Good morning, everyone. I'm Aishwarya Sitharam from the Biocon Investor Relations team, and I would like to welcome you to Biocon's earnings call for Q3 FY 2022. I'd like to indicate that all participants will be in the listen-only mode, and there will be an opportunity for you to ask questions after the opening remarks conclude. Should you need to raise questions, please select the Raise Hand option under the Reactions tab of your Zoom application. We will call out your name and unmute your line to enable you to ask the question. While asking, please begin with your name and your organization. Please note that we will not be monitoring any questions on the chat box. You can raise any technical concerns that you may be facing for our support team to help. I'd also like to bring to your attention that this conference is being recorded.
To discuss the company's business performance and outlook, we have with us today the Biocon leadership team comprising of Dr. Kiran Mazumdar-Shaw, our executive chairperson, and other senior management colleagues. I'd like to take this opportunity also to remind everyone about Safe Harbor. Today's discussion may be forward-looking in nature based on management's current beliefs and expectations. It must be viewed in concurrence with the risks that our business faces that could cause our future results, performance, or achievements to differ significantly from what is expressed or implied by such forward-looking statements. At the end of this call, if you need any further information or clarifications, please do get in touch with Nick or Johnny. I would now like to turn the call over to Dr. Kiran Mazumdar-Shaw. Over to you, ma'am.
Thank you, Aishwarya, and good morning, everyone. I welcome you to Biocon's earnings call for the third quarter of FY 2022. Let me start this earnings call with warm wishes for a happy, healthy, and hopeful 2022. As I reflect on the year that went by, I recall the optimism at the start of 2021 with a flurry of vaccine approvals and signs of the pandemic receding. However, this was short-lived, with the Delta variant delivering a devastating second wave, thwarting the global economy, which was just beginning to recover. Vaccines were deployed across the world to attain levels of protection that would enable revival. When it seemed like the pandemic was reaching an endemic stage, yet another strain of the virus, Omicron, emerged. Omicron, while three times more transmissible than the former variant Delta, seems to be far less severe, with low hospitalization and death rates.
While the outcome of this variant is yet to be seen, mass immunization through vaccination or boosters, an expanded therapeutic arsenal, and lessons from the earlier waves will help blunt the impact of Omicron. This, however, may not be the last variant, and we, as a community, need to brace ourselves for more variants in the future and continue to adhere to COVID-appropriate protocols. Pediatric trials need to be sped up so that children can also soon get protective immunity. I also encourage everyone to take booster doses when available. The need for vaccines has never been stronger as the world continues to battle infectious diseases. As you are aware, Biocon Biologics has recently formed a strategic alliance with Serum Institute, enabling it to enter the vaccine space.
Collaboration such as this, along with our existing COVID portfolio, will enable us to continue to be at the forefront in the fight against COVID-19. Biocon remains committed to provide a comprehensive solution of affordable therapeutics for global healthcare. Let me move to the next slide, where I will now start discussing the key highlights for Q3 FY 2022. Let me take you through a few of these. For the first time, we entered the prestigious Dow Jones Sustainability Index in the Emerging Markets category for our progressive environmental, social, and governance, or ESG, practices. We made all the submission for corporate sustainability assessment for listing on the DJSI and made it to the Emerging Markets Index with a total sustainability score of 45 as against an industry average of 18, achieving a 93rd percentile.
We also secured an improved carbon disclosure project rating of B from CDP, which earlier, as per the 2021 report. We are working to establish a strong ESG framework that can endure the test of time and stakeholder expectations while enhancing our responsible corporate citizenship. Biocon has been selected to participate in the government's Production Linked Incentive Scheme 2.0 for the pharmaceutical sector. Under the scheme, Biocon will receive financial incentives of up to INR 250 crores over a period of six years linked to investments in manufacturing infrastructure and corresponding incremental sales of pharmaceutical goods.
Several companies had applied for the scheme, and we were among the 55 companies that were selected based on parameters such as manufacturing investments over the last 10 years, number of regulatory approvals, R&D spends as a percentage of manufacturing revenue, et cetera. I would now like to turn to certain management updates. Biocon Biologics has appointed Matthew Erick as the Chief Commercial Officer, Advanced Markets. Matthew's appointment reflects our strategic intent to build commercial capabilities in the advanced markets of North America, Europe, Australia and New Zealand. Matthew will be based out of the U.S. The second management update relates to Dr. Mandar Ghatnekar, who has been appointed as Chief Digital Transformation Officer at Biocon Biologics, and will be leading the IT and digital solutions initiatives. Ajit Pal Singh has joined us at Biocon Biologics as Head Branded Formulations, India.
Ajit will be responsible for spearheading near-term plans and long-term strategic investments for our existing portfolio, as well as building brands to drive sustainable growth. I will now move on to the financial performance of this quarter. At a consolidated group level, revenues for Q3 FY 2022 were INR 2,223 crores, versus INR 1,885 crores, a year-on-year growth of 18%, and a sequential growth of 14%. Revenues from our biosimilars business delivered a robust year-on-year growth of 28%, while that of our research services business grew by 10%, and generics revenues grew by 7%. We recorded a ForEx gain of INR 19 crores this quarter, as compared to INR 6 crores during Q3 FY 2021.
A loss of INR 77 crore arising on account of mark-to-market loss on Biocon Biologics investment in Adagio Therapeutics is reported for the quarter. We also recorded a gross R&D spend of INR 178 crore for this quarter, which corresponds to 12% of revenue ex-IndG. Of this, INR 138 crore has been expensed in P&L, while the balance amount has been capitalized. Core EBITDA margins, that is, EBITDA margins net of licensing, ForEx, mark-to-market loss on Adagio investment, and R&D stood at 33%, compared to 31% in the same quarter last year. This is on account of an improved performance in both biosimilars and generics. EBITDA for the quarter was INR 537 crore, a 25% year-on-year growth. The EBITDA margin stood at 24% as against 23% reported in Q3 FY 2021.
Profit before tax, or PBT, for the quarter stood at INR 269 crores, up 14%, versus INR 236 crores during the same quarter of last fiscal. Net profit for the quarter stood at INR 187 crores, versus INR 169 crores in Q3, a growth of 11%. However, if we adjust for the mark-to-market loss on investment in Adagio, our EBITDA during the quarter would be INR 614 crores, reflecting an EBITDA margin of 28% as against the reported margin of 24% previous, margin of 24%. Profit before tax for the quarter would be INR 346 crores as against the reported INR 269 crores. Let me now turn to the performance of our business segments during the quarter. Let me start with generics.
