Good evening, a warm welcome for those of you in person, of course, those of you online. We'll of course, get to see your faces when you ask a question online. Really nice of you to all of those who've come to the office. A warm welcome. As you can see, it's really warm outside. Without further ado, really pleased to have our new Managing Director, Mr. Bhushan Akshikar. Bhushan is a veteran with over 27 years, has been with GSK now for over 12 years. Done roles in India, Middle East, Russia, CIS, and Africa region. Before that, Bhushan has been with Janssen for 15 years. In those roles, Bhushan has worked in India, South Korea and Belgium. He's seen it all.
He's been in India, gone there, and now come back, and in two different companies. Bhushan, very nice to have you leading us at this point in time. Of course, we have, again, a new person. Probably some of you have met Juby or not met him before. Juby has a successful track record with GSK for over 14 years. He comes to us from his most recent role that he had in Singapore. Before that, he's been in roles in South Asia, Vietnam, Turkey and the Middle East. With that, I'd like to hand it over to Bhushan, our Managing Director, who will brief you for the analyst meet. Bhushan, over to you.
Just remind me, I'm not supposed to cross this. All right, that I'm still visible to them.
Yes.
Very good evening to everybody in this room as well as everybody online. Thank you very much for your interest and your time this evening. The way I'll structure the next 20-25 minutes at best is just lay out the context of the industry where we operate as GSK. We'll zero down on specifically GSK India and what we are doing and where we intend to be in the next three to five years. We'll briefly touch upon the financial overview, and then we'll open it up for the most important part of this evening session, which is the Q&A. One inflection point in our evolution as a corporation globally was in June 2022, where we split the pharmaceutical organization split from the consumer business. We now remain completely focused on what we call as biopharma.
I think that has allowed us to further sharpen our focus on doing best in terms of the businesses which we are known for, namely vaccines and pharmaceuticals. I think, more importantly, it's allowed us to sharpen our purpose, which is all about uniting science, technology and talent to get ahead of disease together. I think every word there has a meaning. In the next 20 minutes, I'll try and lay out how this global purpose also reflects in our ways of working in India. As many of you may be aware, the pharmaceutical industry in India is just short of about INR 200,000 crores. If you see the revenue in a calendar year, of course, the data points are from IQVIA for 2022, just short of about INR 190,000 crores.
If you focus on the right-hand side of the, of the graph, the tables there really outline how the industry is structured in terms of... If you talked about the diseases on the previous slide, in terms of therapy areas, how is that all laid out? The reason of putting that out is, as we've tried to sharpen our business operating model, we're making some conscious choices of where we want to operate, where we want to play, how we wanna win. As you can imagine, some of the growth end of the therapy areas remain in the, in the therapy areas which are colored in orange, and that's exactly where we've decided to remain focused and anchored. Anti-infectives, vitamins, pain analgesics, and most importantly, the derms business.
These are the few strategic choices that we've made in terms of where we wanna put our energy and remain focused. The reason is twofold. One, if you look at the five-year CAGR as well as what we see over the next three to five years, the compounded growth continues to be strong double digit or at least high single digit. That allows us to play to our strengths. Clearly the choices that we are making are aligned to our strength areas, and that's exactly what we will play out. Just a couple of minutes on how the 12 months have been. Just again to drive home the point that at GSK, we will not probably launch everything under the sun in terms of branded generics, because we all know this is a non-patented branded market in India.
We make some strategic choices which are very aligned with our strengths. Although you might see the pharma industry, generally speaking, has got new introductions, as one lever, that's been conspicuously missing for us for the last few years. I think what's heartening is we have volume growth in a market that's not really grown in volumes. GSK as a company has really used the volume growth driver as one of the key levers. If you were to zero down from that overall market and see where is it that we are making our strategic choices, you'll split that further down at the TC4 level, which is a therapy class at the molecular level.
You will see it's clearly evident that the choices that we made in terms of where we play are strongly aligned to strong market leadership positions. Just to give you an example, if you look at anti-infectives and if you look at all the molecules where we operate, where we have our research molecules or we have our strengths in place, if that therapy area has been growing by 9%, our growth has been better than that therapy area. If you just look at the bottom side, it correlates. We have almost a 25% share, which is a significant share and growing in strong double digits, not just on a year-on-year basis, but even on a compounded basis.
If you were to zero down, anti-infectives, germs remain the most durable as well as strong areas for GSK as an organization. Pain, where we operate with a couple of brands, mainly CALPOL is where we operate. The therapy area has really seen, especially if you see the last two, three years, what we've seen with the pandemic, that therapy area has really shown an upswing. Even there, if you look at our CAGR, it's ahead of the market. It's just in line, 15% CAGR. Where we have not done well is obviously the vaccine market. If you juxtapose that with the external reflections in a market that's actually declining, we've been adding shares.
Our decline is not as sharp as or not as significant. In a market that's overall declined by 18%-19%, we've still managed to hold share. That's exactly where we operate. We made our strategic choices in terms of remaining focused in our represented market, which is roughly about INR 20,000 crore of the IPM. What really makes us relevant in the Indian market even today, is that even today, we are the second biggest multinational organization in India with a very significant footprint. In a highly fragmented industry, we still have a value share in excess of 2.6%. In volumes, given the sheer amount of lives that we are able to touch with our mass products, we have volume share just in excess of 4%.
What makes this even more enduring is the people, the 3,700 + employees who work for us across the value chain. Most importantly, our manufacturing footprint, which has remained intact. Just like this facility where we've operated right from independence, we still continue to have our factory in Nashik, which is definitely upgraded in the last several years with all the measures that we've taken there, state-of-the-art manufacturing unit that we still continue to have for India, where we still manufacture for India. Apart from that, we still have about two-thirds of our products manufactured at contract manufacturing organizations. I think one of the data points that I wanna share with you is that in a population of 1.4 billion, where we still don't know...
If you go to different sources, you'll get different numbers. The access to medicines remains a critical area. Globally, we are always proud to see that GSK continues to figure as the number one company in the access to medicines index. Even closer home, although we may not have similar index, given the nature of our brands, given the nature of our products, we clearly touch in excess of 200 million patients every year. If you were to see the number of prescriptions that we generate for our brands like CALPOL, AUGMENTIN, it is in excess of 300 million prescriptions. It clearly tells you the wide footprint that we have. We continue to be the number one company in the self-pay private vaccine market.
In spite of the decline that we've seen for the last couple of years, we still are the number one company in private vaccines. We can, in a typical year, we typically see about 6 million immunization sessions. That's the real footprint that we have for us in India. As I said, one of the things that's remained at the core of what we've done over the last several decades is our footprint in manufacturing. A short video which summarizes what we continue to do in Nashik with our manufacturing footprint. Thanks for your patience. As you can see, not just the manufacturing footprint, but as a part of our ESG commitment, we're doing a lot there to remain relevant and also complete our formalities.
Specifically now zeroing down to our global strategy and how GSK India plugs in. Post the split from consumer, globally you see a similar nomenclature. We remain rooted around three areas, general medicines, vaccines, and specialty. That's exactly how we play out our strategy even in India. Wiqthin the general medicines business, this is the business that really touches millions of lives. As I said before, the strategic choices that we made to remain relevant in anti-infectives, derms, vitamins, and pain analgesics with those select few promoted brands is what shapes our strategy.
We just launched a couple of brands in specialty, but in the coming years, given the fact that we also have several clinical trials ongoing even in India, the idea is to build that additional growth lever. We remain the leaders in private self-pay vaccines. I think what you will see at the top of that slide is, probably I'll spend a few minutes in the subsequent slides, which is the new launch of Shingrix happening in exactly less than a few weeks, couple of weeks from now. That'll really open up a completely new category in the form of adult vaccination for GSK India. As I said, we continue to make inroads in spite of the declining market that we have seen for the last, at least the last five quarters now.
Things are turning around, but it's too early to say we've turned the corner. Whether it's products like INFANRIX Hexa , the 6 in 1 , Flu SYNFLORIX, we still continue to hold a significant stake. If you were to anchor all these three businesses and see where is it that we really play, it's really the focus that we have in terms of defining sharp strategies for each of those assets. Our responsive go-to-market strategies in terms of our agility. Last but not the least, given the fact that we have an extreme level of commoditization and fragmentation in this industry, how do you remain relevant by differentiating ourselves with science? That continues to allow us to differentiate versus the other competitors.
