Thank you, Margaret. Good evening, everyone. Thank you for being with us on our Q3 FY 2022 earnings conference call. I would like to remind you that some of the statements made on the call today could be forward-looking in nature, and a detailed disclaimer in this regard has been included in the press release that has been shared on our website. On the call today, we have Mr. Shyam Bhartia, Chairman, Mr. Hari Bhartia, Co-chairman and Managing Director, Mr. Arvind Chokhani, Group CFO, Mr. Pramod Yadav, CEO Jubilant Pharma, Mr. Giuliano Perfetti, CEO Jubilant Biosys, Mr. Syed Kazmi, CEO Jubilant Therapeutics, and Mr. Arun Sharma, CFO Jubilant Pharmova. I now invite Mr. Shyam Bhartia to share his comments.
Thank you. Good evening, everyone. Welcome to this conference call. The company's performance during the quarter was affected by headwinds witnessed in pharmaceuticals segment, which was partly mitigated by continued robust performance in the contract research and development services, CRDS segment. In the pharmaceuticals segment, while the Radiopharma business witnessed improved performance, the generics business was affected by lower volumes due to an import alert at the Roorkee plant, latest sartan issue, impurity issues and pricing pressure in the U.S. generics market. Our API business was affected due to lower volumes resulting from an unplanned shutdown during the quarter. Performance of API business is expected to normalize in Q4 FY 2022. In our contract research and development services business, we continue to witness strong growth on a year-on-year basis, driven by robust demand from our customers for our drug discovery services.
I'm glad to mention that in the proprietary novel drug business, our lead program, LSD1 HDAC6 inhibitor, has successfully received FDA clearance for our IND filing and is on track for initiation of phase I trials in Q4 FY 2022. Additional IND filings for pipeline programs are expected to follow in FY 2023. I would like to mention that over the medium term, we have a strong growth levers in our businesses. To drive growth in these businesses, company will continue to invest accordingly. I'm glad to update that our strategic initiatives of API demerger is progressing well, and in January 2022, we have further received approval from the shareholders and unsecured creditors of Jubilant Pharmova. We expect to complete the reorganization during Q1 FY 2023. With this, I hand over to Pramod to discuss the pharma business.
Thank you, Mr. Bhartia. A very good evening to all of you. Pharmaceutical revenue was INR 1,186 crore versus INR 1,692 crore i n Q3 FY 2021. Radiopharma business witnessed improvement in sales year-on-year. On a sequential basis, performance was lower due to customer order scheduling and the surge in COVID cases in North America, especially in the month of December 2021. We continue to maintain a majority market share. A spike in COVID cases impacted repeat installations during the quarter and pushed our new installs to the fourth quarter. Strong performance on new installs is expected in Q4 as we generally witness higher installations. Phase II and phase III clinical trials for NDA of our I-131 MIBG are progressing satisfactorily. Radiopharmaceutical business witnessed a steady performance year-on-year.
Turnaround plan is on track with positive outcome over the last 2-3 quarters. However, COVID impact remains uncertain. The Energy Industrials reported robust performance on year-on-year and stable performance sequentially. The business continues to operate at volumes higher than pre-COVID levels. As mentioned during the previous call, CMO business revenue was affected as the revenue related to COVID-related one-off deals tapered off, and also because of some customer scheduling. In Q3 FY 2022, we realized INR 80 crore of COVID-related revenue as against INR 200 crore in Q3 FY 2021 and INR 160 crore in Q2 FY 2022. Business now is expected to operate at the normalized levels. The API business performance was affected due to lower volume resulting from unplanned plant shutdown during the quarter. We expect now to see improvements in coming quarters.
The generic business performance was affected by impurity issues in certain starting products, which is an industry-wide issue, the lower volumes due to import alerts at the Roorkee plant, the pricing pressure in the U.S. market, and lower remdesivir sales due to fewer hospitalizations. Our immediate strategy is to increase production further in U.S. facilities, increase sales from the Roorkee in non-U.S. markets, and simultaneously transfer some of the Roorkee products from U.S. market to CMOs to get back in the market early. I am glad to mention that we have resolved that sartan impurity issue in very short span of time and have relaunched the product in the U.S. market, which will support performance of this business in the next financial year.