The generics segment delivered quarterly revenues of INR 607 crore, indicating a sequential growth of 15% and a year-on-year growth of 7%. Profit before tax for the quarter stood at INR 67 crore versus INR 53 crore in the same period last year, and PBT margins were up 11% as against 9% in the previous fiscal. The business saw a robust sequential growth due to the successful launch of our vertically integrated complex formulation, everolimus, in the U.S., which was also a day one launch for its 10 milligram strength. We also had a good uptick in our API business. The launch of everolimus was also a key driver in the year-on-year growth of the segment. Since the launch, the product has gained traction, and we expect that this product will continue to contribute to the growth of our generics portfolio.
During the quarter, operations which had been impacted due to COVID-19-related challenges in previous quarters started normalizing. However, the business continued to face pricing pressure headwinds in various markets. While margins improved for the quarter, there was an impact on profitability due to higher raw material costs, particularly solvents and higher costs of logistics. I think this has been felt across industries. During the quarter, we also continued to make progress on our product pipeline. Following the remote interactive evaluation conducted by the U.S. FDA in the last quarter for our oral solid dosage manufacturing facility in Bengaluru, we received an ANDA approval for mycophenolic acid delayed-release tablet at the end of November. During the quarter, we also received the dossier approval for everolimus tablets and fingolimod capsules for the EU market.
In line with one of our strategic priorities to expand our presence in newer geographies, we signed a partnering deal with Tabuk Pharmaceuticals to commercialize several specialty generic medicines in the Middle East and North Africa region. This is an important milestone for Biocon as we strengthen our commitment to provide affordable health care for patients around the globe. Our greenfield immunosuppressants API manufacturing facility in Visakhapatnam remains on track to be commissioned in FY 2022, with qualification and validation in FY 2023. As we add new capacities, accelerate new product launches in key markets supported by our efforts for driving cost efficiencies, we expect continued growth in the quarters to come. Now let me turn to biosimilars. Biocon Biologics recorded revenues of INR 981 crores for Q3, a year-on-year growth of 28% and a sequential growth of 2%.
EBITDA for the quarter was up 12% year-on-year at INR 236 crores. This includes a mark-to-market loss of INR 70 crores we made from the investment in Adagio at its IPO. Core EBITDA, including R&D, Forex, licensing income, and mark-to-market loss on Adagio investment, stood at INR 363 crores, which is up 27% year-on-year. Core EBITDA margin was at 38% for the quarter, in line with the same period last year, demonstrating our ability to profitably grow this business. Profit before tax, excluding the mark-to-market loss on the Adagio investment, stood at INR 201 crores, which is up 82% year-on-year. The strong growth in revenue and profits are backed by robust demand across products and geographies. We launched our 351(k) biosimilar insulin glargine in the U.S., paving the way for interchangeable biosimilars in the region.
The United States Court of Appeals for the Federal Circuit has ruled in favor of our partner, Viatris, on all five Sanofi Lantus SoloSTAR device patents, vindicating our long-held position on intellectual property. We expect significant uptake of the product in the U.S., evidenced by several commercial arrangements already in place. Semglee has received preferred status in the national formularies of key PBMs, including Express Scripts and Prime Therapeutics, and will also be offered through Walgreens Prescription Savings Club. Viatris has established a range of options to support patients, such as patient assistance and co-pay programs. We continue to see gradual improvement in the market share of Ogivri in the U.S., which was pegged at 11.4% in December. It continues to be a leading biosimilar trastuzumab in Australia and Canada.
We are witnessing growth from Europe with steady improvement in performance in the markets where Viatris is present. We have seen impressive growth in the Biocon Biologics-led commercial franchise in emerging markets. We have made good progress on our strategy of entering new markets, enabling sustainable growth in our B2B business. For example, we have forged commercial partnerships for biosimilar bevacizumab in about 20 countries post the EMA approval in April 2021. The Branded Formulations India business, which is our front-end commercial engine in India, continues to see healthy growth with nine months revenues for FY 2022 exceeding the full year FY 2021 revenue. We continue to progress our way through R&D pipeline and expect some of them to enter the clinic this quarter.
Encouraged by the demand for our current insulins globally and the pipeline ahead of us, we have initiated investments for the expansion of our insulin manufacturing facility in Malaysia. Our strategic alliance with Serum Institute Life Sciences, which involves a merger of Covidshield Technologies Private Limited into Biocon Biologics with effect from 1 October 2022, is on track. We will be submitting the relevant regulatory filings this month. To summarize, the strong performance of the biosimilars business, underpinned by its robust business fundamentals, validates its long-term potential. There are multiple near-term catalysts, such as revenues from the vaccines alliance with Serum Institute and the U.S. launch of biosimilar bevacizumab, aspart and adalimumab in the future, which will further propel the business. Now coming to novel programs.
Equillium, our U.S.-based partner, is on track to initiate a pivotal study in early 2022 for the use of itolizumab in first-line treatment of acute graft versus host disease. Equillium is also conducting a proof-of-concept study for its use in lupus SLE or lupus nephritis. SLE is an autoimmune chronic inflammatory disease with over 100,000 patients in the U.S. and over 45,000 patients in India. Many of whom do not respond to standard available therapy of steroids and immunosuppressive drugs. We believe itolizumab can address this unmet need with better remission rates, more durable responses, and a better safety profile. Our clinical strategy for itolizumab was further supported by the recent publication of a manuscript in the Journal of Clinical Investigation, highlighting the contribution of CD6-ALCAM pathway in lupus nephritis.
After observing positive trends in the part A of its phase I-B EQUALISE study for SLE and LN or lupus nephritis indication, Equillium has also now expanded the part B portion to clinical centers in India after obtaining approval from the Drugs Controller General of India. During the quarter, our Boston-based associate, Bicara Therapeutics, completed enrollment for the dose-finding part of the phase I trial for its lead program, BCA-101, as a single agent and in combination with a PD-1 inhibitor. Bicara established all doses tested to be safe and tolerable for both monotherapy and in combination, and is on track to open three expansion cohorts at the start of 2022. I now turn to our subsidiary, Syngene, which hosts our research services business. Revenue from operations stood at INR 641 crores for the quarter, indicating a year-on-year growth of 10%.
Profit before tax for the quarter increased by 10% year-on-year to INR 128 crore. Discovery services and the dedicated centers were three key growth drivers, while development services and manufacturing services delivered sustained performances. A significant milestone for Syngene in the dedicated centers was the extension and expansion of the long-standing multidisciplinary research collaboration with Amgen until the end of 2026. Last year, BMS also extended their contract by 10 years. This confirms the stability of both relationships and demonstrates the strategic value that Syngene provides to help their partners build successful pipelines. Syngene is well positioned to meet the evolving requirements of the client, and the company has raised their revenue growth guidance for Q4 and for the full year from mid to high teens. I would now like to conclude my remarks by saying that we are tracking well across our businesses, and we are confident that we will end this fiscal on a strong growth trajectory. I once again wish you all a happy, safe, and hopeful 2022, and I would now like to open up the floor to questions. Thank you.
