Ladies and gentlemen, thank you for standing by. We welcome you to the Jubilant PharmaA virtual meet. At this moment, all participants are in the listen only mode. I now hand over the proceedings to Mr. Himan Bakhru, Investor Relations at Jubilant Pharma.
Thank you, and over to you.
Thank you, Aditya. Good evening, everyone. Thank you for joining Jubilant Pharma's Analyst Meet. 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 presentation. On the call today, we have Mr.
Shyam Bhatia, Chairman Mr. Hari Bhatia, Co Chairman and Managing Director Mr. Amit Chauhani, Group CFO Mr. Pramod Yadav, CEO, Jubilant Pharma Mr. Sergio Kalvo, President, Video Pharmaceuticals Mr.
Chris Preti, President, Allergy Business Unit Mr. Amit Arora, President, CMO Mr. Khunjan, Head, API Business Mr. Terry Fulham, President, Juglent Kalista and Mr. Jazeeb, President, Genetics, Non U.
S. Business. Finally, Mr. Christopher Crotchet, CFO, Jubilant Pharma Mr. Marcel Veltrop, President, Jubilant Biopsys Doctor.
Syed Kazmi, CEO, Jubilant Therapeutics Mr. Arun Sharma, CFO, Jubilant Pharma. I now invite Mr. Shyam Bharatiya to share his comments. Over to you, sir.
Thank you, Herman. Good evening, everyone. A very warm welcome to the analyst suite of Jubilant Pharma. Explain our pharmaceutical business as well as respond to your questions. As you are aware, from 1st February 2021, the entire chemical business of SDY, Jubilant Life Sciences has been demerged into Jubilant Engravia Limited and Remaining Pharmaceutical business continues to be part of Jubilant Pharma Limited.
Our journey of the pharmaceutical business started from the year 2003 onwards when we first acquired our API business in Nanjingodu, Karnataka. Over the next 6 years, we continued to build the pharma business with well thought through strategy of moving up the value chain while being closer to the customer. We built dosage form facility in Roorkee and various R and D centers in India and acquired dosage form facility, sterile and non sterile injectable CMO, Energy Immunotherapy and Radiopharmaceutical Businesses in North America. Later, to complement our radiopharma business, we acquired radiopharmacy network in 2017. As we saw an increasing opportunity in nuclear medicine, especially in teranostic and PET, we invested in SoFi Biosciences in the year 2020 and are the largest largest shareholders.
As a business conglomerate of 40 years of existence, Jumranet has built leadership position in most of its businesses. We continue to maintain a majority market share in most of our products. In Beauty Pharmaceuticals, we are expanding our product pipeline with in house research and development as well as entering into strategic partnerships. In radiopharmacy business, we have begun to execute a detailed turnaround plan. CMO business is delivering strong growth, and we are further investing into growth CapEx.
Generics and API business continue to grow, and we are adding more capacities. R and D focus is more on complex generics. Contract Research and Development Services business continues to do well, and we are doubling our capacity in this business. Our proprietary novel drug business, we are moving to clinical phase in 1 drug candidate and are evaluating funding for a private public equity raise during coming 18 to 24 months. 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 operation, while continuing to serve our global customers. JUBREENT PharmaVA is ideally positioned to capitalize on its growth opportunities because of cost and market leadership in several products through integration and continuous improvement timely delivery track record with full compliance long standing industry relationships and highly experienced management team with an excellent execution capability. I would now like to hand over to our group CFO to share his perspective of the company. Thank you. And over to you, Erwin.
Thank you, Mr. Bhatia, and a very good evening to everyone. And I invite all of you to today's Farm Owner's Analyst Meet. And I hope all of you are very well, healthy and safe. And as I would like to take you through the 2 or 3 slides to provide a broad overview on the business, I would like to start a little bit with the overview and if we can move to the next slide on the overview.
So subsequent to the demerger of the chemical specialty chemicals business from Life Sciences, Jubilant Pharma Oil Limited has 3 principal operating subsidiaries: Jubilant Pharma Limited, BIOSYS and Therapeutics Limited, which are in the business of pharmaceuticals, contract drug discovery and in house drug discovery, respectively. The company's business Pharmaceutical business is diversified with presence in niche and high entry barrier businesses such as radiopharma, allergy therapy and contract manufacturing business. Our contract research and development services, that is CRDS, is a 3rd party drug discovery business, and we have created strong chemistry and biologic capabilities through our facilities in Noida and Bangalore. We are one of India's leading drug discovery payers. In our Proprietary business, we have some very promising and high potential assets in the areas of oncology and autoimmune disorders.
The company's revenue is well spread across specialty pharma, CDMO and generics businesses. While the CRBS business is ramping very well and we are doubling capacities in this business in view of the strong demand here. In terms of geography, as we can see in the pie, North America is our largest market, which accounts for almost 4 5th of our top line. We are $820,000,000 integrated global pharmaceutical and contract research company. As we can see, we have 6 U.
S. FDA approved manufacturing facilities, including 4 in North America and 2 in India, in addition to 2 world class FODASIS facilities for contract research. Employee strength is around 5,800 people, of which roughly 40% are based in North America. I would like to take you to the subsequent slide on the business overview. And as we can see that our Pharmaceutical business has 3 main specialty lines in Specialty Pharma, CDMO and generics.
And as we can see from this slide that we have created strong leadership positions in various businesses, which our business will explain in subsequent details. Radiopharma business is fully integrated from manufacturing to distribution through the radiopharmaceuticals and pharmacies, respectively, in which we are ranked number 3 and 2 in the U. S.
In the
biology business, we are number 2 player in the U. S. And sole supplier for venom products. CMO business, we have established strong relationships with leading specialty pharmaceutical companies. We are adding capacities in these businesses to meet strong demand.
Generics business, we have manufacturing presence both in U. S. And in India, and we are leading player in several product categories. Solid dosage business is vertically integrated with our API business. Our contract research business is fully integrated with drug discovery business.
As I take you to the next slide, we will talk a little bit about the experience of the management team. As you can see that Jubilant Pharma 1 Limited is led by very experienced management team and Board with decades of experience in creating value in multiple businesses with strong corporate covenants. Our 3 main business segments are led by experienced CEOs with domain knowledge over 3 decades. At Jubilant, our vision is to attain global leadership position, continuously create growth opportunities and enhance return on capital for our stakeholders, and we'll see and examine that in more detail. And with this, I would like to invite Pramod to elaborate on the Pharmaceutical business in more detail.
Over to you, Pramod. Thank you.
Thank you, Arvind, and very good evening to all. May I request next slide, please? So I'm Pramod the other, and I will introduce Jubilant Pharma Business briefly. And subsequently, each businesses will be covered in detail by the respective business presidents. As Mr.
Bhartiya mentioned, we started building a Lubilant Pharma business in 2003. And on the top portion of the slide, you can see the timelines, the way we kept on building the businesses. You may see on the bottom left of the slide that our 3 business segments are specialty, CDMO and the generics. And may notice that while most of Indian pharma companies are focused on so called the generic segments, we are very unique in that sense where Specialty and CDMO contributes 75%, while the generics is balanced 25% in our portfolio. This makes our majority of revenue coming in from segments, which have higher growth potentials, more barrier to entry and also sustainable margin on the long run.
Few key business highlights on the right bottom of the slide. We have about 80% revenue coming from North America, 6 manufacturing sites, strong R and D capabilities, serving to more than 80 countries globally, long term relationship with the Hulu and Pharma Industry, very diversified business models, with only 40% supplies coming from top 10 vendors, only 32% revenue from top 10 customers and only 30% from top 10 products, so very diversified in all the aspects. 5,200 employees globally with 2,300 in North America and last but not the least, highly qualified, dedicated and experienced management team and the Board. Next slide, please. So here you can see, we have 6 manufacturing sites, 2 each in India, U.
S. And Canada. And since 80% of Jubilant Pharma, the revenues come from the North America market, each site is inspected by FDA regularly, and you may see last inspection details on the bottom left of the slide. In addition to FDA sites are also inspected by various other global regulatory authorities. And to further explain, Indian sites are at the Roorkee, manufacturing generics at the Nanjingoort for the API U.
S. Site in Salisbury for the generics, Spokane, CMO as well as CMO for sterile injectables as well as allergic immunotherapy. At Montreal, we have sterile and non sterile injectables, ophthalmics, ointment, creams and the liquids and also radiopharmaceuticals. In addition to this, what you don't see on this slide is that we have network of 48 radiopharmacies in 22 states in the U. S.
Next slide, please. So here on this slide, we are explaining you that in each of the businesses we are in, what are the key characteristics, what are the market dynamics and how considerable headroom we have for growth in each of the business. I mentioned earlier, specialties are niche, U. S. Focused, high barrier to entry and the businesses require front end.
We have our own network of radiopharmacies in both and in both the radiopharma as well as LSD, we have our large front end sales team. While most of these businesses are through long term contracts, having complex supply chain and having limited players leading to concentrated market, The radiopharmaceuticals currently are growing by about 6% to 8% and in fact having potential to grow even at much, much higher rate, and Sergio will explain that. In CDMO business, the operation that's operational oriented, thus requiring cost and quality leaderships with agile R and D in API. In the CMO business, there's a lot of tailwinds currently due to shortage of sterile injectable capacity and which got further fueled with the increasing vaccine demands with current ongoing pandemic situation. Had high anti barrier due to strict quality and the GMP requirements and also higher capital cost.
On quality, we'd like to highlight that we have very clean quality record. And in spoken our recent FDA inspection with the 0483 observations. API also having tailwinds currently due to the disruptions in China and also favorable policy reforms like the production linked incentive schemes in India. And like the generics, here also demand is shifting towards the complex APIs. Both these markets, CMO and the APIs, are also growing in the range of 6% to 8%.
And finally, generics, which requires ability to continuously identify niche products and then also launch them. As of now, there is improved outlook in U. S. Market and also non U. S.
Market, which is stable with the derisked growth opportunities. Overall, generic market is also growing by 6% to 7%. Next slide, please. So while we operate in the diversified business segments, each of our business currently is at different stage of evolution. Let me explain that.
In 3 of our businesses, which are radiopharmaceuticals, allergy and CMO, We are sustaining momentum. We are maintaining the growth rate and also protecting margins and generating healthy cash flow. Like in radiopharmaceuticals, we have the leadership in the profitable products like MADTPF. We have highly advanced pet cardiac products like the Rubifil, which continues to grow rapidly. In LNG business, we have leveraged our strength of the as a venom sole supply position, build market build higher market share in the U.
S. And the adding the capacities. In CMO, we are not only sweating our existing assets to maximum, but also expanding Spoken sterile fill and finish capability, the capacities by 50% and entering into niche, the ophthalmic in Montreal next year, which Amit will explain, with the state of the art preservative free technologies. However, the API and the generics are the businesses, which we shall scale up by leveraging the leadership positions, by customer relationships and by focusing more onto the research spent on complex or the difficult to enter segments. And unlike other businesses, the radiopharmacies business, however, is at the turnaround phase.
And for that, we have developed solid action plan comprising of commercial excellence, under which we will drive market share and growth and operational excellence to drive efficiencies in operations as well as the procurement. Next slide, please. So if we look ahead in the market, so markets are already in place for the sustainable and accelerated growth across each portfolio. While each of the business is at a different stage of evolution, as explained on the previous slide, we also, at the same time, have robust growth oriented strategy in place for each of the business. While the business precedents will be discussing same in details, let me explain in brief.
In radiopharmaceutical, we will continue to grow our Rubi field, launch our NDA I-one hundred and thirty one MIBG, which is having market potential of about $240,000,000 and we have our own R and D pipeline of 7 products, which we will launch over the next 3 to 4 years having market potential of about $300,000,000 And we are also working on growing Theranostics and the new products under pipeline under various partnerships. In allergy, we are entering into partnerships with the distributors ex U. S, and there, we will grow the market rapidly. We are also exploring opportunities of launching the adjacent products in our allergy immunotherapy. In CMO, other than expansions already announced, we are also evaluating further expansions in sterile fill and finish capacity in Spokane, which will double the capacity from the current level as well as Montreal, where we are increasing sterile fill and finish capabilities or the capacities by 150% and also evaluating new ophthalmic line other than the one which is already, as of now, under commission.
In API, while we continue to debottleneck existing Dungeon Wood site and improve assets throughput, we are also evaluating greenfield site to cater to increasing customer needs. In the generics, we have 37 pending ANDH for approval, which we will be launching post approvals. Also, various U. S. Products we are extending to focused pharma emerging non U.
S. Markets and our own front end presence in some of the selected markets. In radiopharmacies, as explained earlier, we have the turnaround plan in place to eventually target the single digit positive EBITDA margins. We have many fundamental capability investments already made. And our network, which is predominantly being SPECT, we made a strategic investment into Soffe, who has the complementary large pet network of 14 pharmacies.
This will help us to target the large IDNs jointly by which will be offered to our customers full basket of the products. We also plan to expand our network by adopting by opening up more of the pharmacies in those metropolitan areas where currently we are not present. Next slide, please. So with all these, the stage of evaluations where we are and in each of the businesses, we have huge growth opportunity. On this slide, let me explain you what are the key 5 key differentiators we have for the JUBBLENT ready, the pharma business.
While for each business, we have focused growth strategy. We will sustain the outperformance in each of the businesses. The first key differentiator is the diversified portfolio. So whether it's the business segments or the customer base, the vendor base or the product range. Though we remain focused with the U.
S.-centric front end, which drives innovation at the back end in the R and Ds. However, same gets supported by the robust operations we have in the low cost economies of India. And the second is scale and leadership in each of the businesses. While specialty business leadership in U. S, we will continue to grow with in house R and D as well as strategic partnerships, we will, at the same time, also grow our CMO API and the generics by addition of more manufacturing capacities and focusing on rather more complex molecules.
3rd is the sustainable moats for high anti barrier in few of the businesses, clubbed with the long term contracts, which makes the anti barrier even more stronger. And at the same time, various portfolio synergies help us to keep our cost in check. Like the vertical integration we have in API and the generics, we make allergy and radiopharmaceutical products in our own sterile facilities. We are integrated in radiopharmaceuticals and the pharmacies. 4th is strong mergers and acquisitions and the turnaround of muscle and sustainable operations in long run, Each of the business since we acquired, we invested in strategic growth CapExes, invested in human capital and we have grown the revenues and the margins multiple times.