With regard to Roorkee import alert, our remediation activities are ongoing as per plan, and we expect to complete same in H1 of calendar year 2022. In nine months of FY 2022, pharmaceutical business revenue was at INR 4,271 crore versus INR 4,304 crore in nine months last year. EBITDA during nine months of FY 2022 was at INR 864 crore versus INR 1,022 crore in nine months FY 2021. With this, I hand over to Giuliano to provide insight into the Contract Research & Development Services business.
Thank you, Pramod Yadav. In our Contract Research & Development Services business under Jubilant Biosys, we continue to report robust performance driven by sustained strong demand from biotech companies for our integrated discovery as well as functional services such as chemistry, DMPK, and discovery biology. The business has an active pipeline of new contracts and customer acquisition for FY 2023. Q3 FY 2022 revenue grew 51% year-on-year, and EBITDA grew 51% year-on-year with a margin of 38.5% versus 36.4% in Q3 FY 2021. Our 9 months FY 2022 revenues was up by 49% year-on-year, EBITDA by 72% year-on-year, and margin stood at 36.7%. I'm glad to mention that we are ramping up capacity utilization at our new state-of-the-art drug chemistry research innovation center at Greater Noida ahead of the plan.
The new facility has been designed with the highest global compliance standards to support both biotech and big pharma by delivering superior speed, quality and innovation. In view of the strong demand from our customers, we have approved further expansion of the Greater Noida facility, which will deliver both chemistry and DMPK services. With this, I now hand over to Syed Kazmi to discuss the proprietary novel drugs pipeline.
In our proprietary novel drugs business, we are focused on developing potential first-in-class and best-in-class precision therapies in oncology and autoimmune space. The company uses Jubilant's proven discovery engine with a structure-based drug discovery expertise and a track record of partnerships. The acquisition of our out-licensed EGFR program to Lengo Therapeutics by Blueprint Medicines in December 2021 provides validation for our platform. We received our initial share of proceeds from the transaction in Q3 FY 2022 that would be followed by additional milestones and royalties as part of our licensing agreement. We currently have four highly differentiated active programs in the pipeline. A novel first-in-class dual LSD1 HDAC6 inhibitor.
JBI-802 with synergistic anti-tumor activity that provides superior efficacy and optimized therapeutic index with quick on, quick off kinetics compared to LSD1-only and HDAC6-only inhibitors. We have a substrate-competitive brain-penetrant PRMT5 inhibitor, JBI-778, with sustained exposure in both brain and plasma to treat many types of tumors localized in the brain. Number three is an oral brain-penetrant PD-L1 inhibitor, first ever potential checkpoint therapy for brain tumors. Finally, number four, a novel IL-4 inhibitor with potential first-in-class profile in tumor metastases and autoimmune disorders with no immune suppression. Validated by collaborations with Boston Children's Hospital, Harvard, and Wistar Institute. The lead program, LSD1/HDAC6 inhibitor, has successfully received FDA approval of IND filing and is on track for initiation of phase I trials in Q4 FY 2022. Additional IND filings for pipeline programs are expected to follow in FY 2023.
We are transforming Jubilant Therapeutics to a clinical-stage biotech with higher value creation opportunities through potential partnering deals, capital markets access, subject to the emerging scientific results. With this, I now hand over to Arun to discuss the financials.
Thank you, Syed. A very good evening, and I thank everyone for taking out time and joining us on our quarterly earnings conference call. I would like to highlight the company's financial performance for the quarter and nine months ended 31 December 2021. First, I'll discuss about the quarter. Revenue from the operations during the quarter was at INR 1,311 crore as compared to INR 1,771 crore in Q3 last year. Pharma revenue was at INR 1,186 crore versus INR 1,169 crore. While contract research business reported revenues at INR 120 crore as compared to INR 79 crore during Q3 2021. The reported EBITDA during the quarter was at INR 200 crore as compared with INR 496 crore in Q3 FY 2021, with margin at 15.3% versus 28% in Q3 FY 2021.
