Ladies and gentlemen, good day and welcome to the Q3 FY24 earnings conference call of Gufic Biosciences Limited. As a reminder, all participants' 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 have, I now hand the conference over to Ms. Ami Shah, the Company Secretary. Thank you, and over to you, Ma'am.
Thank you, Anita. Good evening, ladies and gentlemen, and a warm welcome to Gufic Biosciences Limited earnings conference call for the third quarter of FY23-24. I have with me today Mr. Pranav Choksi, Chief Executive Officer and Whole-time Director, Mr. Devkinandan Roonghta, Chief Financial Officer, and Mr. Avik Das from the Investor Relations team to give the highlights of the business and financial performance of the company and to take queries, if any. We will begin the call with business highlights and overview provided by Mr. Avik, followed by a financial overview from our CFO. Following the opening remarks, we'll open the floor for the Q&A session. I'll now pass the floor to Mr. Avik. Over to you.
Thank you, Ami, and thank you for joining us for Gufic Biosciences' third quarter call. I'm delighted to present an update for this quarter, and I'll highlight the progress we've made on various fronts, beginning with the CAPEX at Indore. So our state-of-the-art manufacturing facility is progressing rapidly. The facility will have an annual capacity of approximately 52 million lyophilized injectables, about 60 million liquid ampule injections, and 30 million liquid vial injections. This will position us as one of the largest single sites in the world for injectable products, especially in the general category. We remain very committed to ensuring the highest level of quality and regulatory compliance, and are currently undertaking extensive validation activities to ensure the same. On those lines, our efforts have started bearing fruits, and we've received the drug manufacturing license from the FDA at Madhya Pradesh.
Now, moving to our strategic business divisions and starting with critical care. So our brands in critical care continue to penetrate the market with over 1,500 hospitals recognizing us as their preferred choice, notably Polytec Secured, number one position in the Polymyxin B injection market, and Micafungin emerged as the market leader in the Micafungin market. Additionally, our recent product launches such as Cavim and Neuropic DCB have received significant acclaim as well. The success of our critical care brands is the result of a comprehensive market strategy that we follow. We focus on penetrating the market by establishing strong relationships with medical professionals as well as hospitals, and our product's efficacy and quality have earned us the status of being a preferred choice among these healthcare providers, which is obviously a testament to our commitment to patient care and scientific rigor.
Now, coming to the neurocare division, we are very thrilled with the market acceptance of Zarbot, which is the first Indian botulinum toxin of international pedigree. With over 100 leading neurologists prescribing Zarbot within one year of launch, it has become the preferred choice for many as well. Our continuous scientific engagement and expansion initiatives aim to further grow Zarbot's user base in India. The market acceptance of Zarbot and our ongoing engagement with leading neurologists are a result of our strategic focus on quality and innovation and building awareness around botulinum toxin. We recognize the unmet need for high-quality botulinum toxin type A in the Indian market and have leveraged our scientific expertise to develop a product that meets with the international standards. Our continuous scientific engagements and expansion initiatives further aim to grow Zarbot's user base in the years to come.
Now, on to our Ferticare division. The launch of Supergraft and Guficin Alpha further demonstrates our commitment to addressing some very critical issues in the infertility treatment. We are also excited about the introduction of the Hydrogestrone tablet in time to come. All of this will offer convenient and effective options for patients that are undergoing fertility treatment. Our innovative product development in the Ferticare division is driven by our commitment to address some of these critical issues in infertility, such as recurrent implantation failure. We understand the challenges faced by patients and healthcare providers in this area, and it's our endeavor to keep responding with products such as Supergraft, Guficin Alpha. Of course, these products represent a significant milestone for our commitment to growing infertility division for Gufic as well.
Now, coming to our mass market divisions of Spark, Stellar, and Healthcare, these divisions have been witnessing robust growth and market leadership, especially in products such as the Dydro products in Spark division. We continue to introduce very innovative products in this division, such as Polimacoxib and [guess]. Our strategic focus to diversify in Stellar division is paying us good dividends with oral and topical products now contributing 50% of sales. Now, coming to Spark division, we are very proud of the market penetration that we have achieved in the Spark division. We have touched and are dealing with 117 hospitals as of December 2023. This is, again, a testament to the commitment of our team and improved quality and efficiency in our supply chain.
And just to highlight, the rapid market penetration achieved by Spark division is the result of our investment in appeal post leadership and supply chain. We recognize the importance of building strong relationships with hospitals and healthcare providers, and our commitment to quality and transparency has helped us to establish a strong foothold in the market. The model has emerged to be very robust, and it's a win-win for all the participants. We anticipate this growth trajectory to continue, and we will keep investing in building the product portfolio as well as the field team in Spark. Now, coming to Astridham division. Astridham's achievements are a result of our focus on advancing aesthetic care through research and innovation.
Our initiatives such as Faceoff, which was a split-face study with a leading botulinum toxin brand, and advanced aesthetic programs aim to elevate the standards of aesthetic care in India. Through initiatives like GROW, we are fostering new dialogues on advanced indications and complication management in toxin practice, which is extremely essential as the market for botulinum toxin grows in India. Arisia's emergence as a center of excellence in Mumbai is a result of our strategic investment in infrastructure and talent. We understand that providing unparalleled levels of knowledge, training, and service are essential for establishing ourselves as a leader in aesthetic care, as well as growing the market for botulinum toxin. The open knowledge repository is an example of our commitment to sharing insights and advancing the overall field of aesthetic care in India.
