Q1 21/22

Aug 16, 2021

Quarterly report

Ladies and gentlemen, good day, and welcome to Glenmark Life Science Limited Q1 FY 'twenty two Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions as the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Ms. Shwami Rao, General Manager Corporate Communications with Renmark Life Sciences Limited. Thank you, and over to you, Ms. Thank you for joining us early this morning. We welcome you all to the Q1 F 'twenty two earnings call of Glenmark Life Sciences Limited. This is our first earnings call post listing. Today, we have with us Doctor. Yashi Raoji, MD and CEO, Glenmark Life Sciences Limited and Mr. Bhavesh Putara, CFO, Glenmark Life Sciences Limited. Let me begin the earnings call. Here is a review of the operations of the company. For the first quarter ended thirtieth June twenty twenty one, Glenmark Life Sciences registered revenue from operations of INR 5,249 million, recording a Y o Y growth of 32.2%. EBITDA stood at INR 1,006 and 42,400,000.0 for the '2. EBITDA margin for the quarter was at 31.3%, similar to the margin profile for the whole of FY 'twenty one. Profit after tax was at least $1,009,100,000 registering a growth of 34.5% against the first quarter of the previous financial year. The company's gross debt comprising of outstanding purchase consideration payable to the parent company was at INR800.8.3 million as on ninth July twenty twenty one, and it has reached the full of its outstanding amount pursuant to the funds raised to the IPO. Working capital as on thirtieth June twenty twenty one is at $9,089,400,000 at one hundred fifty eight days on sales, improving from one hundred twenty six days at the end of the financial year at the end of the last financial year. Now coming to the company's business performance. Revenues from the generic API segment increased 38.3% Y o Y to rupees $4,803,400,000 during the quarter, which is driven by growth across all geographies. Key markets contributing to the growth are Latin America at 94.4%, North America at 45.4% and rest of the world at 52.6%. The company's CDMO revenues registered a Y o Y Z growth of 7% at Rs. 388,900,000.0. This is mainly due to phasing of orders for customers, which is in line with our expectations. We expect a stronger sales trajectory from the next quarter. The company's regulated markets account for 67 of net sales in Q1 F 'twenty two, growing at 30.6% Y o Y, where emerging markets account for 33% of net sales in '2, growing at 37.6% Y o Y. Products from key chronic therapeutic areas such as CVS, CNS, Diabetes and Skin Management accounts for 56.1% of net sales in Q1 F 'twenty two, growing at 24.3% Y o Y. Amongst other operational highlights, the company filed nine GMF CEPs across major markets, such as United States, Europe, Japan, Russia, Brazil, North Korea, Taiwan, Canada, China and Australia during the quarter, and the cumulative filing stands at INR $4.00 7 as on thirtieth June twenty twenty one. During the quarter, the company spent INR185.4 million towards capital expenditure. In the generic API segment, during the quarter, the company continued development of its complex portfolio with strong progression of four iron complex molecules and four oncology molecules. The overall end market opportunity for these eight molecules is more than USD 15,000,000,000. With that, I would now like to invite Doctor. Yasir Raoji, MD and CEO, Glenmark Life Sciences Limited, to say a few words before we open the floor for the Q and A session. So before I do that, I'd like to read out the disclaimer. Some of the information in the documents, especially, you know, information with respect to our plans and strategies, may contain certain forward looking statements that involve risks and uncertainties. These statements are based on current expectations, forecasts and assumptions that are subject to risks and uncertainties, which could cause actual outcomes and results to differ materially from the statements herein depending upon the economic conditions, government policies and other important factors. Such statements should not be regarded by Refinitiv as a substitute for the exercise of their own judgment. The company undertakes no obligation to update or revise any forward looking statement, whether as a result of new information, future events or otherwise. Our actual results may differ materially from those expressed in or implied by these forward looking statements. Thank you. Shomi, thanks for the introduction. Good morning to everybody, and thank you for getting on to the call. It's first it's our very first call after the listing, so it's going to be interesting, I'm sure. But welcome to all of you, and I hope, you know, everyone is staying safe, your families are safe, and we are going through this pandemic in a in a safer manner as we are as we can. Now coming to Genmab's life sciences, we have had our challenges with respect to dealing with the pandemic. So, you know, if I dial back a year ago, we we were hit with the first wave, and that was the time when we had to deal with a lot of uncertainty, you know, across whether it's related to people, their safety, what kind of protocols we need to put in place, how we need to operate the factories efficiently, and how the material movement is also to work out. So I would say that that was