Ladies and gentlemen, good day and welcome to Cipla Limited's Q3 FY25 earnings call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Diksha Maheshwari, Lead Investor Relations, Cipla Limited. Thank you, and over to you, ma'am.
Thank you, Michelle. Good afternoon and a very warm welcome to Cipla's Q3 FY25 earnings call. I'm Diksha Maheshwari from the Investor Relations team at Cipla. Let me draw your attention to the fact that on this call, our discussion will include certain forward-looking statements, which are predictions, projections, or other estimates about future events. These estimates reflect management's current expectations of the future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied. Cipla does not undertake any obligation to publicly update any forward-looking statement, whether as a result of new confirmations, future events, or otherwise. I hope you have received the investor presentation that we have posted on our website. I would like to request Umang to take over.
Thank you, Diksha. Good afternoon to all of you, and we appreciate you joining our Quarter Three earnings call. I'm pleased to share that 2025 marks our 90th year in the journey of Caring for Life. It's an exciting time for us to move forward on our innovation-led and care-driven commitment to provide the best healthcare solutions across the globe. We are fully committed to doing our best in providing healthcare with a focus on equitable access so that no one should be denied medication. Cipla looks forward to another decade of science, innovation, and technology. Over the past three years, we have been de-risking our manufacturing network and products to our U.S. facilities. Between fiscal year 2020 to year-to-date fiscal year 2025, we have spent almost $100 million of CapEx in these facilities. With this enhancement, we now have DPI, MDI, and existing large-volume OSD facilities in the U.S.
Filings from these facilities have already commenced, including the filing of generic Advair, our major inhalation asset. The backlog of our key assets of generic Advair, generic Abraxane, and one partnered inhalation asset has the potential to help us grow the U.S. top line post-generic Revlimid . We also have created a well-diversified business portfolio. As you're aware, our EM & EU and One Africa businesses put together account for more than 25% of the company's total revenue, similar in size to our U.S. business. In nine months of fiscal year 2025, both of these markets combined have delivered a strong growth of 15% year-on-year in INR terms. Our diversification and backlog of our launch pipeline gives us confidence of a resilient business model. In FY 2026, we retain our guidance to grow our top line. We will further provide guidance on profitability once we finalize our budget.
Coming to the quarter performance, despite seasonal headwinds, especially in the acute category, our One India business delivered a healthy growth of 10% year-on-year. In our branded prescriptions business, we continue to outpace market growth in our key therapies of respiratory, urology, and acute, with the overall chronic mix improved to 61.5% year-on-year as per MAT IQVIA December 2025. Our big brand franchisees continue to achieve key milestones during the quarter. Foracort continued to be the number one brand in IPM. We have now five brands with revenue over 100 crores in the IPM to reach a total—sorry, we added five brands with a revenue of over 100 crores in the IPM to reach a total of 26 brands with revenue greater than 100 crores. We now have seven therapies with a top five rank in the IPM.
We continue to be the largest pharma company in terms of volume and the only player with 2 billion-plus unit sales in IPM as per the IQVIA MAT December 2024. During this quarter, we launched Cipla, an AI-powered mobile application to simplify asthma screening in India. In our trade generics business, we are back on the growth trajectory. The performance was supported by execution excellence in distribution, new introductions, and technological interventions. Our consumer health business witnessed strong traction with Anker brands continuing to grow bigger. Our Anker brands, Nicotex, Omnigel, and Cipladine, maintained leadership positions and ranked number one in their market in their respective segments. We continue to build on this by driving healthy secondary growth and strive to look for opportunities to invest in products and channels to strengthen our distribution network. The operating profitability of our consumer health business remains consistent.
In North America, we delivered a quarterly revenue rate of $226 million. If adjusted for the supplier disruption in lanreotide, our revenue would have been on a growth trajectory. Our Albuterol market share further enhanced to 21% as per IQVIA MAT week-ended 27th December 2024. The business is on its way to resolve the supply issues related to lanreotide and come back to normalized supply levels towards the end of Quarter Four. We've also received various generic drug approvals, including Phytonadione injectable, esomeprazole granules, and potassium phosphate injection. Our One Africa business recorded a significant growth of 9% in USD terms, with South Africa growing at a rock-solid 21% in ZAR terms. In our private market, our secondary growth was at a healthy 8.8% versus the market growth of 2%.
Our South Africa private market now ranks number two in the market, with the prescription business maintaining its number one position as per MAT November 2024. North Africa also demonstrated a strong growth during this quarter. In EMEU, our deep market-focused strategy laid a strong foundation with the business delivering a strong growth of 20% year-on-year in U.S. dollar terms, with the uptake in both our DTM and B2B categories. We also sustained our operating margins. We continued to invest in our pipeline for these markets with focus on execution excellence. I'll now provide an update on our regulatory front. As highlighted in the beginning, our Goa facility has been cleared by the U.S. FDA with a VAI classification. During this quarter, the U.S. FDA also inspected our manufacturing facility located in Virgonagar, Bengaluru, and issued Form 483 observations. Official classification is awaited.
