Ladies and gentlemen, good day and welcome to the Marksans Pharma Q3 FY 2026 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal from DAM Capital Advisors. Thank you, and over to you, sir.
All right, thank you. Good afternoon, everyone, and a very warm welcome to Marksans Pharma's Q3 FY 2026 earnings call hosted by DAM Capital Advisors Limited. On the call today, we have, representing Marksans Pharma management, Mr. Mark Saldanha, Founder, Chairman, and Managing Director, and Mr. Jitendra Sharma, Chief Financial Officer. I will hand over the call to the management team to make their opening comments, and then we'll open the floor for questions. Please go ahead, sir.
Thank you, Nitin. Welcome, everyone, and thank you for joining us for our Q3 and 9-month FY 2026 earnings conference call. We sincerely appreciate your interest and continued support for the company. I'm pleased to report that we have delivered a steady and resilient performance marked by healthy revenue growth, sustained margin expansion, and continued progress on our strategic priorities. Our Q3 FY 2026, for Q3 FY 2026, operating revenue grew by 10.6% year-on-year and reached, and reached INR 754 crore, which is an all-time high for the quarter. The growth was supported by stable execution across geographies, robust order book in U.S., as well as a seasonal uptake during the quarter. The performance is despite high single-digit price erosion in the Rx product segments. In the U.K., we delivered an improved performance on quarter-on-quarter basis. The business is stabilizing after experiencing pricing pressures in Q1.
This recovery is supported by new product launches and a favorable currency movement. Our product pipeline execution remained strong during the quarter. Our U.K. subsidiary, Relonchem, received MHRA market authorization for multiple products mefenamic acid tablets and cetirizine oral solutions. In the U.S., Marksans Pharma Inc. received U.S.FDA approval for loperamide hydrochloride, and enhanced our presence in high-velocity OTC categories. These approvals are in alignment with our strategy of focus and repeat demand therapeutic therapies, particularly in pain, allergy, GI, and cough and cold segments. Strategically, we are taking measured but decisive steps to expand our global footprint. During the quarter, we incorporated Marksans Europe Limited in Ireland, Marksans Canada Inc., and are exploring further expansions. These will strengthen our platform for the future growth in the related market. Despite external volatility and pricing pressures in certain markets, our focus remains deeply rooted in execution.
Our priorities are clear: consistent market share gains, strong pipeline and filing and launches, disciplined cost management, and prudent capital allocation. We believe that this focused approach positions Marksans Pharma well to deliver substantial growth, healthy margins, and long-term shareholder value. With this, I'd like to hand it over to Jitendra for an update on the financials.
Thank you, sir. In Q3 of FY 2026, our operating revenues stood at INR 754.4 crore, an increase of 10.6% on a YoY basis compared to INR 681.8 crore in the same quarter last year. Revenue from the U.S. and North American market stood at INR 412.4 crore, an increase of 16.9% on a YoY basis. This was driven by volume and supported by seasonal demand. U.K. and EU formulation recorded revenue of INR 258.2 crore, flat on a YoY basis as pricing pressure continued to persist. Australia and New Zealand market revenues stood at INR 61.4 crore, delivering 30.1% growth on a YoY basis. The rest of the world revenue stood at INR 22.4 crore. We continue to remain cautious for this market given the macroeconomic challenges. Gross profit for the quarter grew by 14.3% YoY to INR 438.2 crore, with a gross margin of 58.1% compared to 56.2% last year.
The gross margin expansion of INR 184 on a YoY basis is attributed to softening of raw material prices, a favorable product mix, and also from benefits from foreign exchange movements. We recorded EBITDA of INR 160.7 crore in Q3 of FY 2026, up 23.2% on a YoY basis. The EBITDA margin for the quarter stood at 21.3%, an expansion of 217 basis points over Q3 of FY 2025 and 125 basis points over Q2 of FY 2026. EBITDA margin expansion was driven by operating leverage and improved cost efficiencies. Profit after tax stood at INR 113.7 crore, an increase of 8.2% on a YoY basis. EPS for the quarter was INR 2.5. Moving to nine-month of FY 2026 performance, our operating revenue stood at INR 2,094.8 crore compared to INR 1,914.4 crore in the same period last year, an increase of 9.54% on a YoY basis.