Thank you, ma'am. While we wait for the queue, I would like to remind everyone that should you need to raise a question, please select the Raise Hand option under the Action tab of your Zoom application. We will call out your name and unmute your line to ask the question. First question is from Damayanti Kerai from HSBC.
Hi. Good morning. This is Damayanti from HSBC Securities, Mumbai. Thank you for the opportunity. My first question is regarding your launch of Semglee interchangeable product in the U.S. Since you launched the product in November 2021, can you share like what kind of response you have seen so far from your competitor in response to your interchangeable launch, whether they have gone more aggressive in terms of pricing offer or some other changes which you might have noticed in the market? Thank you.
Hi, Damayanti. This is Shreehas. Thanks for your question. I think as we've discussed in the past, many of these formulary listings happen in that July to September timeframe. We were very successful. Our partner, Viatris, was able to win a preferred status with Express Scripts in the formulary contracting cycle, which allowed us to get a status displacing Lantus, which was the preferred brand until then. Clearly, you know, we've been able to displace some of the incumbents and move them out from, you know, from that preferred status. We really see 2022 as a place where we will be in a position to move the market in the manner that we projected. We're not really looking at a competitive dynamics playing out during the course of the contracting cycle with the accounts that we've been able to secure.
Thank you, Shreehas. My second question is again on Semglee. Obviously you have got listed in some of the biggest PBMs in the U.S. Any update on your progress towards moving to government program, whether it's Medicaid or Medicare?
If you looked at the launch strategy that Viatris came up with, we came up with a dual-brand strategy. That dual-brand strategy was essentially to address exactly the kind of question you've asked, where we address patients in all types of segments, you know, regardless of their insurance or their payment plans, whether it is in the commercial space or the formulary listings, which is roughly about 30-odd% of the market, or the Medicare Part D, which you just referred to, which would be around 35% of the market, or the government-supported programs, or the part where we manage the Medicaid part of it, which would be another 15%-17%. With these initiatives and the two-brand strategy that we've come up with.
The programs that Biocon Biologics has launched, whether it is the senior citizens, you know, programs or the Walgreens prescription savings programs, we are looking to cover patients across the spectrum regardless of their co-pay strategies, so that we can really provide this affordable biosimilar interchangeable insulin to patients in the U.S. It's a very comprehensive strategy to provide these insulins to people with diabetes in the U.S.
Oh, thank you. I'll get back in the queue.
Thanks, Damayanti. Our next question is from Tarang Agarwal from Old Bridge Capital.
Hello, good morning. Two questions from my side. On appointment of Matthew, if you could give us some broad brush on the scale of commercial capabilities that is being envisaged on the front end, and would the focus be concentrated on specific therapeutic areas?
Let me respond to that, Tarang . I think if you've seen over the last few quarters that we've you know come back, we've actually built our leadership team and leadership capabilities across all parts of our business. You know, during the last three quarters, we've set up our emerging markets commercial front end with a very strong leadership. In fact, even today's sales announcement saw that we've strengthened our commercial front end further in India, despite the fact that we've performed very strongly in the current three quarters, which have exceeded the full year revenues of last year. Our conscious strategy has been that we expand our presence into advanced markets.
Matthew joining us is basically to expand into the vision and the strategy that we have set for ourselves, starting with our recombinant human insulin, which becomes our first product to get into the U.S. market, and then to get our wave two products across the various geographies where we intend to commercialize our products across the world. We have always developed a global biosimilars business, and now that we've strengthened our presence in emerging markets in India, we're looking to expand this into the advanced markets as well. That's where Matthew's joining us fits in, Tarang.
Got it. The second on Semglee. Could you give us some insights on the strategy behind launching branded and unbranded glargine?
Yeah. I just explained on a previous question to Damayanti. I think the important part was to cover patients in or people in all types of insurance coverages that they would have regardless of whether, you know, they have a particular formulary listing and a coverage through a particular formulary or not. Now, because we may have a coverage with some of the largest formularies, the national formulary listing with Express Scripts and with Prime Therapeutics. There could be people who would be in need of Semglee or the insulin glargine interchangeable who may not be in this coverage. That's where we brought in the second brand which then allows us for a much wider, broader coverage regardless of any particular a patient's insurance coverage. That's really the thought behind it.
Thank you.
Next question from Surya Patra, PhillipCapital.
Yeah. Thank you for the opportunity, sir, and congrats, good set of numbers. My first question is on the sequential swing in the biosimilar business, what we have witnessed. Is it fair to believe that the larger chunk of that has come from the interchangeable Semglee? A related question on that. The interchangeable branded version, Semglee Bota, it has been launched at double the price of the earlier version. How's what difference that we should see in terms of profit efficiency going ahead, since this is going to be a kind of a very chunky contributor throughout this calendar year, given the exclusivity that we'll be having?
Surya, I think the two questions, the sequential growth that we've talked about, I think we've had sequential growth for last three quarters, we've essentially had sequential growth all through. Fair to say that while we've had growth in all our segments across products, I think a large part of our growth has also come because of the launch of the insulin glargine interchangeable in the U.S. That's a fair comment. We expect some of this to stay as we get into calendar 2022. This kind of increased sequential growth is something that can be driven by insulin glargine. That is a fair point.
The second aspect is, where you talk about the margins and whether there is a, you know, there is an opportunity to see that, these margin improvements, will happen over time. I'll defer that question to Chini, to respond to that second half of the question. Chini, over to you on that part.
Surya. Yeah, hi. Sorry, I didn't catch the second half of the question, but yes, the sequential growth is for Q3 particularly on the back of the starting supplies of interchangeable insulin for the U.S. markets. We see that picking up as we go into 2022. Of course, the profit share that will flow through. I mean, as this converts into in-market sales. Because right now what you see in our Q3 books is just a supply of product from Biocon Biologics to Viatris. In terms of pricing and profitability, we don't want to comment on that. There is, I would say, I mean, there's always a gross price, net price, but we don't comment on pricing.
Sure, sir. I think there are a couple of new initiatives that has been taken by the company. If you can just provide us some clarity on those initiatives. Let's say for example, the PLI thing, what we have heard. You know, can you share something about that? What is the kind of investment commitment, the nature of the product that you would be targeting, whether it is the future initiatives on the PLI front is entirely fermentation-oriented, something on that front. This is one, the new initiatives I would say. Secondly, even on the vaccine foray through the Serum Institute alliance.
