Ladies and gentlemen, good day and welcome to Ipca Laboratories earnings call , Q2 FY 2026, hosted by Dam Capital. As a reminder, all participants' lines will be in 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 touchstone phone. Please note that this conference is being recorded. I now hand over the call to Mr. Nitin Agarwal. Thank you, and over to you, sir.
Hi, thank you. Hi, good afternoon, everyone. And a very warm welcome to Ipca Laboratories Q2 FY 2026 earnings call, hosted by Dam Capital Advisors Limited. On the call today, we have representing Ipca Laboratories management, Mr. Ajit Kumar Jain, Managing Director, and Mr. Harish Kamath, Corporate Counsel and Company Secretary. I will hand over the call to Mr. Jain to make the opening comments, and we'll open the floor for questions subsequently. Please go ahead, sir.
Thank you. Thanks, Nitin and DAM Capital, for organizing this call. Today's hearing call and discussions and answers given may include some forward-looking statements based on our current business expectations. This must be viewed in conjunction with risk that pharmaceutical business faces. Our actual financial performance may differ from what is projected and perceived. You may use your own judgment on the information given during the call. Domestic formulation business for Q2 FY 2026 has delivered a growth of around 8% for the quarter. Business of the quarter has impacted due to GST rate rationalizations, rate structure correction made during the month of September 2025. We have seen that subsequent to that, in October month, we had a very good business recovering on domestic market. Ipca's MAT September 2025 range continued to remain around 16 as per IQVIA.
Compared to MAT September 2024, market share of Ipca has improved from 2.3% to 2.8% in MAT September 2025. Both in acute and chronic segments, we have outpaced the IPM as per IQVIA data for the quarter. Overall, market growth in this period has been around 7.8%, and Ipca has grown in Q2 around 11.6%. On the acute side, market has grown by around 6.2%. Ipca's growth was around 8.2%. On the chronic side, market has grown by around 10.3%, and Ipca's growth tracked by IPM is around 14.2%. Both chronic and acute business both have delivered better growth. Overall, share of chronic business in overall Ipca's business has moved up from 34% in last quarter to around 35% now. For market, it is around 40%. We are continuously now increasing our business share from chronic business now.
On export formulation business, for the quarter, it is around INR 493 crore as against INR 541 crore in last financial year. That has declined by almost around 9% for the quarter. For H1, it is around INR 941 crore as against INR 937 crore in H1 2025, almost flat. We are expecting a business growth of almost around 8%-9% on generic formulations in H2 2026. On the API front, for API business, Q2 FY 2026 has delivered a growth of around 28% from INR 319 crore to around INR 408 crore on back of better business from Europe and Latin America. Overall, API business of current financial year is expected to grow more of 14%-15%. For Q2 FY 2026, R&D spend has increased to around 3.91% of the turnover from 2.7% for Q2 FY 2025. Higher R&D spend of around 4% of turnover will continue for the current financial year.
On margin fund, our standalone EBITDA margins have improved to around 25.46% for Q2 FY 2026 as against 22.89% in Q2 FY 2025, an improvement of almost around 2.57%. Consolidated EBITDA margin for Q2 FY 2026 is at around 21.68% as against 19.1% for Q2 FY 2025. That consolidated EBITDA margin for the quarter has also improved by almost around 2.58%. Looking at overall, the margin improvements in the Q2 of the current financial year, we see that from our guidelines of around 20% consolidated margin, the margin is expected to be better by almost around 1% in the second half, and that improvement will be there. Having given the broad numbers, now I request participants to ask the questions.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchstone cell phone. 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 Sayan Mukherjee from Nomura Securities. Please go ahead.
Yeah, hi, good afternoon. Thanks for taking my question. I just wanted to know, sir, your comments on GST impact, if you can quantify and also if you can throw some light around various therapy dynamics in India, how those are growing in the secondary market, please.
Overall, let's say the pain is our biggest segment. That continues to grow around 10%-11% kind of growth is there on that segment. Q2, we have around 10% growth. For H1 2026, we have 11% growth. As far as cardiovascular segment is concerned, as we had talked earlier, in the first quarter of current year, we had a major restructuring in cardiovascular business because we added two more divisions. The first quarter business was impacted because of that. In second quarter, we see good recovery. This business has grown by around 11%. For consolidated, for H1, the growth is around 10% on cardiovascular business. Overall, anti-malarials have seen decline in this quarter also. For H1 2026, this quarter, it has declined by around 8%. Overall, decline is around 2%. Antibacterials in this quarter, the business growth was around 4%.
