Ladies and gentlemen, good day and welcome to the Jubilant Life Sciences Limited Earnings Conference Call for the quarter ended September 30, 2020. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Hemant Bakhru, Head of Investor Relations. Thank you, and over to you, Mr. Bakhru.
Thanks. Good evening, everyone. I'm Hemant Bakhru, Head Investor Relations at Jubilant Life Sciences. Thank you for being on our Q2 FY 2021 earnings conference call. I would like to remind you that some of the statements made on the call today could be forward-looking in nature, and a detailed disclaimer in this regard has been included in the press release that's also shared on our website. On the call today, we have Mr. Shyam Bhartia, Chairman, Mr. Hari Bhartia, Co-Chairman and Managing Director, Mr. Pramod Yadav, CEO of Jubilant Pharma, Mr. Rajesh Srivastava, CEO of Life Science Ingredients, Mr. Syed Kazmi, CEO of Jubilant Therapeutics, and Mr. Arun Sharma, CFO of Jubilant Life Sciences. I would like to invite Mr. Shyam Bhartia to share his comments. Over to you, sir.
Thank you, Hemant. Good evening, everyone. I'm sure you would have had a chance to go through our presentation and press release, which we have shared with you. Q2 has been a substantial improvement over Q1, despite continued adverse impact of the COVID-19 pandemic in at least first half of Q2. LSI segment's performance continued to be strong with quarter-on-quarter as well as year-on-year EBITDA growth. Our Drug Discovery and Development Solution segment witnessed strong growth led by a continued healthy demand from customers during the quarter. Pharma business performance improved substantially quarter-on-quarter, led by growth in CMO and generics. Radiopharma continued to have temporary negative impact due to COVID-19 related restrictions on hospital visitations. Demand conditions have started improving. Allergy business is already at pre-COVID level during Q2 FY 2021. We continue to see new business opportunities in CDMO, generic, and specialty pharma segments.
We have announced a strategic partnership with SOFIE Biosciences, where Jubilant will become the largest shareholder with 25% equity stake. Pramod will elaborate on this partnership. We continue to see improvement in demand in most of our business segments with strong demand recovery and expected new business sign-ups. We expect a strong performance in our Pharma, LSI, and DDDS businesses in H2 FY 2021. The company reduced its debt on constant currency basis by INR 193 crore in H1 FY 2021. This is in addition to INR 515 crore reduction in net debt during FY 2020. We remain focused on further deleveraging by generating healthy levels of cash flow. We have also have on the call Syed Kazmi, CEO of Jubilant Therapeutics, who will elaborate on our opportunity for proprietary novel drug business. With this, I will hand over to Pramod to discuss the Pharma business.
Thank you, Mr. Bhartia. A very good evening to all of you. Pharmaceutical Q2 revenue grew 4% year-on-year, led by a strong performance in CMO and the Generics. In specialty pharmaceutical segment, comprising of Radiopharma and Allergy businesses, the revenue declined by 21% year-on-year, with continued impact of the lockdown, priority given by hospital systems to treat COVID-19 cases, and also extra cautious approach for lung procedures to avoid the risk to the medical staff. Both Radiopharma and Allergy businesses have recovered in second half of Q2 with Radiopharma is at around 90% of pre-COVID levels, just barring lung procedures, and Allergy business has fully normalized to 100% of pre-COVID levels. We continue to see improvements in volumes in specialty pharma segment. In CDMO business, we continue to witness a strong growth led by higher capacity due new COVID-related deals as announced in Q1 call.
The CMO business growth led by capacity expansion via debottlenecking initiatives, including new lyo installations and 24 by 7 operations in all areas, including inspection and packaging. We signed another supply agreement in CMO business, taking total deals to five in H1 FY 2021. We believe these signed deals could contribute up to INR 500 crore in revenue in next 12-15 months, depending upon product approvals by the U.S. FDA. Like remdesivir of Gilead Sciences, approved by U.S. FDA, has contributed to CMO revenue growth already. Under our five COVID-19 related contracts, we have already produced about 1 million vials, including remdesivir for Gilead Sciences. We are excited about the new business opportunities in the CMO businesses.
We are pleased with our generic business, which experienced a 43% year-on-year increase in revenue for quarter driven by launch of remdesivir in India, and other licensed countries and limited competition in select products in the U.S. market. We remain confident of continued growth in this business. We have doubled remdesivir manufacturing capacity in India that should allow us to service more demand in India as well as expand access to more countries. As mentioned by Mr. Bhartia, the Jubilant Radiopharma will become a strategic investor in SOFIE Biosciences with 25% equity holdings and the largest shareholder. SOFIE is an innovation leader in molecular theranostics, one of the fastest-growing field in the medicines. Theranostics is the combination of diagnostic and therapy using the same target molecule. SOFIE has three lines of businesses that are highly synergistic to Jubilant Radiopharma.