How confident you are in terms of optimally utilizing the targeted capacity of the Serum that is around 10 crore doses per annum, starting from, let's say, second half what you have mentioned. That is the second. And similarly, the third point I would ask here is that, how should one look at this INR 150 crore losses, what has been booked so far relating to the investment into the Bicara. If you can clarify these three new initiatives, then I think that will give a kind of a greater clarity about the next year's performance.
Maybe, Siddharth, you would like to address some of these queries, PLI and Bicara, and maybe Chinni could talk about the others.
Sure, I can. Surya, the PLI scheme, as you know, the government has announced the scheme, the second scheme, which was not necessarily linked to any products. It was linked to a broad-based scheme which covered the complex generics, biosimilars. As a group, we are investing heavily in CapEx, whether it's in Syngene or biosimilars or generics. In the category B where we were, where we had applied, we were the top company which was selected, and the benefit would be INR 250 crore, which will come over a period of six years on incremental sales. The revenues, which will be eligible for this would be coming from both generics as well as biosimilars. There's no change in strategy as far as investments are concerned in CapEx, because we continue to invest, let's say in generics itself, whether it's in fermentation or synthetic or peptides facilities and in insulin for in Malaysia, which obviously does not qualify for PLI benefit, but other antibody facilities in bios for biosimilars in India.
Sure. Sure.
As far as Bicara's investment is concerned, we have residual carrying value of investment in our books of INR 25 crore, which we expect would be going through the P&L in the fourth quarter. Bicara is also in discussions with third-party investors to raise the fund to advance its pipeline. As we have said that, you know, Bicara will look at external fundraise for future R&D expenses, and we expect some movement in the fourth quarter, after which we will see that those expenses will not be on the consolidated P&L.
Got it. My last question.
I'll take the vaccines question.
Sure.
Yes, of course, we see very strong demand for our vaccine portfolio. Initially, of course, there's a bias towards the COVID portfolio, then rolling into the next-gen vaccines and then progressively as we enter developed markets, which are in our medium- to long-term plan. To convert that into financial terms, initially at the pricing, we believe it this could play out closer to 100 million units, which could translate to close to $400 million of revenues and profits, which is in line with our core EBITDA margins, which is in the mid- to high 30s%.
Whether you have started some marketing effort there, sir, because just marketing around 10 crore or 100 million doses from nowhere, whether it would be a staggered ramp-up, that is why or you have taken up your marketing efforts seriously and hence you are confident to utilize optimally within the first year.
Yes, there's a lot of joint commercialization efforts underway, and we believe that the revenues will start to play out right from the start of the merger. I mean, right now it will be through CTPL, and as CTPL merges into BBL, we will record the revenues.
Sure. Yeah. Thank you, sir. Thanks a lot.
Thank you, Surya. Next question is from Shyam Srinivasan from Goldman Sachs.
Hi. Thank you for taking my question. Quick, three questions, and I'll stop. First one is on, if you look at biosimilar pricing, it has been again, if you look at the latest 3Q data calendar, from CMS, another 6%-7% decline QoQ. Brands have taken 3% cut. Both the two sets of both brands and biosimilars have taken significant cuts. If I were to plot the 15-16 quarters, since biosimilars have launched in the U.S., we have seen up to 50% drop in prices. Just want your comment on how you look at pricing. In fact, if I look at Biocon, it has taken some of the lesser pricing. How should we kind of look at price versus volume? What are some of the aspirations?
So that's question number one. Question number two is on capital allocation. We've had some press speculation around you looking at Mylan's biosimilar business in a combined entity. If you could care to talk about that or at least give us what are your capital allocation priorities are. The third question is on the split of Biocon Biologics revenue this quarter, EM versus DM, and how does this progress? Thank you.
Hi, Shyam. Thanks for your question. I think, let's talk a little bit about price erosion first. I think the important thing is that, and I've talked about this before, the general acceptance of biosimilars, particularly in the U.S., which was something that was a big question mark, has been quite resoundingly addressed. That there is no concern around biosimilars acceptance. That's a very positive takeaway. We are seeing multiple, you know, players enter the market and be successful now. There is, you know, there is acceptance of that. We also aren't seeing a very steep decline we were expecting, you know, with increased competition. That's the whole idea behind having biosimilars. That's the whole idea behind having competition, to see that there is a more affordable option to the brand.
We have expected this all along, and we've signaled that right from the beginning. The U.S. has been a more accommodating, steady market where price sanity has prevailed, if you look overall. We've basically, between Viatris and us, our strategy has been to preserve value as we've gone, so we've not chased market share in pursuit of that. We've not eroded value like many others. We've continued to hold on to that. Our market shares have held steady in that, you know, 8%-10% market share range that we've had, whether it is in Fulphila or whether it is in Ogivri.
We of course see it now inch forward with Semglee, with the discussions we just had now recently. In Europe, we see a slightly different trend. It's not a homogeneous market, it's a heterogeneous market. Several market archetypes where you see that where there is a single big vendor, particularly in the Nordics, you would see a more aggressive pricing trend and you would see someone, a winner-takes-all kind of a strategy. Then there is more aggressive pricing in such markets when in certain cases. In most other markets within Europe, you have also seen a position where there are mandated price reductions year on year once there's a first biosimilar launch. Some of these are predicated, some are pre decided.
We have seen that, given that there is a 10%-25% reduction which you would have factored in, the market remains, you know, in line with where we had expected it to move. Emerging markets sometimes have, you know, surprised us with the kind of, you know, price that they've held on to, and that's where we've also seen, encouraging signs for the products that we've brought to market. Kiran talked about signing 20 new partnerships in recent times in emerging markets, and we are encouraged with the response that we've received in several markets and the partners that we are working with.
On the whole, I would say price erosion is along with the expected lines and really something that biosimilars were expected to do when they as a basic principle to bring them into the market. That was the first question. Let me answer the third question that you talked about, where I think you asked us about the EM versus DM split in for the quarter. I think what's been our case so far is with the launch of the interchangeable insulin in the U.S., we are starting to see that the needles start to move towards the developed markets.
It's still at this stage, I would say, given that we've had a strong emerging market performance, it's more or less at this point around that 60% mark. It's balanced still. We expect it to probably start moving as we gain more supplies into the U.S. with Semglee and other products. I will leave the question on speculation out at this time because there's no point to responding to speculation, but unless Arun or Kiran want to respond to anything beyond that.
Just maybe the question then on capital allocation, yes. What are the priorities?