a big learning, and we spent some time, you know, fine tuning things. And, fortunately, for us, when the second wave hit us earlier this year, we were much better positioned to take care of of the challenges that fit and there were bigger challenges this time. You know? But the the fact is that we were, you know, we were positioned well because of the learnings of last year. And as a result of this, we've kept we've kept the operations pretty much under control with respect to people, how, you know, we keep our people safe, both at home as well as work, and how that all translates to a smooth operation. And with respect to materials as well, there have been challenges both with respect to exports imports rather. In both exports as well as internal material movement. And that, again, has been dealt in a very smooth fashion. So overall, I would say that, you know, things have worked well for us in the second wave, and we've been able to to ride through this difficult period fairly well. So coming to the IPO, I mean, you all know the numbers. Right? The IPO was oversubscribed many times. And we'd like to thank the entire investment community, all the investors, the retail investors, the QIDs, and everybody for participating because it gave us a huge vote of confidence on the business on on our ability to get the company forward. So thank you once again for for being there for us, and we'll make sure that we deliver to you as promised and hopefully even better. So let's turn now to the business real quick. Okay. So this is the '22, and it's our first earnings call with analysts, right, and whoever gets on to the call. So basically, the quarter has been a very solid quarter. We had 30% growth like Swami said. We had this on the back of a very strong generic demand that came from across geographies. Our CDMO business was a little bit lower than what we saw last year. And then that's something that is expected. It's not something that we don't expect that will happen. Okay? Because we don't see in any of our businesses a sort of very steady quarter on quarter demand. So it's a function, I would say, of the business and the way the customers face in their demand. So, you know, overall, the business has been very strong. And we believe that given the kind of demand that we're seeing across geographies, this business will continue to remain strong. Now coming to execution, let's talk I would like to split this into three parts. So we'll talk about short term, long term, and midterm. So on the short term, I think our priority for execution is to stay focused on customer service and being able to deliver for the customer. Because at in times like this, that's what the customer expects from us. It's to to continue to service their demand consistently with good quality and not sell them in any way. So that's something that we have, like I said, done, control on the way we handle all the issues related to the pandemic. And that is completely different for you. When it comes to midterms, there are there are a couple of priorities. One is related to r and d. And that is that we continue we continue to make sure that our filings happen on time. And these are not only the new filings, but even the cost improvement projects that we have taken up. And continue to we continue to deliver on the on the on the r and d filings. Apart from apart from that, we need to stay focused on the long term as well. Now you would know that we have embarked on two projects for capacity expansion. One is a brownfield expansion, and the other is a greenfield expansion. Now the brownfield expansion is well underway. We have got four modules that are being built up in one plant, one independent plant in the hedge, another hedge facility. And this will this module will become operational in quarter four of this year. And all four modules are expected to become operational by quarter two of next year. The greenfield expansion is something that is going to start in you know, after we get clearances October or November of this year. And this will this will definitely start getting operational in four of this. So these are the these are the two long term priorities that we should focus on. And the last one is to ensure that our supply chains remain robust and continue to operate in a way that we continue to service our business. So I think I will stop there and open it up for for questions at this point. So thank you very much again for joining the call, and we look forward to taking your questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question to assemble. Participants, you may press star and one to ask a question. The first question is from the line of Sarvesh Gupta from Maximal Capital. Please go ahead. Good morning, sir, and thank you for taking the question. Sir, just because this is the first call and since you talked about near term, medium term and the long term, if you can help us with some of those key business matrices because, for example, ROIC, I find it to be higher, 3533%, which looks to be on the higher side compared to other players. Similarly, the asset turnover. So if you can give us some expectation of what the sustainable business progress as we are building on in terms of the return on capital employed margins, working capital days and asset turnover. Okay. Let me hand