During this month, we were also inspected at our MDI facility by the U.S. FDA and issued Form 483 observations. Official classification of this facility is also awaited. I will now request Ashish to present the financial and operational performance for this quarter.
Thank you. Thank you, Umang. I'd like to present the key financial highlights for the quarter. This quarter has been yet another quarter of highest-ever quarterly revenue and all-time high EBITDA margins. That's excluding the other income, as we always do. All numbers I talked about are adjusted for QCIL divestment, which is sitting in the previous year. So we reported a quarterly revenue of INR 7,073 crore, with a growth of 8% YOY, driven by our core businesses of India, North America, South Africa, and EMEU. Each of our markets, other than the US, which we already talked about, grew at double-digit YOY. One India grew at 10%, One Africa grew at 10% again, and EMEU grew at 22% in INR terms. The EBITDA margin stood at impressive 28% for the quarter, up by 184 basis points YOY and 138 basis points QOQ.
Reported gross margin after material costs stood at 68% for the quarter, which is 166 basis points above the last year's figures, driven broadly by overall mixed change. The total expenses for the quarter include employee costs and other expenses, which stood at INR 2,820 crore, in line with the revenue growth. Employee costs include our strategic investments in India-branded prescription business field force, especially on the chronic therapies. From FY23 to nine-month FY25, we have added 1,800-plus feet on ground. As highlighted earlier, we have also introduced a retail task force in India and trade generics business. A team of 500-plus feet on ground has been added for better visibility in the business.
In addition to that, as we completed our trade generics model change, the employees of our marketing agent were onboarded, adding the cost to the employee cost, which will be set off against the reduction in the commission going forward. The R&D investment for the quarter is at INR 360 crore, or about 5% of the revenue. It is primarily driven by product filing costs and developmental efforts. The R&D cost is likely to moderate as the requirement of clinical trials is relaxed, but we retain our guidance of 5%-6% as it actually gives us an opportunity to add more product programs to our pipeline. The profit after tax for the quarter is at INR 1,571 crore, or about 22% of sales, and adjusted for one-off, the effective tax rate is at 25.5%. Our free cash flow generation and operating efficiencies continue to drive our healthy net cash position.
As of 31st December 2024, the debt on our balance sheet, including lease liability, stood at INR 466 crore, with net cash equivalent balance of about INR 8,947 crore. Our unwavering efforts continued on de-risking our assets for generic Advair. The de-risking has been progressing as per expectation, and we plan to launch this asset in late half one of FY26. And for Abraxane, we expect to launch it from our Goa facility post few months after the approval, and the launch should largely be towards the back end of half to FY26. Now, I will conclude with the key focus area and growth levers in the subsequent quarters. The priority for One India would be to continue the growth momentum, to be ahead of the market in both branded prescription and trade generics.
We will further work on solidification of our growth levers for wellness portfolio, including ramping up in our new launches. In North America, our focus would be to resolve supply issues, maximize the commercial execution, and expedite the launches from our US facility. In South Africa, our focus stays at margin expansion. EMEU are top priorities to maximize top line with focus on deepening our penetration in identified core markets while sustaining the strong margin trajectory. EBITDA for the year FY25 is trending higher than our earlier guidance that we've given, which was 24.5%-25.5%. ROIC continues to be strong at 30%. Thanks for your attention. I'd like to just hand it back to the moderator for Q&A.
Thank you very much, sir. We will now begin with the question-and-answer session. Anyone who wishes to ask questions may press star and one on the touchscreen phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only hands while asking a question. In order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Saion Mukherjee from Nomura Securities. Please go ahead.
Yeah, hi. Thanks for taking my question. My first question is around the US revenue trajectory. So we understand the slowdown this quarter, but if you can give us some details with regard to Advair, Lanreotide, and Revlimid, how that ended sequentially. And also, it seems like there is some delay in your key product launches in the US. How should we think about the next few quarters in terms of the US revenue trajectory? Thank you.
Revlimid is sequentially more or less the same. There is no increase in—I think there's no increase in Revlimid quarter on quarter. Quarter on quarter sequentially. On the rest of the assets, Advair is still not launched, and we're signaling set to launch from the U.S. facility. On Abraxane, we are saying we have a definite launch at least by the end of this next year and a few months after approval. I think the delays are largely due to regulatory clearance and filing, and post that should follow. We believe that if we were to add a fuller basis of Abraxane and a fuller basis of Advair and a fuller basis of the partnered inhalation asset, we believe that this is quite meaningful in the ability to offset share of the generic Revlimid reduction.
It will not offset the total amount, but it will offset a significant portion of it.
Understood. Okay. And also, on the contribution from Global Access and PEPFAR in particular, if you can share, because there is some news on funding constraint there. Any views if you have, and how will that impact Cipla?