The only reason of that being, you know, the proof of the pudding is in the eating. Even after several decades, we're very proud to see the strong portfolio playing out in the form of recognition, not just in the form of sales, but even for the calendar year 2022, AUGMENTIN continues to be the number one brand in the pharma industry overall. There's a lot of science that still goes behind each of these brands. A reflection, a clear reflection of the trust that healthcare practitioners in general have in our brands is born out of the fact that four out of our brands continue to be in the top 50 brands in the Indian pharma market. We also, as I said, are ahead of the market in terms of our growth.
Therefore, most of our brands, promoted brands, have evolution index in excess of 100, which means we are growing better than the market. Just to give you some reference, in terms of the sheer long shadow that we cast, with many of our brands, with these brands no longer remaining trademarks, they're really trust marks in terms of the trust that patients and healthcare practitioners in general have. Just to give you a quick sense of the sheer volumes that we sell in India. Over the last couple of years, we've been trying to also re-reshape our strategy in terms of using ways to really improve our footprint, not just the physical footprint, but to use ways of reaching out digitally to healthcare practitioners.
As much as we are well represented on the ground, with, you know, more than 2,700 reps comparatively in terms of the share of voice, you see on the left-hand side all the data points which clearly tell us why we remain relevant as an organization. We cover in excess of 10,000 cities, distinct towns and cities. We have our reps based in 400 rep-headquartered towns. That allows us to really reach out to almost 300,000 HCPs on a daily basis in terms of the detailing or the promotion. Most importantly, apart from those physical touchpoints, in terms of the science-based promotion, we also make ourselves relevant.
I think in the last couple of years, we really accelerated our digital strategy by way of opening up new channels of meeting out and reaching out to customers where they want us to be seen, be it emailers, be it channels like WhatsApp and doctor networking platforms. This balance continues. I think as we continue to shape our journey in the next few quarters, we'll see more of being present where HCPs want us to be seen, and not just the face-to-face interactions which remain relevant and which will continue to be the mainstay of our operations.
If I were to summarize our strategic focus in the short term, short to medium term, it's clearly about growing our promoted brands, the brands that I just shared with you in those three pillars in gen med, vaccines, and specialty. Really improve the competitiveness in each of those assets, profitably. Second is to defend many of those brands with some optimization, we call them performance brands. Last, but most importantly, launch new assets, have some exceptional new category creation starting with Shingrix next month. All this is possible only with a culture where we really believe that people can thrive, develop and do the right things. One of the mainstay of our portfolio continues to be the general medicines portfolio.
We have sizable brands, significant in terms of the lives that we touch. I think these are just pulling out two examples to show you that innovation is not just about launching new molecules, but it's also contemporizing the portfolio and really putting energy into life cycle management. Just to give you an example about the number one brand, AUGMENTIN, that we have. We launched AUGMENTIN ES. Obviously, we want to address this molecule continues to be one of the most susceptible in terms of effectiveness, and therefore to further help specialists, we launched AUGMENTIN ES targeted specifically at certain appropriate patients and promoted only at specialists, which is ENTs and Peds. It's really To reshape some of the thinking around how to treat these difficult to treat infections. That's one example. The second example is about CALPOL.
This brand continues to save lives quietly. Apart from all the medicines that saved lives during COVID, I think, paracetamol, led by CALPOL, continued to be at the top end. Even a commoditized category like paracetamol, we've invested in newer technology. We launched Optizorb technology, which essentially accelerates the disintegration of the tablets, potentially leading to a faster effect. CALPOL 650 is not just trusted, but it's also trusted and advanced now. These are just two examples of showing how we are doing a lot more in terms of unlocking value, in terms of lifecycle management. Vaccines market, we've clearly seen a struggle for the last several quarters. The market is yet to regain the momentum that we had pre-COVID. As...
If you see the last couple of months, there's been the negative declines have now started evening out, so probably in the forthcoming quarters we'll see some reflection. I think most important is even in a declining market, where the market declined in excess of 18%, 19%, we've grown our share. In this private market, our share grew from 34% to almost 37.9% on the left-hand side. One of the questions that keeps getting asked is our focus. Obviously we have a portfolio aligned to the interest of all those birth cohorts, all those babies in the first year, second year. In spite of many of the antigens going to the National Immunization Program, I think our portfolio remains relevant.
A case in point is the 6-in-1 Hexa, which continues to grow well for us, even in the first two months even of this quarter. We will also have some supplies restored in the coming months, in our vaccine portfolio, that should also strengthen, helps accelerate some of those growth numbers. Clearly in the private vaccine market, our endeavor is to sustain the momentum and go back to the growth numbers that we had. I think the big area where we remain focused is the disease awareness campaigns that we have, especially to build the footfalls to encourage all those parents who may have missed a vaccination. One of the themes that was predominant in almost 12 to 18 months was many parents were missing their vaccination during the COVID period.
As many of you may have seen, last year we ran a very successful 6-in-1 campaign, with celebrities, like Dhoni. This year we just launched a new campaign with some more brand ambassadors, under an overall umbrella campaign called Faisla Sahi, Zindagi Sahi. I wanna give you a quick example of what we are trying to do, given also what we are seeing around the flu vaccine right now.
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As I said, this is an umbrella campaign that we've launched. The example that I just showed you was just about flu, given the topical nature of many of us navigating through this challenging time where flu is quite rampant right now. We have a similar campaign for many other including, for example, meningococcal disease, so there's a similar one. We're using the social media extensively. There's a whole media plan that we have for the next few quarters. I will not show this. You probably get the drift of what I'm sharing, but that was for another area. I think where I wanna spend the next three or four minutes specifically is opening up a completely new category for us, which is the launch of Shingrix.
As some of you may have tracked our global corporation, may be aware, this is right now one of the biggest assets for us, delivering almost GBP 3 billion on top line. A growth of 72% for the last calendar year, 2022. It's been launched in nine markets last year, so right now as we speak, it's available in almost 26 countries. We're very proud and privileged to have Shingrix being launched in India in the next few weeks. Clearly this is a massive opportunity. Almost 90% of adults more than 50 years old, and this is all scientific data, where we have the data points around epidemiology and prevalence available, they are always infected with the virus that actually causes herpes zoster or shingles.
One in three estimated, you know, will have this reactivation from the varicella-zoster vaccine that remains in our cerebrospinal fluid when we have chickenpox in our childhood. I think most importantly, this vaccine helps protect adults over 50 from painful, extremely painful and debilitating conditions like post-herpetic neuralgia or herpes zoster ophthalmicus, which are quite dangerous. I think this is where we are opening up a completely new category. I think a lot of the organizational effort will be spent in ensuring that we spend our energy in ensuring that all available subjects get to know about this disease, but more importantly, have the potential opportunity to get vaccinated. Why is this vaccine so special?
As I said, this is the first time we have a non-live vaccine for herpes zoster in India, so it's really a first in the class in its category. It's approved for everybody who's 50 years and above. It's, it's innovative to the extent that this is one of the first vaccine which has efficacy of 97%. Not just that, if once you've taken those two jabs, you have protection. We have proven protection data for 10 years, which add up to 90%. That's really, you know, at the, at the deep end of efficacy which you rarely get to see with innovative medicines. This is exactly where we will be launching.
We've just created a whole new adult vaccine team in the last few months, and we are going live with the launch in April. That's about Shingrix. As I said, this will open up the beachhead for us in creation of the adult vaccine category market in India. We obviously, there's a lot of follow-on vaccines, including vaccines like RSV, for which trials are happening. Now we'll see which of those innovative medicines and vaccines really make sense for India. This really is a category for which the time has come, and that's where you'll see a new platform of growth for us in the Indian context.