Now, on the international business front, we continue to make strides in international markets with registrations across molecules and countries. Our strategic focus on regulated markets and new product registrations furthers our position as a global player. Our success in the international market is a result of our focus on leveraging our existing formulations and targeting new markets based on market gaps and opportunities. We recognize that different markets have very different needs, and our approach is to tailor our products and our portfolio and marketing strategies accordingly. A very quick update on the R&D. Our efforts in peptide R&D and innovative drug delivery system underscore our commitment to self-reliance and adding new therapeutic segments to our portfolio. We are also excited about the progress of Cellvax in addressing the urgent need for effective pancreatic cancer solutions.
Of course, there's a long highway in front of us with Cellvax, but we are very excited with the progress that we are seeing in our investment there. We also recognize that developing new APIs and augmenting our molecule portfolio and drug delivery systems are very essential for maintaining the competitive edge for ourselves in the injectable space. It's our endeavor to align our R&D initiatives to help us achieve this overall philosophy that we have in R&D. With this, I'll hand over the call to Mr. Roonghta, our CFO, to give you an overview of the financials.
Thank you. Thank you, Avik. I'm going to highlight the financial results of Q3 of financial year 2023-2024 versus the Q3 of financial year 2022-2023, as well as the financial highlight of nine months of financial year 2023-2024 versus nine months of financial year 2022-2023. Total revenue from the operation in the Q3 of last financial year was INR 117.5 crore. This year, this Q3 is INR 208.8 crore. There is a growth of around 13.6%. EBITDA margin in last Q3 of last financial year was INR 34.2 crore. This year, it was INR 36.9 crore. EBITDA margin Q3 of last financial year was 19.3%. This year, Q3 for financial year 2024 is 18.3%. Profit before tax last Q3 was INR 27.2 crore. This year, it was INR 29.6 crore. PAT margin last year was 15.3%. This Q3 is 14.7%. Profit after tax last Q3 was INR 20.3 crore. This year, it was INR 22.3 crore.
PAT margin last year was last Q3 was 11.4%. This Q3 is 11.1%. Now, if you see the picture of the nine months of current financial year versus last financial year, the total revenue in last financial nine months was INR 517.6 crore. This year, it was INR 611.7 crore. There is a growth of around 18%. EBITDA last year nine months was INR 101.1 crore. This year, it was INR 112.94 crore. EBITDA margin last nine months was 19.5%. This year, nine months was 18.5%. Profit before tax last nine months last year nine months was INR 82.8 crore. This nine months is INR 88.6 crore. PAT margin last year was 16%. This year, it was 14.5%. Profit after tax last year was INR 16.6 crore. This nine months was INR 66.1 crore. PAT margin last year was nine months was 11.9%. This year, it was 10%.
Now, I'll hand over the call to Ami to take it further.
Thank you so much, sir. We can now open the floor for Q&A sessions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Adityap al Singh Jaggi from Motilal Oswal Financial Services Limited. Please go ahead.
Hello. Am I audible?
Yes, sir.
Hi Avik. I've been out.
Hello, Aditya. How are you? Please go ahead.
Good. Just wanted to quickly get the numbers on revenue from our SBUs, that is, domestic branded business, CMO, international business, how they have grown over the last year.
Sure. So you are saying per quarter? Let me just give you sort of a heads-up, keeping in mind the YTD nine months. Is that okay?
[Foriegn language] That is also good. But then give me YTD of last year as well so that I will be able to gauge the performance as well.
I'll be able to give you the growth. I'll give you the percentage right now, more or less, what is there in terms of the different segments. I'll give you the growth percentage on last year versus this year. That'll give you an idea about last year's because last year's percentage is not with me, but I think these two numbers will help you get there. The main, like I said, and I'll give you a little bit of a two-liner also for each and every division to say why the reason of the growth is happening. Before I get into that, just let me clarify because this one question also came to us by writing, and I'll just clarify.
So whatever numbers which you see in the Q3 or the YTD till now don't involve any revenue from, what do you call, Indore or negligible because right now, most of the validation batches and the 3 batches of stability are happening for all different products. Totally, we have selected around 68 products also from Indore. So the commercialization would happen by March end once we get at least the 3-month data and the 6-month data, depending on the molecule. But the percentage I'll be telling you will be purely from the existing base of numbers only, which is comprising on the YTD numbers. So first of all, the domestic market would be around 56%, followed by the international market, even though it's only at around 18%, but it has grown from 15% what it was before.
The contract manufacturing would be close to around 23%, and the remaining would be API. That is the, what do you call, the API business of ours, which we sell the API outside. When I mean API, I also mean institution business also. API and institution, we collaborate as others. Coming back to the domestic business, out of the 52, sorry, 56%, it would be mostly critical care taking the lead, not only because of Cavim and other brands, but it would be more than around another, I think I would say 38% would be 38%-39% would be critical care, followed by around 27% would be, what do I say, our Ferticare, followed by then the mass marketing, which would be a combination of Spark, our healthcare Spark and Stellar, which would be close to around, again, 24%-25%.