Time, we have only less than $1 million worth of PEPFAR-supplied products from Cipla, and whatever this $1 million comes at, basically no margin. So there's no impact to Cipla, basically, on this.
Oh, thank you. I'll join back. Thank you.
Thank you. We'll take the next question from the line of Kunal Dhamesha from Macquarie. Please go ahead.
Hi. Thank you for the opportunity. So the first one, can you provide your view on the recent comments from the U.S. President on tariff on the pharmaceutical product, and what is your base case scenario here, and what could be your strategy in the worst-case scenario?
Yeah. I think we can't comment specifically because I think we have to let the policy framework of the new administration set in, and whatever we're hearing right now is through the press and through media, so we'd just like to see what's coming out as documented plan of action from the government, so we can't comment on that, but just the other thing that maybe I would like to add is that the last three years, we've now been setting up facilities in the U.S. So there will come a time when we begin to understand the economics of shipping straight from India and having potential duties or whatever and the freight with it linking up with what the cost of manufacturing and supplying from the U.S. is.
So in some ways, our model is de-risked to a large extent for our portfolio, whether it's the MDI or the DPI portfolio and the OSD portfolio. So I think we're just waiting for more, we're waiting for more color from the documented activity. But I think we're well de-risked to be able to offset some of this, as and when it comes up. And in addition to that, if you look at the supply which U.S. gets, okay, it's about a third of supply from India. Otherwise, we have partnered products, CMOs, and we have, of course, InvaGen local facility out there also, which meets the balance.
Sure, sir. Thank you. And second is on the FY26 outlook, which you provided on a broad base, that you expect to see revenue growth in FY26. Could you provide more color on probably the segment-wise growth expectation, primarily US? I know you have indicated that Advair and Abraxane seems to be more H2 FY26 product. So beyond these couple of names, do we have other products which could help us grow? And second part to that question is, how is the price erosion in the US market evolving in the quarter three and in January?
Yeah. I don't think we've seen anything abnormal on the price trajectory within the U.S. so far. Depending on the channel you are in, whether you're in retail, institutional or the government business, pricing action differs on that, but there's nothing unusual we've seen. Maybe on your other question of whether we have a pipeline asset beyond the three or four assets that we mentioned, yes, for certain. Certainly, we have a pipeline asset, and notable in that is two or three star respiratory assets that hopefully can come in 18 to 24 months and have been filed, and we also have other peptide assets, etc., within that mix.
Sure. Thank you and all the best.
Thank you.
Thank you. A reminder to all the participants to limit their questions to two per participant. We'll take the next question from the line of Damayanti Kerai from HSBC. Please go ahead.
Yeah, hi. Thank you for the opportunity. My first question on Albuterol. So in the last two quarters, you have gained significant market share. Now, you are at 21% market share as per your presentation. So do you see further room to gain market share? And also, if you can comment on the pricing environment in the Albuterol market.
Pricing, other than marginal erosion, it's stable, and in terms of our market share, I think we are slightly more recently ahead of 21%, but that's where we see it stabilizing.
So with this broadly stable pricing, and if you gain further market share, do you think you can gain it will remain a substantial contributor for the US business? That we can assume, right?
Yeah. Yes, you can, Damyanti. I think the one thing here is that we were at something like 16%-17% share, and then the share began to moderate a bit just after the inspection we had in Indore, and then we built back from there to the share that we have right now. But from here, I think share increases will be very moderate. It's also supply dependent. Yeah. And we've got a fair number of inhalers that are going out, so I think it'll be more moderate from here.
Sure. My second question is on Lanreotide. So you mentioned the supply issues are abating, and then maybe towards the end of March quarter, you'll be back to normalcy. But just want to understand, how should we assume the trajectory ahead, whether it will happen in phases, or you are expecting, say, a quarter down, you'll be back to the level where you have dropped?
The endeavor is to come back to the level that we had earlier. The question is the timing to get there. I think based on the manufacturing setup there, there are two lines that manufacture. We have been working with a partner very closely. We've put in a lot of effort into rectifying the supply situation. And we believe that from a supply perspective, we are probably about 50%-60% there. And what is not there, the partner is rapidly working to bring that online as well. Our expectation right now is that the full capacity of the partner probably starts getting delivered pretty much from the end of March. And so that allows us the ability to potentially see the ramp-up in quarter one, as also gives us the ability to build a little bit of inventory.
Sure. And just a clarification, this supply is for 505(b)(2), or it will be for the generic formulation as well?
For both. For both. Both products pretty much share a supply chain.
Okay. Thank you. I'll get back in the queue.
Thank you.
Thank you. The next question is from the line of Neha Manpuria from Bank of America. Please go ahead.
Thanks for taking my question. Umang, just a clarification. Did I hear correctly that Abraxane launch is at the back end of second half fiscal 26?
Yeah. It will be your second half FY26. That's more likely outcome.
