the U.S. DOJ has made material cuts across multiple areas. FDA has lost 20,000 people.
Thankfully, the reviewers are still there. I mean, they cut a lot of the policy folks, but not the review branch that actively reviews and approves products. The Inflation Reduction Act, the government is actively reviewing the Pill penalty on IRA. I mean, as a number of you might know, the IRA allowed HHS to negotiate drug pricing for biologics 13 years after the product is approved, while on small molecules, it's nine years after product is approved, which was considered really a discrimination against small molecules. That is under active review at this point. We expect that it could land in the same place as biologics. You've heard in the last couple of days, MFN, the executive order from the Trump administration linking the pricing in the U.S. to most favored nation pricing across developed markets in particular. We're going to see how this evolves.
I think a lot of analysts are saying this is more bark than bite at this point. A number of big pharma companies have made commitments to invest in the U.S. and very likely will renegotiate or backtrack those commitments if the government is going to pick pricing to overseas markets. We know that the U.S. market actually funds for majority of the innovation in our industry. Really reducing pricing in the U.S. is going to have a significant impact on the innovation front in the pharmaceutical industry. There is growing talk about onshoring manufacturing in the U.S. As I mentioned, this is likely going to be very closely linked with what the administration does on the MFN front, also very closely linked to what happens on tariffs, if there are material tariffs in place. There is an economic incentive to manufacture locally that makes products more viable.
Certainly, there'll be an opportunity to expand in the U.S., expand manufacturing in the U.S., that is. Switching to India, the pharma industry in India is poised to grow double in the next five years. This is not just in India, but also exports from India outside of the country. It is an expectation of the revenues of the entire industry out of India is expected to double over the next five years. You're fueled a good part by the growth in the middle class. That's expected to be 170 million people by 2030. Also very pleased that the government is now supporting development in India in the new R&D scheme, the research scheme, incentive scheme that the government has talked about putting in place.
Just like the Production Linked Incentive scheme, PLI scheme that has really benefited the industry in the last five years, we expect that this will certainly encourage more innovation in India and was much needed for the country. The India opportunity is pivoting from pharma alone to overall healthcare. We talked a little bit about this in our context. Patient-centric adjacencies like diagnostics, digital health, consumer health is gaining momentum. The full solution for patients and physicians is gaining momentum in India. On the generic side of the business for the developed markets, there certainly is a move towards complex generics as well as specialty. We see multiple companies moving in that direction, both on the complex generic front as well as the 505(b)(2), as well as innovation front. We have been active, of course, on the complex generic front. We've executed in multiple areas, inhalation in particular.
Also on the specialty 505(b)(2) front, we have an active portfolio together, pipeline together of both transformative opportunities as well as incremental innovation that will help us differentiate our portfolio in countries like the U.S. as well as other developed markets. We have seen over the last couple of years, blockbuster drug classes emerge like the GLP-1s, diabetes, obesity class that is set to grow to $100 billion over the next five years. Certainly a material opportunity that has emerged in the marketplace. As some of these products go off patent, like semaglutide in particular, goes off patent March of next year in a handful of countries, it will open the market for further expansion on this class of drugs. I'd say likewise, there is also an emergence on the biologics front.
In India in particular, we are seeing emergence of biologics, in particular in areas like immunology and oncology that is set to grow very nicely. Lastly, the rising impact of AI across industries and in pharma as well. On the brand side of the industry, there's certainly a very strong focus on drug development front through AI, delivering both efficiency as well as from a timing as well as cost perspective. On the generic side of the business as well, there are multiple areas where we have potential gains here from an efficiency standpoint, from a commercial execution standpoint, from an operation standpoint, from a cost optimization as well as quality perspective as well that our industry is going to leverage. A lot going on across the globe in our industry. That brings me to our strategic areas of focus as an organization.
Looking at all of these trends, the areas that we have prioritized for our organization, number one is to sustain our growth in our two major regions, India as well as the US. Based on the portfolio we have, based on the investments that we plan to make, we are confident of continuing to grow in both regions in the foreseeable future. Second is expanding our inhalation business. We have established a very strong position on the respiratory front. Today, if I look at our global turnover, 25% or so is on the respiratory side. We were always very strong in India, but over the last five years, we have built a significant presence in the US, Europe, and emerging in other parts of the world like Canada, Australia on the respiratory front. We continue to build on this pillar as well as innovate.
I mean, there is a material move, in particular in countries like Europe, to move towards green propellants on the metered dose inhalers. We believe we are at the forefront with this. Our R&D teams, our manufacturing teams have looked at our evolution from a pipeline perspective on the green propellant side, both for India as well as developed markets like the U.S., Europe, and other parts of the world. Third, delivering on our new product launches on time and on budget is a major part of our focus. It's been a substantial success for us over the last three years. Our team has come a long way in ensuring that the products that we target, we deliver them in time. That's how you've seen products like Mirabegron, products like Tolvaptan, products like Spiriva come to market in time.
There is a very strong focus in the organization to deliver our new product launches. Number four is establishing a specialty business. I mean, a number of you know we have had a legacy specialty business in the U.S. We actually started the U.S. business on the specialty front on the pediatric side. Then over the years, we went into the women's health side of the business, which we had some success with and got out when we saw challenges, when we went through three, four years ago, when we went through the downturn, we decided to get out of women's health. We are refocusing our efforts on building the specialty side of the business, both with acquisitions as well as internal pipeline, especially the 505(b)(2) pipeline that we are developing in-house. Fifth is establishing injectables and biosimilars as a growth driver for the future.
I mean, we have capabilities across both in R&D and manufacturing, as you know. This year in particular, we're going to see a material inflection on the injectables front with products like Glucagon, products like Liraglutide, Risperdal Consta from Nanomi coming to market. With the emerging biologics opportunities, with the FDA regulations easing up, as well as the private label business emerging in the US, we expect biosimilars to be a material growth driver going forward. Of course, as barriers reduce, the competition tends to increase. We are very selective with our portfolio here to ensure that we are either in the first wave or we are one of a few players that will enable us to get a solid return on our investment with biologics, as well as grow that business on a sustainable basis. Sixth is establishing a novel product pipeline.
I mentioned the 505(b)(2) pipeline that we are developing internally on our long-acting injectable platform, on our respiratory platform, some oral solids as well that will help us build both our specialty business and in some cases also help us build our hospital business in the U.S. in particular. Building scale across other developed generic markets is also a focus. We believe that the platforms that we have in place and the pipeline that we have in place, whether it is on the respiratory front, biologics front, or the injectables front, has tremendous opportunities outside of the U.S., in particular in Europe, Canada, as well as Australia-like countries. There is a tremendous opportunity for us to gain operating leverage from these platforms across the global generics market, especially in the developed markets.
are very focused on growing our European business and other developed markets at a faster pace through these strengths that we have established. Lastly, I'd say that continued focus on the cost position across our network. The bulk of our business is still generics, and cost optimization has to be a consistent effort to drive profitability on the generic side of the business. There's still tremendous opportunities. As much as we have gained a lot of efficiencies over the last five years, there's still a lot of opportunities that we have on the operational front, on the supply chain front, on the quality front to be able to continue to improve our cost position as an organization. All of this is enabled by, number one, our focus in quality and compliance. We have an aspiration to be best in class in compliance.
We were best in class 10 years ago, and there's no reason why we can't get to this goal in the next few years. We are exploring areas that we can leverage digital and AI to get more efficient, get more creative as an organization. It's a big lever that is yet to unfold, yet to really conclude what areas make sense for us to double down. We have embarked on five or six material areas where we believe we can make a material difference through AI as well as digital. Last and most importantly is our people strategy. I mean, all of what you have seen so far has been delivered by a very strong, committed team.
