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 a listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Hemant Bakhru, Head, Investor Relations.
Thank you, and over to you, Mr. Bakhru.
Thanks. Good evening, everyone. I'm Iwan Bakru, Head of Investor Relations at Jubilant Life Sciences. Thank you for being on our Q2 FY 'twenty one 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 Bhatia, Chairman Mr. Hari Bhatia, Co Chairman and Managing Director Mr. Tomod Yadav, CEO, Jubilant Pharma Mr. Rajesh Srivathar, CEO, Life Science Ingredients Mr.
Syed Kadhimi, CEO of Jubilant Therapeutics and Mr. Arun Sharma, CFO, Jubilant Life Sciences. I would like to invite Mr. Shyam Bhatia to share his comments. Over to you, sir.
Thank you, Himansh. 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-nineteen 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 Solutions segment witnessed strong growth, led by continued healthy demand from customers during the quarter. Pharma business performance improved substantially quarter on quarter, led by growth in CMO and generics. Radiopharma continues to have temporary negative impact due to COVID-nineteen related restrictions on hospital visitations. Demand conditions have started improving, and LNG 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 Soffe Biosciences, where Jubilant will become the largest shareholder with 25 percent equity stake. Ramon 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 DDBS businesses in H2 FY 2021. The company reduced its debt on constant currency basis by INR 193 crores in H1 FY 2021.
This is in addition to INR515 crores 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 Ghazmi, 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. Bhartiya. A very good evening to all of you. Pharmaceutical Q2 revenue grew 4% year on year led by strong performance in CMO and the generics. In specifically Pharmaceutical segment, comprising of radiopharma and energy businesses, the revenue declined by 21% year on year with continued impact of the lockdown, priority given by hospital systems to treat COVID-nineteen cases and also extra cautious approach for lung procedures to avoid risk to the medical staff.
Both radiopharma and energy businesses have recovered in second half of Q2 with radiopharma at around 90% of pre COVID levels just barring lung procedures and Energy 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 strong growth led by higher capacity and new COVID real estate deals as announced in Q1 call. The CMO business group led by capacity expansion via debottlenecking initiatives, including new LIO installations and 20 fourseven operations in all areas, including inspection and packaging. We signed another supply agreement in CMO Business, taking total deals to 5 in H1 FY 2021.
We believe these signed deals could contribute up to INR 500 crores in revenue in next 12 to 15 months depending upon product approvals by the U. S. FDA. Like remdesivir of Gilead approved by U. S.
FDA has contributed to CMO revenue growth already. Under our 5 COVID-nineteen related contracts, we have already produced about 1,000,000 vials including remdesivir for Gilead. 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 AMDC VAR in India and other license 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. Bharatiya, the Jubilant Radiopharma will become a strategic investor in Soffe Biosciences with 25 percent equity holding and the largest shareholder.
Soffe is an innovation leader in molecular keranostics, one of the fastest growing field in the medicines. Keranostics is the combination of diagnostic and therapy using the same target molecule. Soffe has 3 lines of businesses that are highly synergistic to Jubilant Radiopharma. The first is a network of 14 radiopharmacies dedicated to fat stressors, which is complementary to Jubilant's work. And the 2nd business line is a specialized CMO facility in New Jersey, which is dedicated to early clinical developments of keratinostic agents by which Juglend can also partners with innovators early in the development phase.
And finally, Soffe owns 70% exclusive rights of a proprietary fibroblast activation protein inhibitor called FAPI. This is molecule developed by University of Edelburg, the most celebrated center of excellence in ceramostics. FAPI has received worldwide acclaim for its value as a key next generation diagnostic agent with the ability to greatly enhance the detection and treatment of wide variety of oncology diseases. With our deep expertise in R and D, regulatory affairs, marketing and uncompromised quality, Sofia and Jubilant are partnering to become a Theranostic powerhouse. The EBITDA for the quarter was at INR 343 crores as compared to INR386 crores in Q2 FY 2020.
CDMO and generics delivered strong growth through its specialty pharma continued to have temporary impacts of COVID-nineteen. 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 Nungen Good API manufacturing facilities. The two sites have already completed remediation measures with respect to bonding letter and official action indicator OAI issued by U. S.
