Ladies and gentlemen, good day and welcome to Q1 FY 2026 Earnings Conference Call of Torrent Pharma. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sudhir Menon, Executive Director, Finance and CFO. Thank you, and over to you, sir.
Thank you. Good evening and welcome to the first quarter earnings call for FY 2026. We continue to see strong performance in our branded markets, which accounted for 72% this quarter. Our two largest branded markets, India and Brazil, each delivered healthy double-digit growth. India business grew at 11%, and Brazil grew at 16% in constant currency. On the generic side, U.S. business grew at 19%. Germany grew at 9%. The euro growth for Germany was 1%, mainly due to supply disruption at the third-party supplier this quarter. Coming to the key highlights for quarter one, revenues at INR 3,178 crore grew by 11%. Operating EBITDA at INR 1,032 crore grew by 14%. This quarter, other expenses include acquisition-related one-off expenses of INR 15 crore. Adjusted for this one-off, the underlying operating margin for the quarter stands at 32.9%. Net leverage stands at 0.45.
I'll now hand over the call to Aman for India business.
Thanks, Sudhir. India revenues at INR 1,811 crore registered a growth of 11%. As per the AIOCD Pharma Track secondary market data, the IPM growth for the quarter stands at 8%. Torrent's chronic business grew at 13% versus the IPM growth of 9%, driven by outperformance in cardiac, diabetes, gastro, and CNS divisions. We continue to see positive traction in our consumer health business, particularly in the Curatio brands. On a MAT basis, Torrent has 21 brands in the top 500 of the IPM, with 14 brands with more than INR 100 crore sales as of MAT June 2025. Field force strength at the end of the quarter stands at 6,600 compared to 6,400 in the previous quarter. We are encouraged by the performance in the recently expanded divisions and headquarters.
This expansion will help us to provide a platform for new launches and increase our territorial reach and gain regional market share in previously untapped areas. We expect the India business to continue outperforming the market growth. Our focus during the year will be to continue to improve the market share in focused therapies, new launch performance, improve field force productivity in expanded divisions and regions, and continue the investment and scale-up of the consumer health portfolio. I'll now hand over to Mr. Sanjay Gupta for the international business.
Thank you, Aman. We'll start with our branded generic market of Brazil. In terms of internal sales, Q1 constant currency revenue was BRL 143 million, suggesting a 16% Y-on-Y growth. As per IQVIA, market growth was at 5% for Q1. Secondary sales for Torrent, as per IQVIA, also grew by 14%. Growth was aided by the performance of top brands and new launches. In Brazil, we have a rich pipeline of 62 molecules filed and waiting for end-user approval. Moving on to Germany, our German businesses have registered a constant currency revenue of EUR 32 million, up by 1%. Growth was impacted due to supply disruption at a third-party supplier. In the U.S., we registered constant currency revenues of $36 million, up by 16%. Growth is coming from increased purchasing on existing contracts and achieving targeted market shares in recent launches. Operator, we can open the call to questions now.
Thank you.
Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star then one on the touch-tone phone. If you wish to remove yourself from the question queue, you may press star then two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, please press star then one. Our first question comes from the line of Damyanti Kerai from HSBC. Please go ahead.
Hi, thank you for the opportunity. My first question is, can you explain the forex loss which you have booked in other income? So that's my first question.
Yeah, I think the major part.
How much is the number? Yeah, yeah.
INR 48 crore is the forex loss which we have booked in other income, and a major part is on the euro/USD pair, I would say, where the euro has appreciated almost by 10% this quarter. It is more of translation losses, which I believe going forward, you should start seeing some of them reversing.
Okay, so it should reverse in coming quarters. In Brazil, I understand the currency situation is not as, I think, severe as what we had seen in the previous quarter, right? Compared to the constant currency growth and reported growth, I understand the difference has come down.
Yeah, so Damyanti, if you see last full year, the currency depreciation was around 15%. And since then, I think it's appreciated by almost 10%. So still, there's a depreciation of 5%. So you see that 5% difference between constant currency growth and INR growth.