We continue to work on our team, both developing our people internally as well as bringing in capabilities from the outside to complement and drive growth going forward along with our internal team. Very strong areas of growth that we have identified for ourselves. We are very focused on each of these areas and are confident that we will continue to grow our business on a consistent basis in the years ahead. With that, I will hand it over to Nilesh to walk us through a deeper review of the business.
Thank you, Vinita. Is this working? Yes, it is. Yeah. First of all, thank you for coming today. We used to always love doing this investor meet in person, and COVID derailed it, and then we did it in 2022. Then we did not do it for a couple of years after. We certainly hope to do this regularly. We just think it is a wonderful opportunity to engage with you today. Vinita talked about people. I will just quickly introduce some of our people. I will start here. Ranjana, our Head of Quality. Rakesh, our CIO. Christophe, our Head of Tech Ops. Rajeev, our Head of India Region. Yash, our HR Head. Moving to the next table, Tommaso, our CEO's Chief of Staff. Saurabh from our India region, the power behind Rajeev. Sumitha, Head of BD for India. Mohan, the in-charge of taxes. Amit, our Company Secretary.
Robin, our finance team. Suresh from our finance group. And then last of all, Ravi. I'm missing out a few in the back, but I think this is an opportunity for you to see some of the power behind Lupin as well. On the business side, I think the biggest change which has happened is the US business, where we were in this slump, and then we've grown the US from a net sales perspective back up to the $900 million-plus, $925 million year-over-year growth of 13%. That is obviously I'm going to move this side. That is obviously one of the biggest moves that we've had in the Lupin numbers. As you know, we've been number three in the US in terms of generic market share, 4.9% market share. We're very proud of the position that we have.
Especially at times like today, when India's role is being questioned, when tariffs are coming into question, I think a very important lever in this all is the market share that we have. We're very proud of the market share that we have in the US. You've seen this before, but in terms of the number of products, about 138 products in the market, 105 of them were in the top three. Forty-five were actually in number one. We have more than 100 products pending in the pipeline, addressing a market size of close to $150 billion. You know the recent NPLs, Mirabegron, Spiriva, Bedford, and of course, earlier this week, Tolvaptan. Obviously on a very good trot from a launch perspective. As Vinita mentioned, the focus is on cost efficiency and optimization.
Obviously, we want to build on that base business that we have of specialty. We have Zopenex, Namuskla that we have, but this was legacy for us. We started with Suprax in the US, so certainly want to build out that specialty. If you really see what that's done, if you look at the journey in the last five years, I mean, 800 went to 720, 738, 632. That obviously was a very disruptive time for Lupin's P&L. If you see the last three years, you see that consistent 21% growth in the business. We're very proud of the way that we've turned this around. Obviously, our collective goal is to sustain this growth that we have had and build on this business. Obviously, that's come from the move to complex generics.
If you see in FY25, complex generics is about 30% of our revenues. If you look at the next five years, that complex generics will move to 49% of revenues. Obviously, the key growth drivers for the generics business remain NPLs, more than 100 plus NPLs. 65% of revenues that we will get will come from complex generics. Over 60 filings in the next five years, focused highly on first two files on Para IV products. Clearly, in the U.S., the key imperative, other than the move getting deeper into complex generics, would be to build on specialty, both through our own portfolio, but through acquisitions and alliances as well. On our second key market, India, we're ranked number eight. We're not happy at all with this rank. I think we have to be in the top five, but currently number eight.
Good growth rate in the last 10 years, 12%, 1.2 times the market growth rate, 3.4% market share. Our key therapy areas, as you know, are diabetes, cardiovascular, and respiratory. GI is actually the fourth largest therapy area for us, doing well in diabetes and cardio. Respiratory has been extremely sluggish in the last two years. I think this will be the year that it'll bounce back as well. GI, again, growing very strong, double digit. Vinita mentioned the sales force side, but total more than 10,000 people across the sales team. Clearly, our focus is on building the innovation pipeline for India. Part of that is going to come from very strong in-licensing as well.
If you see the India business and just double-clicking on that a little bit, if you split it between the IL, the in-license, and the non-IL, you'll see that the in-license portfolio actually helped us grow in the past. Even in 2021, 2022, you see the growth coming from the darker green bar, which is in-license portfolio. The last three years, that portfolio has been challenged. Degrowth in FY2023 of 13% in that portfolio, minus 1% and minus 12%. Despite that minus 12% growth, we've grown at 8%, at 8.4% versus the market growth of 8% in FY2025. The loss of exclusivity, the erosion on the in-license part is largely played out. Therefore, from FY2026, we see getting back on the double-digit growth across the portfolio and continuing double-digit growth going forward. The focus, as Vinita mentioned, is on chronic.
If you look at the current portfolio, 64% of sales come from chronic. If you see by FY2030, it'll actually move to 70%. So 69-70%. We actually will get even deeper onto the chronic side. You've known this. We've talked about this before. Number two in respiratory, number three in diabetes, number three in cardiac as well. The growth going forward, first of all, the aspiration is to grow at 1.2-1.3 times the market. Part of that is it's going to come from enhanced reach, over 2,000 representatives to be added in the next four-five years. Basically, programmatically, we want to add the 400-500 representatives every year. Of scientific approach, when we're reaching out to doctors and the community, including the patients that we would work with as well.
NPLs, new product launches, is going to be a key growth driver, over 80 products in our portfolio for the next five years. Focus will remain on chronic therapy areas. Obviously, as a large cardiac and diabetes player, GLP-1 is going to be an important part of that play. Also beyond that, getting deeper into GI, building that as the fourth large therapy area for us, getting into oncology. We are there, but we are fledgling in our presence. Oncology, CNS, vitamins, scaling up in these areas as well as the next three areas that will come into our India region. Obviously, partnering as the market is changing with e-commerce, with organized retail, with the institutional business as well. We will evolve organization structure to meet with that target M&A. Sorry, before that, the extra urban. This is a part of the market that we feel is very exciting.
I think really going into tier two, tier three, we started with a pilot. The pilot was successful. We're now scaling up, and that's where the major addition in sales force is happening this year. Obviously, we would look at opportunities in India. They're few and far between, but we want to be there. We've acquired a few, but not of scale. I think that is certainly an organization priority. Moving closer to physicians, closer to patients through our adjacencies as well. Other developed markets, I think Europe is, we've always talked about the fact that we built India and the US, and in that neglected Europe, we are certainly focused on Europe. At this point of time, it's grown to a reasonable scale, $195 million in the last fiscal, 14% growth rate in the last five years.
Obviously, products like Namuscla, the respiratory portfolio is driving the business in the U.S., including Etanercept biosimilar. We are in a few regions, and the others are through pan-European partnerships. Nice reach across Europe, but to be scaled. If you look at the next five years, 50-plus NPLs in Europe, 55% of revenues will actually come from complex generics and obviously expand into other markets with our own onshore presence within Europe. Canada, again, a nice little business, $47 million sales, FY2025, 18% CAGR for the last five years, and 60% of the business coming from specialty. If you look again, going forward, complex generics will drive that portfolio, a lot of it led by inhalation. Lastly, on the other developed markets, Australia, $78 million sales.
We're ranked number four in the Australian generic market, 20% CAGR in the last five years, growth led by both our own business, but our partnered business within Australia as well. The focus is on new product launches there, including biosimilars, and we're expanding into the New Zealand market as well. To the next bucket, other emerging markets, South Africa, $83 million, number one rank in cardiovascular, the eighth largest generic company in South Africa. Focus again remains new product launches there as a large cardiac player to move into GLP-1s as well, participating in ARV tenders as well. Philippines, smaller, close to $40 million in sales. We are number two ranked in our reference market in that, again, a very wide portfolio of products. You'll see GLP-1s everywhere, but 50-plus launches, including biosimilars planned for the Philippines. Mexico, about $50 million.