I think one of the main questions that we will address, but I wanna get that upfront is yes, the NLEM, which is announced once in five years, was announced, as we all know, late 2022. This time we have KEFTAB and TIVDAK, these are the two assets that we have, which were new inclusions. Just to give you a quick sense, if you follow the pie charts, till last year, we had almost one-third of our portfolio which was NLEM impacted. That's moving up by about 9 percentage points, and now we have about 42% of our portfolio, which is included in the NLEM.
Obviously, to mitigate this exposure, the short-term exposure, we will use the Shingrix launch effectively to ensure that we are able to not only create the category, but build this additional growth lever in the immediate near term. We also are quite optimistic about stabilizing our pediatric vaccine business in the coming couple of quarters. Most importantly, as we've seen in the past, this is the third time we have the NLEM impact. With every single impact, I think there's always a short-term impact, but we always seen that we've grown the volumes 2x, 3x for some of our products. That's exactly what we're gonna...
We have seen the detail working, and we have the plans in place now in terms of specifically zeroing down on what kind of volume upsides we will have for each of the assets that's now included. Apart from, of course, the tailwind that we may potentially get from WPI, and of course, cost optimization, which continues to be a part of our ways of working. That's the summary on the NLEM impact. I think if you were to ask me how does it directly correlate on the EBITDA and margins? Yes, in the last three or four years, we've definitely improved our margins.
As you would see, in the immediate near term, we don't see an impact for the financial year, we certainly see in the financial year 2023-2024, we will see some erosion there. As I said, it's a short-term erosion which we are confident given the volume growth that we will drive, plus the launch of new assets will help us tide over so that we are back to the EBITDA and the margin expectations in the near term. If you were to look at the five-year ambition that we have at GSK India, obviously it all begins with touching the lives of as many Indians as we can. As I said, at any given point of time, we touch about 250 million-300 million lives annually.
The question is: How do we touch, continue to touch 1 billion lives in India over this plan period or even more? The three pillars therefore on which we will base our strategies, one is driving all innovative launches to fuel this growth machine. Most importantly, deliver and continue to deliver the competitive performance with profitable growth for each of those assets in the base business, both general medicines and pediatric vaccines. Above all else, remain rooted in our cultural pillars of being ambitious for patients, being accountable for impact, and doing everything that's right for our patients and for the organization. Evolving a culture where our people can really develop. That's the sum and substance of what I had to share.
I also wanted to share with you that we are incredibly privileged and honored that this November 2023, we will start our centenary year of celebration of GSK's operations in India. We are entering our centenary year, so November 2024 is when actually we complete 100 years. Our centenary years begins, and that's only because of the trust. We continue to, with all that you saw in the previous slides, our endeavor will be to build with the growth story, continue to build that trust, not just for the assets that we have, but for everything we do to serve the needs of patients and consumers at large in India for the next 100. With that, I, this is my last slide. I think I and Juby can open up the question and answer session.
Oh, thank you. Thank you, Bhushan. May I request you, Juby, to come?
I think the first preference for questions would be the people here, and, because you've already taken the time to come here. Maybe we'll start with Alka. Maybe the mic, unko dedo. Maybe just introduce yourself first so that everyone knows, who you are and your questions. If you have a preference, for a response from Bhushan or Juby, just state that. Yeah.
Hi, Alka from Centrum. Sir, if you could explain a little bit more on the Shingrix market size in India in order to, you know, help us in understanding how big the opportunity is going to be for us. I'm a bit confused because I was referring few articles. The cases in India for Shingrix, I have received for some multiple sources. Some sources says, like, you know, annual cases in India about 1 million, some says, like 3,000, something like that. If you can share some like, you know, broader level prospects on that.
Sure.
That would be helpful. Thanks.
Just to give you again a context. Remember, one of the things that's unique at GSK is that we operate. Probably we are one of the few companies that still continues to be broadly diversified in terms of operating at both ends of the spectrum, prevention and treatment. Even if you look at the treatment of herpes zoster, what you talked about is the actual treatment and obviously Shingrix is to prevent, so the numbers, depending on what sources you see, are different. Even there, for example, acyclovir is again a research molecule of GSK, continues to be the mainline of treatment for herpes zoster. When you look at who all potentially can benefit, the label that we have is every single person above 50 years.
Given the fact that it's well documented that the immunogenic responses go down after 50 plus coupled with some of the concomitant illnesses that people may have, that may also trigger immunogenic responses and therefore lead to reactivation. Most of us are infected with this virus and it remains in our cerebrospinal fluid, as I said, when we have chickenpox in our childhood. This gets reactivated and then gets, you know, manifests itself in the form of herpes zoster. If you look at the scoping, clearly everybody above 50 years, and that cohort is very significant in our country. We are talking of millions of people who can potentially benefit. Now obviously, it's a vaccine.
As I said, it's a new category, so we are mindful of, you know, using all appropriate filters in terms of who can benefit, who can access and who can, you know, afford, these kind of preventive medicines and vaccines. That's, you know, prima facie, the cohort that we're talking of is in excess of 10 million people, to begin with. That's the kind of change you can bring about, with a vaccine like Shingrix.
Okay, thank you. Talking about the affordability, if you could explain like, you know, this is also self-pay. Okay, like when do we see the, like, you know, for us the sales to start coming in? Because in the specialty portfolio we are already seeing like, you know, NUCALA and TRELEGY are roughly about 1% or 2% of the overall sales. When like, you know, how do you see the ramp up in Shingrix post-launch?
Yeah. I just want to contextualize. Probably NUCALA is continues to be a niche product. As you are aware, it is indicated for severe eosinophilic asthma, which is really, you know, you know, the top of the pyramid in terms of it's an incredible product. It's a biologic, but it's indicated for a select few group of patients, unlike the base of the pyramid, which continues to be mild to moderate or even severe asthma. This is really severe asthma with patients who really need a biologic. To begin with, the comparison might be a little, you know, incorrect.
Shingrix, coming back to Shingrix as a, if you look at most of the markets where it has been launched, the trajectory has been significant in the first six to 12 months itself. Suddenly you have now an innovative vaccine which has 97% efficacy. Most importantly, it helps avoid serious complications like post-herpetic neuralgia, which is extremely painful. We will start, the stocks have already arrived in the country. They are undergoing testing, we estimate that we should be able to offer this vaccine to consumers at large from next month, from April.
That answers my question.
Yeah. Okay. Can you pass the mic? Yeah. Okay, go ahead. Just introduce yourself. Yeah.
Gokul from Awriga Capital. Just two questions. One is that you break up your business in terms of promoted brands, others and vaccines. In the last nine months results, what would have been the growth rates between the three broader segments of the business?
The general medicines, the way we categorize general medicines, private vaccines and of course the speciality. Given the size of the speciality business, it is still relatively small because it is a muscle that we are building for the future launches. A bulk of our business, almost 80% of our business still comes from general medicines portfolio. That part of the business has been growing in high single digits.
Yeah. General medicines is growing 10%. General medicines make almost 80% of our total business. Vaccines is 20% of our total business, which is de-growing roughly 34% in the last quarter, 35% in the last quarter. We expect that is going to stabilize. Inside g eneral medicine, which makes 80% of our business. The promoted brands grows 10%-13% depending on the last two quarters. Q2 was 13%, last quarter was 10%. Broadly, double-digit growth across most of the quarters you could see. It's very strong portfolio, and we expect the same might be continuing also.
Just to clarify, you mentioned vaccines is decline of 34%.
Vaccine, if you see Q3 of FY 2023, which is the last quarter, the decline discrete quarter has been 35% decline year-over-year. Okay. The quarter before it was also around 30%-32% decline. What is interesting is that sales value of the last two quarters is remaining almost stable. We are seeing a stability coming through in the vaccine portfolio. This decline is mainly driven by the market decline, as well as there's an NIP business which is the decline from National Immunization Program. Some of the antigens are getting there. The good news is we started seeing growth in some of our key assets. That's one part. Second is the overall portfolio started stabilizing in the last two quarters.
Essentially in FY 2024 you should see a growth in the vaccines portfolio?
That's right. That's what we are expecting.
That's what we are expecting. Absolutely.
Okay.