Overall, for the half year, it is around 5%. CNS segment, we had around 18% kind of growth. For H1, it is around 14%. Cough and cold, there is a recovery now. This quarter, it has grown by almost around 17%. For the first half, it has grown by around 18%. Pharma business in this quarter has grown by around 11%. Urology business was also around 11%. This is in spite of there is an impact in the month of September because that growth was very, very low for us here.
Sir, what was the impact and what is your guidance for the full year for India growth now?
Let's say overall, let's say our guidelines was around 10%-11%. And broadly, we will be in that line here.
Okay. Thank you, sir. The other question I would like to understand from you is on Unichem. If you can just take us through what we should expect. You talked about synergies before, part is realized, part will be. If you can talk about the timelines and the quantum there. What is your guidance on EBITDA margin for Unichem this year or next year, please?
Let's say as far as Unichem is concerned, let's say we were talking about whatever cost reductions we need to do as far as their shipping, logistics, and that was already done. Their energy cost reductions were already done. In last financial, it said that was done. As far as the business issues are concerned, number one was that we should extend their product to the various markets. That work has started. I think around 12 product dossiers are filed in European market and other markets. That filing has started. That work, and after this filing, probably approval may take around one year to one and a half years. That's the time. Then we will start extending their product businesses to the other markets. That work is going on.
As far as qualifying whatever API they are buying from outside, and where Ipca is one of the major sources, that qualification applications are already data, they are generated and filed with regulatory authorities. Once they, let's say, that's clear. So far, no sourcing has started from Ipca. Once that approvals come, there is some maybe around six months to nine months kind of delay may happen. Thereafter, probably from next financial year, some of our major APIs, we should start supplying to them after the regulatory approvals are there. That's the overall journey which is currently happening. As far as Unichem margins are concerned, first quarter was largely impacted because of some restructuring which has happened in Europe because one of their facilities, manufacturing facilities, which was there in Europe, there we had the handshake with people, and we were closing that facility.
That business is transferred to their buddy. Overall, they were incurring around EUR 3.5 million-EUR 4 million every year, the expenditure. That expenditure will be cut now. That manufacturing and all the sources and all approvals have received. I think the normal business has already started from their buddy facility, which has all those kind of approvals. All customers and all regulatory approvals and everything is in place. Ireland facility is being getting closed down. These are the major changes which were there. I think that cost has hit on their first quarter account. On European Union kind of penalties and all, that payment was made.
I think since EUR has moved adversely, that provision was also there in the first quarter of exchange difference of around INR 10 crore-INR 12 crore, which has also impacted their first quarter. The second quarter was normal. They had a good business growth in the U.S., around 12%. Their European business has also done well. I think over INR 60 crore kind of EBITDA margins they have, which is around 11% or so of the second quarter. More improvements will start coming in once, let's say, those dossier filing which has happened and their approvals start coming in from the various markets and they start extending their product to the other markets. That advantage is still going to take some more time. I think overall, their business margins are expected to remain around what is in line with the second quarter.
Larger improvement may take place only after the various approvals what we are expecting.
Sir, we could get to what, 15%-20% kind of levels? What would be the after all these approvals and verifying?
The business also has to mature because business starts, so it will take time. I would say it may, for that margins to go up, it may be around one and a half to two years.
Okay. Okay. Thank you, sir. I'll join that.
Thank you. The next question is from the line of Anchil from Lotus Wealth. Please go ahead.
Hello. Am I audible?
Yeah. Yeah.
Yeah. Yeah. I just wanted some clarity around the synergy from Unichem. We see that the R&D has increased in this quarter. If, for example, the R&D from Ipca is around INR 200 crore, while the R&D from Unichem is around INR 100 crore, this at the consolidated level comes to around INR 300 crore, correct? Going ahead in the next year, can we say that this expense from INR 300 crore can come to around INR 150 crore or INR 200 crore?
