Ladies and gentlemen, good day and welcome to the Q3 and 9M FY 2022 Conference Call of Eris Lifesciences. We have with us on the call today Mr. Amit Bakshi, Chairman and Managing Director, and Mr. V. Krishnakumar, Chief Operating Officer and Executive Director. 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. V. Krishnakumar, Chief Operating Officer and Executive Director of the company. Thank you, and over to you, sir.
Thank you. Good afternoon, and welcome to our Third Quarter Conference Call. I'm Krishna Kumar, and I'm happy to share the highlights of the quarter with you. As per the AIOCD retail audit, the Indian pharma market grew at 5.7% in quarter three of this year on the back of a 6.4% growth in quarter three of last year. In comparison, I'm happy to share that Eris grew at 7.8% in quarter three of this year on the back of a 14.5% growth in quarter three of last year. If you look at the first nine months, the Indian pharma market has grown at 18%, but on a very low base of 1% growth in the first nine months of last year.
Eris has grown at a 16.3% rate in Q3 on the back of a 7% growth in the first nine months of last year. When you see the numbers from the pre-COVID base, Eris has demonstrated a two-year CAGR of 13.9%, which is nearly twice the pharma market growth of 6.8% during the same period. This has been driven by sustained market-leading growth in all of our five therapies, top five therapies, diabetes, cardiology, VMN, CNS, and women's health, which collectively account for 91% of our revenue. The therapy-wise breakup of this growth is available in our investor presentation. Eris continues to feature among the top 10 fastest-growing companies in the Indian pharma market from pre-COVID levels.
The cardiometabolic market grew at 4.9% in quarter two and 3.3% in quarter three of FY 2022. These have been the lowest growth rates for this segment in a very long time. In terms of comparison, the four-year median growth rate for the cardiometabolic therapy has been 11.2% per quarter. From a long-term base growth rate of 11.2% per quarter, this market suddenly crashed to 3% and 5% levels in the preceding two quarters. This has obviously had an impact on our primary sales in quarter two as well as quarter three. Nonetheless, we view this slowdown as a transient phenomenon, and we expect the market to start recovering in the next two-three quarters.
Despite these unprecedented headwinds faced in Q2 and Q3, Eris grew at 7.8% in Q3 versus the IPM growth of 5.7%. In the cardiometabolic segment, which constitutes nearly 60% of our revenue, Eris grew by 15.5% in Q3, which is nearly five times of the market growth of 3.3%. In CNS, which constitutes 8% of our revenue, Eris grew by 30% in Q3, which is nearly four times of the market growth of 7.5%. In women's health, which is another fast-emerging therapy for us, Eris grew at 14.5% in Q3 versus a market degrowth of 2.2%. Our VMN segment degrew by 12.4% in Q3 versus a market degrowth of 0.6%.
We continue to enjoy high prescription ranks among our focused doctor specialties as per the SMSRC data for MAT October 2021. We maintained our number three ranks with diabetologists and neurologists and number four ranks with cardiologists and gastroenterologists. We have improved our rank among consulting physicians from number six to number five. Coming to the financials, our consolidated operating revenue for quarter three stood at INR 332 crore, which represents a 7% growth over Q3 of last year. The consolidated EBITDA for the quarter stood at INR 122 crore, which is a growth of 13.5% over Q3 of last year. Our consolidated EBITDA margin in Q3 has expanded by 210 basis points owing to improving MR productivity and a better product mix.
Consolidated profit after tax for quarter three stood at INR 101 crores, which represents a growth of nearly 12% over Q3 of last year. The tax rate for Q3 stood at 7.5% of PBT as the Guwahati facility continues to contribute nearly 80% of the total revenue in quarter three. On a nine-month basis, consolidated operating revenue stood at INR 1,041 crores, which represents 11.5% growth. Consolidated EBITDA stood at INR 388 crores, which represents a 15.5% growth. Consolidated profit after tax stood at INR 326 crores, which represents a 13.6% growth.
At the start of the year, we had guided to a 15% growth, and I'm very happy to inform you that we are on track to deliver an EPS growth of 14%-15% in this financial year on the back of a 21% EPS growth, which we delivered in the last financial year. In terms of operating cash flow, it stood at 73% of our EBITDA for the first nine months of this financial year. Quarter three was a significant one for us in terms of a strategic foray to take our anti-diabetes franchise to the next level. On the back of a market leading position in oral anti-diabetes, we have kick-started our entry into the insulin analogues and GLP-1 markets through a joint venture with MJ Biopharm, in which Eris holds 70% equity stake.