Let me give you examples. Like API, we have grown 7x since we acquired it in the revenue. And the Dogeys form in U. S, we have grown 30x. Spoken Business, we have grown 3x since the acquisition.
The Montreal Business, we have grown 4x since the acquisitions. This demonstrates our expertise in identifying and integrating the assets and then sweating the assets. We are in the process of doing something similar turnaround in radiopharmacy business as of now, while we are also expanding our innovative pipelines through partnerships. And 5th one is, of course, the experienced proven management team. While our each of business is focusing independently, headed by the respective presidents who are experienced leaders having deep insight of industry and proven track record for themselves.
With this, I sum up overall Jubilant Pharma introduction, and I hand over to Sergio to walk you through radiopharma business in detail.
Thank you, Pramod. Good evening to everyone. It's a pleasure to be here. I'm Sergio Cabo, President of the Radiopharmaceuticals division. I'll be presenting to Brillant Radiopharma, which includes Radiopharmacies and Radiopharmaceuticals.
I'll start with Radiopharmaceuticals. Next slide please. Next. Jugel Radha Pharma serves the nuclear medicine specialty. Nuclear medicine is a medical specialty that uses small amounts of radiation to diagnose and treat disease.
It's widely used in the world with more than 40,000,000 procedures in the world, half of them approximately in North America. Nuclear medicine as an imaging or diagnostic modality is similar to other diagnostic imaging tests like X-ray, CT and MRI. The difference is that in nuclear medicine, we inject the radiation into the patient. So it's a chemical process in which the radiopharmaceutical, which is the combination of the dark and the radioisotope is metabolized by the body, which means we will take a picture of the physiology or the biochemistry of the patient and the image is very rich in clinical information for the physicians. There are 2 types of imaging modalities in nucleomassim, so called SPECT Imaging and PET Imaging.
The difference is the way the radioisotope decays, the type of radiation emitted and the equipment that is used to photograph that radiation. There are many applications for SPECT, many others for PET, some of them overlap. Pets is known to be a little more powerful in terms of image resolution, but spec has many merits and qualities as well. The 4th row of this slide, you see the most interesting area of nucleomercin at the moment. Nucleomercin can be either there, can be used to treat disease, has been used for many, many years, 80 years to be precise in thyroid imaging, for example.
Most recently, we've been able to develop very specific peptides, very targeted peptides that carry radiation to the incisor boundaries of tumors to treat cancer in a very effective way and with low in general side effects for the patient. Nuclear therapies or radiopharmaceutical therapies are becoming one of the most powerful tools to treat cancer. The combination of imaging and therapy using the same molecule is something unique of nuclear medicine. This is being called theranostics. Theranostics is a term used in other contexts, but most prevalent in nuclear medicine today.
We talk a lot about we talk more about the potential of this combination in the subsequent slides. Next slide please. The value chain of nuclear medicine is very complex. There are many players around the world and it starts with the production of the radioisotopes. Radioisotopes can be produced in your reactors, nuclear reactors or particle accelerators.
This slide is showing a nuclear reactor chain. There are only a few of them in the world. They're expensive operations to run. From then, they go into so called processors. Those companies that you see listed here, they purify the radioisotopes and make them ready for medical use.
Then it goes to manufacturers of radiopharmaceuticals, companies that will combine them with the drugs to make radiopharmaceuticals. That's where we play. And from this point, we move into the commercial or in hospital radiopharmacy. That's where the individual patient doses are prepared. We also play a very important role in this field.
As Pramod mentioned, we have a network of radiopharmacies. We are the only major player with a strong presence on both manufacturing and commercial radio pharmacy in North America. Sofia Biosciences also has a presence on both sides and they are one of our most important partners. Next slide. Here we show our estimates based on reliable sources of the nuclear medicine market in the next 10 years.
As of today, the market is about $5,500,000,000 primarily based on SPECT and PET imaging. Therapy is a meaningful contribution with about $1,000,000,000 The therapy, as I mentioned before, is about to start growing much, much faster and could reach according to the most optimistic or perhaps realistic estimates up to $20,000,000,000 globally by the end of this decade. It's a huge opportunity. Mind you that a lot of it will be taken by big pharma. They are coming into this field because of its growth potential and their investment required to play Novartis, Bayer and many others are investing heavily.
But there is a very important role for companies of all sizes, and I think ours is in the sweet spot to play here because most of the cancer treatments or many of the cancer treatments that will arise from this agnostics era will be niche applications. So the big companies will not be able to cover them all and we have a very important role to play. Next slide. This is a snapshot of the current split across companies globally and in the United States. We believe our position in the world today is number 5.
We have a very strong presence in North America. Some of the companies listed here are present in more than one continent like Purim, for example, or GE. We are number 3 in North America with about 12% market share according to the latest estimates. One interesting thing about nuclear medicine as a market is it's very fragmented. The more than 80 companies playing today of reach a reasonable size and about 100 companies developing nuclear medicine products, many of them trying to develop nuclear therapies, which are the highest potential as you saw.
Many of those companies will need partners to commercialize their products. Next slide. Few words about us. Our division is based in Canada. We are one of the most traditional vendors in this space.
We were founded in 1955. Nuclimension predates that, but the invention of the spec imaging device, the gamma camera, was in 1953, which should give you an idea of how early we were in this field. We have 2 pillars in our organization. 1 is quality. We are highly regulated and we are known to be compliant with the most stringent quality principles.
The second one is our quest for innovation. We are number 3 in the U. S. We are leaders in some critical products such as lung imaging and therapeutic iodine. We are the innovation leader in cardiac PET.
We'll talk about more later. And we have avant garde programs to treat diseases such as neuroblastoma. Next slide. This is a snapshot of our portfolio. I'll show a few key products in more detail.
There are 6 SPECT products that are generic, 1 proprietary product in PET, Rubicyl, 1 commercial therapy, Iodine 131 and one clinical program for MIDG for neuroblastoma, high potential and it's going to play a major role for kids. Next slide? A few more details about some of our lead products. On the left side, you see our RubiFill. This is a bedside generator of rubidium 82.
The short cap life of rubidium only 75 seconds makes it mandatory to have a generator very close to where the patient is. With rubidium82, we're capable of creating a very powerful image of the heart. It's the most powerful test, non invasive test for the heart. You can tell a physician status of coronary artery disease and most importantly, we provide very insightful guidance where to intervene if we're going to stand or not. It's a very powerful tool for interventional cardiology and clinical cardiologists.
This is complementary to the role that nuclear medicine SPECT imaging plays in cardiology as well, which is widespread. And PET is becoming a more powerful, an evolutionary step in nuclear cardiology and growing fast in the United States, but still with a potential to grow much, much further and much, much further outside of the United States as well. The second column shows our traditional MAA and DTPA, we are leaders in these products as well, play a major role diagnosing pulmonary emboli. 4,000,000 people in the United States every year are suspected of having pulmonary embolag and we are one of the best we are the best test to diagnose pulmonary embolag with very, very low radiation exposure. 3rd column shows radioactive iodine for thyroid disease.
This therapy was invented in 1941. It is a therapy that cures the patient. All the new sophisticated therapies that are existing now, they extend the life of the patient for now. Hopefully, they will do more than that. Iodine cures, and we are the leaders in North America for this product.
Next slide. Looking forward, we will not abandon our current position in any way, but there are evolutionary steps that we are planning. So this slide is a summary showing that our current portfolio and strategy will be strengthened. We will continue to invest in spec generics. It's a high margin.
It is a stable, profitable market. We will grow leaps and bounds our branded portfolio, RubiFil for PACCARTA Imaging, huge opportunity and a major role for us to play in cardiology. And we are building an innovative pipeline that is going to be primarily focused on back end, even more specifically, Theragnostics, which as I showed you, where the opportunity really is. Next slide. This slide represents our playfield.
Today, we serve about a $400,000,000 market size. Mind you that I'm here talking about the product specific segments, like what's the market size of MAA in North America, which is where we are. And when I add up the markets that we truly serve in the geography where we are currently really acting, it adds up to about $400,000,000 That's our playfield. By introducing new products by ourselves and with our partners, we're going to enlarge this playfield to more than $1,000,000,000 more than $1,500,000,000 within the next 5 years. This is not accounting for any mergers or acquisitions that could take place during our history.
This is only through planned and other planned initiatives that we have under execution at the moment.
With
further enrolled skin therapies, which are also in planning stage, we plan to expand our market potential to the range of $5,000,000,000 during the next decade. That's our goal. That's our aim. And I think it's our duty to play a major role in the expansion of nuclear therapies. Next slide?
Here I show a little more about the strategic pillars of our growth strategy. So the first column shows expanding the core portfolio, how stable and strong the spec market is in the United States. So that's one of the things we are doing, expanding that portfolio. 2nd, play a major role expanding the cardiac pet market. It's an opportunity and it's a social role that we can play making cardiology a better tool, more powerful for physicians around the world with Rubipo.
3rd role, our ongoing MIBG program for neuroblastoma. About 800 children are diagnosed with neuroblastoma every year and many of them could benefit from this treatment. And we are we have a clinical program, 2 clinical trials and an expanded access program to provide this treatment to as many kids as we can. And hopefully, this we will have a commercial product available within the next few years. 4th pillar, strategic partnerships.
We have chosen announced 2 already. I will detail a little more about them in the next two slides. And those are fundamental for us to expand even more our capabilities and be a more integrated company in the radio pharma space. Finally, we are very attentive and actively pursuing inorganic opportunities. As I said, there are about 100 companies developing nuclear medicine solutions around the world.
Many of them would benefit from partnerships and we are actively pursuing them. Next slide. Few words about Soffe Biosciences. This partnership was announced in November 2020. This company is founded on innovation.
They have a network of radio pharmacies in the United States and they were blessed with very fortunate strategic moves in the recent past. Soffe has state of the art CMO facility for therapeutics, which they planned way before this boom was starting to happen. They also have manufacturing and distribution agreement with Lantus for the drug, Pilarifi, which was approved by the FDA just 2 weeks ago. This is a targeted PSMA agent for prostate cancer, which is one of the fastest growing fields in PET in the world. So if you will be part of it.
So if you also have an exclusive manufacturing and distribution agreement for some geographies of most geographies of the United States for the light molecular drug, Neurosy. This is an amyloid imaging tracer, primarily for Alzheimer's disease. The drug has been approved for a while, but the growth starts now. Because 2 weeks ago, the FDA approved aducanumab, Biogen's drug, 1st disease modifying drug approved by the FDA for the treatment of Alzheimer's disease. The usage of this drug most likely will require an amyloid scan before the drug is approved.
So this market is about to grow very fast. Finally, Sophy has 70% of the rights of the family of FAP or FAP targeted or FAPI molecules developed by University of Heidelberg. FAPU is a miracle tracer for PET, will be a revolution in many ways. It provides a very high signal to background ratio, high resolution and has a very specific tracer for solid tumors. From a diagnostic perspective, it's going to be a revolution.
Also from a workflow perspective, this tracer can be injected and the patient can be imaged immediately. The conventional tracers like FDG requires the patient to rest for about 1 hour before the scan starts. It's also a workflow evolution for pet centers. FAPI molecules because they are specific, they can be used for diagnostic and treatment. There is studies already showing that when we combine FAPI molecules with treatment isotopes, we can use it to destroy the cancer or to tear down the cancer walls, the so called stroma walls around the tumor.
So it's going to be a fantastic adjuvant treatment for external radiotherapy, chemotherapy and immunotherapy. Soffe and JUBELA are kind of made for each other. We have perfect synergies, complementary portfolios, complementary skills and the only thing we have really in common fully overlapping is the quest for innovation. Next slide. We also announced in March 2021 a partnership with the company Isotopia.
Based in Israel, this company is a world class multidisciplinary team of scientists in nuclear sciences, radiochemistry, nuclear engineers, physicists and so on. 2 lead products of isotopea are PSMA agent, which can be prepared in just 5 minutes with Gallium 68 and Lutetium-one hundred and seventy seven, a beta emitter used in therapies and one of the most important radioisotopes in the future of radiopharmaceutical therapies. There are also many synergies with Jugilant. Next slide summarizes. Next slide, please.
Here I summarize the only 2 partnerships already announced and many others that we are considering. How we can become or can how we are today and will be even more so integrated in the nuclear medicine space by combining our capabilities with those of our partners. And this shows from the synthesis of API to the development of molecules to radio labeling, to manufacturing and finally to distribution, we are the most integrated company in the radiopharmaceutical space. On the distribution side, I now will explain a little bit about our strategy on the radio pharmacist division. Next slide.
Radio pharmacies are the final step of the value chain. That's where we prepare the individual doses for the patients. It's a very complex operation. There are many products involved. We have to be available 20 fourseven for our customers because most of them can do emergency services and they require product pretty much anytime, schedule or not.
Usually, we cover wide geography, for just from a handful of pharmacies for the continental size of the United States, each of them cover a very large geography. It's a logistics challenge when we are dealing with a product that is decaying fast its radiation. So not an easy operation to manage, but a fascinating business. Next slide. Just like radiopharmaceuticals, radiopharmacies are in the context of nuclear medicine.
So the aging population and high prevalence of disease, increasing prevalence of disease in the aging population, definitely they will increase the demand for nucleomassay procedures. And specifically for the radiopharmacies, the increase of generics pipelines, the ones we are developing and others, usually makes their margins better. So profitability has a natural trend to increase. Also their portfolio are increasing because of the development of new PET tracers, new therapies, new PET tracers as well. They are proprietary.
So the portfolio which bring higher margins are also increasing. It is a good time to be in this business. Next slide? Besides the high potential, it's not an easy business to get into. It's highly regulated.
The supply chain is complex And to place in radio pharmacies, it requires a lot of CapEx, could be to the tune of $5,000,000 just to put a number to set up a new radio pharmacy facility. So there are not newcomers seen in this space very frequently. So we have a relatively stable competitive landscape. Next slide. This is a competitive landscape of Radia Pharmacies.
We are the 2nd largest network and we serve a base of about 1700 customers. On this list, c Cardinal Health, which has petrospec pharmacies, We have primarily spec pharmacies and Sophie Biosciences shown at the bottom of this page is primarily a pet radio pharmacy network. Combining the two networks, we can be much more comprehensive in our portfolio. The third one, pet net, it's only pet, RLS is only spec and pharmacologic is primarily a spec. So with the partnership with SoFi, Tubilant and Cardinal Health are the only 2 truly players on both SPECT and SPECT.
