Q1 21/22

Jul 26, 2021

Greetings and gentlemen. Good day, and welcome to Delambix Pharmaceuticals Limited to discuss the company's Q1 FY 'twenty two financial results. We have with us today from the management Mr. Pranav Amun, Managing Director Mr. Shonakamind, Managing Director Mr. RK Bahiti, Director, Finance and CFO Mr. Vitan Sushar, Head Finance Mr. Deshil Shah, Head Strategy and Mr. Adhikumar Desai, Senior VP, Finance. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. RK Jayati, Suresh Finance and CFO, from Alembic Pharmaceuticals Limited. Thank you, and over to you, sir. Thanks. Good evening, everyone. Thank you for joining the Q1 results conference call. I'm sure you will have got the results by now. However, let me briefly take you through the numbers for the quarter ended 30th June, 2021. During the quarter, our total revenue was flat at INR 1326 crores. EBITDA was 19% of sales, stood at INR 254 crores. Pre earning EBITDA is 31% of sales. Profit before tax debut 46% to the RMB199 while after tax profit dew 45 percent to RMB165. EPS for the quarter is to be RMB8.37 per share for the quarter. This is versus 15.99 in the corresponding quarter of the previous year. We are redrawning our EPS guidance for the year 'twenty one, 'twenty two on account of softness in the U. S. Business due to a reduction in completion, which has led to price erosion as well as delaying FDA inspections of our facilities. CapEx. CapEx in the quarter is INR 124 crores. Cumulative CapEx for ongoing projects under CWIB, which will be INR1892 crores. Financial assistance to Azure JV for the quarter, 50 crores. Borrowings. The gross borrowing is consolidated leverage with the 500 crores, since it is India long term diminishes, and the company has to do INR273 crores of cash on hand. So the net borrowing is INR 227 crores. Net debt equity is negligible at net debt equity is negligible at 0.04. I will now hand over the discussion to Pranak for its presentation of the international business. Thank you, Mr. Bedi. As you are all aware, U. S. Business has, over the last 5 years, had an exceptional growth. We had a massive, very impressive CAG uptake. A lot of this growth was on the back of the certain opportunity. We're very lucky that it lasted much longer than we had anticipated as well as other market based disruptions. The early part of last year also threw up additional opportunities due to COVID related disruptions. Since it was a challenging quarter, this was a challenging quarter on account of intense competition in the market. Our long term view of the U. S. Business still remains bullish. We'll do minor strategy tweaks in the meantime because of the additional competition that we're seeing in the U. S. Market. The ex U. S. ROW business continues to do well and grew at 13% during the quarter. Just to refresh your memory, this is a business that had impressive growth last year because of the year before that when we had serialization. The API business also continues to do really well and grew at 6% during the quarter. This was pretty good considering that last year Q1 was a lot of growth in azithromycin and some of these other APIs where there were certain disruptions from China due to COVID. Our R and D expense was INR167 crores in the quarter, which is approximately 13% of sales. We received 70 approvals, launched 2 products. We have cumulatively INR 146 A and D approvals. This includes 18 tentative, and we plan to launch around 5 products in the Q2. The International Formulation business grew by 27% to INR 5.66 crores for the quarter, and the U. S. Generics, they grew by 38 percent to INR 369 crores for the quarter. Hex U. S. Generics grew 13% and API grew 6%. I will now hand over the business to Sonak the discussion to Sonak for India business. Yes. Good afternoon, everyone. For the quarter, we saw nice ramp up in our India business despite challenges in related to COVID. The overall business grew by 57%. Between the 3 key segments, Specialty grew by 29%, Acute grew by 122% and Veterinary didn't continue to outperform 2.45% in Q1. There were some amount of COVID related challenges in the market and for the nonaccurate portfolio. And definitely, there was some amount of pickup which was due to the sharp uptick in cases. I think the net effect of both put together, I think we did pretty well keeping both things in mind. Our specialty business grew despite all the lockdowns, which affects the business from the long term perspective. So I think we managed to manage control the business and make it clear in this quarter. Like I say, I think at this point in time, our India business, we see enough pockets of growth across the portfolio both in the acute specialty as well as veterinary side effects. We continue to perform the very comfortable business. There we still foresee some COVID related disturbances to happen in the market maybe this quarter. Hopefully, it should be much less. So I think it will come to terms with how to balance these ups and downs in the businesses and as well as how to manage the business in the period of lockdowns. What is helping the business is the high clinician rate of these doctors is definitely giving a positive impact to the business despite the lockdowns? We are quite bullish on the business and we continue to tap these opportunities for growth. We look to scale up parts of our business, but we are to be mindful of the pandemic related challenges at this point in time. If you think looking, we are committed to growing the business, and I think we see good opportunities to invest in its 2 engine business and make it grow. So now I'd like to open the floor up for Q and A. Thank you very much. We will now begin the question and answer The first question is from