FDA. EGA of Australia, during their inspection of both the facilities in November 2019, we 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 the successful TGA inspection, Health Canada, which had performed a joint inspection with the U. S. FDA of the Namgyanguru facility in December 2015, also converted the non compliant NC status to compliance status in November 2019.
We are confident that our remediation efforts and engagements with the U. S. FDA will soon resolve the OI and warning of our 2 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-nineteen pandemic, Life Science Ingredient Business segment reported EBITDA of INR 139 crores, which is higher on year on year as well as quarter on quarter basis. Our EBITDA margin is 17.7 percent, 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'd 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 Products 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 B3 business has witnessed lower demand during end of quarter due to destocking 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 markets, driven by higher demand in pharma segment. Revenue growth of Life Science Chemical business was modest due to lower price of STKs 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 crores as compared to INR 753 crores 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. Now coming to our Drug Discovery and Development Solutions segments, BTDS 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 acquisitions. Q2 FY 2021 revenue increased by 23% year on year to INR 75 crores. EBITDA stood at INR 21 crores versus INR 29 crores 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's proprietary novel drugs pipeline.
Thanks, Rajesh. Good evening, everyone. In our innovative therapeutics business, we are working on more than 4 programs to deliver precision medicines focused on both 1st 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 1st in class LST1, XRAC6 dual inhibitor and PADD IV programs, which have the most advanced in the world today in their class, address multi $1,000,000,000 margin segments in hematological malignancies, solid tumors and autoimmune disorders such as rheumatoid arthritis. We plan to initiate Phase 1 clinical trial for our new program in second half of FY 'twenty two.
Shyam?
Thank you. This is Arun Sharma. Thank you, Syed, for the brief on Rock IC NovoTouch pipeline. Good evening, very good evening to all of you and thank everyone for taking our time and joining us on our quarterly earnings conference call. I would like to highlight the company's financial performance during the quarter ended September 30, 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 2375 crores as compared to INR 2,266 crores in Q2 last year. Pharma revenue was at INR 1516 crores versus INR 1462 crores in Q2 2020. While NSE reported revenues at INR 7.84 crores as compared with INR 7.53 crores during Q2 FY 2020. Drug Discovery revenue was higher by 23% year on year INR 2.75 crores.
Reported EBITDA during the quarter was at INR.493 crores as compared with INR.481 crores in Q2 FY 2020 with a margin at INR 20.8 percent versus INQ2 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 crores, down 1% year on year. Finance cost during the quarter was at INR 64 crores, down 11% year on year. Average blended interest rate for Q2 FY 2021 was at 5.72 percent, R and R loans at 7.48 percent and U.
S. Loans at 5.47%. PBT grew by 7% year on year. Q2 FY 2020 had a lower tax increase due to deferred tax liability reversal of INR 50 crores. Reported PAT during the quarter was at INR 2.24 crores as compared with INR 2.49 crores in Q2 FY 2020.
However, adjusting for tax reversal, PAT is up 12% 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 31, 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 levels. Capital expenditure for the quarter, excluding R and 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 2020. Post its company had filed application for approval of the composite scheme of arrangement with NCLT and our branch. On August 8, 2020, the company arranged an NCLT convened meeting of shareholders, secured and unsecured creditors of the company at its Gedrona facility for voting on the composite scheme.
I'm glad to mention that It would be shareholders, secured creditors and unsecured creditors of the company have approved the proposed composite scheme of arrangement with our requisite majority and the same has been mentioned in the scrutinizer report dated August 8, 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. With this, I would like to conclude our opening remarks. We will now be happy to address any questions that you may have.
Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. The first question is from the line of Simon Mukherjee from Nomura. Please go ahead.
Yes, hi, good evening. Sir, on the Specialty business, where we have seen 21% decline, you talked about COVID related disruptions. Now 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? Because I understand this is one of your large products in the specialty space.
Can you just throw some light there?
This is Pramod here. So in specialty, the major impact is because of COVID. One is this hospital visitations are less. So we are operating at about 90% of pre COVID level. And there's also impact I mentioned in my speech about lung procedures.
So we have a product called DTPA. And in lung procedures, the patient has to inhale and exhale multiple times. So that exposes the risk to the medical staff who is there in the room. And that product currently, its consumption has its use has gone down. So these 2 are having a larger impact.