We are on track to launch human insulin next month. We are creating a new division with 140 medical representatives to kick-start our insulin business. The next big product from this joint venture would be Glargine, which is presently in phase III clinical trials. We expect to launch Glargine sometime in calendar year 2023. Other important pipeline products include the insulin analogues, aspart and lispro, and liraglutide, which is a GLP-1 agonist. We expect to leverage our distinctive patient care platform to bring a differentiated value proposition to our insulin business, which is very involved in terms of patient engagement and service. I'm happy to share that our standalone YPM has grown to INR 5.1 lakhs in the first nine months of this year, compared to INR 4.6 lakhs during the same period last year.
As discussed before, this has been a major lever in the improvement of our EBITDA margin from 36% to 37.3% over the first nine months of the current financial year. We continue to execute on our identified growth drivers of power brand expansion and doctor reach expansion. We enjoy significant tailwinds in our power brand portfolio with eight out of our top 15 mother brands continuing to be ranked among the top five in their respective segments. This is why we were able to maintain our growth trajectory throughout the pandemic period, when Eris grew at a CAGR of 14%, which is twice of the pharma market CAGR of 7% during the same period.
Of the 10 new product launches planned for this financial year, we launched four products in the first nine months, and we have several more launches lined up in the segments of diabetes, CNS, and women's health in quarter four. Significant launches include human insulin and Drolute, which is our brand of dydrogesterone in the women's health segment. Dydrogesterone is a synthetic progestogen that is used to treat hormonal disorders in women. This is a INR 500+ crore market, which is growing in excess of 40% per annum. These were the highlights of the quarter. We can now open up for questions.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may kindly press star one on your touch-tone 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. We have the first question from the line of Sakshi Chaudhary from Mount Infra Finance. Kindly proceed.
Good evening, sir. Could you speak on the acquisitions and the growth for Eris, and also on the outperformance with respect to IPM?
Yeah, hi. When you talk about acquisitions and growth, are you talking of forward-looking, or would you like me to talk about how the historic acquisitions have worked for us?
The forward-looking.
Okay. I think forward-looking would be all speculation, right? Because our last two acquisitions, Strides portfolio and Zomelis have worked very well for us. If I just look at Zomelis, which was our last acquisition, we acquired Zomelis in less than two years is a commendable performance by any standards. We are encouraged by those kind of value accretive initiatives we've been able to take, and we continue to be on the lookout for acquisitions. As we have said before, we don't wish to venture into, you know, very far-flung territories. We will stick to our focus therapy areas of, you know, cardiometabolic, wellness, women's health, CNS, and potentially dermatology. These areas are segments where we continue to evaluate deals.
Obviously, we are starting from a position where our standalone gross margin is 84%, so anything which is less than 70%-75% gross margin is a tough sell in our system. Based on all these parameters, we do continue to evaluate deals all the time. I think, when will something, you know, hit the bull's-eye? That is very difficult to say. I think, the deal that we did with MJ Biopharm, I guess you could call it as, you know, some sort of an in-licensing deal because, that is a true partnership where MJ Biopharm will develop and manufacture and supply the product to us, and we will be doing the marketing. We are completely, you know, open to inorganic opportunities to further the growth as long as, you know, it meets our return expectations.
Right. That would be my comment on acquisitions. I think as far as the market outperformance is concerned, I think, ever since, you know, COVID has broken out, I think, the market has become very choppy. It has become very difficult to make sense of the quarterly market numbers. Something is up one quarter and then it is down the next two quarters and so on, which is why we always benchmark ourselves to the pre-COVID base of the market and see where we have moved corresponding to that. That is where, you know, I have commented early on that, across all our five focus therapies, we have grown faster than the market compared to the pre-COVID base.
Oral anti-diabetes, the market has grown at 6% CAGR in the last two years, and we have grown at 18%. In cardiology, the market has grown at 9% CAGR. We have grown at close to 17%. In VMN, the market has grown at a 7% CAGR in the last two years. We have grown at 12%. CNS market has grown at 8%, and we have grown at 17%. In women's health, which has grown at 8%, which is the market growth, and our portfolio has grown at 13%. This is a very reassuring sign for us because these are the top five therapies for us, which account for 91% of our revenue and which continue to receive all our investment in terms of going forward.