Chini, do you want to respond to the capital allocation part of it?
Shyam, I mean, of course there is two types of investments needed to be successful in the biosimilar market, or let's say three if you add the commercial infrastructure. The R&D, the CapEx and the commercial infrastructure. As you've seen, we've been investing quite significantly in building our CapEx, capital infrastructure to service both the developed and the ROW markets. Significant amount of investment has already been made. We expect that to play out over the next two years as we commission one of the large-scale, monoclonal antibody facilities in the coming fiscal and another facility in FY 2024, FY 2025 timeframe. R&D investments, you will see that going up as we bring some of our Wave two molecules into the clinic. Clearly there is a lot of investments going into this, both in building the capital infrastructure, CapEx and the R&D investments needed to give us that long, medium to long-term growth from Wave 2 and Wave 3 molecules.
Thank you, Senior Management.
Thanks, Shyam. Next question from Prakash Agarwal, Axis Capital.
Yeah, am I audible? Hi.
Yes. Yes.
Yeah, hi, good morning to all. The question is on R&D. We saw, you know, in the last two quarters, R&D is kind of coming off. It's down 5% YOY nine-month basis. Just wanted to understand, you know, how do we see this for the rest of the year as well as next year? What would be the outlook? And is there any update on the Sandoz pipeline? We had talked about that around calendar 2022 we will give some color. These two questions, please.
Prakash, I think we talked about it in Kiran's opening remark as well. Our R&D pipeline has been quite robust. We've in fact, you know, we are looking to get our products into the clinic this quarter. You will, you know, you're right in noting that our R&D expenses so far have been, you know, more or less, you know, not as high as we would've expected. That's because our products have not hit the clinical stage until now. This quarter we are expecting them to be in the clinic, and you will see that there'll be a big catch-up in terms of the R&D development investments that we will be making once these products move into the market.
In terms of the Sandoz pipeline, we had talked about these products being under development, and we will, you know, disclose them to the investors once we've reached that stage where we can talk about them publicly.
Prakash, any follow-up questions on that?
Yeah. Am I audible?
Yeah.
Any outlook we can give for the R&D expense next year, like we always do about 12%-15% has been our outlook for FY 2022?
Chini, you want to respond to that?
Hi, Prakash. We will be in a better position to give you guidance for FY 2023 as we draw up our full year plan for next year. Yes, we see this trending upwards.
Okay. Is there any update on the rh insulin progress? I mean, I learned from the investor deck that, you know, it is progressing. What are the timelines we are looking at in terms of going to the next level and approval if all goes well?
In terms of our rh-Insulin program, there are multiple products that are in the human insulin franchise. We are developing all of these products to bring them to the U.S. At this stage, these products, you know, we progressed with the soluble product, and we moved that for discussion with the agency. We are working to bring the other products as well to the agency. We will of course discuss in more detail once we're ready to have a more complete conversation on that, Prakash. We are moving on that, you know, as planned.
Okay. Lastly, you know, a mix of, you know, the conversation we had now. So R&D is going to increase a bit. Cost structures given that we are, you know, planning to expand in, you know, vaccine commercialization, et cetera, will go up. At the same time, we have higher value insulin glargine. I mean, on a net basis, I assume it will add more value. So what is the margin trajectory that we are looking for next year, given, you know, we have some big products as well as, big scale up of future products?
Prakash, I'll take that. Yeah. For the biosimilars business, we see core EBITDA margins, I mean, sustained or improving as you go forward with, I mean, both the addition of the vaccines business and the increased mix of developed market sales to our total sales. Those two things will help to maintain and grow our core EBITDA margins. On R&D, I'm not yet in a position to give you specific numbers, Prakash.
Okay. This is despite assuming R&D expense will increase, we are guiding the-
Sorry, Prakash. The core EBITDA margin is before R&D.
Oh. Oh, got it. Okay. Thank you. Thank you for your answers.
Thanks, Prakash. Next question is from Yash Tanna at iThought Advisory . Yash, please unmute your line.
Yeah. Am I audible now?
Yeah.
Yeah. Good morning team, and congratulations on a good set of numbers. My first question is that, we're addressing Biocon. We have won the litigation against Sanofi for Lantus SoloSTAR. We had mentioned in the press release that the market for Lantus is $1.4 billion and Lantus SoloSTAR is around $5.1 billion. My question is, I want to understand the addressable, total addressable market for this Lantus product. It would be around $6.5 billion or $1.4 billion only for the Lantus. That's my first question.
There are two different products there. Lantus is sold as a SoloSTAR, as a pen, a prefilled pen, Yash. They also sell it as a 10 mL vial, which is also called as Lantus. We at Biocon Biologics are the only player in the market which has both these products. We would essentially have a complete offering of products, and we would have the full addressable market.
Of $6.5 billion, right?
Yeah. Those are the full reported numbers. The actual numbers will be.
Yeah. Got it. Thank you. The second question is a little product specific question. A drug called Victoza, whose sales around $2.8 billion-$3 billion. I believe the patent is expiring in 2023. The API is liraglutide, which I think we have filed in September 2021. My question is, what is the status on that approval, and what kind of economic opportunity can that present to us?
Let me take that. You know, it's covered. The product is being developed by the generics business. It's a very large product in the U.S. and Europe. We have filed the DMF, and we'll soon be filing our BLA in the U.S. We hope to be in the market in line with the second round of companies we'll be launching because there are only a couple of settlements for day one launch. We should be in the market in FY 2025 for this product.
FY 2025. My third question is around the novel biologics segment. I went through an interview of the Equillium CEO, Mr. Bruce Steel, and where he mentioned that early next year they will initiate trials for itolizumab for acute GVHD. If those trials are successful, it will be approved for acute first line treatment of acute GVHD, which is more than a $500 million market in the US, what he mentioned. Then I went through the Equillium annual report that mentions that there are a few milestone payments that we can receive upon the approval and sale of this drug, which is, I think around $550 million. I think we also have exclusive supply arrangement with Equillium. My question is, what does the approval of itolizumab present for Biocon in economic terms?
Well, there are milestones linked to the various development stages. There would be, you know, the, and the amount that you mentioned is from various indications. Now, the first, the most advanced indication is acute GVHD, which is also an orphan indication. We expect, once the trial starts this year, we'll be able to, Equillium will be able to make good progress in the next couple of years. There are milestones linked to, filing and approval, filing of BLA and approval. There are royalties, which are applicable on sales. We will be supplying the product. The product itself will be manufactured by Biocon Biologics since it's an antibody. We'll be supplying to Equillium, at a cost plus markup.
Can you quantify any numbers in terms of milestone payments or anything like that?
