Q1 21/22

Aug 16, 2021

Ladies and gentlemen, good day, welcome to the Q1 FY 2022 earnings conference call of Glenmark Pharmaceuticals Limited. 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. Ravi Agarwal. Thank you, and over to you, sir. Thank you, moderator. Good morning, everyone, and a warm welcome to the Q1 FY 2022 results conference call of Glenmark Pharmaceuticals Limited. Before we start the call, a review of operations of the company. For the first quarter of FY 2021/2022, Glenmark's consolidated revenue from operations was at INR 29,649 million, as against INR 23,448 million, recording an increase of 26.4% year-on-year. On to the businesses, first the India business. Sales from the formulation business in India for the first quarter of FY 2021/2022 was at INR 12,250 million, recording a growth of 57.1% year-on-year. Q1 FY 2022 was a landmark quarter for the India business, with both the COVID and non-COVID portfolios of the company performing well. The India business outperformed industry growth, continuing the trend of the past several years. As per IQVIA MAT June 21, Glenmark's India business recorded growth of 35.4% as compared to the industry growth of 14.7%. Glenmark's India formulations is ranked 13th, an increase of one rank with market share of 2.6% as compared to 2.24% in Q1 last year. Glenmark is the fastest-growing company amongst the top 20 companies on a MAT June 2021 basis. Glenmark is ranked number 1 in antivirals, number 2 in derma, 4 in respiratory, and 6 in the cardio market in India. The company launched 7 new products during the quarter. Glenmark's novel patent-protected and globally researched sodium glucose co-transporter 2 inhibitor, remogliflozin, continues to do well in India. Total remogliflozin sales, including brand extensions, grew strong double digits during the quarter. Glenmark has recently signed an exclusive long-term agreement with Canadian biotech SaNOtize to commercialize nitric oxide nasal spray for COVID-19 treatment in India and other Asian markets. Studies have shown that the nitric oxide nasal spray is safe and highly effective in reducing viral load in COVID-19 patients and reduces onward transmission. phase III clinical trial is expected to be completed, followed by commercial launch under the brand name FabiSpray in India later during the calendar year. During the quarter, Glenmark became one of the first companies in the world to launch Ryaltris-AZ nasal spray, a novel fixed-dose combination of mometasone furoate and azelastine for the treatment of moderate to severe allergic rhinitis in India for patients above 12 years of age. Launched at an affordable cost, the product provides a far more convenient, cost-effective treatment option in the country and reinforces the company's strength in its respiratory franchise. Our Consumer Care business. Secondary sales of Glenmark's Consumer Care business grew by 24% year-on-year during the quarter. Candid powder recorded its highest-ever secondary sales in June 2021. La Shield and Calplus both recorded their highest secondary sales in the quarter. The company also successfully launched Candid cream during the quarter, which is available in more than 30,000 outlets currently. Coming to North America. North America registered revenues from the sale of finished dosage formulations of INR 7,878 million in Q1 FY 2022, recording a growth of 6.1% year-on-year. On a constant currency basis, the revenues have grown 8.5% year-on-year during the quarter. In Q1 FY 2022, Glenmark was granted final approval and launched tiopronin extended release tablets, 300 mg and 450 mg. Glenmark has been granted a competitive generic therapy, CGT designation for tiopronin extended release tablets, 450 mg. With this approval, Glenmark is the first approved applicant for such competitive generic therapy and is eligible for 180 days of CGT exclusivity upon commercial marketing of the 450 strength. Glenmark also received approval and launched arformoterol tartrate inhalation solution. Our arformoterol is manufactured at the company's North America manufacturing facility based in Monroe and marks the company's first nebulizer approval. In addition, Glenmark launched the previously approved product rufinamide tablets as one of the first available generics on the market. The company filed eight ANDA applications with the U.S. FDA, including three filings from Monroe, and is on track to file 18 to 20 ANDAs in FY 2022, including four to five filings from Monroe. Glenmark's marketing portfolio through 30th June 2021 consists of 172 generic products authorized for distribution in the U.S. market. The company currently has 44 applications pending in various stages of the approval process with the FDA, of which 21 are Paragraph IV applications. Talking about the ROW region. For the first quarter of FY 2022, revenues from ROW region were at INR 2,686 million, recording growth of 26.7% year-over-year. In Russia and CIS markets, the company is witnessing recovery, with secondary sales having grown 42% year-over-year in the region. In Russia, as