That is kind of a bit of a color on the outperformance.
Okay. Sir, I have one more question. In terms of the organic move, do you see opportunities coming your way to differentiate in-organically?
Sorry, could you repeat that question? Are you talking of acquisitions or are you talking of organic growth?
The organic growth.
I think what I can say about organic growth is if I look at the next two-three years, as a company, we are far, far more excited about the next two-three years and the opportunities coming up organically in the next two-three years compared to what we were in the last two-three years. We are heavyweight on cardiometabolic, right? Whichever way that market goes, you know, we will also follow that by that way. If I just look at the opportunity in the cardiometabolic segment in the next two-three years, it's amazing. It's something that we have been waiting for the last 10 years. The organic opportunity is phenomenal.
Okay. That's it from my side, sir. Thank you so much, and wish you good luck for the coming quarter.
Thank you.
Thank you. Participants, if you wish to ask a question, kindly press star one. The next question is from the line of Anubhav Agarwal from Credit Suisse. Kindly proceed.
Yeah, hi. Just one question on the base business. Actually, when I just take a stab at the numbers, and if I just remove Zomelis and Gluxit from this quarter number and from the base as well, approximately, I don't see that our base business is growing more than 2%-3% here. Can you comment, what's happening in the base business? I know in the presentation you mentioned that the vitamin portfolio is not doing well, but still that 2%-3% growth is looking very low.
Yeah. I think if you take out Zomelis and Gluxit, then I think the two dominant molecules that remain in the portfolio are glimepiride and telmisartan, right? I think we have all seen what has happened to the telmisartan market. There has been a secular degrowth in the market in the for the foreseeable past, whatever time you take, ever since COVID broke out. As far as glimepiride is concerned, we know that the whole oral anti-diabetic therapy is being taken over by the DPP4s and SGLT2s at a very rapid clip. In fact, our outlook for glimepiride is very, very weak over the next five years. When we say that we look forward to a robust opportunity in oral anti-diabetic, this entire opportunity is built on the DPP4, SGLT2 and their combinations.
The current penetration of DPP4 and SGLT2 in India is 44%, and we expect that this penetration will grow by leaps and bounds. We have, let's say, grown at 18% in diabetes over the last two years. This growth, a big part of that has come from Zomelis and, you know, dapagliflozin. Not just because we were able to be in these molecules, but because we have consistently been at number one position in these molecules. I think that has been a big driver of growth. If you take away DPP4 and SGLT2, there is no growth in diabetes, not for us, neither for us nor the market. That is where the market is growing.
You know, as far as anti-hypertensives is concerned, it's again part of that, you know, mind-boggling phenomenon which I articulated in the start of my call, that a market which has grown at a secular 11% quarterly growth rate is suddenly crashing to 3% and 5% levels. Starting from the flagship, you know, brand Eritel in the category, I think the biggest molecule has consistently de-growed. I think this is part of the phase that we have to go through. There is no way that, you know, we will be showing growth when the underlying market is, you know, growing slow or de-growing.
But just-
The good news is we don't expect it to last long. We expect that post-Q2, the market will recover, but, you know, it is what it is.
Our query is, what's happening in the anti-hypertension market? Where are the Eritel current patients who are taking it? Where are they? What are they taking now?
I would request Amit to answer this. You might get more insights.
Anubhav, this is a question which we have been asking the, you know, prescription data people and also the product data people. What the answers which are getting are like this: number one, whenever the acute becomes very heavy, the overall stocking on chronic goes down. That's how the balancing happens at the stockist level of his own capital management. This is one piece which we are hearing. The second piece which we are still hearing is, you know, there had been a lot of, you know, stock-up which has happened in April, May, and for some it would have lasted a longer period of time. The other thing is there could have been some erosion in the patient pool because of, you know, whatever has happened.
These are only three explanation which we have. Other than that, you know, it's like anybody's guess.
In the prescription data, so what kind of data you have seen? Like, is it like, for prescription, is it down low single digit?
Yeah. We'll send you the SMSRC data. You will see the same reflection in the data also.
Okay. Helpful.
