Ladies and gentlemen, good day and welcome to Cipla Limited Q2 FY 2027 earnings conference call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions 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. We have with us in today's conference Mr. Achin Gupta, MD and Global CEO, Mr. Dinesh Jain, Global CFO, and Ms. Diksha Maheshwari, Head Investor Relations. I now hand the conference over to Ms. Diksha Maheshwari. Thank you, and over to you, ma'am.
Thank you, [Shaurya]. Good afternoon and a very warm welcome to Cipla's Q2 FY 2027 earnings call. I am 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 Achin to take over.
Thank you, Diksha. Good afternoon to all of you, and we appreciate you joining our Q2 FY 2027 earnings call. We are pleased to report a revenue of INR 7,404 crore with a steady sequential growth of 4% QoQ. This was supported by broad-based performance across our key businesses. One India recorded its highest-ever quarterly revenue while our global portfolio continued to demonstrate resilience amidst a dynamic operating environment. We continue to invest in pipeline, and we received key approvals, including our first DPI approval of generic Advair in the U.S. In line with our objective of strengthening biosimilar pipeline, we partnered with Qilu for pembrolizumab in North America, and we initiated clinical development for one more respiratory biosimilar asset out of our own pipeline. Together, these developments reinforce our confidence in the long-term opportunities across our markets and portfolio.
Coming to business-wide performance, One India delivered 12% YoY growth, sustaining its track record of consistent double-digit growth over last few quarters, driven by strong execution across key therapies and the resilience of our franchise in the IPM. In our branded prescription business, we continue to outperform the market, delivering 15% growth, which was led by the chronic portfolio as per IQVIA YTD September 2026. Our key chronic therapies continue to grow ahead of their respective markets, with respiratory growing 11%, anti-diabetes grew 50%, including the GLP, urology 11%, and dermatology 16%. This was underpinned by strong brand equity, robust volume growth, effective field execution, and sustained momentum from new product introductions. Our overall chronic mix stood at 60.3% as per IQVIA MAT September 2026. Our launch momentum remains strong.
During the quarter, we strengthened our portfolio through targeted launches across key therapies, including Revesmart in respiratory, Galvus DM and SR in anti-diabetes, Dytor E in cardiovascular, and Rizontem in anti-infectives. These launches collectively underscore our focus on deepening our presence in priority therapy areas and further add to the breadth and competitiveness of our portfolio as we continue to lead IPM in terms of volume share. We also entered into an exclusive licensing agreement with CTTQ, a Sino Biopharmaceutical Group company, for a novel asset, HER2 bispecific antibody-drug conjugate. This partnership further strengthens our innovative oncology portfolio and expands our presence in the next-generation targeted cancer therapies. On our trade generic business, we delivered a strong double-digit QoQ growth. Expanding the portfolio remains a key growth driver here with 15+ new launches this quarter.
On our consumer health business, continued the upward trajectory with Nicotex, Omnigel, and Cipladine consolidating their leadership positions in their segments. The business is driving healthy secondary growth and actively exploring opportunities to invest in products and channels to further expand the distribution. Operating profitability improved, reflecting the strength and scalability of our consumer health strategy. Coming to North America, we delivered a quarterly revenue of $172 million in Q2, which represents a $10 million improvement versus the previous quarter. We remain confident of furthering this momentum through the remainder of this year, supported by our launch pipeline and scale-up of these new assets. Cipla continues to hold the number one position in overall U.S. Albuterol MDI market this quarter as well, with our market share of 22% as per IQVIA data for last week of September 2026.
So far this year, we have secured approvals for two key respiratory products, with generic Ventolin approved in Q1 and generic Advair approved in Q2. Notably, generic Advair approval marked our first DPI approval from U.S. based manufacturing network, further validating our differentiated respiratory capabilities and reinforcing our commitment to complex resp therapies. Another important strategic milestone during the quarter was our exclusive partnership with Qilu Pharmaceutical for the U.S. commercialization of a biosimilar to Keytruda, pembrolizumab. Looking ahead, we remain focused on enhancing the performance of our North America business through a combination of new product launches and disciplined commercial execution. A quick update on our pipeline. Our pipeline for this financial year includes three additional significant launches for the U.S., which is in line with our previous guidance. This includes two more respiratory assets and one key peptide opportunity.