The first is a network of 14 radiopharmacies dedicated to PET tracers, which is complementary to Jubilant's work. The second business line is a specialized CMO facility in New Jersey, which is dedicated to early clinical developments of theranostics agents, by which Jubilant can also partner with innovators early in the development phase. Finally, SOFIE owns 70% exclusive rights of a proprietary Fibroblast Activation Protein Inhibitor called FAPI. This is molecule developed by University of Heidelberg, the most celebrated center of excellence in theranostics. FAPI has received worldwide acclaim for its value as a key next-generation theranostics agent with the ability to greatly enhance the detection and treatment of wide variety of oncology diseases. With our deep expertise in R&D, regulatory affairs, marketing, and uncompromised quality, SOFIE and Jubilant are partnering to become a theranostics powerhouse.
The EBITDA for the quarter was at INR 343 crore as compared to INR 386 crore in Q2 FY 2020. CDMO and generics delivered strong growth through specialty pharma continued to have temporary impacts of COVID-19. We continue to execute on our strategic initiatives across the businesses and expect better performance in Q3 and Q4 over Q2 FY 2021. Coming to regulatory compliance status of our Roorkee dosage form and Nanjangud API manufacturing facilities. The two sites have already completed remediation measures with respect to warning letter and official action indicated, OAI, issued by U.S. FDA. TGA of Australia, during their inspection of both the facilities in November ninth, verified effective actions regarding the observations provided by FDA and Health Canada, and awarded with highest compliance rating, A1, which provides an assurance that our remediation efforts were effective.
As a result of this successful TGA inspection, Health Canada, which had performed a joint inspection with the U.S. FDA of the Nanjangud facility in December 2015, also converted the non-compliant NC status to compliant status in November 2019. We are confident that our remediation efforts and engagements with the U.S. FDA will soon resolve the OAI and warning letter status of our two manufacturing sites. We are pleased to report that our all manufacturing facilities in North America and India have been fully operational through Q2. With this, I hand over to Rajesh to provide insight into LSI and DDDS business.
Thank you, Pramod. Very good evening to all of you. I would like to start by highlighting that despite the challenging market scenario due to COVID-19 pandemic, Life Sciences Ingredient business segment reported EBITDA of INR 139 crore, which is higher on year-on-year as well as quarter-on-quarter basis. Our EBITDA margin is 17.7%, which is 559 basis points higher on Y-on-Y basis, and 89 basis points higher on quarter-on-quarter basis. I am pleased to inform that we continue to have normal operations at all our facilities without any disruptions. I would like to thank all our colleagues for working diligently, following strict safety measures and new practices, aiding continuity of our regular business operations while continuing to serve our global customers.
In our specialty intermediate business, pharmaceutical segment witnessed significant improvements in demand, though agrochemical segment demand was lower due to extreme weather conditions in certain geographies like cold weather in Northwest Europe and excessive rain in North America. Our nutritional product business has shown strong revenue growth of 11% year-on-year during the quarter. Business performance was supported by price recovery in vitamin B3 and other products from a low level in FY 2020. Vitamin D3 business has witnessed lower demand during end of quarter due to de-stocking by the customers, especially in Europe and USA, where lockdown started easing up. However, we expect demand to improve going forward while pricing environment continues to be strong. Our Life Science Chemical business delivered revenue growth of 6% year-on-year, led by strong demand of all the products, including acetic anhydride in domestic and export market, driven by higher demand in pharma segment.
Revenue growth of Life Science Chemical business was modest due to lower price of acetic anhydride year-on-year basis. We continue to focus on optimizing product portfolio to improve margins in Life Science Chemical business, which has led to improvement in margin both year-on-year and quarter-on-quarter. Overall, LSI segment Q2 FY 2021 revenue was at INR 784 crore as compared to INR 753 crore in Q2 FY 2020. We expect LSI business to achieve close to double-digit growth in revenue and significant growth in EBITDA with higher margins and very healthy cash generation in FY 2021. Coming to our Drug Discovery and Development Solution segments. DDDS business continued to deliver healthy performance during Q2, driven by strong demand from biotech companies from integrated services and functional chemistry. The business has a healthy pipeline of new contracts and customer acquisition.
Q2 FY 2021 revenue increased by 23% year-on-year to INR 75 crore. EBITDA stood at INR 21 crore versus INR 29 crore in Q2 FY 2020. As we informed in last quarter, the business has committed investment to double the chemistry research capacity. Project is progressing well, and we expect the facility to be up and running by Q1 FY 2022. With this, I now hand over to Syed to discuss the project proprietary novel drugs pipeline.
Thanks, Rajesh. Good evening, everyone. In our innovative therapeutics business, we are working on more than four programs to deliver precision medicines focused on both first-in-class and validated but intractable targets to address unmet medical needs in the area of oncology and autoimmune disorders, with potential to fast track promising assets from discovery to clinical stage. Our first-in-class LSD1/HDAC6 dual inhibitor and PAD4 programs, which are the most advanced in the world today in their class, address multi-billion-dollar market segments in hematological malignancies, solid tumors, and autoimmune disorders, such as rheumatoid arthritis. We plan to initiate phase I clinical trial for our lead program in second half of FY 2022.