Depreciation and amortization expense during the quarter was at INR 93 crore versus INR 96 crore in Q3 FY 2021. Finance cost during the quarter was INR 37 crore versus INR 46 crore in Q3 FY 2021, a reduction of 21% YOY. Effective tax rate of 27.7% versus 35.6% in Q3 2021. Current quarter benefited from reversal of certain deferred tax liabilities. Reported tax during the quarter was at INR 51 crore as compared to INR 219 crore in Q3 last year. EPS for the quarter was at 3.2 per share versus INR 13.75 per share in Q3 FY 2021. Coming to nine months, financials. For nine months FY 2022 revenues stood at INR 4,603 crore versus INR 4,519 crore in nine months FY 2021.
Pharmaceutical revenue was at INR 4,371 crore versus INR 4,304 crore in nine months FY 2021. Contract research and development service revenue was recorded at INR 315 crore against INR 208 crore last year. Reported EBITDA for the period was at INR 923 crore versus INR 1,023 crore in nine months FY 2021. Depreciation and amortization expense was at INR 281 crore versus INR 263 crore in nine months last year. Finance cost was at INR 106 crore versus INR 141 crore in nine months FY 2021. Lower finance cost was due to lower gross debt and a lower cost of debt compared with Q3 FY 2021. Average blended interest rate for nine months FY 2022 stood at 4.58% versus 5.9% in nine months FY 2021.
Effective tax rate of 32.6% versus 34.8% in nine months FY 2021. Current period benefited from reversal of certain deferred tax liability in Q3 FY 2022. Tax for nine months FY 2022 was at INR 354 crore versus INR 401 crore for nine months FY 2021, with EPS of 22.26 per share versus 25.19 per share in nine months FY 2021. Net debt on constant currency basis on December 31, 2021 was at INR 1,790 crore versus INR 198 crore as on March 31, 2021. During the quarter, we saw net debt on constant currency to decrease by INR 32 crore. On YTD basis, net debt on constant currency basis was lower by INR 137 crore.
Capital expenditure, including R&D capitalization, was at INR 112 crores for the quarter and INR 350 crore for nine months FY 2022. For FY 2022, we expect CapEx of around INR 500 crore to be incurred.
With this, I would like to conclude our opening remarks. We will now be happy to address any questions that you may have. Thank you.
Hi, sir. Good evening. Obviously disappointed numbers that we have shown up. Just would like to understand a bit deeper into specifically the generics. On generic side, we had mentioned in our earlier notification that the impact of sartan route would not be more than 3%.
Okay. Sir, in the earlier notification, we had mentioned that the impact of Roorkee import alert would not be more than 3% because of the exempted product. Sequentially, if we see within one quarter itself, we've seen the whole annual impact if we try to do conversions of INR 150 crore that we see in the decrease in the generics. I'd like to understand what exactly has happened and what is the Roorkee going forward, sir.
Rahul, this is Pramod here. Since we gave earlier about the 3% of the overall company revenue for the restricted product, that's the impact we are still measuring for the financial year 2022. In addition to that, there have been the other factors which have impacted the overall performance, which we mentioned, which are, one, is the certain impurity issue, because we had to withdraw the product from the market, which is also industry-wide issue. We also had the lower sales of the remdesivir. As you know that, the hospitalization due to Omicron is not there much, and the remdesivir is prescribed for the hospitalization, so that sales was lower. Other issue is overall generic prices in the U.S.
For us, the major market of the generic is U.S., and the entire U.S. generic industry is going through this cyclic trend, where the prices go up and then comes down for a year or two. We are also not immune to that. Like everyone, we are also impacted because of that. These all are the reasons which have led to the impact in the performance. There was also some impact of the products which were exempted because we had mentioned in our last call that we took almost a quarter to restart the supplies to meet the FDA requirements for the additional quality checks.
All right. Sir, also, so have we restarted the products, exempted products back to the U.S.? Also, we were planning that the remaining year capacity would be diverted to the other markets.
The exempted product supplies have restarted to the U.S. market. With regard to the diversion of the capacity to the other market, our efforts are ongoing in that direction. We expect that in next financial year, our sales to the non-U.S. markets in comparison to FY 2022 will be much higher. In the same way, as I had mentioned in my speech, we are also increasing capacity utilization of our U.S. facility, and we expect that facility to operate at a higher run rate. Though the pricing pressure for the products in the U.S. market remains there.