There is some impact because of the completion, but that was anyway planned. So that's not a major impact.
And so do you okay, sir. And do you have a visibility like how this would play out? Because typically, see what we see in generics, right, whenever a competition comes, we see significant erosion. I mean, what gives you confidence that it would not be very disruptive?
So 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. So when the generic comes, what happens is that market share to certain extent gets adjusted. But 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. So 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. And so just second question on the CMO business. I might have missed some of the numbers you said. So you mentioned INR 500 crores revenue from COVID related contracts
that
we have over the next 10 to 12 months. I remember last quarter you mentioned about INR 50 crores upfront. And then you also mentioned about remdesivir sale happening this quarter. So this INR 500 crores includes the remdesivir sales also made? And have you already booked any of that INR 50 crores upfront or licensing amount that was expected for this fiscal year?
So first, let me clarify on ramped SCVs. We have 2 businesses around SCVs. One is we are doing contract manufacturing for the Remdesivir in U. S. For U.
S. So that is what I mentioned in my speech and I mentioned that we have already talked about 1,000,000 vials including Temdecib on the vaccine related products in what is booked facility in U. S. The 2nd business we have is our voluntary license for manufacturing and marketing RANDA in India and other 126 developing countries. There we are making RANDA ourselves and then we do fill and finish and over here.
This business, what we're doing in India and other 126 customers are booked into our generic business. So that's on RMB778. And your other question was on about 50 onetime charge for the COVID related products, what we had the capacity charge, etcetera. Yes, quite a good portion of that has come into the Q2 revenue.
Okay. Thank you, sir. And I'll join that in the case. Thank you.
Thank you.
Thank you. The next question is from the line of Alankal Garude from Macquarie. Please go ahead.
Yes. Hi. Good evening, everyone. Thank you for the opportunity. Sir, continuing from the previous question regarding Curium.
So Curium has also commented on launching a series of products over the next 2 years in radiopharma in U. S. So in general, can you comment on the competitive intensity within the radiopharma manufacturing space? And are we expecting any further competition, say, over the next couple of years for any of our products in the portfolio?
So we have also announced that we have about 7 to 8 products pipeline and the Korea also have 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. And a lot of interest of that is happening because there is huge opportunities of using these products, which so far traditionally have been only used for the diagnostic purpose, but also for the therapeutic purpose. And there have been the molecules where the same molecule with the different cases you can use for the diagnostic as well as the therapeutic, which is called keranostics, which I mentioned in the space where we have done this partnership with the Sophie Biosciences. You may have seen couple of deals happening in the 1,000,000,000 of dollars where the large pharma companies have acquired those of the businesses which were getting used for the Theranostics.
So there is a huge opportunity, huge interest. This is our field which will continue to attract investment, which will continue to attract the interest. And we are in the forefront of this.
Understood, sir. So basically, there is some likelihood that competitive intensity in this space could increase over the coming years. Is that right?
It will, but this is not as easy to enter in this business as you can enter into the generic business. The thing is that it has its own issues of the managing entire supply chain because you are handling the radioactive material. Then even into the generic, it takes a long time for the development. 3rd barrier of entry comes, how do you distribute the product? So like in the U.
S, there are only 3 major players who are having this distribution network of the radio pharmacies, and we are one of them with the 2nd largest network. So there are many entry to barrier to this business, much, much more than what you see into the other delivery forms or the other kind of the general businesses.
Understood, sir. So 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. But historically, if
we look at the LSI margins, they have been fairly volatile. So 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? Yes. So Rajesh here. So as you know, LSI, the margin depends on 2 things. 1 is the product mix and secondly is the raw material prices.
Now we are working continuously to improve our product mix to improve margin and that has actually shown results in last 2, 3 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. And therefore, we can say that going forward also, we expect the margins in the same level of 15% to 17%, at least for next couple of quarters.
Understood, sir. And one last question, if I may. Any comments on Thiad? Any comments on what is the traction which you are seeing with the plans which we had? And on breakeven, if you could comment on that, that would be helpful.
So it's Pramod again. So yes, as I mentioned, this business has many entry barriers 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 of both those businesses club together. So we are there is no more tracking that business separately.