I missed out one thing. The one thing which people say that the new patient initiation post April, May had gone down because the footfall of the chronic patient hadn't been normalized. I think people were talking about November, December when normalization was, you know, happening quite a bit. Then there is the Omicron stuff. Those are the three areas, Anubhav, wherein everybody is putting their bets on.
This weakness in prescription, have you seen only for Eritel, or you've seen for the entire category?
Entire category.
Entire category.
Our representation in the chronic is quite robust. You know, it's not that we are selling some part of the therapy. If you look at our therapy, it's quite robust. The whole therapy behaves like this. In diabetes we understand that, you know, glimepiride is no more a first-line treatment. What is also working well for us is a combination which we call Glimisave MV, where we have kept growing ahead of the market and now we have become number two brand, almost INR 84 crores and still growing by 15%, which is the highest growth in the market. Beyond that, you know, that's what it is.
Okay. That's helpful. Now, Amit, just one clarity on what Krishna- KK mentioned is that, why is it so weak? What's happening, as you also mentioned, glimepiride. It's no longer even if it's combination, let's say, are people doctors not using this as a first-line therapy at all now, even combination of glimepiride?
Anubhav, what has happened? Look, anti-diabetic were always. People with diabetes were dying of cardiovascular disease.
There were no anti-diabetic which had a cardiovascular protection profile unless the gliflozin came in. The treatment, the ideal treatment of diabetes would have been one which reduces the complication, either it is cardio, cardiac or the nephro, and then it is weight neutral or it loses weight.
Dapagliflozin and DPP-4 were one of their kind, which you know, anti-diabetes, which the world has seen. Therefore, the whole guidelines have changed. All this depends upon how the bigger you know, the American Diabetes Association, the Quality Society of Diabetes, how do they position. They have moved sulfonylureas to number three now. What we expect is that sulfonylureas will slow down in terms of growth. We will see a very small marginal growth, that too not coming from units, but coming from value gain. Glimepiride era is more or less over. As we know that drugs do sustain over a long period of time, so the sustenance would be longer. Like for example, SMSRC has already shifted this market to a mature market. It was there for 25 years in the growth market.
It has now been shifted to mature market.
Okay. What is the doctor's first line of treatment now, between, let's say, gliptins DPP-4 versus, let's say, SGLT2?
Anubhav, the data starts with DPP-4.
Okay.
Metformin has always been the gold standard. Post-metformin, it used to be a glimepiride, which has now moved to metformin and a gliptin.
Okay.
I add Dapa as a second-line drug.
Understood. Very helpful, Anubhav. Just couple of more question. One is on Drolute. You were launching this product this quarter. Can you just talk about. So you mentioned about INR 500 crore plus as a market. What, how big this can be a project for you? Can this be next one or two years, INR 50 crore kind of product for you?
INR 30 crore in the next year, and INR 50 crore very much possible in the next two years. We have just launched it, and we feel that we will have a INR 6 crore run rate in this quarter. We are quite. The market is very robust actually. This is again a complicated API, so we had to pay a license fee to acquire this. The competition is going to be limited. I think there are five-six players as of now. The API is quite complicated. The market is very robust, very, very robust. It has the potential of changing the entire progesterone market in India. You know, gynecology INR 500 crore is not a small thing. It has never happened before other than the progesterone. At INR 500 crore, it is showing around 40% growth.
Clearly this is a winner.
Okay. You mentioned that this can be INR 50 crore for you by end of next year, something like that. Annualized.
Two years.
Two years.
Yes.
Just a related question, this year is largely done now, quarter is there, but for the expectation for next year, do you think that on the top line, can you do what kind of range? Just as a range, but will it be 10% kind of range for us organically or 15% kind of range for us organically next year with insulin-
We have left this question for to answer in quarter four. What I can tell you, Anubhav, that if the cardio diabetes market ends up between 5%-6% or 5%-7%, in my mind, I feel two-year CAGR will again come back to 10%. Whatever will be left out in this year should be covered in the next year, by which I'm meaning that this market should grow at 12%-15% next year because there hasn't been any instance at any point of time where on a yearly basis this market hasn't grown at least in double digits.