Okay, got it. Coming to India, I have a few questions. First, if you can break down the India growth into the components, volume, price, and new launches. Also, if you can talk a bit more on your MR expansion plans.
Yeah, so our growth reflected in the AIOCD Pharma Track data is 12.2%. The breakup of that is 3.5% volume, 6% price, and 2.5% new products. This is against, I think, 8% growth of the market for the quarter. In terms of expansion, I think nothing really new from the last quarter that we shared. Essentially, it is the same expansion that has been executed in the chronic segment. We have added 200 MRs this quarter. I think a similar number may be added by the end of Q3 this year. Give or take, the plans remain the same, that maybe 6,900 to 7,000 MRs should be onboarded by the end of the financial year.
Okay, that's helpful. My last question is in Brazil. You mentioned there are 62 products awaiting approval. Can you update? A few years back, I believe the approval cycle in Brazil was very lengthy. Have you seen improvement in the approval cycle? When do you expect these 62 approvals to come, say over three, four years, or could it be even further?
It depends upon the type of submission, right? Some of these are clone submissions from the company's approved products. Hence, the clone submission in Brazil generally takes six to nine months. Some of these will take between 30-36 months. Essentially, what we are looking forward in Brazil is we have three divisions, and we are looking at two to three product launches per division per year.
Around 8-10 launches we can expect per year, right?
Correct.
Okay, that's helpful. Thank you.
Thank you. Our next question comes from the line of Neha Manpuria from Bank of America. Please go ahead.
Yes, thanks for taking my question. My first question is on the margin, the adjusted margin of 32.9%. Sudhir, you did not really give us a margin guidance last time. Based on the performance of the first quarter, would it be fair to assume that this is the run rate or slightly better probably as we go through the year given the branded growth?
Yeah, that's what we expect, Neha. Minimum what we have reported in quarter one should continue for the rest of the quarters.
Understood. My second question is on Germany. The supply disruption that we mentioned, if you could give some color on when this would normalize, or do we expect this to continue to impact us for a couple of quarters?
Yeah, unfortunately, I won't make a prediction, but at least a couple of quarters.
What is this related to exactly, Sanjay?
In Germany, 75% of our business comes from third-party products, right? We have a lot of partnerships. One of our partners has had some supply issues linked to regulatory requirements. It has a major impact on growth. We are kind of a little bit hostage to the situation in the sense it's not within our direct control. Some products we are sourcing to other places or we are bringing them in-house, but it takes some time before it normalizes.
Okay, so this year we shouldn't assume any improvement in Germany?
It would be good news if we can show some improvement in the subsequent quarters, but I don't know. I'll just keep my fingers crossed.
Understood. My last question on U.S. Now that the facilities are improved, we started seeing contract wins and new product launches gaining share. How should we look at the traction in that? I mean, if you could give us some color on the number of launches we should be building and what's the sort of growth that Torrent can see in the U.S. market?
I would say that in the course of this fiscal year, we should see about 10 launches. Some of them are mature products, and a couple of them are day-one launches. In the first quarter, we launched about four or five products. The biggest launch for us so far was the esomeprazole g ranules, which we launched at the start of the fiscal year. We have had a few other smaller launches of products which are already generic type. Last week, we launched Sacuval also. Going forward, we expect another five, six launches for the rest of the fiscal year.
With these launches, it's fair to assume that U.S. is now profitable for us. With every subsequent launch, does our profit margin improve?
I think Sudhir will answer that.
Yeah, Neha, it's still not profitable. It'll take some while before we get into the profitable zone post-R&D. The progress is looking positive. I think quarter on quarter, you'll see the losses coming down for the U.S. and therefore a positive contribution to the overall performance.
Got it. Thank you so much.
Thank you. Our next question comes from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead.
Thanks for the opportunity, sir. The company MR account, again, we have increased the MR base by almost 1,000 over the last one year. From 5,700, we are reaching to almost 7,000 by end of FY 2026. Somehow the growth rate, or let me put it another way, the MR product rate is still then lower, or sort of the growth is still not catching up with the addition of MRs. If you could elaborate on this?
