Ladies and gentlemen, good day and welcome to the Q1 FY 2020 Q Earnings Conference Call of Jubilant Pharma Limited. As a reminder, all telephone lines will be in a listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Praveen Singh Sanijan from the Investor Relations.
Thank you, and over to you, sir.
Good evening, everyone. Thank you for being with us on our Q1 FY 'twenty two 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 Dharthya, Chairman Mr.
Hari Dharthya, Chairman and Managing Director Mr. Arvind Shukhani, Group CFO Mr. Pramod Yalla, CEO, Jubilant Pharma Mr. Syed Gharthi, CEO, Jubilant Therapeutics and Mr. Arvind Sharma, CFO, Jubilant Pharma.
I now invite Mr. Shyam Bharatya to please share his comments. Thank you. Good evening, everyone. I hope all are in good health and keeping safe.
Before we discuss the company's performance during the quarter, I have an important announcement to make. Board of Directors of Jubilant Pharma Limited at its meeting held on July 23, 2021, has approved the demerger of the API undertaking of Jubilant Generics Limited and vesting the same with Jubilant Pharma on a going concern basis to be implemented through a scheme of arrangement between JGL and JPN and their respective shareholders and creditors under Sections
230 to
232 and other applicable provisions of the Companies Act 2013. The business of reorganization is aimed at creation of a small molecule discovery and chemistry focused vertical present across value chain of CRO and CDMO of innovative and generic APIs. It will strengthen and sustain long term growth, profitability, market share, customer service, risk management as it requires focused management attention, different skill sets and resources.
This will ensure
that synergies between CRO and CDMO businesses are realized more effectively under a holding public subsidiary company structure as compared to fellow subsidiary structure. This organization would also help in supporting our customers for their needs from early stage of research to completion of active ingredient and will provide competitive edge to this business. Now coming to the company's performance in quarter 1 FY 2022. Though the radiopharma continues to be impacted due to COVID in Q1, we saw sequential improvement in Specialty Pharma segment with gradual recovery across radiopharmaceuticals, radiopharmacy and allergy. In radiopharmaceuticals, we have enhanced efforts to promote existing products as well as expand our product pipeline with strategic partnership.
With the gradual recovery in nuclear medicine procedures, the radiopharmacy business has come close to pre COVID levels and turnaround plan is on track. The CMO business continued to benefit from COVID related deals. Our Roorkee facility was placed in the import alert by U. S. FTA, while exempting some products subject to certain conditions.
For rest of the products, revenue impact for the company is less than 3% of the total revenues. The company will engage with the agency to resolve the import alert at the earliest and ensure cGMP compliance. Contract Research and Development Service Business witnessed strong year on year growth in revenues led by healthy demand from customers. We have doubled our chemistry research capacity and the facility is operational now. Despite COVID-nineteen related lockdowns, we have been able to ensure continuity in most of our manufacturing operations across all business segments, while at the same time ensuring safety of our employees.
I take this opportunity to thank all our employees who have worked tirelessly across all our plants and offices to ensure continuity in company's operations while continue to serve our global customers. With this, I hand over to Pramod to discuss the pharma business.
Thank you, Mr. Bhatia. A very good evening to all of you. Pharmaceutical revenue was at INR 1541 crores versus INR 1096 crores in Q1 FY 2021. In radiopharma business, due to improving COVID situation in the U.
S, there is gradual improvement barring lung expense which are trailing the recovery curve. The Rubifil installs are picking up and we expect to gain momentum in the U. S. If COVID-nineteen situation remains stable. In radiopharma, we continue to maintain majority market share and have long term contracts in place.
We are building a long term pipeline of radiopharmaceuticals, including generics as well as proprietary products being used as the diagnostic, telematics, teranostics and the devices via in house R and D as well as strategic partnerships with key nuclear medicine companies. We are executing a detailed turnaround plan for radio pharmacies to grow top line strongly with new customer wins, expand network to service newer geographies and enhance cost and procurement efficiencies. The allergy immunotherapy volumes were normalized to pre COVID levels in Q1 FY 2022 as COVID related restrictions ease. The CMO business revenue grew year on year based on strong demand from customers as well as COVID related deals. The INR 200 crores COVID related revenue for FY 2022 indicated in the previous quarter has been realized in Q1 and we expect to realize an additional about INR 100 crores in the rest of FY 2022.