Thank you. This is Arun Sharma. Thank you, Syed, for the brief on proprietary novel drugs pipeline. Very good evening to all of you, and thank everyone for taking out time and joining us on our quarterly earnings conference call. I would like to highlight the company's financial performance during the quarter ended September 30th, 2020. I would also like to highlight that from this quarter onwards, we are highlighting proprietary novel drugs as a separate segment. Revenue from operations during the quarter was at INR 2,375 crore as compared to INR 2,266 crore in Q2 last year. Pharma revenue was at INR 1,516 crore versus INR 1,462 crore in Q2 2020. While LSI reported revenues at INR 784 crore as compared with INR 753 crore during Q2 FY 2020. Drug discovery revenue was higher by 23% year-on-year to INR 75 crore.
Reported EBITDA during the quarter was at INR 493 crore as compared with INR 481 crore in Q2 FY 2020, with a margin at 20.8% versus 21.2% in Q2 last year. Pharma EBITDA grew 91% quarter-on-quarter, and LSI EBITDA grew 12% quarter-on-quarter. Depreciation and amortization expense during the quarter was at INR 116 crore, down 1% year-on-year. Finance cost during the quarter was at INR 64 crore, down 11% year-on-year. Average blended interest rate for Q2 FY 2021 was at 5.72%, INR loans at 7.48%, and USD loans at 5.47%. PBT grew by 7% year-on-year. Q2 FY 2020 had a lower tax incidence due to deferred tax liability reversal of INR 50 crore. Reported PAT during the quarter was at INR 224 crore as compared with INR 249 crore in Q2 FY 2020. However, adjusting for tax reversal, PAT is up 20% year-on-year.
EPS for Q2 FY 2021 is 14.1 per share versus 15.7 per share in Q2 FY 2020. The company's net debt on a constant currency basis stood at INR 3,060 crores, a reduction of INR 193 crores compared to March 31st, 2020. We continue to have a strong cash position and expect to generate healthy operating cash flows during the year to further reduce our debt level. Capital expenditure for the quarter, excluding R&D capitalization, was at INR 110 crores. For FY 2021, we plan to spend around INR 500 crores. Before I conclude, I would like to provide an update on our reorganization proposal. After filing the composite scheme of arrangement with BSE and NSE stock exchanges, we received no objection letters from both exchanges in January 2021. This company had filed application for approval of the composite scheme of arrangement with NCLT Allahabad branch.
On August 8th, 2020, the company arranged an NCLT convened meeting of shareholders, secured and unsecured creditors of the company at its Gajraula facility for voting on the composite scheme. I'm glad to mention that equity shareholders, secured creditors and unsecured creditors of the company have approved the proposed composite scheme of arrangement with the requisite majority, and the same has been mentioned in the scrutinizer report dated August 8th, 2020, which has been filed with the stock exchanges. With unlocking underway, we expect NCLT to function at normalized levels and expect reorganization to get completed by January 2021 timeframe. I would like to conclude our opening remarks. We will now be happy to address any questions that you may have. Thank you.
Thank you very much. Ladies and gentlemen, we will now begin the question answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Saion Mukherjee from Nomura. Please go ahead.
Yeah, hi, good evening. Sir, on the specialty business, where we have seen 21% decline, you talked about COVID-related disruptions. We also seen an approval for MAA by Curium. I'm just wondering, is that having an impact in terms of pricing and volume for this product? I understand this is one of your large products in the specialty space. Can you just throw some light there?
This is Pramod here. In specialty, the major impact is because of COVID. One is this hospital visitations are less. We are operating at about 90% of pre-COVID level. There's also impact I mentioned in my speech about lung procedure. We have a product called DTPA. In lung procedures, the patient has to inhale and exhale multiple times, that exposes the risk to the medical staff who is there in the room. That product currently, its use has gone down. These two are having a larger impact. There is some impact because of the competition, that was anyway planned. That's not a major impact.
Okay. Sir, do you have a visibility, like, how this would play out? Typically, what we see in generics, whenever a competition comes, we see significant erosion. What gives you confidence that it would not be very disruptive?
What you see in the generics generally doesn't happen in nuclear medicine or Radiopharma business, because here the number of players are very limited. When the generic comes, what happens is that market share to certain extent gets adjusted. That also takes little time, because when the new player comes, their capability to consistently produce the product of the right quality and maintaining the supply consistency is not known. Yes, you have to give some market share, but not much, and the price erosion generally doesn't happen the way you see it into generic industry.