Additionally, we have four biosimilar programs under development for global markets, which continue to advance steadily through key development milestones. Alongside these efforts, we remain focused on strengthening our R&D capabilities, particularly for the U.S. market. We are progressing well on the organic pipeline development, with approximately 45- 50 filings planned over the next three years. In South Africa private market, we achieved a strong secondary growth of 6.5%, which outperformed the market of 5% as per IQVIA MAT August 2026. One Africa business continued to strengthen its position through solid performance in key therapies and successful new launches, reinforcing our presence across diverse markets. In EMEU, we delivered revenues of $1 01 million during the quarter. While the business operated in a challenging geopolitical environment and there were certain market-specific headwinds, we demonstrated resilience through strong execution and cost discipline across both DTM as well as B2B segments.
A word on the regulatory front. We continue to make steady progress across our global manufacturing network. During the last quarter, U.S. FDA certified the inspection at our InvaGen Unit III facility in New York as a Voluntary Action Indicated, VAI . During the current month, the U.S. FDA conducted a routine GMP inspection at our InvaGen manufacturing facility in Long Island, New York, which concluded with zero Form 483 observations. As you are aware, U.S. FDA also conducted a follow-up GMP inspection at our Pithampur facility in India in the previous quarter and issued seven observations in Form 483. We continue to engage constructively with the U.S. FDA and remain committed to maintaining the highest standards of quality and compliance across our network.
Overall, we continue to focus on sustained growth in our core businesses, improving productivity and strengthening our pipeline in order to serve the patients with trusted, high-quality medicines. Now, I would like to invite Dinesh to present the financial and operational performance. Dinesh?
Thank you. Thank you, Achin. Now, I would like to present the key financial highlights for the quarter. We reported a quarterly revenue of INR 7,404 crore with a sequential growth of 4% quarter-on-quarter. The EBITDA margin, excluding the other income, stood at 18.7% for the quarter, reflecting a sequential improvement of 200 basis points. This performance is in line with the guidance of sequential margin expansion, and we remain confident of continuing this trajectory over the remainder of the year. The reported gross margin after material cost stood at 64.4%, up 7% quarter-on-quarter, supported largely by an improved product mix. Total expense for the quarter stood at INR 3,382 crore, reflecting an increase of 4% quarter-on-quarter. This increase reflects our current investment in the upcoming product launches and enhanced manufacturing readiness. We remain focused on innovation and future readiness.
R&D investments for the quarter were INR 423 crore or 5.7% of the revenue, directed largely towards the product filing and key development programs. We continue to guide for the full-year R&D expense in the range of 6%-7% of the revenue. Profit after tax for the quarter stood at INR 878 crore, representing 11.9% of the sales, with a sequential improvement of 77 basis points. The ETR for the quarter stood at 27.2%. Now coming to our free cash generation operating efficiency that continue to drive healthy net cash position. As of 30th September , the debt on our balance sheet, including lease liability, stood at INR 699 crore with a net cash equivalent balance of INR 9,823 crore.
Looking ahead, our key priorities will include for One India, the aim is to focus on the execution to sustain the growth momentum and outperform the market in the branded prescription, trade generics, and consumer wellness. We will further strengthen our presence in chronic therapies while maintaining the robust trajectory we have built in respiratory. In North America, we will remain focused on driving growth through new product introduction, including the key launches. We continue to maintain the guidance to exit this fiscal year with $1 billion annualized revenue run rate. In South Africa, our focus will be on continuing to grow faster than the market in the private sector. In EMEU, the top priority is to drive top-line growth while maintaining a strong margin trajectory.
I would like to thank you for your attention, and I will request the moderator to open the session for question and answer.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Surya Narayan Patra from PhillipCapital India Private Limited. Please go ahead.
Yeah, thanks for the opportunity, sir. Sir, so now, for the second half, you have reiterated in the opening remarks about your--
Sorry to interrupt, sir.
Yeah.