Though we have seen pricing pressure in API as well as the generic business, especially on certain, However, the generic business overall grew year on year as well as quarter on quarter on back of higher volumes, including remdesivit sales. Our R and D spend is primarily directed towards development of new products in radiopharmaceuticals, API, generics and analogs. The radiopharmaceutical spend is the highest given the complexity of the business and the fact that some of the products are innovative in nature. The EBITDA for quarter was INR 3.62 crores as compared to INR 1.79 crores in Q1 FY 2021. The Rookey formulation facility was placed under import alert by U.
S. FDA. The agency has exempted a few products from the import alert, namely the meclizine or hollangipine ODT, rasperidone ODT, spirolektron and valsartan. The conditions for exemptions include testing by an independent third party, the certification by an independent third party auditor and confirmation that no badge or lot offered was involved in an incident associated with an out of specification results. For rest of the product, revenue impact for the company is less than 3% of total revenue.
We are engaging with the agency and are taking help of consultants and hope to resolve the issue soon. And the management good OI status remains as it is. We have completed remediation activities and await U. S. FDA inspection.
With this, I hand over to Arvind to provide insight into contact research and development services business.
Thank you, Pramod. Our Contract Research and Development Services business under Jubilant Biosys brand continues to deliver a very heavy performance during Q1. This was driven by strong demand from biotech companies, integrated discovery as well as functional services such as chemistry, BNPK and discovery biology. The business has a healthy pipeline of new contracts and customer acquisitions for FY 2022. Q1 FY 2022 revenue grew 55% year on year and EBITDA grew 90% year on year.
As we informed in the previous quarter, the business has committed investment to double the chemistry research capacity in Greater Noida and the facility is operational now. With this, I now hand over to Syed to discover the proprietary novel drugs pipeline. Over to you, Syed.
Thank you, Arvind. Good evening, everyone. In our proprietary Novel Drug business, we are developing a pipeline of potential 1st in class and best in class agents to deliver precision medicines focusing on addressing unmet medical needs in the area of oncology and autoimmune disorders. We are also leveraging our industry validated drug discovery platform to identify novel promising agents and move them from discovery to development on an accelerated timeline. Our 1st in class LST1 Hdac6 dual inhibitor addresses multibillion dollar market segments in both hematological malignancies and solid tumors.
And it's undergoing investigational new drug IND studies with a goal to file IND and initiate 1st in human clinical studies in early 2022. 2 more programs are following this lead: a first in class PAD4 inhibitor targeting autoimmune disorders such as rheumatoid arthritis subsets, as well as metastatic cancer and a differentiated PRMT5 inhibitor with potential best in class profile, which uniquely shows both blood and brain exposure and therefore can address brain tumors like glioblastoma as well as brain metastasis. IND filings for these two programs are planned over the next 12 to 15 months. The U. S.
Biotech market is witnessing very strong investor interest in precision therapeutics in oncology and autoimmune diseases based on the recent equity raises at attractive valuations. We now forecast for a novel drug business. We are developing very high end potential and 1st in class assets in these areas. 4 of our assets under development are at advanced preclinical stage and will transition to clinics starting early next year. The company is working towards creating shareholder value in this business through a private or public equity raise during the coming 18 to 24 months.
With this, I now hand over to Param to discuss the financials.
Thank you, Saiid. A very good evening, and I thank everyone for taking our time and joining us on our quarterly earnings conference call. I would like to highlight the company's financial performance for the quarter ended June 30, 2021. As the LSI business trends emerged from Jibilant Pharma 1 effective February 1, 2021, I would cover performance of our continuing business, which includes pharmaceuticals, complex research and development services and proprietary novel drugs. Revenue from operations during the quarter was at INR 1635 crores as compared with INR 1150 crores in Q1 last year.
Pharma revenue was at INR 1541 crores versus INQ1 FY 2021. While contract research business reported revenues at
INR 88 crores as compared
with INR15.57 crores during Q1 FY 2021. The EBITDA reported during the quarter was at INR379 3.79 crores as compared to INR183 crores in Q1 FY 2021 with margin at 23.2 percent versus 15.8 percent in Q1 FY 2021. Depreciation and amortization expense during the quarter was at INR 88 crores versus INQ1 FY 2021. Finance cost during the quarter was INQ35 crores, which is INQ48 crores in Q1 FY 2021, a reduction of 28% y o y. Average blended interest rate for the quarter was at 4.64% per annum.