Next slide. So here we show the United States map. Blue dots are our radio pharmacies, 48 location, 49 radio pharmacies. And we have here also shown the SoFi Pet Pharmacies in red. Our key figures are shown here.
We have about 750 employees. We serve 1700 customers, about 3,000,000 doses are delivered every year. That's not accounting for Soffe, which would add another 500,000 to this number. Next slide. So Radnor Pharmacy, as in its future, we have a lot of key differentiators.
The vertical integration with JDi brings safe supply chain, the partnership with SoFi, possibility to provide a comprehensive portfolio, a one stop shop for customers number 3, 2nd largest network, convenience geographically to serve customers and we are planning to expand to about 20 new sites in the next 5 years early access to innovative products through the vertical integration with Radiopharmaceuticals and 5th, perhaps the most important, we have a strong track record of quality and good service. Next slide. To close, I'll leave you with our strategic pillars for the Radioparmacy division, driving operational efficiency to reduce costs, improve efficiencies, drive commercial excellence to increase our market share and finally drive network optimization and expansion to serve an even more and even larger base of customers and seize opportunities in the United States. Compute by saying, Dumoulin, Brinav Pharma is in a fascinating field of nuclear medicine, one of the fastest growing fields in medicine and one of the best opportunities for our company. With this, I turn to Chris Freddy to present the allergy business unit.
Over to you, Chris.
Thank you, Sergio. Good evening, everyone. My name is Chris Credi, and I have the pleasure of actually representing the allergy business unit as the President. What I'd like to do is first define what I mean by allergy immunotherapy. Specifically, this is all around treating the underlying cause of the disease, what's causing the reaction to the allergen versus just suppressing the symptoms that are causing the reaction.
And in particular, if you look at the market itself under AIT, allergy immunotherapy, there's 2 main groups. The first group is what's called subcutaneous immunotherapy, otherwise known as SCIT. These are allergy shots. And worldwide, this is the most predominant form of allergy immunotherapy, SCIT. The other form, lesser, is called SLIT sublingual immunotherapy, and this comes in the form of drops or tablets.
If you look specifically at the U. S. Market, over 90% of the U. S. Market is in the skip form or shots.
Outside the U. S. Is slit predominantly or the tablets and the drops. Going one step further and looking at actually the skip marketplace, there's another category under the skip marketplace, which is venom immunotherapy, otherwise known as VIT, venom immunotherapy. And specifically, this is very important therapy for individuals who have anaphylaxis or a reaction to flying stinging insects, such as bees, for example.
And the reason I highlight this is in 2018, following AOK's Albaio exit from the U. S. Market, Jubilant Hollister Steer became the sole provider and supplier of VIT, venom immunotherapy, in the U. S. Marketplace.
Next slide, please. If you look a little bit about my business, specifically, there's over 100 different allergenic extract products that we offer, 6 different insect products and an exclusive array of skin diagnostic devices. We're the number 2 player in the allergenic skit U. S. Marketplace.
And there's a high barrier to entry because these are biologics that have been grandfathered in their biologic license application or BLA into the U. S. So that's a high barrier to entry to competitor entrants. The marketplace in the U. S.
Consists of 2 customer groups, allergists and ear, nose and throat physicians or ENTs. And the products are sold under the Hollister Steer name in the U. S. Because that name goes back over 100 years in the allergies community. And with that name comes a lot of equity and a lot of reliability in terms of quality for allergy treatment.
We have a dedicated sales force in the U. S. And we have key distribution partnerships to allow us to actually introduce our products in Europe, Canada and South Korea. Our products are manufactured at our Spokane facility approved by the U. S.
FDA and Health Canada. And we're one of 2 suppliers with onshore manufacturing and the only manufacturing of venom in the U. S, which provides a potential strategic advantage, as I mentioned earlier. Next slide, please. If you look at our categories of products, there's 3 major categories.
On the left is our nonvenom extracts. These are the 100 plus different products that are produced in a unique acetone precipitate process using phenyl free excipients. What this means is at the end, the product that is produced is more potent and more robust, providing us an advantage in the marketplace. And this provides an array of non venom products from dog to cat to mite to mold to an array of pollen options for folks who suffer from allergens. Our in house capabilities, we have small sterile fills and also commercial scale lyophilization.
In terms of the middle column, this is our venom products. This is our anchor to our business. One of the reasons why is in the U. S. Alone, 16,000,000 Americans are at risk of anaphylaxis reaction to a flying stinging insect.
And there's over 230,000 hospitalizations, ER visits every single year because of an anaphylaxis reaction to a flying stinging insects and 60 deaths a year. So that's why it's critical to have an option, venom immunotherapy or VIT, that's highly efficacious and this is, ours is, in 98% of the cases to provide this therapy and this significant benefit to patients. We cover the whole array of flying, sting and insects listed on this slide from honeybees to hornets to wasp to yellow jackets and mixed vestments. And then our 3rd category on the right is our trading goods or our skin testing devices. And once again, these are unique in terms of the actual stainless steel tip used actually provides less or minimal trauma to the patient when testing for appropriate allergies.
Next slide, please. In terms of key sources of differentiation, there's 4 main buckets. The first, as I mentioned before, is we're the sole venom supplier in the U. S. Marketplace.
Customers like to buy the portfolio of products and having a portfolio of non venom extracts plus venom allows us to uniquely differ our products and our offer to the customers. We also have the opportunity as the sole provider in the U. S. Marketplace to double the opportunity to double the amount of doses in the U. S.
Marketplace as it relates to venom immunotherapy. And we're aggressively promoting through our Be Aware campaign, this is a digital campaign to raise awareness around venom anaphylaxis and the importance of getting diagnosed and tested. Our second differentiator is these are biological products with very difficult to replicate supply chains. But over the years, many years, we have optimized the supply chain of this natural biological product. We have optimized it such that we now have a consistent and reliable supply of these products.
And as I mentioned earlier, that coupled with the fact that these are grandfathered in biological license application products, it provides us a barrier to entry, a competitive advantage within the marketplace. The 3rd differentiator is onshore manufacturing. Specifically, as I mentioned, we're the only venom provider in the U. S. Marketplace and we're investing in new capacities.
Our capital is predominantly going towards increasing our capacity, so that we could meet a 100% increase in increasing demand in the U. S. And ex U. S. As it relates to venom and non venom extracts.
And our last differentiator is branded differentiated portfolio. We have new offerings coming out of our R and D pipeline, specifically a dog and cat product, and we continue to leverage the Hollister Steer name and the equity that brings with the allergist community. Next slide, please. This is just a quick example of some of our aggressive be aware promotion and digital campaign that we're doing. This runs the array of resources, specifically patient testimonials as listed on the left, patient educational materials in the middle column, digital assets illuminating and highlighting the importance of getting diagnosed, how many individuals specifically suffer from venom anaphylaxis potentially and the seriousness of this disease.
And then on the right, resources for patients and individuals to look up and identify their local allergists to go in and engage with them about appropriate diagnosis and testing in the venom immunotherapy space. Next slide, please. And to close, our strategy going forward. Next slide. Thank you.
Our strategy going forward. Today, the health of the allergy business unit is very strong. In the future, the health of the business will be even stronger. We have a good future strong growth through 2 aspects, growing our venom and non venom business in the U. S.
And growing our ex U. S. Venom footprint and expanding our Venom outside the U. S. There's 3 pillars that will support this growth and this strategy.
The first on the left is leveraging existing capabilities. Specifically, this is around being the sole provider of venom and offering that portfolio of products, venom and non venom to the customers, doubling the amount of doses worldwide that we produced from approximately 500,000 to 1,000,000 over the long term horizon. Aggressively promoting our Be Aware campaign is also leveraging our existing resources and then finally, leveraging the Hollister Seer brand name and the equity that provides to the allergy community. The middle pillar is all around enhancing our U. S.
Footprint and our portfolio. Specifically, now that we've actually optimized our supply chain, we are changing the customer mindset from made to sell to made to stock and giving the customer the reliability that we can supply the whole array of antigens and extracts that they're looking for. We're evolving our digital campaigns as well to make sure that we can engage with the customers where they want to engage with and we're upgrading our capacities, as I mentioned earlier. Specifically, the majority of our capital plan over the next 5 years is to upgrade our facilities so that we can meet the increasing demands that the market will actually tell us over the next 5 years. And the last pillar on the right is expanding target markets and portfolio.
And there's 2 elements of this. 1, the new launches that I mentioned, specifically coming out of our R and D portfolio, 1 for dog and one for cat, which will allow us to continue to differentiate in the marketplace and then 2, ex U. S. Expansions, specifically within Venom. If you look at the entire worldwide Venom market, 98% of the market is comprised of 2 players, jubilant Hollister Steer and 1 other player.
We will tap into that continued opportunity in that footprint, FUS, through strategic partnerships, as I mentioned before, through establishing our own presence through jubilant in some of these local affiliates and then through partnerships with local entities where that's required, so that we can continue to grow our ex U. S. Venom footprint. So I'll close by saying the health will continue to be strong and we will continue to grow our business through U. S.
Expansion in Venom and non Venom and further Venom Venom expansion outside the U. S. And now it's my pleasure to turn it over to my colleague, Amit Arora.
Good evening, everyone. And it's a pleasure to meet all of you virtually. Thank you, Chris. If you can get to the next slide. So, the global CMO pharmaceutical industry has continued to grow.
It's continued to grow in high single digits. And within that, if you really look at the injectable market, that is growing pretty much at the fastest pace as we know today. The sterile injectable demand continues to be strong because of rising demand from new launches, including COVID. And over 70% of the molecules are what Jubilant can handle at both of their sites, Spokane and Montreal in Canada. The ophthalmic demand, another area where we have continued to focus on and invest, is growing significantly again because of the aging population.
And ability for us, it's about how the preservative free market is growing, which prevents irritation to the eye and increases life of the product in the hand of the patient, where Europe is pretty much getting on to preservative free and U. S. Will follow over the next 2 to 3 years where we are investing in. Now the trends in the CMO business, they are fairly, fairly strong as you would have also seen with the COVID opportunities in the past where in the last 18 months where all these virtual companies have passed on their business to CMOs like us. And then the trends are also from the perspective of shortages in the injectable drugs and injectable capacities where Jubilant is gaining because of that shortage of capacities.
And then and the technical expertise in the drugs where we are a niche player and have a very strong relationships with existing customers, which I will talk about on the next slide. So sterile injectable business, which is again at both our sites in Montreal and Spokane, accounts for over 80% of the revenues. And non steroid products, which are majority of them in Montreal, accounts for 20% of our CMO revenue. In injections, we can handle vial sizes from 2 ml to 100 ml ml and our batches can go as high as 2,000 liters. We have a very robust order book position as of today.
And as I mentioned about the partnerships, we serve 7 of the top 20 pharmaceutical companies globally. And our relationships with almost all of them extend beyond 5 years, which has given us consistency in our operation and growth as well. Our sites, Spokane, it manufactures clinical and commercial fill and finish patches for parenteral drugs. And Montreal is a multi dose form capability which includes injectables, amp fuels, solids, semi solids and liquid creams and lotions. A very strong inspection track record as you would have heard Pramod mentioned earlier that our last inspection with FDA resulted in 483s and we are very proud of that inspection history with a lot of other regulators including Russia, Korea, Japan and in Visa.
Again, we spoke about investment earlier. Our $92,000,000 investment will increase our capacity by 50% in Spokane. And we have another preservative free oxalmic line
coming
up in Montreal. And we are pretty much one of the only CMOs who is investing in oxalmic in North America. If you move on to the next one. So what I'm trying to do, again, you've seen some of the announcements we've made on our COVID related products in the last some months. But we've continued to look at expansion across the board.
We've other than the expansions already announced, we are looking at another brand new line, high speed isolated line at Spokane, which potentially will double our existing capacity to and then we're also looking at expansion of our Montreal facility where tripling the capacity on sterile fill and finish over the next 4 years and have potential to increase our revenue significantly. As we leverage our existing assets and expand on the existing sites, that could also result in a margin expansion across both sites and the CMO business. We've continued to work on operational efficiencies, which I think, as most of you would be aware, is the core for CMO. We continue to focus on our first time right. We continue to focus on minimum deviations on the badge, increased product yields for our customers and patients and very high capital efficiency through and all these are done through business excellence initiatives where we are invested on our sites.
Our focus has always been with new lines coming in, new customers across all dosage forms. And we continue to support our customers in new product launches. And that's through the development phase because when the opportunity comes in, we can track it. And one of the opportunities which we publicly announced is obviously Gilead Ramdessigee, which even effect started manufacturing for Gilead for from the development phase almost 4, 5 years ago. And as the opportunity came in, we really encashed on that for our site.
And we continue to focus on creating long term high value contracts with large pharmaceutical companies to continue to grow. And including COVID projects, all excluding, we've continued to grow our business, grow our current products with existing customers and also getting new products starting from clinical phases in all dosage forms. So thank you with that. And with that, I pass on to Terry. Sorry, API, Gunjan.
My apologies.
Thanks, Amit. Good evening, everyone, once again. This is Gunjan Singh and I'm responsible for the API business at Jumil. I will now take you through the business in the next few slides. Well, as you all know, API is in a very interesting phase currently, especially in the Indian context.
Looking at this chart over here, if you see from a usage point of view, the API can be classified under 2 buckets, either it's outsourced or captive. So we play as Jupyterin, we play on both, but dominant play is on the outsourced one. And from a patent perspective, the below pie chart, if you see, that classifies how depending upon the patent, whether the API is for innovator or for generic. And here, our dominant play is on the generic side. So overall, long story short, it's close to around $48,000,000,000 worth of market, addressable market that is available to us from an API standpoint.
Next slide, please. So regarding the highlights of our business, we are playing largely in the regulated market. More than 60% of the sales are coming from U. S, Europe and Brazil market. Also, most of these relationships, as Amit just mentioned in his section, several of our relationships also extend beyond a decade or so.
As I earlier mentioned, around 80% of our revenues are coming from 3rd party states. So, which is non captive usage of the API there. Also, from a portfolio standpoint, if we see, our dominant presence is in the lifestyle related therapy. What this means for us is that it gives us a larger market size to address. At the same time, there is a consistent demand for these kinds of products there.