We have seen this, you know, earlier in the GST era where there was a blip for a year, but then it gets compensated. You know, we are running a very different game. You have to understand that, you know, we are running a very different game. Last year we were around seven, eight , 10% growth. Industry was 1% because acute was completely down and the whole range of growth came from the chronic. We get into the next year because of reasons you know, the acute is the king and chronic has taken a back seat. Because of COVID, the secular growth which we had seen over a period of time has got little, you know, little disturbed, little disrupted.
In my mind, cardiovascular market this year and next year CAGR should be at least a double digit, which means that this market will have to grow 12%-15% in the next year.
Okay. I'm clear.
Okay.
Thank you. Thank you.
We have the next question from Tushar Manudhane from Motilal Oswal.
Yeah, thanks for the opportunity. Just taking a little forward on this anti-diabetes, you know, DPP-4, SGLT2 growing aggressively. How does it look like?
I'm sorry to interrupt, sir, but there seems to be the echo coming from the boardroom.
Is this better?
Uh, kindly be online. We'll just reconnect the boardroom. The management line is reconnected.
Am I audible?
Yeah, Tushar, please carry on.
Just wanted to understand anti-diabetes again, that while the DPP-4 SGLT2 category has been aggressively being prescribed, that is impacting the product portfolio as such. Considering that we 18% CAGR in anti-diabetes, 15%-16% last year, how do we see this impacting the therapy growth for us? Wherein once the new for Gluxit?
Yeah. I think that is the right observation, that the base effect for Glimisave and Zomelis will start kicking in. What will keep this therapy vibrant over the next two, three years is that we have more products that are, you know, going to come available to us because of the loss of exclusivity. This is something that we've discussed before. We don't see a challenge either in the diabetes market growth or for us to be able to sustain the growth in the diabetes therapy over a two- to three-year timeframe. There is enough and more that will keep rolling off the conveyor.
So-
Are you able to hear me, Tushar?
Yeah, yeah. Very much. Very much clear. Thanks a lot, Krishna Kumar.
Amit would like to add something.
Tushar, whenever a drug moves to the first-line therapy now, the new initiation of patients happen in large quantities. If you see how glimepiride metformin had done in the first 10 years, any of these markets have done far better. The adoption rate in these markets will continue. We will see a lifting growth at a high double-digit level for a very, very long time of the entire category. Dapagliflozin, these are just early years. It's been one year, it has been out of the patent, you know. It has at least in some form, either in combination or alone, it has at least seven-eight years of very high growth available for this product.
Got you. No, no. The prospects remain definitely interesting on the DPP4 SGLT2. Just that, if I look at it from an Eris perspective, the glimepiride or the Glimisave as a brand is on a considerable base to Glucotrol. You know, from that perspective.
Tushar, we have transited well over from glimepiride to the newer therapies. The fact that we are market leaders in two of the brand, the combination of these, like there is a Glimisave family, the same way in the next seven years there will be a Zomelis family and there will be a Gluxit family. We have transitioned very well from the conventional, now, you know, we have to call them conventional OADs to the newer OADs. Even if you look at how our shares are now, our shares in DPP-4 SGLT2 has become more than what is in glimepiride metformin. The transition for us has been quite smooth. Therefore, there is a huge runway for growth in these areas.
Tushar, just to supplement that, I think the conventional, I mean, glimepiride is very, very important to us, and it is very important to all the companies which rank on the top five with the OAD therapy, because it is not enough to only have, you know, the new molecules. Because in order to build brands in the new molecules, you need aggressive investments. Where does this investment come from? You know, it comes from cash cows like glimepiride. I think between glimepiride and Zomelis and Gluxit and all the upcoming DPP-4s and SGLT2s, they form a very neat little package. Where on the one hand you have a mature molecule which is throwing out the cash flows, and these cash flows are being invested into the new growth molecules.
This is pretty much the combination that every company, not only us, every company who's in the leadership therapy in oral anti-diabetic, this is pretty much the ecosystem that we are all in. This will continue to be the growth story going forward as well. I think I had mentioned this to you earlier that we are scripting a 10-year story in diabetes, right? Between dapagliflozin and the upcoming molecules, the next 10 years are sorted. There is nothing to worry.
Sure, sir. Got it. Just secondly on this, given that Q4 would be having good number of launches, so how different would be the ad expenses, would you say? Will there be a meaningful increase?