Reported PAD during the quarter was at INR160 crores as compared with INR 35 crores in Q1 last year. EPS was at INR10.1 per share versus INR2.2 per share in Q1 last year. We continue to focus on deleveraging and I'm glad to mention that during the quarter, the company reduced its net debt on a constant currency basis by INR277 crores to INR16.51 crores. Capital expenditure, excluding R and D capitalization was at INR 106 crores for the quarter for FY 2022. We plan to spend around INR 700 crores to INR 800 crores.
With this, I would like to conclude opening remarks. We will now be happy to address any questions that you may have. Thank you.
Thank you very much. We will now begin the question and answer session. The first question is from the line of Alankar Garode from Macquarie. Please go ahead.
Hi, good evening, everyone. Sir, can you update us on the key issues cited by FDA which led to the import alert?
Yes. Hello, Anankar. This is Pramod. The key issues cited by FDA in the 4/83 observations were mainly related to either cleaning protocols or some of the validations for our data, the way they are backed up in the server, etcetera. While raising the in force alert, the FDA doesn't cite the issue separately.
So my point there is if
I look at the issue with respect to cleaning, so that was also cited in the we received in March 2019. So and we had more than 2 years to rectify the issues. So why do you think we got the import alert and why did these issues continue to persist even after 2 years?
So we had taken the help of the consultants and we had resolved the issues to the best of our knowledge. But however, when the inspection happened, there were some issues related to the cleaning, which was not part of the process. They are actually material was not coming in the direct contact. And on that part also, FDA made the observation that these also need to be included in the SOP for the cleaning. And since the issue was related to cleaning, so your observation is right that this issue also came up earlier and probably that is the reason that FDA took the decision to raise the official But since the issue is only related to G and P and some of the practices, which are to be followed, including the cleaning, etcetera, these are not the issues, which are difficult to resolve.
And we hope that we
should be able to resolve And we hope that we should be able to resolve these issues very soon.
Understood, sir. So basically, there are no data integrity issues?
I'll say there is no any data fraud or that kind of issues. Okay. So essentially, do you see
a possibility of a systemic risk for any of our other facilities because of the import level?
Level? We don't foresee at this stage. We don't have such kind of observations at the other facilities. So there's nothing more to comment on that at this stage. Fair enough, sir.
So my second question is if you look at the restructuring, is it a
precursor to a separate listing of the CRAMS and the API business in the future? No. At this point, the idea is to create a business unit which is synergistic both to the CRO, where we provide chemistry service and early stage CDMO and combine it with our plans to for large scale CDMO in the API as well as generic API. So presently, the idea is to manage this as a one single business unit so that we can provide end to end services to the customer. Understood.
And one final question from my side, if I see cash has increased sequentially or in this quarter, so would it be fair to say that out of the INR 700 crores CapEx which you outlined for this fiscal, there was not much CapEx in the first quarter?
I think Arun had mentioned that we spent about INR106 crores in Q1.
Okay. Fair enough, sir. Thanks and all the best.
Thank you. The next question is from the line of Rahul Veera from Abacus. Please go ahead.
Hi, sir. Sir, in our Drug Discovery and Solutions business, we have been close to 38% kind of margins. So, wanted to understand the sustainability and also how many enterprises do we have in the team? And what will be the number once we increase the capacity out there in the coming year?
So as you heard that we doubled our chemistry service offering and the start of Greater Noida unit. And we do see a good traction in the market. And we are hoping by the time we reach end of next year, we should further look at increasing capacity. And we have room available in the Greater Noida facility itself. So and quickly take up expansion out of the units if we need more capacity there.
As far as other discovery services are concerned, we do want to expand it in Bangalore and for which the plans are getting finalized, which both integrated drug discovery as well as other biology related services.
Sir, my question is what are the number of scientists do we have right now on payroll? And post the increased capacity, what will be the number of scientists in the drug discovery business?
I don't have the numbers ready in hand, but I'll make sure that it comes to you.
Sure, sure. That is great. So, one quick question. So, post these reorganization, so the 2 units are largely the radiopharma and development grants, that's the way to look at it?
No, no, not radiopharma.
Okay. So could you just give some highlights out there like how will the business structure will look? Like which will be the 2 large deals for us after this restructuring?
No, no, no, sorry. What was your question?
So post the restructuring, how will our business appear? I mean, which will be the 1 large engine, which will be the 2nd division? Right now, we report a specialty CDMO, Rig Discovery?
Yes, yes. So in Jubilant, Paribas will be large business and then CDMO will also be large business and generic business, the 3 business sectors will be there.
Okay. And Jugli and Jugli?
No, Jugli will be that discovery and API and innovative and generic APIs.
APIs. The next question is from the line of Ranveer Singh from Suniti Securities. Please go ahead. Yes.