The remaining would be, of course, Spark and Astridham. And yeah. So I'll just give you the percentage of growth, and then we can go ahead. Yeah. So critical care division is growing by around 16%-17%. Ferticare is growing by 18%-19%. The mass marketing is growing by around 14%-15%. I'm not getting into decimals. That's why I'm giving you the range of the percentage. Astridham is growing by around 42%. And the Spark is a new thing, so it has no relevance of, what do you call, background. So it's completely growth in this year. I mean, it's completely just a new division. These are the numbers for our domestic business.
Perfect. Perfect. Perfect. This helps a lot. So when we say Astridham, we are only including the cosmetic side of botulinum, right? The neurocare Stanox [crosstalk] .
Yeah. So you're absolutely right, sir. The critical care would have the offshoot of neurocare also. And here in Astridham, I would be including only Xanax as well as the cosmetic brand is what we have.
Perfect. And so if I can also understand what would be the revenue from Spark this quarter, and if you can also help the revenue from Cavim. So Cavim has been a phenomenal molecule for Gufic. So just wanted to quickly get numbers on that as well.
So, just can I understand your question? Spark, what would you like to know, sir?
The revenue for this quarter.
Yeah. So Spark, we are looking at anyway, again, I'll try to give you everything percentage. Please don't mind me. So the Spark would be another, I think it totally comes to just let me be clear. It would come to around 7 and around close to 7%, sir.
7% of our revenue, right?
Yes. Yes. Yes. Sorry, 5.5% to be precise. Sorry, 5.5%.
Understood. Understood.
Yeah. Coming to the question of Cavim. Cavim, of course, is still leading. As you see, in December also, we are still, after the innovator, the number two product. And that is also contributing to a decent, I think, INR 4.5 per month or something like that, if I'm not mistaken. It's close to, sorry, it's more than, I think, INR 1.5-1.8 crore, depending on the month average, but it comes to around INR 23-24 crore for us, right, Macpicker.
Perfect. That's fabulous. That's fabulous. Just a few bookkeeping questions. So we've invested in our employees this quarter, right, because our employee benefit expenses have increased, or have we increased the count of employees?
Incentives are more, sir, more than the thing. And also, the increment cycle in Gufic is different, sir. So it is more about the appraisal cycles in Gufic added up with the incentives which they have received, which also normally come during Diwali before that and apart from that. So that is how that's the two reasons it has gone up.
So this figure will not be this will come down?
I think, Roonghta, sir, can you elaborate on this because I might be not sure, but you can elaborate on this. Incentive, I think, will continue, but I think the appraisals will be now factored in the dividend, right? Just confirm it, sir.
I can say that the average for the total employee cost for this quarter is around INR 30 crore, but most probably, the average should be in the range of around INR 28 crore. So INR 27-INR 28 crore will be always with every quarter will be there. Additional INR 1.5-INR 2 crore, which was the extra incentive, will be going to reduce in the next quarter.
Understood. Understood. This is super helpful. Also, just wanted to so we got a patent for a lyophilization process. How does it help us?
Oh, sir, are you referring to Omadacycline?
Yes. Correct. Correct. Correct.
Yeah. Yeah. So Omadacycline is basically a product which we are filing for DCGI. The product will be actually commercialized, depending on the DCGI's timelines, hopefully in 2025. And for that, already, we have got a patent in place because normally, we try to get a patent before the documents go into DCGI so that the public information should not lead to a loss of our IP. So that's why the patent was in place. This molecule is a future generation of tigecycline. Tigecycline is right now a molecule for certain, it's an antibiotic which is used for certain bacterial infections. It's an important brand for us because we are now, I mean, almost out of the top 10 brands in India, we manufacture for almost 7 of them.
And also, internationally, if you see Russia, South Africa, Canada, Brazil, etc., also, it's a very important strategic product for us. Now, Omadacycline is the next generation of this molecule, whereas the advantage of Omadacycline is that apart from just being an injection, it also has an oral tablet capability. So the switch-off therapy of this molecule helps us to not only keep our, I mean, I would keep our leadership in this segment. At the same time, this will be also an offshoot where we are working on the API also in-house. So if tomorrow, it can also not only, I would say, amplify the effect of Tigecycline, but at the same time, certain infections which cannot be treated by Tigecycline, this can be a good option. Tigecycline has a black box warning in the United States.
Omadacycline is a product which falls out of this category, and this has a good potential in the US market also going forward. This is the significance of the patent going forward.
Perfect. Also, would love to hear from you how is our molecule pipeline looking like? How is the R&D process going on?
As of now, this is really exciting from my end, but I cannot, unfortunately, disclose any names to you. Again, I'm sure you will respect that because as a shareholder, we don't want our patent to be exposed where a lot of other people get into it. But just to give you some numbers, critical care, infertility, even orthopedic, and now even for, of course, apart from the Astridham, we are working on certain products which help in and to prevent the anti-spike of sugar also. We are also working on certain products which help us for pain management, which I already have discussed last time, which is an in-license product which a pain management injection can be taken only once a week. I'm just giving you one or two examples here and there. Then, of course, we are working on the topical form of botulinum toxin.
So apart from the conventional new generations of molecules which we work on, like we worked on Ceftazidime, Avibactam, we are working on other Avibactam combinations. We are working also on other Meropenem combinations and Imipenem combinations, even working on certain gram-positive, gram-negative bacteria, working on the super-pure form of HMG for infertility, working on the extended release formulations of Dydrogesterone and others. I mean, every segment has their own roadmap, and we have it at least lined up at least for the next 3-4 years. And apart from that, we have a biological appetite which post-botulinum toxin would be vaccines followed by the cancer, I would say, again, product from Cellvax. So that is how right now we are placed.