The U.S. and North American market recorded revenue of INR 1,127.3 crore, up by 24.2% on a YoY basis, and contributed 53.8% to our total operating revenue. U.K. and EU market revenue stood at INR 707.3 crore, contributing 33.8% to the revenue. Australia and New Zealand market recorded revenue of INR 179.7 crore. The rest of the world market recorded revenue of INR 80.6 crore. Contribution from these two markets stood at 8.6% and 3.8% respectively. The gross profit stood at INR 1,208.2 crore, up 10.3% on a YoY basis, with a gross margin of 57.7%, up by 43 basis points compared to last year. EBITDA for the period was at INR 405.4 crore, with the EBITDA margin at 19.4% compared to 21.2% in 9-month of FY 2025, primarily reflecting the impact of weaker Q1, higher employee expenses, and costs associated with scale-up and integration.
Although profitability improved meaningfully in Q2 and Q3, profit after tax was at INR 271 crore, and EPS for 9-month of FY 2026 was INR 6. In 9-month of FY 2026, cash generated from operation amounted to INR 263.2 crore, with the Capex during the period being INR 97 crore. Our working capital remained steady at 151 days. We invested INR 62 crore in R&D in 9-month of FY 2026, which amounts to 3% of our consolidated revenue. We continue to remain debt-free, and the cash balance stood at INR 824.2 crore as of 31st December 2025. With this, I would like to open the floor for questions and answers. Thank you very much.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their 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. The first question is from the line of Nirali Shah from Ashika Stock Services. Please go ahead.
Yeah. Am I audible?
Yes, you are.
Yes, ma'am. Am I audible?
Hello?
Hello? Yeah. Am I audible?
Yeah. Yeah, you are audible. You, for a minute, you just cut off out there, but you're audible.
It's yeah, okay. Thank you for the opportunity. I had a couple of questions. So firstly, on the U.S. performance, we have benefited on the U.S., due to seasonal demand. Excluding the seasonality, are you also seeing improvement in volumes or customer traction that is supporting the growth beyond?
Yeah, we are seeing that. And, obviously, some seasonality does help during this. Normally, the third quarter is always the strongest quarter. Yeah, so basically, it does help from all parameters. But overall, the product, all other products also, which are not seasonal, have also shown a decent growth.
Okay. And on the U.S. on the U.K. business, we are seeing some kind of sequential stability also after a lot of pricing pressure. So is this stability sustainable?
Yes, it is sustainable, unless something else happens geopolitically. But otherwise, right now, it is sustainable.
Any color on the entire U.K. business?
Pardon?
Any color on the entire U.K., U.K. business?
We are still very bullish. Obviously, we have done a lot of filings on our end in U.K., and we are receiving approvals every quarter. So that is basically, you know, changing our product portfolio in that market. And it does help when there's a price erosion to stabilize, you know, that the pricing pressure that one experiences. So we do see ourselves only growing stronger, and we do see a better quarter than the previous one.
Sir, lastly, on the employee costs, we have stepped up over the last few quarters, and that is particularly driven by the Goa facility and the broader wage changes also. So what should we consider as the new normal for the employee costs?
I think what you're seeing is basically the one minute.
So, Nirali, there is an impact of INR 2.8 crore, you know, due to the new labor code, accounting on gratuity and new pay. So barring that figure, I think everything else, like, you know, will remain, like, you know, in terms of the overall employee cost.
Got it. That is helpful. Thank you.
Thank you.
Thank you. The next question is from the line of Ahmed from Unifi Capital. Please go ahead.
Yeah. Thanks for the opportunity. Firstly, on the U.S. business, can you give some comments? How does the order book looks like, and what kind of growth you sort of see coming in the next few quarters? We have done fairly well, I think, in the first 9 months and over the last few years. So how does the near term look like in terms of order bookings and the momentum in the revenue growth?