the line of Sriram Ghati from ICH Securities. Please go ahead. Firstly, on U. S. Market, I mean, like last quarter, we were expecting that 55 to 60,000,000,000,000,000,000,000,000,000,000,000. Is it purely because of higher competition? And at the same time, I mean, is the impact of competition in QS filing results also to this number? Yes. So Kiran, this is pretty much only due to additional competition in the U. S, something else. We were seeing this trend moving forward. Theophylline happened we haven't seen the full effect of theophylline because that happened towards the end of Q1. But that will happen as well as going forward to Q2. Yes, I think we were expecting a higher run rate, and I still hope that we'll get to this 55 kind of run rate moving forward. We're doing some fine tweaks. But yes, most of it is due to cost due to pricing pressure in the market. Okay. So in that case, I mean, Q filing can have additional impact in Q2 and the numbers can be more than around this number or will be lower? So, yes, so what will happen is 2 things. 1 is, on the volume side, we haven't seen too much change on the volume side. Maybe Q1 has a little bit of an impact on volumes. But we're picking up new awards, we're getting more business. We're working on some cost rationalization in house. So I think we'll hopefully with those things, we'll be able to pick up more business moving forward in Q2, Q3 to counter for what we'll see additional competition in Thio, Palyn and some of the other ones. Okay, got it. Thanks, Suraj. And then on the gross margin side, like this quarter, we are around 71%. So now, I mean, will you say that I mean, this is more of a normalized number now that should be there going forward? Yes. So we've been saying that when we had these margins of 78%, 79%, I was always, I mean, making a cautious statement that they will come down is your part of those high prices you could get during those disruptions. I don't know, I mean, this is a direct number depending on the so India prices are static. India cost also remain more or less static. Some increase in the NPI prices, but not significant. So it depends on at what prices do we get to sell in U. S. That will determine the gross margin numbers. Okay. Got it. Is there any update on the Kirkari only coming after we did all the acquisitions and any further in that? No, I think nothing since the last quarter when we spoke. Same, we just went back and forth with the FDA. We're just waiting to hear from them. So let's see hopefully in next couple of months what Sanjay did. Thank you. The next question is from the line of Yes, sir. We'll move to the next question, which is from the line of Takashi Durbar from Axis Capital. Please go ahead. From your side, maybe people are not able to speak or Let me just text it. Please give me a moment. Mr. Prakash Agarwal, please go ahead. Yes. Am I audible? Yes. Yes. Hi, and good evening to all. My first question is on the INR50 EPS guidance that we had given. Is there any thought there? Do we maintain it? Or how to think about it given the Q1 has been little weak? Yes. So maybe, Prajak, you might have missed the opening statement. Mr. Baidi said that we're temporarily withdrawing this guidance due to a lot of uncertainty that we're seeing and some softness in the U. S. Market. So he said that in the opening statement. So we're not Okay. But is there any revised guidance for the same? No. I think right now, due to the dynamic situation, we might rather refrain from giving any guidance. Okay. Understood. And on the gross margin, somebody asked, but I mean, if I see my sales mix has gone favorable, right? So India fees is higher versus last quarter Q4 numbers. And U. S, in the last quarter only, we said that the start up opportunity is going or fading away. And despite that, we have seen another $15,000,000 decline. So, a, what has really happened Q on Q in the U. S. From Q4 to Q1? And b, despite India business moving up, our gross margin, so is that everything sitting in that $15,000,000 which was at a very high profitability? Would that be correct? Or what's profitability? Would that be correct? Or what how should we think about it? Yes. I think the right way of looking at it is, as I'm saying, like the volumes haven't moved as much for the U. S. Market. So pretty much what we've seen is on account of pricing. Okay. So these are now the real estate? Or do we expect one more round on this? Or this is on the base level portfolio, there is no special pricing on these products? So I just I mean, as I mentioned, it's very difficult. It's too dynamic. That's why we're not giving any guidance. And I don't know because it's not on our end. It really depends how the competition is on the market. So I'm not constrained from giving any guidance on that. Okay. Now, Dibez, last quarter, we heard you saying that you have visibility of 10 plus products, both in oral, dorms, etcetera. And we also expect in second half with the LSB inspection obviously happening, 2nd half onwards, meaning there is an injectable business coming back on stream. So I'll tell you what, so basically near term you will see some challenges. I think I don't know how much and to what extent whether this is the new normal or what is going to happen. Long term, we're still our view of the U. S. Business is still intact. Long term, I believe we should be okay. And we're still I'm still quite bullish on the U. S. Market. And that 10 month launch is winning? Yes, that will remain. I think more probably closer to 15. Okay. Thank you and all the best. Thank you. Thank you. The next question is from the line of Anmol Ganjul from JM Financial. Please go ahead. Yes. Hi. Thanks for taking my question. A slight reiteration of what got asked by the earlier participant. So if you look at the U. S, there are plucky vectors. One is the product launches on which we obviously seem to be holding what we had articulated earlier, 10 plus product launches. 