that over to Bhavesh, right? He'll give you the numbers and also basically explain what is it that we are going to be doing so that we try to keep these numbers as consistent as possible going forward because there will be fresh investments. And, obviously, that is likely to move things out. So, Harish, will you please give a sense in terms of how we are going about? Sure. So, Sarvesh, to your first part to your question, so I think our nature of business is quite differentiated, particularly kind of the API product portfolio space that we operate in. So we predominantly deal with high value API. So our revenue to tonnage ratio is relatively higher when you look at some of the other players in the industry group. And that means our let's say, on an average, we have our APIs in the range of $200 a kg to almost $800 $900 a kg. And what it does is that it gives us more turnover or unit of investment as well. That is the aspect around the high FATR that you asked about. The second aspect is the combination of high FATR and high EBITDA margins, which leads to over 32 kind of ROCE for us. So that's the mix here. Our focus is going to be continuing in this space. As we branch out our product portfolio into the complex platform, this will further strengthen this profile. On the middle line front, we continue to focus on working on cost improvement projects. So any pricing pressure that we might encounter is sufficiently offset that has been our track record so far. And that's how the entire retail and profitability and the rates are stacked out. The working capital cycle, there has been continuous improvement that you could see from the numbers that we have given in the prospectus, and then you can see our quarter one results as well. So right now, we are operating with our working capital cycle of about 158. Going forward, also we would like to to this 150, 155 kind of range. Now as we expand into the form of additional investment, right, so we are going to focus on the incremental R and D capabilities and manufacturing capacity expansion. There might be a slight leap in the mandatory shift, which we fix as a tonne. But with the working capital cycle improving, I think our RoTE profile should still remain robust at 30% level going forward. Understood. And secondly, with this expansion that we are going to, one of the problems which may occur when you are focusing on these high margin products is that the scalability might be limited. So now that we are expanding significantly, do you see that there is enough opportunity in the spaces that you operate? And secondly, if you can give some sense of the time line by which we can get 100% utilization on the brownfield and the business? Okay. So as far as as far as expandability of the you know, into the new facilities, right, and at the product level, what the good part is that our brownfield has already been inspected by the the US FDA, right, and other agencies. So anything that comes in these facilities is basically going to be a very simple kind of variation approval that we go through in order to bring these facilities online. So that that would be relatively straightforward. Now, obviously, coming to the greenfield, that would be, you know, that like, we said, that would take there would be a little bit of a time lag. Then we have a significant emerging markets business also. And we would be looking at, you know, bringing in executing that business from the greenfield. Yeah. And if you could comment on the scalability as we scale further, we will be able to get the same high margin profile that we have for our current business, high margin, high revenue for current business. The the basically, the high margin comes from the fact that our portfolio is pretty well differentiated, okay, plus the the geographies in which we operate being highly regulated geography, basically do not bring us into this highly sort of commoditized pay that usually happens in, you know, markets that are, you know, the less regulated markets. So as long as we keep our geographic focus in these markets, right, we are likely to see a, you know, a margin profile that is going to be sustained going forward. Now your question probably relates also to taking a higher market share. Right? So in cases and products where we are at a lesser market share and want to, you know, grow our market share, you know, will we sort of do it, you know, in a way that, you know so we will take market share and be expensive margin. I think we would be judicious, Sudhish, in doing that other than sort of just jump in and just keep market share and then just because we are scaling up. We got enough checks on the product pipeline. It's not need to do that. Understood. Thank you, and all the best. Sure. Thanks, Harish. Thank you. Mr. Bins, you may press star and one to ask a question. The next question is from the line of Mr. Pippan Modi, Retail Investor. Please go ahead. Good morning. Thank you for providing me this opportunity. I'm sorry to interrupt you. May I request you to speak a little louder? Very good morning. Thank you for providing this opportunity. What I would like to know, what is the percentage of R and D spend vis a vis the revenue in the first quarter? It's just under 2%, Bhavan. Our release spend for this quarter was just under 2%. Okay. And what is the