And the reason for delay, given that Goa has cleared, is there anything in the application, the ANDA, that is required? And you also mentioned there'd be a little bit of lag post-approval to launch the product. So just trying to understand the reason for the delay in the launch.
Yeah. I think, Neha, we are so there are two things that have to happen. One, we have to first get approval for the file. So while Goa has cleared, and the earlier information to us was that there is nothing pending in the file from an FDA perspective, we still have to get approval for it, and I think, obviously, we are waiting for that approval. Once that approval comes, we will have the ability we will need to take a few batches, etc., because we've not really manufactured the product, and the site was under remediation, and so I think that may take us to get ready for launch. It may take us some amount of time. So depending on the approval, we'll have to add some time to it, so it could be nine months from now. It could be six months from now.
If the approval comes tomorrow, it could be six months from now. If the approval comes a little later, it could be nine months from now. But we definitely expect to launch the product by quarter four of FY26.
Okay. Got it. So the only delay I mean, there's nothing pending from an application perspective from the U.S. FDA on Abraxane?
Yes. And I think the first validation of that will be the approval, hopefully, whenever we get it.
Is there a PAI required, in your view, for the approval? Could that be a roadblock?
Neha, we are not clear about that, which is why we are waiting to hear from the agency, and our belief is that if it is required, it will follow very shortly now since the site has already got a VAI stay.
Okay. Got it. And I think, Umang, last year, we had also mentioned a couple of 505(b)(2) assets and a few peptide assets that we expect to launch this year. Other than the Lanreotide generic launch, we haven't really seen any other large launches coming through. Can you give us an update on when do we see the 505(b)(2) assets and the rest of the peptide assets coming through for us?
So I think, yeah, we are looking at close to so we've launched about two this year, right? We have one, which we still need to launch, and we are hoping to launch it perhaps near the remainder of this year. And then we have two planned in terms of peptides in FY26. And then we've got the rest of the assets. But the peptide ones, looking at one or let me put it this way, looking at approximately three over the next 15 months.
Okay. Okay. Got it. And one last one, if I may. On the trade generic business, now that it's getting back to normal growth trajectory, are we seeing a slowdown in growth even in trade generic? Previously, there were numbers floating around that the trade generic market is growing 15%-20%. Has that growth for supply, in your view, now on a steady-state basis, more like high single-digit loading, low double-digit? How should we think about the trade generic business growth from here?
I think that the trade generic business, at least what we've seen. So there are some factors, Neha, which are typical to us, right, which was the transition that we were going through in the first quarter or second quarter. I think in the third quarter, the trade generics and the branded are more or less matching. I think the trade is slightly faster than the branded. That trend is continuing. But relative to the previous year, where there was perhaps a higher pricing impact in the market than this year, that element of growth has slowed. For example, if the overall price increase that was allowed in the market last year was 3% or 4% versus that, if this year the general average is 1%, that 2% or 3% is offset from the overall growth in the market.
We did see a slower volume offtake due to season largely in the first two quarters of the year. But that may have also been because of our transition, but it may have also been because there was a very, very slow season in this year too.
Okay. Got it. Thank you so much, Umang.
Thank you.
Thank you. We'll take the next question from the line of Ankush Mahajan from Axis Securities. Please go ahead.
Thanks for the opportunity, and just for a good set of numbers, so very strong gross margins this time that has led to the expansion in the EBITDA also margin, so what are the reasons behind it, and how do we see the gross margins trend in upcoming quarters?
Excuse me. Yeah. See, I think it's a combination of the mix that we have in the business. This is always the best quarter for us because of the respiratory uptake. So that actually helped us. There is also some cost control that we've seen, some phasing impact of the cost as well that has helped us to achieve this margin. And like I said, quarter four is seasonally low. So overall, for the year, if you look at it, we should land at higher than the guidance that we've given of 25.5.
So, what is the seasonal? What is the sustainable trend now?
Sustainable margin trend.
Right. So are we increasing our EBITDA margin guidance or something?
So like we said in the beginning of the call, for next year, once we finalize our budgets, we should be able to give you the guidance.
Okay. So last one is, how is the price erosion in the base portfolio?
So, if I think, price erosion is dependent on the basket. So while some of our products may have faced some erosion and the others have not, on an overall basis, it's a moderate erosion that we had of high single-digit. While, like I said, in certain segments, we saw higher erosion.
Thanks, sir. Thank you.
Thank you. The next question is from the line of Anubhav Agarwal from UBS. Please go ahead.
Yeah. Thank you. First question on Lanreotide, just trying to understand. Let's say we index our production or supply to 100 before the problem started. Once you come back in, let's say, April, would you be back to 100? That's part A. Part B is, I think, all the problems with the partner was driven by capacity expansion for Lanreotide. So what point of time would you, let's say, 100 will become 120 or 150 for you guys?