Yash, it's a little premature to comment on the payment because we are still few years away.
Okay. Sure. Thank you. These are my questions then. Best of luck for the team.
Thank you, Yash. Next question is from Nitin Shakdher from Green Capital. Nitin, please unmute your line.
Hi, good morning to the management and good morning to Mrs. Kiran Mazumdar-Shaw as well. I have two simple questions. My first question is in relation to the strategic alliance between Biocon Biologics and the Serum Institute Life Sciences. Does the management feel that in terms of the growth of the communicable diseases and the vaccine market seems to be far higher in the future versus the growth in biosimilars? Can you sort of comment on that point, please?
I don't think it would suggest that communicable diseases are much you know are likely to grow much faster in terms of the need for vaccines and biosimilars. These are absolutely two separate categories. I think as a company that is focused on global healthcare, up until now we were really focused on non-communicable diseases. This pandemic actually shone the you know the spotlight on communicable diseases which we had not really looked at seriously. We believe that you know in the future it's important as a global healthcare player to cover both communicable and non-communicable diseases. I think each one of these businesses has its own growth potential. Its own growth segments. We believe that obviously from our business point of view, our focus is on pharmaceutical and biopharmaceutical opportunities as the primary focus for us as a company. We also believe that vaccines can add to this focus and make us truly a global health company focused on both aspects of disease.
Thank you, ma'am. My second question is in relation to the specific partnership with Adagio Therapeutics to manufacture and commercialize the neutralizing novel antibody. I just wanted to get a sense of what are the specific products which are going to be launched for the prevention or the treatment. Does the management have a sense of the product line at this point in time?
Well, the principal product is a product called ADG20, which was an engineered monoclonal antibody for the treatment of obviously COVID-19. At this point in time, of course, its efficacy on all previous variants was very high. Therefore, it was considered to be a very differentiated antibody. Because it was an intramuscular jab as opposed to an IV infusion, it had a very strong differentiated profile. It had high efficacy with all previous variants as well as a very differentiated drug delivery profile, which is why we believe that this was a very good partnership, and it is a very good partnership. Recently they had a setback because the efficacy vis-à-vis the Omicron virus was substantially reduced.
However, they have also, you know, shared with the, in the public domain that the reduction in efficacy of their antibody is no different to that of the two antibodies, the GSK-Vir and the AstraZeneca antibody, cocktails, which also have shown a reduction in the efficacy to treat Omicron patients. They believe that they're on par with these other antibody preparations, and they would like to now actually have an adaptive trial design that can actually enhance the dose form of their current dosage to see if they can actually deal with Omicron in a better way. I think that's the reason why they've had a bit of a halt in their clinical trial program.
Having said that, you know, they have indicated to us that ADG20 continues to be a very important opportunity, a very important product. As you know, the pandemic is not over as yet. We don't know what variant will come next. At this point in time, we believe that this pandemic does require treatment interventions, and we believe that antibody treatments are a very important part of this treatment required for dealing with the pandemic.
Thank you, ma'am. Thank you for the clarifications. That's all from my side. All the best for the next financial year.
Thanks, Nitin. Next one is from Sameer from Morgan Stanley.
Hi, good morning, everyone. My first question is on aspart. How are you thinking about the CRL issued by FDA? Is it connected with the six open observations? By what time do you think you'll be able to resolve this and get the approval?
Hi, Sameer. The CRL was a disappointment for us. Really, we've gone through the CRL letter and there are essentially two aspects to it. The agency came back to us and said that there was a particular diluent. Diluent is used alongside the aspart vial that we have, and that is given to patients who are of very low body weight, particularly pediatric patients. They need this diluent to dilute their dose so that they can take that rapid acting analog. They wanted more information of that diluent to see which is essentially water for injection along with some excipient. It doesn't have the product at all. It's a separate product in itself.
That is something that we have to provide more information to them, which we will, we are working to provide. The second one was the updates on the inspection, that, we had provided them in terms of the CAPA responses that we had given them. They wanted us to provide us, a completeness of that, data, and we will be, submitting that, information to them. We have been in, correspondence and dialogue with the agency to understand something that is currently ongoing. Once we're done with that, we should have a more clearer picture how we will be able to and how quickly we'll be able to resolve the CRL.
Yeah. Thanks. Just putting these things together, do you think you'd be able to secure the approval in time for contracting for 2023, or there's a risk that we slip into later part of this year?
The way it was scheduled is that we were looking to be in time for the second half of the year, and we expect to be there with that. We will of course know once we interact with the agency. But to give a commitment on behalf of when the agency will decide would be actually going too far. But we are hopeful and let's see how the discussions progress.
The second question is on insulin glargine. When you have done the contracting already for 2022, how do we think about the volumes and the pricing? Are these open? You just have sort of a broad, you know, umbrella sort of contract or are they more specific? If you wanna share your thoughts around this.
Well, these contracts are drawn up by our partner, Viatris, along with the various customers that they've got. You know, we may not be able to share a lot of detail around it, but these are contracts that are executed for a contracting term, you know, which is in some cases a year, some cases two years, which could be, you know, defined as such. We believe that these are, you know, we're not looking for a quarter-on-quarter change of situations like this. We believe this to be a sustainable revenue stream for us, a volume stream for us, which is why, you know, we've guided that some of these things will be, you know, much more steady going forward for us.
Okay, thanks. One final question from my side, if I may. It's on the generic business. So Siddharth, if you can just respond to points. One is, I believe you have spent INR 600 crore on the Vizag facility. So what kind of asset turnover can we expect from this, and over what time period? And second is on the PAI inspection that was done a few months back, any update on that final approval? Thank you.
Sure, Sameer. The asset turn is difficult to quantify because the output from Vizag facility would go both for our API business as well as for our formulations business, and we do have an existing facility in Bangalore, so this, the Vizag facility will augment that capacity in Bangalore. As you know, immunosuppressant has been our biggest growth driver in the last couple of years, and we are capacity constrained, and we definitely see a huge growth coming in from this investment. We will be in the future also looking at adding more fermentation capacity in Vizag, which is beyond immunosuppressant. Obviously being a greenfield investment, there is a lot of infra cost, or the CapEx on infra was included in the INR 600. In terms of asset turn, it would be difficult to quantify, but it, you know, you can look at our API business asset turn overall was in the range of 1.25-1.5. For the formulations, it's a little lower too. I don't expect it to be anything lesser than that once fully commercialized.
Thanks for that. Also on PAI inspection.
The PAI inspection was concluded for our formulations facility. Immediately after that, we received approval for mycophenolic acid in November, December 2021. We have a couple of more drugs which are pending approval, and we actually expect to get some of these approvals during the fourth quarter.