I also mentioned that, the products which are restricted for the U.S. market currently, we are also in the process of transferring them to the CMOs so that, we can get into the U.S. market early. Those efforts are also ongoing.
Okay. Okay. Sir, in terms of the CDMO of our current run rate of INR 370 crore, is that the normal base or there'll be some products which are one-off even in this quarter for the CMO business?
In this quarter, we said that about INR 80 crore of the revenue we realized by those happening COVID-related deals. Those deals are now almost getting over. From Q4 and into the next financial year, we expect this business to be operating at the normalized levels.
Okay. Fair point, sir. I come back in the queue, sir.
Thank you.
Thank you, sir.
Hi, good evening, sir. So just wanted to get a quick view, if we were to model Q4, specifically within pharma segment, starting with the specialty pharma CDMO generics. In your view, I don't need a finite number, but would we be looking at improving trajectory for all of the sub-segments or, you know, some would still decelerate before starting to accelerate? Can you give a qualitative view in terms of Q over Q, what should we expect?
See, the issues because of which the Q3 performance is impacted, some of the issues are one-off, and some of the issues will take a bit longer to get fully resolved. Like in the CMO business, COVID-related deals which have tapered off, I am saying now the business will operate at the normalized level, and it will continue to operate at the normalized level, which are also healthy margins. With regards to API, the plant shutdown was a one-off activity. In Q4 onwards, the plant is expected to operate at the normal level, and it's currently operating at the normal level. In API, the API overall performance in Q4 will be definitely better than Q3. With regards to generic, the import alert impact will continue. The U.S. pricing pressure impact will continue.
The lower sales of the remdesivir impact will continue. However, the losartan, the impurity issue of the sartan is getting resolved. We have launched the product in the market. More impact of that we will start seeing from Q1 of next financial year.
Thanks for that. Q3, you know, like our EBITDA is about 15% for pharma segment. Let's say Q4 or Q1, when we sort of normalize operations and the issues are behind us, what is the sustainable EBITDA for pharma segment in your view? A range is also good enough.
It will be difficult to give range, but in Q4 we don't expect too much of the change. It will be marginal improvement over Q3. Then we expect that in next financial year, in the operating businesses, we will see the improvement. We expect to see improvement in Radiopharma business, hopefully because of COVID should be behind us by that time. The energy business will continue to improve and will keep on delivering the healthy performance. The COVID deals in the CMO business and the issues of the generics will take time.
Yes, sir. Okay, great. Then one last one, because we called out certain improvement within Q4, and we are already one month in Q4. How are you seeing RUBY-FILL which sort of, you know, installations were moved to Q4? Are they on track per your internal plans? Are they looking good?
Yes. In Q4, we are doing. We have already done quite a lot of installs which we missed in Q3. January was a good month for that. We also have many of the contracts signed which we plan to install in the month of February and March. In terms of overall installs planned for our FY 2022, I will say that, we are on track. The quarter-on-quarter, there had been variation more related to the COVID impact.
If I can squeeze one more for CRDS segment. We have done about INR 315 on nine-month basis in this year, and I believe new CapEx is gonna come online. Do we have a view in terms of what are we expecting in FY 2023 on CRDS based on new CapEx that is gonna come online?
thank you for the question. Giuliano speaking. Thank you for that. I think we expect a large number of contracts and renewals to be signed and we do expect definitely a new year which is higher in terms of overall revenues than the previous year. That's mainly due to the utilization of the new assets which is in greater number, as mentioned, and which we are now ramping up to fully utilize that.
Okay. Would you be able to provide number for us to sort of model our analysis? Again, a range would be good.
Well, what I can tell you for the moment is that we do have already, let's say, a number of new contracts and renewals which we think will be realized in the next year, and we are working to fulfill this pipeline. Difficult to provide you a precise number right now since we are finalizing a big reevaluation from our side. I think the performance of Q3 and Q4 will be helpful to identify the levels for next year.
Okay. Thank you. Thanks a lot. That, that's about it from my end.