Just to add to that point, if you recall, there were enough data points available to actually show that the birth cohorts were indeed suppressed for at least three to four quarters. When you look at some of the surrogate markers in terms of the pregnancy test or some of the products used for pregnancy, those have gone up from September. Which means our birth cohorts will start normalizing as we speak. That's another indicator for us to tell us that we will definitely see stabilization in the pediatric vaccine market.
Okay. Secondly, WPI last year allowed us. I mean, the price hike in the NLEM was 10% because WPI was that number. In our NLEM portfolio, did we take the 10% kind of a price hike across?
Yes, we taken on all the portfolio 10, full 10% price increase. That said, it is little bit phased out. Some are coming after April, May kind of time. There's a bit of a phasing there, but it's full annualized impact on that for FY 2024 will be completely 10%. It's just been fully taken to your question.
The impact of this will be felt going forward.
That's right. That's right.
Okay. Lastly, just on the slides, which you mentioned that high single-digit growth aspiration, that was for the next three to five years. Is that...
The next couple of years, given the fact that we will definitely have... We don't foresee much of an impact for the overall financial year ending March 2023. 2023/2024, we definitely with all that we are doing, we certainly see there'll be some marginal impact, both top line, bottom line. That's why I said single high digit. Obviously, when I scope it over a five-year period, the ambition is the aim is to grow by double digit.
Okay, great. Thank you.
You can just pass it on.
Just pass. Okay, you're right. We'll come to you. Yeah. Just introduce yourself.
Yeah.
Yeah.
I'm Satish Bhatt, from Anvil Shares & Stock Broking. Sir, I have seen Glaxo from maybe 1990s. A literally span of 35 years. You had a good phase till maybe 2000, you had a very bad phase till maybe last 10 years, I think maybe very erratic, maybe because of NLEM coming in and those things. In the last five to 10 years, we have seen that the entire market is going more towards the chronic area. That way, how Indian things are also getting changed. You can see from your portfolio, cardio switch is just 5% maybe years back. Now it has account for 30%, 40% of the market. Your portfolio is now more confined towards vaccines and respiratory, which we feel is one of the specialty of GSK is putting money in the R&D side.
You told your Shingrix you're targeting a market of something like INR 1 crore population, you know? Maybe the tier one and two cities, max, where they can understand such type of products, you know. Just if you do a mathematical work and you launch at INR 5,000, which may be a decent thing. That's a roughly INR 5,000 crore product. I just want to know what type of thinking is there in terms of management to make, if not five, maybe INR 500 crore-INR 1,000 crore product, because that is really going to move the needle for Glaxo, you know? For a company whose size is INR 3,500 crore. You need some good products really which are. You can make INR 500 or INR 1,000 crores. You, you are the only person who have such type of vaccine.
What type of marketing, differentiated marketing investments you want to make it? Maybe are you ready to spend INR 100 crores-INR 200 crores on a product? Is the board or management thinking on those lines? You have something, a good product, you know. What is management thinking on those? I'll say talk, we'll talk on NUCALA also, sir.
Sure. First of all, thank you very much, sir. It's a great question. In terms of scoping out the size and potential, we would love to have this kind of an aspiration translating, but as you would also agree that in a market where, not just pediatric but adult vaccines are self-paid, there are definitely filters of access, affordability. But that's exactly the reason why we are playing at the deep end now in terms of placing these bets in areas where we think we have the advantage. We know, we are confident that we have the differential advantage in terms of the innovation, but more importantly, the ability to build that market and build that category. That's exactly the reason why we are spending our money and our energy there.
The point that you make, I think you make a very good point. If you remember one of the points I made on my slide, we are one of the few companies which still has four brands among the top 50. That's almost 10% of the top 50 brands are from GSK stables. That's one of the reasons why, as an organization, you will not see us launching products which just make INR 5 crores, INR 10 crores, it doesn't make sense to put our energy and focus. It's better to invest in areas where we know we have a differential advantage, where we know we can make a significant impact and solve a critical medical need.
You'll see most of the subsequent launches that we have or the work that's happening is all in areas where we believe we have the ability to build such mega brands. Just following up, the question that we ask internally is which is the next AUGMENTIN for us? Which is the next CALPOL for us? That's the intent with which obviously we want to build and spend and create that new category for Shingrix. The answer would be definitely aligned with what you're thinking.
Sir, vaccine is basically preventive. The next is on NUCALA. I think two or three years back, I think in your annual report you told the eosinophilic-based asthma, we have around INR 9 lakh patients in the country. And maybe the cost of treatment is something INR 1 lakhs-INR 1.5 lakhs for the entire four or five doses which you take. That itself is another big market, you know. This is a product, the market is ready. What is preventing you from not making INR 500 crores? What is preventing the what different you have to do, which Glaxo has not done till date, you know, to make it something?
Sure. Yes, we truly believe NUCALA is a great asset. As I said, it continues to offer benefit to patients. Now, obviously we have aspirations in terms of taking it to the next level. We've just created a new structure now to support our entry into the institutional segment, build key account management capabilities. The brand has done, I think for 2022, we did cross INR 15 crores-INR 20 crores. The question is, what will it take to make it INR 50 crores, INR 100 crores in the coming time? I think that's where we are spending.
You have a market. You have INR 9 lakh patients already there.
Also you have to remember it's a biologic. I think like any new category, you know, physicians have to be ready to start choosing biologics. I think that's an area where we have invested in the last 12 months, and we'll continue to invest even in the coming time. That's exactly where we are putting our resources and energy in terms of category creation. When categories get created like this, they will not follow a linear curve, they follow an exponential curve at some point. Although the build up might seem like a slow burn, at a certain point, it really creates a different exponential trajectory, and that's exactly what we're aiming for.
Yeah. Are you ready to spend INR 50 crores-INR 100 crores on that particular brand in a particular year?
Why would you-?
For next three years, you can spend INR 150 crores. Maybe the payback will be maybe after three years, you may see suddenly top line becoming like INR 100 crores, INR 300 crores, INR 500 crores. That's already a $3 billion drug for you globally, you know? That's a product which I think India needs, you know. It's just I think the education by the science provider to your doctors. I still cannot why Glaxo is not making that, "Chalo, make it a killing year." What is preventing from that?
No, I think there's nothing preventing. As I said, even if you look at all the biologics that are used in this space, it is a significant new entrant. The reason I say that new entrant is, we've started getting into some of the key accounts because these kind of products also need to get into the right institutional accounts. That's happening in the last few months. I don't think anything is stopping it. It's just a question of the right time for us to swing that needle. As I said, category creation in biologicals is definitely, it's not a linear curve, it's definitely an exponential curve.
Yeah. Okay. Thanks, sir.
Thank you. Thank you for your question. Can we pass it? Yeah. Introduce yourself.
Yeah, hi. This is Anuj from M3 Investment. I want to drill down on vaccines a little bit. First on the short term, see, industry after industry, we've seen a pent-up demand showing up. If I see the parents' portfolio, the vaccines have grown by 20% ex-COVID, post-COVID. It's interesting that India continues to show a degrowth, and it's not a normal scenario. You said the cohort is showing up, but isn't it too delayed? Why is India behaving differently than global? That's question number one.
Two things happened. As I said, one is we did see a suppressed birth cohorts. Again, in a population of our country and where you have a birth cohort of 26 million average annually, should it really be material enough to start denting, is a question we can ask together. We did see that the footfalls in the clinics of pediatricians definitely had gone down. The other reason that Juby just alluded to was also the introduction of some of the newer antigens in the National Immunization Program.
You had PCV, the pneumococcal conjugate vaccine got into the National Immunization Program, and that was probably the biggest, if you look at the immunization rates in our country, even in the targeted cohorts, the largest or the highest immunization rates are in some of these categories. When these get into NIP, a large part of the population also starts moving to places where this is given free. I think that was also one of the reasons why the vaccination for other antigens started getting mixed in the private chambers. Again, these are anecdotal. These might seem anecdotal, but in terms of connecting the dots with all the data points, this is exactly what we know was happening on the ground.
As I said, some of these surrogate measures that we've seen in the last few months tell us clearly that, you know, we've seen that it's turned a corner. We're stabilizing up on, in terms of both value, volumes as well as value. The growth will only start coming in the, in the next few quarters.