Done. This is super exciting. Just last couple of questions. I'll combine the two. So first is that Indore is taking a bit longer to come online. When are we thinking of commercializing, generating revenues out of that plant? And second is, I think, so Roonghta, sir, can answer that is when are we planning to capitalize it on our balance sheet?
I'll let Roonghta, sir, answer the question. It will be a shorter one, and then I'll go on to my part of the question. Roonghta, sir, you go ahead about capitalization.
Basically, all the validation process has already been started, and we are hopeful to capitalize by 15th of March. Definitely, after capitalization, whatever will be the tax advantage is there that we want to claim in DCGI itself. All permissions of pollution control board, factory licenses, labor licenses, power, everything has been bought, including the FDA license. I think all the validation batches which is required for initial capitalization is ready, and we are most probably going to capitalize in the month of March from 15th March.
Yeah. So that is one part of the question which Roonghta, sir, rightly explained. And just to give you a little bit of background that why we are a little bit taking time because if you see the factory is ready, anyone is more than welcome to visit everything. But the issue is we are trying to go for one global quality there. And there are certain, I would say, guidelines or quality management systems which we are following, by which we are trying to minimize the duplication in an expense. I'll explain how.
If we have a particular API, we have particular filters, we have a particular RM, PM, and others to be used not only for the markets of Europe or for the we are trying to club it with the markets of U.S. also, as well as create certain dossiers where at least the target markets for the next three years are taken care of. I'll give you that is one reason by which the validation takes time. Also, before we can start commercial production, there's known as a media fill validation.
In Media Fill Validation, we are trying to cover as many different vial sizes which can help us to take up products which are totally around close to 58 or 62, depending on what we say in phase I, which help us to we don't need to then tomorrow go for any break in production once the actual, I would say, factory starts. Because right now, for every Media Fill Validation of every single vial type, it takes normally 12-15 days, plus that is for the 3 runs, and followed by 15 days of sterility. So imagine if we have to do 60, I mean, 58-62 different product line. And out of that, considering the overlapping vial sizes, ampule sizes, X, Y, Z, we still have to go for at least 18-20 different media runs.
18-20 media runs, normally, we are trying to combine in all 4 lines in a period of 4 months, which ideally, if we take a break and we start production, then we again have to take a break of 3, 3, 3, 4, 4 months in the future, which will again compromise our ability to serve our clients. We foresee already, I think, in Navsari, we are facing shortages in terms of, I would say, capacity. But we feel that if we take the break now rather than taking the break in April, then there will be a huge backlog which will come up in the month of September or October also.
So we are trying to open Indore with a bang by which all four lines start together, and we can start manufacturing 58 and 62 products by which we can at least declog the Navsari pipeline by almost 30%. And if we can be able to do the 30% declogging in Navsari, that will be equal to immediate capacity utilization of at least 15%-20% to start off with immediately, plus the additional business which anyway we'll be getting. So our target of at least 30%-40% capacity utilization in the first year can be attained, keeping in mind these time investments of media fill, quality management systems, as well as product validations also. So that is why it's maybe a time invested now for a better future.
Understood. Understood. And now that we've started generating revenues from our Meropenem DCB, dual chamber bags, so the inventory is normalized, right, or it's starting to normalize?
It's not going any further now. In fact, you already see a consumption happening if you go through the numbers. The inventory is already starting getting commercial. I already had given a hint last time. It will take us at least 12 months for the entire inventory to be zero. But of course, when I mean 12 months, the inventory will come back to normal. The existing inventory will be used, plus we'll be keeping inventory of two months. Gradually, you will be seeing that INR 18 crore-INR 22 crore inventory being gradually shifted out in the next few months also. Absolutely.
Perfect. Thank you so much. Thank you so much for answering all the questions that I've.
Thank you, Aditya. Yeah.
Thank you very much. The next question is from the line of Nitya Shah from KamayaKya Wealth Management. Please go ahead.
Yeah. Hi, team. Congratulations on a good set of numbers. I just want to understand what is the targeted R&D spend as a percentage of sales in the coming two years considering we're allowed to bring a lot of products? I think, Roonghta sir, you want to take this question?
Yeah. Yeah. No problem, sir. In the next two years, basically, our Indore facility will going to start the commercial operation. There will be a lot of validation batches we're going to have because of taking FDA license from India as well as out of India. Our normal R&D expenses in the range of around 7%-8%. But I feel that looking to Indore R&D facilities and new validation batches, the R&D percentage may go from 9%-10%, or it may cut to 11% also because of a lot of validation batches, a lot of new products, and everything. So it may be minimum 9%, and it may go up to 11% also.
Great. Also, a couple of concalls earlier had asked regarding you were saying that you would plan to franchise out more of Aresia centers. So what's been the progress on that, or is there still just one in Mumbai?
Very frankly, this is something which we have a little bit taken on the back burner because we wanted a particular, I would say, break-even to be obtained in Mumbai, which we have not yet done so. And we just don't want to open the number of centers without having a proper business plan in terms of having legacy data to show that what would be the treatments to be pushed, what would be the cost efficiency, the pricing, and the actual break-even time for any new franchisee order to be done. So I still feel we have done a little bit, I would say, administration and organization changes.