Thanks for taking my question. So again on this restructuring, just wanted to get clarity that currently our CDMO business is U. S. Waste rate on Montreal facility. So that U.
S. Business of CDMO and CRO business under Jovalent Biopsys and Plus API, that will be getting clogged after IZR? No,
no, no. The CBMO business is a sterile one
in this.
That is that will stay as one single business unit. That is a sterile contract manufacturing. That will stay as a separate. Only the chemistry part, which is the API part, will get integrated with the CRO business and both are in India, as you know.
Okay. Okay. Okay. So, Vamdi, that CRO API which was earlier clogged under CDMO, that is carved out and that CRO business would be clogged. That is what So, the
Biocics business and the API business will be managed together.
Okay. Okay, fine. And so secondly, you mentioned INR 200 crores COVID related revenue came, which was related to earlier year. That INR 200 crores is part of our pharma business, right, in this quarter?
Yes. So this INR 200 crores was not a revenue of earlier year. I said that in the last call, we mentioned that during FY 2022, we expect about INR 200 crores revenue to be realized. And in this call, I mentioned that this entire INR 200 crores has been realized in Q1. However, on top of that, we expect another INR 100 crores plus to be realized during the rest of the FY 2022.
So ideally, that should come in 2nd quarter or that will spread across year rest of the
year? Yes. So it's spread across the quarter,
but there can be variation quarter on quarter.
Okay. So if I reduce this INR 200 crores, the rest of the business has actually been lagging on Q on Q basis also and year on year there are potential growth. But on Q on Q there has been even the pharma business you see has declined significantly, right?
No. But in last year also there were a lot of COVID related deals we had and we mentioned that they were close to about INR535 crores over the to 3 quarters of FY 2021. Okay. Okay. So the non COVID related business continues to remain strong and that business continues to grow as well.
So in Specialty Pharma segment, allergy therapy, you have mentioned that volume has normalized now. Whether we have saw a growth in this quarter in Germany
in allergy therapy? Yes. Since the volumes have normalized, which in the previous quarter were close to about 95%. So to that extent, there is a volume growth and revenue growth.
Okay, fine. That's all so much. Thanks, hello.
Alum. Thank you. The next question is from the line of Sriram Rathi from ICICI Securities. Please go ahead.
Yes, thanks for the opportunity.
So firstly, on the specialty pharma side, I mean, has I mean, the QoQ recovery in radiopharma, how has that been? I mean, radiopharmaceuticals particularly, has that just grown on QoQ basis?
So on quarter on quarter, we have seen that there is a gradual recovery. And for the most of the products, it by the time the quarter ended, especially the month of June, we were back to pre COVID levels, except the lung scans, which we mentioned are still trailing the recovery curve. And we expect them to also recover soon with the time. But we did mention in the previous calls also that we expect for the lung scans recovery to be little slower than the normal products.
Okay. Okay. So okay. And I mean, it is lower, but
it is recovering, right?
In the coming quarters, we should see continued momentum in terms of sequential recovery of the revenue.
Yes. In that business, we should see the sequential improvement.
Okay. Okay. And on the CDMO side, I mean, if you look at the base business, actually in the COVID days, it seems that the revenues haven't started on YY basis. And last year also in quarter 1, the overall revenue was actually down 19%.
So I just wanted to understand what I mean on
the lower base also we have flattish. So the base business though we have
the I think order book around INR 36100 crores as this was last time, but that is not somehow visible in the number. Am I missing something on that or is
it still So I don't know from where you are getting this analysis that the revenue is flattish. We have the context in which we do the annual price increases. Those annual price increases directly go into the growth of the revenue as well as they go into EBITDA. And that business continues to remain strong and is growing. Quarter on quarter, there could be some bit of the variation depending upon the customer requirements.
And also since we had a lot of COVID related deals and of course, they were having the higher margins and they were getting the priority, so there could have been a variation in some of the customer specific requirements. But overall, that business remains strong and continues to grow.
Okay, got it. Okay, sure. And on the generics business,
I mean, this quarter, did we see any benefit of higher industrial supply or something like that? The revenue seems quite strong.
Yes. So we had this unfortunate the wave 2 of the COVID in India and that did lead to the additional sales of our MSCV. Okay. In the coming quarter,
that should normalize the margin, this may be the current situation I think?
Yes. It will depend upon how the COVID situation remains. But now India but now the government has also opened up the exports during the peak of the time the exports got stopped. And as you see, the COVID globally remains little bit of the erratic. In many of the countries for which we have the license, the overall number of cases are increasing there.