Hi, thanks for the opportunity. I was hoping I would congratulate the management, but seeing the numbers, I'm really disappointed, and I hope so is the management. My first question is, like I've seen there's a significant drop in generics. Probably, I'm not sure if some of the previous participants have asked that question or not. You have been attributing that it is related to this import alert issued at the Roorkee plant. But there's significant drop in the generics. On one side we are seeing it is 3% drop, and on one side we are quoting a significant number. I'm not able to understand what is the reason behind it. Next question. We have been telling in each and every con call that there will be a turnaround in the Radiopharma business.
I believe management is seriously clueless as to how it's going to pan out, and they are passing it to the subsequent quarters and eventually into the next financial year. This is my next question. I want to understand how we are going to really plan out the significant turnaround, which we have been just talking and talking and talking with no execution. One thing is, I've seen that there is significant hit in the margins also. Every time we'll not be contributing or attributing it to the COVID thing. Management has to take a stand on this. Investors are losing their money seriously. I'm not really sure what will push investors to stay invested in this business. Thank you.
Vivek, this is Pramod Yadav. Your first question on the generics, exactly same question was asked earlier, I think, by Rahul. Maybe you were not on the call that time. We had explained that due to import alert, the impact guidance which we gave to the market earlier for the restricted products being about 3% of overall company revenue, we are staying within that guidance. The additional impact on the generic business which has come are due to the other reasons as well, the entire U.S. generic industry is going through the pricing pressure, so we are also impacted. The sales of the remdesivir, in spite of the higher surge of the Omicron, is much lower in comparison to previous year.
The reason for that is remdesivir is being administered when the patient goes to the hospital. Thankfully, the Omicron is not that leading to much of the hospitalization. Good for the society, but it has impact on the remdesivir sales. Other issue is the impurity issue of the sartans, which is again the industry-wide issue. We were also impacted because of that, as we had to recall the product. We have already cleaned up the process, and we have already launched the product in the market. We expect from next financial year we will see improved performance due to the sartan issue. This was on the generics. Related to the Radiopharma business, I can understand the sentiments behind your all the questions.
The fact is that we are also not very happy with the performance, and we continue to see as the business starts coming out, again the COVID surge comes and we see the number of cases or the collective diagnosis which is happening at the imaging centers again goes down. Now, we have an advantage of being in both sides of the businesses, manufacturing products and then also distributing. From our pharmacies we track the number of doses being dispensed on daily basis, on the weekly basis, and we see a direct correlation of the number of doses getting dispensed versus the COVID cases which are there in the U.S. As we speak, we are back to about the 90% of the pre-COVID level, which had improved about 96%-97% in Q2 of this year.
Now, that's the reality. However, when we talked about the overall plan to turn around the business, we had given the guidance that it will be turning around by FY 2024. It was not to be turned around immediately. The turnaround was to happen because of three different initiatives: overall growth of the top line, the improvement in terms of procurement efficiencies, and overall operational efficiencies. I am happy to inform that the improvement in the procurements, most of the initiatives have been implemented, and we have already started seeing benefits of that. In terms of operational efficiency also the projects are on track. Some improvements have started flowing into the bottom line. Some are yet to be captured into. Growing the top line is.
We are growing the top line, but it's a bit challenging in this current environment, especially during the time of COVID, when the hospitals and the hospital systems are much more geared to other activities. For them, changing the vendors and changing their entire software and shifting to another supply chain is not the priority. Even then, we are winning the deals, and it's a business where you have to continue to win and there's a continuous churn. Our overall winning rate this year has been higher than the last year, and our churn has been much lower than what it had been last year. We are on track. Yes, it will take time. We don't expect this business to turn around before FY 2024.
Hi, Pramod sir. Just wanted to understand now, even if you consider specialty pharma at INR 633 crore revenue, ideally even if you consider Radiopharma plus allergy business at higher margins of 14%+ and the losses of Triad, still the net-net EBITDA margin should be 30%, which comes to INR 180 crore, which is the reported EBITDA for the pharma segment. Sir, where is our assumption going wrong? There's a large loss going on in generic business at INR 188 crore in revenue or is it the CDMO business at INR 300 crore, INR 373 crore of top line not generating any EBITDA. Which segment is hitting us the hardest, sir?