Okay, great. Thank you. That's it from my side.
Thanks, Sameer. Next question is from Harith from Spark Capital. Harith, please unmute your line. Harith, are you on? Yeah.
Yeah. Sorry about that. Good morning. Thanks for taking my questions. My first question is on Aspart. When I look at our launches, biosimilar launches in regulated markets in the past, like pegfilgrastim, trastuzumab and insulin glargine, those were followed by successful launches of these products in India and some of the emerging markets. For Aspart, can we expect a launch in India in the near term? I see that there are fairly large brands from the innovator in this in Aspart in India.
Harith, we've always developed a global franchise, whichever product we've picked. Now, I don't want to specifically talk about a particular market, but whichever product we've picked, you know, the idea has been to build a global franchise with each of the molecules that we've brought to the market. It could be depending on the business cases of a particular market or the specialties of a particular market that they could be timed differently, but the intent would be to see that it makes sense to bring them across.
All right. Second question is on novel biologics. I see that we've been booking some revenues in this segment, not a very material number, but INR 10-15 crores, in the last two or three quarters. What exactly is this related to, any specific programs? And is this part of the licensing income that we're disclosing?
I'll take that question. This is actually intercompany billing that is billed from India to Bicara US and Bicara being an associate, this intercompany billing does not get eliminated. The corresponding leg is sitting in R&D cost and in SG&A under Bicara. This is not really a third-party income.
No, I think there is also a, he may be referring to itolizumab sales.
No, no, Kiran. What he referred is right. This is Biocon billing to Bicara intercompany billing.
Okay. Yeah, last one, again, an accounting related question. What is our current stake in Adagio? I'm also trying to understand the rationale for taking the MTM losses through the PNL and not through the other comprehensive income.
Chini.
Harith, hi. I'll take the question. We've got a small minority stake in the business. We've invested $5 million in Adagio. Don't have the specific percentage, but it's a small minority percentage. The thing of doing it through the P&L, we saw this as a short-term investment, and thought we'll take it through the P&L and exit this fiscal. But the price has moved quite a bit. As you saw in Q2, we had gains playing out because of Adagio, and this quarter we have a huge loss. It's something, I mean, in retrospect, we should not have taken it through the P&L, but it is a decision we have made, and we've been looking to exit from this investment in the near term once the price stabilizes.
Got it. Thanks, Chini. That's all from my side.
Thanks, Harith. The next one is from Vikram Agarwal, Systematix Stockbrokers.
Good morning, team. Just one small question. In the recent past, one of the prime reasons why the results had suffered was because of logistical issues. Issues such as due to COVID, hospitals in the U.S. were not able to treat, you know, major therapies, you know, like, diseases like cancer and the other things, and delays in U.S. FDA approvals. What do you think is the situation of these, and can you comment if these problems have abated or we can expect certain similar problems arising in the future also? Thank you.
Vikram, you know, some of these logistics issues, as I think you noted, Kiran, the initial remarks, I think, the pandemic really, you know, just when we had thought that it's behind us, it's actually come up with a new variant each time. Each time it's come, you know, it's really impacted the way we've tried to return to normalcy as a community. You know, likewise in the U.S. as well, where footfalls to hospitals have continued to be challenged. Put off maybe non-critical treatments as much as they can. Of course, you know, whatever is critical has to happen. Some of these things have impacted. They continue to slow things down. You know, eventually these things will have to come back to normalcy. At this stage, we do see some you know, trailing impact of these, you know, delays because of the COVID impediments that are there across the world. I think we are as a community, we are learning to deal with it, is the way we would see it.
Great. Thank you and all the best for the future.
Thanks, Vikram. Next one is from Nithya from Bernstein.
Hi, thank you. Two questions, one on Semglee. Semglee, Shreehas, you had mentioned that you have the interchangeable product, you have the branded product as well. Question: Is Mylan likely to retain the sales force into 2022 as well, or is that something they're retiring? Because I assume your profit share is net of their sales and marketing expenses.
Nithya, I didn't quite catch your question. Was your question that, given that we have a two-brand strategy, what happens to our sales force? Probably my line was bad. Is that the question?
The question is Viatris retaining the sales force in 2022 and beyond? The reason I'm asking is I'm assuming your profit share is net of the sales and marketing expenses.
Yeah. I think in terms of Viatris' commercial strategy, I wouldn't want to comment too much on that, if that's best left to them to address. Clearly, we are looking at, you know, glargine as not just one product and the formulary having, you know, being listed in some of the top formularies being the end of the line. We're looking at more products to follow. Clearly we are looking at a larger subscription than what we've got today. We don't necessarily see this as a be all in terms of where it is. We are looking at the more wider presence than what we've created. We see this as a beginning. I wouldn't necessarily comment on the sales force increase, decrease, specifically. That may be a Viatris specific question, but we see this as a beginning of a franchise rather than just one win or one product situation. In terms of how our profits are accounted, I'll let Chini comment on that. Over to you, Chini, on that.
Nithya, we had actually clarified in the past the profit share with Viatris is based on gross profit and selling and marketing expenses is not a deductible that we shared.
Understood. Thank you. The second question was on aspart. I think in the last earnings call, Eli Lilly had commented that the aspart contracting is far more complicated in fast-acting insulins. It happens along with premixed insulins in a more bundled format. Your reaction to, you know, do you see this as a challenge to adopting your aspart when it's in the market?
I don't specifically recollect that conversation, but we've not heard of anything specific, Nithya, that could be a challenge that is specific to aspart contracting. We do believe that we will have to be there at the table. We also believe that we will, you know, have a product which meets all the expectations of the agency and will be amongst the, you know, the first interchangeable analog as well, rapid-acting analog. We believe we will have what it takes to be approved and be chosen over the competition. I don't know or I can't recollect any specific challenges that you referred to.
Thank you, Shreehas. I was referring to what, Eli Lilly said in their last earnings calls about payer contracting happening in a more bundled fashion along with premixes in the fast-acting insulin category. That's what I was referring to. Thank you. Thank you so much, and all the best.
Thank you.
Thanks, Nithya. Next one is from Chintan Chheda from Quest Investment Advisors.
Yeah. Hi, good morning. Hello, am I audible?
Yes.
Good morning to the team, and thanks for taking my question. My first question is related to insulin. Just wanted to understand, like, up to what level of market share in the U.S. this Malaysian facility can fulfill the requirements at existing capacity. This facility had some tax benefits in phase one. Will the same be applicable for phase two of future expansions?