Net sales, we're number three ranked as an ophthalmic player. 70% of our revenues come from ophthalmics, and more than 20 products lined up for launch, including Namuskla. Brazil, $42 million, number three rank in their reference market. A lot of their business there is OTC. 40% of our portfolio in Brazil is OTC. We're looking at point of sales expansion, and we're looking at new product launches across multiple therapy areas in Brazil. Lastly, our GIB business actually had one of the best CAGRs across our businesses, 20% in the last five years. Growth obviously led by scaling up TB, including prevention of tuberculosis with products like rifapentine and building out the HIV portfolio as well. The adjacencies really quickly, we don't talk that much about those. On Lupin Diagnostics, 44% year-on-year revenue growth. We have been amongst our peers, the fastest to get to INR 100 crore.
All our labs are approved by NABL, and that was a key part because we want to be a trusted partner on the diagnostic side. That is our differentiation in this area. The target is to be EBITDA positive in FY2027. Pretty good reach across most cities. We're not in North India. Other than that, we're actually across most geographies in India. Lupin Life is our OTC business, INR 150 crore. Big plans to grow. The aspiration is to well more than double this in the next three to four years. A lot of reach being expanded at this point of time. We have two anchor products. There are two more products that we're launching as well. Small business today, but certainly another anchor to growth in India.
Our digital health, we've talked about this a little bit, but this has been a challenging part of the business for us because we're actually changing physician behavior as well as patient behavior. So it's been slow. I think it's getting to that inflection point at this point. The goal there is to be the partner of choice for post-discharge care of cardiac patients. We have our first product. There's a follow-on product. We can talk a little bit more about this, but I mean, the focus here is connected devices, AI-powered apps, experienced healthcare professionals backing it up. If somebody has a cardiac event, we want to be the partner of choice post-discharge. Lupin Life Sciences is our trade generics business. We launched this last year, obviously building on the equity of the Lupin brand and quality products from Lupin.
The focus is primarily on tier two and tier three towns in areas where we're currently under-prescribed. We're building a lot of on-the-ground presence with more than 400 people in that field force, which is different from the model which many other people do it. The idea there is really to emerge as a strong player in this space. The last of the adjacencies, Lupin Manufacturing Solutions, our CDMO business. We have a full team, right? Global commercial. We have all the structures in place. I think we've taken a lot of effort to put the team together in the course of the last year. We have this legacy of developing complex products, including fermentation products. We have large-scale manufacturing from a CGMP perspective as well. We have our R&D center in Pune.
That really positions us to be able to work on innovation pipeline, but also to carve out our own differentiation within the space. Part of that is going to be in areas like peptides or in ADCs. On the R&D and the portfolio, it's been a fun journey, right? I think it's been over 20 years. We started with the first two files. Right now, we're pursuing 30-plus first two files, as I mentioned. We moved into inhalation. We really have that franchise across the inhalation space. MDIs, DPIs, SMIs even. Obviously getting deep into inhalation across the U.S., India, across Europe as well to expand to other geographies as well. Building that presence next on injectables, on the complex injectables, in particular depo injections, peptides, liposomal products as well.
We'll talk a little bit more of our pipeline in the next few slides, but clearly that was the next bucket. Biosimilars, where we've built a nice commercial presence ex US, but the intention, of course, is to be meaningful in the US on that as well. What we have is absolutely world-class R&D and manufacturing capabilities and the ability to do a pretty wide array of products. The last on the product development and capability building is obviously specialty. Building out the 505(b)(2), building out the value-added medicines, whether it's long-acting injectables, oral solids, IUDs, implants, green propellants as well. You see a wide array of capabilities that we built over the years. What it's really done is deliver on the business. If you see the US, FY2020, complex generics was 2% of the business, grew to 34% in FY2025.
If you see again the next five years, we'll grow to 55% of the business in the US. In Europe, even more stark, right? 9% was the composition of complex platforms in FY2020, 55% at this point of time, and growing to two-thirds of the business by FY2030. I won't talk through the entire portfolio that has driven this, but obviously we've had some nice launches. We had Etanercept. We obviously had Albuterol in the US in 2020. Foster (Nuforbec) that we launched in Europe became a big anchor product. Obviously came products like Tiotropium, and there's a whole slew of products, especially on the inhalation side, which have helped deliver this. If you look at the upcoming launches, and we were cognizant that we've obviously had a good year last year, we have a good FY2026 as well. What's happening in FY2027?
It's actually a good portfolio coming in FY27 as well. Three products that we intend to launch on the inhalation side, a couple of products on the injectable side, biosimilars, two products that will come to market, and a couple of important oral solids that will come out as well, and our first specialty product in FY27. Before that, in FY26, you see injectables picking up. You see glucagon, you see liraglutide, you see risperidone long-acting that we hope to launch this year, Etanercept in Australia, obviously Tolvaptan, which we've launched, and another oral solution that we will launch, which will be a key product as well. This is on the back of a good number of products in the market.
If you read through this, in inhalation, 12 products in the market across geographies, injectable, over 10 products, biosimilars, obviously Etanercept only at this point of time, and on the oral solids, obviously well over 300 products over time. You see the products in the pipeline. Inhalation, that's where we're all in, 30 products in the pipeline, injectable, another 30 products that are in that pipeline as well. Biosimilars, we have over 10 products in the pipeline. Obviously, all the other dosage forms kind of adds up in the number as well. If you look further, if you look at FY2028, you see more of that inhalation, you see injectables, you see the biosimilars coming to market as well. In FY2029, you see a whole slew of inhalation products that will come to market.
That's, I think, when we'll get steady on the injectable side as well. We can talk more about this, but if you see the pie chart at the bottom, I think those are the revenues of new product launches that will come from complex generics. The lighter green is, if you see that FY2026, obviously, products like Tolvaptan are contributing significantly to the new product revenues. FY2027, you see a very large portion, 55% coming from complex generics, similar in FY2028, 54%, even higher, FY2029, 61% coming from complex generics, and even higher thereafter with 62% revenues coming from complex generics in FY2030. Quickly on quality, we've color-coded this a little differently because we wanted to add the biotech facility, which is pending a little bit as well. Like we said, we've got two sites which have been in a non-satisfactory state of compliance, obviously biotech.
We're pending approval from the U.S. as well. We put that into the list. Other than that, obviously, the rest of the facilities have been inspected regularly and have good standing. As you would see over the years, I think the FY2020 was obviously the worst, where we had five sites which were not in a satisfactory state of compliance, now down to two. Obviously, we've had a bunch of inspections, so EIRs from about six sites that have been received in the last year. Our goal is, one, to be best in class, two, to target all sites to be ready at any point of time for an inspection. We're looking at really the supply chain. It is not just us, what happens before us with KSMs or APIs that we would buy. That is part of the ensuring quality. The other part is on training.
Can we really use training as a differentiator, focusing a lot more on training than what we did in the past? Lastly, we talked about Christophe. We have set this global tech ops function. Very good results over the last few years on this. If you look at it from a customer-focused perspective, our OTIF levels are at 100%. We used to be there about 10 years ago, and I think we have—I think we need to—at peak, our FTS became 50 million. Yeah, it was a horrible number, right? Now our OTIF levels are really 100% in FY25, even for India, 98%. Lowest ever backorder, lowest ever FTS. Our focus is on de-risking, whether it is from China or whether it is other single-source entities. We are working to build agility into the system so that our lead times just keep getting better and better. That is our focus. We are not done.