In this quarter, the generic segment had hit us and that's a reality. There was also impact in the API which we mentioned that the plant was under unplanned maintenance shutdown. About your the Radiopharma business, you are very quick in speaking. I was not able to catch the numbers you were talking about.
At INR 633 crore of top line in the Specialty Pharma where we include Allergy plus Triad Isotopes plus Radiopharma.
Yeah.
Sir, I believe between the three, right, Allergy is close to monopoly. In radiopharma we are close to monopoly. That's business. These two segments within specialty pharma should be generating 40%-50%+ EBITDA margins, and there'll be some losses in the Triad that we have to include here. Even if I consider net-net 30% EBITDA margins for the specialty top line. That itself is the whole.
Sorry. Please go ahead.
This itself should be the total reported EBITDA. The CDMO businesses we are probably doing it at a very low margin, and there is a major loss happening at the generic business. Just trying to reconcile.
You took the benchmark of 30% of EBITDA margin in specialty. We are not at 30%. We are lower than 30%. We have very good margins in radiopharmaceuticals, which is-
Right.
our development and manufacturing products. We have good margins in the allergy. On the pharma side we have lost.
Right. Our losses have expanded, so just trying to understand that.
Losses in FY 2022 are lower than FY 2021 due to all the plans which I mentioned on the previous question. I had mentioned that we are improving year-on-year. We are improving quarter-on-quarter, so we are on track. They were higher in FY 2021. The losses are still there, but they're lower than 2021.
Right. That INR 188 crore of top line in generic would we be making any money in the EBITDA level, sir?
In the generics, in this quarter we didn't make money.
Okay. Fair point, sir. Thank you.
Hi sir. Thanks for the opportunity. Sir, just wanted to understand sartan issues a bit more. Can you just tell us exactly how you are going to relaunch the product and when the other competitors also had to discontinue the production or you were the only among the ones? How the prices are going to be? Whether we are going to see a further increase in the prices than once we reenter the market or the prices are still subdued?
In the start we didn't have a high market share. There are the two players which had a much larger market share. When we saw the impurities, we have withdrawn the product. The other companies, we had also analyzed the samples for the many players, and we have seen that almost everybody had the impurity, but every company is taking their own call when to withdraw, when to recall the product. In the meantime, we had cleaned up the process. There are the two of the losartan products what we have in the market. One is the losartan plain and other one is the losartan HCTZ.
The losartan HCTZ we have already launched in this quarter and the losartan plain we plan to launch in the next quarter. About the other players, I will not be able to comment regarding their strategy and what they are doing. We have seen that there have been the disturbances in the supply chain of the losartan from the many players.
Right. Is it safe to assume that there could be some price change also that the prices are going up if you all are having supply issues related to the quality? Are the prices inching up again like it happened last time?
So far we have not seen change in the prices.
Okay. Sir, I am still unable to understand one part. Considering that, as you mentioned, we didn't have much market share in losartan, so why we have lost out on the revenues in a bigger way? Because considering our market share was low and the pricings had already corrected in the past quarters, so it doesn't add up. What exactly. There shall be something apart from sartans as well as the root issues which should have impacted us. Even if we do that math, still there seems to be a big gap and it can't be explained just by the price erosion. Mere price erosion.
When I said that our market share was not very high, it's a question of the relativity. The losartan market size as such is very, very large. The losartan overall market size is I think more than four times of the valsartan. It's a very large market. In that large market, even a smaller market share also means reasonably good number for our generic business.
Right. If we have to just prioritize in terms of what would have led to sharp decline in the generic business. What you will keep it at first? Will it be sartan business which will be impacting the most?
No, sartan business is not the one which is impacting most. In the sartan business we had to do some write-offs of the inventory which we recalled. That had an impact on the business. There was an impact due to the Roorkee issue. If you ask me how to do the prioritization between the four, then I request if you can connect with me after the call and then we can discuss.
Sure, sir. Thank you.
Thank you.
Thanks for the opportunity. Just again, on the sartan, just would like to understand whether the whatever changes had to be done at the manufacturing level. So, all that, whether the U.S. FDA kind of confirmation was required to restart or it was done on the company's prerogative?