Okay. Thank you. Sir, just a second question on the CMO business. I might have missed some of the numbers you said. You mentioned INR 500 crore revenue from COVID-19-related contracts that we have over the next 10-12 months. I remember last quarter you mentioned about INR 50 crore upfront, and then you also mentioned about remdesivir sale happening this quarter. This INR 500 crore includes the remdesivir sales also made, and have you already booked any of that INR 50 crore upfront or licensing amount that was expected for this fiscal year?
First let me clarify on remdesivir. We have two businesses for remdesivir. One is we are doing contract manufacturing for the remdesivir in U.S. for around 1 million. That is what I mentioned in my speech, and I mentioned that we have already about a million vials, including remdesivir, on the vaccine-related products in Spokane, Washington in U.S. Business that we have is our voluntary license for manufacturing and marketing in India and other 126 developing countries. There we are making remdesivir ourselves, and then we do fill and finish and over here. This business, what we are doing in India and other 126 countries, booked into our generic business. That's on remdesivir. Your other question was on about INR 50 one-time charge for the COVID-related products, what we had the capacity charge, et cetera. Yes. Quite a good portion of that has come into the Q2 revenue.
Okay. Thank you, sir. Like done. Thank you.
Thank you.
Thank you. The next question is from the line of Alankar Garude from Macquarie. Please go ahead.
Yeah. Hi. Good evening, everyone. Thank you for the opportunity. Sir, continuing from the previous question regarding Curium. Curium has also commented on launching a series of products over the next two years in Radiopharma in the U.S. In general, can you comment on the competitive intensity within the Radiopharma manufacturing space? Are we expecting any further competition, say, over the next couple of years for any of our products in the portfolio?
We have also announced that we have about seven to eight products pipeline, and Curium also may have announced. Overall, the Radiopharma business is now attracting quite a lot of interest from the manufacturers, from the investors, from the medical community, from everybody. A lot of interest of that is happening because there's huge opportunities of using these products, which so far traditionally have been only used for the diagnostic purpose, but also for the therapeutic purpose. There have been the molecules where the same molecule with the different tracers you can use for the diagnostic as well as the therapeutic, which is called Theranostic, which I mentioned in my speech, where we have done this partnership with SOFIE Biosciences.
You may have seen couple of deals happening in the billions of dollar where the large pharma companies have acquired those of the businesses which were getting used for the Theranostics. There's a huge opportunity, huge interest. This is the field which will continue to attract investment, which will continue to attract further interest. We are at the forefront of this.
Understood, sir. Basically, there is some likelihood that competitive intensity in this space could increase over the coming years. Is that right?
It will. This is not as easy to enter in this business as you can enter into the generic business. One is that it has its own issues of the managing entire supply chain because you are handling the radioactive material. Even into the generic, it takes a long time for the development. Third barrier of entry comes, how do you distribute the product? Like in the U.S., there are only three major players who are having this distribution network of the radiopharmacies, and we are one of them with the second largest network. There are many entry to barrier to this business. Much more than what you see into the other delivery forms or the other kind of the generic businesses.
Understood, sir. Sir, my second question is on the LSI segment. Now 17.7% margins in this quarter. You have called out good demand and improved pricing in vitamin B3 and some other products. Historically, if you look at the LSI margins, they have been fairly volatile. Would you like to call out any short-term benefit or would you say that there has been a structural improvement in LSI margins possibly because of some low-margin segments contribution coming down?
Rajesh here. As you know, LSI, the margin depends on two things. One is the product mix and secondly is the raw material prices. Now we are working continuously to improve our product mix to improve margins and that has actually shown results in last two, three quarters and we continue to make our efforts to churn out the product mix in a way so that we can keep our margins improving. We can say that going forward also we expect the margins in the same level of 15%-17%, at least for next couple of quarters.
Understood, sir. One last question if I may. Any comments on Triad? Any comments on what is the traction which you are seeing, the plans which we had and on breakeven if you could comment on that would be helpful.
Yes, as I mentioned, this business has many entry to barrier and the entire distribution network of radiopharmacy is an important factor in and that was the reason that we did that strategic acquisition. We have already integrated that business entirely with our business of radiopharmaceuticals and we have been reporting when those margins of both those businesses clubbed together. There is no more tracking that business separately.
Okay. Sir, earlier we used to comment on whether we will achieve breakeven or not. No comments on that as well?
Because we integrated the business. After that, then we made this announcement. Earlier we were operating this under the name of Triad, and the other business we were operating under the name of the DraxImage. Then we said that now our both the businesses get clubbed together and will operate under the name of Jubilant Radiopharma.
Okay. Fair enough, sir. Maybe one different way to ask this question would be, are you happy with the progress as far as the distribution side of Radiopharma is concerned? Or do you expect some material improvement there coming through on the operational side?
In terms of performance, I will say we are tracking as per our plan, as per our budget. We are quite satisfied with that. More important that we see the future of that business, the kind of strategic advantage it will bring to the portfolio of the products we are working upon.
Thank you, sir. That's helpful. That's all from my side.
Thank you.
Thank you. The next question is from the line of Sunil Singhania from Abakkus AMC. Please go ahead.