Okay. Sir, earlier we used to comment on whether we will achieve breakeven or not. So no comments on that as well?
Yes, because we integrated the business. After that, then we made this announcement there. Earlier, we were the Dex Image. And then we said that now our both the businesses get clubbed together and will operate under the name of Jubilant Radiopharma.
Okay. Fair enough. So 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 we expect a material improvement there coming through on the operational side?
So in terms of performance, I will say we are tracking as per our plan, as per our budget. So we are quite satisfied with that. And more important that we see the future of that business, the kind of the strategic advantage it will bring to the portfolio of the products we are working
about.
The next question is from the line of Sunil Singhania from Abaqis EMC. Please go ahead.
Yes. Hi. Thanks a lot, sir. Sir, just one question. On the radiopharm side, the de growth has been pretty sharp.
And you mentioned that you are back to 90% normalcy. Is there a significant drop in pricing because the revenue growth has been 30%? And the second thing is on the triage business. In last year, there was a loss of almost $30,000,000 and we acquired it. That time, it was profitable.
Can you shed some light there?
So I'll not say there's significant erosion on to the prices. There when the competition enters, you have to make minor adjustments into the prices. So that happens. But it's there's nothing close to significant level. And as regards to the track business, I just answered to your another colleague that we have merged the businesses and to the club the businesses both under the brand of Cleveland Radiopharma.
But the number what you have when we acquired it was making profit and then in year 1 we made the losses. For that the reason 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 charge for the licenses, etcetera. We are now settled quite well on the growth chart. And we have the plan in place by which we are expecting to continue to grow. 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. So one question for you. So I know you have been responding to the questions on MA competition from Korean. When you say there has been some price reduction, can you just for our understanding, because you don't understand that radiopharma is good as much as you guys do, can you just kindly give us 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? And on similar lines, can you also comment on the level of market share loss? So Korean has been in the market for 3 to 6 months now. So have we lost like a single digit market share to Korean?
Have we doubled digit market share? That would be really helpful to understand how that industry works.
So supply position earlier and now there is a competition. So there are 2 players working in the market. Any information product specific I will share will hurt our competitive interest. But 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.
So sorry, sir, the benchmark you took out, when the new generic player enters, the price on Akash share it goes by 40%, 50%. Is that the benchmark you're taking?
Yes. I said that somewhere around that. But in this case, as I earlier mentioned that when the generic player enters the price erosion, doesn't happen to that extent. So it is much, much, much lower than that.
Much lower than that. Okay. Got you. That is helpful, sir. And secondly, on the payout profitability, so you mentioned to the previous participant that while we made $30,000,000 locked in FY 2020, and I know you are not sort of breaking the numbers out, but from a front end presence perspective on 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?
So I can mention you about the sales. So we did lose the business, but we also then gained quite a lot of business. And we also mentioned that we are doing the renovations of the pharmacy network. We are also opening up new locations where we are not. And with that, we have some plans in place to grow the top line quite aggressively.
And more important than that, as I mentioned earlier, this network gives us an assured the availability or the network to move our product, especially the innovative products, which we will be bringing out in the market. And now with our the partnership with Soffe, who have a network of 14 pharmacies on the pet side. And we have most of the pet. We have only 3 pet which are operating. With this partnership approach now, we will be able to leverage our strength in the distribution network even much more.
Right. So 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?
So both the markets are slightly different. We are into its pet and within its pet we said that we are the 2nd largest. And within the pet network, if you look at the market share for the pet, SoFi is close number 2 again.
Okay, understood. And the question to the CFO on this CDW, so I think INR 100 crores NCDW disapproval for that today. So we are for the past 2, 3 years, we have been in a phase of paying down debt. I'm just wondering why this INR 100 crores NCD rate, what is it that we'll be using the funds for?
No, this is enabling resolution we have taken and this will be used primarily to in case we go ahead with the density, this will be primarily used to reduce the debt, which is at high cost. So we're not going to add any debt as such and only this will go in reducing the interest cost further.
Understood. So while we have reduced debt by INR 200 crores in the first half of FY twenty twenty one, 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? And then what is your debt repayment target for FY twenty twenty two, if you have thought about that?
It's very difficult to quantify a number, but our reserve to reduce debt continues and we'll try to deleverage as much as possible depending on the cash generation we do in second half.