Yeah. Anubhav, I think right now we are at roughly close to 40%-50% of their overall index of 100, right? And we expect that by the end of March, we will be back to the 100, right? Now, capacity expansion at the partner is a function of two things. It's a function of the capacity train, which is now in place. It's also a function of batch size, which is the ongoing work that will also happen post-April. So I think that the capacity will go up in stages. But right now, the train, etc., is all in place to allow that capacity increase. So we are going to be back at the index level, and the batches will start for capacity expansion post-April.
So let's say in second half next year, or let's say in FY27, could you be like 50% higher than this 100, closer to 150? Just as an idea, right?
I'm not sure we'll be 50 higher. This is a pretty tough product. But yeah, it could be 20, 25 higher. And at the same time, we are also examining other options beyond just this partner for overall capacity. Between the partner and us, we are examining expansion of capacity at alternate sites as well.
Okay. That's very helpful. Second, on the respiratory portfolio today, in the US, ballpark, we are about $150-$200 million. I'm talking annual number. Let's say once we launch Advair, Symbicort, your partner in relation to said QVAR also, right? FY28, for example, what kind of ramp-up could we see? This $200 million can become $400 million, let's say double from here? Can we just roughly talk about the scale-up?
Yeah. Look, today we are slightly more than that number because we've got to Albuterol, we've got Budesonide, both falling in that category of respiratory. And without getting into numbers, if you look at the pipeline itself, some of our larger assets that are coming out of pipeline are actually respiratory. So we've talked about Advair, generic Advair. We've talked about generic Symbicort, QVAR, one of the partnered inhalation products. And there is just one or other large asset that we are looking at. So all put together, this large portfolio of respiratory. So the share of respiratory overall is likely to go up with all these coming, which will all come over a period of time, so.
Sure. No, I was just trying my luck that can this portfolio double? Is that a possibility there? Or because all assets are large, is there potential to double the respiratory contribution?
So I think, Anubhav, the way to look at it is depending on the type of the asset. If, for example, we have Albuterol, which is a large asset, but if you were to look at the type of asset, keep in mind that we are likely to have three more over the next maybe 15-18 months launching in the U.S. And they're all kind of sizable categories of assets. So depending on the timing, it could be, and the problem with this is that it's very binary to each asset. So if nobody else comes in in the asset that we are in, right, then it's a much larger delta compared to if others show up before us. But if your question is whether this will double, triple, it's going to be moving up step functions.
It's not going to be moving marginal increases with each asset being approved.
That's helpful. Just one clarity on the India business, on the consumer wellness side. Last year, quarter-wise, we were doing about INR 250 crore. Now the run rate has increased to INR 380 crore. Just trying to understand that. So we made one acquisition in quarter four. So is there more shift which has happened from trade generic to consumer wellness that is like INR 70 crore-INR 80 crore per quarter which has shifted there? Or what is leading to such a high growth in consumer wellness in India?
So last year, quarter three, quarter four. So if you remember, in last year, in quarter one, we had transitioned two big assets to consumer health. And when we transferred two big assets to consumer health, we had anytime you transfer assets from one division to another, you do tend to take time to regain distribution. And that was the problem that was afflicting us in quarter three and quarter four of last year. So the base went down a bit. It was a base impact. And then in this quarter, not only is the base impact of last year there, but also we've grown quite significantly faster on some of these categories because of the branding effort, etc., that we've put in. So yes. And then there was this acquisition that we had as well. So we had an acquisition.
We have one or two BD deals that we have done. And we have our natural growth that is coming. But our endeavor is to continue to grow the wellness franchise because I think it's Cipla has a good formidable position for it now.
Yeah, indeed. It's already become INR 1,600 crore, INR 1,500 crore. Thank you.
Thank you. We'll take the next question from the line of Bino Pathiparampil from Elara Capital. Please go ahead.
Hi. Good afternoon. Umang, could you explain how the Abraxane market is now? Because already there are three, four players, and you will be another year more to launch. What's your thought of price erosion, market share gain by generics, etc., as of now in the market?
I think the understanding we have of the market is that there are possibly two 505(b)(2)s, one fully entrenched 505(b)(2), one Teva product which effectively is an AG, and one Sandoz generic. That's our understanding today of the market. We believe this market is likely to move more towards generic alternatives, right, and not necessarily 505(b)(2). Till the time the generic player launched, the market could have been just a 505(b)(2) market. But post-generic launch, we do think that a large section of the market begins to convert to generic. I do think that this market will still be attractive because Nano Paclitaxel is now a fairly significant capacity to ramp up. It is not an easy product to ramp up. And I do think that there will be opportunity for generic players in the market as well.
Got it. But when you enter, what do you think the price erosion could be or the pricing could be compared to the original innovator level before generic entry? Even if you give a rough, could it be just 30% lower or more like 50%-60% lower, or could it be 80% lower?