There would be. It is logical to expect that, you know, whenever you have new product launches, you will have, you know, promotion expenses going up. Since, you know, nine months are already done, so we have a very reasonably good handle on the entire year, right? Which is why instead of talking about Q4, we have mentioned that we are on track to deliver that, you know, 14%-15% growth in EPS this year. I think that is something on which we have good line of sight.
Sure, sir. Got you. That's it from my side. Thank you.
Thank you. We have the next question from the line of Saion Mukherjee from Nomura. Can we proceed?
Yeah. Hi, good evening.
Good evening.
Can you throw some light on, I mean, impact of organized players and online players on your business? What fraction of business comes from there? I'm assuming chronic therapy, particularly on online would have gone up. Are there any discounts there and how the business is sort of getting impacted? What's your view, you know, on the long term impact?
Saion, there are absolutely no discounts there. Organized pharmacy retail, I think the only one player who has taken a clear lead in this market is PharmEasy. Overall, organized pharma retail accounts for about 3.5% penetration of the IPM. The penetration is of a similar order of magnitude for us also. It is very interesting to note that there is absolutely no discounting happening in these channels. The kind of working relationship that we are starting to establish with these players is, you know, based on very symbiotic model, which is, you know, to do with some kind of pay for performance.
Because these people have very insightful data in terms of, you know, PIN code level performance of our brands, which there is no way we can get access to. Based on what they see, I mean, you take Bombay as a city, they have segmented it to 100 zones, right? They tell us that, you know, in Bandra, your brand is doing this, whereas in Kandivali, it is behaving like this. Now, that's a lot of insight, right? They come up to us with ideas based on analysis of their own data, that we believe that, you know, this is what you should do. You should follow ABC strategies.
It's turning out to be a very consultative, you know, symbiotic approach, where the end goal is, you know, how do both of us emerge with a win-win situation. So far it's been a very positive experience in working with these players.
Right. Sir, I mean, they can also influence, you know, brand selection or in any way, you know, push their private label. Those are the risks that, you know, one can foresee going forward. How are you thinking about it?
Private label, I think is a question of time, right? Because these people also have to justify their balance sheets at some point, and they cannot keep bleeding cash forever. It is expected that they will launch private label, but private label will not be in cardiology, it will not be in diabetes, it will not be in CNS. It will not be in any of the hardcore prescriptions categories. Their private labels will come up in wellness. Wellness and nutrition, I think the whole market has to contend with that. I think it is something where, you know, the market will have to achieve an equilibrium over a period of time. As far as substitution is concerned, these guys do not substitute.
I think that has become very clear now because they want to work with all the top pharma companies, right? Substituting drugs aggressively will only set, you know, one client off from that perspective, and they don't gain anything. There is no reckless substitution happening. I think private label, the wellness category, VMN, I think, when as and when it plays out, we'll have to see. There is no threat of private label in the core chronic therapies that we are in.
Okay. Thank you.
Thank you. We have the next question from the line of Utsav Mehta from Edelweiss AMC. Can you proceed?
Hi. I'm Utsav Mehta. You referred to telmisartan. Could you just elaborate on that? I'm not aware.
Utsav, there is a lot of disturbance on your line. I think, I'm losing chunks of your conversation.
Yeah. Sorry, KK. What I meant was that, you earlier alluded to telmisartan losing a lot of market and, generally sartans not doing well. Could you just elaborate on that?
Yeah. I'll invite Amit to share his comments on it. I gave telmisartan as an example to showcase the overall slowdown that has been happening in cardiology and antihypertensives in particular. We picked telmisartan because it is the largest molecule, right? Whatever happens to telmisartan kind of sets the tone for the market. Over to Amit for more comments.
Yeah. Look, the whole market has been in some kind of a slumber this year, and telmisartan being the strongest market has represented most of it. Sorry. Telmisartan. Yeah, sorry. You know, what I was speaking to, you know, Anubhav, was this. It's the same thing. There are three things which, you know, we are talking about, but we don't really know what has happened. It is unprecedented. It'll never happen, and I've talked about all those three things. We are quite hopeful and confident that this is a one-year blip, and once we look at a two-year CAGR, you will find most of these things coming together because unlike glimepiride, telmisartan is a clear winner. For any scientific reason, clinical reason, there could be no disruption. It's only to do with what we have already alluded to.
I think we should wait for a year. They will average out pretty well.
Understood. Market issue as such has more, sort of time right now some issue thing rather than.