2nd is that if you look at last quarter commentary with respect to certain pricing, and we all know these things tend to undershoot once competition sets in. So that obviously has happened. So I don't think there's a real surprise. So why therefore a view that despite domestic formulations doing well and the suspension of guidance, what's the real directional surprise during the quarter? That's what I wanted to understand for because everything else obviously seems not very different from what we understood last quarter? And is there anything which kind of has incrementally worsened with respect to landscape? Yes. So I'll just give a brief and then I'll let Mr. Bedi to add whatever else. So why the withdrawal is, Anil, because few things have happened. One is, as I said, from the last quarter also to now, we've seen incremental lot of erosion in prices in the U. S. Market, number 1. Number 2, we're seeing that we're not seeing any guidance from the FDA in terms of when they're going to come, what they're going to do. And the third is, as you all know, there's been an incremental competition in theophylline, timolol, some of these other products, which are highest big products. So there's a lot of unknown or uncertainties in the market. So then we were not comfortable with the guidance. So that's the reason why we've removed it. As I mentioned earlier, long term, we are still quite intact. Just I'm just going to wear off for a second before I get to back to Mr. Bedi on the guidance. Just I sense that there will be a lot of questions on the U. S. Business in today's call. Let me just give a flavor on what kind of things we are doing or what we are in the midst of doing. As you know, LNVIC has actually captured a lot of high priced opportunities due to disruptions in the market. The market has changed now. Everyone is back on suppliers and there's not really any disruptions. So we're doing a lot of cost cutting, cost reduction, supply chain volume growth, picking up business, bidding for new businesses. And I think we will see the effects of that Q4 definitely excuse sorry, Q3 definitely, but maybe Q2 also as we're picking up some volumes, we're picking up some business, we're rationalizing some R and D spend, we're rationalizing other expenses as well. So that's what the strategy is moving forward because those high price opportunities are not there. So there's a lot of fluff in the system that we're trying to connect. So maybe on the guidance, Sumeet? No, I think we have covered. Yes. Amol, anything else? Yes. So briefly, two more quick questions from my side. So obviously, this quarter, we've under the competition has overshot expectations and we seem to be stabilizing at around $200,000,000 annualized run rate on the base. Sartan at least would have worn off. So incrementally, I don't think that the portfolio is vulnerable to sartan pricing at least. Fearfully, again, if what has happened this quarter is anything to go by, the risk should be on margins, not as much on volumes. So I think with a lot of these things happening, which were expected as you highlighted, then $200,000,000 plus the launch rate of new products, that is how we should be budgeting for the U. S. Growth on a full year basis. Is that correct in terms of assessment? I mean, if you extrapolate from this quarter, yes, that could. But again, there's too many unknowns. That's why I don't want to give a guidance on the number. Okay. And second question is on the domestic formulations. Good show there, Pankaj. So obviously, that's been very impressive. But if you look at the drivers, is this the new normal? Or you think that it will be a lot of work required to sterilize it to this number? And again, as one of the Asia participants highlighted, I mean, domestic growth at this rate should obviously be able to buffer the margin dilutive developments in the U. S. Market, although it's still at a very high base. But the domestic coming back, both from a cash flow perspective as well as a mix perspective, how should we be extrapolating it going forward in terms of guidance? Shyam, so I would request Soumit to respond to the business environment part and then I'll take the financial numbers. Yes. Anurag, so you know that I think honestly, like the market is so dynamic, I think, with the lockdowns play a large part in what could happen to the business. Like I said, ex acute or rather ex azithromycin, firm, the portfolio has performed fairly well, which gives me a level of confidence that a part of this is sustainable. There might be quarters whether it's up or down, but broadly, we see the momentum is sustainable. Obviously, Northpac is part of the portfolio, excess is relative from the exceptional level. I'm just fairly confident that we can maintain. Obviously, a lot of the growth is linked to market growth. A lot of the market growth at a very macro level is linked to BDP, is linked to disposable interest with monsoon these things. So a lot of factors that play into it as long as the market does perform. I think we have plenty of options of outperforming the market on a sustainable basis. Is this number at 57% growth sustainable for every quarter? Like I said, it's all a lot of this is deterministic out of my control, which is a market movement. So as long as the market stays positive, there's no major slowdown in the market at an overall level. I think we are like I said, we would be like I mean consistently saying, I think we are fairly confident about reforming the market in all of our key therapeutic segments