Also, over the period of time, Jumulen has very successfully developed its own niche in some of the select geographies, geographies such as Brazil, South Korea, Middle East. We have a very regional play as well in terms of partnerships with 1 of the local regional dominant formulators there. Our facility at Nanjingar provides API globally and has been approved by FDA, PMDA Japan, Korea, COFIpress, Mexico and Visa. All the global certifications are available with the facility. As you can see over on the right side as well, this is the list of API where we have a dominant market position in terms of market share globally.
So ranging from around 10% to 20% and going as high as 50% to 70% odd in select APIs. Now this kind of a dominant position also helps us in bucketing or basketing our APIs and further strengthening our customer relationships. Next slide please. We'll now talk particularly around our USPs, our key sources of differentiation. And as I was saying in the previous slide, our leadership position in some of these products, especially the franchisee products such as carbamazepine and oxcarbide and pinovirium, help us have a deeper share of the customer's wallet.
And also, in addition to these niche APIs, we are also present across multiple product ranges, including products such as Valsartan, adytonomycin,avisartan and so on. Our R and D capabilities are really distinguished and these help us in adding the complex APIs. So, which is now currently as well and going forward as well will be the key thing in demand. We have invested a lot in terms of developing and strengthening our relationships with the customers and several of our relationships extend beyond the kids. We also know that in the generic industry, it's important that we always keep our costs under control.
So our key focus has been on cost reduction through R and D and process chemistry. At the same time, doing more from less. And that's through the de bottlenecking initiatives at our Nanjing World facility. Additionally, we also are privileged in terms to have our own forward integration with the use of API in captive formulation products to our dosage teams. Next slide please.
Yes, coming to our strategy going forward. So as a business, we have chosen these 3 pillars in terms of charting out the future growth for us. And the first pillar is around putting focus on more sustainability and more predictability. Now if you see on these pillars, if we analyze the new business, the new growth, there we want to have a more robust and agile portfolio. So what at the same time, so we are expecting close to around 20% of the revenue to come in from these select portfolio additions.
At the same time, on the existing portfolio, we are going to focus on further de risking and sustaining our cost leadership on the parts. The second pillar for our strategy is to invest in growth. This typically involves investing in debottlenecking, investing in niche R and D investments and also investing in new capabilities and capacities. We have recently initiated designing work for a greenfield product at our SEZ in Baruch as part of our further capacity addition. And the last pillar here is to invest in relationships.
So basically this means that expanding our entries further into the emerging markets and strengthening the position into U. S. And Europe markets. At the same time providing a more significant value proposition to our customers. And last but not the least, centering the approach of the organization to be a more customer centric organization, so that we take this business to the next step.
With this, I will hand over this to Jazdeep and Terry, my colleagues, who will explain about the dosed business.
Thank you, Gunjan. I'm Terry Fallman. I'm the President of Jubilant Cadistra, which is the U. S. Generics business for Jubilant.
I will be speaking to our global dosages and formulations business. So on the first slide, I'm just going to go through the first few slides, just a brief overview of the market. I think many of you are familiar with our market. I'm not going to spend a lot of time on this. So the global generics market in 2020 was $329,000,000,000 That is expected to grow to about 4.75 $1,000,000,000 to $500,000,000,000 by 2025.
And if you look at some of the trends that are going on, so the volume in the generic segment is really driven by patent expiry of a number of molecules. I'll show that in a minute. And there's also going along with that increased affordability and access to pharmaceuticals with this shift. And then at the same time going in parallel to that is kind of a move towards complex generics. Next slide, please.
So this is a breakdown of the different types of markets and also where we are where the industry expects them to go. So the light blue is the generic portion of spend. And I'm highlighting spend because Scripps is slightly a different story. So on a global basis, about a quarter of the spend is in generics. And if you look at the developed markets down at the bottom, that's 16%.
But if you look at script volume, that's actually a very different story. So in the U. S, for example, the generics make up about 10% of the spend, but make up 90% of the scripts, nine-zero. So it's kind of flip flop because the generics are low priced, but our innovative products are very high priced. If you look down the road to 2025, I expect the global generics to increase in terms of their proportion of spending from 26% to about 30%, and that's really being driven by the developed markets.
Next slide. So this is a graph on the left hand side of patent expiries and the dollar value of those expiries. So recently in 2020 2021, there's kind of been a low point in those expiries, so $14,000,000,000 $16,000,000,000 respectively. But going forward, that's going to ramp back up to even higher than it has been in the past. So that's really what is going to be driving a lot of this generic growth.
In terms of the first few bullets that I already spoke to on the first slide, but some other trends that are going on is really a look at supply chain across the globe. In the U. S, specifically, there is a lot of attention on that. And it's being balanced with concern on pricing of pharmaceuticals and also quality. So those three things are being looked at all at the same time.
And prior to COVID, there was already a concern with overseas or reliance on overseas manufacturing and then COVID kind of exacerbated that concern. So there are a lot of policies being proposed in the U. S. For onshoring at least some of the production that has gone overseas. Next slide.
So that's a little bit about the overview of the market. Now I'm going to talk a bit about our business. So on a global basis, we are a market leader in the U. S. In select products.
And on the right hand side, you can see what those products are. We have capabilities in multiple dosage forms. We're vertically integrated with our API business. We also have our own in house R and D for formulations. We cover broad therapeutic areas, including cardiovascular, central nervous system, gastrointestinal.
We have manufacturing facilities approved by U. S. Regulatory, UK, Brazil, Japan, Australia and South Africa. Our Woorkee, India site expansion was completed in FY 2020. And our Salisbury, Maryland, which is our U.
S. Site, is pretty much at the end of its expansion, which will increase our capacity by about 85% in that facility. Our non U. S. Business supplies over 45 countries with 80% of the revenue coming from 10 countries and is really driven by distributor led and B2B model, while retaining the marketing authorizations in most of those countries.
In the UK and South Africa, we have recently started our own offices as a part of our long term plan of going direct to market with our own sales team. This is a significant part of our growth strategy, at least in those markets. And then another focus area for us in non U. S. Is branded generics.
So, Jubilant branded products are sold currently in 8 countries with a portfolio of 57 products. Next slide, please. Okay. So in terms of our sources of differentiation, one is how we go about selecting products. So we target areas that will be expected to have lower competition.
That way we can have better margins. And we take extra effort in identifying those markets. So we believe we are able to do that better than our competition. Also in terms of vertical integration, we definitely leverage that significantly. 60% of our revenues are supported by our own in house API, which provides both supply security and also a cost advantage.
We have calibrated redundancy in manufacturing flexibility in our supply chain. So what that means is in certain respects in certain products, we do qualify the products in more than one manufacturing site, so that if there's an issue one place, we can ramp up in the other and respond more quickly. And also, this means dual sourcing a lot of our materials. We have multi agency approved facilities and we have a durable B2B customer relationships and 7 customers account for about 70% of our FY 2020 revenue. Next slide, please.
So in terms of our go forward strategy, it's really 3 pillars. 1st is leveraging our R and D capabilities. So we're looking to enter underserved markets through opportunity identification
and
do that rapidly. So that's the key in the generics business is to be quick to respond when you see opportunities. At the same time, we're moving up the value chain to get into more difficult products, and we're doing that partly with our in house capability, but also partnering where we don't have those capabilities. We are focusing on various delivery systems and dosage forms, and we're ensuring robust formulations in terms of our scale up to support reliable supply. So often, you grow by your competitors not having good supply and if you do have the supply and you're able to fill that gap.
In terms of sustainable manufacturing, it's really a balance. The balance is between cost, supply reliability and speed to market. So to solely focus on any one of those would not be a winning strategy. So the secret to success is really doing a good balance of those 3 to make sure that you do have a good cost position, but they are able to respond to the market quickly and that you have reliable supply, which is extremely important to the customers. We mitigate our supplier concentration by having alternate sources of API.
We file products in multiple locations, as I mentioned before. We're exploring additional manufacturing sites either through partnerships and or inorganic growth, and we ensure sustained compliance through global regulatory standards to have that consistent growth. And our last pillar is market expansion. So as I mentioned in some of the previous slides, we're really looking at even though U. S.
Is our biggest business, there's a lot of opportunity in the non U. S. Markets. And we expect to launch a number of products products over the next few years, both in the U. S.
But also in those non U. S. Markets. New products are expected to add potential revenue of US300 $1,000,000 in the period of FY 2022 through FY 26. And we're also going to be shifting from a traditional B2B model to a B2C model in some of those key non U.
S. Markets to leverage the growth potential there. So with that, I am going to hand it over to Chris to walk through our financials. Thank you very much.
Good day, everybody. Chris Krawcheck, CFO for Jubilant Pharma. So let me take you through our financial statements and our financial performance for fiscal year 2021. As you can see, we printed $782,000,000 of revenue compared to $803,000,000 and EBITDA of $177,000,000 to $211,000,000 respectively. Our revenues by segment were principally driven by specialty pharmaceuticals, of course, CDMO and our generic business as the folks just outlined.
And our year on year performance as a result of these businesses were really reflective of the performance of our management team and the market conditions in fiscal year 2021, and of course, impacted by COVID-nineteen. As you can see, due to the diversity of our businesses and our markets that we serve our customers in, we were able to seize opportunities in our CDMO business to help our patients and our customers navigate through and yet still manage risk associated with COVID-nineteen. Our CDMO business performed extremely well in fiscal year 2021, driven by strong performance and one time certain one time take or pay contracts and strong performance in our generics business. This was partially offset by the performance of our specialty farm business, which was mostly impacted by COVID-nineteen. This was principally driven by what I would call patient behavior as well as HCP behavior, principally in the area of lung perfusions as a result of patients seeking what I would call less accurate kinds of treatment.
This effectively happened early on in fiscal year 2021. We see improvement in those COVID conditions today as the U. S. Has been almost fully vaccinated and patients and practitioners are seeking more accurate lung perfusions, lung scans, etcetera. So our specialty farm business is recovering nicely in that regard, particularly in North America as vaccines have rolled out.
Year on year, our profit after tax was effectively driven by changes in our changes in tax rates and driven by our changes in accounting associated with deductibility of goodwill. So aside from the financial performance of our business, let me turn it over to Marcel, who will talk a little bit about our Jubilant Biopharm business.
Great. Thank you, Chris. Good evening, everyone. Can we have the next slide, please? It's my pleasure to introduce you to the industry of research as a service.
And this slide introduces you to what is a very attractive marketplace of global research outsourcing, both in the preclinical stage as well as in the clinical stage. And market has been growing consistently about 7% annually from a number of SEK 25,000,000,000 some 8 years ago, and we are exceeding SEK 40,000,000,000 SEK 42,000,000,000 in the coming years. So the market is continuing to grow. We see signs of that. And if we look at the drivers of that growth, it is driven by the very high cost escalation that the society and industry has seen over the past few decades.
You've all heard of the $1,000,000,000 plus development cost of a new medicine, which includes all the failures, of course. And the industry has been looking for ways to stream costs to reduce that number and become more efficient. And one of those ways was outsourcing their services, and that is notably taking place in the small molecule area, which is the area that Jubilant Biases focuses on. Big pharma companies are focusing on their core competencies, development and commercialization, and they are increasingly relying on virtual companies which have emerged. Those are the biotech companies that we read exciting stories about in the press and notably in U.
S, some in Europe and other geographies who feed, who develop compounds, discover compounds and license them out with sufficient clinical data. And my colleague, Sayed, will give you a lot more insights in the next presentation. And the other benefit of outsourcing is, of course, that rather than invest and maintain very advanced research laboratories, huge staffs, which are fixed costs in nature, you actually pay for research as you need it. And as soon as you have candidates and you go to the clinic, you can convert your efforts from the research discovery phase to the development phase and move your finances with the phase of the compound. And that has proven to be a very efficient methodology.
Next slide, please. So what does Jubilant Biases do in this industry? On the left hand side is a snapshot. We have capability in scientists, which provides new drug discovery services to those innovators in the U. S, Europe and Asia Pacific, including Japan.
Those are the markets where we see innovation taking place primarily. We can offer integrated drug discovery service. That means we can offer a portfolio of services that combined leads to a new candidate, which can go to clinic and that requires all of the services that I'll introduce a little bit later. And we can do functional services, which is essentially a menu. And depending on the requirement of an innovator, we can offer chemistry, biology or further testing of those compounds in life and cell based systems.
The business is driven by a number of long term relationships, which gives stability and also give references to expand our business in the future. We have, in addition, engaged in several risk shared discovery projects where we sacrifice some top line in return for milestones and upsides in case programs reach successful next phases. The service is offered out of 2 locations in India, 1 in North India, Noida, Greater Noida, where primarily chemistry analytical services take place to make thousands and thousands of compounds that they get tested. And the ones that make it will then be scaled up in GMB infrastructure for Phase I clinical trials. In our Bangalore site is where we have all preclinical services concentrated from biology, medicinal chemistry, etcetera, which are required to serve into an investigational new drug application.
The site also houses the brand's trial stack, which is an electronic data capture system for clinical trials. Clinical trials are one of the most expensive parts of developing a new drug. And in recent years, the automation and digitization has accelerated. And Jugula is playing its role by a startup, as we call it. We're developing a software platform that we have rolled out in North America, and all of the services are being developed out of our Bangalore site.
Related to that is a foray into digitization services that one can read about in the industry on a daily basis. Machine learning, artificial intelligence, we are making enrolls in that to understand the domain, understand how it applies in drug discovery and how it accelerates drug discovery in the next 1 or 2 years. And later this year, we hope to launch some services in this area that will improve the speed of the quality of what we're doing. If you look on the right hand side, in the discovery area, you see an array of services. And I won't go into scientific detail of all of them, but it gives you a snapshot of the breadth of capabilities required to both design a molecule, to test it, including animal testing, avoid toxicology effects and then finally be able to come up with a compound that has the potential to go to human clinical trials.
That is the rigor that we find in the drug hunting phase of where we are in this business, which is a very exciting business to be in. The business has been doing extremely well in the past couple of years. We have nearly grown 50% in 3 years, touching close to 20% year on year, and we expect to see continued growth in fiscal 2022. We will make some major investments that are introduced on the next slide, please. Our strategy is based on 4 key pillars and the most important one is expansion of capacity and capability in our 2 key locations in North India, Noida and Greater Noida as well as Bengaluru.
The first initiative will actually occur in the next quarter. That investment is approved. It is nearing completion. And that will more than double our chemistry capability to synthesize complex molecules, which are then ready for the testing phase. To synthesize complex molecules, which are then ready for the testing phase.