I would not look at it in that way. Generally, the MR additions take at least 12-18 months to onboard and kind of get familiarized. If you see last year's full growth, we were at 13%, which was, I mean, significantly higher than the market growth. That was the result of the expansion done in the previous kind of two years, right? That is the time and impact that it takes. Anything that gets done today will not have an impact on positive growth in the next quarter or two quarters. It may be seen in the next one year and two years. I think the numbers that we are seeing in the places that we have expanded, in divisions we have expanded, certainly there is a meaningful positive uplift. Otherwise, we would not continue doing it.
I would say that it is best to look at it from a two-year horizon rather than anything shorter than that. Just to kind of add one more point is that last year, Q1 growth in India was actually 15%, and this year is 11%. On a two-year CAGR, it is about 13%, which is still significantly higher than our previous CAGR before the expansion started. These are all signals together that add up and give us confidence that the expansion is certainly helping increase our growth.
That is correct. If you could break the growth into consumer healthcare and, I mean, consumer things can be prescription things? For India segment.
We do not really look at it that way. We see every brand separately, every division separately, rather than kind of looking at consumer versus prescription. I would say that the investments being made in the brands like Tedib ar, for example, are certainly giving very, very positive results, way more than the prescription growth. We believe that should continue for the next couple of quarters at least. It is at a base which is growing rapidly. Til we reach a certain level of market share saturation, I do not think that should slow down. Partly that is aided by the consumer spend that we have been making for the last, say, one, two years. Definitely, there is a positive correlation that we are seeing.
As we mentioned earlier, also in brands that we see where the results are not really coming in expectation to what we thought, we cut down the spends. It is all kind of measured at a portfolio level.
Got it. So at least it's not the growth rates, but if you could also share what has been the composition of India business into prescription and consumer?
Composition of the sales contribution or?
Yeah, India business into prescription and consumer.
Yeah, I mean, we've generally shared that the consumer brands are between 10%-15% of the total portfolio.
Got it, sir. Got it, sir. Just one more on Germany. I said the last couple of years, there has been, unfortunately, some of the other reasons which has been keeping the growth under check. Any rethought on the geography per se? You think that we'll be able to do better in the next three to four years?
No, so there's no rethought on the business in terms of geography. We are trying to improve, and every time we improve, something else goes wrong. That does not mean that we are giving up on Germany. We are the fifth-largest generic company with about 6% of the German generic market. We have an aggressive growth strategy in terms of new launches and cost improvements of existing portfolio. All that work continues.
Got it. Just lastly, one more, if I may, on India business, how many launches would have done over the last six, seven months out of that? How many line extensions and how much customers?
Meaningful launches would have been maybe four or five. Line extensions would have been more, maybe say nine or ten. The contribution of the new products is about 2.5%, which may increase slightly in the coming quarters because the brands would start increasing in size.
Thanks. Thanks a lot, sir. Thank you.
Thank you. A reminder to all the participants, if you wish to register for a question, please press star then one on your touch-tone phone. Our next question comes from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.
Good evening. Thank you for taking my question. Just on the JB Pharma acquisition, it's a month since we made the announcement. So any update? I know you talked about all the approvals take six months, but anything that has passed in the last 30 days?
No, so Shyam, there are some filings which were required in terms of public offer and merger scheme. Including the CCI application. All those have been done now. Now, what we believe, I mean, we have to wait for the CCI reward to come back and see if there are incremental things to be done.
This is largely on track, right? Nothing changes?
Absolutely.
Understood. Just a second question is on, we are getting about, maybe I missed asking this last time, but we are getting another field force of about 2,100 once the deal closes with JB Pharma, right? Once you do the merger as well. Is there a rethink when we look at our 6,400 plus 2,100? Do we think there is, I know you have not called out synergies and stuff, but should we look at us going slow and then consolidating, and that is how we should look at field force?
No, I don't think so because where we are expanding is in non-overlap areas. So regardless of the acquisition, we would like to go ahead. We did review this, but it's definitely kind of the more appropriate call to continue the expansion rather than wait for the merger.
Okay, that's helpful. Last question is on the ETR tax rate. It came in 24%, 25% for the quarter. How should we look at for the full year? Thank you.