Sir, could you keep a bit distance from your device?
Sure. Okay. Is it fine?
Yeah.
Okay.
Yeah. Please go ahead.
Yeah. So in the opening remark, you have pointed out about your U.S. revenue target of around exiting the year with a $1 billion kind of run rate. Now it is relatively close by. If you can give some sense, some color, what is bridging this gap from the current 170 odd levels to 250 kind of levels, that would be helpful, sir.
Yeah, sure. So, we had guided to a sequential improvement this year, and we had mentioned that there are four big respiratory product approval and one big peptide approval that we are expecting this year. Our revenue guidance is a function of upswing, which will come from these launches as we get the approval and as we scale up these products to gain greater share in the market. We have different pathways to get there, and therefore we are maintaining the same guidance at this point in time.
Okay. Just one clarification here, whether we are in any manner thinking about resumption of lanreotide or even progression of the Ventolin is too incremental component to achieve this kind of a timeline, means revenue number.
Regarding the two products that you mentioned, Ventolin will be a big driver for us as we progress in the year and as the product scales up, Ventolin will be a big contributor. Lanreotide, we don't anticipate being back for this financial year. We are pursuing two parallel paths. One is to work with Pharmathen for their remediation and representing back to the FDA to resume supplies of lanreotide from there. The second is a new site which we are working in North America, to file lanreotide. Both of these are not included in our exit run rate guidance of $1 billion as far as lanreotide is concerned.
Sure. My second question is about the domestic business. It seems that the GLP-1 portfolio, largely led by the Yurpeak, is about 10% of your domestic sales currently. This could be because of the first year kind of a penetration, what we are seeing in the GLP-1 products in India. Is there any sense of what could be the growth in this GLP-1 portfolio, or is there a possible growth that one should think for the next year? Because the adherence of the kind of a product or the therapy among the kind of patient population may not be great the way it is visible currently. Also, if you can include your semaglutide launch timeline, and hence what growth that you are thinking about this GLP-1 portfolio in the next year.
We are seeing very good adoption of GLP-1 as a therapy, particularly on tirzepatide as a molecule where supply is playing. We are seeing month-on-month growth rates of somewhere between 5%-10%. We expect that trajectory to continue. Yurpeak has become the second largest brand in the ranking on GLP. I think we don't expect any saturation on this front. We expect a steady growth in the months to come.
Okay. Just one more point, sir. In fact, the trade margin cap, what we have seen on the oncology portfolio. Right now the supply, means the price point of the suppliers, that is not getting impacted, but whether this is likely to create a kind of a competition among the suppliers.
I think this discussion is still ongoing. The one thing which the government had announced was around margin cap on high-priced oncology products--
Yeah.
--which will benefit the patients, and we do not believe it will have any significant impact on our business. Anything else which comes out through these discussions and rulings, we will have to wait and see what the directive is before we can comment on the impact.
Sure, sir. Yeah. Thank you. Wish you all the best.
Thank you.
Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services Limited. Please go ahead.
Thanks for the opportunity. Sir, just on generic Advair, is this product launched?
Tushar, this is getting launched in Q3. You will see Q3 and Q4 revenues building up.
We got approval in July, and could you just explain, is this a normal timeline to launch the product or this product is taking a little longer time?
As we had explained last time, we have put up new plants in the U.S., so this is actually the first DPI to come out of that facility. Therefore, you are right. Normally, we expect to launch immediately upon approval. It is just taken a couple of months longer.
Got it. Secondly, sir, with respect to the investments in the biosimilars, first, how much would have been the overall investment in the biosimilar space for Cipla? Secondly, with respect to this Keytruda biosimilar agreement, if you could just share where does the clinical development status of the product from Qilu Pharma?
On biosimilars, the investment that we have is in four assets which are currently under development. All of these assets are out of the R&D expenditure that we report. I think it's subsumed within that, and we are guiding towards a 6%-7% R&D expenditure on an ongoing basis. It will be part of that. On the pembrolizumab biosimilar that we recently licensed for North America, we are expecting it to be amongst the first wave of launch and therefore, make a very significant contribution to our North America business once it reaches the market.