I think there's a lot more that we would want to do on that customer-focused part. On the cost leadership, we've talked in the past. $50 million were delivered last year through AVDs, through freight optimization, yield improvement, and the like. We're optimizing our global footprint. Our air-ocean ratio is down to an all-time low. Basically, it's only new product launches that we would send by air. Everything else pretty much goes by ocean. The supply chain is really, really working, including our manufacturing, procurement, and the like. The next anchor on this is technology leadership, whether it is AI, digital transformation. We have Kinaxis, which enables the entire organization globally. We have several of our sites which are fully paperless. On the backbone of that, you can imagine what you can do with AI today.
Now we're investing a lot more into automation and the like, continuous flow reactors. We started with one or two use cases. Now there are three or four cases that we are considering, robotics that we're introducing into some of our plants as well. Very exciting time from a manufacturing perspective. I'll hand over to Ramesh now for the most important part.
Strategy and, of course, the actual operations are very important. Thank you, Nilesh. Friends, we are meeting after a gap of nearly three years. Obviously, this used to be an annual event, and we were very, very happy to meet with everybody. Unfortunately, COVID actually put a rest to that for some time. Glad to be back in action in that sense. It's not as though we have not been in touch.
We obviously have been in touch, in continuous touch for that matter. We still continue with our roadshows. We meet with all of you on a one-on-one basis or in groups or when the various broking houses conduct their meets out here. We certainly meet. In that sense, we certainly have been in touch. Prita and Nilesh, of course, focused a lot on FY2025 and took you through the strategies that we have for the future and, of course, give you a glimpse of what we intend doing over the next five years and how we're going to achieve our goals. I'm just going to focus on, in fact, the current year. What have we done in this particular quarter? The momentum for the current quarter was, of course, set a few quarters ago. The last seven to eight quarters, it's been a period of continuous growth.
That is reflected in the numbers that you see out here as well. This quarter, again, it was great growth across various markets. The good thing about Lupin is the fact that it has been secular growth across all markets. This has come about with the number of the kind of products that you have introduced, which, of course, you will see in the next couple of slides. Equally, there has been good performance across all markets. Of course, a lot of focus across various lines. Nilesh, Prita spoke about various initiatives that you have taken, and all of those have borne fruit. Talking about, in fact, this particular quarter, U.S., of course, we had Mirabegron. We also had other products, Prednisolone, Rivaroxaban, and, of course, the inline products of Albuterol, Spiriva, which deliver. We talked about the advanced markets in Europe, U.K.
Lufabac continues to do pretty well and, of course, tottering up pretty good growth. India, this particular quarter, there was seemingly lackluster, but the fact of the matter is we lost exclusivity on a couple of products when it came to diabetes. Of course, the respiratory portfolio, the overall market itself has not performed too well. Clearly, if you compare year on year, we've done pretty well there as well. API, of course, the full year we've done extremely well. The GIB business in API, of course, has done extremely well as well. It's a cyclical business in a general sense. The most important story is daily on the EBITDA. The last several quarters, we've seen continuous growth. This particular quarter, we ended up at 23.2%. This is after taking into account a couple of things.
The first is essentially you would see a INR 100 crore increase when it comes to the R&D expenditure. There has been a decline in terms of PLI that it claimed for this quarter. This is about INR 50-odd crore. If we would adjust for these two, the actual EBITDA margin would have been close to about 26%. The other thing that you should certainly take into account is the fact that some of our adjacencies that we started in recent times are still making a loss. Obviously, it is a question of time before they also evolve and grow in size in critical mass and, of course, contribute to the overall profits. If you were to take that into account, that would actually be a good another 3.7 percentage points.
Clearly, the EBITDA margins are in line with, in fact, the rest of the competition, the peer group, and we are caught on pretty well. For the full year, of course, done extremely well. Last year's margin so close to about 19%. Full year, we are moving it at 23.7%. Clearly, the momentum has been maintained and more to come, as Prita and Nilesh were saying. Clearly, we learn from history. And whilst we have come a long way, it's also equally important to see how the magnitude of change really. Clearly, Lupin peaked way back in 2017, 2018 when we had products like Fortamet and Glumetza and the like. And, of course, that was a time when the entire industry was also doing pretty well. Lupin was, of course, at its peak. Our market cap was close to about $13.5 billion and the like.
Since then, a lot of water has flown. You would recognize that the entire structure of the industry changed quite a bit. First, you had the enactment of GDUFA, which changed in lots of ways the industry because there were faster approvals and the like. Second is, of course, the channel consolidation, which happened in the United States, which, of course, set us back because it was stacked against the manufacturers, so to speak. If you move to FY, and then there, of course, COVID, which struck. That is when actually we also had our own systemic problems in terms of our FDA facilities were under OAI status. Because of that, we were not getting approvals. Whilst we had a pipeline of close to about 109 molecules, we unfortunately were not getting the approvals to launch them. To that extent, the top line was not moving.
The actual movement started in 2021 when we got our approvals for Albuterol. Since then, the mojo was back. In 2022, we actually brought in a couple of other products also. In 2022, we had, no, forget what the product was. Posaconazole was one of the products. Of course, Brovana. Brovana is what we launched in 2022. In 2023, we had products like Zopenex, which came in. We also had Suprax. In 2024, we had Spiriva. Before that, we had Darunavir. This year, of course, we have Mirabegron. All of this has brought in a tremendous change when it comes to, in fact, the top line. More importantly, what it did was also increasing the gross margins, the quality of the products. It went up over time.
Whilst we reached a nadir of about 58.3, and this is the time when we were actually plagued by failure to supply penalties because of that and, of course, returns in America because of nitrosamine products and issues and the like. Clearly, all of this was something that we addressed with the team that's out here. Since then, the margins have crept up. The gross margins are now moving up. In 2024, we saw it at 66. This year, we closed at 69.2. Big increase over the last several quarters. Whilst we focused on, in fact, the mojo on the top line, of course, bringing in good products, we didn't lose sight of, in fact, the various lines across the entire P&L. As the leaders were saying, there was a lot of work done on every line of the P&L.
We looked at, on the gross margins, of course, in terms of alternate vendor development, route synthesis, productivity across various lines in terms of R&D, in terms of manufacturing, in terms of our sales force and the like. All of this actually resulted in, in fact, the expenses that we brought in line. You see that we also undertook a mission to actually bring down costs by close to about INR 7.5 billion-INR 10 billion. Nilesh just mentioned the fact that there has been good success in that, and we saw the numbers as well. You could actually see whilst in FY2020, it was about 30.4. FY2021 was the period when you had COVID, and there was a reduction in terms of sales and promotion expenses.
Since then, a lot of the measures that we took have seen bring these lines back to less than 30%, something that we committed to the investing community some time ago. A lot of emphasis on moving to more complex products. Though, of course, the R&D spends have been increasing, the percentage of sales has actually been kept constant around about 8%. Though, of course, you might actually see in absolute numbers and as a percentage of sales going up over the next few years. As a result of all of this, obviously, the EBITDA margins have seen an all-time growing continuously. The NLS community would talk to us and talk about the fact that our margins were less than their peers. We have addressed that. As I was just telling you, we were at 23.8% thanks to all of this.
If I were to knock out the impact of, in fact, the adjacencies and runtimes and the like, obviously, things would be much more. Capital expenditure has been contained. We addressed the footprint, are still addressing that as well. A lot of the capital expenditure has already been done, not too much actually happening out there. From that perspective, you'd also find the free cash flows increasing. There's been a lot of focus on operating working capital. Some time ago, we were the darling of the crowd when we actually had operating working capital of less than about 96-97 days. It went up over time because we lost sight of that for a period of time. The issue is back, and we find that the focus has brought us back to pretty good operating working capital.