Yeah, yeah. We are already in the new tax regime, Shyam. At least standalone India, you should see 25% playing out. Considering subsidiaries, 1% year-over-year. Maybe 25%, 26%.
Got it. Thank you. All done.
Thank you. The next question comes from the line of Saion Mukherjee from Nomura Securities. Please go ahead.
Yeah, thanks. Good evening. Sanjay, on Brazil, we had good growth, but I remember you had some low base, and also last quarter, you mentioned about some destocking in the channel. So the constant currency growth is pretty strong this quarter, but there is a fair bit of volatility. How should we think about growth in the coming quarters because it's much higher than the market growth rate at this point?
Brazil is a funny market because it is highly concentrated in terms of distributors, right? They pretty much decide how much inventory they want, destocking, stocking. Volatility of primary sales is there quarter on quarter. I have always kind of guided that it is best to follow the IQVIA data because that kind of normalizes that, and it is more related to the demand. I would say that IQVIA is currently running at about 14% for us. That is actually a better reflection than the primary sales.
Got it. Also, Sanjay, on the semaglutide launch in Brazil, what's your expectation at this point in terms of timing for approval? How do you see when you get the approval for Torrent, how the market evolves or the market share evolves, how many companies you expect to be ahead of you? If you can sort of paint a picture for us for this opportunity in Brazil in particular?
Sure. What I'll do is I'll actually not talk too much specifically about Torrent. I'll just give you a brief on the market. Because, I mean, for competitive reasons, I don't want to tell you which month we would buy, which month would get approved, etc. Let me just give you a macro picture where we are in Brazil. Semaglutide is two products, right? Ozempic and Wegovy, right? Ozempic's been in the market for a while in Brazil. Since Wegovy launched in the middle of 2024, Ozempic's been in a decline. It's been going at - 15%, -17%. The current size of Ozempic has pretty much come down a lot. It's about $350 million, okay? Ozempic, by the time it goes off-patent, would be smaller. We've seen that due to changes in regulation, it's losing the obesity patients to Wegovy. Wegovy is currently running at $150 million a quarter.
In the space of one year, it's reached a run rate of $150 million. Let's see how the growth continues, but it's already a $600 million product on an annualized basis. Wegovy generics would come to the market a little later because people have not started filing as yet. Wegovy in Brazil would be, let's say, a couple of years behind the Ozempic launch. The dynamics would be different. We are working on both the products without giving you more specificities. We are trying to be in the wave one of launches. As of today, I can't go into more detail. I think it'll be a little bit detrimental to our business interest to reveal more. We are working on both with partners, and we intend very much to be there.
Sanjay, what you're saying is that first you will get Ozempic and then Wegovy a couple of years down the line? Given the size of Ozempic, it will not be a meaningful contributor for Torrent, at least in the near term. Would that be a fair assessment?
I don't know what you mean by meaningful, right? It depends where the market is. Where the market is going down, - 14, - 15, and if 10 people show up, then I don't think it'll be a meaningful contributor. On the other hand, I would be much more gung-ho about Wegovy because of where the market is going and the fact that it's a little bit down the line, so I would probably have better chances of being on day one. Yeah, that would be my general sentiment.
Understood. Thank you.
Thank you. Our next question comes from the line of Vivek Agrawal from Citig roup. Please go ahead.
Hi, thanks for taking the question. These are just some clarifications on the margins. As you commented that margins are expected to remain stable at current level throughout FY 2023. If you look at the branded markets continuously doing well, there can be some operating leverage as well while we are also seeing some improvements in the profitability of the U.S. Shouldn't you expect margins to move up in the coming quarters? Is there anything particular that is pulling down the margins? Thank you.
I think, Vivek, what I said, minimum this margin should sustain for FY 2026. That's point number one. Point number two, I think in the last quarter's earnings call, I did indicate that there will be a pickup as far as R&D spend is concerned, plus certain reinvestments which are happening in each of the businesses, right? For now, I feel confident that basically 32.9% minimum is something we should achieve. Quarter on quarter, let's see whether there's a further improvement, which is possible or not.