The issue with the price conversion is that it also depends on how the families of assets, whether the B2s or the generics, are tagged from a perspective of insurance in the market, right? I kind of think that we will not see more than one or two players enter this market. So I'm not sure this is going to be hyper-competitive. But then we have to wait as the market begins to pan out. We are aware of what the rough ratio in the market is today. But we'll be able to provide more color to it, Bino. But right now, we think that it's fairly attractive for us still.
Got it. And South Africa market has seen exceptionally strong growth this year, all three quarters. So is there something really happening because it's higher than usual trend growth there?
No, so the growth has been basically coming from two areas. One is that we've had new launches out there, so that's basically taking away share from other businesses as we launch new products out there, and the second has been we've been selective about tender. We want to maintain the margin that we have in the overall business, so therefore, the tender businesses have gone up, but our focus has been to make sure that we do the tender business at the right margin, so that has also led to the growth in the South African market.
Understood. One last bookkeeping question. What would be the consolidated tax rate for full year? This quarter was especially low, so.
For 27. We're guiding to 27, 28 ETR for the full year.
Okay. Thank you very much.
Thank you. The next question is from the line of Chirag Dagli from DSP Asset Managers. Please go ahead.
Yeah. Hi. Thank you for the opportunity. Am I audible?
Yes, sir. Please proceed.
Yeah. So, two questions. First is on the U.S. FDA issues. We've kept on seeing these crop up every once in a while. And this is quite unlike what Cipla historically has been. So Umang, what is it that you're trying to do to make sure that these issues we fix these longer term? We've recently got approval for one of the larger facilities, but the other one still continues to remain under issue. So how are you thinking about the reasons why we've frequently gotten into these issues? And what are we doing longer term to make sure that these don't repeat? And the second one I had was on capital allocation. We have 9,000-odd crore almost of cash. How are you thinking about capital allocation going forward?
Yeah. Ashish, you want to answer on the capital allocation?
Yeah, sure. Chirag, let me probably address the capital allocation, right? So you've seen that in the last two years, gradually, we've increased our dividend in line with the profit increase. And we've given guidance of about 30% to the market as well. And we're sticking to that. I think we see a lot of growth opportunities yet in many areas in India, which is our core market. And now we see some gaps in our portfolio, which we want to address through acquisition in many forms, not just whole company acquisition, but product acquisition in licensing, etc., etc. And then in the US, any differentiated asset, we are looking at acquisitions there. Overall, in the rest of the world as well, any attractive market, we're looking at opportunities there.
So I think and then we want to land some allocation for innovation as well. Very recently, we've looked at certain assets on the innovation category, and we continue to scout for those. So that's the dry powder that we've kept, and we are constantly looking at those. And I think a lot of our growth will come from these acquisitions as well in the future.
Yeah. So Chirag, on the first. Do you have Chirag, is anything else as a follow-up to Ashish Adukia?
No. Thank you.
Just on the quality piece, Chirag, actually, the last we had two inspections where we received citations and adverse rating. One was Indore, and one was Goa. And Indore happened in 2023, February. So where we are right now is that the Indore facilities have to be reinspected by the FDA. And there were some observations in Indore, which were kind of similar to Goa in terms of sterile practices, etc., which we are hoping that will probably be addressed by the time the FDA comes to inspect again. And it then depends on how that inspection is assessed by the FDA. So I think there's been a lot of progress made. And certainly, we've had many other inspections from the US FDA at several of our other facilities.
And while we've received observations, we have been able to remediate and secure a compliance certificate from the FDA that allows the new product launches and operations to continue. Structurally, how we are solving this is. Its quality is a function of practice, equipment, and talent. And we have worked on all three of them. The more you can automate your equipment, the less there is a chance of any errors that happen. The more that you can build in sensitivity to your talent about how to do proper root cause investigations and observe your processes, the less you will have disruptions. And the more that your practices converge with what your guidelines are, the more you will be able to conform. So we have worked on all three aspects, and we will continue to work on this.
Okay, sir. Thank you so much.
Thank you.
Thank you. The next question is from the line of Abdul Qadir Puranwala from ICICI Securities. Please go ahead.
Okay. Thank you for the opportunity. So just firstly on generic Revlimid, I heard you comment previously about the flat-ish revenues for the quarter on a sequential basis. But if we have to look at the nine-monthly number, and if you could throw some light as to where are we on the overall annual target for shipment of this particular product, would we kind of see some sales moving up in Q4 as well from this product, or a large part of it is already booked in the nine months?
No, so see, I think, like Umang mentioned, that quarter three was a similar number to quarter two, and that's what we expect going forward. Specific numbers, we avoid the guidance because as we are by the contract, we can't share those numbers.
Got it. And so in the past, we have spoken about filing a couple of oligonucleotides. And in terms of your near-term launches, you're calling about three, four products. So by when should we see launches of these products happening into the U.S. market?
We're looking at filing some of these products in about three to five years' time frame. There is still time for oligonucleotide launches to come through.
Got it. I'll get back in with you. Thank you.