So it all will depend upon how this COVID situation continues to evolve. But it will be lower than Q1, that you are right.
Okay, got it. And just 2 questions on
the financials. I mean, the gross margin seems to be significantly higher this quarter at 78%. Is it because of the COVID related supply?
Yes, that did have an impact. And also there was an impact of the RMB701.
Okay. So RMB500 has been higher to 1,000,000 for us compared to the number of years. Okay.
And any specific reason for the higher SG and A expenses this quarter, I mean, it
looks like around INR 400 crores is there, but
it's normally rendered around INR 300 crores to INR 3.40 crores in the past?
No, there is no specific reason for that. It may have been the normal this marketing related expenses. And in the previous quarters, especially in Q1 of the last year when the COVID was there, so all the traveling etcetera had totally stopped. And as the situation improves, some of those expenses start coming back. Plus we are also spending the additional amount for the growth for the Ruby Film and that impact is also there.
Okay. So this is just probably we should model with this current run rate now for the future process?
Okay, sure. Yes, I think
we can do a bit of
the detailed analysis and then take that offline.
Okay, sure. Thank you, Simeon.
Thank you. The next question is from the line of Satikoothari from Unique PMN. Please go ahead.
Hi, good evening and thank you for the opportunity, sir. So my question is regarding our Roorkee import alert. I believe we were pretty ambitious in terms of the number of new products that we wanted to plant that we had some big plants out there. If you can just throw some light what gets affected because of that and what those plans were?
So you are right that since now this import alert is there and we didn't get the VAI. So till the import alert is lifted, that plan gets postponed. So we can assume that at least there could be a delay of about a year because of that. But in the meantime, we are also exploring the possibilities that all the important products which are there, if we can file them from the different locations so that we are able to put on bring the products earlier in the market. So we are in the process of doing that evaluation.
And at the same time, likewise, the products which currently have been restricted for import into U. S, they can also we can stick to the other sites and then bring them back into the U. S. Market. So that evaluation is also ongoing in parallel.
Okay, fair enough. And sir, on the specialty side, our expectation was that in the first half, in
the quarter one, quarter two, we'll
be back to pre COVID levels.
And I believe our pre COVID levels were anywhere around INR 700 crores, INR 800 crores a quarter and yet we clocked INR 26, INR 30 crores right now. So one, you did highlight that the radio part on the lung side is an issue. But is the new competition coming in resulting in us reporting lower numbers?
Yes, to some extent competition impact will be there. And this we have been saying that we have given whenever a generic enters in this space, you have to give some market share. And a bit of the price correction happens, but not to the extent what you see into oral solids or to the other generics. So to that extent, impact will be there. But that impact is not as large as the impact we had because of the COVID.
So the COVID impact was larger than the completion impact.
Fair enough. And so my last question on the CDMO side, I mean, like you mentioned, there are 4, 5 deals with COVID related, which we won last year. I mean, we'll be completing that in the next quarter. So post that, will we go back to the numbers that we used the quarterly numbers that we used to report earlier? Or do we have something to fill in those gaps?
I mean, talking about currently we're doing INR 450 crores, INR 450 crores a quarter.
Do we go back to INR 250 crores,
INR 300 or do we have something to fill that gap now?
So one is that the COVID deals are not ending in Q2. They are extending for the rest of the year. And when we had been doing the debottlenecking of these capacities, we were doing because we were seeing the additional demand in the market and the customers of our existing products were asking the higher volume. Last year and in the current quarter also because of the COVID deals, we that the rest of the business volumes have been more or less stagnant. As the COVID deals starts to winning out, we will have the capacity available to take care for the normal business which we had been running And we will have opportunity to grow the volumes there.
So we have already engaged with the customers on that front. But in the CMO, you are aware that all the scheduling, etcetera, is done well in advance. So we are engaged with the customers and are already exploring how many additional batches we can make for them once the COVID related deal is freeing up the capacity.
Fair enough. Sure. Thank you, sir, and all the best.
Thank you.
Thank you. The next question is from the line of Vishal Manchanda from Nirmalbank Institutional Equity. Please go ahead.
Thanks for the opportunity. Sir, with respect to your drug discovery services where you have doubled your chemistry capacities, can you quantify how much revenues can it add to your base? And how long will it take to do that?
As you know, 50% of our business comes from integrated and about 50% comes from chemistry service. So by hopefully, by the end of next year, we would have doubled our chemistry part of the business.