Got it, sir. Thanks. That's it from my end.
Thank you.
Thank you. The next question is from the line of Dr. Kunal Dhamesha from Macquarie Capital Limited. Please go ahead.
Hi, thank you for the opportunity. The first one on the U.S. business. If you could provide some details on the U.S. ramp up that we are expecting in the second half from the $172 million, the exit rate of a billion dollars. If I were to split this ramp up between the existing products and new products, which are yet to get approval, how should we think about that?
The ramp up is a function of new launches this year, which includes Ventolin, which was approved already, Advair, which was approved in Q2. So these two ramping up will have a significant contribution, and then we have three big opportunities, two respiratory products and one peptide opportunity, which will also help in this transition. As I said, we have multiple pathways to get to that exit run rate, and we are working towards delivering that kind of exit run rate.
Sir, I understand that. I just want that, the $80 million ramp- up that we are expecting, of that, potentially what proportion is going to come from the products that we have already gotten approval or launched, and what proportion would come from the three approvals that we are waiting for?
Okay. See, it is a little bit hard for us to give product-wise guidance, but as I said, Ventolin will be a big part of this. Advair will contribute significantly. Some of the new products that we are talking about are also very significant drivers. We have different ways of reaching that exit run rate, but each of these individually is a very large opportunity for us, and that is how we are looking at delivering the growth rate that we are talking about.
Just on Ventolin, we have launched this product in quarter one. We also have CGT. What is leading to ramp up being delayed to H2 for us? Are these contracts that we are waiting for in terms of renewals, or is it the supplies from our side which is ramping up? How to think about this?
Yeah, Kunal, these are from our North America manufacturing site, which is a new facility. It is a function of the supply ramp up, which are happening, and as we are able to fully ramp up, you will see a significant growth in the remaining part of this year.
A lot would not be a function of the usual respiratory uptick that we see in U.S. business during winter, right? That is not a big part of our calculation, is it?
No, because if you see in a crowded Albuterol market, on the other Proventil generic, we are holding on to a very healthy 22% leading market share. Commercial, share-wise, we are very confident, and we have all the right relationships to get to that share. But we need to ramp up on the supply.
Not disclosing the numbers on supply, but let's say if you're manufacturing certain quantity, where do you think that quantity would be, like 2x, 3x, 4x by second half?
This is approximately a 24-million-unit market. So we can get to a--
Okay.
--much higher share of that market compared to Proventil, given that we're the only generic in this. So it's probably not 2x, 3x, 4x. It'll be an exponential increase from where we are.
Sure. Thank you. One last question on the trade generics business. We have said that there is a strong double-digit growth on sequential basis in Q2. If you could provide how the business has panned out on a year-on-year basis, and also the disruption that we had in Q1. Would you say quarter two is more of a normalized run rate or is it the quarter three where we would get a normalized quarterly run rate in that business?
On the trade generics front, it had good growth from last quarter to this quarter. But if you compare year-on-year, this is mid-single digit, and that is a function of some seasonality and also some cost-related factors which have come in. But we expect a steady growth in this business, like we have delivered in the past years. There is no change in the thesis on the trade generics, which has been a very steady performer for us over the years.
Sure. Thank you, and all the best.
Thank you.
Thank you. The next question is from the line of Damayanti Kerai from HSBC bank. Please go ahead.
Hi. Good evening, and thank you for the opportunity. First, as you retain your guidance for U.S. exit run rate, do you retain the guidance for EBITDA margin also, which you indicated earlier, 18.5%-20% range?
Yes. Damayanti, we are maintaining both the guidance that exit run rate for the U.S. would be $1 billion and for the EBITDA guidance for the full year will be 18.5%-20%. We are not changing the guidance.
Okay. Thanks for that clarification. My first question is on the awaited launches for the U.S. As you indicated, three significant launches still remaining for second half. My question is specific to the peptide opportunity and Symbicort respiratory inhaler. In your observation, how far you are from the final approval and how confident are you about launching these products so that they can contribute towards the second half ramp-up?