The operating working capital today is amongst the best in the industry at just about 110. Obviously, all of this results in much larger free cash flows. We are talking about a figure of about INR 1,330 crore this particular year after taking into account all the amounts that we expended in terms of capital expenditure, the increase in working capital, and also in terms of investments for the M&A that we have done. The company is very happy to know that we have now a cash surplus company. The overall net debt of the company is virtually zero. It's come down to the ability to actually raise monies and, of course, going for acquisitions is fast-paced right now. All of this has, of course, resulted in much higher ROCEs, which has been climbing over time. Today, it's a good 22%.
It's still a far cry from what we were about a few years ago. We were 27-28%. It's a question of time before we get to those levels. Of course, we would be looking at M&A because clearly that's something which is important from our perspective to grow our specialty business and, of course, look at growth in India. Clearly, there is a lot of focus on ROCE. We started our ESG journey quite several years ago, but we were not articulating that in terms of our annual report. Today, over the last three years, we've been reporting a lot of stuff in the integrated report. You would find that we have made pretty good progress out there. In terms of the lot of frameworks that are there in existence, we have actually done extremely well.
On a DJI-sized score, we have scored a high of about 75 last year, which is amongst the top three in the industry. Equally, we have actually got a lot of accolades across various frameworks, eco orders in terms of UNGC, in terms of TCFD, and all of that. All of that is reflected in the various metrics that we keep publishing from time to time. In terms of our goals itself, the number of goals that we have taken for FY 2030, I do not want to get married to each of those, but clearly, there is a lot of focus because we are passionate about it. We would like to actually look at a very differentiated way of presenting this and taking this in terms of our responsibilities. We have done a pretty good job there.
Some of these are actually mentioned out here in terms of we've done a lot of stuff when it comes to climate change. And there has been a 23% reduction till date, while the goal, of course, is about 38%. In terms of water, I think we are leading the industry out there. And we'll talk about recycling about 50% by FY2030. Similarly, there are a lot of other goals that we have taken. And this is something which is very important from a European perspective because there's a lot of focus on ESG goals when it comes to Europe. I think it's taken a bit of a backseat with the current administration in America. Thank you, friends. With that, I think we could just move on to the question and answer session.
Thank you, Vinita, Nilesh, Ramesh. We opened the floor for Q&A. We have an online audience as well. I would just request that whoever's got questions could just give their name and the name of their company. For the people who are joined online, there's a chat box. We'd request if you could just put in your question in the chat box, and we'll answer those questions as they come.
Hi, this is Kunal here from CLSA. Thanks for outlining the product pipeline for the next five years. That's quite articulate. Just to back that up, how do you look at, say, revenue growth going forward in FY2026 and possibly beyond that? Also, if you can articulate for both India as well as US business. Also on the margin side, with the share of complex generics increasing by FY2030, at the same time, you spoke a lot about the cost efficiency levers that you have. How should we look at on the margin side? Margins play out over the next in FY2026 and beyond that as well. Thank you.
One thing? Yeah.
Clearly, the buoyancy on the top line would contribute tremendously because, as Nilesh, Vinita were talking about, the pipeline is very strong. Given that mojo, we would, of course, expect that to contribute. There is, of course, tremendous focus on cost itself. As a combination of that, you would expect margins to certainly go up. This year, for example, we have Tolvaptan, and there is a host of other products that we have lined up for the next several quarters. The margins would continuously go up. If you speak about the adjacencies, we have plans to, of course, at some point of time, they would, of course, evolve in terms of growth and, of course, critical mass itself and start contributing profits. If that were to be brought in, you would certainly expect the margins to creep up.
Next quarter, next this year, of course, we think it'll go up by at least about a percentage point as in the past. Of course, it'll increase in terms of the way the pipeline evolves.
Sure, thanks. My second question is on if you, one of the growth levers that you spoke about was a focus on the novel drugs, right? With the MFN policy now, how should we look at that strategy going ahead? Also, the second part is on the tariff side. We do have two facilities in the U.S., and you also in your opening remarks alluded towards if there are enough incentives, you would look at setting up more facilities. What kind of flexibility, first of all, do the two facilities offer us in terms of managing supply chains on some of our key products? Obviously, if you can talk a little bit about how we are looking at setting up any new facilities if possible?
What was the first question?
Okay. Yeah, so I think the MFN would definitely impact the brand side of the business much more than the generic. The focus under IRA has been on the highest value drugs. It is really the highest value drugs that will likely get impacted. I mean, I think that at the end of the day, the value of the brand has an impact on the opportunity for generic. Obviously, we track it very carefully. We do not see a direct impact on our brand products, which are relatively speaking small in the scheme of things. I also think that the MFN order would be challenged quite a bit, like it was the last time Trump was in the office. I mean, I think you are going to see litigation. I think you are going to see big pharma fight it pretty hard.
If they're going to make the tens of billions of dollars of commitment to manufacturing in the U.S., to reshoring in the U.S., they would not accept price pegging to ex-U.S. markets. I think that there's a lot that's going to unfold over the next couple of months here. I'm not very concerned about MFN at this time. As far as tariffs go and our flexibility, what we are willing to do in the U.S., my first hope is that the bilateral trade negotiation is successful. I mean, we heard the U.S. administration talk about the fact that India is willing to reduce tariffs on pharmaceuticals, steel, and automobiles to zero. Hopefully, that is somewhere in the negotiation and means that, reciprocally, also the tariffs into the U.S. should be at the same level.
Having said that, given the flexibility that we have with Coral Springs as well as Somerset, if there is a need to manufacture essential drugs in the U.S., we will explore it. We are actively exploring that with the National Security Council as part of the White House right now. The government has identified nine drugs that they believe that are essential. We are going through a dialogue back and forth with them to determine how we can build a partnership between India and the U.S. to ensure to give them the confidence that they will have reliability of supply. On our own investments in Coral Springs, we are investing into the Ellipta line. We are investing into the Respimat line that was already underway even before this administration. We are continuing to invest in the respiratory franchise.
If there are incentives offered, grants offered to set up more manufacturing, do more development in the U.S., we certainly will be open to it. We have an active dialogue right now on that front. Thank you.
Hi. Question from Quantum. Just on the same note, your views about the House of Representatives cutting costs for Medicaid by $880 million. What do you think if that goes through, how do we or the Indian generic companies get affected?
Can you just repeat that question? What was that?
The House of Representatives of the U.S. is trying to cut the cost of Medicaid by $880 billion to fund the gap in the tax. Just wondering how and how could it affect the Indian hemisphere if it does get through. That's on the.
I think a big part of the CMS spending is on branded drugs. I think the first impact you would see is on branded drugs. That is what they're trying to do with this MFN clause to negotiate pricing on brand drugs at a level similar to Europe. I do not expect it to get to generic drugs very quickly because generic drugs are already a pretty low spend. We have emphasized to the government as part of the 232 investigation in the Commerce Department that there is a lot of inefficiency in the supply chain. When you look at the generic side of the industry, there is only a small percentage of the value that comes to the manufacturer. There is a big part that goes into the GPOs and PBMs. That is where they need to focus to be able to gain efficiency.
I think that is also, I think, resonating with them. They are looking at the numbers and saying, this is really, they can see how skewed the value chain is. We think that the PBMs are going to be challenged quite a bit. We already started seeing some of that. A few of the states have already started disintermediating PBMs. I think that you're going to see potentially more negotiation with big pharma on brands. Again, to be seen how that syncs up with the reshoring goal that the administration has. I see limited impact on generics.