Okay.
And so basically, is this chemistry services has to do with API process development? Is that right to is that a fair understanding?
It is while doing discovery work, pharma and biotech companies need chemistry support because they need FTEs and they need sometimes manufacture of very small quantities of molecules. So we do both. Got it.
And sir, second on your specialty business, which is currently at a run rate of INR 630 crores. So if I analyze it, it's at 2,000 around about INR 2,500 crores. And if I go back to FY 2020, it was say around INR 2,900 crores then. So we are almost kind of INR 500 crores running at a run rate, wherein we'll be INR 500 crores below the FY 2020 number. So does that mean that INR 500 crores number losses has largely to do with the DTP and MA business loss that has happened in the current quarter?
So I am not getting your numbers on the analysis part. But yes, whatever is the impact, because currently that is related to NA and the DTPA, which are impacted because of COVID as well as some impact because of competition. So both the impacts are clogged into that.
So the entire radiopharmacy business has normalized. That's fair to assume,
the distribution business? It had normalized towards the later part of the quarter.
Got it.
Okay. Okay. Even in the month of April in U. S, there were the cases. But in May June month was much better.
Got it.
That's all from my side. Thank you.
Thank you.
Thank you. The next question is from the line of Bharat Ali from Ikra Securities. Please go ahead.
Yes. Hi, sir. Thanks for the opportunity and good evening everyone. So I just wanted to understand or we just want you to quantify what sort of revenues have come from VENVACIVA during this quarter? And as well clarification, when we say that the COVID related revenues have been around CLP 200, we are not including the rent receivables in this.
Can you clarify that?
So IN SEK 200 is the revenue for the CMO, which doesn't include the rent receiv. That's the revenue we get from the North America market for the CMO business what we do for the innovator company. And the REMS CV, we have voluntary license for India and other developing countries, which doesn't include North America market. So both are totally different businesses.
Right. And can you quantify how much has come during the process and when we are together?
I think that the product is specific quantification we should avoid.
Sure, sir. Sure. And so just wanted to understand on the gross margin part, since there will be a bunch of revenue of vendor today, which will be having relatively low margins, still our gross margins have improved sequentially. So what exactly could be the reason for that? Because RMB3 will be relatively far lower margin and we are having some sales success during the start of the quarter?
No, margins in the RMB3 were reasonably good. And plus also the margins in CMO for the COVID related deals were much higher than the normal CMO business.
Understood. Understood. Also, just wanted to understand one more part on the Vodhi plant. How many products are filed from that facility? And what sort of mitigation strategy we are taking over there?
Are we moving any product to some other facility back in the year?
Sorry, I missed your question.
Yes. So how many ANDAs are filed from the Roorkee facility, if you could clarify that? And how many are we looking to site transfer to some other facility?
So we have total 98 filings from the Roorkee for ANDAs. Out of which, 61 are approved and 37 are pending. So which are approved, that's there, but the one which are pending, which we were to launch after the site would have got out of the warning letter. Out of that few important products, we are looking at taking to the other sites. But we are as of now doing that evaluation.
We haven't decided yet completely because this is a very new platform.
Right. And how many projects will be filed from the U. S. Facility, Hollister?
So A and D then we file other than from the RUTI, we file from the Carista, which is in the Salisbury. Right. And those products have no issue for the approval.
Right. So how many products are
filed? Right.
So how many products are filed on there, which are pending approval from Phase 3 plant?
Okay. Okay. I may not have the exact number, but it's into single digits.
Sure. That's helpful. I will definitely make you. Thanks a lot.
Yes. Thank you.
Thank you. The next question is from the line of Atif Lakhani from Unify Capital. Please go ahead.
Yes. Hi. Two questions. First, the entity that you're carving out in the form of a demerger is just a pure play API business, which is give or take INR 600 crores. Is that understanding correct?
Yes, yes.
Okay, fine. 2nd, I just wanted to understand that now Triad, our radio distribution business, it's been 3 years. And when we acquired that as well, that business was a loss making entity, if I understand correctly. So just wanted to pick your thoughts on how this acquisition has played out 3 years down the line? How do you think about it?
Has it met your strategic sort of thinking? What are your key learnings from this? And how do you do you have any timelines regarding the turnaround? Thanks.
Yes. So in terms of strategic thinking,
I'd say that we are very pleased that we have this entire distribution within our business of the radiopharma. It gives us the direct access to our customers. And as well as we continue to grow the pipeline for our all the developmental products, which are in the development in the R and D and which we plan to launch soon in the near years. This distribution gives us the ready made market for those products. So whatever market share we have into the distribution that much market share, we as such get for those products directly as soon as we launch them.