as well as all our key products. And yes, so I think that's the outlook of this point. Yes. Ajahn, if I may just kind of ask that a bit more. So if you look at the growth that we've had, obviously, some market has done well, but there must clearly be if the ex erythromycin portfolio has done well, then there have to be market share gains elsewhere given the big lead we'll have this quarter over the rest of the market. So just trying to understand, are there any drivers of market share gains in this quarter which should be Yes. There are market share gains. I think 1 quarter is too small a period to start tracking market share gains. I mean, I don't want to get into quarterly market share gains because the market is, as you know, IMS, even in this period, I think the IMS data collection was affected or gets affected when there are pandemics and lockdowns. So I yes, there will be market share gains, but I don't want to like I said, we need to see at least 2 quarters of market share gains for us to really come out and say that we are facing large picture gains. Okay. Thank you. But we have grown faster than the market. That I think we've substantially outgrown the market in all the segments. So I think that is that is the nature of any of these difference. The next question is from the line of Shivanamesh from JSP Securities Private Limited. Please go ahead. Good evening, sir. Three questions from my side. So broadly, sir, you said that the long term is pretty intact. So from that perspective, considering that we've completed most of our CapEx and once it starts getting commercialized, where do we see the U. S. Business the potential of that CapEx to kind of drive our U. S. Business? Like what would be the top line that one can expect? Is it in the $500,000,000 to $600,000,000 range? And based on history and your experience, when does a particular plant reach its maximum capacity utilization once the approvals are with us? So that's my first The second one is regarding our gross profit margin. Mr. Baretti did mention about the gross margin, but just reconfirming that if I go back to my notes, he had said that a broad range of 70% to 72% is what we normally would be confident of doing. So does that still hold? And the last one was on the modified opinion that we've got in terms of accounting for the debenture. So if you could just give a color in a layman's language that why have we not gone through the not followed the accounting standard guidance and taken a differentiated stance. So that's it from it. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Let me now respond to the first question, and I will respond to the next two questions. Yes, sure. So our long term view, as I mentioned, it still stays intact in terms of what we see the market where it's going. Yes, maybe couple of quarters a year or year over year, it may change due to the delay in FDA inspection and approvals. But by and large, it states that we haven't given the long term guidance. I've mentioned in the past that companies of similar size and what they've been, we should look at about CHF 400 odd 1,000,000 of sales revenue in moving forward by 24, 25. So it still stays intact. In terms of I think the other part was on the capacities and when do we expect in this addition? Yes. So basically, as you know, the whole approval process does take some time. We have made filings from these facilities. Now depending on when the activity comes for inspection and all of that, it will take some time before we get approvals from meaningful products. And these assets have been very keeping long term in mind. So there's a whole bunch of products that will keep getting filed over the next few years. And as we file those products, even more and more time we can come to finish paying facilities. So from a long term point of view, I mean, when you ask the question, when do we see peak sales? So I think it will take about 5, 7 years before we see some peak sales coming from these plants, Just based on the filings and the approval time and things like that. Okay. And if I may just add, when we talk about peak sales, so what so my question was what could that be based on your experience on a similar asset in another company or what your internal assessment would have been when you all would have expanded this CapEx? What is the peak phase that this particular asset can give, so the current block? So basically, generic business, we've been seeing a very lot of uncertainty. But having said that, overall, if you look across the sector, the general things to fixed asset ratio, if we look at, it's in the ballpark of about 1.5 to 2 times. And we should be aiming to achieve similar numbers over the long term period. But again, these are very broad numbers, so please don't make too many quantitative determinations from here. So we're just giving kind of a direction. Sure, sure. I get that. Coming back on that modified agreement, I mean, actually, this is the policy which we have been performing consistently. This is in respect of AURE. So AURE doesn't make provision for interest nor do NLP Pharma makes income nor does NLP Pharma recognize the income because as per the JV agreement, the interest will be payable by NIM only when it starts with I mean, there are some conditions which are to be met. So I just gave those conditions are still sometime away, and that's how we will not meet. Actually, on a consolidated basis, it doesn't make much difference except then partners' share of loss will go up a bit. But as far as cash flow is concerned, energy and other operations are concerned, it doesn't impact us because accounts is consolidated. And then on your margin question is, I mean, I've been saying these are That's it from me. Thank