Yeah. Hi. Thanks a lot, sir. Sir, just one question. On the Radiopharma side, the de-growth has been pretty sharp, and you mentioned that you're back to 90% normalcy. Is there a significant drop in pricing because the revenue growth has been 30%? The second thing is on the Triad business. In last year, there was a loss of almost $30 million, and we acquired it, that time it was profitable. Can you shed some light there?
I'll not say there's significant erosion onto the prices. When the competition enters, you have to make minor adjustments into the prices. That happens. There's nothing close to significant level. As regards to the Triad business, I just answered to your another colleague that we have merged the businesses and clubbed the businesses both under the brand of Jubilant Radiopharma. The number what you have when we acquired it was making profit and then in year one we made the losses. The reason for that was that during the time of acquisition, we lost some of the customers because the acquisition process took quite long due to various regulatory approvals which were required there to transfer the licenses, et cetera.
We are now tracking quite well on the growth chart, and we have the plan in place by which we are expecting to continue to grow as a partnership.
Okay. Thank you.
Thank you. The next question is from the line of Aditya Khemka from InCred AMC. Please go ahead.
Hi, sir. Thanks for the opportunity. Pramod Sir, one question for you. I know you have been responding to the questions on MAA competition from Curium. When you say there has been some price erosion, can you just, for our understanding, because we don't understand the Radiopharma space as much as you guys do, can you just kindly give some flavor on what is the extent of price erosion? Is it like a single-digit price erosion? Is it a double-digit price erosion? On similar lines, can you also comment on the level of market share loss? Curium has been in the market for three to six months now. Have we lost a single-digit market share to Curium? Have we lost double-digit market share? That would be really helpful to understand how that industry works.
Sole supply position earlier. Now there's a competition. There are two players sitting in the market. Any information product specific I will share will hurt our competitive interest. To give information to you at a broad level, like in case of the normal generics, when the generic player enter, there could be price erosion or market share erosion to the extent of 30%, 40% or so. In our case, it is much, much lower than that.
Sorry, sir. The benchmark you took was when a new generic player enters, the price or market share erodes by 40%, 50%. Is that the benchmark you're taking?
Yeah, I said that somewhere around that. In this case, as I earlier mentioned that when the generic player enters, the price erosion doesn't happen to that extent. It is much, much, much lower than that.
Much lower. Okay. Got you. That is helpful, sir.
Thank you.
Secondly, on the Triad profitability. You mentioned to the previous participant that while we made $30 million loss in FY 2020, and I know you are not sort of breaking the numbers out, but from a front-end presence perspective from Triad, given that you lost a few contracts during the restructuring of the business, now are we back on our front-end sales to the original number and profitability, or are we still behind what the original numbers were before we acquired the radiopharmacy?
I can mention you about the sales. We did lose the business, but we also then gained quite a lot of business. We also mentioned that we are doing the renovations of the pharmacy network. We are also opening up new locations where we are not. With that, we have some plans in place to grow the top line quite aggressively. More important than that, as I mentioned earlier, this network gives us a assured the availability for the network to move our product, and especially the innovative products which we will be bringing out in the market. Now with the partnership with SOFIE, who have a network of 14 pharmacies on the PET side, and we have most of the SPECT. We have only three PETs which are operating.
With this partnership approach, now we will be able to leverage our strength in the distribution network even much more.
Right. Sir, could you quantify what is the market share now we will have in front-end radiopharmacy business once we combine the radiopharmacies of SOFIE and Triad?
Both the markets are slightly different. Within SPECT, we say that we are the second largest. Within the PET network, if you look at the market share for the PETs, SOFIE is close number two again.
Okay. Understood. The question to the CFO on the NCD raise. I see INR 100 crore NCD approval put up today. For the past two, three years, we have been in a phase of paying down debt. I'm just wondering why this INR 100 crore NCD raise, what is it that we'll be using the funds for?
No, this is a enabling resolution we have taken, and this will be used primarily to, in case we go ahead with this NCD, this will be primarily used to reduce the debt which is at high cost. We're not going to add any debt as such, and only this will go in reducing the interest cost for that.
Understood. Sir, while we have reduced debt by INR 200 crores in the first half of FY 2021, is there a number you would like to guide investors to as to how much we can reduce debt in the balance of the year? What is your debt repayment target for FY 2022, if you have thought about that?
It's very difficult to quantify a number, but our vigor to reduce debt continues, and we'll try to de-leverage as much as possible depending on the cash generations we do in second half.
Okay. I have just one bookkeeping question, sorry at that. Firstly, on the bookkeeping side, I sort of missed the comment on the restructuring. The management mentioned in the opening remarks that you expect the restructuring to happen by January 2021, would that mean both the different stocks be listed by January 2020? Is that how I should interpret it?