I guess it is a market issue, but it is not because of science or medical reasons, because in the case of glimepiride there was a clear scientific reason why the mature molecule was losing ground, because there are superior alternatives available on the market. In case of telmisartan, there is no scientific reason. It is more of a phasing out thing, which we believe is a combination of, A, number one, overstocking in the prior months, and B, because of the acute therapies taking the lead in the more recent quarters.
Understood. Thank you so much.
Thank you. We have the next question from the line of Anubhav Aggarwal from Credit Suisse. Kindly proceed.
Yeah. Thank you. Amit, I have one question on dydro. The question is, can you talk about this market a little bit? I don't understand it fully. Why are there only a few generics right now? What is it in this market with 10, 15 generics right now? And given that you're buying the API, you're doing formulation yourself or you're just getting the entire product done from outside?
Entire product from outside. You know, my knowledge in obs and gynes is little limited. You know, in all difficult pregnancies, whether they have a history of you know, spontaneous abortion or it's a late pregnancy, the biggest task is to hold the fetus for the first three months, which is called the luteal phase support. Now, all these IVF hormones which you see, most of them are placed towards that three-month period where the fetus could be held properly in the uterus. That's the idea. For that same purpose, progesterones are used. This is a product which was in patent and was doing very well. It opened up last year, but the API was very complex.
The access is very poor because there are only two players who are making the API. We had to pay a license fee to get the product. This product is a clear-cut winner in the gynecology market. It is INR 500 crore at 42%. It is just opening up. It's in the midst of opening up at a lower price point. You must have heard of that, you know, of the big brand.
Duphaston.
Duphaston.
Yes.
Yeah, yeah. This will replace Duphaston over a period of time, and this is the only progesterone where there's a lot of data available for supporting the luteal phase. We are all of this opinion, while you know I don't understand this as much as I would like to, but we are all of this opinion that this is going to be the biggest market in gynecology.
What is the price at which you launch your tablet?
We have launched it at a INR 60 tablet.
Which is very same price like Duphaston. They are about INR 75.
INR 75 and 60, yes, there is some saving, but I hope when the API gets more and more popularized, the prices still have a scope to come down.
At this price, it's a good price, but you're sourcing it outside. Will you be able to make a proper average margin in this product?
No, we will not be able to make it, Anubhav, in the one-year time. We haven't accounted for that. It's only when the market opens up over a period of time, then the margins will kick in. It's typically like any other product. You know, the first six months of Gluxit are also like this. Zomelis had been like that. You know, these products will follow this trajectory unless and until that clears up.
Okay.
Yeah.
Second question was, can you just talk about the market size of vildagliptin and let's say dapagliflozin today in the IPM?
You will have to come again. I'm sorry.
Tell us the market size of vildagliptin today?
vildagliptin, INR 1,000 crore+. I think INR 1,200 crore. INR 1,200 crore, still growing at 19%-20%.
Dapa, 6, 700.
% Dapa is?
Dapa is around INR 650.
Seven.
It is growing at, this quarter it grew 90%.
90%. It's just crazy. You know, what I meant when I was talking, like, you know, glimepiride we saw some kind of a build-up over a long period of time. The build-up in these markets will be very quick.
Right.
You have a little bit of price advantage. Because of these newer products, the price points are higher.
Okay, sir. Have a good. Thank you.
Thank you.
Thank you.
Thank you.
The next question is from the line of Neelam Punjabi from Perpetuity Ventures. Kindly proceed.
Thanks for taking my question. My question pertains to Dydro, Jesse. You mentioned that the INR 500 crore market growing at 40%. Just wanted to know what do you anticipate is the potential market size for this molecule? Do you think that it can be a INR 2,000 crore molecule, or what? If you can please answer.
I mean, if I look at the current level of momentum, then I would not rule it out.
Yeah.
Right? Because things are just opening up. As we discussed previously, there is a INR 75 price point, and then we are launching at INR 60. This is a flow that we have seen in every molecule after molecule, that when the market opens up, more and more people start making the APIs and then the time is not far off when you start getting this product at INR 50 and INR 40 and INR 30, right? As the price point becomes more affordable, the market just explodes.
This is a saga that has played over in molecule after molecule and at such a high price point, if Dydro is already at INR 500 crore and growing at 40%, I would not rule it out that it can become a 2,000 molecule, you know, in a forecast period.