No, that expenditure reduction will not happen because Unichem has to do a lot of work in terms of, let's say, extending their dossiers to the various markets. In a lot of places, there are repeat bioequivalence studies that need to be done for filing in other markets like Australia, New Zealand, Canada, all those markets, Europe filing and all. Those bioequivalence studies and all are required. Somewhere trade dress needs to be matched because somewhere colors of the tablet may be different and other size shapes are different. A lot of those kinds of work, incremental work, need to be done in order to align the product portfolio and getting those kinds of approvals. In fact, those expenditures are going to remain. What we have eliminated is that both the teams will not work on a common product. There will be no duplication.
As far as work is concerned, in fact, that cost has already increased and will keep on remaining at that level because a lot of incremental work need to be done in order to get better fructification of their product range from other markets.
Okay, sir. Also, around the NDA synergies, so say if Unichem already has an approved NDA, can Ipca use the same molecule NDA and gain any synergy around here?
Let's say Unichem is marketing out Ipca products. So Unichem, if it is producing their NDA, they will continue to produce. Ipca will not disturb that part. Only thing what will happen that future development, it will all depend that whether Unichem, if Unichem has API, Unichem will develop that product. If Ipca has API, Ipca will develop the product. There will not be a common product development at both the places. But both the team will continue to work on new product development so that both the teams will be working on their respective range. Yeah.
Okay, sir. Understood. Just one last thing. I just wanted to understand your pipeline for the 505(b)(2) in Ipca as well as for Unichem.
We don't have any pipeline of that nature.
Okay, sir. Thank you so much.
Thank you. The next question is from the line of Prashad from Motilal Oswal Financial Services. Please go ahead.
Thanks for the opportunity. Just on the generic export, while we are guided for 8%-9% growth in the second half, what is it that will drive this? Do we have any certain product approvals or traction? Because first half has been pretty flat for generics.
First half, basically, it was basically on account of one product because in the market, there was a good amount of higher inventories were there, and there was no production of that. Otherwise, the European business has, if I look from the ranges point of view and all, that has done well. Overall, the kind of orders we have and kind of whatever interactions with customer and our business expectations suggest that we should be able to have around 8%-9% kind of growth on generics in H2 2026. Yeah.
Got it. And similarly, on the branded export side as well, I mean, the first half again has been pretty soft.
First quarter, we had a good growth. I think it's only second quarter, and quarter to quarter, there could be variation. That business also will have around 9%-10% kind of growth on the full financial year basis. Quarter to quarter, in this kind of business, always some fluctuation happens on ROW market and all. Overall, for the year, I have no doubt that that kind of growth will not be achieved.
Got it, sir. Just lastly, on the API side, while this quarter was pretty strong, we are sort of guiding for a little lower growth rate for the full year. Does it mean that we had certain businesses which are not going to sort of recur in the subsequent quarters?
Yes. Some of our APIs which we were selling, but on which our volumes were low, certain APIs have gone to European customers. There, I think there was a bulk procurement for their businesses and all, which was also at higher margins. That business will continue, but there may not be third quarter buying to that extent. Once they consume and then again they come up. Looking at all those kind of things, API business, overall guidelines we have given is around 14%-15% kind of growth overall.
Lastly, if I may, progress on the U.S. business from Ipca's side?
More or less, business is trading very well. I think last quarter also we have said that whatever current businesses which are happening is translating into almost around INR 14 crores-INR 15 crores. I think we have shipped around six products there, and almost around five to six products are under manufacturing. Once those products goes, probably the business may start in the fourth quarter of the current year or maybe some business maturing may take a little longer time. We were not there in the market for such a long time. It is taking some time to cover up those kind of business. Overall, that is why we are more conservative on that part.
Got it. So this 2KOM at INR 14 crores-INR 15 crores crore is what you are making?
Overall, H1, we have made about INR 55 crores .
Yeah.
Got it, sir. Thank you.
Yeah.
That's it, sir.
Thank you. The next question is from the line of Rajakumar from RK Industry. Please go ahead.
Yeah. Good evening, sir. Thanks for the opportunity. Sir, my question is on the cash situation in Unichem. After this payment of this penalty, would you need any cash infusion in Unichem?