you. Thank you. The next question is from the line of Abdul Karan Chiranwala from Anand Rati. Please go ahead. Yes. Hi. Thank you for the opportunity. Just one question from my end. So if I just look from a standalone to control business, the profit number looks quite lower. So I understand this could be partially because of the U. S. Business. But at the $50,000,000 or a $55,000,000 on a quarterly run rate, would the U. S. Business still be profitable for Yes, it is still profitable. The only thing as you have to mention is that RST has come down. That way, it's still profitable obviously. Okay. Thank you. That's all from The next question is from the line of Bharat Sheri from Equifax Securities. So I just wanted to understand on the gross margin side given that during this quarter we had okay? So the pricing was secondary. So that's how the news is operating operating. Now we are looking at all ground efficiency improvement. So we think we are used to a number which is sustainable. Right. And sir, from the perspective of other expenses, we have seen a sharp increase sequentially despite being a case where overall commercial activities have been subdued. So what's the key reason for that? So the other expenses, I mean, I think the large portion of other expenses are not related to the GBS business. The large portion of other expenses relates to domestic market. Last year, domestic market expenses were very muted because of a very strict lockdown throughout. This year, markets have opened up, so we have spent more on promo. We have spent more on food, travel and all the field related activities. So again, it's closer to the normal reality. So is it a number we can both hide this? This number will continue? So will it be more like a base color? Yes. The expenses are never uniform in all quarters. There'll be some quarters where there'll be high expenses on promo, and then there'll be some quarters where those investments will be strict. So it depends on marketing strategy, but it is broadly 20, 30 crores year on year, these numbers should change. Sure, sir. And sir, last one on the U. S. Business side. So we are saying that we are going to see around 15 months in the year. So does it mean that by fiscal line, we will be returning back with the guidance of R55 1,000,000 which we have guided for as I said, for the year for the U. S. Market? No, actually, I have not guided. I have not given a guidance on the GBP 55,000,000 sales. I think I just mentioned in the last call that what we were seeing typically about GBP 65,000,000 to GBP 70,000,000 that is coming down because we were seeing a trend of lower more price erosion. That's all. That's where that's how the number came out. You're right. But Sona, in your assessment, can we go back to around $55,000,000 under by the pixelant as an adjunct in this? So yes, I responded this to the earlier question as well. If you want to extrapolate from this quarter, you may have looked at the $50,000,000 odd, but it's very tough to say. And that's one of the reasons we have before in the guidance is I'm seeing a lot of it's a very dynamic market. I'm seeing more competition. I'm seeing what's happening. So I really don't know. I think I'll have to wait for a couple of quarters to see where it settles down in order to give out for those opening where actually the market will be. The next question is from the line of Robin from Falcon Investments. Please go ahead. Hi. My question is around the U. S. Business model itself. Looking at your history, it seems you've generally made profits when there is some sort of a structural issue or your 1st day filing or something of that sort. So in a normal way, the U. S. Market doesn't allow you to make much profits at all. And the fact that this competition has come up is no surprise. It's going to keep happening, right? Because that's the way the FDA wants it. It wants all these suppliers to kill themselves literally and get the medicines at the lowest cost. So what makes this business model good in your view? And why is it so about it? Yes. So first of all, I think the U. S. Market for us, I don't know what the others are in the market. But for us, it has always remained profitable and still is profitable. I think since inception, it's always been profitable. So I don't see any issues there per se. In terms of the appeal, I really can't comment on that what they want. But what makes this market attractive and why are we still attracted to it or why do we keep making investments in it is because of few reasons. One, the addressable market side is very good. There are opportunities to make money in the U. S. Market and we continue to force that up. If you look at us over the last 5 years, we've grown at a CHG ROE 25% and every quarter has been profitable on that. And that's so I think it's a good market. Addressable market size is big. Compared to the other international markets, I think it's a bit better market because it's easy to do your own front end in the market. So that's what we feel about the U. S. Market. No, I agree you have made profits. But if you look behind the profits, there's been a reason behind it, right? The short end is completely because of supply constraints, right? It was not run of the mill business. It's not business as usual. I mean, it's like a commodity, right, when there's supply constraints. Steve, another word you have to understand is that that is how the U. S. Market is. There are continuing disruptions. But even if you take the disruptions out, it's still a profitable business. You look at us, you look at some of our peers in the industry. And there's still a lot of profit to be made. Well, could you I mean, could you explain more of your conviction why you think that way