Just on the India piece, how do you see insulin acquisition of the Lilly drug playing up with SEMA when it goes off-page and India comments on that? How do you think you're going to play that?
We have Rajeev here. We have Rajeev here. We can ask him to answer. Give it back to us after.
As far as the Lilly acquisition is concerned, our objective was to acquire human insulin so that we can penetrate into tier two, tier three markets also, and we can capture that market of insulin there. Now, Novo going out as far as the insulin market is concerned, particularly cartridges, we expect that we will be able to garner that market share also, which will be vacated by that. At present, our human insulin market share is 18%. We expect with this space becoming available, we will be able to garner another 6%-7% market share as far as human insulin is concerned. That is absolutely our strategic move as far as acquiring human insulin is concerned. Semaglutide going off-patent, as Vinita also mentioned, in March 2026, we are developing in-house also semaglutide, and we have partnered with other partners also. We are very much ready once it goes LOE.
We expect that this market is going to go up because once the prices come down, the usage is going to go up like anything. Hope I answered the question.
You don't see cannibalization happening if SEMA comes in?
No, SEMA, apart from diabetes, because there is a separate market for GLP-1s, there is a separate market for insulin. Particularly in obesity, insulin has no role. GLP-1s are going to be the ones which are going to play a major role in obesity.
Last one. On MERA background, where do we stand? What is your stance on that right now?
We continue to sell the product. No change. I mean, we have the trial in February, and I believe that we have plenty of defenses that we have a good chance to fight at that point in time. We will find out in February.
Albuterol market share right now for us?
Sorry?
The market share for Albuterol right now?
It's close to 20%, 19-20%.
Stable. Thank you.
Yeah. Hi, this is Damyanti. Vinita, earlier in TV interview, you mentioned $250 million US sales is a new run rate for you. But just want to understand, you continue to sell Mirabegron, and then Tolvaptan has come. Why should it not be much higher?
Hopefully it's higher. We think that we're going to see pressure on Albuterol. We've already started seeing it. We think Tolvaptan will be a great contributor in the first half of this fiscal year. The second half, we certainly expect other competitors to come in. While our first mover advantage will be there because it's a specialty drug, it's a REMS product, we will expect to give up share. It is really we expect some products to go down.
Therefore, Tolvaptan and continued growth in Spiriva offsets some of the decline in other products and helps us hopefully grow over $250 a quarter.
Okay, but does it look that your first half will be much bigger than the second half?
For the company, it looks like both first half, second half would be great. For the U.S., first half certainly has a lot more of Tolvaptan than the second half does. In the second half, we have injectables coming in. In particular, the three I mentioned, glucagon, liraglutide, and risperidone all come into a tail end of the first half, so really have a strong contribution in the second half. We certainly have the U.S. more front-loaded in the year.
Yeah, my second question is in your injectable launches, which you just mentioned. In terms of your application, what is the current visibility? Are you confident about timely launches?
Yeah, so we think that majority of these products, we've heard recently about glucagon. We have heard recently about Victoza. It's between July and August that we should get approval. We haven't heard any different on risperidone. In the next couple of months, we should get that approved as well.
Okay, thank you.
Hello. Yeah, hi. This is Surya from Phillip Capital. My first question is about the CDMO initiatives. Could you share what is your plan there and how do we position your CDMO or CRDMO business while you are having an established generic business here?
I think the CDMO market is very mature in the fact that people would pick people for their reputation, for their manufacturing capabilities, their compliance record, and the like. I think that the fact that we're a large generic company as well, I don't see that as a challenge, at least in none of the conversations that we've had so far. We've seen that as a challenge. This started with the fact that we were over-invested in API, and we had additional capacity which was available as well. I think with some of the China rhetoric, with some of the alternatives that people have been seeking as well, I think it's become a large opportunity. It's also an opportunity that we can do at scale. I think there's multiple reasons why we're excited with it. We need to build.
Once we've got numbers, we'll present those numbers to get it to scale. I don't see anything coming as a challenge at this point of time. We have to build capability, though. I think our key goal was commercial capability, project management. It just operates at a very different level versus a generic company in that. Our goal has been to build that. The team that we built is all from the CRDMO space. Optimistic, but I think we put our heads down, work for two years, and then talk about good numbers.
Any sense about the timeline of the progress of this?
It is fully functional. I mean, it is a separate entity already. They have a separate office. They do not even sit in the Lupin offices. They are fully functional already. I think we certainly want to get the entire business is about building a funnel. We want to build that funnel with a good number for this year as well. I think in the revenues, I mean, it will be nothing meaningful at this point of time. I think in the next two years, it will get to a meaningful number.
Okay. Second question is about the margin for the quarter that you mentioned, Ramesh, that after adjustments, it is something like 26% kind of a margin profile for the core business for the quarter. There are adjustments also which are currently having negative impact to the overall FY25 margin. Two things. What would have surprised this 26% kind of core EBITDA margin for the quarter? Is it Mirabegron only driving that, or can you clarify that? Secondly, the impact of the adjustments, if you can quantify that for FY25.
I said in terms of adjustments, this is essentially the digital business, the diagnostics text, and of course, the API, and of course, the bio business. All of these API, CDMO, all of these are still evolving. If you were to knock out that impact, it'll be about 3.5-3.7 percentage points. In terms of the first part of the question, you actually said, yeah, if I had to be lost out in terms of PLI, it was not lost out. It was actually capping out because there is a limit to which we can actually claim for any year. The previous quarter was higher by about INR 500,000,000. This quarter, that's the impact. It's about 1% lower because of that. The higher impact in terms of R&D, I specify that again, the R&D spends are a lot higher.
If you knock out that impact, then potentially the 23.2 would have been 26.
Okay. Just last one question. There has been a kind of 20%, more than 20% kind of CAGR growth on the R&D spend over the last three to four years that we have seen. Obviously, there are some results that we are witnessing now on the market. Going ahead, what would be your plan in terms of the spend quantum, in terms of percentage, or in terms of growth? How do you think that is a kind of area for?
Our R&D expenditure is certainly set to go up. It would go up. Next year, for example, we expect at least about 10%-15% growth out there, principally because of the kind of products that we are working on. There is a slant towards more complex stuff. Clearly, that will bring in a lot more expenditure as well. If you take count, actually close to about 70%-72% of our spends today is really on complex stuff. It includes biosimilars, the inhalations portfolio, the complex injectables, the 505(b)(2)s, all of this, and in some parts, the specialty as well. Clearly, that calls for a lot of expenses. Therefore, the absolute numbers are set to go up. As a percentage of sales also, it is about 8% right now. I personally believe that will be upward of 8.5% next year.
Okay, thank you. Just one last clarification, ma'am, from your side. Any competition for Spiriva one should think about?
I mean, there are one or two filers that have filed already. Just given how long it took us to get approved, it took five years for us to get approval. Now, the FDA would have gained a lot through the interaction back and forth. I think the next 12 months, we should still be the sole generic in the marketplace.
Sure. Thank you. Wish you all the best.
Just to clarify again on R&D, when I talk about actually EBITDA margin increase next year, it is after taking into account this increase in R&D expenditure.
Sure. Thank you, sir.
Hi, good evening. Kunal Randeria from Axis Capital. On Vinita's, should we expect Spiriva Respimat launch in FY27?
No, actually, it was one of the FI29 DPI products.
All right. Okay, sure. Secondly, again, just a bit more on R&D, while Ramesh did give some color. Since the majority of your incremental growth is coming from inhalers, how much of that spend is being spent on inhalers?