Okay. And I have just one bookkeeping question, sorry. Firstly, so on the bookkeeping side, I sort of missed the comment on the restructuring. So did the management mentioned in the opening remarks that you expect the restructuring to happen by Jan 2021? And would that mean both the different stocks be listed by Jan 2020?
Is that how I should interpret it?
Yes. So we are looking forward to NCLP to operate in a normal manner and give us the approval maybe somewhere in Q3. And what will happen to be clear on this, once we do a demerger then this company, Digit Life Science Limited Resilient Company will be listed immediately. And the Digitment Engrevia, which is the LSI portion that will get shifted to this new company Digitment Engrevia Limited will get listed within 30 days' time.
Within 30 days? Yes. Thanks
and all the best gentlemen.
Thank you so much.
Thank you. Before we take the next question, I'd like to remind participants if you wish to ask a question. The next question is from the line of Ranbir Singh from Suniti Securities. Please go ahead.
Yes. Thanks for taking my question. So my question partners to that R and D activity. So that 4 programs we have currently, what R and D budget we have for FY 2021 or FY 2022 for these programs?
Sohyad, you're there? So I think we don't have Syed on the call. So the CapEx program for the R and D is around $15,000,000 what we have going forward. And this all will be funded through monetization of few of the molecules what we have going forward.
So monetization means we'll be doing out licensing type of thing?
Yes. 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. And what we have invested in SoFi
for 25% testing? So in SoFi, we have invested $25,000,000 for the 25% of the equity.
Okay, okay. Fine. That's it from my side, sir. Thank you.
Thank you. The next question is from the line of Yaweisai from TBS Bank. Please go ahead.
Hi. This is Wei Ping from TBS Bank. Thank you for taking my questions. Now we earlier had some discussion on deleveraging. Now I'd like to move down a similar vein and understand that under the pharma business, there are currently 2 issues of bonds.
Specifically, I'm referring to the one in 2016. And 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?
Yes. So that's a good question. We are working on few options to see how we can partly refinance and partly use our repurchase to take care of these bonds, which are coming up for repayment
in October
2021. And what I can tell you is that we are working very closely with few banks to commit the line for this. And maybe we should be able to give you some policy transfers for maybe next quarter. And we'll try to refinance this before the end of fiscal year 2019.
Okay. Thank you. That will be all from me.
Thank you. The next question is from the line of Sion Mukherjee from Nomura. Please go ahead.
Thanks for the follow-up.
Sir, on remdesivir, you mentioned you are increasing
the capacity for India.
But now with
we have already increased the capacity. We have already increased the capacity. We have
So we have already increased the capacity and increased capacities operating. So far we have been running the plants at the capacity and we have that demand. But yes, you are right that the number of cases are coming down, but we have the license for another 126 countries. And how the COVID situation will develop, we don't know. So it's good that we have capacity in place as well to meet the requirements of the patients as per the need.
Okay, okay. And sir, on
the Nutritional Product business, you mentioned there is demand and the pricing also has improved, but now we had some inventory issue. So how do you see the second half playing out for this segment?
So this inventory issue worked in the beginning of the second quarter because what happened that in the Q1 when the lockdown started in India and this part, all the customers in U. S. And Europe started stocking the materials. And then in a month or 2, they realized that availability and supplies have no problem at all. So after 2, 3 months of stocking, they have started destocking.
So that destocking scenario is over. I think it is over by mid of last quarter. So now the situation is that people need material. So actually the demand in vitamin business should be better in Q3 than Q2.
Okay, sir. So just one question, if I can ask on property programs. I see some other trials starting. You mentioned you will monetize also. So I'm just wondering, is there a risk of significant cost increase in the property program, which can hurt overall margins or EBITDA for the business?
So
This is Syed.
I can go ahead.
Syed, go ahead. Syed, go ahead. Syed, go ahead. Syed, go ahead. Syed, go ahead.
In terms of the risk of these programs, of course, in the innovative business, there is always risk. But we have carefully selected these programs and have done all the necessary preclinical, if you will, studies in collaboration with a number of scientific advisory board members and key opinion leaders to manage that risk and going forward initiating the clinical programs in specific patient populations with certain gene signatures to increase the feasibility of success. And 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. So 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. So is there a cost number that you can guide to in terms of what can be the potential increase over the next 2 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 1st 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. But that depends on a number of factors, depends on the science, depends on the data that we generate. But 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. The next question is from the line of Rahul Vida from Abaxis AMC. Please go ahead.