expected of your spend? Typically, we operate between two to two and a half percent. This year is probably going to look like that. It went on it we've been operating at around just over 2% Because of the relatively high revenue this quarter, it dipped to about 1.8%. But, typically, we would be between two to 4.5% this year. And then going forward, it will probably inch up to around, you know, between two and a half to 3%, but it will not exceed that. And, basically, this quarter had a generic growth of around 36. Are we expecting the same trend to little continue for the generic? Or is it due to the lockdown impact last year, so the figures are with the higher side? Okay. See, the lockdown impact of last year, I think you're referring to, you know, the the thing about building up inventories and stuff. Right? So I don't think it has anything to do with the lockdown last year, okay, in terms of this demand being so solid, which is people don't continue to, you know, keep inventory for, you know, four, five quarters in a row. Unfortunately, they get inventory and then they they, you know, they kind of, you know, go flat with respect to how they build their demand going forward. But with us, we have seen, like I said, a pretty solid, you know, demand across geographies. And we hope that this will continue. We believe that there are very good reasons why this should you should continue because there is there is this China plus one that is very real, and we are seeing, you know, robust demand on the back of this kind of, you know, mindset on the part of the customers. So this is pretty new, I believe. You know? And, again, like I said, you know, we've had pretty solid growth across the regions, and this demand is likely to stay. K. And the last thing, wanted to know about the new customers for the current quarter. I think the revenue take up than 50% revenue contribution? Yeah. Well, new new customers might be I mean, we might have to come back to you on that, right, in terms of what new customers we had this quarter. Right? But we will keep adding customers in various geographies. So, you know, that would be there, and that does drive our growth. Okay. With respect to the customer concentration, yes. You know, you have a product concentration. Right? Customer concentration. So we do have I'll continue to tell you both. Right? We do have fair amount of customer concentration, right, because we deal with top customers who take, you know, who are who take multiple APIs from us, and they are engaged in multiple projects for quite a few years now. So, you know, our top 10 customers, you know, account for about 65% of our business. Okay. And in terms of products, very similar kind of thing is where there are top end products account for about, you know, again, about 60% of our business now. I think that's a good thing because, you know, we we have a whole lot of customers after these top 10 that also contribute quite significantly. And at the product level, also, we have a pretty deep pipeline. And so as newer and newer products come in, a product that is today at top 10 might drop to less than you know, might drop to number 11 or number 12, but then another product will come in and take. So that's the that's the target of having a very strong and deep pipeline. And was the percentage revenue from group company Glenmark for the current quarter? Yes. The percentage revenue was 40% this quarter from group company. Alright. My all answers. All questions are answered. Yeah. Thank you. Thank you. Thank you very much. Participants, you may press star and one to ask a question. The next question is from the line of Surajeet Khan from Sabodasani Landmark. Please go ahead. Thank you. Good morning, gentlemen. See, what you were saying is that, you know, you have a strong demand traction and you don't think that, you know, last year, basically, for the pandemic, we would not have any reason to believe that about the growth of a single little couple weeks ago. So do you do you do you like to pay in a way this kind of particular particular growth and sustainable for you, you know, for the next two weeks of the quarters? I would not I would not give a number. Right? But I can say that whatever we have seen, okay, in if I if you look on the time the pandemic started, okay, is that the growth has been good. Right? If you go back and look at our, you know, last year, we did 20% growth. Now so from a demand perspective, things have been very strong. Okay? And that has we have seen across now five five quarters, including this quarter. Is it something that could be consistent across quarters in terms of number? I don't know. It's unlikely. Right? Because in in our business, right, we we have there there is a bit of a I would not say cyclical, but, yeah, the demand, yeah, the demand does go does go up and down. So it's likely that, you know, in the next quarters, we may not see, you know, a thirty, thirty one percent growth. But over the years, you know, we could be looking at about a 16 to 18% growth, you know, on our business. Yeah. So so, basically, that is that is my point. This is, you know, kind of the growth. When you say you have a differentiated product in your system, know that API is pretty it should be copyable by this year, so maybe it's possible within six months. We do