Sure. Thanks. My second question is, you know, if I again look at the parent's portfolio, the growth for vaccines it seems has been 10% CAGR for past 22 years, maybe 23. If I take the India data, it seems that it's nowhere close. Again, there are three parts to it. One is the NIP program, one is the competition, and one is, you know. Can you just give some more color as to? As you explained, some part of the loss is structural because of the NIP program. Some more details as to every year how are we losing in terms of the NIP expansion?
Sure. If you look at the vaccine market over the last two decades, I mean, if you look at GSK, 20 years ago our biggest vaccine brand was a brand called ENGERIX-B. Now that no longer even is available. Most of the countries it's. As vaccines evolve, where you have higher valencies, where you have, tetravalent, you have pentavalent, you have six diseases covered in one single shot, obviously the nature of your portfolio evolves, and I think that's the nature of the vaccine business. Today if you look at the pentavalent and the hexavalent, these are the ones which are mostly. If you look at these two categories, they're really driving the growth.
Therefore, if you look at even internally within GSK, our own hexavalent brand that we have, INFANRIX Hexa. It's not following the same curve as a PCV, which is going to NIP. It's growing. Compared to the -35% decline that we see in the market, this brand is still growing. Maybe in single digit, but it's never seen a decline. Which means you see the market is shifting to vaccines that really make sense for physicians in terms of lesser jabs, lesser pricks for children. I think that's the nature of the vaccine business.
Okay. On the specialty portfolio, I think the last you communicated back that it was 4%-5% of our revenues and we had aspiration of 10%. Where is that heading up? Also, the portfolio which could be transferred from the parent in, let's suppose, the next three to five years, some light on that area, please.
I don't know about 4%, but we've just launched. We have only two products in the specialty as portfolio right now. We have NUCALA, which is, as I said, a biologic. We just launched the triple close SITT, which is an inhaler called TRELEGY. Again, that's indicated for COPD, not for asthma. These are the only two products we have right now. We'll see. As I said, there are more than 20+ clinical trials, global trials happening even in India for many of our assets. We'll see in terms of the access strategy, in terms of what makes sense for us, in terms of unmet needs. We'll see what to tap into from that portfolio. That's something in the future.
As you talk, the idea is right now to build this specialty muscle with the two assets that we have in the form of NUCALA and TRELEGY.
Okay. One last question. I think the earlier gentleman was talking about investments. Could we talk about the org structure or the sales for which you are aligning to this segment so that it'll give us some thought flow to how we're building the segment?
It's a brilliant question. In fact, both were brilliant questions in terms of the appetite that we have to really fuel the growth at the growth end. Just to give you an example of Shingrix, we've created a completely new team for adult vaccination, especially for Shingrix. Almost 200 people on the ground with specialized capabilities, with experience in creating new categories. That should also tell you, plus these kind of new launches will also depend on how we are able to resource all areas around disease awareness, around creating consumer campaigns, really creating patient assistance programs. I think those are all the levers that we are unlocking. Something that you will see in a very significant way, beginning with Shingrix.
Right. My name is Viraj. I'm from SiMPL. Just couple of questions. First was, you know, you talked about high single digit growth rate, you know, next three to five years. This, I'm assuming, is post the impact of NLEM. If I look at 2024, you know, based on current prices of the brands we have, what will be roughly the impact of NLEM? Post the WPI increase, what will be the net impact? That is question one. If you can...
Sure. I'll hand it over to Juby, before that, look, the NLEM prices are coming at different stages. Even as we speak today, a lot of these draft prices are out, some of the draft prices are still not out. You know, the final ceiling prices are... I think it's coming in a staggered fashion, so it really depends on which quarter it falls in and therefore which year it gets accounted for. That's why I made that statement that for the financial year ending this year, March, 2023, we don't see a significant impact. For the coming year, definitely we definitely have an exposure and that's why we have lined up all the initiatives that I just shared in terms of how we intend to mitigate.
Primarily through new launches like Shingrix, also learning from all the lessons that we've had in the past where, as I said, AUGMENTIN has had an NLEM impact twice. Today, I just showed you, it still continues to be the number one brand in the industry by way of revenue in terms of value. That gives us confidence to mitigate a large part of that exposure. I'll hand it over to Juby if he wants to add something.
Speaking on NLEM, I think first there are two, three new assets got added into this, right? Which is KEFTAB, T-Bact. These are big additions into the NLEM.
The total impact, annualized impact for next year, FY 2024, could be in the range of 8%-9%. We're talking about INR 240 crores to INR 260, 70 crores. That's massive. We should not see this impact as discrete price impact, because most of these price impacts are so massive or significant that the price volume gains will kick in. Net, we've been thinking about how we can mitigate it. There are ways we are going to mitigate. One is the volume, which we were talking about in the slide. Second is new launches, which is like the product life cycle extensions which we are seeing in CANport plus. Third is the cost optimization. Fourth is the expense or, you know, the GTN optimization. All these things will help us.
Net-net, what we are talking about is roughly we have very good line of sight of 70% profitability mitigated as we speak. Okay, 8%, 9% top line impact flowing into the bottom line. 70% of that we will be seeing mitigated. The rest of the things we are still exploring. As you know, we had in 2014 and subsequently similar level of, you know, impact, but we've been mitigating it. The same perhaps will be happening this year also.
This 8%, 9% is pre-WPI price increase?
Pre-WPI.
Okay.
WPI will be further helping us to mitigate further on this one also.
Okay, got it. Second question is on the vaccine part, you know, and what you were answering to one of the earlier participants was how the mix has changed over, let's say, a 20-year period. There are two, three questions on vaccines. First is, if I have to look at last five, seven years, can you just probably give some more color in terms of how's the, say, the contribution? What were the top five vaccines contributing to the portfolio? How has that changed, say, versus last five, seven years and now? You know, what are those? If one has to understand further the market segmentation, if you can provide a little more perspective in terms of which segments you have seen more sharper degrowth, and which segments are still growing?
In that sense, how is the overall competition in each of those segments? Yeah.
There were multiple questions in that, but I'll try to unpeel those layers and try and answer the broad themes. Yeah, I think, if you look at the biggest launch that we had in the vaccine, private vaccine business, was almost a decade back when we launched SYNFLORIX, which was our brand of pneumococcal conjugate vaccine, indicated for obviously prevention of pneumonia. In fact, this was the first vaccine in the industry to cross INR 200 crores in annual revenues. Today, this is exactly the vaccine which is in NIP. Will, in the private segment, obviously, will this demand evaporate completely? Absolutely not. There will still be parents who will want to vaccinate their kids, you know, in the private setting.
That's why we still believe that any given point of time, for a company like ours, we will still have access to vaccinating about 25,000 kids every month, in the pediatrician's chamber, with this vaccine. To the, you know, to the broader question, if you look at our vaccine portfolio today and look at what's in NIP and what's our exposure, our exposure, because we already mitigated that, is now less than 6%-7%. ROTARIX, for example, which is our other brand for rotavirus, which is also in the National Immunization Program, or now SYNFLORIX, both these are accounting for less than 6% of our top line. I think that the blow is already factored.
Where we are now playing is the hexavalent that I said. It's the largest vaccine now. It's almost INR 165 crores in top-line value, growing. That's where we are investing all our energy. We have flu, which was one of the best, FLUARIX Tetra, which is, you know, not just during the COVID times, those two years, but even today, as you can see, it comes in both Southern Hemisphere and Northern Hemisphere, two variants, given the seasonal changes. That's another vaccine which is significant for us. Of course, we continue to have, you know, leading brands like the TDAP in maternal immunization with BOOSTRIX and HAVRIX and MENVEO.
Clearly our portfolio is now very well aligned as opposed to in the past where one brand was pulling up the whole portfolio. Today it's much more balanced in terms of the contribution and also the growth end.
Okay. you know, when you're expecting a growth for this portfolio of vaccine to grow next year, X of Shingrix, what kind of a growth we see start coming for us? you know, of the effects at the end of immunization and other elements, you know, that kind of, you know, going behind us now. how should one look at the vaccine portfolio X in this behaving for us? what kind of a team MR team is kind of supporting this particular division?