Yeah, Damayanti, I can hear. We are confident about the approval. We are getting closer to launch, but I think the exact timelines is more a function of how the U.S. FDA reviews these files. But we are confident of the approval.
Again, it's safe to assume you have goal date for both the products in coming months, where we will hear back from the U.S. FDA. Okay. My second question is on your Ventolin opportunity, where you have launched and as we are discussing, it's in ramp-up phase. When I look at the market share gain so far, still I think in single digit, and you are indicating significant ramp-up in the second half. It's just a matter of ramping up supply from your end, right? Will you have enough visibility on the market demand and your penetration within the channels, et cetera, which can make it a successful launch?
Yes, exactly. Because we're dealing with the same set of customers. We have very strong relationships on the rest of our portfolio, including another very similar inhaler. We are very confident about the commercial strategy and our teams are in touch with the customers. That will not be a problem.
Okay. My last question is on Pithampur FDA observation. This plant, I think, has been under upgrade and improvement, et cetera, for quite some time. What actually has, I think, led to say seven observation? I think that seems below expectation. How do you see that scenario?
We had received an OAI on this facility approximately three and a half years back.
Yeah.
That is the normal time it takes for the FDA to revisit. This time, as we had shared previously, we did not have any repeats, and we did not have any DI. We are working on resolving these and we remain committed to getting these out of the OAI status.
Okay. You have done risk mitigation for most of your key approvals in near to medium term. That is safe to assume. As you indicated earlier, you will do dual site filing, et cetera.
Yes. If you see, the new approvals have all been mitigated. They are coming from a U.S. site or Goa. If you see also the last several U.S. FDA audits we have had, we have been coming out with VAIs and with good responses. I think team is working on it, and we do not see any downsides at this point from the Indore audit. If the site gets converted to VAI, it will open up further opportunities for us going forward.
That's helpful. Thank you, Achin. All the best.
Thank you. The next question is from the line of Neha Manpuria from Bank of America. Please go ahead.
Yeah. Thanks for taking my question. Achin, just to clarify, the two respiratory approvals and the peptide approval, did I hear correctly that we expect the approval, the goal date for these products is in third quarter or would it be more fourth quarter weighted?
Neha, we are expecting these to be approved in this financial year. I think that's part of what we have guided. The exact dates are not 100% in our control, so we announce them as soon as they get approved.
Understood. My second question is, for the respiratory launches, once we get approval, is it fair to assume that the time to ramp up probably wouldn't be as much as what we've taken for Advair and Ventolin? Are these also from the U.S. facility or are these filed from our India facility? I think one of them is third party, right?
Yeah. So one of these partnered assets is from the Goa facility, which has been manufacturing MDIs for quite some time. So there's no ramp-up involved there. The other one is from the U.S. facility.
Understood. So would the ramp-up for that also be more gradual like we have seen for Ventolin and Advair?
No. See, some of this was a function of all the remediations that we've done in the last three to four years, and Ventolin and Advair were the first launches out of these units. But now the team is there, and they have the experience of working on these products. So we don't expect similar kind of challenges on future launches.
Understood. My second question, Dinesh, on the other expenses in the quarter, there seems to be a very sharp jump that we have seen quarter-on-quarter. Just wanted to get a sense, is there any one-off there in that number that is there in the second quarter?
Neha, there is no one-off, per se. If you look at sequentially also, normally our quarter two expense base is always higher than the quarter one. As we have guided earlier also, as Achin mentioned just now, our launches ramp-up is going to happen subsequently, but our investment is already happening on that. I think that is one play which is happening here.
Okay. Understood. My last question, tax rate for the full year would be closer to the 25% level or this 27% that we have reported in the first half?
It will be in the range of 27% to 27.5%, Neha.
All right. Thank you so much.
Thank you. The next question is from the line of Bino Pathip arampil from Elara Capital Private Limited. Please go ahead.
Hi. Good afternoon. Couple of questions. One, just to follow up on Keytruda. You said you hope to be in the first wave of launches. Could you also put some timeline to it? I believe the patent expiry is around 2029 calendar year. Is that your target entry time?
Yes, that's right. We will expect to file it next year, which allows us to be in time for the patent expiry. To launch in time for the patent expiry.