because it hasn't happened that way? Because the price erosion immediately sets it. What I'm saying is it's not, well, it has happened that way. Yes, UPCR is history, what we've eliminate our U. S. Business, it's always been profitable for us. And I still think it's a great market. There are a lot of opportunities to make money if we do the business strategy at the right prices. And I think the industry has seen that and we've seen across the board with every pharmaceutical industry as well. If you're making all these investments and you don't know what the pricing is going to be, you don't know how many competitors are going to enter, No, I don't think so. I think that's just the way the industry is. You have to find the opportunities. You have to ensure the variables that you take care of, retail and supply chain, retail sourcing, retail marketing front end. That said, there's no business with 100% certainty. If there was, let me know what I'll get in touch with. Thank you. Next question is from the line of Adeshit Jain from Idean Capital. Please go ahead. Just two questions. First question, how India business is doing out right now? Post COVID, things are opening up right now. If you can throw some color on this thing, especially on the equipped therapy portfolio, how the things are shaping up? And X, as you throw my thing, if you can throw some LifeSeq, what is the growth number for India business, if you can throw some right on this thing, sir? And third question, what is the CapEx guidance? Are you maintaining your 1,000 crores CapEx guidance for next 2 years? And if you can Farag, you mean the initial question? Yes. Just to get clear, we asked you for a Q2 guidance number. No, no. I'm not asking how the things are shaping up. I don't need numbers and all this. I just how the trends are there right now in last 1 month, if you can throw some light on it. So you want Q2 numbers basically? Yes, yes. So market is still opening up. So I think we're in a state of seeing the market just open up gently. I think it's good to make sure to make any large statements. I don't want to get into giving absolute numbers for Q2 when we are in the middle of the quarter. But yes, as you have heard, the cases have come down. So I think with cases coming down and I think some amount of market shifting up, I think there's some amount of normalcy coming back into the market. So I think that's what we're seeing at this point. And to your other part of the question, yes, Exelitrone has seen also the entire the other non Exelitrone, etcetera portfolio as well as company portfolio Yes. Please go ahead. So I have just one question. So you sound very cautious on the U. S. Business. And we all know that the competition typically leads to price erosion. But apart from that, in molecules, which are not the incremental competition, has that been also affected by the price erosion or the pricing has remained stable on those and the key ones who have incremental competition where we have seen price erosion? So generally, there is no competition across product profile. The most intense competition, of course, has been patterned when the prices have come down, but we assume that in other products also. Which have not seen any incremental competition in this quarter? I mean, let's see which I can find that there is no incremental competition. Electively, the stable price increases also, very gross margin. But in general, yes, I mean, it is patterns which had an impact on current quarter. Okay. Sure. Because I think the cautiousness that you have shown seems to be like there is some structural change. Even the products which are not seeing competition might also be facing tight competition. So that's right erosion. So that's why I think it's it's I think the competition is across the board, across everywhere in the U. S. So that is there. But within the portfolio also, there will be some products which would not have the incremental competition and their pricing has remained stable or there also because sometimes when the wholesaler consolidation happens, without incremental competition also price erosion happens. Yes. It's really coming down. Some products there was no erosion and some there was. Okay. Sure. Thank you. Thank you. Thank you. The next question is from the line of Kushal Manadani from Multilal Otsdar Financial Services. Please follow-up. So with this pattern, just to understand top three products should be contributing how much for users now? I don't think we'll do product I said let's see. It's changing every quarter. It's tough to say. Typically, industry is I think, with the way the industry is 20%, top 20% or is something about like 80% of sales. That's what the industry figures are, but we don't get to that it's too dynamic. Okay. And just to come, Arun Viswan with 160 or 60% for the quarter, how much to look for FY 'twenty two full year? So if you don't give the guidance, sir, I'm assuming it will get close to RMB 650, RMB700 standard level annually. Okay, sir. Got it. Thank you. The next question is from the line of Vishal Mankanda from Nirmalbank Institutional Equity. Thanks for the opportunity. My question pertains to the API business. So wanted to understand whether the current run rate can sustain for rest of the year? So as I mentioned in last few quarters, the API business had a phenomenal growth last year. And a lot of the growth last year was due to the COVID related disruptions. So having said that this quarter, they've done well. I expect them to be close to this 5%, 7% up to 10% growth is where we look at for this year for the API business. Okay. And the second is in the U. S, we have also seen volume share loss in case of Pendo Digim. So is it on account of manufacturing disruption? Or is it on account of competition? So as I understand, there is significant market share loss in that product, I believe. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Yes. I think it would be probably just pricing pressure or we may have backdrop, but there's nothing related to manufacturing. Okay. And would you kind of can you give a sense on the A and D approvals that you expect this year? Some sense on for A and D revenue number, Is that possible for you to estimate? No, it's very, very tough to do give that. And I wouldn't be comfortable with that kind of guidance because it's too dynamic. Who's going to launch? How many people launch? What the competitive intensity will be? It's tough to predict. So it's not that maybe the what value of the market what market opportunity do these ANDF represent in terms of the brand sales or the market overall market, including Zendesk? We can take this offline. I'll just ask. Sayak, you can get in touch with you. I don't have that figure with me right now. Okay. That's all from me. Yes. Thank you. The next question is from the line of Ranvir Singh from Sunabe Securities. Please go ahead. Yes. Thanks for taking my question. So my question pertaining to India business. We see some low base last year in Q1. Now we have seen a very good growth here. But I see that properly run rate has come up better than now pre COVID level. So my question is whether that kind of growth, I mean that kind of run rate, it's sustainable going forward? Or internally, what should I take growth, especially in acute segment? So what kind of growth you see from here on? So like I said, I think operationally, we are we feel there are definitely pre COVID levels we can we need to be at that. As long as the market doesn't shut down, I mean if you go into 1 more 6 month lockdown, then I think I can't tell you what's going to happen with the base of the business because you know lockdowns will impact the business. Keep in mind that things don't go rewire and market stays stable, I think the basic issues with good monsoon and GDP growth and global income, things like that stay in line. I think as long as the market behaves correctly, I think we're fairly confident of showing down growth in all our businesses going forward. And this growth will be it should be in excess of represented market growth, both for acute as well as specialty as well as wet. Okay, fine. And secondly, on API side, whether we have seen price erosion in Spartan API also? So there is the erosion in Spartan has been across the board. It's not a big API component for us. So it's tough to say, I think. The more so the pricing that we saw from the formulation side of the U. S, not as much on the API side. API was a supplier availability which caused the formulation tends to go up. And also we're not last year that API is off. Okay. And where we are what is the status of Oncology injectable facility? So have we started filing from this facility? Yes. We've started filing from this facility. We're doing batches and we'll be filing and then we'll await FDA inspection for the interim. So, can we take your question again? I mean, can we come into a follow-up? Yes. So just a related question that in oncology injectable, just I wanted to understand if we are awaiting for the GSFD and SXM or GSFD clearance, so meanwhile, are we selling anything to non U. S. Market from these new facilities? No. Okay. Okay. Thanks. Thank you. The next question is from the line of Ravi Kumar, an Individual Investor. Please go ahead. The next question is from the line of Manish Mehta from Rivers Delta Advisors. Please go ahead. Yes. Thanks for the opportunity. Just one more understanding on the domestic business. The overall market, as I understand, has grown by about 50% in the month of April May, And it came down to almost 14%, that is 1 4% in the month of June. So are we as a company also seeing a similar proportionate decline in June? Or is it still much better than the market? Okay. But I don't have that granular pace. You can tell me that. And we are very fast. Okay. I think we have I saw that we have been outperforming market, but then I'll just add to that. I think, yes, what you're saying, IMS inflection in April, May versus June, definitely there was an IMS slowdown, which we also saw. But like I said, the outcome of the bucket, I think the slowdown is more to do with like lockdowns. I think peak of lockdowns always slows the business down. I think there's nothing that the lockdowns happen. I think 3, 4, 5 weeks into the lockdown, everything starts to slow down because basic movement slows down or people moving in and out. I think that's a slow down, football slowdown. So we see a lag of the lockdowns coming in. So but that is it. I think that going forward, I think like I said, I think markets have opened up largely now. So we're seeing a more normalization level of movement. So and I think the monsoon coming in good also this year. So that gives a boost to cotton cold and active treatment. Okay. The other thing I wanted to know, has we expensed out sorry, has we capitalized any expenses with regards to R and D of Eleor and operational expenses of facilities not commercial? And if yes, how much is that? Yes. We have capitalized R and D of a year. And when we put the product line, once we get the approval, when we put to use, then we amortize those expenses. You can get the numbers in the March 'twenty one, and it is around R200 also. And talking about this quarter, what would that number be? That plus operational expenses that we capitalize, what would that number be for this quarter? Yes. So for the Olympics Pharma, it's around INR 70 odd crores, which is a fee of expenses. And Allure would be a small