Yeah. We are looking forward to NCLT to operate in a normal manner and give us the approval maybe somewhere in Q3. What will happen, to be clear on this, once we do a demerger, then this company, Jubilant Life Sciences Limited, the Jubilant company will be listed immediately, and the Jubilant Ingrevia, which is the LSI portion that will get shifted to this new company, Jubilant Ingrevia Limited, will get listed within 30 days time.
Within 30 days?
Yeah.
Understood. Thanks and all the best, gentlemen.
Thank you so much.
Thank you. Before we take the next question, I'd like to remind participants that if you wish to ask a question, please press star then one on your touchtone telephone. The next question is from the line of Ranvir Singh from Sunidhi Securities. Please go ahead.
Yeah, thanks for taking my question. My question pertains to that R&D activity. That four programs we have currently, what R&D budget we have for FY 2021 or FY 2022 for these programs?
Syed, you there? I think we don't have Syed on the call. The CapEx program for the R&D is around $15 million what we have going forward. This all will be funded through monetization of a few of the molecules that we have going forward.
Monetization means we'll be doing out licensing type of thing?
Yeah, we are working on it quite vigorously, and we hope so that we should be able to do it something in next 12 to 18 months.
Okay. What we have invested in SOFIE for 25% equity?
In SOFIE we have invested $25 million for the 25% of the equity.
Okay. Fine. That's it from my side, sir. Thank you.
Thank you. The next question is from the line of Weiting Seah from DBS Bank. Please go ahead.
Hi, this is Weiting Seah from DBS Bank. Thank you all for taking my question. Now, we earlier had some discussion on de-leveraging. Now I'd like to move down a similar vein and understand Under the pharma business, there are currently two issues of bonds. Specifically, I'm referring to the one in 2016. I believe the 2016 issue will be coming due sometime in October 2021, just next year. I'd like to understand what are the company's plans, specifically the pharma business, on refinancing.
That's a good question. We are working on two options to see how we can partly refinance and partly use our resources to take care of these bonds, which are coming up for repayment in October 2021. What I can tell the investor is that we are working very closely with a few banks to commit the line for this. Maybe we should be able to give you some concrete answers maybe next quarter. We'll try to refinance this before the end of fiscal year 2021.
Okay. Thank you. That will be all from me.
Yeah.
Thank you. A reminder to the participants, if you wish to ask a question, please press star then one on your touch-tone telephone. The next question is from the line of Saion Mukherjee from Nomura. Please go ahead.
Yes, sir. Thanks for the follow-up. Sir, on remdesivir, you mentioned you are increasing the capacity for India, but now with cases coming down, do you see still such high demand to put up additional capacity for remdesivir?
Pramod again.
Yes.
We have already increased the capacity and increased capacity is operating. So far, we have been running the plant at the capacity, and we have that demand. Yeah, you are right that the number of cases are coming down, but we have the license for another 126 countries.
Okay.
How the COVID situation will develop, we don't know. It's good that we have capacity in place that's able to meet the requirement of the patients as per the need.
Okay. sir, on the nutritional product business, you mentioned there is demand and the pricing also has improved, but now we have some inventory issue. How do you see the second half playing out for this segment?
This inventory issue was in the beginning of the second quarter because what happened that in the first quarter when the lockdown started in India and this part, all the customers in U.S. and Europe started stocking the material. In a month or two, they realized that availability and supplies have no problem at all. After two, three months of stocking, they have started de-stocking. That de-stocking scenario is over. I think it is over by mid of last quarter. Now the situation is that people need materials. Actually the demand in vitamin business should be better in Q3 than Q2.
Okay, sir. Sir, just one question, if I can ask on proprietary programs. I see some of the trials starting. You mentioned you will monetize also. I'm just wondering, is there a risk of significant cost increase in the proprietary program which can hurt overall margins or EBITDA for the business?
If I can answer that.
This is Syed. I can answer that first.
Oh, sorry. Go ahead.
In terms of the risk of these programs, of course, in the innovative business, there is always risk. We have carefully selected these programs and have done all the necessary pre-clinical, if you will, studies in collaboration with a number of scientific advisory board members and key opinion leaders to manage that risk. Going forward, initiating the clinical programs in specific patient populations with certain gene signatures to increase the feasibility of success. We are working in a semi-virtual mode and with our scientific work going on in Bangalore and our development stage work to initiate investigational new drug filing is happening here in the U.S. We are monitoring cost and at the same time, we continue to explore partnership with pharma and biotech companies for some of our other pipeline programs.
Okay. Sir, is there a cost number that you can guide to in terms of what can be the potential increase over the next two years?
In terms of the cost number for the innovative business, at this point, I think it's very hard to tell if and when we are going to do those partnerships that we are exploring. As we generate more data, and especially because these programs are first-in-class and novel with the clinical proof of concept, the chances of having a meaningful partnership and the revenue coming in from that partnership would be higher. That depends on a number of factors, depends on the science, depends on the data that we generate.
We are being very diligent in terms of going after indications where there is a higher probability of success to generate meaningful clinical benefit data, which then can be partnered with appropriate pharma companies.