Okay. The U.S. filing approval, all this is completely in Qilu's hand or are you involved as well?
Yeah. So we have a lot of expertise on that. Our teams are going to be involved.
Got it. Okay. Just one other question. There is this product, DOVATO, which is dolutegravir and lamivudine, in which seems like you have a first to file. Could you confirm that and also give us a timeline for launch?
I think, can we get back to you on that? I will have to check the exact status and come back to you on that.
Okay. Sure. Just to wind up, these respiratory assets you are expecting, is one of them from the Ellipta franchise?
No. That is later. Right now what we have are MDIs.
Okay, great. Thank you. I will join back with you.
Thank you. The next question is from the line of Abdulkader Puranwala from ICICI Securities Private Limited. Please go ahead.
Hi. Thank you for the opportunity. Two questions from my end. First is on your India business. If I look at your consumer business, in Q2 as well as in first half, there seems to be a slowdown. Can you help us understand, is it mainly because of the higher base of last year or anything to read out there? Thank you.
If you see the brands themselves, all of them have continued to grow and gain market shares. Therefore, that leadership is maintained in the category. We have high single-digit growth rate, but there were some headwinds in the form of costs and pricing, which we're working on mitigating. We will see a good double-digit growth on consumer business going forward.
Understood. Second is on margin. In this quarter, we have seen a good amount of sequential improvement. For the second half and FY 2028, where we see you as doing better than where we are today, any color if you could provide us to how the margins may shape up?
Right now, what we can say is we are expecting sequential improvement for the remaining two quarters of this financial year. Then I think by the start of next year, we'll provide the guidance for next year. But we expect it to improve it from where we are now towards the end of the year in order to deliver the 18.5%-20% that we've guided for current FY 2027 itself.
Got it, sir. Thank you.
Thank you. Anyone who wishes to ask a question may press star and one on the touchtone telephone. The next question is from the line of Vivek Agrawal from Citigroup. Please go ahead.
Yeah. Thanks for the opportunity. Just a small clarification on margin. You are highlighting that you are expecting quarter-on-quarter improvement in the margin in the coming quarters of this year. But I am just looking at the Q4 margins of the company generally remain on the lower side because of the seasonality. But this time around, you are expecting a QoQ improvement from 3Q to 4Q. Is that a right way to understand?
Yeah. As we guided earlier also, we are expecting a ramp-up in the U.S. business. So I think that is going to lead to this improvement sequentially.
Thanks. That is from my side.
Thank you. The next question is from the line of Saion Mukherjee from Nomura Asset Management Company. Please go ahead.
Yeah. Thank you for taking my question. Achin, on South Africa, one clarification. You mentioned the growth is almost 30% faster than the market as per secondary data. But the primary data seems to suggest a decline. Is this all related to the accounting changes? If you can talk about the primary growth that you are seeing in that market, both for private market as well as for the tender business.
There are two factors. One is the accounting change, which we explained last quarter. Same thing is valid for this as well. It restates top line slightly, preserving the same EBITDA. But also on the tender front, we had lost one of the tenders, which we contested in the courts, and there is a favorable ruling which has just come out a few days back. So right now, what you are seeing as a dip on the overall reported numbers is also partially on account of tender business, which we are hoping will correct now that the court ruling is in favor.
Right. Also, of your total EMEU business, what percentage would be tender-driven currently?
It's not that high.
Okay.
Yeah, it's not very high. We'll have to quantify it exactly, but we do not play too much in tenders across the world. I think the bigger chunk will be in the South Africa tender. Yeah.
Okay. The other question I have on R&D spend and biosimilars in general. You have four products under development. Will you be required to do phase III trials here? In that context, wanted to see over the next two years, how you see R&D spend increasing for you from the current level of, say, quarterly run rate of INR 400 crore-INR 500 crore.
For the U.S., there is a general acceptance that most products will have a waiver on phase III. The first one that we have where we are the lead product under development, we have an understanding consultation with the FDA that we would not need a phase III. We would expect similar trends for the remaining biosimilars as well. That would not be a challenge. The investments are more on product development and running the phase I or the bioequivalence.