We don't share platform-wise details, but clearly, we're just saying bundling all of this expenditure relating to complex together, and I'm saying as a percentage, it's close to about 70%.
Sure. And just one more, if I can.
I think inhalers is probably 30%.
Yeah, I would say roughly about that.
30%, right. Great. And just one more. I do not quite understand your biosim strategy. When I look at your pipeline, most of your products are coming maybe four or five years after the first entrant. I do not know. Is it more opportunistic because the regulatory barriers seem to be lower now? Just the thought process behind it.
Yeah, so it's been quite an evolution. The strategy has been evolving on the biosimilars front, just given the market evolution. When you look at the changes that have taken place in the U.S., it's really creating opportunity for older products as well for us. I mean, for example, pegfilgrastim. It's a very old product, multiple players in the marketplace. But as we've had conversations over the last year with the customer base, the fact that we will come in with a new ASP that's attractive for providers makes it a very attractive opportunity. We really see value in bringing pegfilgrastim to market. Whether we do it ourselves or we do it through a partner is a question mark. We have both options available to us.
When you look at the other products, if you start looking at the first product we had invested in, it was Etanercept, Enbrel. The idea with Enbrel was global. We wanted to get into the U.S. market, European market, everywhere we can. There is a submarine patent that appeared in the U.S. that held the product back until 2029. We launched it in Europe through Viatris, now Biocon, as well as other parts of the world through other partners. In the U.S., we have the ability to bring the product into the market ourselves. In fiscal year 2029, it is fiscal year 2030, actually, that the product will come to market. It will be a material opportunity for us because we likely will still be one of four in the marketplace. For us, so far, it has been a learning on the biosimilars front.
We've tried to mitigate the risk through partnerships, partnerships on the development cost, partnerships on commercialization. In the last 12 months, with the changes in the U.S., we really see an opportunity of going direct into the market with biosimilars. In particular, for products like pegfilgrastim, certainly there's an opportunity. Also for the ophthalmic products, the two products that we have on the ophthalmic front, ranibizumab and aflibercept, we have the relationships with ophthalmic distributors right now. AmerisourceBergen, which is now Cencora, is 70% of the ophthalmic market. They visit 70% of the ophthalmic clinics. We have the relationships in place to be able to enter that market if we get approval in time and can launch the product.
Sure. Thanks.
Yeah. Having said that, going forward, we are now, given the barriers are reducing, it becomes like a complex generic play for us. The focus is on products where the number of competitors are limited or where we can be one of few in the marketplace.
Vinita, with competition also increasing in future, the price erosion will be much sharper. We have seen it in the last couple of years that it's behaved almost like an oil solid, where the price erosion has been very, very sharp. Now it can get even sharper then. I don't know if that costs justify launching this.
The cost has come down in development. The cost is going down on market access with these private labels. If you have a private label avenue like Cordavis, the CVS private label, or one of the other private labels where you're not creating the commercial infrastructure, we already have the capabilities on the development and manufacturing front. Why would we not leverage it to get products where we are in the first wave or products where we are one of few in the marketplace?
Sure. Got it. Thanks.
Hi, this is Neha from Bank of America. Thanks for taking my question. Ramesh, if I was to think about margins after 2026, obviously 2026, we have Tolvaptan helping us, and then you have the injectables. As we think about after that, when probably, as Vinita mentioned, Spiriva sees competition, Tolvaptan FDF goes away. Is the margin expansion entirely dependent on the adjacencies turning around, given we would continue to invest in R&D?
Yeah, I do see that turning around would, of course, be a very important part of the whole thing. At some point of time, we would also perhaps look at allowing them to kind of spin on their own axis by getting a private equity player or a strategic end to kind of allow them to grow also. Clearly, their evolution and their growth and their profitability is also important. It is not going to be the most critical factor from our perspective. It is going to be really the core really contributing in terms of the buoyancy on the top line and other imperatives that you've taken, other initiatives that you've taken on.
Understood. Vinita, on your foray again into specialty. One, what are the therapy areas that we're looking at this time? Is it different from what we were looking at previously, which was women's health? Second, from a P&L as well as balance sheet investment, when does the P&L investment kick in? How much are we thinking we want to invest given the pipeline that you have? From balance sheet, what's the number that we'd be looking at committing for M&A or asset acquisition for specialty?
On the areas of focus, they are very much respiratory and CNS. I mean, respiratory, given that we have Xopenex, we have a position in respiratory already. We can bring synergies through development, lifecycle management within our internal capabilities. Respiratory definitely is a big focus building on what we have. And CNS neurology with Namuskla. We are now doing the study to bring the product to the US as well. That is multiple times the opportunity of the current product. If we can get other neurology products, they would be synergistic with the infrastructure that we have in Europe as well as what we will build in the US. Those are still the two focus areas. Opportunistically, we look at other areas as well based on the assets that come to market. Our focus is very much on accretive assets.
On a limited basis, we are looking at pipeline assets. On the pipeline front, we obviously want de-risked pipelines, so late-stage programs. And we'll want to look at creative structures around it to be able to mitigate the risk on our P&L. In terms of allocation, capital allocation, maybe let Ramesh talk about it. I mean, the overall allocation is the focus is specialty and India region. Yeah.
We have actually drawn very good guardrails in terms of our overall capital allocation policy. In terms of, for example, the overall debt that we'll take on the balance sheet, it would be around the 2:1 ratio in terms of EBITDA to debt. If you're talking about EBITDA of close to about INR 5,000-5,500 crore, then you're talking about potentially the debt we can raise is about INR 10,000-11,000 crore. Clearly, we're also kind of prioritizing in terms of where we would be putting our monies in. From our perspective, it's going to be in India and, of course, specialty. Though we would, of course, like to address white spaces in our distribution program across, say, countries like geographies like Europe.
Of course, we have also said that when it comes to adjacencies, we would actually restrict our overall involvement to what we actually endorsed at the time of drawing up the investment program for various adjacencies. Beyond that, we would actually involve private equity houses or potentially a strategic or the like. Clearly, we have also said in terms of financial returns, we would be expecting a return of about 20% and in terms of a payback period between four to six years, depending on the project. Some of these guardrails are already operational. Going forward, we would be pretty sure that most of the projects qualify under this.
Thank you. Nilesh, last one for you. For the India business, you talked about double-digit growth for next year. Given we just went generic, we have that impact. We had a large tender number in the base. Despite that, we would be able to grow double-digit. Would that be a fair conclusion? What would be driving that growth? Is it new product launches? Is there more? You mentioned about 400-500 MR addition. Are there new divisions that you are launching? Just some color there. Thank you.
Yeah, yeah. Rajeev is here, so do not say anything less than double-digit because he'll very happily reduce it to that. No, I think we're really coming into our own in some of these therapy areas. We've had all these disruptions on the cardiovascular side. That's all played out and the like. Now we're seeing that 30% ahead of market growth. You see diabetes, obviously, with this happening, but we'll still see good volume growth. I think we'll still grow at a good single double-digit in diabetes as well. Respiratory has been slow in the last couple of years. We've launched a new task force for nebulization. We've expanded our Rhoda division, which is focused on extra urban as well. That will lead to growth again as well. Some of it all, I think we are going to grow at double-digit.
Not just for the next year. I think the intent is to grow 20-30% ahead of market. We believe the market will grow at 6-7% or 8% as the case may be. On top of that, if you grow at 20-30% ahead, you will be at that double-digit. I think some of this is all trade generics. We have launched that into a separate subsidiary. That entity is expected to grow at a strong number. OTC is expected to grow at a very strong double-digit number as well. I think the summation of all of this adds up to a good double-digit number.