know the, you know, private demand for the cheaper version. So I just need to understand what could be the contribution of the profile model? I mean, the name of the software model is. What could be this molecule change profile? This is a time period to. Okay. Let me answer that first question. Okay. In terms of, you know, anyone being able to make these molecules. See, in our business, like, it's not just about making the molecules in the chemistry. Right? It's about positioning yourself in a market. When you look at regulated markets, that's where our concentration is. Okay? You not only have to have the technology to make the molecule, but then there are a whole bunch of other things that go through. And then demonstrate to the health authority, like an FDA or a European authority that this molecule, which is an API, can go into the drug of a And this is not. So I'll I'll take it to you in a different way. If you do a Google search, right, on our molecules, you can look at any of our molecules on our website. Right? If you do a Google search, you'll find, you know, 10 to 12 players or even more in these molecules. Now are all these molecules are all these players who claim to make these molecules? Will they operate in the regulated market space? Very unlikely. Because just to give you an idea, to file to file a single API in a regulated market, you need to make about 50 to 80 and even 100 impurities. Every company cannot do that. Every company cannot do that. They're gonna show you. So it's not it's not a simple matter that you you just make the molecule and then you manufacture and then you're able to sell in the market. I mean, maybe it's possible in some markets, but it's obviously not possible in those markets where we operate. So from the stability perspective, our business has got a lot of stability in terms of our customers having that trust on us. But, look, we we not only will deliver API to them because it's like it it will be of a high quality, a consistent quality, and it will come with all the documentation and all the support that is required to be able to satisfy the health authority of that country that we are able our API is fixed on the drug in that country. So I hope, you know, Sudhir, that answers that part of the question. When it comes to molecules, right, I can tell you what our top five molecules are today. But what our top five molecules are today would not be the top five molecules for the next year. Right? Because there would be newer molecules like I said that continue to help growth, continue to add. So just to give you a sense in terms of what are our top molecules. So we have. We have. We have. We have. We have. We have. These are some of our top molecules. And so so you say that on an average, the top five model is generally around the two months time? Or how long these are the names that you have taken, then we talk about. No. Can you repeat that? I just How long this top five business in name? I've been really top five business in the company. See, that's relative to us. Right? So today, what I named have been top five molecules right this time. Now another another couple of molecules that we know are growing very nicely. Right? We you know, in a matter of, you know, six months to a year, become number three, number four. And then what is today number four, number five, we'll go down to number six, number seven. That's how it happens. Right? So that's the because, see, the monitors that we have commercially even today also keep growing as we expand geographically and the customer base. Yeah. Yeah. Yeah. That's really understood. Understood. May I just want to have an idea. You said, you know, there is the various kind of kind of you know, the complex molecule have been sold for $3.04 years, five years or so. And and some of the companies where, you know, they are churning out very far. So they they they don't care. You know? They they are not sensitive to software molecule being for five. This is. So what would be your average pay of the software that that I need to understand? Because I only. The line for the participant, sir. Okay. Sure. So take the next question. Yes, sir. In terms of all the participants, please respond to two questions per participant. If time permits, please come to the next question queue for a follow-up question. The next question is from the line of Nitin Agarwal from BN Capital Advisors. Please go ahead. Yes. Thanks for taking my question. Yes, sir, two things. One is, a, at a broader level, the management team in GLS, you've been around for a few years now. The management team has done a lot of management changes in some recent times. In your own assessment, I mean, what are the changes that the business has seen over the last two or three years? And what implication does it have for in terms of future growth trajectory of the business? Okay. So talking about the management team first. Right? Yeah. I've been here since nine quarters. Okay. So I've just finished nine quarters. This is my tenth quarter. Okay. And we we needed to build a newer team because we needed to do this business a very strong focus, an outward focus. Okay. And in order to do that, I mean, the the team was built. Now what has happened in the last two and a half, three years is let's start with r and d. So we've we've sort of