In addition, we are in advanced stages of planning a complete new site that will replace our existing site in Bangalore on a much larger location where we can grow and that will also be more than doubled in capacity if all is approved later in the year and you will be informed accordingly. That site will also include in the plans is a larger GMP pilot plant that will take us up to Phase II clinical supplies. It will have an associated expanded process research and analytical research department for new chemical entities CDMO Services. That combination of knowledge generation and pilot plants is required. Lastly, we are planning a globally compliant GLP tox lab where animal studies take place to test compounds for final stages that will increase the number of therapeutic areas that we can offer to customers.
That's the foundation of our business. The quality of our business is driven by operational efficiencies. We've been succeeding in a very efficient electronic lab notes book for 500, 600 scientists, which we have done recently that has tremendously improved productivity of the science that we deliver. We are driving quality, data integrity assurance through a robust system of quality assurance and SOPs, which will lead to ISO certification that we are targeting by Q1 of next calendar year. Jubilant has a huge experience with business excellence across all its businesses, and we have recently applied that also in the research stage.
And we have seen amazing results, accelerating turnaround time of 30% to 40% in discrete parts of our business, which is delighting our customers very much and is underpinning the growth that we are seeing. Due to the complexity of the science, we are also focusing on high end talent PhDs as well as global pedigree PhDs with postdocs. Business expansion occurs in the 3rd pillar, new customer targets. Because the top 50 pharma is increasingly focusing on other modalities, we see thousands of biotech companies emerge in the U. S, in Europe as well as Korea, Japan, Australia, etcetera.
So we're looking to drastically expand our customer base and that has been working quite well. And we are increasingly looking to close longer term contracts, which is not typical for this business. Most of it is done relatively short term focus, 6 to 12 months. In the past year, we've been able to close 2 to 3 year deals with several large VC companies in the U. S.
And finally, technology development is critical as finding new drugs is increasingly difficult, applying new technologies of the earlier mentioned machine learning AI, which is going to deliver value for us in the coming year. The digital services we're offering and we are expanding in clinical research through our TrialStent brand. And we are applying chemical technologies such as flow chemistry, which enables synthesis of highly complex NCEs that are difficult to make in regular setups. And finally, because the biology is increasingly complex, we are investing in new state of the art instruments that give us a higher resolution to model exactly what the compounds that we are making are doing to a cell or an animal and in order to select the right candidates. These are the 4 pillars of our business that has driven the growth rates that I presented to you in the previous slide.
And with that, I'll hand over to my colleague and customer, Syed, in Jubilant Therapeutics.
Thank you, Marcel. Good evening, everyone. I'm Syed Kazimi, and I have the pleasure of representing Jubilant's proprietary novel drug business, Jubilant Therapeutics, as President and CEO. Jubilant Therapeutics was born out of Jubilant's drug discovery organization that Marcel just walked you through. And we now have several first in class and best in class drug development candidates that are moving along very nicely in the area of oncology and autoimmune disorders that I'll walk you through very shortly.
This slide, as you're well aware, is really describes the multi step process for novel drug discovery and development, starting from the target identification and validation and then tutoring the process of discovering novel drug candidates and taking those through the preclinical exploratory and candidate selection phase. And then on the right hand side, as you are well aware, the clinical process then starts after investigational new drug applications are submitted to regulatory agencies and first in human studies Phase 1 would then be followed by the mid stage and the pivotal trials before the drug can reach the market. So this cartoon is essentially here to really give you a sense of where exactly Jubilant's proprietary drug development business, Jubilant Therapeutics stands today. And if I could draw your attention to the intersection of preclinical and clinical, we are very excited that we are really at the value inflection point of transforming Jubilant Therapeutics from preclinical to a clinical stage company, which is really one of the most important milestone in the evolution of novel drug development business as you well know. As I will describe to you later, our advanced program is going through the IND track studies with IND filing in later this year and starting the human studies in both solid tumors as well as blood cancers early next year and there are other programs right behind going through this journey of finalizing and optimizing and doing all the sophisticated animal based studies to prepare these drug candidates for fasting immune studies.
So as we go through this journey for a biotech like Jugilant Progytics, there are 2 primary value creation opportunities for novel Proprietary Drug business. The one is where you have these wonderful exciting first in class differentiated programs that can be partnered in a licensing or collaboration setting with large polymer companies. And the second value creation opportunity is to access funding through private or public ways. And we will give you an introduction to both of these value creation opportunities for biotechs in general and for Jubilant Therapeutics in particular over the next two slides. So next slide please.
So biotech companies like Jubilant Therapeutics dominate the new drug pipeline with novel agents as shown here in this summary. And if you look at the top bar that represents unpartnered biotechs like Jubilant Therapeutics with 1st in class or best in class programs. And at every stage of the drug development, these biotechs, which includes Jubilant Therapeutics have more new drugs in pipeline compared to the large pharma companies that are shown in the bottom bar, the 3rd bar there. The external innovation or partnering with biotech companies are becoming more commonplace for pharma companies to develop new drugs as much as 2 thirds of the pharma late stage pipelines come from biotech companies like Jubilant Therapeutics and other peers. And just to give you a sense, the recent data shows that over 1 third of pharma investment, in this case, the precise number from the recent surveys about 26% of total investment of Big Pharma is towards these deals to bring in novel candidates from innovative biotechs.
So partnering pipeline programs with large pharma, other biotechs to innovative venture funds with upfront milestones, royalties and equity on deals is really one of the, like I said before, a key value unlocking opportunity for Jiblin Therapeutics. In our case, we have pursued and will continue to do so department opportunities at the right value inflection point, which will be typically after IND filing or after having some clinical proof of concept data from our innovative programs to maximize the deal value. And partnering,
as
you well know, we have already done with our 2 prior programs, one with a very top notch BC company called Fraser and with a company formed around JUBLENT's asset called Lango Therapeutics and we have also partnered with Checkpoint Therapeutics before. Going forward, we will continue to explore these value creation opportunities for Jubilant Therapeutics pipeline as well at an appropriate value inflection point. Next slide, please. The second value creation opportunity for novel proprietary companies like Jovian Therapeutics is driven by the fact that there is a lot of attention and demand for biotech companies to attract funding through private public placement. And if you look at the recent data, the biotech IPOs have really grown exponentially.
And also if you look at the size and valuation of these biotech IPOs, they are all trying to imply. And especially last year, we have seen a lot of activity in both private placement and public market access for innovative biotechs. And the key there is to have a differentiated product for unmet medical need, especially in oncology. Increasingly, these companies are going and accessing external funding now, starting from preclinical to Phase I stage. This is a new trend because there is a lot of demand for innovation from investors and from large pharma companies.
So over the last 3 years, we've actually seen a number of preclinical where we sit right now or pursuant to the Phase 1 company going public. Majority of these companies have oncology focus, which, by the way, we play in the same sandbox. And more than 50% of the IPOs, just to give you an example, in 2020 2021 year to date, have lead assets in stages where we sit in today. And it's really a matter of generating some proof of concept to give the best possible valuation and go through some of the private public funding ramps. Last year alone, I think as many as 91 biotech companies went public with a total raise of about $16,500,000,000 And this year, year to date, it's going to be looks like it will be even better because already close to about 53 biotechs have gone public in the last 6 months with a total raise of $9,000,000,000 So similarly, Jupyterin Therapeutics has an equally, in some cases, better pipeline with novel targets and advanced preclinical programs with opportunity to raise capital for private placement or public markets over the next 18 to 24 months.
So next slide gives you a snapshot of where we are and who we are in terms of our management, our collaborations and our programs. So we are advancing, as I said before, potent and selective small molecule precision therapeutics in the area of oncology and autoimmune disease. The company was launched formally about 20 months ago in Bedminster, New Jersey with discovery labs in India as you're aware And we are now at the cusp of, like I said, transforming the company from preclinical to clinical over the next 6 to 9 months. We have assembled an excellent and experienced leadership team with both large pharma and biotech liquid, experienced in bringing novel compounds from discovery to the clinic. And we are very fortunate to be working with a number of top names in oncology and autoimmune therapeutics, the key opinion leaders and our scientific advisory board from world class institutions such as Memorial Sloan, Francis Quick in U.
K, Dana Farber in Boston and several others. In terms of our pipeline programs, just to give you a quick introduction, our 1st in class dual inhibitor of 2 validated oncology targets are now in the IND filing stage with the filing completed hopefully later this year. And as I said, this program is targeted for both solid tumors and heme malignancies. Our second program is a differentiated modulators of target that has been well established to play a key role in a number of cancer types, but more particularly in brain cancers, especially glioblastoma for which there is very little therapy available and it's almost a death sentence and the survival is very, very limited. We have managed to develop molecules that can cross what is called blood brain barrier.
So not every drug will be able to reach brain because nature has put in this mechanism to prevent some of these drugs to go through brain and have all kinds of deleterious side effects. But you can still develop very targeted therapies that can pass through that blood brain barrier and act on specific proteins or genes to modulate and treat some of these brain cancers. And ours is a very differentiated, best in class molecule that is targeted not only for glioblastoma, but also for other brain cancer that are secondary to lung cancer, breast cancer, prostate cancer and so on. Our 3rd program is a 1st in class modulator in the autoimmune inflammation space. And this program is also going through the critical IND track studies.
And we hope to file an IND for this program as well as for PRMT5 program in first half of next year. So you can see that over the next 12 to 18 months, we are looking at 3 of our programs going through the IND filing process and getting ready for clinical studies, which is pretty remarkable if you look at the overall ecosystem of biotechs because most of these companies with very good valuations usually have one such lead program in their pipeline, and we are fortunate to have 3 very novel and very selective precision therapeutic candidates that are going through the initial process of IND filing, so human studies can begin. We have other programs behind these two, including a checkpoint inhibitor program, which is in oral therapy. As you know, checkpoint inhibitors like PD-one, PD L1s have become the new standard of care. It's probably the best thing that has happened to the field of oncology to the point where we are now talking significant, significant clinical benefits from these novel pathways.
These are all injectables. And our goal is to develop a small molecule that can be taken orally for long term maintenance therapy. We have some undisclosed discovery stage programs against difficult to drug targets in the area of what we call oncogenes that are so critical for regulating a number of tumor progression and that's utilizing our state of the art technology platform that is described in the next slide, please. So this platform that we are leveraging from our sister company, it integrates computational chemistry, structural biology and sophisticated methodologies to study protein protein interactions to study protein protein interactions to understand targets well so we can develop novel small molecule modulators. And the goal is to really optimize these modulators with the best possible therapeutic index.
And we do that for identifying novel hits and then subsequently optimize these hits into a potential clinical candidate, which then goes through a very sophisticated integrated translational assays to then be able to select and declare clinical candidates. And from these efforts, as I mentioned before to you, there are 3 programs have emerged. I'm suffice to say without going into too much scientific detail that the first program, which is called LSD1 HDAC 6 dual inhibitor. So you can think about these, these are 2 targets that are that belong to a class for epigenetics. So these are not specific gene sequencing approaches, but these are the pathways and mechanism that influence gene expression.
And in this case, these two targets essentially either decrease or increase expression of a number of genes that are involved in cancer progression. So by interfering with this target in a selective fashion, you can interfere tumor growth and in some cases achieve what is called tumor regression without having to affect other pathways where these agents are also involved to a certain extent. So the idea here is to develop a selective molecule that we have been able to do with the best possible therapeutic index. And then along with that, we have utilized AI enabled algorithms in a strategic partnership to identify biomarkers that can be used for selecting patients that are going to respond best to our drug candidates as well as tracking clinical activity during the trial process. Our second program, as I mentioned, is a differentiated program.
As I will tell you in a minute, this target has been subject to a lot of interest as one of the primary target for brain metastasis, brain cancers. And we happen to have a very differentiated molecule with enhanced exposure in both brain as well as in plasma. So it has potential for development across multiple tumor types and is going through the final process of lead optimization and the studies that will be needed for eventual IND filing. FACT 4 is essentially an autoimmune target. And you can think about autoimmune diseases like lupus or rheumatoid arthritis or psoriasis.
As diseases triggered by autoantigens in the body and pathways like PADD 4 interfere and stop the creation of those autoantigens and thereby treat or help reduce the implications of autoimmune diseases without the liability of immunosuppression. A number of autoimmune targets that are out there like Humaras of the world with TNF or JAK2s, this is another target in autoimmune. These agents, while they prevent creation of these autoantigens, they also cause immune suppression and patients are more prone to infections. This mechanism we have chosen, which has this very clever pathway to regulate autoimmune antigens without the liability of causing immune suppression. And again, like PRNT5, this program is moving along nicely towards IND enabling studies.
This pathway also plays a role in tumor metastasis. So we are looking at a dual track development for VAD4. Next slide, please. So where do we how do we compare to some of the other companies that are playing in this space and the indications that we are pursuing. So just to give you a quick sense, for our dual inhibitor program, as lead indications, we are looking at some leukemia subsets as well as a small cell lung cancer indication, which as you know is close to about 50%, 15% of the total lung cell population.
There is really nothing other than chemotherapy that works in this disease. And both these indications, as you see on the right column, are multibillion dollar indications. Our PAD4 on the autoimmune side is targeted for subsets of rheumatoid arthritis, some inflammatory derm indications as well as on quality. And as you can see, rheumatoid arthritis is a huge, huge market. There are many agents, but there is still a need for agents that can give you that autoimmune effect without the liability of infection or immunosuppression.
In our brain cancer program as well as some of the lymphoma for PRMT5, these are again $1,000,000,000 opportunities. So we are playing in significant markets. And if these agents continue to show the differentiated profile, these will result hopefully. And of course, as you know, drug development is driven by data, but hopefully in large value assets. The companies, just to give you a reference point, for our dual inhibitor program, there are 2 companies, Horizon and IMAGO that are shown bottom right.
These two companies have LST1 program only. So this is not a dual inhibitor. And their value is largely driven by LST1 inhibitor program. And in one case, Horizon based largely on that one program has a market cap of 235,000,000 and another private company just did a Series C with the free money of 180,000,000 Our the nearest surrogate for our platform program is a company called BlackRock, which was sold to BMS not too long ago. And the discovery stage even earlier than where we are today, for a deal value of up to $600,000,000 including an upfront of $150,000,000 And there are 2 companies there are many companies that are working on PRM-twenty five program.