We have gotten some more experts from the field of, I would say, cosmetic background in terms of clinical experience and an administrative background also. I still feel we will still see the next six months perform. The moment we start hitting in break-even plus 10%, 20% numbers, which we are very close to, I feel, maybe two, three months more to go. Then we would like to mimic this model on a national level. Anyway, I think our hands are full with other projects coming in. This is something where we want someone else to have at least a basic background and who can extrapolate our data with their own expertise in that respective geography area. We are a little bit behind this, and it might be six months more before we actually branch out.
Okay. That's a fair response. So are you seeing month-on-month increase in footfalls in the center, and how is the awareness picking up, and how's the response to the product?
So that's what. So I think what was the first mistake which we realized last year in the first quarter was that we did not do much of social media awareness, keeping in mind the geography which we are in. So firstly, we first came up with an SOP of the number of treatments which can be from a price point of INR 5,000 lakh to a price point of even INR 10-15 lakh. Initially, we tried to make it a very high-class clinic and selling products which are almost INR 1.5-2 lakh and above.
But then we realized that the catchment area would be when a person comes in for a INR 5,000 and then can be convinced for a INR 20,000 lakh followed by a INR 50,000 lakh and INR 1 lakh, depending on the body and face contouring or effect they want to do. So that's the first correction which we did in the first three, four months. We still then started making a lot of content because today, the content in terms of what services we can offer, there are totally 368 different services which we can offer from INR 5,000 lakh to INR 15 lakh rupees.
We tried to shoot videos over the last six months, create reels, also create some sort of an animated video showing before and after, actually showing case studies where toxin and fillers are used, especially Xanax and fillers are used, along with energy devices by which what are the before and after results. Adding to that, vaginal rejuvenation and also vaginal tightening also. And I feel the reels should start coming in in the month of, I think, March, April. And then we would see the footfalls. Answering your first question about footfalls, yes, the footfalls are increasing around, like I say, around not more than 10%-12% month-over-month.
But I believe once the juggernaut of social media and marketing goes on from March and April, we should see right now, the campaign is going on, "Get your body ready for the summer," or "Get your " we missed the marriage season, unfortunately. But right now, at least for the marriage, the celebrations of Diwali followed by the wedding season, again, December, we have everything lined up now in terms of content, reels, and videos. So I foresee the next six months should help us for minimum at least 50%-60% month-over-month in the increase in business. That's why I'm saying we are very close to the break-even. Not only close to that, but it's surpassing it, what I would like to say.
Right. So you said 10%-12% month-on-month growth. So what's the absolute number of people coming into the clinic?
I think I would not have that data, but I can get that data to you. But I will ask because we have a separate team heading Aresia for that. It's a separate SBU. But I'll get that data for you.
And also, just to confirm your commercialization of the CAPEX, where we start seeing the revenues will begin from Q1 FY25, right?
That's what I foresee in a big way, possibly.
Yeah. Okay. Okay. Because I remember in the earlier presentation, it was always mentioned Q1 FY24 is where the commercialization would begin. So it's almost been postponed by a year, the commercialization.
No. So I'll tell you, there were two differences there. If you see that was the first time, then we were going to go for only three lyophilizers.
In the end, we decided to go for 6 lyophilizers because of the backlog in order which we had. So that's why I think we are referring to a very old thing. But we always were targeting around Q4 2024. But because of Pseudomonas being there, one issue which we had in the water system, our entire thing got delayed by 45 days, which was unexpected. Otherwise, like I said, keeping in mind the validation, the QMS, and all that, we have made a very pragmatic decision that by increasing the number of lyophilizers, the total number of products, as I mentioned in the earlier call reply also, went up to 58-62. And now, incorporating all these 58-62 products for the next three years without taking any major break in terms of validation, qualification, or even media fill, I think this time would be fine.
We are much more better prepared to handle a bigger capacity. And like I said, declogging Navsari by 30%, which is very important because we are seeing now orders coming in from other parts for Navsari, and we'll need to push the domestic business out to Indore.
Great. Thanks a lot for the very elaborate answers, and I wish you all the best.
Thank you.
Thank you very much. The next question is from the line of Dhara Patwa from SMIFS Limited. Please go ahead.
Thank you for the opportunity, and good evening to all. We say that we are the largest supplier of Ganciclovir and Micafungin. Can you throw more color on the existing market size, what are the other players present in this, and how our market share is standing at in this category?
Ami, did I understand Micafungin? What was the first product you mentioned?
Gonadotropins. We have opened our market there.
Gonadotropins. Yeah. Gonadotropin. Yeah. Okay. So Gonadotropin is actually part of the IVF markets where we have HCG, HMG, and FSH, where we said that apart from being a strong contract manufacturer because of legacy and now also being a strong marketing company in the domestic space for these molecules, I mean, that is where the actual growth is coming from. I feel now with Supergraft coming in, which is a new, highly purified form of HMG also, which is, I think, going to be a very good tool in terms of the follicle size and the number of follicles as well as will be an important weapon to help the doctors to treat, I mean, in the treatment of infertility, we are going to see a good traction going forward also. We are quite bullish on the IVF segment as have been from day one.
India also, I think in the last two years, the advantage in India has been that even though you all don't see it, we are still growing. But the Indian market has gone through a good metamorphosis. And I'll explain how. The IVF market was not as regulated in pre-2021 or 2020 as it is right now. The people who can donate their eggs, the number of surrogacy which are possible also, who will be eligible for surrogacy. Also, at the same time, how many donors can give how many eggs per in a specific time, all has been now controlled by the government. And it's an amazing thing because now you have traceability. At the same time, you have, I would say, the right quality also taken care of.