The impurity was coming from API. We had to clean up the process and we had to revise our DMF. That was done. Based on that revised DMF, we had to also file the regulatory approval for the formulated product. That we did, and for that also we received approval, and we launched the product. All these activities takes time, but we have been able to accomplish that within 3-4 months.
Now they don't have any issue per se on the sartan side.
From sartan side?
From the U.S., from the U.S. FDA standpoint.
Our product is absolutely free of those azido impurities, which was the issue. With that impurity-free product, the losartan we have already launched, and the losartan plain that we'll be launching next quarter.
Just lastly on this topic itself, like, so, but then is there any scope of market share gain now that you have resolved the issue compared to the peers?
I mentioned every company will take their own call what they are doing with this impurity and when are they withdrawing the product and by when they are able to clean up. I will say that we are one of those who are ahead in the game. The impact of that, we are yet to see.
All right. Thank you.
Good evening, sir, and thanks a lot for giving me the opportunity. Of these INR 500-odd crore drop in revenue in pharma that we have seen, which seems to be pretty substantial. How much of this was a quarter-specific, sort of a problem which you see going away? How much of this INR 500 crore drop can potentially add back in Q4?
See the impact on API will add back in Q4. The impact of the losartan will start getting added back in Q4 and then more in the next financial year. The impact of the COVID-related deals or the impact of import alert or the impact of U.S. pricing pressure and the remdesivir sale, that will not get added back in.
That is understood. You know, if you have to quantify against this INR 500 crore drop, if you can give a range of percentage of revenue which can potentially normalize in Q4 from this INR 500 crore, so what can be that number?
I had mentioned that we may see improvement in Radiopharma and energy depending upon how the Omicron surge continues. Overall, we expect Q4 to be better than Q3, but not substantially.
Okay. Sir, when it comes to our Radiopharma business now, you know, on one side we are seeing a lack of hospitalizations because of COVID, let's say in case of remdesivir, and there our sales are down. At the same time, what can be the reason when, you know, the hospitalizations are low and everything, then why are people not sort of going to the hospitals to avail of, our, you know, Radiopharma products? It seems to be like, you know, we are getting hurt on both sides of the business. Any particular reason why we are facing these challenges? Because people will also know that hospitalizations are low and all that, so their fear factor will go away, and they would potentially want to get these treatments, right.
In the U.S., in the month of January, many of the hospitals had reached at about 90%-95% of the bed capacity. In the U.S. the number of cases for the COVID are much, much higher than what is getting reported in India. The impact comes on two accounts. One is that, as such the hospitals have done the priority get shifted because they have to treat the COVID patients, and whatever operation they are doing, they have to do with all the COVID protocols. The healthcare workers are also getting infected because of COVID, so there's absenteeism. We are seeing that absenteeism impact in the U.S. all over.
The airline industry is getting impacted, departmental stores are getting impacted, supply chain is getting impacted, and the healthcare system is under pressure. That has an impact on the elective diagnosis, especially because in any of the nuclear medicine process, it takes the longer time. There's a tendency for the patient to shift to less accurate modalities like CT scan, et cetera, and it will continue with the treatment.
Understood, sir. On the generics business, sir, how do we sort of see the pricing pressure? I mean, the general understanding was that in the last quarter we saw a stabilization of the U.S. generics pricing erosion. This quarter on a QOQ and a YOY term, if you can quantify the pricing impact that came onto your portfolio, that would be very helpful. If you can give a range of pricing erosion that you have seen on a QOQ and YOY basis.
Like YOY, I'll say that we are into near double digit in terms of price erosion. That's the impact we are seeing on the business. It's not different from what the many other companies are reporting.
On a quarterly sequential basis, how have you seen against Q2, which we were thinking at least that is sort of the bottom?
No. Sequentially because of pricing, it's not much of the impact. The impact is in comparison to last year.
Understood, sir. Thank you and all the best for the coming quarters.
Thank you. Thank you.
Yes, I'm Pramod here. Thank you everyone for joining the Q3 FY 2022 Jubilant earnings call. If you have any question, please feel free to reach out to our investor relations head, Mr. Vineet Mehra, or to Arvind Chokhani who's our group CFO, and they will be more than happy to answer your questions. Very happy return to everybody. Thank you.