Hi, sir. So just a quick question on trials. What is the target for the breakeven for trials, sir? Like by which year we are expecting it to break
Pramod again. So I think it looks that you missed the earlier question answer where I mentioned that we are no longer tracking the trials separately. This as well as our earlier business, both are under the same name of Jugilant Radiopharma and the businesses have been integrated.
Right. Fair point. But sir, after entering Europe, will there be any additional cost now since you are expanding on the European side now?
So on the European side, what we are doing is we are doing installations of the Ruby Trail, which is our another star product, which is very innovative, it's state of the art. And that has been developed over the many years of the research and the innovation efforts on to that. We are expecting to do our first installation of the Rubikil in the Europe as approved product this year. And then we have planned to continue to ramp up the installation.
Okay. Okay. So on the revenue side, I understand that we've increased our capacity and possibly the Kissei going down. But even after including the 126 countries that we are planning to export, how many license have we got till now? And by when we can expect it to our plants to be fully utilized?
So 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 also. 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 are already we continue to get more and more approvals into the country and we'll continue to export there.
Sure, sure. Fair point, sir. Yes, thank you.
Thank you. The next question is from the line of Dikshit Doshi from Whitestone Financial. Please go ahead.
Thanks. Firstly, sir, can you give the sale of rental period for current quarter?
So we don't disclose the specific product revenue or product EBITDA, but I mentioned this is club into our generic business.
Okay. And secondly, so as of now, our net debt is around INR 3,063 crores. So can you just break this up in terms of pre merger? How much will go to Pharma business and how much for LSI?
So to be precise on this, INR 2,200 crores will be at Pharma level and the balance will be at LSI level.
Okay, RUB 2,200 pharma. Okay. And can you give a rough breakup of depreciation in terms of load base revenue approach percentage?
Yes. Total depreciation for this quarter is INR 95 crores. So I'll just tell you. So major depreciation, it will be around INR 45 crores will be LSI business and balance will be pharma and GBDS business.
Okay. Thank you. So that's it from me.
Thank you. The next question is from the line of Alankar Garode 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. So can you just elaborate on that?
Also, any thoughts on participation in the P and I scheme, especially after the recent changes?
So after our plant was closed for about 2 months, we had mentioned that now for the rest of the year, we will be cleaning the plant almost at full capacity. And we continue to make the efforts to do the debottleneckings with the end up quickly or as best possible time as we can. And this is at the plant is lower capacity. We have the order book. And that's how in Q2, you have seen that there has been a substantial improvement over the Q1.
And we expect that in Q3 and Q4, the performance will be even better than Q2.
And 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 closed. As far as the earlier scheme, we were not making any plans to participate, and we don't have concrete plan
anymore. Understood, sir. And my last question on the Ruby Trail, any comments on the traction over there? And in general, as far as the market is concerned, could you comment on how quickly the market is transitioning from pet to spec? Any thoughts would be helpful.
So market is transitioning from spec to pet. Fat. The fat is the segment which is growing more than the spec. The spec is also growing, but fat is growing more. And in terms of the rubicle overall, I will say that this product continues to do well.
We 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. And 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, slowly. So whatever projections we had made earlier for this product, we are tracking on that quite good.
Thank you, sir. Sir, on pet itself, so if I remember correctly earlier, the overall share was less than 10%. So any thoughts on the market? How is it moving?
So PET is growing by about 7% to 9%. And that's a very healthy growth rate into the PET. And that is the current rate at which it is growing. As more and more of the ferroenoscopy product comes into the market, it's likely to grow even much faster pace.
And would it be fair to say, sir, that PEGS will be growing at about 3%, 4%?
Yes. So Ezepec, Ezepec continues to grow with that rate. But when the TheranOptics product comes in the market, it's not necessary that all the products will come through PEGS. There are also products which are through Ezepec. And they will also lead to the growth of the Ipcept 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 Uttari from Unique Asset Management. Please go ahead.