It's a very good question again. Look, from a massive slide that we saw for the last 12-18 months, consistently in the pediatrics vaccine segment, as I said, the last couple of months, which means two months of the last quarter of this financial year, we are seeing the business stabilizing. You know, from as opposed to the 19%-20% growth, we have low single digits, you know, 3%-4% growth, which means we've turned the corner, at least in terms of holdings. The idea is as we enter the new financial year, get back to double-digit growth.
Of course, as I said, we also have the advantage of some of the vaccines which were stock constrained, like the, you know, we have a vaccine called varicella, which was out of stock for more than a year, that's coming back, which is for chickenpox, basically. That's coming back this year. With all of that, we should be able to get back to our intent will be to drive a double-digit growth again. Juby, you wanna add something?
No, I think you've completed it. Double-digit growth we are expecting, particularly with the vaccine business stabilizing, some supplier assumption, ex-Shingrix.
Okay.
Also, just to add one more point, the NIP part, which was having some impact, it's so minuscule at this point in time. That's not going to have a big impact in terms of decline.
Okay. Just one more question was on the MR team. You know, if you can provide more perspective in terms of how's the diversification in terms of, you know, the specialty, vaccine and then other segments. What kind of MR team is focused in each of these, you know? Just to get a perspective of how we are going about where we kind of putting more resources in terms of future, opportunity and growth.
As I said on one of my slides, our strategy is very clearly aligned in terms of therapy areas and the customers that we serve, and that's how the strategy is dictating the current structure. As we speak right now, we still have a large...
If you were to, if you were to look at this as a continuum, at one end of the spectrum, you have the mass teams, which are largely the general practitioner-led pediatrician teams, which promote products like AUGMENTIN, CALPOL, which are more of the reach, you know, more of getting the share of voice out. Then we have the dermatology business team, which is very specialized focus. Then we have the pediatric vaccine team, and then we have the Shingrix team. That's how we are structured. On top of that, I think we continue to provide a lot of access to science. We still have a rural team which is based in the tier three, tier four towns. We have 175 of them who are based in the interiors of India, and they cover the entire portfolio.
Largely the practitioners in these areas also develop a specialist. This is how we are structured currently, and that's exactly to serve the strategy that I showed you in the earlier slide. This is how we are structured. What's changed in the last three months is we've carved out a completely new Shingrix team, and we have a specialty team, which we're just reinvesting, similar to what you heard. We just expanded that team to build some of the new capabilities. This is how we are structured as an organization.
Okay.
On the ground.
Just two more question. One is on the employee base part. I think we rightsize around 125 people and in the distribution, sales and distribution function. Suppose this change in employee base, you know, we're doing something around INR 140 crores-INR 150 crores quarterly run rate in terms of expenses. Should this kind of sustain or we have avenues to further, you know?
The resizing, if you see from 2022 financial exit.
Mm.
To now, it's almost 200 headcounts we have resized down.
Mm.
Okay? This is the trend then. The inflationary pressure, what we are seeing in the, what you said, employment cost, it is helping this re-resizing is helping us to manage that. Other than Shingrix, we are not investing in headcounts in other areas because we have resized it already. We have already categorized into these three categories, and we are putting. Shingrix is again a new headcount, which we are positioning 200 headcounts into the business.
Yeah. Just one last question for you. If you look at our own listed entity for last 10 years, the returns, shareholder returns has been, you know, below FD returns to put it. In that sense, if I have to look at the top management, if you can provide some perspective, how are they incentivized? You know, do we have formal ESAP policy which kind of, you know, may bring more focus in terms of the growth part of the business? How is parent looking in for the listed entity in India?
Well, we continue to be listed here. As I said, we're listed here for more than 50 years now, so that should tell you that we have a board of independent directors who are absolutely focused on revving up the growth engines of this company, so that's the top line. Yes, I think the global organization, so we do have visitors in India, including our global leadership. Obviously, given the geopolitics, India continues to be now an even more important market for us as an organization. I think, yes, if you look at the last 10 years, the TSR is definitely. It's left a sour taste in everybody's mouth, including ours. What are we doing about it? I think we've...
As with any organization, we place some bets. Unfortunately, as the nature of business development or the bets that you place, some of them work, some of them did not work at all and have taken us back, including, for example, what happened with our plant and some of the key assets that fell off the radar for us. Obviously, the idea is to be forward-looking and see what is it that we can do. That's why I said my last slide was clearly focused on what will it take for us to deliver a 10% growth as an enterprise. If you look at the last couple of years, there has been double-digit growth on parts of our business.
If you look at the general medicines, which is 80% of our business, that's grown by 10%. Hypothetically, if our vaccine business had delivered, if it was not these externalities that were completely out of syllabus, so to say, we would have probably been able to solve that growth story and answer some of your questions. That's the intent moving forward. I think the whole organization, both globally here as well as the listed entity, is focused singularly on the growth agenda right now.
Hi, this is Jina from Awriga Capital. I have only one question. The global reorg that we had between the consumer and pharma business, does it have any implications for India in terms of focus for pharma from the points that you've been mentioning? Does that really have any focus from that sense?
From an Indian standpoint, not really because we were always, you know, there was no umbilical cord between the consumer and the pharma business, connected in India because we were two separate legally listed entities here. To that extent, on the Indian market, it hasn't really made any difference. I think the only difference is globally, obviously, it sharpened the focus in terms of putting energy into the biopharma, and that plays to our advantage because the whole organization is now focused on how we can increase the growth trajectory within the pharma business, of which India is continuing to be the largest business within the emerging market business. We are the largest business within the EM group. Therefore, the focus even further improves moving forward.
Juby, you wanna add something to that?
I think, you said it. It's a completely different business now. Two things. One is we become more relevant in the emerging market group. Second is globally, as the completely different entities and the focus on research, development, finding new entities, all those things will go up globally. Eventually that will flow into India, right? Directly once they find something. That is the simple connection we'll have. Other than that, logically, at this point in the ground, there's no difference. We are completely two different management teams. Everything is separate. No sharing on expense, nothing of that sort. It's business as usual for us at this point in time.
Okay, thank you.
Good luck.
We have 2 folks who've raised their hands online. We have about 58 people at a point in time who joined, two of them have raised hands. Melroy, if you can unmute one of them and if you can introduce yourself and then shoot the question to Juby or Bhushan. Melroy?
Yep, I've asked them to unmute.
Yep. If the name is visible, maybe you can call them out.
Mr. Gagan.
Yeah. Am I audible?
Yes, you are.
Mm-hmm.
Hi, Gagan.
Good evening. The first question is more of a clarification. You indicated a INR 250 crore impact of the revised NLEM on T-Bact and KEFTAB on the top line. You said you'll be able to offset 70%. Does that mean the operating level, EBITDA level impact would be around INR 75 crore because of this?
Firstly, INR 250 crore is not for KEFTAB and T-Bact. It's a total impact across all the NLEM portfolios, okay? We got around 34 stock keeping units under NLEM. It's a total impact on all the portfolio. Yeah, roughly 2%-3% impact we'll be seeing on the bottom line for the first year at least. We are expecting to mitigate in the outer years as we speak.
Right. In the last few months, I think the prices of paracetamol API and also some other APIs, you know, have sort of come down and softened a bit. As you enter the year, you on the NLEM piece, you probably get, you know, an 8%-10% increase. You also get input prices correcting, and the full impact of the last year's 10.7% increase. Would all of this not in some measure offset the impact of the revised prices? Are you saying that after considering, you know, these positives, a net impact of 2%-3% is what you estimate?
Yeah. After considering all these things, we are talking about 70-75% mitigation at this point in time.
Right.
You have to see this is a massive impact, right? 8%-9% is a massive impact on top line.
Mm-hmm.
-covers all these things, including the cost savings, including the WPI which is going to come up, as well as some of the changes which we are making in the manufacturing. For example, when you're seeing that video of Nashik, there's some packaging changes we are making on some products like aluminum to LamiTube. These are all going to help us on the cost savings. Now, just to add, we've been working on this for a long time. If you think about 2014 or 2015, our EBITDA used to be 14%-15%. It used to be higher. It has come down at some point in time, 14%-15%. Now it has gone up. After that, several initiatives have gone through. We are working on several initiatives like that. As we speak, we are talking about 70% mitigated.