Okay, thank you. Thank you, sir.
Thank you. The next question is from the line of Rahul Veera from Abakkus AMC. Please go ahead.
Hi, sir. Just a quick question on Triad. What is the target for the break-even for Triad, sir? Like by which year we are expecting it to break even?
Pramod again. I think, it looks that you missed the earlier question answer, where I mentioned that we are no longer tracking Triad separately. This, as well as our earlier business, both are under the same name of Jubilant Radiopharma, and the businesses have been integrated.
Right. Fair point. Sir, after entering Europe, will there be any additional cost now since you are expanding on the European side now?
On the European side, what we are doing is, we are doing installations of the RUBY-FILL, which is our another star product, which is very innovative. It's state of the art. That has been developed over the many years of the research and the innovation efforts onto that. We are expecting to do our first installation of the RUBY-FILL in Europe as an approved product this year. We have planned to continue to ramp up the installation.
Okay. Sir, on the remdesivir side, I understand that we've increased the capacity and possibly the cases are going up, but even after including the 126 countries that we are planning to export, how many licenses have we got till now, and by when we can expect our plants to be fully utilized?
As of now, our plant is already fully utilized, and we have many orders in place already for the coming months for India as well as outside. We have already done the registration or have filed for the registrations in almost 70 countries. Exporting the product, I may not be able to tell you exactly how many countries, but I know it's somewhere close to 15 plus. We continue to get more and more approvals into the country, and we'll continue to export there.
Yes. Got you. Sure. Fair point, sir. Yeah. Thank you.
Thank you.
Thank you. The next question is from the line of Dixit Doshi from Whitestone Financial. Please go ahead.
Thanks, sir. Firstly, sir, can you give the sale of remdesivir for the current quarter?
We don't disclose the specific product revenue or product split down, but I mentioned this is clubbed into our generic business.
Okay. Secondly, sir, as of now, our net debt is around INR 3,063 crore. Can you just break this up in terms of demerger? How much will go to pharma business and how much for LSI?
To be precise on this, INR 2,200 crore will be at pharma level, and the balance will be at LSI level.
Okay. INR 2,200 pharma. Okay. Can you give a rough breakup of depreciation in terms of goodwill amortization ? Approx percentage?
Yeah. Total depreciation for this quarter is INR 95 crores. I'll just tell you. Major depreciation, it will be around INR 45 crores will be for LSI business, and balance will be pharma and CRDMO business.
Okay. Thank you, sir. That's it from me.
Thank you. The next question is from the line of Alankar Garude from Macquarie. Please go ahead.
Yes, thank you for the follow-up. Sir, one question on the API business. You mentioned about a strong order book. Can you just elaborate on that? Also, any thoughts on participation in the PLI scheme, especially after the recent changes?
After our plant was closed for about 2 months, we had mentioned that now for the rest of the year, we will be running the plant almost at full capacity. We continue to make the efforts to do the key debottleneckings up quickly or as less possible time as we can. Based that, the plant is running at capacity. We have the order book. That's how in Q2, you have seen that there has been a substantial improvement over the Q1. We expect that in Q3 and Q4, the performance will be even better than Q2.
Sir, on the PLI scheme, any thoughts on participation after the changes recently?
Yes. Anyway, the deadline is, I think, 30th November, which is quite close. As per the earlier scheme, we were not making any plan to participate, and we don't have complete plan as yet.
Understood, sir. Sir, my last question on RUBY-FILL. Any comments on the traction over there? In general, as far as the market is concerned, could you comment on how quickly the market is transitioning from PET to SPECT? Any thoughts would be helpful.
Market is transitioning from SPECT to PET. The PET is the segment which is growing more than the SPECT. SPECT is also growing, but PET is growing more. In terms of the RUBY-FILL, overall, I will say that this product continues to do well. Whatever we have planned for this year for number of installations, we are already having a very strong funnel for that, and we have plans to install that many sites within U.S. Also now we are expanding outside the North America, getting into Europe. We also have plans to do the installations into the other part of the world slowly. Whatever projections we had made earlier for this product, we are tracking on them quite good.
Thank you, sir. Sir, on SPECT itself, if I remember correctly, earlier, the overall share was less than 10%. Any thoughts on the market? How is it moving?
PET is growing by about 7%-9%, and that's a very healthy growth rate into the PET. That is the current rate at which it is growing. As more and more of the theranostic product comes into the market, it's likely to grow even much faster pace.
Would it be fair to say, sir, that SPECT will be growing at about three, four %?
SPECT, as of now, continues to grow with that rate. When the theranostics product comes in the market, it's not necessary that all the products will come through PET. There are also products which are through SPECT, and they will also lead to the growth of the SPECT as well, even more growth.
Understood, sir. That's all from my side. Thanks, and all the best.
Thank you.
Thank you. The next question is from the line of Pratik Kothari from Unique Asset Management. Please go ahead.