But just to highlight, a company called Prelude Therapeutics, which just went public, is now has a market cap of 1,500,000,000, largely driven by this single program called PRMt5. And another company, Tango Therapeutics, just went through a SPAC merger with a value of close to $1,000,000,000 So this is just to give you a sandbox where we are playing and the potential value propositions down the road depending, of course, on the success of our programs. Next slide, please. So just to summarize, as Jugal Intrepudis, we are now transitioning to clinical stage, very exciting and with great programs in early next year with our dual individual program. And like I said, subsets of acute myelocytic leukemia, there are some, again, blood cancer types, 1 in this case, it's called MPN.
And then the select solid tumors with the specific gene signatures. Next 2 IND filings around the corner in first half of next year. And like I mentioned before, in terms of value creation, we're looking at creating shareholder value in this business through pharma biotech partnership at an appropriate value inflection point and private public liquidity raise during the coming 18 to 24 months. And with that, now I invite Mr. Arun Sharma to give you an overview of Farmover Financial.
Over to you.
Good evening, everyone. I hope everyone is doing well and keeping safe. So if you can see the slide, our results revenue for 2021 is INR 6,099 crores, up from INR 5,976 crores, which was reported in INR 5.20. This revenue has been reported despite the challenges of COVID, which we faced in few of our businesses. So, Jubilant Pharma has delivered a stable performance for this year despite these challenges and stoppage of 1 of our API plants at Penjangpur.
If you go by revenue segment, in 'twenty one, you see 37.8% is contributed by our specialty pharma business, 33% is contributed by our CDMO business, generics contributes 24.2% and CRDS contributes 5% of our business. The EBITDA margins has been slightly lower side because of COVID challenges this year, and we reported INR 14.14 crores EBITDA this year in FY 'twenty one against INR 1585 crores last year. That margins has been at almost at 10% at INR 574 crores. Again, it is a little lower, INR 678 crores reported last year. Next slide, please.
So if you go to return on capital employed, our return on capital employed for FY 'twenty one was at 14.2%, which is quite comparable with all the major pharma companies. Leverage, if you see, our leverage for this year is at 1.36 times. And in leveraging, we have a focus on deleveraging our company. Whatever free cash we have, we try to deleverage our company. And this year, if you look at our financials, we have reduced our gross debt by almost INR 760 crores and our net debt by almost INR 2019 crores on a constant currency basis.
INR 219 crores on a constant currency basis. Capital expenditure this year has been INR 276 crores, which is 4.5% of the sales. Working capital has been 86 days, down from 94 days. They have released much cash into our system to have the operations smoothly. Next slide, please.
So coming out with the detailed P and L account. As you can see, Pharmaceutical reported a total revenue of INR 5,790 crores in FY 'twenty one. This is breakdown into specialty pharma INR 2300 crores. CDMO reported INR 2,010 crores. Genrecs reported INR 1476 crores.
Contract research and development services has been growing quite steadily over year in year and reported a revenue of INR305 crores. So total revenue from our pharmova business, which we call continuing business due to demerger in February, is INR6,099 crores, 2% as compared to last year. Coming on to EBITDA, pharmaceutical EBITDA was at INR1386 crores and contact research and development service EBITDA was INR109 crores. Property Novel Trucks, we have booked some expenses here. So our reported EBITDA is INR1414.
After depreciation, amortization and finance cost of INR184 crores, we reported profit before tax of INR 8.81 crores. If you look at our finance cost, finance cost, we are always trying to optimize it so that we borrow at a much lower rate. And this year in FY 'twenty one, we have replaced our high yield bond of 4.875 percent with a much lower cost of term loans, which has brought the reduction in the interest cost. After exceptional items of INR21 crores, we have reported profit before tax of INR871 crores and tax expenses of INR2.97 crores, so that's reported as INR5.74 crores. EPS is at INR36.04 per share.
So pharmaceutical EBITDA margins are 23.9%. Contract Research and Development Services reported EBITDA margins of 35.6%. So overall reported EBITDA margin is 23.2% for Jubilant Pharma for FY 'twenty one. With this, I come to an end of my financial presentation. I hand over to Hemant for Q and A session.
Thank you very much. We will now begin the question and answer session. First question is from Mr. Alankar Gorde.
My first question is to the group CFO, Mr. Shobani. So you mentioned about continuously achieving ROCE at least 10 percentage points higher than the cost of capital. Firstly, what would be your ROCE target for the business over the next 3 to 5 years? And secondly, can you give an indicative number on the quantum of cumulative CapEx client across different segments over the next few years?
Hi, Alankar. So presently, we are at an ROC, as you know, of around 17%. And our target is to maintain the ROCE over a medium term. There may be certain short term fluctuations because of some of the CapExes. And we have given indicative 3 year CapEx for different businesses that we have provided.
And we are being very mindful of these CapExes, so that our ROCE does not fluctuate in line with our investments. So I would say that our objective is to maintain the ROCE and not to cause too much volatility in our ROCE from present levels and at the same time to ensure that we invest for the future. So that's what I would respond to that, Alankar.
No, thank you, sir.
You're welcome.
I'll further add that, as you know, that 95% of our business is in Jubilant Pharma. And drug discovery is also about 95% exports to U. S. And Europe. And the Jubilant Pharma business is a dollarized business.
So the cost of capital is also lower in dollars as compared to in rupees.
My second question is to assume. Now ex MAA and DTPA, we have spoken about 90% return to pre COVID levels from a manufacturing business. But then these two products itself are amongst our top key products. So including them, the impact would be much higher. So even if I adjust for, say, the competition in NAA, when can we expect the radiopharma manufacturing sales to return to pre COVID levels?
So from a market perspective, we expect recovery to pre COVID levels under the 1st semester of this fiscal year. However, it's important to notice that we have competition on MAA now. And the pre COVID level coincide with the moment that we were without competition as well. So we do not expect MAA sales to recover to our pre COVID levels.
Sorry, Sajid, you mentioned recovery to pre COVID by when? I missed that.
First half of this fiscal year. Okay. Okay. Q3 of the calendar year.
Understood. And one final question, if I may, and again, it's a follow-up to Sergio. With all the legal issues behind, when can we expect the Rubik's sales to exceed that of Bracoastal, Diodesium 82?
Too? The legal issues are getting very close to resolution. I don't think we will face any trouble on that side. Rubifil was also impacted by COVID. Many pet centers that were supposed to invest in cardiac pet were delayed.
And the growth of the market is a progressive phenomenon in the U. S, something that we drive, something that the market by itself organically grow. So Ruplu is growing at the moment and we are actively working to grow it much, much further than today. So especially after COVID, things are getting back to normal. Pet centers are resuming their projects to start cardiac pet programs.
I would say that part of the business and its growth is already happening.
Fair enough. That's all from my side. Thank you and all the best.
Thank
you. Next question is from Mr. Rakesh Jhunjhunwala.
Thank you for the detailed presentation. What I would like to ask is, do you care for pediatric oncology dose of orphan drug? Am I right?
You have
an orphan drug which you are trying to apply for pediatric oncology?
Yes, sir.
Where is that progressed?
So we have I-one hundred and thirty one MIBG, which is for the neuroblastoma.
Yes, but at what stage is it now?
Yes. So it's Phase II and Phase III, both the trials are going simultaneously.
And if we're able to launch it, on what time period could we launch it?
Yes. So we expect the launch of after Phase II trial in early FY 'twenty four. And for Phase II trial, we will get the permission to launch it after the first relapse. Simultaneously, Phase III trial, which is going on, that is for its approval as a first line therapy. That opens up the market even much more.
And that approval and launch, we are expecting it early FY 'twenty five.
Sameer, right. Second thing is you have now entered the radiopharma business in Europe, if I'm right. How significant can that be?
Yes. So in the Europe, currently, we have entered for the product Ruby Fill, which Sergio explained on his slides. It's for the pet cardiac product. And the Europe also like U. S.
Has quite a large market, and it's totally untapped. So in the Europe, no one had the approval for this. Our competition, Braco, had installed very limited sites under a special access program kind of the thing in the Europe, but not a fully approved product. So ours is a fully approved product in the first one, and the market over there has to be developed, but the potential is huge.
Roughly, what is the size of the market?
Size of the market, currently, you can say that since the product is not there, so the market is not there. But the way we have the projections for the Ruby fail, we expect this product to deliver us close to €200,000,000 revenue in the next few years.
Annual revenue?
Yes. So
things like this CDMO business that you have in Bangalore, which has that 35% margin, I think, crores of turnover you have in that, where you do drug development and research on contextual basis. How scalable is that business? How much are we scaling? What kind of projection do you have for that? Or plans?
So Rakesh ji, this is Haribartia. What you are talking about is our discovery services business. We do 2 things. We do integrated drug discovery, and we do chemistry service.
Right.
And things like DMPK. So I think, Marcelo in his opening remarks said that we have already almost doubling the capacity for the chemistry service. Now that is very scalable. And with the chemistry service, we are going to add DMPK very soon. What is DMPK?
It's an additional service that I can ask Marcelo to explain that comes with chemistry. When customers who come to us for FTEs on chemistry also request DMPK services. Marcel, if you can explain that?
Yes, yes. It is a testing platform, drug metabolism pharmacokinetics. Essentially, it tries to model what happens to the compound when it gets metabolized in an organism, whether it's cell Pen
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pen and a
pen and a pen and a pen and a pen and a pen and a pen and a pen and a pen and a pen and a pen and a pen and a pen and a pen and a pen and a pen and a pen and a pen and a pen and a pen and a pen and a pen and a pen and a pen.
So that is the first filter of drug discovery.
Yes. So the other part, I want to just add Rakesh gee that while chemistry service is scalable in terms of FTEs and Marcel can give you the numbers that we are scaling up in our present expansion, the potential that we have, we're almost doubling. We also have potential to scale up our what we call CDMO, the scale up business. That means in chemistry service, we do very early stage in few grams, we produce compounds for our customers. But that has a potential into producing kilos for their preclinical requirement and clinical requirement for Phase I and II.
So we continue to look at expanding that. So that's where we are working on how do we expand the capacity there so that we continue to have serve customers who come to us at an early stage and we continue to retain them for a later stage when they increase the quantity of compounds that they require.
Am I right in assuming that this business is some part of what Syngene is doing with Biocon subsidiary? Is it similar?
Yes.
So that
is highly scalable. Syngene has got a very good profitability and a very good turnover. So we can also scale up.
Rakesh g, we will also scale up. It was a very small business and we are scaling it up very fast. And but I'll tell you the differentiation that we have, Rakesh, is our integrated drug discovery is a very differentiated. That means we actually discover the compound for biotechs and large pharma. And we have done over 85 programs in the history of the company, which is a very, very rare, very few companies in the world are known for integrated drug discovery.
And we use computational chemistry and structure based drug design to do that. It's a very unique differentiation. So our Biopsys' reputation was built on so we are we have a great science reputation. And now we are going into more in terms of areas which are expandable. Integrated drug discovery is difficult to scale up more than what we are doing.
We'll continue to scale that up because there are other services that we are adding to that, which are high end. But we are now getting into areas which we will scale up much faster. That is the chemistry and the CDMO part.
How many people will have in that business today?
Marcel?
What was the question, how much?
How many people will be having that business today?
We have about 850 people growing to 950 to 1,000 in the coming fiscal year.
Right. And how many people would Syngene have?
Syngene has a few 1000, 3000 to 4000 people.
How can we be lower than a lady, sir? You have to beat her.
I can tell you we have some land in place, but the scalability of Syngene is also linked to huge infrastructure. You need a lot of research buildings. So
Rakesh, part of the Syngene business is also I don't know whether you have studied that. It's also CDMO business.
So no, no. And we are gearing up for expansion.
We have bought a new business, we bought scope, And it's like a software service. And I think we need to really scale up and invest money even take some more risk if needed.
You are right. And
Rakesh ji is a we have a great team and we have great scientific capability, very well known in the market. We have acquired 10 acres of land near the airport where we are expanding in the future in the next 5 years our research park. We have already tomorrow, we are going to inaugurate a very large center in Greater Noida. And if you whenever you have time, would love for you to visit.
No, our centers are to Noida and Bangalore.
That's right.
Yes. Go ahead.
Absolutely. Okay, sir. I feel there is a good pleasure in that business. We must expand it. Best of luck for all the analysts.
Yes, hello. Look forward to them. Best of luck. Thank you.
Thank you.
Next question is from Mr. Zafar Ahmadulla.
Thank you for the presentation. Just a couple of questions, please. The first one is on radiopharma, where if I understand correctly, there's there are 2 parts of the business. On the pharmacy business, we are losing money and then trying to turn around. So can you sort of give us a little light on that?
And maybe it would be helpful if you could split the numbers out so that because at the moment, our profits look less than they are because of losses of the pharmacy business are sort of coloring the numbers out. So if you could maybe explain that, please?
Yes. So in radiopharma business, we mentioned that the radiopharmaceuticals and the pharmacies business are integrated. And it's a strategic acquisition for us because it helps us to take our all the products through the dispensing up to the nuclear imaging centers. The entire acquisition had been strategic because we have quite a strong R and D pipeline of the products, plus we are also bringing products through the partnership arrangements. And if we have our own dispensing system, then we have a better access and a wider access to our customer base.
So it will not be fair to take these 2 of the businesses separately. But however, when we internally analyze and look at a standalone business, we know that in this business currently EBITDA is negative. But I mentioned that we have a very robust turnaround plan for this. We did a very detailed exercise. And we will turn around this business on 3 aspects.
1 is the commercial excellence. We mentioned
that we are growing our market share rapidly. And excellence. We mentioned that we are growing our market share rapidly and the operational excellence where we are bringing a lot of efficiencies into operations, into procurement and third is overall network continue to grow this business.
Okay. The second question is on the CDMO side. You mentioned that last year, the margins were benefited from some one off contracts in COVID. And so I think because they were last minute ones, they were very profitable. Roughly, can you give us some idea how much the sort of base is inflated because of this so that when we go into the current year, most of that will run off?
I'm sure there'll be some spillover, but how much is left?
So in our last quarterly call, we indicated that we have done 5 COVID related deals. And with that, in FY 'twenty one, we had generated about INR535 revenue. And with those 5 deals which we had, we are expecting another about INR 200 plus crore revenue in FY 2022. However, please appreciate, currently, the COVID market remains very volatile. Things continue to change every week, every month, and there's a possibility that the volumes can go up.