Okay. Your R&D spend will continue to remain at 6%-7% in the years ahead, you think?
Yeah. This year it is 6%-7%. It is a percentage, so as revenue grows, you get more to invest. We will provide a more detailed guidance, or if there is any change, we will provide that guidance along with the next year numbers.
And so
for this year, we will stay within the 6%-7%, and we are able to support all of these.
This biosimilar asset you have, facilities or you are investing in facilities, you can give an update on drug substance, drug product capabilities?
Yeah. We have a joint venture, which is called Aspergen. It is a joint venture with an experienced manufacturer called Kemwell. That is the one that we are calling in-house because Cipla has majority ownership there.
Okay. You already have a facility there?
Yeah.
Are you.
That joint venture has access to facility and it's also scaling up.
Okay. Thank you.
Thank you. The next question is from the line of Alankar Garude from Kotak Institutional Equities. Please go ahead.
Hi, thank you for the opportunity. Achin, one question. When you say multiple pathways to achieve the U.S. guidance, can you please elaborate on it? The question is basically, does it mean that you would be able to achieve the guidance even if, say, one of the three large pending approvals do not come through in FY 2027?
Alankar, I think the idea is to, between a combination of the ramp-up of existing assets which are already approved and the new assets, we have pathways to get to that number. The exact combination of what drives exactly how much is also a function of when we get these approvals. That is the reason we mentioned that statement. But I think with what we have as visibility, we remain confident that we should be able to get there.
Understood. Basically, Achin, you have some flexibility of possibly doing better on the already approved assets. At the same time, the timing of the new assets remain, and while you are confident, the exact timing can vary as you highlighted earlier. Just from a more of a scenario standpoint, assuming one of the relatively smaller assets out of the three gets delayed, can that really make a big difference as far as the guidance is concerned?
There are multiple combinations here, so it is hard to answer that particular question, Alankar. But I think as we said, Ventolin has a lot of potential. It is a very big opportunity. That itself covers a lot of the delta between this and the exit rate. Then between some of the other combination of the new products, I think we remain confident of getting to that exit rate.
Okay, fair enough.
Exact attribution to each product is a little bit difficult because there are a lot of moving parts to it.
Understood. Fair enough. The second question is, you had previously spoken about higher focus on specialty and innovative assets, more with respect to developed markets. Can you take us through the thought process here and any progress you would like to share on this front?
Yes. If you see, we have called out an increase in the number of filed products for the U.S. market, where we are saying 45- 50 filings we will be able to do for North America in the next three years, compared to roughly 10 as an average that we had in the past. All of these are complex assets. We do not have plain vanilla generics in the pipeline. That is one. Biosimilars is the other leg, where internally we have four assets under development. Last three years said we will add one or two each year. We will selectively in-license a few, not too many, but a few like pembro to fill the pipeline for the more near future. Three, I think what we have started looking at is for markets like India and other emerging markets where we have a branded presence.
We are in-licensing innovative products like the deal that we announced with CTTQ for breast cancer ADC product, bispecific ADC. We are interested in those kind of partnerships in order to further the portfolio and take it more on the differentiated patent protected side. I think those are the levers that we're working on.
Just one clarification there. Is licensing or acquisitions of innovative assets in developed markets a part of your strategy?
Less of innovative, but there are certain 505(b)(2) assets which can be of interest to us. That strategy will probably be more in the nature of acquisition than licensing, because an acquisition typically comes with some front-end and some experience of marketing those products. We are considering those, and we will continue to strengthen more differentiated product pipelines as a percentage of our overall portfolio.
Got it. That helps. That's it from my side. Thank you.
Thanks.
Thank you. The next question is from the line of Ashutosh Kumar Jha from Balyasny Asset Management. Please go ahead.
Hi. Thank you for taking my question. Just wanted to understand one piece of our overall business construct. Given that the U.S. revenues have come off post the lanreotide supply disruption, is it fair to say that close to more than 55%-60% of your current EBITDA comes from the India business at this point?