Understood.
Yeah.
You mentioned that there are two API players making the API, right? If you can just name those two players, if possible.
It would be a little unnecessary to get into that, but those are information which are public. So let me not get into that. The more important thing is, the age at which the pregnancy is acquired these days have moved on substantially. We are seeing a lot of urban people having their first child in their early thirties. At a late age, there is more support which is required to, you know, keep the pregnancy good. These kind of products, as we have seen how IVF market has grown, these kind of product will keep on having more and more traction over the coming years.
Okay. Thanks for answering. That's all my side.
Thank you. Thank you.
Thank you.
Thank you.
We have the next question from the line of Vidal Patel from Ventura Securities. Can you proceed?
Thanks. My first question is, can you please comment on the chronic and subchronic segment? If you could throw some light on the future growth, it would be helpful.
Yeah, Vidal, we spoke about these in the start of the call, right?
Mm-hmm.
The growth of the chronic and sub-chronic segments have been disturbed in the last few quarters because of the unnatural circumstances brought about by COVID. Whereas the acute market has never seen a double digit or, you know, some crazy double digit kind of growth numbers has never happened. That has been brought about by COVID. The right way to look at the acute market as well as the chronic market is on a two-year basis. If you see a two-year kind of a performance. If you look at a two-year
There seems to be a-
Yeah, that was a little jarring, yeah. If I look at a two-year basis, then it is, the chronic market growth is completely on track. I don't see any aberrations when I look at it on a two-year basis. Our expectation going forward, I think quarter one, I think this is important for all of us to take note that quarter one for the IPM is going to be choppy because there was a huge base in quarter one of FY 2022 because that coincided bang with the wave two of COVID. Whereas quarter one of next year we don't expect any COVID, right? I think quarter one is going to be a bit of a washout for the entire market.
Post quarter two, you know, if the pandemic starts getting into the endemic phase, then I think the acute therapies and the chronic therapies will both start normalizing. As far as our core cardiometabolic therapy is concerned, as Amit has already articulated, we are very bullish and optimistic that this market will return to 11%-12% kind of a growth rate by the end of this year.
My second question is, the company is planning on coming up with women's health and derma. Why do you think this is a good product mix? Any reasons why you're choosing these two?
Because both of these therapies have a specialty angle to it, right? One thing that we understand very well in Eris is specialty play. When you say specialty play, the opposite of a specialty play is a GP play, general physician, which is usually focused on the acute therapies. What we do very well at Eris is working with specialists and, you know, engaging with specialists, building mind share and credibility with specialists. This is what we have done for the longest period of time since inception, right? Incidentally, we turned 15 last week. For 15 solid years this is what we've done. Which is why when it comes to growth, we are not very excited about acute therapies. We always look for therapies where there is a specialty play.
In dermatology there is a specialty play with the dermatologist, and in women's health there is a specialty play with gynecologist. This is the reason.
Okay, thanks, and all the best for your next quarter.
Thank you.
Thank you. Ladies and gentlemen, due to paucity of time, that was the last question. I now hand the floor over to the management for closing comments.
Thank you. Thank you all for your participation in the call. By way of summary, Eris delivered a Q3 consolidated revenue growth of 7%, EBITDA growth of 13.5%, and PAT growth of 11.8%. For the nine months ended December 2021, we delivered a revenue growth of 11.5%, EBITDA growth of 15.5%, and a PAT growth of 13.6%. As guided at the start of the year, we are on track to deliver an EPS growth of 14%-15% in this financial year on the back of a 21% EPS growth delivered in the last financial year.
Our standalone MR productivity has expanded from INR 4.6 lakh last year to INR 5.1 lakh this year, and this has led to an expansion in our EBITDA margins. Our power brands portfolio continues to perform well with eight out of our top 15 mother brands continuing to be ranked among the top five in their respective segments. We launched four new products in the first nine months of this year, and we expect to launch several new products in the areas of diabetes, CNS, and women's health in quarter four. We expect our organic growth to be driven by growth in our power brands portfolio, new products pipeline, expansion of specialist and CP coverage, and our expansion into newer specialties. Thank you all. Have a good day and stay safe.
Thank you. Ladies and gentlemen, on behalf of Eris Lifesciences, that concludes this conference. Thank you for joining us. You may now disconnect your lines.