No, Unichem does not require cash. In fact, they have surplus right now also. In the current quarter also, they have generated cash from business, and they will continue to do that. I do not think so. We already sold their Jogeshwari land, and I think overall proceeds of that, after this overall payment also, will leave some surplus with Unichem. After payment of tax also, there will be surplus. Yeah.
Okay. That money is already realized for Jogeshwari sale?
Jogeshwari sales, yes, money is realized. Yeah.
Okay. Because we are in the.
That is realized in the third quarter.
Sorry, we are in second quarter, right?
Transaction happened in the month of October. It will get reflected in the third quarter.
Third quarter. That's what I said.
Okay. Okay. Got it. Got it. Sir, and also while there is a huge inventory situation in Unichem, compared to the business between Ipca and Unichem, it's similar. Their inventory levels are very high in Unichem as compared to Ipca.
Unichem business is more or less U.S. business. Almost around 80% is U.S. business. Their cycle is such that they need to keep around three months inventory at the U.S. and transit inventories and all that kind of things. Since a lot of their products is also from their own API basket, there are API inventories and all. We are working also on reduction of those kind of inventory. You will notice that in this quarter, we have reduced overall inventory by almost around INR 150 crore in the system. Yeah.
Okay. Sir, lastly, can you comment on? Yeah. Yeah. Lastly, can you comment on your other listed subsidiary like Unichem Lab? Even there was very some deterioration in their performance.
Like our lab has such, let's say they do a lot of P2P business. Because of this GST rationalizations, all that, a lot of customer has said, "You don't produce now in the month of September because that will be the once the price is changed, then only they wanted production, and they can't take batches and hold." I think that business got impacted, and I think they had some kind of some rejections. That impact was there of around INR 5 crore-INR 7 crore on their overall number. That has impacted the business. Yeah.
Okay, sir. Thank you.
Otherwise, their critical care business, which they are building up, and also their animal healthcare business, what they are building up, that journey is going up as planned. Yeah.
The last study is impacting Lyka, right?
Yeah.
Okay. Got it, sir. Thank you so much.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Kunal from Axis Capital. Please go ahead.
Hello. Good evening, sir. Sir, my question is on R&D. Sir, you have around seven biosimilar projects in the pipeline, three of which are expected to go to clinical trials next year. I will tell you R&D has gone up slightly this year. Should we assume that even next year the R&D increase will be even sharper than this?
I think overall the R&D spend in the current financial is going to remain around 4% of our turnover because a lot of filing and bioequivalence studies and our filing in various markets is also getting the pipeline is also becoming very strong. Those expenditures are also increasing. Also the biosimilar expenditures are there. Once the clinical trials start, that cost will be extra. This 4% may go to around 4.5% or 4.75% in next financial year.
Got it, sir. Sir, secondly, if I were to look at your OpEx, which includes R&D, that has gone up by only mid-single digits. The fact that R&D has gone up quite a bit, is it some deferment of some costs or is there some cost optimization you have done? If you can just throw some light.
It's basically all other costs remain in control. As far as the manufacturing overheads are concerned, let's say your fuel cost is down. My power cost has gone up by just 1% because we have a lot of renewable power project installations. That savings are coming. Overall other costs, by and large, except the testing cost, which has moved up, other costs by and large remain same. There are not much of escalation in the manufacturing cost. Marketing cost has moved up by almost around 6%-7% in this quarter.
Got it, sir. Is it, sir, are you kind of have stopped expanding the sales force because last couple of years you were expanding? That was also kind of hitting your P&L. Now it's more of a steady-state growth number. Is that what we should assume going forward too?
Let's say this year also we have expanded the field force. Overall, if you look, we have almost around 7,000 now medical rep. Two more cardiac divisions were added in the current financial year. In time to come, we will add one more division on cosmeto-dermatology. Some kind of those expenditures were there, is likely to be there. Also, one division was added, one division named FLEXICARE was added to extend our equity on, let's say, on pain management because we are very strong with ortho and we have leadership there. We have only pain products, so we have launched a range of products. That division right now, last year it has started. It is still incurring the losses. In time to come, that productivity will also build up. We have almost around 7,000 people.
Additions are not going to be much. Maybe around 400 people-500 people annually can be added. Beyond that number, addition is not going to be there in the next two to three years' time.