Understood. Thank you. Just one question for Sanjay, sir. You said that Wegovy is taking market from Ozempic, and Ozempic is consistently coming down. Do not you think that once the generics come, there can be some off-label use, etc., and even in the weight loss, some generic Ozempic can also get some kind of share? Your thoughts would be super helpful. Thank you.
In theory, yes. In reality, what is happening in Brazil is that Anvisa has put in place very strict rules. Each prescription for semaglutide has to be issued in two copies, and with the indication on the prescription, the pharmacy is required to maintain extensive records, including a copy of each prescription. I've never seen that draconian measures put in place by Anvisa to prevent misuse of the drug. Hence, my submission would be that the off-label use would be minimalistic.
Thanks, sir. Thanks. That's all my side.
I'll just add one more point to the margin, especially on the India side. Just to supplement what Sudhir said, is that while directionally what you're saying is correct, I would also just want to point out that the margin expansion has happened even after the kind of expansion in field force and increase in marketing spend that we've made for the last, say, two to three years in a row. Once that reaches a kind of stable level where we maybe don't expand as much or just kind of don't need to expand beyond what the optimal level is, that should hopefully, if the top line keeps growing at the same level, that should also bring some leverage. We don't know when that could be. We right now don't foresee any slowdown in expansion. As a direction, that's what we wanted to point out.
Thanks. Thanks. That's all my side.
Thank you. Our next question comes from the line of Rahul Jeewani from IIFL. Please go ahead.
Yeah. Thanks for taking my question, sir. Just a clarification. Did we indicate that we have launched sacubitril, was started in the U.S.?
Yeah. It got launched last week.
Okay. Sir, how are you seeing competitive intensity on this product? At least, let's say, for the initial few months, do you think it could be a sizable opportunity for us?
I would say it's a little bit early to give you a prediction. We saw 10 people launch on day one. That's quite a lot of people. What I don't know is how much is the product available on the market, if it's in excess supply, who's targeting what market shares. I think it's better to wait. It's just been a few days, right? Actually, our invoicing started on Thursday, Friday of last. I would give it some time.
Okay. So around 10 players have already launched in the market?
Correct. Correct.
Sure, sir. Just on the India business, I missed the split of this 12% growth across volume, price, and new launches. If you can repeat that, yeah, thank you.
Yeah, sure. It's 12% as per the Pharma Track data. The breakup is 3.5% volume, 6% price, and 2.5% new products.
Thanks, sir. Versus market, what would have been the volume growth? Our volume growth has been 3.5%. What is for the market?
The market overall was 8% out of which volume is 0.3% for the quarter.
Okay. Okay. So on volumes as well, now, let's say we are outperforming market growth by 250-300 basis points?
Yeah. I mean, certainly in this quarter, it appears so. I would say that the expansion has contributed meaningfully in this volume growth.
Okay. Okay. Thanks. So that's it from my side.
Thank you. Our next question comes from the line of Bino Pathip arampil from Elara Capital. Please go ahead.
Hi. Good evening. You mentioned your thoughts around the semaglutide market in Brazil. Do you also mind sharing your thoughts around the market in India as it opens up and your plans?
Yeah. Again, there is a lot of moving parts here. I would refrain from giving any specifics at this stage. Certainly, a large opportunity is ahead of us and the market overall. We believe that the injectable will be the large part of the market, and the oral will also have a kind of fair share over time. Both have a kind of separate use and kind of patient pool. We believe that both will be important opportunities for us. We are conducting the phase III clinical trials as of now for the oral product and have partnered for the injectable. As of now, it looks like we could be in the first wave. I would not want to make any speculation on how large the market could be, but it is certainly going to be a reasonable addition to our chronic portfolio in the next one, two years.
Okay. Got it. Thank you.
Thank you. A reminder to all the participants, if you wish to register for a question, please press star, then one. As there are no further questions, I would now like to hand the conference over to Mr. Sanjay Gupta, Executive Director of International Business, for closing comments.
Yeah. I'd just like to close this call. Thank you very much for your interest in Torrent Pharma today. We look forward to talking with you soon. Thank you. Bye-bye.
Thank you. On behalf of Torrent Pharma, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.