per Q1 IQVIA, Glenmark's revenues grew 29% in value terms vis-à-vis the 13.2% growth in the overall retail market. During the quarter, the company successfully commercialized RYALTRIS in Russia with indications of seasonal and perennial allergic rhinitis in patients over 12 years of age, strengthening our respiratory franchise in the market. Secondary sales of the company grew 20% year-over-year during the quarter in Asia, with strong growth in key markets like Philippines and Sri Lanka. The company also witnessed recovery in the Middle East Africa region, with secondary sales growth of 52% year-on-year, with growth witnessed in markets like Kenya, South Africa, and Saudi Arabia. Europe. Glenmark's European operations grew, was at INR 3,059 million, recording a growth of 11.7% year-on-year. The company witnessed a mixed performance in the Western European region where growth was affected by continued COVID restrictions in some countries, key markets like U.K. and Netherlands witnessed positive growth. The Central Eastern European region witnessed healthy growth across most key markets. In line with our global focus on the respiratory segment, Glenmark became one of the first generic companies to successfully launch tiotropium dry powder inhalation, the bioequivalent version of Spiriva HandiHaler, under the brand name of Tiogiva in the U.K. during the quarter. The company has a strategic exclusive licensing agreement to market Tio DPI in Western Europe and is planning subsequent launches of the product across markets in Western Europe. In this quarter, Glenmark concluded the DCP procedure for RYALTRIS in Europe, enabling approval in 17 countries across EU and UK with launch planned in the current year. Latin America. Glenmark's revenue from its Latin American Caribbean operations was at INR 675 million in the quarter, recording growth of 2.5% year-on-year. Revenue growth was impacted by Brazil where the market remained challenging due to the pandemic. We have begun to witness recovery in this region, with most of the other markets recording positive growth momentum during the quarter, including Mexico, which grew 63% year-on-year during the quarter. Glenmark's specialty and innovative R&D pipeline. We start with RYALTRIS. Rytrex is currently under review with the FDA as a treatment for seasonal allergic rhinitis in the U.S.A. Glenmark's response to the agency's CRL was submitted to the FDA on July 21 with a PDUFA goal date in Q4 FY 2022. In April 21, Glenmark concluded the DCP procedure in Europe, enabling approval in 17 countries across EU and U.K., with potential launch in key markets in H2 FY 2022. During this quarter, Glenmark also received regulatory approval for Rytrex in Zambia, Ecuador and Peru. Rytrex sales continue to progress well in Australia, South Africa, Ukraine, and Uzbekistan. In Q1 FY 2022, Glenmark's partner in China, Grand Pharmaceutical Company Limited, finalized the phase II protocol for China and submitted the IND application in July 21. In South Korea, Glenmark is working with its partner Yuhan Corporation to potentially launch the product by H2 FY 2022. GBR 310. Glenmark had announced successful phase I results for GBR 310 that suggest similarity in pharmacokinetic, thermodynamic, safety, and immunogenicity profiles between GBR 310 and the reference product omalizumab, marketed in the U.S. under the brand name XOLAIR. The company is in discussion with potential partners and is targeting to conclude a deal before initiating phase III studies. GRC 39815. GRC 39815 is the company's respiratory pipeline asset being developed as an inhaled therapy for treatment of mild to moderate COPD. It's currently under phase I clinical development with a single ascending dose study in the U.S. The phase I study is expected to be completed in the next few quarters. GRC 17536. GRC 17536 is the company's same pipeline asset being developed as an orally administered treatment for pain in patients with painful diabetic peripheral neuropathy. A regulatory submission to DCGI for conducting the phase II-B GRF study in India was done in Q1 FY 2022, the study is scheduled to be initiated in the next quarter. The company is evaluating further options, including out licensing for the molecule. GRC 54276. GRC 54276 is being developed as an orally administered IO adjuvant treatment for patients with solid tumors in oncology. Preclinical in vitro and in vivo profiling was completed in Q1 FY 2022 and preclinical DMPK and non-GLP toxicology studies are currently underway. Further evaluation of the molecule is ongoing to advance towards clinical studies. Glenmark Life Sciences, GLS. The equity shares of GLS were listed on BSE and NSE on 6th August 2021 following a successful IPO. Pursuant to the IPO, GLS published its unaudited financial results for the first quarter of the financial year on 13th August 2021. For the first quarter of the financial year, GLS registered revenue from operations, including captive sales of INR 5,249 million, as against INR 3,969.7 million during the same quarter of the last financial