I think in terms of the, you know, the ability to supply the U.S. market, I think we've got a very good capacity to supply the U.S. market. We've said that in the past as well, that we've got a very we built a global scale facility in Malaysia, which is a very large integrated facility for drug substance, drug product, and pen assembly. We've continued to expand that facility as well. In fact, today, we've also shared that, you know, encouraged by the responses that we've seen and the impending aspart approval in the near future, we will be making even further investments on that site, so that, you know, we can cater to even a higher market share than we're looking for today. We're very confident in terms of the ability to supply the market. We are looking for, in fact, much more aggressively in terms of volume share as we get into more products ahead of time. Clearly, you know, very strong position on the capacity front to feed the market.
Tax benefits, what were the tax benefits? Do they stick if we go further for further expansions?
Yeah, Chintan, I'll clarify that. Yes, we do have very good tax. We've got a long 15-year tax holiday with, linked to our phase one investments. We are engaged with the Malaysian authorities for incentives supporting the phase two investment.
Okay.
If that's all.
Yeah, yeah. Thanks for that. Second question is related to aspart. So for the EU market, we have the approval in hand. So have we gone for the launch in that market? And if yes, then what has been the performance so far in this financial year?
Chintan, we've got the approval in the EU, and which is why we're very confident about the science and we are looking for the right time to launch the product. At this time, you know, we are working, Viatris is working out on the right launch strategy and the right markets to launch in. As I've said before, Europe is not one country. It's a heterogeneous market, and it's about the timing of which product to launch in which markets. They are working on putting that commercial strategy together. Given that we've, you know, crossed the bridge in terms of the approval part of it, we will be, you know, putting together that strategy with Viatris to bring the product to Europe once that's put together.
Okay. Thanks a lot. That's it from my side.
Thanks, Chintan. Next question is from Patrick Stadelhofer from Atlantic Lion Investments.
Good morning. Just one bigger picture question. How do you see the biosimilar partnership with Viatris evolving? Given how important biosimilars are becoming to your overall results, how do you strategically think about your ability to control your own destiny here versus having to rely on Viatris, for whom this is a much smaller part of their business, executing for you? Thank you.
Arun, would you want to respond to that?
Patrick, if you look at our portfolio of biosimilars, our initial portfolio was partnered with Viatris, and they continue to be a strong partner for us on our initial wave of products. We've also talked about our increased R&D spends going forward, which essentially reflects the progress we've made on our future portfolio, which is not partnered with Viatris. Clearly, as our future portfolio matures, you know, we would be, of course, more, I would say, balanced in terms of our commercial channels, what goes through Viatris and what goes directly, y ou know, through us. We talked about making initial steps in building out our commercial footprint in advanced markets through some of the senior hires. This is the first step towards that destiny that you talked about being completely vertically integrated across R&D, manufacturing and commercial for our-
Thank you.
I think next one is from Vipul Shah from Samangal Investments.
Hi. Am I audible?
Yes.
My question is, what will be the CapEx for such expansion for Malaysian facilities, and what is the financial performance of the Malaysian facilities? What is the capacity utilization? What is the EBITDA level performance? If you can comment, that will be very helpful.
Hi, Vipul. The Malaysia expansion will come within our overall CapEx plans that have a CapEx spend of about $100 million-$150 million per year. We look to fund the Malaysia expansion within this overall CapEx allocation. If you look at Malaysia's performance for the quarter, this has been a very good quarter because we had positive EBITDA and breakeven at the PBT/PAT line, near breakeven. As profit shares accrue from the states assembly in the US, we see this trending upwards and Malaysia moving to full profitability in FY 2023.
A follow-up to that. Should we assume that Malaysia will at least breakeven from here on for all subsequent quarters and year?
Yes. We strongly believe that Malaysia will be profitable going forward from Q4 onwards.
Thank you, and all the best for you.
Thanks, Vipul. Next one is from, Ashutosh. Ashutosh, please unmute your line.
Yeah. Can you hear me?
Yes.
Thanks for giving me the opportunity. My question is: how do you see Biocon different from today's Biocon in less than next, say, 10 years? Thank you.
Sir, ma'am, you're on mute.
Thanks for that question. As you know, Biocon sees itself as a fully integrated global biopharma biosimilar company. I think one of the missing capabilities we have is really to have a strong commercial engine for advanced markets. I think in the next 10 years, we expect ourselves to be amongst the leading biosimilars companies globally as a fully integrated player in this particular segment with a very large portfolio of products. We expect to have one of the largest portfolio of biosimilars catering to global markets and being dominant in many, many of these markets, especially some of the key global markets, which are the advanced markets and key emerging markets. That's how we want to see ourselves.
Thank you.
Thanks, Ashutosh. I think, the next one is a follow-up from Surya from Phillip Capital.
Yeah. Just a follow-on on the small molecule side. This immunosuppressant dedicated facility what we have set up. With that, obviously, we will have a kind of a meaningful global positioning. Can you just share what is the current positioning in the global market so far as APIs are concerned, and the competitive position versus Chinese peers and post this plant, what equation that we can have? We know that there is a positive trend that is also likely to support that the alternative to Chinese source equation is a kind of favorable wave, I believe. Given all that, what expectations that you are having out of this immunosuppressant portfolio and let's say even the fermentation capability as a whole that you have built?
Thanks, Surya. I will defer this question to Neel, who heads our commercial for our API business.
Yeah. Thanks, Surya, for the question. Surya, we already have a very, well-established, client base on immunosuppressant, and also our clients are well-spread globally. Today we have large market share both in advanced markets, emerging markets as well as domestic markets in India. Many of our existing immunosuppressants, we are unable to fulfill the market demand. We believe the additional, capacities that would kick in with our, investment, it would fulfill those demands. Our leadership market position that we have would become even stronger. You are right with your thought that while, you know, there has been a dearth of, capacity over the past 24 months, we believe that, we would be able to overcome the, you know, sentiments against China and get a larger market share than what we have today.
In fact, if I may just add, for the immunosuppressants, in fact, that we are working with many Chinese companies to sell immunosuppressants for the Chinese markets. So that's how you can understand that if the Chinese companies are buying from India, that shows the uniqueness and differentiated part of this molecule, where there are not many companies locally who's able to get the drug at the same quality that they are able to source from us.
Sure, sir. Is it a free from China kind of a product category in terms of?
Although from a logistics perspective or supply chain dependency, this is not dependent on China.
Sure, sir. Yeah. Thank you.
Thanks. Thanks, Surya. I think this was the last question for the day. We thank you all again for joining us today. If you have any additional question, please feel free to reach out to Aishwarya or myself. We look forward to seeing you again next quarter. Have a good day.