bought our portfolio, right, to to become, I would say, a much more productive portfolio going forward. We had a pretty good portfolio, and and our r and d team was doing a good job, but it was pretty spread out. Okay? So the launches that we would have seen from our portfolio earlier were happening a lot of them were going to happen in thirty one, thirty two, thirty three. Okay. This is the year 02/1931, 3233, and even beyond. So now that did not make sense to us, right, when we relook at the whole thing. This is about two and a half years ago. And we said, okay. Let's just go and focus on a portfolio that we will be able to launch in in the near term. Okay. So let's look at molecules that we can bring in in '23 to '26 time frame and even earlier if possible. So that's one change we made. Right? The other thing that we also did in r and d is got a lot more focus on the cost improvement side. Because while launches were slated to happen, our second generation process was not going to happen soon enough to where the customer would start feeling the competitive price pressure at the front end and would come back to us and ask us for a better generation process. So that we did and we did very effectively, Nathan, I can tell you. Right? So much so that even in the last year, we've been able to support customers very effectively with second generation processes. And as a result of that, our customers have not only retained their market share, but are likely to even grow that market share, which obviously means more business for us. Okay. So that's on the r and d side. Coming to coming to capacity and the utilization, we we had a a lot of we had our capacities, by the way, all fungible capacities. They're all multipurpose plants. But the two large plants had a lot of gaps in terms of, you know, our ability to bottleneck debottleneck. And we did that again very effectively by debottlenecking a lot of products, and we were able to increase capacity with a relatively small CapEx spend in the last two years and make both our dealer sites much more efficient in terms of being able to churn out more EPI. Ramesh referred to that in terms of our FCR. And our FCR in the last two years also, two and a half, three years, has also improved much much better, and that we've done with the current capacities. One thing that this team has done in the last two and a half years is that we have sharpened our geographic focus to not only work in the regulated market space, which is our. I explained to, you know, mister Sujit earlier that, you know, we work in the regulated market space, and that's a tough market. It's not an it's not anybody's game. Let me just get into a regulated market and. So so the point is that, you know, while we continue to stay in the regulated market space, what we also identified is a lot of emerging markets are becoming more and more regulated. And that's where, you know, if we focus on those markets, markets like Brazil, Mexico, Taiwan, Korea, Russia, okay, we have a lot more business to take because the health authorities of those countries are becoming much, much more demanding and stringent in terms of data. And our ability to satisfy those health authorities especially means that we are then able to take more and more business, you know, to the customers in these markets. So I would say that all in all, this team has been there for two and a half years. It has been extremely impactful in being able to, you know, not only impact the business today, but also, you know, have a very different trajectory for growth for this business in the next five to seven years. Thanks. That's helpful. I think sticking off from there, I mean, earlier in the comments, you mentioned that you feel comfortable with the 16% to 18% growth in the work period of time. Now in terms of composition of the growth, see, what is the majority in the listed companies that are there in the API business, Lot of the growth that would be historically has been on the executive team, so that's especially continue to remain a mainstay for them going forward. Is this the same way our growth confluence is going to look like? Or is it going be is there any how should we look at the growth sort of very broad discount in terms of how it looks you know, what could drive growth for us going forward? Okay, Nitin. So, see, the thing is that while like like I said, we have a very deep portfolio. Okay? And, again, it's in in a sort of noncommodity space. Right? So we expect that even this base portfolio will have a pretty healthy growth just on the basis of the geographic expansion that I talked about. Having said that, though, right, we we have newer molecules that are coming up. Every year, we are going to be introducing, you know, two to four molecules. Right? And these will obviously drive growth, right, and newer molecules. Back to that, what we are also doing is we we will be introducing more complex molecules, you know, not next year, but I mean, next year, we'll be introducing one. But then there will be a much more rapid introduction of more complex molecules, which are higher value molecules. So this is as far as the generic growth of. And we do have a CDMO driver. Okay? And while, you know, it's small today, right, and it's got a relatively small base, the kind of the kind of portfolio overlap