While we collate some of the audiences, while we put up a queue here, there are a couple of questions from the people who have joined online. One question is, the U.S. government has expressed a desire to reduce dependencies on PBMs and increase the transparency of drug pricing. The question which is asked is, does this lead to better predictability of drug pricing? Is it a positive measure from a generic pricing perspective going ahead?
The scrutiny on PBMs?
Yeah, they're saying that they actually, the question is that the dependency on PBMs the government in the U.S. would like to reduce. Does that mean that the pricing environment for generics in the U.S. actually improves going ahead?
I think the PBMs take a big part of the value. It certainly improves the opportunity for generic drugs. Also, it's a big opportunity for the government to save drug spend. It is a combination. I mean, we certainly think that it'll reduce drug spend overall because right now it's going into the pockets of folks that do not pass it on to patients, not payers either, and potentially can help us with generic pricing.
Sure. A couple of questions on Mirabegron. I think we did answer some parts of it. One question is, are we continuing to sell Mirabegron till the litigation dates in February? An added question on that is, on the 780, are we fighting against infringement or invalidity? The add-on question to that is, if we win against infringement, do we ever get a pathway till 2030 when the patent actually was off-patent?
The first question was, do we continue to sell? Yes, we continue to sell. Two, in terms of our defenses, it is going to be both non-infringement as well as invalidity. If we have the opportunity to prevail on infringement only, we might have a long-term opportunity. We will see.
A couple of questions actually come. I think Rajeev did answer. Again, this concern that with the launch of the generic GLPs in India, there could be some cannibalization on the diabetes side, especially on insulin. I know Rajiv did mention that there are two very different categories. Is there anything else we have in terms of just talking about the fact that our diabetes portfolio, we have visibility and confidence that it will continue to grow even with the GLPs coming in?
I mean, the market is going to open up, right? It is going to take time to shape therapy itself, right? It is a near-term opportunity to grow on the GLP-1 side itself. That does not take away the fact that there is a lot of diabetes in India, a lot of untreated diabetes in India. It is not like everybody is going to jump onto a GLP-1 product to change where the therapy will head it. Obviously, with the genericization, price point comes down, access becomes much more available to people to access GLP-1 products itself. Yeah, I think we are talking many years out in terms of this. In the near term, certainly RMTP is talking about double-digit growth on the diabetes side as well. To add to that, I think Rajeev talked about insulin.
I think the insulin opportunity, I think we can emerge as a very large insulin player, as Lupin. Especially if we can bring access to tier two, tier three towns, I think the insulin opportunity is a very large opportunity in itself.
Questions to the audience? I think we have some.
Yeah, hi. Thanks. Christian Bihar again. Just quickly, Canada, $45 million. We are not there. We are launching SEMA in India. We are not there in Canada, are we?
No, we don't have the product as of yet. The team is actively looking at an opportunity in licensing. We have an internal product which will come later into Canada.
I see. Just on the European part, Nanomi acquisition and the French injectable acquisition, just how does it come? We have respiratory pharma coming from Nanomi. How does it complement? Could you throw some light as to the acquisition? Put together, how does it help us? Or it does not help us at all? Just trying to understand that landscape.
What?
The Nanomi and the French, we acquired a French injectable.
Metasol. Yeah.
Yeah. So I'm just trying to understand, is there any benefit both combined? Because I think so. We call respiratory contra injectable pharm Nanomi, as far as I remember. So does it help us?
I think they're independent in any case. I mean, Nanomi is more a platform that we bought for long-acting injectables. And it's a very unique platform. I mean, Risperidone Consta, of course, will be validation of the platform. It'll be the first product that we bring to market through the platform. What we're doing with that platform is really exploring innovative opportunities, 505(b)(2) opportunities. We have put peptides on that platform. We are working on biologics on that platform to see how far we can extend the use of the platform. To us, the biggest opportunity with Nanomi is really the ability to innovate and build a novel pipeline. The Medisol acquisition was really injectable business acquisition in France. We didn't have a presence in France until we bought Medisol. It gives us a presence in France.
On top of the portfolio we have there, we're looking at all of the injectables that we have in India, including Risperidone Consta, but really looking at the broader portfolio of injectables to bring into France.
Last question. All the DPI India are coming from Indore? Just a clarification.
Right now.
Future filings? The future filings?
Yeah, the future filings will be a combination of India as well as Coral Springs.
Excellent. Thank you. Thank you.
Yeah.
Any more questions from the audience? Yeah, I think that's all.
Yeah, hi. You spoke about pricing pressure in Albuterol. Can you elaborate?
I mean, with additional competition, you have pricing pressure. So we've had some.
Another question to Ramesh. Ramesh, you showed the chart on CapEx of INR 700 crore or INR 600 crore kind of run rate for the last several years. Your cash flow statement shows a CapEx of INR 1,600 crore, INR 900 crore for last year, FY 2025-2024. What is the difference for that number?
Essentially, the free cash flow is actually a function of your additional working capital and, of course, capital expenditure and the acquisitions. There have been acquisitions across various paths. It is really a function of that.
So these are acquisitions of ANDAs or intangibles other than the non?
All could have been intangibles. We bought into companies like Medisol. I just mentioned that. All of those acquisitions that came in. The free cash flow is after taking into account all of that.
I was talking about the CapEx number, the INR 700 crore number, which you had showcased for the last couple of years on an average versus the cash flow statement where there is the CapEx number over there. The gap is very wide, is what I understand.
No, I showed only one figure, which is really the CapEx capital expenditure on an annual basis for four or five years, really. That, I think, averages about INR 500-700 crore. A larger chunk was really for maintenance CapEx. There has been some expansion in some parts, especially when it comes to biosimilars, injectables, and the like.
You're saying the gap between the.
Take it offline again if there is any discord.
Yeah, I can take it.
Any more questions from the audience?
Hi, this is Kunal from Macquarie. The first question is on the Tolvaptan. I think our understanding was that this is going to be a long-tail product for us. Has there been any change in that view that we had on this product?
No, we always said that, obviously, in the six-month exclusivity, we will gain a lot more than the period where we have additional competition. Given the launch efforts and what we have learned in the last couple of months, the specialty distributors and that market works a little bit differently. They really like to establish longer-term relationships. For a REMS product, we expected in any case the tail to be longer. Now, with the relationships that we've established with the specialty distributors, we feel even stronger that we should be able to maintain a high share in the time when others get in.
Sure. I do have a second question on the overall impact on RPN and let's say from next three- to five-year perspective because we are looking at a lot of shift towards complex generics and specialty, right? So margins, wherever they are right now, or ROC, whatever it is right now, where do you see that panning out over next three to five years? Because it also seems that a lot of investments, R&D may be inching up for that future pipeline. How should we think beyond FY 2026, just looking at this shift in the business mix that we have put out today?
I mean, the team has worked hard to really improve margins year after year. That is a consistent effort going forward. I mean, as we look at the situation right now, based on the pipeline that we bring to market, certainly, R&D spend on complex generic is up, but also the new product launches of complex generics are up and increasing over the next five years. We should be able to afford the investment and still grow our margins.
Sure. Thank you.
Last question?
I think, yeah, I think we'll take a last question. It's online. It says on semaglutide, we've highlighted that we have partnered as well as we have our own version. The question is, what was the reason to have both? Is the reason to compress the timeline, or is there something else?
I mean, we have a play in the oral solid, the tablet, as well as injectable. So the tablet we have internal, injectable we partnered.
Sure. Thank you. I think if we have no further questions, we'd like to end. Thank you so much. We really appreciate your time, effort. It's been a busy day for you, but we'd end this session. Looking forward to seeing you and connecting with you again going ahead as well. Thank you.