Thank you. The next question is from Umesh Laddha from Nirmal Bang. Please go ahead.
Hello. Am I audible?
Yes, sir. Please.
Yeah, please.
Yeah. Thank you for giving the opportunity. So actually, I wanted to know that how much of our One Africa and emerging market sales are constituting of antiretroviral agents, API and FDF combined?
Sorry. API and?
API and FDF fixed dose formulations combined, how much are we exporting ARVs to emerging markets and South Africa?
We'll have to come back to you with that exact number. Largely, the number is going to be in South Africa and African continent and very little in emerging markets. So Africa is about 11-12% of our total. We don't sell any antiretrovirals in North Africa. Primarily, it is sub-Saharan and South Africa. So we can come back to you, but I would not expect that number to be more than 3-5% of overall revenues. At max, it cannot be higher than that. And to the rest of the world, we do it through our global access. So yeah, I can come back to specific numbers.
Okay, so answer what are the margins which we are getting from this portfolio? If you could just give some color.
See, it's competitive. These are all tender. All I can tell you is that the margins we make here are very low, and they are not at all. They are significantly lower than company average, and we do it for a different reason. We do it to ensure access for these products in the countries that we operate in.
Okay. So got it. And so lastly, on the India business, are we planning to launch Semaglutide? And there is a 10% revenue growth in the India business. So can you just give a split how much of this has come from price and volume, if that's possible?
No. I think the question was around semaglutide. Yeah. Sema, we can give you. Just to clarify, I want to also be very clear that PEPFAR, as a portion of Cipla's business, is less than 0.2%. So we do less than one million of PEPFAR. So while your question was broader on HIV, I just wanted to also clarify that in PEPFAR, the business that Cipla has exposure to is less than one million. So on semaglutide. Sorry. You finish your thought on semaglutide. On semaglutide, we believe the market will form in 2026. And there will be, obviously, depending on who all gets approval in India, I think Cipla is aiming to be in the first wave of launches. I think you had a question on price and volume in India. So we can't estimate the volume.
I mean, with obesity as a category, it's very difficult to estimate volume, the overall growth, I think, so I think last, this was a weak season overall, like we mentioned, so the volume growth was around 2%, and the balance was coming for us from price and NI, so that was a balanced growth, and so we see some improvement in the volume growth in the coming years.
Got it, sir. Thank you so much.
Thank you. The next question is from the line of Surya Narayan Patra from Phillip Capital India Private Limited. Please go ahead.
Yeah. Thanks for the opportunity. So my first question is about the Horizon 2 initiatives that we have taken and based on which we have been anticipating CDMO opportunity, leveraging our peptide as well as injectable capability. So could you give some update on that, if any?
Yeah. No, I think in the last call, also, we had clarified on the CDMO. So we are not looking at CDMO as a business opportunity for us. What we have said is that in peptides, we partner with the CDMOs on development and manufacturing of the products. But it's not a business for us to be in.
Okay. Sure. So this clarification is useful, sir. Second question is on the injectable side. So how big is the injectable portfolio right now, or in terms of, let's say, business mix in the US currently? And could you give some sense about the pipeline in the complex injectable side that we are talking about?
It's likely going to be peptides to start along with nano paclitaxel . Those would be the two.
Key injectable side.
The two injectable portfolio, and then we've got a few that are partnered outside, which will be in the area of general injectables.
Okay.
Yeah.
Thank you, sir. Thank you. Thanks a lot.
Thank you. The next question is from the line of Shashank Krishnakumar from Emkay Global. Please go ahead.
Hi. Thanks for taking my question. I think we touched upon Advair. I just wanted to check on our Symbicort and QVAR filings as well. Have they also made progress with the site transfer for these two assets?
Yes. On Symbicort, we have. On QVAR, we believe that Indore will be the site that we will get approval from. So yes, on Symbicort, we have already done that.
Got it. Thank you. The second question was on the trade-generic business. Is it possible to sort of call out what was the growth rate in the trade-generic business this quarter? Any ballpark number would be helpful, either on a YOY or a QOQ basis.
I think QoQ, you can probably take the One India growth number as a good surrogate. Even on YOY, I think Rx and Gx both grew at a similar number, the growth rate.
Got it. Thank you. Yeah. That's it from us.
Thank you. The next question is from Harsh Bhatia from Bandhan Mutual Fund. Please go ahead.
Yeah. Thank you. Am I audible?
Yes, sir. Please proceed.
Yeah. Thank you. Sorry to hop on this, and please correct me if I'm wrong. Abraxane , you mentioned even if the plant gets clear tomorrow, it is six months to launch. Again, is there a margin of safety that we are working with, which is why we are building in a six- to seven-month period over a year? Or is it because the complexity of the product is such that that six months is a primary condition? In addition to that, are we already building in a PAI to this timeline? Could you help us just understand what are those two, three assumptions over a year for this six-month time gap?