Got it, sir. Just one more, if you do not mind. Sir, it is on the margin front. In this quarter, the growth was driven by API and the subsidiaries, the top 10 groups, that is, which I assume are lower gross margin businesses, while your India and Branded were slightly softer. Despite that, the gross margin is very robust. I just want to understand how you have been managed to have 69%-70% gross margin.
Let's say if you look at the current quarter numbers, overall, let's say top line has moved up by around 7%. At the same time, the material cost is down by almost around 3%-4% kind of reduction is there in material cost. What we are finding is that there is no increase in material cost as such procurement cost. Since our product mix is improving, let's say my chronic product mix is improving, my other product mix is improving, where we have high margins. That is resulting in the overall margin. Also on the API side, certain businesses have started happening, which are also at a higher margin level. That margin has also improved. That has resulted in almost around EBITDA margin improvement.
In spite of lower growth in the quarter, we have almost around 2.57% improvement in standalone EBITDA margin from 22.89% to almost around 25.46%. The consolidated margin for the quarter has also improved to around 21.68% from 19.1%. By and large, it is largely driven by Ipca's margins here. That trend will continue. The trend will continue.
Right. So you are saying there is more headroom to 25.2% standalone EBITDA margin?
Margins are improving, I would say that. This quarter is a peak quarter. Next quarter, some businesses, domestic businesses, come down. Fourth quarter, domestic business is low. Depending on the mix, but I would say that margin will continue to improve compared to last financial year.
Right. Thank you and all the best.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Dharmil Shah from Telmanas Capital. Please go ahead.
Hi. Thank you for the opportunity. My questions are more on Unichem with regards to the generic business. We keep hearing about the other Indian generic companies about the price erosion in the U.S. market. What has been the trend for us, for our monthly reads for the last two to three years with regards to price erosion? What is the current situation? How do you expect to find it out in the next two to three years.
Actually, during our Q1 phone call, we had said Unichem has lost market share in certain of its products. That is also because of the lower prices for that product and increase in the competition. At the same time, they have also gained market share in a few other products. To convert that into business will take some time. Going forward, we are confident two to three new products will also get added each year. Their U.S. business should grow on a standalone basis about 8%-10%.
Understood. What is the?
In addition to that, they will be also marketing Ipca products.
Understood. So 8%-10% growth is considering all the factors that you are considering.
That is correct. Yeah. This year, the growth has been slightly lower because, as I said, they lost certain market share in two of their major products. That is the reason. Nothing else.
What was the reason for losing the market? Is it purely based on price?
The competition increased and people quoted lower prices, and they took certain market share.
Understood. Is it more like a tendering business for us where each year the tenders are?
It's not exactly a tendering business. When there is a concentration of market share in few companies, other companies also come into business. It happens. Whatever they have lost, they may recover in the next cycle. It is a routine thing in generic business.
Understood. Do you expect the price erosion to continue, maybe, unless you can quantify single digit, lower single digit?
It all depends product to product. If competition increases, price reduction will happen. Otherwise, there could be a chance price may also increase. It is a cycle. Nobody can guess that correctly. It all depends on competition. How many new players come into that molecule?
Understood. You mentioned.
Currently, we are not seeing any kind of shortages in the U.S. market. Pricing pressures are definitely there. One-time buying opportunities are a little lower currently. Yeah, that used to translate into more margins. That business opportunity, we are not seeing to that extent currently.
Understood. So 8%-10% growth for the U.S. business. But how do you expect for the rest of the market? I mean, the other geographies you mentioned that you would be marketing.
That we have been playing. We have started filing dossiers of Unichem in the rest of the market. The dossier registration process takes anywhere between 12-18 months. Once the dossiers are registered, we will be taking their product in so many other markets where they are not present today: Europe, Australia, New Zealand, Canada, and also ROW market. That process is on. Because there is a regulatory involvement, there is a two to three years period all this processes take.
Understood. Yeah, I understand it's a very long process to get the approvals and start marketing the new products. Just to understand more on that, currently the U.S. contribution to the Unichem business is around 60%-65% of the U.S. revenue.
70% you can say.
Yeah. So assuming, I mean, with new products and newer geographies, what do you expect U.S. contribution to come down to what levels maybe next three to five years later?