portion of around INR 10 odd crores. Okay. Okay. Thank you very much. Thank you. Thank you. The next question is from the line of Nitin Agarwal from Bank Capital. Please go ahead. Hi. Thanks for the clarification. Shunak, on the U. S, actually, you've been spending almost INR 600 crores on R and D for the last few years now, 3 years now. Where do you see some of these higher R and D spends sort of culminating? Maybe relevant meaningful launches or what's the which you need to follow from a revenue contribution perspective? So your question is the R and D expenditures that you're delivering, where do we see meaningful launches from these? Is that the question? By what time frame do we see this time frame on board and we see So I'm not asking for amortization of R and D expenditure or monetization? So in terms of results of the R and D expenditure you've done for the last 3, 4 years, over what time period do we see the results that are showing up from by the launches on those on the arm from that spend? Sure. Yes. So actually, as you know, the approval time frame for Aperi V is close to about 2 to 3 years. So as and when these products keep on getting approvals, we will be able to commercialize. And as we commercialize, we will see revenue coming in and therefore, the result can drop profit. So I think this is a continuous kind of an effort. So we keep spending money. And as in when the approvals come through, we keep on monetizing. So the amount that we have spent in the next last 3, 3, 4 years, you will see monetization of 5 to 7 years in the minimum. Right. And have you been just in the way the market dynamics have really changed over the last 2, 3 years, have there been a significant number of projects where probably where the dynamics for your I mean, your own estimates have changed meaningfully versus what you are what you thought of when you are probably investing those projects? Or are there like very few things like that? Yes. So obviously, dynamics keep on changing, and we keep on monitoring the market dynamics on almost on a monthly basis. So we look at where the products are, how much investments have been made, how much activity made, what is the complexity of the product and how many new products are emerging. So it's so many factors we keep on looking on a real time basis. And whenever we feel that the competition has changed in a dramatic way, when we are in early phases of development, we kind of take a call and kind of call those products. So basically, we actually monitor this on a very active basis and maintain the discipline of ensuring that the products which are in the grid are expected to generate the required rate of return. And lastly on that, your experience on operating assessment over the last 3, 4 years, opportunities like these where you can make probably higher than average revenue per product as soon as opportunities become difficult to combine? Or there's still nothing more opportunity like these around? Yes. So traditionally, the generic business, as you know, and you can see the number of filings that the industry is missing. Like data is available in public domain. You can see a number of ANDAs have been filed over the last maybe 7, 8 years. And so that's very clear situation for not just for us, but for the entire industry that you have a number of products getting filed. Having said that I think it's better we take this call offline, yes, yes, because I think we're talking about basic nuts and bolts of our business, which I think is Okay. Sure. Thank you. This will be the last question, which is from the line of Rohit Gala from Monark Network. Please go ahead. Hello, sir. Thanks for taking my question. So on the Dhola part of the business that is Allure JV, we've seen decent number of approvals. Can we throw some light in terms of the profitably and pricing part? Also given the investments you made in this asset, when do we expect it to start contributing meaningfully? So, it starts, Gautam. So, now you are right that we have got a lot of approvals, but unfortunately, it's not great commercial opportunity at this moment because of intense completion. We have started supplying, we have launched the products. We are talking to customers for getting better market share. We are also looking at optimizing the capacity utilization. So also the efforts we are doing, but I think the size of operations we have, it will take a while to really make their nature profitable. So we are ready to be patient at this moment. Fair enough. So last question from my side. So qualitatively, most of the approvals that we've been getting are relatively smaller opportunities and seem to be very well competitive like the recent approvals I'm talking about. And given the R and D expense Sorry, go ahead. Yes, given the R and D expense we've seen, yes, so actually, so we have a portfolio of products. So some of these products, silicon side, I mean, we keep on looking at competition. And some of these products, competition may have increased by the time we got approval. So you'll see that. But it's going to be a mix of products. So I mean we've had opportunities in the past and we continue to believe that we will have opportunities in the future. Okay. Fair enough. Okay. Yes. Thanks, Suneet. So I think we have completely ran out of time, and I would take this opportunity to thank all of you to have been actively associated with us participated in our calls asking the relevant questions, keeping us on our toes. And we look forward to continuing the interaction with you. Anyone who has some patience can always get back to us offline, Dipanshu earlier, others available. We will now also request. So I will close my comments. We thank you to all of you. Thanks. Good evening.