So this, even though, I would say, to some extent in the last two years, affected the overall uptake of the infertility industry. However, as a company, we were quite aggressive, and we took a good market share out of it. I already mentioned that it's more than close to around an INR 3,000 crore-INR 4,000 crore market, especially keeping in mind that dydrogesterone is also taking a big lead in terms of use, apart from the hormones along with progesterone. We foresee that this market will continue to grow in double digits, and we would be one of the major leaders who at least target 15%-20% bare minimum out of this growing market and ensure that not only in our own marketing but also in the contract manufacturing, try to take more and more share. So this is about the IVF, Gonadotropin.
In regard to Micafungin, Micafungin is an antibiotic which is a class of Echinocandins, which are, I would say, relatively new. I would not say new now. It's almost since decades they are there. But they are still quite, I would say, new as compared to the overall antifungal space. So Micafungin, Anidulafungin, and Caspofungin are the products which normally are used to treat Candida species. And luckily, with our basic manufacturing and our also in-house, I would say, manufacturing of not only APIs but formulation but also certain patent benefits, we foresee that not only Micafungin but Caspofungin and Anidulafungin also will continue to grow, plus a strong use or strong scalability of Liposomal Amphotericin B, which is another good antifungal which you must be known during COVID. After COVID, it was used in mucormycosis.
That is also something where we are targeting in this year that we should take more and more market share. But not only in India, but we will also start we have also started filing it for countries abroad also. So these all molecules, not only India but in the world, should take a strong market share. So again, how much quantity and all that, I'll get back to you. But I hope this answers your question.
Yeah. Yeah. That's very helpful. My second question was we are partnered with Prime Bio. So is this a revenue-sharing model, or the revenue will be booked entirely by Gufic and royalty would be paid? If you could explain that.
Yeah. It will be revenue would be entirely booked by Gufic, and royalty would be paid to Dr. Balram Singh, his company, Prime Bio. Yes.
This would be around 2%-5% royalty, or is there an agreement, anything? Do we have a number over here?
We have a profit share of 60%-40%. 60%-40%. 60%, Gufic Biosciences get. 40% of the profit goes to Prime Bio. And that we have an agreement in place. Yes.
Okay. Sir, just last question. What is the total debt as of December 23?
I think I'll request Runtasa to answer that question.
There are two types of loans. Basically, it's a long-term loan that is called a term loan. We have taken around INR 160 crore term loan from HDFC Bank and Saraswat Bank for our Indore plant. For our existing Navsari plant, only INR 15 crore term loan is pending. The total loan outstanding as of today is around INR 175 crore. Other than this, there is limit sanction of working capital loan for INR 150 crore. That is a fund based. Around 70%-80% is utilised at present. Remaining is unutilised. Limit is available because.
Okay.
Here it's a good time to also elaborate on one point. I think Yumkash, I think maybe you can elaborate the point.
Yeah. Yeah. I can elaborate. We have issued differential allotment of INR 100 crore to one of the shareholders, Motilal Oswal. That fund has been utilized for repayment of the existing term loans of Saraswat Bank for our Navsari plant. And also, we have paid around INR 5 crore to Abhid Delhaguru for which we have taken a residential flat purchase for the employees of the company as well as for the guests coming from different locations. And the outstanding total term loan is not able to repay because of the blocking period of Indore. There is a total two-year blocking period for both the loans that before two years, we will not be able to repay any loan. Otherwise, we are also in a position whenever there is a cash generation, we are going to repay the term loans.
So yeah. Just to elaborate that yeah. So just to elaborate, ma'am, what he said that around INR 99.99 crore has been raised, which has also been used to pay off long-term debt as well as the other money has been parked in the CC limit because the moment our prepayment clause gets over, or I think it's around June 2024, we will be using the amount which is parked in CC to pay off the other long-term debt also. So the entire INR 99.99 crore has been used to pay off the long-term and the short-term debt. And after that, the numbers have been shared with you by Runtasa.
Okay. That's helpful. Yeah. Thank you.
Thank you very much. The next question is from the line of Yash Tanna from iThought PMS. Please go ahead.
Yeah. Hi. Good evening.
Good evening, team. So the first question, I think you partly answered. But now, we are commercializing this Indore by March, is that so if you can broadly state, what would be the path forward for the optimum utilization of Indore in the short, medium, and long-term in terms of which segments or which geographies would be targeted in the short, medium, and the long-term for Indore?
Yeah. So thank you, Yash, for the question. So just to elaborate the geographies, I'll start off first. The capacity utilization will be discussed by Roonghta because he has those projections in place. But I'll just tell you that the geography we thought we I mean, we have no option but to start with the Indian market.
Provided the 6 months' stability data and the process validation and the analytical method validations are done, we then start submitting our dossiers for all countries where we already want to trigger the inspection. So be it, I would say, Southeast Asian markets, which have been our legacy markets, plus Africa, South America. We will be also triggering Europe to start off with. U.S. is another market which we are hoping to target by 2025 initially or maybe end of 2024 as there are 2 molecules which we'll be getting the dossiers made and then submitting the thing. But like I said, that would be triggered by our partners where we will be a pure contract manufacturer. That has been a policy from before only. For the first 2, 3 years, we would be sort of a contract manufacturing option for U.S.