70%-75% will be mitigated.
Right. You also indicated that, for 2024, you are aspiring to a high single digit top line growth. If the impact on your top line is of the order of 8%-9% negative from these two, three products or whatever more SKUs you've talked of, it means the balance portfolio has to grow very sharply. You know, probably closer to 20% for you to be able to, you know, create that sort of a top-line growth. Could you elaborate a little more? I mean, is the new product that you're going to launch, plus the baseline growth on other products going to be able to give you that much?
Yeah, that's right. I think what we are seeing is two, three dynamics playing out in FY 2024. One is Shingrix launch. It is a big launch for us. That's one piece. Second is the volume increase. Okay. Some of these price reductions, particularly T-Bact and KEFTAB, you will see a massive volume increase. That's what we are expecting. With the volume increase, with the new launch, with some of the supply coming back on VARILRIX, we are expecting that kind of a double-digit growth. The net-net, we are talking about high single-digit growth.
Yeah. Final question from my side. One of your slides showed, you know, the operating margins initially come down and then over the next three, four years, you know, you aspire to take it up to, what, 25 odd percent, if I could, you know, eyeball it correctly.
Mm-hmm.
You know, what are the levers for you to, you know, to be able to take your margins up, once you've sort of, you know, digested and countered the impact of the revised NLEM?
Two, three things. One is the NLEM is once in a five-year impact, right? You'll keep on having this WPI as well as the normal price increase coming up. That is one major factor which will be helping us to improve on the margin. 2nd is our promoted category, which is relatively high margin business. Okay. That's going to grow high double-digit or double-digit growth. That's also helping us to improve the margin. Last but not the least, the cost saving initiatives which we are working on, that's also going to help us on margin improvement.
Thanks. Final question. Why is it that you have, you know, two SKUs in paracetamol, which is Crocin and CALPOL, and Crocin is, you know, with your other entity, which is a consumer health? Essentially, they are both the same products. I mean, it could have been captured very easily in the listed entity. What's the size of Crocin versus CALPOL for you? These are the two questions.
I think I'll take that question. First and foremost, as I said earlier, we are two separate legally listed entities, so there is absolutely no connection between CALPOL and Crocin. Crocin continues to be now a trademark owned by Haleon, as that company is now called. There is no correlation. If you were to look at the IQVIA data, I won't hazard a guess in terms of their size, but we continue to be the number one paracetamol brand when it comes to the not just within paracetamol, but if you look at all the prescriptions that are written in India across all categories, across all brands, the number one prescribed brand in India is CALPOL.
You know, my question-
Also it is, yeah.
Sorry to have interrupted. My question is that, you know, what was the rationale behind putting one paracetamol brand in a consumer entity and one paracetamol brand in a listed, I mean, in this entity, which is an RX entity. Logically speaking, either it is a consumer brand or it is an RX brand, which means that either the whole of the package should be with you or the whole of it should be with them. Why is it split up?
I think we'll have to go. Yeah, it's a good question, but I think you'll have to go back to history because this is a brand originally owned by a company called Duphar, as some of you might know. It was divested by that company and then picked up by SmithKline. It went to the consumer business. There's a long history, but that's the reason why it stayed there. Whereas CALPOL remained anchored around ethical promotion. It's sort of brand that you will see in the public media being advertised. We are clearly rooted around ethical prescriptions, whereas the route that I think that company took was more towards leaning towards the OTC space.
Again, as I said, you'll have to go back and see the history of how that brand had moved from Duphar.
Likewise, what was the rationale for Otrivin?
Also the CALPOL was, I think, from Burroughs Wellcome.
Absolutely. Absolutely.
Yeah, that's true. Okay. Thank you.
Hey, Gagan, hope we've answered your questions. I don't know whether it's comprehensively as far as your mind goes, but I think you should tell us, you've been tracking GSK for a longer time, so we'll connect with you for answers too sometime on the history of CALPOL and Crocin. There is one more hand raised, Melroy. If you could just announce the name and unmute.
Nikhil.
Yeah. Hi.
Hey, Nikhil.
Hi, good evening. Am I audible?
Yes. Hi.
Hi, I'm Nikhil Upadhyay from Securities Investment Management. Just three questions. One is a clarification to Juby. When you said this INR 250 crores of NLEM impact, and if we build in the WPI price increase and volume increases, what I understand is that the impact does get watered down significantly. Considering the growth and the cost initiatives, the impact on the margins would have been much more normalized. When you say this 2%-3%, do you consider the WPI price increase from April 2023, which we will get? Just a clarification.
Yeah, we countered that as well.
Okay, fine. Now two questions. One is, if we look at, like in your presentation, you mentioned that from 23 to 25 or 26, we would like to grow in high single digits. If we break GSK's portfolio, there are three buckets. One is vaccines, one is specialty, and one is the general medicines. Both on vaccines and specialty, if we look at our launches, these are more launches which are focusing on unmet needs, or there is a higher lower penetration of these products. In a way, intuitively, this part of the portfolio can grow at a higher single digit, and it used to grow in past pre-COVID. On the general medicines, if we look at it, we've got brands where we've got significant market share.
Like, on an average, it's in our focus brands, our average market share is beyond 30%, 40%. That part of the portfolio is also grown in high single digit or high double digit. When you say over a three to five years, the company's growth rate of a high single digit, and if I look at the portfolio breakup, which looks like intuitively can grow at a higher double digit, what part of the business is pulling this growth down?
Like someone asked here, the whole NLEM is sitting in general medicine portfolio, right? That is approximately 10% of general medicine portfolio. Now, to grow in double digit or high single digit, the business has to grow double digit, high double digit. That is the pricing, the whole pricing element is pulling it down. There's nothing else there. We are expecting our promoted brands continue to grow double digits.
Okay. The end markets.
The pricing element will be offsetting it, bringing it to high single digit.
Okay, the end markets are still. If we look at the end market, say for AUGMENTIN or of KEFTAB or CCM, the addressable markets, are they still seeing healthy mid-single digit or high single-digit growth? Because we've got significant market share, so, maybe increasing market share beyond in some of the brands looks very difficult. How do you see the end markets growing over, and do you see that can sustain a healthy growth for us to sustain growth in the general medicines portfolio?
Let me just give you a bit of flavor what I'm talking about. If we talk about KEFTAB, okay, which is one of the biggest impacted NLEM product. The price cut we are going to see is roughly 60%. The price is still to be notified is 60%. Which means our price is going to come such low, the price volume play will play. What will happen is there are a lot of patients or lot of doctors who are not able to prescribe because of the high price of that product, will now start prescribing. We mapped it out very clearly how to play on this one. We believe some of those factors, particularly when the price becomes much more accessible, we'll be going to access the lower end of the pyramid.
That's what we are seeing in other products also like AUGMENTIN. It's the same analog which we have used as we were building up all this forecast. We have seen that in the past also, when the NLEM impact has been significant. The volume play will be definitely there. There's a market share gain will be there, as well as the doctors who are using generics, there will be a shift. Some part of that will be from that. Some part will be from the market. Building also will be happening. The category also will be expanding as the price dynamics change in the category. It's a function of all those things, but we'll be expecting to see that.
Okay. Okay, fine.
Sure.
Just one last question now. What we've seen is, like, there's a constant change in the management at the MD level. Like in last 10 years, there's been a fourth change which has happened. As an outsider, what we see is that the new incoming is always trying to clear out the problems of the previous. By the time the problems get cleared, the management again changes. There is no continuity in terms of, say, like, a focus on, okay, how we have to grow and probably make the company stronger. That's clearly visible in the earnings also of the company, so that we are flat where we were. How does the parent look at it?
This three, four years change in the management, how is driving the focus in terms of making the company longer or larger over a five, 10 years? Who is driving this whole idea of the company over the next five, 10 years, where we want to be and how we have to be better than the market?