that we have, know, current generic portfolio and the likely CDMO opportunities is pretty significant. And so we expect that the CDMO business will grow faster than the generic business. One is because it's smaller. Right? But also because, you know, it's it's got a lot more attention. Right? Because we are talking about a whole new set of customers now in the CDN. So all this put together, I think, will will help us to drive both the generic business as well as the CDMO business pretty smartly. So we have the base. We have the new molecules. On top of the new molecules, we have the focused molecules, and then we'll have the CDMO business. So all this put together, I think, is going to give us a know, we've got many levers to pull as part of the business concept. Thank you. The far to pull next question from line of Ashwini Dhirwan from Ashwini Ashwini Dhirwan I have two questions from my side. One is that when you were talking about the investment of the lithium wall, when you're talking about 16% to 18% growth per year, are you kind of implying that there is some large one off component to growth in the first quarter? Or are you seeing pressures? It seems given the kind of end product pricing pressure we are seeing, especially in The U. S? Okay. So, Ashwini, your you have two questions. Right? One is related to a one off, right, that that gives us a 30% growth. Right? The other is pricing pressure. Right? So let let me take the first one first. Right? So, yes, this quarter, we had a significant scale of. Okay? And so, you know, was quite significant. But even if I take away, right, we are still at around 37% growth. So, you know, if I take away the effect of, right, in quarter one this year and quarter one last year, our growth from without ex value around 27%. That's pretty pretty stupid. Okay. Now having so that that's one thing. Now yes. As far as The US is concerned, right, there is pricing pressure, and it's always a test. It's not something that, you know, we don't have to deal with. The good part about it is, again, it doesn't happen it doesn't happen uniformly across all the products of the. So while, you know, there you may have some of the. I mean, if you're following this case. Right? The has been under pressure. Right? And we have also seen the price pressure. Now what what happened to us, which is good, right, is that we increased the second, third gen second generation process for only certain. Right? And we're able to move our customers to the next one process. So while there is a bit of price pressure now, right, and a little bit of margin pressure also, right, the good part is that we were able to handle the margin pressure because we were also able to negotiate much better rates on our raw material prices instead of handling that. But longer term, you know, the the customers have already taken up our new material to be able to qualify themselves. And then, you know, in in a matter of another three to six months, we will move to the new gen process. And that would insulate us from, you know, this this whole starting story. And then the other thing is that we've got only two circles really that we have to deal with. So we don't have a whole bunch of Sarkin's there. But to address your larger question, that do we deal with pricing pressure? We do. We do. And it's a it's a pretty it's a pretty well calibrated approach that we take handling pricing pressure because we are ready with the second or sometimes even a third generation process to be able to handle that. Right. So you for elaborating on that. And my second question is, as you look forward, you spoke about CDMO again in response to significant risks. How should we track this? I mean, are there client engagements with our ongoing? When do you expect these relationships to occupy? Will you be sharing with us on an ongoing basis what is your CDMO revenue complement? And having that you signed very significant transaction? See, Ashwini, at this point, right, I'm I'm a little weary, frankly, of getting into a product level discussion on CDM. Right? Because it's a competitive space. Right? And it won't take it won't take a long time for my competition to catch up with me in terms of who's the customers I'm dealing with. I mean, in our CDMO business, right, we are splitting up on end of life cycle management. Right? So that has a pretty solid overlap in our portfolio. Okay. So, I mean, overall, you'll be able to see that we would be chasing quite a few opportunities with, know, big big players, okay, in this business. Where we have to be extremely careful and guarded, right, is from the five zero five g two opportunities. Right? Because they're they they are pretty specialized opportunities, and they take a while to, you know, start the, you know, gestation period from the time we start the project to manage this commercial is a sensitive period because, basically, we've got to tailor make the molecule, you know, to the, you know, to the customer's requirements. Right? Whether it's a different salt, whether it's a free base, whether it's it's some particular challenge that we are dealing with, you know, in order to circumvent and make sure that the customer is in a and us, of course, So at this point, Ashwini, I would say that, you know, we would be careful, right, and not share what is in