Eventually, then we will decide whether we want to go for our own R&D or not. So like I said, it will be starting from our legacy markets, of course, starting with the domestic market where we see anywhere good traction, followed by the legacy markets, followed by the regulated markets of Brazil, South Africa, Canada, Russia, Europe, and then eventually U.S. This is the way going forward. And capacity utilization, I'll request Runtasa to take it further.
Runtasa has already explained to you that initially, we are going to target the domestic market. In the first year of operation, we expect capacity utilization between 25%-30%. Next year, again, also, the main focus will be a domestic market. I feel that the capacity utilization will be going to jump from between 30%-40%. And after two years, when we get the permission from the market will be open all over the world, the capacity utilization will going to jump. But initial two years, I feel the capacity utilization will be around 40% for the first two years. Then it will start gradually increasing the capacity utilization once we are able to get all the permission from the international market.
Yeah. Sir, just to add to that, when we talk about capacities, that as in when the commercial production is happening, a lot of capacity will be used for validation batches since we have 68. I'm sorry, 58-62 products planned. Why I keep on saying 58-62? There are 4 products which we are still on the fence whether to take it in phase one or not. But let's assume 58 products also from phase I. Then we have to plan for 3 validation batches also into different batch sizes. So we are looking at 58 into 3 into 2 batches to be taken at least in the next 1-1.5 year, which will help us to produce dossiers to take it to the international market.
Those also will be even though manufactured. It will have no commercial relevance till the dossier is approved in those countries.
Sure. Sure. Got it. And then that will, you said, declog the capacity in Navsari, which will help us probably to grow in the international markets from Navsari.
That will help. The declogging of Navsari will help us to plug in the domestic requirement from Indore, very frankly. And you rightly said, yes. Navsari is seeing its own traction for orders coming from Russia, Brazil, Canada, South Africa, and of course, Europe. So the capacity in Navsari, which is free, will be immediately, I think, used up in the next 3-5 months only with the export orders coming in. We are a little bit running behind schedule. Otherwise, our capacities are an issue right now. But hopefully, from April I mean, March end, April onwards, that declogging should start helping us for revenues requirement.
All right. That's very helpful. Second one is with respect to botulinum toxin. So now, we are trying to make a market in India, right, with Zabot and Xanax. But it would take its own time. You have mentioned that before. But the biggest opportunity is actually in the international markets, right, as stated by you also previously. I mean, the drug has potential going by the market size, the drug has potential to change the trajectory of company. So is there any monetization plan with respect to botulinum toxin, maybe outlicensing or something else? I mean, we briefly spoke about this in the AGM as well. So would love to hear your thoughts on the same.
Yes. Absolutely. Let's hope that we can do something very soon. That's all I can say.
Okay. Bye. Sure.
I'm not allowed to say anything further. That's why.
Sure. One last question. Now, with the fundraise, you said we'll pay off by June the INR 100 crore that we have raised from Motilal. The balance sheet is slightly more comfortable. What would be our capital allocation priorities now?
Just to clarify, the long-term and short-term debt can already have been paid off right now. The only thing is that we have parked that money in a CC limit. Otherwise, whenever the option opens, it's just basically to remove from the CC limit and pay off the long-term debt whenever required because the interest percentage of both the loans are same only. So it's as if we have paid off it anyway, the March balance sheet itself will reflect that when you get it. Coming to your second question, at least for the next 12 months, except for repairs, maintenance, or I think I would say replacement of any machine which is down due to breakdown, we will not be investing in any CapEx as of now. Most of the money and the resources will be used for dossier development, R&D purposes, as well as validation only.
So as of now, except there is some external infusion of funds by anyone or maybe some opportunity via JV or whatever, I mean, that's again, let's see when the time comes. Gufic and Gufic Biosciences as such directly will not be investing in the next 12 months in any capital expenditure.
Sure. The priority will mainly be to pay off the remaining debt, right?
Pay off the remaining debt and also to maximize the Indore potential as well as Navsari potential. So because most of the money will be required to pay off I mean, to get those dossiers and validation done. So that will actually help Indore start generating the revenues what we desire. So yes, it would be more than the debt repayment. At least for the next two years, it would be creating dossiers, marketing authorization, R&D, which eventually would help us to pay off the debt in the next three to four years after that. Yeah.
Right. And that will be booked in the P&L, right? The R&D cost.
Absolutely. Oh, absolutely. That is anywhere taken in the P&L, in consumption as well as in other expenses. Yes.
Correct. Correct. Thank you, sir. And best of luck for the future.
Thank you.
Thank you very much. The next question is from Bhavya Sonawala from Samaasa Capital. Please go ahead.
Yeah. Hi. Thank you for the opportunity. Just a couple of questions. Recently, I just read that the Meropenem prices had taken a correction recently. So does that affect us, and will that affect the dual-chamber bag whenever we do roll out?
Yeah. So I think, Bhavya, if you are following us for a year, the Meropenem MRP you're talking about the API prices or the Meropenem formulation pricing control in India?
Yeah. The formulation part.
Yeah. So the MRP of Meropenem has already been fixed in April 2023, so actually on 1st April 2023 itself. So anyway, since last year, I think and if you have been following us, that's the reason that our DCB bags got delayed in terms of launch because we have been after the Indian government to allow us to launch the DCB bags with the differential pricing. So the pricing allocation, we still are trying to get our 15%-20% benefit. Of course, we have asked for much more, but I think the government has not agreed to that. But I think looking at the legacy data and the past approvals which they have done, they will be giving us a 15%-20% benefit of price upward as compared to the vials. And that is what we'll have to live with it right now.