year, recording growth of 32.2% year-on-year. The EBITDA margin for Glenmark Life Sciences, including captive sales, was 31.3% for the first quarter of this financial year. For Q1 FY 2022, external sales for GLS was at INR 3,040 million as against INR 2,348 million, recording growth of 29.5% over the corresponding period last year. For further updates on GLS, please log on to www.glenmarklifesciences.com. Ichnos. Glenmark has invested INR 1,617 million, which is around $21.9 million in the first quarter of the financial year as compared to INR 1,735 million, which is $23 million in Q1 last year. For further updates on the pipeline and the organization, please log on to www.ichnosciences.com. The pipeline update for the third quarter is published on this slide. Key objectives for FY 2022 are: We expect revenue growth of 10%-15% during the year. We expect to sustain EBITDA margin performance at similar levels of FY 2021. We expect to reduce debt by at least INR 16 billion during FY 2022 through a combination of free cash generation and IPO proceeds. Post FY 2022, the strategic priority is to enhance the free cash generation for further debt reduction. We prioritize this over R&D investments and Capital Expenditure. We also expect to close 1-2 out-licensing agreements in Ichnos during the financial year. Some notes before we open for Q&A. The India combination revenues include INR 350 crores of FabiFlu sales with EBITDA of INR 70 crores during the quarter. Forex gain for the quarter was at INR 38.9 crores as against INR 40 crores last year, which is recorded in other income. Gross debt for the period ending 30th June 2021 now is at INR 4,636 crores as compared to INR 4,687 crores as on 31st March 2021. The net debt for the period ending 30th June 2021 was at INR 3,444 crores as compared to INR 3,549 crores as on 31st March 2021. The total net debt reduction was at INR 105 crores, and this is after adjusting for one-time expenditure of around INR 40 crores in ABCD technology and around $7.5 million as premium on prepayment of FCCBs during the quarter. Inventory for the period ending 30th June 2021 was at INR 2,426 crores as compared to INR 2,277 crores as on 31st March 2021. Receivables for the period ending 30th June 2021 was at INR. 2,601 crores as compared to INR 2,572 crores as on 31st March 2021. Payables for the period ending 30th June 2021 was at INR 2,354 crores as compared to INR 2,238 crores as on 31st March 2021. The total asset addition in the quarter was at INR 165 crores, of which the tangible asset addition was around INR 105 crores. The R&D expenditure for the first quarter was around INR 284 crores, which is around 9.57% of the total net sales for the first quarter. Before we open the floor for Q&A, I would like to introduce the management of Glenmark Pharmaceuticals on the call. We have Mr. Glenn Saldanha, Chairman and Managing Director, Mr. V.S. Mani, Executive Director and Global Chief Financial Officer, and Mr. Robert Crockart, Chief Commercial Officer. With that, we'd like to open the floor for Q&A. Over to you, moderator. Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may please press star then 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star then 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue is settled. To ask a question, please press star then 1. The first question is from the line of Krish Kaista from Enam Holdings. Please go ahead. Hi. Thank you for taking my question. I have two questions. The first one is on the debt repayment from operating cash flow. Is it fair to assume that around INR 400-500 crores of that debt repayment will be made through operating cash flow? Yeah. About INR 400 crores will be paid from the operating cash flows. We have set a target of about INR 1,600 crores, so of that, the IPO will give us at least INR 1,200 plus. Because whatever we receive in the IPO, there is some amount of issue expenses as well as on the OFS side, there'll be some tax on that. Net around INR 1,200 will come from the IPO, whatever we are using, and balance INR 400 plus will at least come from the internal generation of cash flows. Okay. My second question was on the Ichnos licensing deals that you mentioned. Is there any timeline we can expect when it's likely to happen, whether Q3 or Q4 of this year? Krish, our target is to close this fiscal year at least 1 deal. Between 1 to 2 deals is when we'll close this fiscal year. I mean, we've made a lot of progress, and we are pretty confident that should happen. Okay. Thank you so much. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. Hi. Thanks for taking my question. Again, just picking up from the last question, in your commentary that you've sort of stated in the presentation in terms of a strategic priority being prioritizing debt reduction going forward over CapEx and R&D. Can you just help us talk a little bit more through in terms of how you're looking at subsequent to FY 2022 on the utilization of cash flows? What kind of debt reduction does it imply, and what does it really mean for the balance sheet post FY 2022? I think, Nitin Agarwal, strategically, what we are saying is, as Mani mentioned, we generate INR 400-500 crores from the business this year. That should keep escalating every year in FY 2023 and 2024. I mean, if you run the math, I think we will have very Low net cash or net debt numbers by the end of FY 2024. Every year you can expect the free cash to keep escalating from the business. That's what we are targeting. Is there a number that we're working with in terms of what we're looking to reduce our net debt by over the next 2 years, barring Q4 FY 2022? Nitin, again, if you read what I'm saying. I am saying that from this year onwards, every year, the free cash generation of the business will keep escalating, and all that free cash will go towards reducing the net debt. If you do the math by FY 2024, it will be a very low number. Right. Secondly, on just associated point, how should we look at the CapEx now for the business over the next 2 to 3 years? We obviously got the GLS listing. They have their own growth plans. Taking that into account, what kind of annualized CapEx number we should look at now, including tangibles and intangibles? Nitin, I'll take that question. What we are saying is that going forward, we are looking at about INR 650 crore to INR 700 crore, and maybe next year onwards, a little bit lower, INR 650 crore or so. As you can see, even in the first quarter, that probably will be the trajectory at which we'll do. We are about INR 160 crore or so in the first quarter. I think INR 650 crore to INR 700 crore is what we look for the current year, and going forward, it will be more towards INR 650 crore or so. That will include the GLS CapEx as well. Because many of our important CapEx decisions are already implemented in terms of Monroe, et cetera, and also some of the other things, in terms of in-licensing, et cetera. On a broad basis, we are looking at this as a number, yeah. When this number will continue for at least Till what time are you comfortable with this kind of CapEx before we sort of step up CapEx again? About three years, Nitin. Beyond that, visibility is difficult, but three years at least, yeah. Okay, thanks. Sir, one more. Again on the business, we talked about the India business, the whole nitric oxide licensing deal that you talked about. Can you just talk us through your own thoughts on this product and the possible potential of this product? When does it begin to sort of impact in the numbers, potentially? Sure. Nitin, obviously this is a very exciting product, primarily because we think it'll not only work in treatment of COVID, but mainly prevention of COVID. Being a nasal spray, there's the convenience aspect. You can use it pretty frequently for prevention of COVID. It's a very exciting product. We started the phase III clinical trial in India. We are hoping if we do get an emergency use authorization, we could launch sometime as early as October, November, otherwise, close to the December timeframe. Okay. This is going to be a device product. This is going to be what? An internal manufacturing or this is something that you're going to be sourcing, Glen? Initially it's sourced, but then we will make it ourselves. Okay. Lastly, associated, aside of these COVID opportunities, related opportunities which are there, how is the base business looking like for India? India, Nitin, we've clearly been among the fastest-growing companies in India, and we continue to sustain that growth momentum, and we are very excited about the prospects of India. We have 2 or 3 big launches in this month and next month. I think that will drive India growth. I think all in all, next 2, 3 years should be good years for the India business for us. Okay. If you could, the last one on the U.S. There has been a lot of talk around generic pricing pressure, most of our peers companies have faced pressure in the current quarter. What has been our experience, given the fact that our portfolio has been significantly eroded over the. This has significant pricing pressure on the dermatology side over the last several quarters. What does the BROVANA launch really imply for us in terms of we haven't seen much? What kind of market share are we looking on that product going forward? Robert, you want to take that? Nitin, I'll take that for you. It's Robert here. First of all, I think, on the pricing erosion side, we have seen a bit of an increase and probably looking at it a little bit of more around the high single-digit levels. Of course, this has an impact as we go along. When you're looking your question on the BROVANA, just to remind you that we really launched the product right at the end of June. It's still very early days and didn't really have a big impact in Q1. However, as it stands today, we already have a 28% share. We're still pretty optimistic in terms of what this product can bring us. Sorry, I missed the last part, Robert. Could you say about where we are currently in the product? Currently, our market share on BROVANA is around 28%. We're making good progress. What I did say was that we only launched the thing at the end of June. The impact in Q1 was low, but the product should affect about Q4 moving forward. Hope you got that. Oh, got it now. Secondly, just to conclude that, how do you see the approvals for the rest of the year? Within about, you can assume every year we will have about 10, 12 approvals. We expect at least another seven, eight approvals yet this year. Okay. Thanks, Glenn. Best luck. Thank you. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead. Hi, good morning, and thank you for taking my question. Just a question, I missed the data point on India growth excluding FabiFlu. We did around INR 350 crores of FabiFlu in the quarter. Excluding that, the growth is around 12%-13%. Yeah. Okay. I know the down. Just then it's surprise, that if we remove that, then we're talking about the domestic growth as well. Was it that the COVID portfolio kind of impacted the non-COVID part of the portfolio. You talked about growth in India domestic business. Just trying to understand why the weakness in the rest of the portfolio. I think, Shyam, overall, 12%-13% is a decent number without COVID in terms of growth. I don't know too many companies who are delivering above that in India, if you take out the COVID products. I think it's a decent growth overall on the core business, even without the COVID products. If we can sustain 13%-14% for the rest of this year, I think that will be a great performance for the India business. Without the COVID portfolio, obviously. Okay. Maybe, Glenn, we didn't have a base impact like last year, perhaps, like the other guys. Would that be another way to look at it? Yeah. Even then, Shyam, look, the Indian IPM, if you strip out COVID products, is in the double-digit range at best. Okay. It's not like we are underperforming the IPM. We've always done better than the IPM. We will continue growing from strength to strength in the India portfolio with all the new launches that we have. Just one on the pricing environment in how you look at it for the domestic India piece. We've seen so far at least industry seems to be growing on the back of price growth as well. How is it for us? I think, overall, the pricing environment is stable in India, and most of our growth is coming out of new product launches and volume growth more than just price growth. Got it. Thanks. Just moving over to the U.S. The 28% market share for BROVANA, what is the denominator we are talking about? We have an AG, we have other players as well. Just trying to understand like for like, are we comparing with the whole market including brand or if you can help us, please. This is on the overall market, Shyam. On the overall BROVANA market. Okay. Yeah, I'm here. I can hear you. Hello. Yeah. Sorry, Glenn, you're saying that it's of the overall market, right? Yeah. It will take time. Look, it's not going to get captured immediately, okay. Please don't take this as next month you'll see the IMS sales or IQVIA sales and expect a reflection. It's not going to happen. It'll take time to build out. I think Robert's statement was more in terms of what we've already captured so far, in terms of market share. Okay. Some of this could be contracted as well and not yet sold. Maybe that's the way to look at it. Absolutely. Got it. Last question is on the R&D expense. I think it was called out at about 9.6%, 9.7%. It seems to have come out of that double-digit number. How should we look at this now on a go-forward basis? Shyam, coming here. Last year we did about 11.5% or so. This year we'll track somewhere, when the first quarter was a little more muted, we'll track somewhere between 10%-11%, more towards the 10.5% or so. That's where we'll be. In terms of over the last two, three years, we have progressively kind of come out substantially. Got it. You called out, I think $20 million for Ichnos, right? Almost $22 million. What Ravi called out was $21.9 million. Okay. Got it. The remainder is for generic R&D for this one? Yeah, the remainder is generic R&D. Got it. Thank you, and all the best. Thank you. Thank you. The next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead. Yeah. Hi, thanks. Good morning to all. My first question is on the India business. FabiFlu did phenomenally well, and just trying to understand how is the run rate being in July, August, and what is the expectation. How do you see this product, are we seeing lower off-label cases are down or billings are still going on? Prakash, we've had virtually no sales of FabiFlu in July and August. Even June has came off pretty significantly. Okay. Looking at Q2 of last year, you had a heavy bump there. How do you expect the remaining 9 months going forward for your India business? I think Q2 in India obviously will be negative growth for us on the India business. I think overall Q2, we're expecting a very good Q2 on the back of a lot of traction that we are seeing in the ROW markets. In Europe, the U.S., we are expecting close to double digit. I think we are expecting a strong Q2 on a consolidated basis. However, on India, we will be