the works. Right? And I'm sure you'll understand as an investor, as an analyst, you'll understand that this is something that, you know, we don't need to be careful about. Coming to what is already commercial. Right? I can share with you. We have four projects. Right? Three of them are already commercial. Right? And we are generating significant revenues from these. Their growth is they are still growing, albeit at a, you know, lesser rate. The fourth project is which is added in the first quarter of this year. So that's going to be a significant project, which we are getting geared up to to service in quarter four of this year. It may move to quarter one of next year, but we're keeping up on this cross because the customer is finding in multiple markets. So we expect that, you know, some commercial gain will start coming in this year. So I think we can share that much, Ashwini. I hope, you know, that's something that's okay with you at this point. Hello? Yes. Yes. Sure. Thank you. Thank you so much for for that. I'll come back. I'll come over. Sure. You very much. The next question is from the line of Vikash Sarva from NT Asset. Please go ahead. Yes. Hi. Good morning. One question on the margin side. So when I look at the first quarter and the fourth quarter of last year, because now you have the quarterly financials reported. So these two quarters, your margins are higher than the full year average, which implies that the Q2 and Q3 last year were below your average margin. So maybe you could just touch on what are the reasons for that? And secondly, means, do you look at the volatility in margins in your kind of business? And I mean, and what are the key reasons for that? Okay. Sure. So let me let me explain, right, how this whole margin game works. Right? So it's a I think you're taking part of the question first. Right? So, basically and I will explain the first part. Basically, what happens, right, is that we have a pretty distributed and diversified portfolio. So we've got we've got more mature molecules, right, which as a result of competitive pressure, getting into, you know, next generation processes. Right? The margin profile tends to dip. Okay. And, you know but then what also happens is the business becomes more mature with less competition easing out and so on. So so we are dealing with molecules here where we got you know, they are part of, I would say, the base, and these are molecules that were launched three to five years earlier before that. So this forms the base, and the the margin profile typically of these is less than our average margin profile. Then you have the newer molecules. Right? And those those typically tend to get us better margins because they are newer molecules. We are talking about our first gen process, and then even the second gen process takes care of, you know, the margin significantly. So all so these two so this is the second lever that, you know, that basically adds to the better margin profile. Right? So then it's a newer business. So then just keep happening year on year. Right? Maybe keep adding newer molecules. So molecules that are three to four years old typically get us better margins. And then the first one is the CDMO business. The CDMO business, right, typically has better margins than generic. Right? And even if it doesn't start off with a better margin, eventually, we do get to a better margin because we work on the cost side, and we don't normally have to pass it to the customer. So this is how the full margin game works. Okay. Coming to quarter two and quarter three of last year, we had we you know, I talked about in an earlier question where was significant contribution last year and even in part one of this year. Right? So what what happened was in because it was a pandemic situation and we had to really aggressively, you know, introduce the API into the market, we did not go for any kind of margin play and basically offered the API at at, you know, relatively subdued margins. Okay? Because the idea here was to scale up and and basically give volumes to our customers. Okay? And as a result of that, volumes on target for the the volume the volumes gave us the top line, but because of this approach that we took, to mind, we filed this as a. The overall business we did in quarter two and fifty. In quarter one and quarter four of last year, right, we had less salary period, and we also had a significant CDMO business in quarter one and quarter four of last year. So that basically, these two reasons put together essentially, you know, give us the kind of margin profile that we've seen, where we had a much higher margin profile in q one and q four, right, and a subdued margin profile in q two and q three of last year. Does it mean that Sabiatravir had negative impact in this quarter's gain on the margins? Not negative, Josh. I mean, I would not say it was negative. Right? But yeah. Mean, mean yeah. It's it's less, sir. It's it's definitely we are making good margins, but compared to our average margin, it's less. Right? Okay. Yeah. Sure. Sure. Thank you very much. Good evening, gentlemen. Due to time constraint, that will be the last question for today. On behalf of Denmark Life Science Limited, this concludes this conference. Thank you for joining us. 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