Probably I'll take a stab at that. It's a relevant question. It's a good question indeed. as a listed company, as you must be aware, we are also having a NRC committee. We have a board that's actively involved in terms of ensuring that there is leadership and more importantly, leadership continuity in shaping and reshaping the organization so that we can continue to leverage this incredible equity that GSK has enjoyed for the last century. now again, in a global organization like ours, it is also quite likely that, you know, talent moves from geographies. I mean, both of us have spent 12 years, but we've...
I mean, he spent, this probably for Juby, this is the first job in India, although he's been with GSK for more than 14 years. For me, in these 12, 13 years that I've been here, I would also had a chance to work outside for almost five years. Point I'm making is it's also a function of when you operate in a global organization, some of these choices of who has to move where is also driven by, you know, how the organization is seeing the individual talent moves. Having said that, the leadership continuity is absolutely critical, and that's why I think, even, you know, moving forward, I can't predict, I don't have a crystal ball to gaze and tell you.
Clearly, in terms of our appointments also, I think the board has been quite clear about ensuring that type of leadership continuity. More importantly, I think even when I look at my own example, I've been here for the last two years. I was a commercial head for the gen med business. One thing that you will not see happening is me cleaning anything because I was very much a part of the team running the pharma business before I got this job three months ago. I think I don't have an answer which can directly tell you whether I mean, whether to say whether this is right or wrong.
I think in global organizations, this is a part and parcel, but I think in terms of ensuring leadership continuity, the organization is fully aware of why we need to have that continuity moving forward. That's all I can say right now.
Oh, thank you. Yeah. I think the company secretary has a word to say.
Just to add, you know, like why the earlier one was for two years, your appointment itself is for four years. If that's any direction you've changed.
Okay.
I thought they wouldn't be knowing.
We have Ajay, our company secretary in the room, it says that we should contract with Bhushan for four years, if that's some indication of how things are.
No, thank you. Thank you, Ajay. We have two more hands raised. We'll take those two questions. One is from Rohan Samant, and after that from Mr. Sameer Baisiwala. Rohan, your question.
Yes, thanks for the opportunity. On the NLEM portfolio where the price reduction would be effective, you know, mostly in FY 2024, the WPI-led price increase would be allowed, in FY 2025? Is my understanding correct?
Yeah. I think, yeah, WPI starts from April. It depends on government notification, right? NLEM will start, some of the products started, got implemented from Jan this year. Some will start from next quarter. Depending on the timing of implementation, this works. Okay? Theoretically, WPI starts from April every year.
Right. Let's say a product, the price cap is implemented from, let's say, April or May of, you know, 2023, the WPI would be applicable from April 2024 onwards, right? For those specific products.
It depends on how government is going to notify that price, right? We're still waiting for the final pricing to come out. It could be how government is going to notify that. It could be with WPI also, they could be notifying it. We don't have clarity at this point in time. We have to wait and see how the prices are going to get notified.
Sure. Okay. Thanks.
Okay. We go to Mr. Sameer Baisiwala. Hi, Sameer. Your question.
Yeah, thanks so much. For a very insightful discussion. The question is, how are you thinking about Shingrix pricing here in India?
Well, I mean, if you look at the global pricing, I would say in India it's priceless. No, I mean, on a serious note, obviously. If you see what the pricing is in the global setting, it's significantly different. Coming to the Indian. The reason I'm not giving you the price because it's still, you know, the brand will be launched next month. Let me say it is competitive, given the fact that it's an innovative vaccine that has 97% efficacy, and the first of its class, non-live vaccine for herpes zoster. It's fairly competitive.
I ask this question.
Just wait for a few more weeks.
Okay. I ask this question because I think, it's priced about $200 in the U.S . Per dose, and two doses need to be taken. That seems to be very prohibitive even at a 30% pricing for here for India. Therefore, you may not be able to realize a lot of value that we were discussing for last hour or so.
Yeah. No, it's a fair point, and I can assure you it's not the U.S. price. I mean, in that sense, we'll definitely have a competitive India price for our Indian subjects.
Okay, great. Just one final one. You mentioned about taking 10% price increase through fiscal 2023. I think the industry in general took 6%-8%. What has been the response from the doctors in such a price-sensitive market? What's the outlook for fiscal 2024? Because the WPI seems to be 3%-4% range. Are we looking at a much lower price increase next fiscal?
For WPI products, we can only take what government notifies. We're not going to decide what is the price we're going to take, right? Last year, government has notified it has 10.7% odd. We are taking that. It's a completely price-controlled portfolio, and it's completely up to government to notify.
On the non-control, obviously, we have in a calendar year.
Yeah.
we have the opportunity to take,
We can take, but that is again depending on the competitiveness.
Yeah.
of the product in the market.
Thanks. Just going back on this. How has been the response by the doctors when you did take 10% price increase through fiscal 2023? Based on your estimation for next year, price controlled and non-controlled, the government notification of WPI is also based on what WPI has seen through these months, isn't it? Just what's the outlook for fiscal 2024?
No, I think. I mean, look, over the last eight, 10 years, when you look at our portfolio, and all the assets that I had outlined in the general medicines portfolio, except for KEFTAB, which was probably a statistical outlier, most of our brands have always been in a certain band. It's not that we have been competitively, you know, so expensive that we have been out of the range. When we took the price hike also last year, I don't think it really made a material difference in terms of the elasticity. Physicians do understand. I mean, look at. I'll give a listed example of CALPOL. A pill that costs INR 2 per tablet.
I mean, when you look at the cost of the raw material of paracetamol having tripled over the last 12-18 months, the price was still under INR 2 per pill. So to that extent, even if you were to increase it by 10%, the materiality doesn't exist. So to that extent, I don't think physicians really given our portfolio, given the nature of our portfolio, it didn't really make a difference. That's exactly the reason that Juby was saying earlier. We are absolutely confident that this cut that's gonna happen on KEFTAB is gonna help us reshape the whole market for cefuroxime. KEFTAB is a trust mark, so we are very confident that that's gonna play out favorably for us in the coming fiscal in driving volumes.
Okay, great. Thank you, sir.
Great.
Thank you, Sumeet. Thank you, Bhushan. We have one last question from Behzad. Behzad, if you can ask your question. That's the last question for the day.
Yeah. Am I audible?
Yes, you are.
Three questions from my end. On the 6-in-1 vaccine which you have launched, do you have competition in the market?
Behzad, yes, it's a fairly competitive segment. We do have competition both from multinationals as well as Indian companies.
Okay. On the vaccine front, SYNFLORIX is quite a meaningful product for you all. Now since it's in the UIP, how do you see the private market shaping up? Since you'll be facing competition from Serum and Biological E, do you expect this product to sustain?
Good, very good question. I'll just probably answer a part of your first question. In spite of that competition that I talked for 6-in-1, we still have a market leadership position in the hexavalent category. We still have more than 50% market share, actually 60% in hexavalent as we speak. Coming to the PCV category. Yes, over the last 12 years, we've had, we've retained our leadership. As you rightly said, a part of that business has started going towards NIP now. We have new players even in the private segment. I think that's exactly the reason why companies like ours are continuing to invest. If you're following our vaccine strategy globally, we just acquired a company called Affinivax globally, which has a successor to SYNFLORIX.
That's gonna be the first 24-valent vaccine for pneumonia. Pneumonia will continue to be one of the most important vaccine preventable disease for consideration. As a strategic imperative, this antigen continues to be important for us. This area of pneumonia continues to be important for us even moving forward.
Okay, great. Thank you, Behzad.
Sir, three questions.
You have one more question, Behzad? Hi, Behzad.
Yes, I do. What percentage of your raw materials are imported, and in which currency do you trade in?
Raw materials, the whole vaccine portfolio is imported. This vaccine portfolio, 20% of our business is in vaccine portfolio. The whole vaccine portfolio is imported. Other than that, hardly anything is imported. Less than 5% is imported products. 97% of our pharma business is from local sources.
Okay. Thank you very much. Thank you for the opportunity.
Thank you. With that, we call it a close. Thank you everyone for joining online, especially all of you who came here. Do join us for snacks for those of you present here. Thank you very much.
Thank you.
We can now close the call, Melroy. Thank you. Thank you, Bhushan. Thank you, Sumeet.
Thank you very much, everyone. Thank you.