It will also come down gradually. Once you get registration, you start marketing, then gain market share. It is a slow and gradual process. Once that process starts, you will continuously grow quarter after quarter. That only we can say. It is a gradual process. You can't expect something to happen drastically in a shorter period of time.
Understood. Gross margins for the last three quarters have been around 54%-55%. Is this purely based on the market share loss you mentioned in the key products, or is it something else?
Yeah. Their gross margin has come down mainly because of that loss of market share.
Gotcha. Okay. So it has nothing to do with the contract manufacturing business, right?
No, no, no. Nothing to do with that. Unfortunately, the products where they lost market share, it was also huge volume. Because of the reduction in volume, their overhead recovery has also impacted to some extent.
Understood. Right now, I mean, given that we have added so much capacity in Unichem, both in population and.
Should you have any follow-up questions, please join the queue. Thank you. The next question is from the line of Surya Narayan Patra from Phillip Capital. Please go ahead.
Yeah. Thanks for the opportunity, sir. The first question is that the growth for us, which has been kind of relatively muted in the recent past, obviously because of the kind of underperformance in the export side. While we have seen that Europe as a market, it has emerged as one of the best-performing markets for many of the larger players also. We have seen some price appreciation there that has been helping people. Despite Europe being one of the largest markets for us, the growth has not been in any manner supported. What could be impacting our Europe growth for us?
No, Mr. Jain has already explained it is because of one single product. Excluding that product, the sales in all other products are good. The products where sales were good were having better margins. Margin did not get impacted. Only that particular product, except that product, everything is fine. Plus, we are doing so many other things to expand our European footprint. Many products are registered, getting registration also in Germany. Where going forward, we shall also participate in tender. We have already incorporated a subsidiary. Europe is a focus market, and we are hopeful our growth should be good going ahead in the European market. Plus, we have also started filing Unichem dossiers in the European market. Basket will also increase.
Okay. Okay. So we have so far not been seeing the cross-selling benefit. That is what you meant to say?
No, no. Nothing so far. So far, nothing.
Okay.
Only two dossiers are registered for which now we are in the market, started talking to customers.
Okay. Regards to domestic market sales, we have always been outpacing with big margin in terms of growth compared to the IPM. Now we have kind of started tracking almost similar to the market growth momentum. Slightly better, though. Going ahead, see, there are obviously two trends that are emerging for the domestic market. One is some moderation in the growth generally. That is one. And secondly, a bigger growth trigger like GLP that is upcoming. Considering these two aspects, what is our expectation and what is our preparedness and thought process about the GLP opportunity also? Beyond this, how should one think about domestic overall growth for the Ipca?
We are very confident our growth will be higher than the market growth. There is no doubt on that. We are also addressing the therapies where earlier growth was not good like cardiac and all. Of it, we have now started seeing the result. We are now beating market as far as cardiac therapy is also concerned. We are very confident our growth will be better than the market growth.
Okay. About GLP, anything that you can talk about, sir? What is your preparedness when you think that it will be there in the market?
As far as GLP is concerned, we did not have R&D of that kind for GLP. E. coli-based R&D we did not have. We are already in the process of putting the facility for R&D, biotech R&D for E. coli-based products. It is going to take time. We will not be there in that kind of race in the current phase of the product. Next phase of product, whenever it comes, we will be there. We are already synthesizing the clones and other things are already going on. As far as market opportunities are concerned, we are also looking to buy the product from other manufacturers and all that. That opportunity we are evaluating. Nothing is finalized right now, but yes, that process is going on.
Okay. Just last one bit from my side, sir. In fact, can you talk about your R&D pipeline, whether it is for US market or whichever emerging market opportunities? See, what is the core focus of the R&D currently and which way that we are thinking at this moment?
R&D has a current capacity of filing almost around 30 products -35 products. It will be of the same product. There are different markets that each filing is taken as one number. Current capacity is around that kind of things. Earlier, we were not, let's say, utilizing that to the fullest extent because we were not there in the U.S. market. U.S. filing has also started. I think the two filings have already happened, and their pipeline is there of around five-six products in pipeline. We have also expedited now a lot of developments for Europe and Australia and New Zealand, Canada market. That is also happening. You will notice that R&D cost is also moving up, not only on the Biotech, but also on the biofluences and foundation development. We are building a very strong pipeline for future growth.