Plus, as I mentioned that every buyer would like to have the alternate vendors. So even in rest of the market also we get the share. So rough calculations, I suppose you assume our market share is about 20%, 25% and then we get another 20%, 25% market share for the others. So when we launch the product, we straight rate it close to 50% market share. So that's a huge strategic advantage we have in this business.
And that's the reason we continue to focus on this business. But you are right up since we acquired we had been into red. And the reason for that we mentioned earlier that during the acquisition process, the acquisition process because of the regulatory challenges lasted much, much longer than what it should have been. In the process, customer got panicky and they had done some long term contracts with the competition. And those contracts are now coming up for the renewal.
But unfortunately, in FY 2021, we had this impact of the COVID. So that had made some dent on to it. And during the time of the COVID, all the customers were having the priority for themselves to sustain their business and not to look for the alternate suppliers, etcetera, because when they go for the alternate supply, they also have to make a lot of changes into their systems for the entire supply chain software, etcetera. So during the COVID time, the customers have withheld any discussion on the changing of the vendors. Now as the situation has started getting normalized in U.
S, now we are seeing all those customers are opening up for discussions. We already have a very strong funnel of the various RFPs and we are in the discussion with the customers. So we that's why I mentioned that we have planned to continue to grow the top line very strongly. And as of now, we see that in another about 2 years' time, we should be at the breakeven in this business. And then we will continue to grow this business and generate positive EBITDA margins.
When we see this business as a stand alone, but at the same time, it will continue to support our own radiopharmaceutical business. So thanks for thank you so much for that. Just a quick follow-up that currently from the INR 19 100 crores radio pharmacies business give or take, I think the distribution business is roughly INR 1400 crores and the manufacturing portion is roughly INR 500 crores. Can you just give me a ballpark understanding that from this
INR 1400 crores, what is the throughput
of our manufactured products going through this 1400 crores pipelines and what is it from the outside? And how do you think this is likely to change in the years in the future? Thanks. One is that I'm getting lost in your numbers because they are quite different than the reality. But however, I mentioned, we have about close to 20% to 25% market share.
And but in this business, we don't distribute only our product. We are also distributing the products of our competitors. So for our product, mostly the priority always remains that we are distributing our own. But however, it's not on exclusive basis because we also have to take care of the customers' requirement. And the customers may have the contact with our customers with our competitors.
So it's a mix.
Sure. So could you just give the proportion of
So sorry to interrupt you, Mr. Makhan. We have requested to rejoin the queue for follow-up questions as there are several others waiting for their turn as well. We would also request participants The next question is from the line of Shanti Patel, an individual investor. Please go ahead.
Hello. Good evening, sir. My question is what will be your capital return on capital employed and return on ECPE approximately as on 31st March 20 22 and 31st March, 2022? And the second question is, in respect of media verticals, what is our market sales in India?
So if I'm able to understand the question correctly, you're asking return on equity or return on capital?
Return on capital employed and return on equity as on 31st March 2223.
So return on capital employed is 15% plus and return
on equity is around 14% plus.
Yes. And yes, are you expecting same as on 31st March 2020?
No, we are expecting an improvement from these levels.
Okay. And what about market share of our various verticals in India?
More market share?
Yes. No, we have got a dominant in the company, I mean how much, 25, 13, 16, 17 in respect of various verticals.
Sorry, this is Pramodu here. So there is market share for which products because we have very diversified portfolio. And you're asking for India? That's right. Yes.
So in India, if you may have seen our overall revenue that is in the last quarter was about close to 10% to 12%, which also included the contribution from the REMS SCV. Other than the other products what we have in that business, that is a business which we call IPC, the Indian Branded Pharma. And that's the business which is the NetCent business, which is the incubating business. And we are growing that business quite relatively now.
And but that the overall revenue of that business as of
now is not of material.
Okay. Thank you, sir. Thank you.
The next question is from the line of Alankar Garode from Macquarie.
So just one clarification on the 5 molecules which have been exempted. So till the time the 3rd party test and audits are completed, are we allowed to sell these 5 molecules or they can only resume supplies of them can only resume once all the tests are done and all the three conditions are met?
Yes. So supplies can resume only when the conditions are met, but we don't expect to take long time to meet those conditions.
So by long time, you mean, sir, take a couple of quarters?
No, it could be probably 1 month, 1.5 month, 2 months max.