And last week itself, we announced another 6th deal with the Ocugen, who is trying to bring the Bharat Biotech product into the U. S. Market. So things continue to evolve.
Okay. And my last question is more a capital allocation question, so maybe Mr. Borthe can do it. As related to JUBLEN Therapeutics, obviously, we have this interesting pipeline, but is Jubilant Pharma the correct vehicle basically to exploit this pipeline? This
is the
story of Indian pharma trying to do innovative products is unfortunately disappointing. And is our capital best employed at this scale in this area? Do we have a budget? How much we are ready to spend here? It's a bit of a gamble, of course.
We all know that. And obviously, if we get lucky, we can get very we can do very well. So is this the right vehicle? And does it not make sense to use other people's capital possibly to and take on de risk? How do you think about a sort of budget of how much money you want to put into this?
Zafar, this is Hari Bhardia. Let me explain our the reason for doing this in pharmova. As you know, Jubilant Therapeutics is an independent company. It's not part of pharma, but definitely part of pharmova. Now where do we get our strength from in the and I think the strength came because Jubilant Biocysts has been doing this drug discovery for other companies and biotech and they have created huge value through our research and we continue to do that.
We felt at a certain point that we should work also on our proprietary molecules. And these are early stage. And I can tell you, Zuhr Bai, this is the most efficient way to do drug discovery to use the best of Indian talent, which we have, which we do it for others to apply in therapeutics. And even in the early stage, when we did develop some of the proprietary molecules, as you may have seen in our early announcements, we have already licensed a few and generated cash with that. So I can assure you that this initiative is very capital efficient.
I would say much more efficient than anywhere being done because we have used some of the out licensing funds to use in this and some of our own funds. And as going forward, Syed did explain that we will in the next 18 months raise private or public fund to take these programs to the clinical stage.
Okay. Thank you very much. Thank you.
Thank you. Next question is from Mr. Rahul Veera.
Hi, good evening, gentlemen. Just a quick question for Pramod, sir. Sir, we've added a couple of new CapExes beyond what we had discussed in the previous call, especially the ophthalmic lines and the Montreal expansion. So what will be the cumulative CapEx over the next 3 years?
Rahul, this ophthalmic line in Montreal, we had announced earlier also, and that's under commissioning. We expect it to be commissioned in FY 'twenty three. Plus, we announced our Spokane expansion, which is increasing capacity by about 50% at that site for investment of GBP 92,000,000 These are the CapExes which are under implementation currently. Now in today's presentation, we also indicated that we are also evaluating on various other expansion programs, which includes another ophthalmic line in Montreal, which includes Montreal expansion of sterile fill and finish and also another prefilled syringe flex line. And this evaluation also includes another expansion in Spokane, which in Spokane, we'll be able to double up the capacity from existing levels.
So those are the various initiatives, which currently we are evaluating. Once we have done its the basis of design, we will be able to know exactly how much is the requirement. And when the Board approves for that investment, we will make the announcement for the investment as
well. Next question is from Mr. Tushar Manudhane.
Yes, you
can ask your question.
Thank you for the opportunity. Just first on the strategic level, while we have a CDMO as well wherein we need to innovate and at the same time, we have our own
Sorry, I didn't get the question, Tushar.
Can you repeat your question? At a strategic level, we have both CDMO as well as our own drug business. And business. In the CDMO space, our experience has been that the innovators are quite taken.
Tushar, your voice is not clear. Can you just keep the mic near you because your voice is not yes, yes.
Is it better now?
Yes, yes.
I think Tushar At the strategic level,
just like that. Yes. You're probably talking about conflict of interest, isn't it?
Correct. Correct.
Yes, yes. So let me explain. Firstly, all the integrated drug discovery players globally do develop their own proprietary set of molecules. And I can explain, sometimes they do completely contract work, Sometimes they develop what they call early target ideas and take it forward to generate hit or lead. And this they offer to their clients, which are large pharma companies for out licensing.
And then when they outlicense, they continue to do those services, which are required to take this forward. Now in case of Jubilant Therapeutics, it's just a separate entity, which has taken early stage risk and our interest is never to really go into the market with the end product. Even while we are developing this and we probably will take it to Phase 1 or Phase 2, when the value inflection will be higher, this is still available to large pharma to buy. As you know, 60% to 70% of large pharma's portfolio and now probably 80% comes by in licensing at different stages. Some could be preclinical, some could be Phase 1, 2 or sometimes even in Phase 3, they are bringing in these products.
So what we are doing is we are playing a role like any other biotech, which is developing a product and then hopefully offer it to larger pharmaceutical companies to take it to the market.
So then the next question was related to Jubilant Telematics wherein as in we are not going to get into clinical trial Phase II or Phase III, then specific reason for raising the funds?
No. We will get into Phase II if required. And but for Phase I also, we need to raise funds. And Phase 2a or 2b, we will look at that depending on if we find that the molecules have we have a stronger interest, we may take it to Phase 2 and then license it out. So the opportunity exists.
And let me tell you, these are all open things. The targets that Jubilant Therapeutics works on, BIOSYS does not work it for any client. So because BIOSYS does the work, so we are very transparent. It is purely if we are working for a project for our clients, then they will not work it for Jubilant Therapeutics, because these are all target exclusivity. We already work for many pharmaceutical companies.
So we make sure that when we work for 1 pharma in a particular target, we don't work for another pharmaceutical company on the same target. So that's how we maintain sanctity and clarity. And that's how other CROs also do it.
Great, sir. Thanks a lot for that clarity. Just on Jumilant Therapeutics again in terms of while either through the fundraise or throughout licensing, but the overall the investment that would be required over the next 2 to 3 years, whether we have it in house or through external funding, Any ballpark number you would like to share?
So I would not share you the full numbers, but I can tell you, this is done very efficiently and done at a very low cost. All our early stage programs, we have brought it and I would say is one of the most efficient way to do it. And if the amount of money that we have spent on these, we can sell all these products immediately right now. There is no there is I can tell you right now. But it's important to sell or exit through IPO at the right time.
And that's where Syed, who is the CEO, he is progressing these molecules in a very effective manner. And we are hoping that when it goes into clinic and has a proof of concept, the value inflection is in multiples. And if you study any of these biotechs globally, you will also get, I'm sure, the similar sense. As far as early stage investments, it is small part of our overall investments that we do in pharma or in our CRO. So we don't see a stress on that.
Thanks. Thanks a lot for clarification and wish you all luck on each segment. Thank you.
Thank you. Next question is from Mr. Vishal Manchanda.
Thanks for the opportunity. Am I audible, sir?
Yes, yes.
So a question on the private equity fund raise. Would you be doing this at the parent level or would this be done at a subsidiary level?
So, this is Syed. So, our goal for the parent is right?
No, no, no, I don't think this is a Which level are you asking about private
equity fund raise? You're contemplating a private equity fund raise. So just wanted to check whether it would be done at the parent level or it would be done at the subsidiary level where the funding may be required?
No. Are you in reference to therapeutics you are asking or you are generally you are asking for private equity fundraise?
Not specifically in reference to therapeutics, but No,
we are at this moment, we are not considering a private equity fundraise either at the holding or at the subsidiary level.
Okay. So a follow-up See,
what we have stated is that the Jubilant Therapeutics, we will raise funds from private or in next 15 to 18 months.
Okay. And would it be right to benchmark Jubilant Therapeutics to companies like Evotec or Galapagos?
No. What
Galapagos and Evotec does is what Bioseys is doing to some extent. Extent. Of course, BIOSYS has a large chemistry service, but the integrated drug discovery part is what BIOSYS is doing. Yes, Galapagos to some extent has gone into both, into service and what therapeutics is doing. So yes, it's a mixture.
And you can discuss this separately in a greater detail minutely also if you want.
So was Jubilant Therapeutics always a separate entity or it's a spin off that has spin off from BIOSYS?
So some early stage work we did in BIOSYS. And then as and when we decided to progress the programs, then therapeutics was formed.
Okay. And a few questions on the radiopharma business. Basically, the first one is on Rubifil. So just wanted to understand what proposition that Rubifel brings. So why would hospitals shift from Cartagena to Rubifel?
Yes. I will let's have you explain this.
Yes, I will. Thank you for the question. So Rubicel and Cartagena are both serve the same purpose. The difference is the way the infusion of rubidium happens, the algorithm of infusion. And our major advantage is on that point.
We have others on the workflow side, and our image quality is also preserved for more weeks than our competitor. Those advantages are demonstrated by scientific investigation, clinical papers and so on.
In addition to what Sergio said, our product is able to deliver the dose in a much more safer way. We are able to calibrate the dose with the weight of the patient and can actually deliver what the quantity is required. So the controls are the Farfar superior, all done through the computer and everything visible to the doctor on the screen. So would
that translate into better savings for hospitals since you are able to titrate the dose as per the patient weight?
It's more the safety of the patient.
His safety is also I think they can take out more doses out of our generators.
Yes. So they'll be able to handle more patients for the same volume.
Got it.
Yes. So our generator efficiency is much better in comparison to the competition, and our safety profile for the product is far, far better.
And what I would also say, there have been some details around volume expiry and time expiry. Does that also help a larger volume, larger expiry line? Is that also different for Cardiogen and rupivit?
I think you're talking about the expiration date of the generator, the Tahoe. Yes. So this is, as Pramod mentioned and Mr. Bhatia as well, the different what differentiates the generator is the fact that we can infuse a constant activity at the dose that is tailored to the patient and we can provide better image qualities at lower doses and even if the generator is approaching the end of its life cycle. So the original systems, 1st generation such as Braco, image quality is better when you are in the beginning of the column, like in the beginning of the cycle.
But it tends to go down to get worse towards the end, like in the last after 3, 4 weeks, it's known that the image quality deteriorates. Our image quality is constant during the entire cycle of the generator. We can use 6, 7 5, 6 7 weeks cycles, have that flexibility as well. And during the entire time, the reading physician will see a consistent image quality. It's very difficult for a cardiologist reading study to have in a certain week a better image and towards the end of the cycle a bad image.
It throws them off and they don't know what they are looking at. It's very, very vital to have consistent image quality across the entire cycle of the generator.
Thanks. This is helpful. And just one more on DTPA. So if this product is approved for lung scans and also other scans like brain imaging and renal scans. So as you said, this year, the sales had declined because lung scans are not permitted with DTPA.
So just a sense on what percentage of sales of DTPA would be coming from non lung scans?
The tPA is used in lung scans more than 90%. There are alternatives for to scan the kidneys and alternatives to scan the brain. The primary use of the tPA is so called ventilation scan. So it's used in combination with our product MAA. MAA looks at the perfusion and the TPA looks at the ventilation.
The pulmonary emboli usually will impact the perfusion, but will not impact the ventilation. So the way pulmonary emboli is detected, the perfusion scan will be abnormal in a certain region, the ventilation scan will be normal. And this mismatch of the 2 is indicative of a pulmonary MRI. That's the primary that's the largest application by far for TPA today. Because the patient has to inhale, it has certain risks of contamination during the peak of the COVID crisis, many hospitals decided not to do the ventilation scans.
Some of them were doing only the perfusion scan and trying to figure it out without the very important support of the ventilation scan. And this is now going back to normal because people in the United States are by and large vaccinated, health care professionals are best vaccinated, including technologists. And therefore, the Society of Nuclear Medicine issued a new guidance saying that it is safe to go back to performing ventilation scans and that's what we're observing.
Thank
you. As we are closer to the time, we will take last three questions. Next question is from Mr. Aditya Khemeka.
Yes. Thanks for the opportunity.
Sir, on the API business in the pharma vertical, we have Nanjingard, which is under, I think, a warning letter from the U. S. FDA. Can you talk a bit about the capacity utilization currently at Nandangar? And how is the warning letter impacting us?
And what is the status of resolution of the warning letter?
So the Nandangar is not under warning letter. It's under OAI, official action indicated. When FDA inspected all the observations, which they made for the inspection mostly, I think 90% of them were related to nitrosoamine impurities. And that was the issue industry was struggling that time. We very actively got engaged with the FDA.
So they didn't escalate it from official action to warning letter. We are one of the company where the official action indicator remains for that long. And the reason for that is that though we have completed all the remediation activities, but unfortunately, by the time we completed this, the COVID pandemic started and FDA stopped the inspections because they audited they don't want to travel. When they just started doing it again, India hit the 2nd wave. And now again, the FDA inspections are on hold.
I am sure that the FDA is piling up the list of the pending inspections. As soon as they start doing the inspection again, they should have the Nanjingur plant also on the priority, and they should inspect it. They also, in between, started doing the virtual inspections, but very selectively. And the decision on that or the prerogative of that is with the FDA, where they want to do virtual and where they want to do physical. So we are waiting.
That's the status of the FDA regulatory compliance. In
terms of
capacity utilization, you asked. So last year was during this COVID time, unfortunately, our plant was shut for about 2.5 months. So in the rest of the year, we had run the plant at full capacity. What I mean to say, full operating capacity. And hence, our revenue for the business for FY 'twenty one were more or less at par with FY 'twenty in spite of 2.5 months' closure.
Currently, we continue to see the demand from the customer for our products, And there's a need for us to increase the capacity, and we continue to do the debottleneckings of the various streams to increase the capacity. And we plan to debottleneck it by about more than 30% over the next 2 years. At the same time, Gunjan explained that we are also evaluating another greenfield site for the future expansions.
Got it. So that's very helpful. Can you also talk about how vertically integrated are we in our API manufacturing? How much of our raw material comes from China? How much of it is indigenous?
And do we buy just the basic raw material from China? Or do we also buy advanced intermediates?
Like any other API manufacturer in India, there was dependency on China, and there is dependency on China. That's how overall API industries in India and China got developed. But with this geopolitical disturbance, we were very we took very proactive approach and we started looking at each and every KSM or advanced intermediate we were buying from China to have an alternate source of that outside China, preferably in India. Some of the products are available, but not all. Those which are not available, we have taken up the projects in our own R and D to develop the technologies, and we are in the process of transferring such developed technologies to the other Indian sites who can make the similar KSM or the advanced intermediates.
And then we start procuring them. So we have a very structured plan in place to reduce dependency from the China, and that plan is working on track.
Got it. I have one last question. On the radiopharmaceutical business side, so while I listen to all the commentary that you guys give, and it sounds very encouraging, But my understanding and my previous reading was that this is a market where the volumes are actually stagnant to maybe declining in low single digits, the MAA and DDPA market. And therefore, all the revenue growth that we have seen in the past 5 or 6 years in the segment has largely been driven by price increases. But hearing you guys out today, it seems to has something changed there?