Okay. Yeah. Thank you, sir. Wish you all the best.
Thank you. The next follow-up question is from the line of Sayan Mukherjee from Nomura Securities. Please go ahead.
Yeah. Thanks for the follow-up. Just following up on this filing question. You made two filings already, and you have five to six which are under development. If you can take us through from a slightly longer-term perspective, let's say over the next five years, how should we think about the U.S. business in terms of filing, the characteristics of those files, the products, and how should we think about the U.S. business sort of scaling up over the next five years?
We are not a company which will be doing too much of filing based on somebody else's API. By and large, what is there in our pipeline, either current pipeline or expected to be there in the pipeline. Only those products are being developed and filed for the U.S. market. Compared to other companies, our filings are by and large likely to remain low only. It all depends on our API capacity because ultimately, unless you have API, you cannot be a long-term player because you all depend on the price given by other parties, and that limits your ability to compete in the market and all. That is the business philosophy, and that business philosophy will remain for longer terms.
If I ask you, how many, so you would be developing new APIs, right, for this?
Yeah, yeah.
Right. And so these APIs would be like is there a number? I mean, how should we think about the kind of products?
Current capacity is around five to six APIs we can develop. So it's only those developments will happen on the foundation side. Some API we can outsource and also file, but it's not going to be a significant number. If API is constituting a very small part of overall product cost, then we may outsource or maybe it's a general type of API with so many products people are producing. Then those kinds of APIs we may not take up. So that's the overall thinking.
Okay. Okay.
Thank you. The next question is from the line of Rajak Kumar from Ajay Invest. Please go ahead.
Yeah. Thanks for the follow-up. The first question is, can you comment on the monetization opportunity with reference to the tech transfer deal that you did with BioSimilar in Puerto Rico?
Let's say it's one of the old products and still having very relevance. The U.S. business of government is also bigger, and the party wanted to take kind of, let's say, technology for your drug substance as well as the drug product both. We have milestone-based payment and royalty-based system. At the same time, that party is expert on NDA and is filing. It's a regulatory consultant to so many companies on biosimilar development and all. Collaborating with him will also help us in your qualification of that plant from U.S. FDA and other markets and all. His assistance would be available to us because he's already consulting a large number of companies in India, China, and Europe also on the biosimilar kind of development and all. Very experienced person.
On that particular product, he will also, let's say, his focus more and more is likely to be the government business and other. He will also do some private business. Simultaneously, we will also be participating in clinical trials with him. Both the facilities will have approval. That is the kind of working we are doing. On that, we will also get the market share in the U.S. From whatever business he does, almost around 25% is the market share which will come to us on that particular. That is the broad understanding we have with the party. Yeah.
Okay. No monetization opportunity in this financial area with respect to the deal?
No. It's not our focus to do the technology transfer, but we want U.S. approvals and experience of that person because he has very practically each and every company in India, almost all companies, he is a consultant.
Okay. Got it.
Very, very rich experience. We wanted to utilize that also. It is not our focus that we keep on transferring those technologies and monitoring. We will utilize those technologies for building up our pipeline.
Okay. Got it, sir. Second thing is on the clarification of the margin guidance. In the last quarter, you said your margin will be down by 25 basis points. Now you are telling it is better due to performance. You are upping your margin by 100 basis points. Is that correct understanding?
Yeah, because the product mix is improving, and that's giving the better margin. We are giving that guideline. Around that time, first quarter result of Unichem was not that good. Their business is also improving. The hit which was there in first quarter is not likely to be there in third and fourth quarter. That is also taken into consideration while giving the margin. Ipca's margins are improving. Unichem's performance is also improving as far as EBITDA is concerned compared to the first quarter. Overall, Ipca's margins, we have seen the better margins in this quarter. Overall, looking into all that, we are increasing the overall margin guidelines
Okay. Thank you, sir.
Thank you. Ladies and gentlemen, that was the last question for today. We have reached the end of the question and answer session. Now, I would like to hand the conference over to the management for the closing comments.
No, madam, you can conclude the conference. I do not think there is any more questions, so we will conclude. Thank you. Thank you, everyone, for participating in this conference. Thank you.
Thank you. On behalf of Ipca Laboratories and Dam Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you.