negative in Q2 because of the high FabiFlu sales we had last year. Okay, fair enough. The correlation of lower gross margin is a function of FabiFlu sales. Is that right? Yeah, Prakash. The lower gross margin is clearly a function of FabiFlu sales. As and when we don't have COVID sales, we'll automatically go back to where we used to be at 66, 67%. Do you expect the gross margins to normalize from Q2 itself? Broadly, as and when the COVID sales are off, it will definitely be there. That's the normal margin. India sales, you are saying that ex FabiFlu anyway you're guiding for 10%-12% growth? Yeah, absolutely. Yeah. Okay. Second one is on the investments. Clearly we have moderated our CapEx, R&D, et cetera, and costs as well. The free cash flow is very good. I'm just trying to understand what are we thinking about next level of investment, if at all? Where would that be over this year, next year? What are we thinking about investments now and in which space? Prakash, our primary objective right now, as we've said in our guidance, is to accelerate the free cash of the business and to pay down debt. The next two years or three years will go clearly in that as the primary objective. Mani also guided towards the total CapEx for the next few years. It's all within that in terms of in-licensing cost. Monroe investments largely done, right? Monroe is done. Okay. CapEx for this year, next year is looking how big? As I guided earlier, Prakash, around INR 650-700. Next year may be closer to INR 650. This is what we're looking at. Okay. These are, just closing the loop here, these are maintenance CapEx or is there anything that's intangible? Is how big here? Largely in GPL, most of them will be maintenance CapEx. In GLS, as we had, I mean, like to tell that they are obviously spending some money on putting up some CapExes in their plants and something on the oncology side. Those are not maintenance. That are greenfield investments. Okay. Thank you so much. All the best. Thank you. Thank you. For participants to ask a question, please press star then 1. The next question is from the line of Kunal Randeria from Edelweiss. Please go ahead. Good morning, and thanks for giving me this opportunity. Glenmark had some huge launches, Budgepaf like Rowama, theophylline CDAC-C. Just wondering, how do you see launches in the second half? Do we expect such launch quality or you think some period of consolidation before it starts to improve? Secondly, how many of your pipeline products are oral FTF or something which needs the CGT designation? I think it's hard to guide towards launches, right? At Glenmark, we never guide towards any specific launches because there's still a lot of uncertainty in terms of filing the approvals. We prefer not to put out any color on the quality of launches, at least in this term. I think strategically as a company, we make sure that we only file products which have got a certain value built in them, whether it is CGT status, whether it's first generic, whether it's in the first wave of generics. We're very focused in terms of what filings we do. Obviously, a lot of that will translate into the quality of launches as and when they do come out. I think all in all, the U.S. business, our perspective is if we are able to grow this business around 10%-12% every year, I think we've done well. This year we are clearly positioned to grow at about 10%, the U.S. business. Sure. Any sort of number or maybe some range you would like to give for CGT or FTF products, not for this year, but maybe in your pipeline? No, we don't guide to any FTF or CGT or any of our pipeline. Sure. No. My second question is actually on AgilTif. Firstly, what was the CRL about that has led to this delay of a few months? Secondly, I understand it's an early stage review, but what has been the feedback so far from the doctors as well as payers? Regarding the U.S. CRL, it was primarily on account of our Baddi manufacturing facility, which is under a warning letter. What we've done is we've now transitioned onto a U.S. manufacturing location, and we have refiled basis that. We are hoping it should get approved basis that this time. Regarding the response of doctors has been very positive. I think the product has beaten all our expectations in the markets where we've launched it. Be it South Africa, Australia, Ukraine, we are launching in Russia. The feedback is really very positive. We are hoping to launch in Europe, starting in Q3 of this year. All in all, it should be a big product for the company at a global level. Just one more if I can slip in. You had mentioned the Spiriva market around $750 million or so in Europe. What is the kind of competition that we can expect here? Sorry, I missed the question. Can you just repeat that? The SPIRIVA market you had mentioned, I think in one of our presentations, that it is around $700 million or $750 million in Europe. I'm wondering what kind of competition do you expect here? We are expecting at least 1 more generic in the next 6 months. Right? That's the only visibility we have. Right? This is from not an Indian player. One more generic is what we anticipate in the next 6 months. Have you launched in all the markets? We've just started the launch process. It'll take us at least six to nine months to even commercialize in all markets. Sure. Sorry, we couldn't understand your question. No, your voice is not coming very clear. Could you come closer to your phone? Yeah, I'm sorry about this. Will your competitor take just as long to commercialize? I mean, will they remain 6-9 months behind you in other markets too? Absolutely. I mean, that's the typical process in Europe. You'll start country by country, and it typically takes that long to commercialize in most of the markets. Got it. Thank you very much. Thanks. Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal. Please go ahead. Yeah. Just on these marketing promotional expenses, how do you see, has it been back to pre-COVID levels, at least for the branded generics market? Yeah, definitely. On a broad basis, there are 2 parts to it. Okay? Obviously, the marketing expenses will be back to pre-COVID levels. If you're referring to the other expenses line, obviously in the first half, normally it's a little lower than the second half. On a full year basis, we'll be back to about 36% or so. We were close to that last year. We'll be slightly above that. Okay. Effectively, let's say improvement in gross margin at steady flow to some extent. Yeah. That will also happen. I mean, it's not like everything is planned that way, but historically, if you look at it, our H1 normally the overall other expenses are a little lower compared to H2. Normally the sales are also a little higher in H2. All right. Thanks. That helps. That's it from my end. Thank you. The next question is from the line of Harith Ahamed from Spark Capital. Please go ahead. Good morning. Thanks for the opportunity. On tiotropium API launch that we have done, this product has been licensed from whom? What are the terms with this partner, in terms of revenue share or profit share? This is licensed from a European manufacturer. We can't disclose the precise deal terms, but it's in license from a European manufacturer. Okay. My second question is on Ichnos. Are there any data readouts that we should expect from the lead assets in the next 6 or 12 months? Just trying to understand some of the milestones that we should look forward to from Ichnos from a pipeline progress perspective. Ichnos near term as we've discussed. You should see some deal action on ISB 880 and ISB 830. Those are near-term events. In addition, I think ISB 1342, you should see a readout in the next six months, is what we believe. If all goes well, we should have POC in the next six months. I think these are the three, and ISB 1442, the IND filing and start of phase I. These are the four inflection points for Ichnos in this year. Okay. Last one from my side. The seasonality that we see in some of our segments, especially ROW, EU, and LATAM, this is on account of what exactly? I mean, is it because of our respiratory products and the seasonality that those products typically have? Is there any other reason for Q1 typically being weaker than fourth quarter? I think there are 2 things which are impacting the. The volatility in sales are purely because one is COVID is still around in many geographies. There are still some lockdowns, there are still some geographies which are getting impacted across the world. That is one impact. Second is, of course, respiratory is a big franchise for us. Latin America particularly, we lost out heavily because of our respiratory sales coming off during the COVID period. I think starting Q2 should be a good quarter for many, many geographies around the world. That's what we are seeing on the ROW side. Strong traction coming out of ROW. Likewise, Europe also should come back to seeing good growth numbers from second quarter onwards. Got it. Thank you very much. Thank you. The next question is from the line of Alankar Garude from Macquarie. Please go ahead. Hi, good morning, everyone. Glen, you mentioned about the next few years being good for the India business. From a capital allocation perspective, are there any plans to increase our focus on India going forward? I think, Alankar, we are anyway growing this business above the market. The bulk of our focus today is on products. Making sure we get new products to the market and making sure we continue to gain market share in the segments which we operate, which is mainly dermatology, respiratory, cardiovascular, and diabetes, the four segments, and oncology. These are the segments we are driving. I think the bulk of our focus is on bringing new products to market and trying to gain share through the product route as opposed to large field force expansions and further capital investments in the India business. Understood, Glenn. My second question is to Robert. I would assume our U.S. portfolio concentration would have come down quite a bit over the past few years. Any color you can provide on what would be the sales contribution from our top 10 products