We are not reporting segment-wide profitability numbers, I think. But yeah, India business remains profitable, growing well. Much of the R&D expenditure is towards developed markets like the U.S. So if there is a swing in revenue on North America, it impacts the EBITDA of North America more than India, which is a steady double-digit growth over the last several quarters.
Understood. Thank you so much.
Thank you. The next question is from the line of Bharat Celly from Equirus Securities Private Limited. Please go ahead. Bharat, kindly unmute your line, please.
Yeah. Hi. Thanks for the opportunity, and good evening, everyone. Just wanted to understand on the three assets, which we are talking particularly from the second half perspective. Over here, since all these products will take some time to ramp up, indicatively, are we talking about these opportunities has to be a 3Q and approval opportunity for us?
Not really, because we are not anticipating ramp-up issues on these products which we are awaiting approval.
Okay. And on Symbicort as well as on the peptide opportunity, which we keep on referring to, have we ever got any CRLs on these products before?
We normally are not able to talk about individual product goal dates or CRLs. I think as we said, we remain confident of getting the approval. The exact details on those products is also competition sensitive. I think it would not be prudent to talk about that in too much detail.
Right. Last one. On Symbicort, have you seen any dynamics changing for Symbicort opportunity, considering there have been additional competition which has come in in the product?
Yeah, I think again, our thesis is that respiratory is complex opportunity, which as per the U.S. FDA classification also it is. There are entry barriers, and therefore, it typically remains a fewer player market. Right now, some products you could be in one player, two player, three player market, but it is typically not a very high competitive commodity generic market. So right now, we see a lot of opportunity on Symbicort, and if the competitive dynamics doesn't change dramatically by the time we enter, we are quite confident of having pretty big contribution come from Symbicort generic.
Surely. That's helpful. Thanks a lot, and best of luck.
Thank you. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.
Yeah, good evening. Thank you for taking my questions. Just looking at the India business prescription growth, the branded prescription growth 15%, if I were to kind of leave out, and maybe I'm being selective, leave out the anti-diabetes portfolio including semaglutide, we have seen slower growth than market. Am I reading too much into this, given a very diverse portfolio, or is there something to read into this?
Your line was a little blurred, but you're asking what is the growth rate across therapies on India business?
Yeah. I'm just saying, I think if we remove semaglutide contribution, 10% like what one participant said, YoY growth at 15%, if I were to strip that out, would be much lower and probably much lower than the industry for the other therapies. I'm just wondering, is there something to understand or analyze that piece?
Okay. The growth is beating the market. Overall, it's 14.6% versus 14.3% for the market on a H1 basis. If you see respiratory, there's a beat on the market. Other than GLPs, also diabetic has done well, cardiac, dermatology, all of them are a beat on the market. I think our numbers have a little bit more skew on respiratory, so one may get this kind of impression. But because respiratory therapy grew slower than diabetic, cardiac, et cetera, in the last two quarters. But we have a beat on individual segments across the board, and we have been focusing on building a very strong presence in chronic therapies other than respiratory. So cardio, metabolic, we have very solid portfolios in these, including now in obesity and dermatology, urology. I think these are very strong focus areas for us.
We'll continue to drive market-beating growth in these segments in order to get more stability and less seasonality on the business.
Very helpful. Just a second question on your cash balance. You're now running at a very high cash balance, cash and cash equivalents. Is there any different approach or philosophy for deploying this cash, because do you need so much cash on a balance sheet? That's the second question. Thank you. All the best.
Yeah, thanks. We will look at opportunities to acquire assets. We have been selective about that, as we mentioned earlier. We're looking at complex or differentiated opportunities, which are more likely to be on North America side or Europe side primarily. Because India, we are number one player by volume, so we find it a little harder to find non-overlapping assets in India market. But we are on the lookout. We evaluate a lot. We're just being selective so that we make the right moves, which will help the business grow from a longer-term window as well.
Thank you. We take that as the last question from the participants. I now hand the conference over to Ms. Diksha Maheshwari for closing comments.
Thank you everyone for joining in. If you have any further questions, please write it to investor.relations@cipla.com. Back to moderator. We can end the call.
Thank you, ma'am.