Hi, good evening sir and thank you
for the opportunity. A couple of questions around the stake which we took in Sophie Bioscience. One is what kind of business, etcetera, that it generates in terms of top line, bottom line?
And also second, I understand the part where you said
that they are in similar business line as compared to our radiopharma business. But 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? [SPEAKER
UNIDENTIFIED COMPANY REPRESENTATIVE:]
So in terms of top line, they are about 68,000,000. And in terms of businesses, I have briefly mentioned in my speech. So they have 3 business lines. The one is they have this patch network and we have the network of its patch and patch, but the majorly on its patch and we have at 3 of the locations we have pet, they have pet at close to 14 locations. So there are quite a lot of synergies possible on this entire the network of the distribution through the pharmacies.
Then the second business they have is of a very state of the art CMO. So you may have seen there are many of the CMOs available for the traditional pharmaceutical products. But for the radiopharma, that kind of CMO facilities are not available. So if you develop a product which requires its compounding with the radiative material and you don't want those facilities, then you are kind of handcuffed. So 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. So we will be much earlier into the game. And the 3rd piece they have is their own innovative platform of the PAPI, which is the fibroblast activation inhibitor, which along with the different radioactive materials can be used for the various kind of the cancers. Almost 20 different kind of the cancers, it can be used for the diagnosis and it can be also used for the therapeutic use. And you imagine that it's in the therapeutic use, it can be used even earlier at this stage, earlier than when the cancer is developing.
It will also help to overall manage the anti disease in a much more efficient way. This is expected to be another blockbuster. So when the Novartis acquired the AAA at about RMB 4,000,000,000 that was being talked about, the Lutathera was talked about a blockbuster. If the way the PAPI, the development is happening and if it happens that way, it is expected to be equivalent or even a better product.
Okay. Fair enough. What margins would be we making currently?
So the margins have not been disclosed so far.
Okay. Fair enough. Thank you and all the best.
Thank you. The next question is from the line of Ramveer Singh from Suniti Securities. Please go ahead.
Yes. Thanks for follow-up. Sir, I understand you may not give separate number for remedies there, but just for understanding purposes, ex remedies there, what whether we have grown or growth has been healthy even without remedies there in generic business?
Yes. So in the generic overall growth of the 43% what we have reported has been contributed by Rambda Seaweed as well as the other products into the U. S. As well as non U. S.
Markets.
Okay. And even in CDMO business also, which includes API, So have you seen revenue growth API also from going into sales of CDMO?
Yes. The plant is already approved by the DGCI and that API we are transferring for the formulation. So that's it.
Yes. So if we exclude this remediation, finished doses as well as API, then what would be the growth in pharma sector pharma segment?
So even if we exclude that, there would have been a growth. There would have been a good growth.
Okay. Okay, fine. And that is, unless I study
Sorry to interrupt you. The growth is there in the plant is running at full capacity because of COVID related business we have. And the growth is also running at full capacity. Plant is also running at full capacity. And into the generics we continue to play the boards.
So in case demand goes up, then what how we are going to cope with this?
So in API debottlenecking plant I mentioned, so we are making those investments. In CMO, yes, currently our plant in Spokane is running at capacity, but in Montreal, we have capacity. So 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. And even in
case of
the generics, we had expanded the Ruki plant earlier and now we are in the process of also expansion into Salisbury where we are increasing the capacity almost by about 80%, 90%.
Yes. And Avir, you used to give order book position in CMO. So is it possible to indicate something what kind of order book currently we have for the city owned business?
So 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 itself that number loses the relevance. So we stopped reporting that.
Okay. And so in LSI segment, that acetic acid prices, what had been the trend now as on today? Price has been stable or we see volatility continues there?
So in Q2, the price was increased from Q1 level. And 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 a little bit.
So currently, it is at $3.70
per tonne, while in Q2, it was in the range of $3.30, 3.35
Okay. Okay. So any increase in prices is translated into our improvement in margin? Or how is this, our margins will remain same?
Mostly the SDKs price is passed on, but there is a lag as we always keep saying, there is a lag of about a month. But mostly it is passed on to the customer index and the product pricing.
Okay. Okay. That's it from my side. 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 Jovland Life Sciences Limited, that concludes this conference. Thank you all for joining. You may now disconnect your lines.