No. So I think the first is that, look, obviously, it will take us time to ramp up. Once the approval comes, we will have to ramp up. We'll have to take some batches to ensure data. The API that we have is an API lying from a fairly long time. So we are anticipating that and have given this guidance on the ramp-up. But we are quite confident that if we get the approval, the launch is definitely going to be before the end of the year. And the sooner, the better.
Sure. And on Advair, just one clarification for the Indore facility. I think the filing is done from the Indore facility in terms of the site change or the site transfer. Again, over a year, also, our launch timelines are building in an FDA inspection, or they are not building in an FDA inspection?
Not here. They are building in an FDA because this is a new site. So 100%, they are building in an FDA inspection.
Sure. And just one last thing. On revenue, for FY26, since January 2026 would be the period when the patent comes off. So FY26 sales pattern is going to be similar to FY25 sales pattern, again, very qualitatively without getting into the numbers? Or would it be very different as compared to FY25, again, in terms of the sales pattern that we are looking at?
I think it will be different, and for the right reasons. I think that the market will have more competitors, and so I think, yes, the pattern will be different.
Sure.
Thank you.
Ladies and gentlemen, this will be the last question for today, which is from the line of Nitin Agarwal from DAM Capital. Please go ahead.
Hi. Thanks for taking the question. Among your falling off from the Symbicort partners you mentioned, what would be the rough timelines and your expectations for Symbicort approval in the U.S.?
I would say about 18 months. We should be tracking to 18 months, within a period of 18 months.
More like a second FY27 launch?
Yeah. Yeah.
Secondly, on the India business, we've done reasonably well over the last few years from a revenue growth perspective. I mean, if you can give us some color, qualitatively, how has the profitability of the business sort of changed over the years? Has the profitability improved a fair bit, and where do you see what kind of opportunities do you see in this business? I mean, one assumption is that typically these are branded businesses, and the branded business, as scale comes, profitability keeps increasing a little bit disproportionately. Is that the right way to think about it?
Yeah. I think scale is a very big scale, and growth is a very big driver for profitability. But we've also been taking a lot of actions about optimizing our productivity. We've been taking actions about automating our processes, about improving the way our reps are detailed. And in the last one and a half, two years, we've also expanded our field force, right? We've added a fairly significant number of people. I think our view on India is that as the penetration in the market increases, the market offers a lot of opportunity. So for us, yes, profitability has improved, but largely due to the fact that we've optimized our own productivity. Because if you really look at the last two years or three years, there have been hardly any price increases that anyone has been able to take.
The weighted average ratio of price increases would not be higher than 2% or 3% in our case. And so we've had to drive profitability growth just out of optimizing our productivity. And that's what our team has done in our India business. And I think as a result of that, we've kind of expanded our margin and used that to reinvest for more reps in the market.
And is it sort of fair to assume that India profitability would be higher than our overall profitability numbers? Should we be in line with that? How should we think about it broadly?
We don't provide margin-specific guidance. India profitability for you have to also keep in mind this year has Revlimid , it has base U.S. business, it's got India business, then there was a transition in the generic business. But it would be safe to assume that our India business profitability is slightly kind of higher than the overall company average. It'd be safe to assume that.
Thanks. And last one, on the paths we've talked about, licensing in possibly Mounjaro, if Lilly decides to launch it in India, there are talks that Lilly would be looking to launch sometime this year, accelerating their launch. Any color on by when if we still are there in the reckoning to become a partner for that? And how important will that be for us as a business?
Obesity as a category will be important because I think it's one area which is very closely related to cardiology, very closely related to metabolic. I think we want to be there when the market forms. And obviously, Lilly is a very trusted partner. We'd like to believe the same of ourselves with them. But it is completely Eli Lilly's decision on who they would choose as a partner. We have always maintained that should they need support to launch in the market, we are always available.
If I can exclude the last one, in the television interview, there was a flash that we talked about margins for Q3 not sustainable. So this is more in the context of Q4 being a seasonally soft quarter, or there were certain elements in the Q3 quarter which are not sustainable in the first place?
No, I don't think Cipla can do 28% margins, EBITDA margins. And that is what I had mentioned because the question was with respect to quarter, whether you'd be able to do 28% EBITDA consistently. And I had said, "No, that's not a sustainable margin profile for us." And it's because of the mix of respiratory season in India. It's because of a larger share of growth from EMEU in the previous quarter, year-on-year growth. And these types, I don't think we can sustain that level of margin going forward. That is what I had mentioned. But at the same time, we also said that we will exceed our guidance range for the current year based on what we had guided earlier. So 28% is not a sustainable margin for us. That's what I had meant.
Thank you, sir. As that was the last question, I would now like to hand the conference over to Ms. Diksha Maheshwari for closing comments. Over to you, ma'am.
Thank you, everyone, for joining in. If you have any further questions, please write it to investor.relations@cipla.com.
Thank you.
Thank you, members of the management. On behalf of Cipla Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.