Hi. Good evening, sir. Thank you for the opportunity. Sir, couple of questions around the stake which we took in SOFIE Biosciences. One is, what kind of business, et cetera, that it generates in terms of top line, bottom line? Also second, I understand the part where you said that they are in similar business line as compared to our Radiopharma business. If you can maybe briefly talk about what do we expect to do with them, what kind of synergies do we expect? What would that business equation look like?
In terms of top line, they are about $68 million.
Okay.
In terms of businesses, I had briefly mentioned in my speech, so they have 3 business lines. One is, they have this PET network. We have the network of SPECT and PET, but majorly on SPECT. At 3 of the locations, we have PET. They have PET at close to 14 locations. There are quite a lot of synergies possible on this entire network of the distribution through the pharmacies. The second business they have is of a very state-of-the-art CMO. You may have seen there are many of the CMOs available for the traditional pharmaceutical products. For the Radiopharma, that kind of CMO facilities are not available. If you develop a product which requires it compounding with the radioactive material, and you don't have all those facilities, then you are kind of handcuffed.
Most of the innovations which will be happening will be going through such kind of the CMO facilities. They already have many good contracts for such CMOs, and that will help us to get close to those innovations at a much early stage and either acquire the innovations or in-license or do the partnership even on that front also. We will be much earlier into the game. The third piece they have is their own innovative platform of the FAPI, which is the Fibroblast Activation Inhibitor, which along with the different radioactive materials can be used for the various kind of cancers. Almost 20 different kind of the cancers it can be used for the diagnosis. It can be also used for the therapeutic use.
You imagine that if in the therapeutic use it can be used even earlier at a stage, earlier than when the cancer is developing. It will also help to overall manage the entire disease in a much more efficient way. This is expected to be another blockbuster. When the Novartis acquired the Endocyte at about $4 billion, that was being talked about, the Lutathera was talked about a blockbuster. If the way the FAPI, the development is happening, and if it happens that way, it is expected to be equivalent or even a better product.
Okay. Fair enough, sir. What margin would they be making currently?
The margins have not been disclosed so far.
Okay. Fair enough. Thank you, and all the best, sir.
Thank you. The next question is from the line of Ranvir Singh from Sunidhi Securities. Please go ahead.
Yeah. Thanks for follow-up. Sir, I understand you may not give a separate number for remdesivir, but just for understanding purpose, remdesivir, whether we have grown or our growth has been healthy even without remdesivir in generic business?
Yes. In the generic overall growth of the 43% what we have reported has been contributed by the remdesivir as well as the other products into the U.S. as well as non-U.S. markets.
Okay. Even in CDMO business also, which includes API, so have we seen remdesivir API also from going into sales of CDMO?
Yes, because the plant is already approved by the DCGI, and that API we are transferring for the formulation.
Yeah. If we exclude this remdesivir finished dosage as well as API, then what would be the growth in pharma segment?
Even if we exclude that, there would have been a growth. There would have been a good growth.
Okay. Fine. That in LSI segment.
Sorry to interrupt you. The growth is there into the where we have the plant is running at full capacity because of the COVID-related business we have. The growth is of API. Plant is also running at full capacity and into the generics we continue to play both.
In case demand goes up, then how we are going to cope with it?
In API, debottlenecking the plant, I mentioned. We are making those investments. In CMO, yes, currently our plant in Spokane is running at capacity, but in Montreal we have capacity. In Montreal we can take more of the business and we can grow. In case of generics, we have the capacity available, so we can produce more volumes. Even in case of the generics, we had expanded the Roorkee plant earlier, and now we are in the process of also doing expansion into Salisbury, where we are increasing the capacity almost by about 80%-90%.
Yes. Earlier, you used to give order book position in CMO. Is it possible to indicate something, what kind of order book currently we have for CDMO business?
If the orders are on a long-term contract and they continue to get renewed and the plant is running at 100% capacity, then order book, that number loses the relevance. We stopped reporting that.
Okay. Sir, in LSI segment, that acetic anhydride prices, what has been the trend now as on today? Price has been stable or we see volatility continues there?
In Q2, the price was increased from Q1 level. At present also the price is higher than Q2 level. The price has gone up from Q1 to Q2 and now also price has gone up little bit. Currently it is at $370 per ton, while in Q2 it was in the range of $330-$335.
Okay. Any increase in prices is translated into our improvement in margin, or how is this our margins will remain same?
Mostly the acetic anhydride price is passed on. There's a lag as we always keep saying. There is a lag of about a month, mostly it is passed on to the customer in the end product pricing.
Okay. That's it from my side, sir. Thank you.
Thank you. Well, ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for their closing comments. Over to you all.
Thank you everybody to be on the call. If you have further questions, I think Hemant will be able to answer it one to one. Thank you and wish you all a very happy Diwali.
Thank you. On behalf of Jubilant Life Sciences Limited, that concludes this conference. Thank you all for joining. You may now disconnect your line.