in the U.S. now versus what it was, say, 3, 4 years back? Well, Alankar, that if you just look at our portfolio as a whole today, the biggest portion of our portfolio, we are a number 1, 2 or 3 player in the top 3 players. Proportionately, our top 10 products would still bring in a very high proportion of our business from a relative perspective. Has that number come down over the last few years, or it's pretty much intact? No, it's come down Alankar. Pretty much. The shares are high. Just to add to what Robert is saying, Alankar. Market shares are high, but in terms of value to the overall business, we don't have a single product which is more than, let's say, INR 15 million in sales. It's a very diversified business today. Understood. Thanks, and all the best. Thank you. The next question is from the line of Charulata Gajani from Dalal & Broacha. Please go ahead. Yes. My question pertains to the agreement with SaNOtize. If you could give some details of the trials and the timelines of launch. The trial is underway. I think it's a 250, 300-patient trial that we are running in India. It all depends on the regulators as to when they would approve us and whether we would get emergency use authorization, or we would have to complete the trial and then launch it. It could be anywhere from October right up to December timeframe, is what we anticipate. For the EUA filing? No, this is for either EUA or final approval. Okay. In terms of my second question on the ROW market, whatever supplies are going into ROW, are they mainly COVID related or they are mainly the other products? I can take that. What we have seen in the last quarter is honestly across the board through all the ROW countries, whether it's Africa, Asia, CIS, and also Middle East, even our Russian business on our base business, we've seen exceptional growth. Just to answer you in short, in quarter 1, there was very little of the COVID product that went out into ROW. Again, what would be the % for COVID? It's negligible. The COVID products are negligible in ROW. Okay. That's fine. All the best. The next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead. Prakash Agarwal from Axis Capital, your line is unmuted. Please proceed with your question. Yeah. Hi. Sorry, I was on mute. Just wanted to understand the margin guidance better. This quarter, particularly gross margin and EBITDA margin marginally lower because of higher COVID-related sales. Next quarter, you talked about Europe and LATAM bouncing back, plus U.S. high margin product, Luana is there. I'm just trying to think that 19%-20% is definitely in the bag. Do we have upside risk on this? Do you expect better margins going forward? Prakash, we would like to guide to a 19%-20% margin, 19%+. If we get anything better, that's a bonus. As you know, there are COVID times, there are uncertainties, we would like to guide to a 19%. GC, obviously, as I guided earlier, we always have a 66%-67% GC. If there is no COVID sales, automatically it goes back there, yeah. That's how it trends. No, but are you baking in higher cost going forward for the rest nine months, or how should we-? The other expenses, as I explained, for a full year basis, if you look at it is almost about 26% plus. In this quarter, it was a little lower. As I also informed earlier, that the first half normally is a little bit lower, and it builds up in the second half as we get to looking at launches, et cetera. On an overall basis, what I can guide to you is to say that we would do a EBITDA margin of 19 plus. That's the clarity. Okay. Perfect. Secondly, I missed 1 point on the 1 or 2 launches, which I think Glenn said, and India business large launches. What would those be? Prakash, we can't mention, I think you'll see it in the next two, three months, right? We have some ongoing launch activities on multiple products. I think in the next two, three months it'll be evident. Are these the core diabetes franchise or these are? This is all within our therapeutic areas. Non-COVID? Correct. Okay. Fair enough. Okay. Thanks a lot. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Ravi Agarwal for closing comments. Yeah. Thank you, Margarita. We will read the disclaimer before we end. The information, statements, and analysis made in this presentation describing the company or its affiliates' objectives, projections, and estimates are forward-looking statements. These statements are based on current expectations, forecasts, and assumptions that are subject to risks and uncertainties, which could cause actual outcomes and results to differ materially from those statements depending upon economic conditions, government policies, and other incidental factors. No representation or warranty, either expressed or implied, is provided in relation to this presentation. This presentation should not be regarded by recipients as a substitute for the exercise of their own judgment. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. With this, we end the call today. A very big thank you to all of you for joining us on the call. Thank you very much.