Has there been volume growth in overall NAA and DTPA as a market? I'm not talking about your segment. Your revenue, I'm talking about overall MAA market and DTPA market because I thought these are slightly outdated sort of products in the radiopharma business and there have been newer technologies which have come in. And therefore, the preference of doctors towards these technologies is actually going down. Please correct me if I'm wrong.
So I
will set the base and then I will request Sergio to add on. The way the nuclear medicine market got developed initially is mostly focused on the diagnostic treatments through SPECT. Over the last few years, from the SPECT, the technology started moving towards SPECT because SPECT gives you much more sharper image. And then in between came the time where from the diagnostic industry started moving on to the therapeutic side and now the latest buzzword in the radiopharma is the diagnostic where the same drug substance you attach with the different isotopes. One isotope helps you to get the diagnosis treatment and the other isotope helps you to give the therapeutic treatment for that.
So overall, currently in the industry, when we mentioned that volumes are flat, that reference is mostly to the existing generic product being used for the diagnostic treatment through SPECT modality. However, even in the diagnosis, the PET is growing by about 6% to 8%. And the huge growth with the Sergio was showing on his graph will come from therapeutic and theranostic molecules, where all the development has started happening only from the last about 5 to 8 years. And the number of large pharma company, number of research institutes who are working on it, there's a huge potential and expectation is that by 2,030, it can grow up to 20,000,000,000 dollars market size just on the Theranostics side. And while PET will continue to grow, SPECT probably will remain flat.
However, in SPECT, the price increases will continue to happen. You would like to add anything, Sergio, on this?
You've covered it very well, Pramod. I think I could illustrate just giving the 2 milestones, 3 milestones that happened in the therapeutic side just for illustration purpose, call a commentary to complement what Ramon said. So in 2013 Bayer launched Glaukosalfigo, it's an alpha therapy for bone metastasis, primarily prostate cancer. It was a game changer, but it was relatively mild impact in the patient survival, but it was a change in direction for nucleomastinib, the first inflection point. The other one happened in 2018 with the approval of a drug called Lutathera, which was developed by a company called AAA.
And this company was acquired by Novartis soon after the launch of Novartis for $4,000,000,000 That was another question. Now most centers, academic centers in the United States are currently offering Lutathera for the treatment of neuroendocrine tumors. Just a week ago, Novartis announced conclusion of the trial that is experimenting with tissue PSMA treatment for metastatic, constipation resistant prostate cancer with very, very with very, very favorable results. That is a result of the acquisition of a company called Endocyte, what we also know, 2 years ago for $2,000,000,000 And that's going to be yet another inflection point, 1st large, huge application, prostate cancer in therapeutics. This trend is not bound to change, let's promote that.
We have many others, many other drugs in the pipeline, prostate neuroendocrine tumors and whole family of products based on FAPI, which I mentioned in my presentation. So there are Peltix. I'm sorry, do you have a follow-up question?
Yes, I do have
a follow-up there. I'm so sorry to interrupt you. Just to understand this better, PET is obviously the modern technology, sharper images. SPECT is the older technology. How is SPECT price compared to a SPECT scan typically in the United States?
Could you give us a ballpark figure as to what the pricing difference between the two scans are?
There is that's a wide range. I would like to just rectify something. Indeed, the PET image quality is better in most cases, but by and large, SPECT and PET are complementary. SPECT is used in many different organs and PET is used primarily in oncology, growing in cardiology, as I mentioned, and growing now in neurology as well. SPECT is more general purpose, but they are complementary and I believe they will remain both modalities will continue to exist.
PET is growing much faster because number 1, the growth in amyloid prostate cardiac PET. And as therapies grow, PET will be the preferred, perhaps not the only one, but the preferred imaging modality that will enable the therapies, right. So as the diagnostic grows, that will grow a bit. And to your question, I'm sorry to say that.
I said that our existing products volume, as Pramod said, is likely to remain not likely to grow, but we have in pipeline 506 products, which are some of the products are spec products, which will add the overall sales increase in our spec products to new product
introductions.
Next question is from Mr. Rahul Veera.
Since, sir, we have been discussing so much about the growth of the PES scan, are we going to increase our stake in SOPHIE?
So, we are already there in PET scan through rubidium generator. Rubidium generator is a PET scanning, uses PET camera for scanning. So, they are already there in one of the heart imaging in PET scan. Now, sir, you can add to it what other things in PET we are doing.
So the partnership with SoFi is one of the ways we are going to reinforce our position in pet. It's not the only initiative. The partnership with isotopia will give us access to PET tracers as well. And our research and development capabilities, our labeling capabilities are also suitable for the development of PET tracers. It's an area we are investing ourselves.
To the question of whether intensified relationship with Sofia, absolutely, I think we are finding more synergies by the day and cooperating more and more, finding many areas that could be done as a partnership. This may lead to higher stakes or not. That's an intense discussion and I don't think we are ready to announce anything like that.
Sure. Because this time we recorded some kind of a licensing revenue in SoFi. Is that correct?
Yes. Because of the 25% stake what we have, so equivalent equity basis, we have recognized the revenue. SoFi had out licensed their FAPI for the therapeutic application to Novartis. And against that out licensing, they have got the milestone payments. There are many more milestone payments are expected, and they will continue to be getting recognized as they come in.
But Sophy has retained the rights for the diagnostic application. So while the Novartis will take approval for the therapeutic, along with therapeutic, Sophy's diagnostic will be used for the diagnosis. And both the SoFi diagnosis and the Novartis Therapeutics will continue to get approved for the many applications into the many geographies, and the market will continue to grow.
Sure, sure. This is very helpful.
Thank you
so much, sir.
Thank you.
Thank you.
If I could just
add to what Pramod said, we record we don't record revenue for SoFi. We actually account for them on their what's called equity method investment and we pick up our share of SOPHIE's profit and loss in our financial statements commensurate with our voting interest in the company with this 25%. You'll see this on our performance.
Thank you. Next question is from Mr. Sion Mukherjee.
Yes. Are you able to hear me?
Yes. Go ahead.
Yes. Thank you. So my question is on the CMO business. I mean, if I look at the history, I mean, there has been some issues with FDA in the past. The revenues were quite muted or stagnant, I would say.
And we see an improved growth because of COVID and now substantial capacity expansion that you talked about. I'm wondering what has changed in the contract manufacturing business that it seems that you are in a stronger growth trajectory. You also talked about the order book. And the second question is just if you can throw some light on the profitability and margin of that business?
So, Sain, on the first question, let me answer this way that we made this announcement of the new line now, and we are saying that this will be up and running in calendar year 2024. So that's the time frame it takes to implement any of the expansion in CMO business. And if you look at the expansion also for this 50% capacity increase is to the tune of $92,000,000 So this business is capital intensive. And then this business has a huge, the compliance regulation. So you are right in saying that in the past, we had some issues, but that's a history that was many, many years ago.
They are since then, our quality record is very clean. And FDA takes pays extra attention to the cGMP compliances on sterile injectables because any misadventure there could be lethal. So many CMOs in the past have gone through these quality issues. And hence, it becomes difficult to make such an investment over a long run and then get into quality issue and not utilize the investment. This has resulted in industry shying away from the investments, and that had led to the demand supply gap.
So over the last 4, 5 years 3, 4 years, the market had been tight, and that had been helping us to renew our each contracts at a better terms whenever that contract came for the renewal. That also made us thinking how we can spread the assets to its maximum. And hence, we debottlenecked our existing lines to about 30%, 35%, which came very handy when this additional demand of the COVID came because we were able to use our expanded capacity, debottleneck capacity for these COVID contracts at a much higher margin. So the market remains tight and the additional vaccine demand of the COVID has further added to that tightness. So industry today requires investments And we being one of the pioneer and we being one of the large player in this industry in the North America, we are also taking lead to make these investments and meet our customers' demand.
Okay. And sir, anything on profitability margin you would like to share?
So you can very well imagine yourself that if there is a market is tight, so of course, the context will be done with the good margins and the profitability. So the margins have been good in this business. And especially, the COVID deals had even higher margins.
I see. Okay. So overall, you think it is above the company average margin for pharma or the CMO business?
So the margins in our all the specialty businesses are good. In the radiopharma margins are good. In allergy margins are good. In CMO, the margins are good. And that's why over the last few years, our focus has been to move more and more towards the specialty.
And that's what I mentioned in my first slide that we are a little different Indian pharma company who has so much of focus on specialties, while we also have the APIs and the generics as our continuing cash cows, and we also continue to build those businesses.
Okay. So just elaborate, I mean, a question on specialty. See, actually, what worries us is also competition like what happened in radiopharma. We have seen competition in MAA, there were some issues with the radiopharmacy business also. Now in allergy extract, you have the venoms where there is no competition at this point.
So and it seems that this business you keep taking price increases, so that helps the profitability. So I'm just wondering about risk from competition and sudden drop in margin. Anything that you can help us understand, elaborate? How should we think about the overall profitability and margin of the specialty business, given all these risks?
Yes. So I will say that we should not be worried for the competition. We should look at the business in the long run. In the long run, all these businesses have entry to barriers. In the long run, all these businesses have sustainable margins.
In the long run, all these businesses have high growth potential. Now in individual products, time to time, there will be competition. Time to time, the competition will be going out. There could be 100% sole supply situation. So there could be little blip here and there, quarter on quarter.
We should not be worried on that as long as strategically we are committed that this is a business which is which has a huge potential at a good margins and on sustainable basis.
And sir, on M and A front, you did mention you look at M and A. What are the top 1 or 2 areas or gaps that's your priority when you're looking at M and A across all your businesses at this point in time?
Sergio, in his presentation, used the word that the radiopharma is a fascinating word. So when it's a fascinating word, we cannot have each and every competency, each and every technology, the each and every aspect of the science within the company. There are the n number of industry research institutes who are working on these innovative platforms. There's always opportunity for us to look at them and tap into those innovations when they are at the various stages of the development. So we continue to look at that.
It's based on the partnership side, not on the acquisitions.
Okay. But anyway, I mean, it looks like specialty and radiopharma seem to be a key focus area compared to, let's say, API or generics, which you can possibly achieve what you want to achieve organically? That would be a right assessment to make, right?
In the API and the generics, also there are the opportunities. We have very good quality products. And we mentioned that we are shifting our focus from the vanilla products to the complex generics in both the businesses. And they will also bring the additional revenue at higher margins. We have the capacity.
We have scope to debottleneck their capacity. And at the same time, we also continue to grow those businesses, and we will expand the capacities as per the requirement because we understand this business. And this business is both these businesses bring consistent cash flow and healthy cash flow.
And sir, in this complex generics, you are looking at other formulations like injectables, etcetera, because currently the presence is largely in oral solids?
Yes. So currently the presence is into the oral solids, but we are looking at the different forms of the deliveries. So like even we made this announcement that we have developed the sublingual remdesivir and we had said that our product is equivalent in pharmacokinetics to the injectable product. That's a different delivery system. Like this, we are also working on the other delivery system.
It will be premature for me to talk about that at this stage, but you will continue to see the activities happening on that front.
Okay. Okay, sir. And the last thing, sir, I was expecting, sir, you will give some growth guidance, if not short term, long term, 5 year growth guidance. Can you give some color, sir? Can you quantify with all the measures that are taking, what's the kind of growth expectation we should have?
Chris, would you like to take that, Chris?
Growth expectations for the pharmaceutical business will continue as we execute our strategy. And to guide you as it relates to where we see each of those businesses, we're happy to do that, but we provide guidance on a total company basis, not on an individual basis. But you can hear that our expectations as it relates to pharma, specialty business will continue to grow as Pramod cited in the first slide of our presentation. He kind of went through each of the businesses, where they're going to grow, what percentage and how they're going to grow commensurate with the overall market capture. So we're happy to go through that again.
But I would say, we've been the default to you on total company, but I think Pramud went through where we're going to sit and how we best strategic position our business in the various markets we operate in.
And overall, like FY 2021, we were impacted because of COVID. There could be a little bit impact of competition here and there. But the way we have explained you about our businesses and the way we have strategies in place, what I can definitely assure you is that our businesses will continue to deliver very healthy growth. Our businesses will continue to improve their margins. Our businesses will continue to deliver higher rate of return on capital employed.
And then just maybe complementing what Pramod said here. Certainly, as Pramod talked about our growth, we're absolutely investing in growth capital to fuel our future growth of the company. And you've heard some announcements that we've made, but we're making strategic investments in every one of our pharmaceutical businesses as it relates to fueling growth for our future
success. Great. Thanks, Greg.
Yes, of course.
Thank you. So now the last question is from Mr. Alankar.
Sir, two questions. Firstly, are you satisfied with the outcome of the new inspection which happened in March?
We are still awaiting the FDA's final outcome on that, which is expected anytime. FDA generally takes about 90 days after the inspection. So FDA had few observations and we have already given the robust kappa on that corrective and the preventive action plan on that. We expect that should be acceptable to the FDA. It will not be appropriate on my part to make the judgment what FDA will be deciding.
Sure, sir. And do we have any plans because we will complete the expansion of Salisbury soon. Do we have any plans to transfer some of these 37 filings to Salisbury?
So in Salisbury, we just expanded the capacity. Terry mentioned that it's almost coming to the fag end of its commissioning. And he also touched upon that we have many products for which we have dual site approvals in place, and we are also working for the other products where the dual site approval is needed. So that strategy will depend will be depending upon product to product. But as of now, we expect that the FDA inspection outcome should be favorable.
So we are waiting for that outcome.
Understood, sir. And my last question is on MAA. Do we expect to hold on to the current market share and expect pricing to sustain? I mean, is there a possibility of changes as and when more contracts come up for relevance?
So this business is traditionally done through long term contracts. And when the competition came in, we ended up negotiating the contracts within the purview of what the contract was allowing. And we mentioned that whenever there will be any generic player, 20%, 30% market share goes to the new player. And that's natural. And that's what has happened here also.
But with that remaining market share, we have contracts in place.
Understood, sir. So we are confident of protecting our current 70%, 80% board share. Ownership.
Absolutely.
Okay. Great, sir. Thank you and all the best.
Thank you.
Thank you. Ladies and gentlemen, on behalf of Jubilant Pharma Limited, that concludes this session. Thank you for joining us, and you may now disconnect.