That's why, keeping that in mind, we have decided to go ahead and launch the DCB bags rather than waiting for it going forward. Once we get the dossier done, international market is where we see we'll see a good traction because there, the realization will be much better rather than India.
Okay. Okay. Understood. Just another question. I'm sorry if I missed it out, but are we at full capacity at Navsari right now, or is there any kind of excess capacity for us to grow until Indore comes online?
Very frankly, Navsari is divided into three parts. The penem block is the new one which came in August 2022. That we have surplus capacity there because it's a new block, and we are maybe at 50% or 52% or 55% only. The lyophilization and the vial is somewhere where we are almost running out of capacity in Indore. And that's the reason that Indore I'm sorry. We are running out of capacity in Navsari, and that's where the Indore is I think we are quite keen to start Indore as soon as possible once the right regulation I mean, validations are done. So I feel, yes, the lyophilization as well as the liquid ampoules and the vials are something which we are facing capacity tensions in Navsari, which should be eased off by March, April from Indore.
Okay. Understood. Just last question, can you just talk about probably the performance of our international business and CDMO for the last, let's say, 1, 2 years, and how do you see this going ahead? In terms of growth rates, if there is anything.
The base of the international market is quite low, so we always will see the international market growing at a much higher percentage. And that's the reason I think Indore cannot come at a better time than what we are seeing right now because we are now getting into backlog of orders from Navsari for Germany as well as Canada as well as even Brazil to that matter, I think. And of course, then the other regulated markets are anyways there for us. So that will still be growing at a much higher pace. Contract manufacturing avenue will be opening and unlocking now with Indore coming in because apart from just lyophilized injectables and normal vials, now with ampoules and with PFS and also with some extent of sustained-release products, depots, and also liposomal products, a larger gamut is opening up of Indore in terms of contract manufacturing.
So again, Indore will start the same life cycle as how Gufic started around maybe 8 years ago through Navsari. It'll be a combination of domestic market plus contract manufacturing, loan licensing, as well as international markets which will start kicking in after 2 years. So you will see a natural progression. But the capacity in Indore is massive. So I'm sure that we will not need to compromise on any of the divisions that we are talking about. So there'll be a good sustainability not only for Gufic as such but also for our valuable partners in terms of international markets as well as domestic also for contract manufacturing.
Okay. Understood. You just mentioned that when we do go to U.S. regulated market, and U.S. specifically, we will go through the contract manufacturing route initially. So just want to understand, is this the kind of route that every pharmaceutical company takes, or is this something that we are taking consciously and then think about it when the time comes?
Very frankly, I don't know about what others do, sir, but I think we are very clear that it's a learning curve for us also, and we don't want to take a big step and then take two steps behind. U.S. is a very complex market more in terms of not only the basic supply but in terms of the legality as well as the other bureaucracy which is associated with it. So we would like to take it as a learning curve step by step and go ahead. And that's how we started in Navsari also with Europe. So that's the procedure which we use.
Okay. Understood. Thank you so much for answering all the questions. Thank you.
Thank you very much. The next question is from the line of Sunanda, a proprietor. Please go ahead.
Hello, sir. Good evening. Can you just share some update on oral vaccine technology and its market potential as you have already applied?
Yeah. So your question is about oral vaccine technology, right? So it is something which we have initiated with DCGI, but I think it'll be very preliminary of me to comment on that because, I mean, like I said, it's still such a sensitive matter. But yes, we have given our first draft to DCGI, as we have mentioned earlier also in the calls. And we hope that we get the roadmap in terms of the regulatory roadmap soon. Very frankly, keeping Indore in mind, we had for some time kept the project on hold because we didn't want to commit much capital and expense at the cost of our dossier Indore. So we would be kickstarting the aggressive oral vaccine pursuit technology for two, three products also for post-June. But till then, we'll focus on Indore to be stabilized.
Right now, I can just add that much to it. I would just request you to wait for two more quarters, and I'll be able to give you a little bit more input about this technology.
Okay. Thank you, sir. All the best.
Thank you very much.
I think we are done, right? It's one hour. Sorry. I just have another call which I have to get into. So if I'm not required, can we ask the remaining team members to take the questions from now on? Sorry. Am I audible?
Yes, sir.
Yeah. So because I thought we had a hard stop at 5:30.
Sorry, sir. So there are no other participants.
Okay. Great. Yeah. Great.
I would now like to hand the conference over to Ms. Ami Shah, the Company Secretary, for closing comments.
Thank you. So if you have any further questions, please feel free to reach out to our investor relations team. Before we conclude the call, I would like to reiterate the disclaimer. The information statement and analysis made in this document describing the company's objectives, projections, and estimates are forward-looking statements. No representation or guarantee either expressed or implied is provided in relation to this document. The document should be regarded by recipient as a substitute for the exercise of their own judgment. The company undertakes no legal obligation to update or revise any forward-looking statements, whether as a result of new information or future events or otherwise. With that, we conclude today's call. We appreciate your participation. Thank you for joining. Thank you.
Thank you on behalf of Gufic Biosciences Limited. That concludes this conference. Thank you for joining us, and you may now disconnect your lines.