I understood, sir. Okay, sir. Thanks. I hope the best.
Thank you.
Thank you. The next question is from the line of Tushar Gohra from MK Ventures. Please go ahead.
Yes. Thank you for your question, Adi. So just one thing, can you help me with the comparison on a quarterly basis Q o Q for the key headline numbers because you had last year you also had rather last quarter, you also had life sciences business for Sampath. So exactly how are we doing on a Q or Q basis, clearly for the Pharma business?
Quarter on quarter, we are doing well in Pharma business and we have given the numbers of Pharma business in Q4 also and Q1 also, the numbers are comparable.
So the Q1 performance of last year doesn't include the our chemical ingredients business?
No, Q4, I'm saying, sir, Q4 business, Q4 vis a vis Q1, if you can just help because the presentation in most places mentions only a YOY performance. Can you just help us with
the headline number on Like to like YOY performance.
Like to like Q o Q performance, I'm looking for.
It's all like to make. I can inter again. You are asking comparison of Q4 last year versus Q1 this year? Right, sir. Yes.
So the revenue has grown by 4% and EBITDA is more or less flat.
Okay. Now, sir, my question is that in this quarter, we had in India as well as maybe some of the emerging countries, no remdesivir sales have been strong for the company. And U. S, I suppose, relatively was a bit more normalized QoQ, plus we would have also had some revenues from the vaccine side. So for I believe we will be working on some of the vaccine candidates.
So despite that QoQ, the performance delta is not visible, sir. So just want to understand why would that be? And also post COVID, what could be a normalized run rate for the quarter, assuming that we don't have any COVID product related one offs as well as business one offs? What should we look at as a stable quarterly base for a company on which then we should assume growth going forward?
So in terms of Q4 over Q1, the impact what you are mentioning, not seeing because of in spite of higher than RMB residual sales. So that is coming from 3 accounts. One is that our COVID related deal in Q1 were marginally lower than Q4. In API, I mentioned that we had some pricing pressure on the Sartans and into some pricing pressure on to the generics in the U. S.
And 3rd impact was the exchange rate fluctuation, where we had to take some impact of the Canadian dollar is standing in comparison to the U. S. Dollar?
Got it. And so what
would be a normalized run rate? So vis a vis let's say INR 1500 crores revenue on the pharma side this quarter, when you assume things should get fully normalized, what kind of these should we assume on an average quarter?
I will say business to business, we will have the variations like some of the CMO COVID deals will go down, but then we will have the growth coming in from Telu Karma business as the COVID gets normalized. Both these businesses are compensating each other due to the impact of the COVID. And also we need to watch the pricing development on to the API and on to the generative space. And we should see the recovery over there.
So on the just a follow-up on this. So on APIs, as you mentioned, Sartan being one of our key product baskets is facing pressure. And on the generic side, given our plants are facing regulatory issues, couple of key plants, so some of the growth has got hampered. So how exactly do we expect this basket to grow? And on the radiopharma side, would it be fair to assume that since a large part of your normalization is to come from the radiopharma business only, which remains a high margin, it should more than compensate for the drop in margins because of the COVID related business.
So on an overall basis, as the things get normalized, should we see a gradual improvement in margins further from here?
If the lung scan procedures comes back to the normal level, then what you are saying is right. But the only issue is that we are seeing that bit slow the recovery. However, we are making efforts in terms of conducting the webinars and educating the physicians to start using these scans because the entire procedure is absolutely safe. The SNNMI has also issued the guidelines that are asking on the physicians to go back to MA and the DTCF because the entire procedure is safe. So the development so the efforts in the direction are going and we have to see the recovery over there happening.
But overall, when that happens, then the business will be back to normal. Plus, then we will bring the additional products which are into the R and D. And we also continue to grow the Ruby thing. We also will have the capacity in the CMO to grow our other products. Then the LNG business continues to do well.
And in API, we have the traction for the volumes. Though we will not though we will have impact from the Roorkee for the supplies to the U. S. Market, but the Roorkee will have additional capacity available to take care of the rest of the world market. So when you look at all these, there are many of the opportunities for us to grow, then just the lung scan procedures there, the recovery is little slow, hence there are many other places there, we can not only compensate that, but grow even more.
Thank you. Sherita and gentlemen, that was the last question for today. I now hand the conference over to the management for closing
We thank you everybody for joining on this call. In case you need any further clarification, please contact our Investor Relations, and we'll be happy to
answer all your questions. Thank you.
Thank you. On behalf of Juvenile Pharma Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.