Yeah. Order books still stands at a very strong $220 million plus. We are still working towards our objective of going to the next milestone. So, we are optimistic on the market dynamics and, you know, the U.S. market by itself.
If I see last year, I think we were commenting around 180-190 a quarter ago, I think it was similar 220 sort of a thing. So does that sort of reflect that we should be able to grow at 20% odd in U.S., in the upcoming financial year?
Yeah. Very close to that, yes.
Okay. Sure. And coming to the Teva facility, I mean, I think we are supposed to launch a lot of new products and different formulations. How is that shaping up in our order book, and how does the utilization look like in the current quarter which went by? And in terms of outlook, the incremental revenue, does it sort of get captured from Teva facility, and hence we have some operating leverage coming in?
Yeah. Operating leverage is very visible because of the Teva facility. We are trending around, you know, INR 560 crore-INR 600 odd crores from the Teva facility. Our objective was to hit about INR 800 odd crores. So we are getting there. Obviously, the product mix has to grow. And, you know, as and when we get new businesses, it is looking healthier. But it is adding tremendous value on, you know, operating leverage per se. So, that's very visible on our standalone numbers also.
Sure. In terms of the new markets, Europe and Canada, I think we have incorporated subsidiaries. We have had some comments last quarter. Would you like to provide some sense what sort of progress we have made? In terms of the sort of contribution coming from those businesses, how far we are as of now?
So obviously, we are quite far where organic is concerned because we've just started operations in Germany. We had first two employees join us literally on the 1st of February. Ireland, we formed a company. Canada, we formed a company. Market authorizations, you know, I think, are being put in place, so that we can start marketing. We need wholesale licenses. You know, we need all these other approvals to basically make us so that we can sell. So it will take a couple of months. We are also exploring, as we've always repeated in the last couple of phone calls, we are exploring M&As in these markets, in various markets out there in Europe. And we are in advanced dialogue to you know to try to push that across.
But, yeah, I mean, we are optimistic that we will see tremendous progress in the next 3-5 years in Europe, which will contribute decently for the company per se.
Sure. Two parts . And lastly, in terms of post the sort of deal which happened, obviously, it doesn't affect us, in terms of tariffs. But in terms of the environment and the conversation, has there been any change in your conversation with your key customers, be it Walmart and so on? And secondly, would you like to give some sort of a sense as blended as a whole? This year, we have done very well in U.S., and some of the other markets in U.K. have been sort of a flattish. So as blended as a whole, what sort of growth rate is practical to achieve in next financial year?
Yeah. So basically, tariff, it's a very valid question. And you are right. Although we were not impacted by tariffs, but there has been a, I think, it has basically put at ease the uncertainty that prevailed, you know, in customers or consumers or clients' minds, right? So, so that is a big plus point that one could take away from this. The trade deal has cleared the uncertainties and the questions that surrounded the trade war that one saw in the last six months out in the U.S.. So it is beneficial for the industry, beneficial for doing business out there. And we have seen that traction happening. The outlooks have, you know, from the client perspective also, they are thrilled that all these uncertainties are put to rest. So definitely, that's a plus for a market like U.S..
From a growth standpoint of view, see, I mean, we are still, you know, we are still working towards our objectives. Our next milestone is INR 4,000 crores, so we are working towards that. And then once we cross that, then we can talk about the next, INR 5,000-odd crores. So, so we, we are we still do believe that, you know, we are we are on track where that is concerned.
That should be ideally 2-2.5 years? Will that be a fair timeline for you?
Yeah. Yeah. I mean, you know, anywhere between 2-3 years is what we should hit our first milestone.
Sure. Sure. Thank you so much.
Thank you. The next question is from the line of Ishika from Perpetuity Ventures. Please go ahead.
Yeah. Hi. The cash on the books is around INR 6,824 crore. Is this just in India, or is this placed in any subsidiaries in U.S. or U.K. as well?
So, Ishika, this is spread across our subsidiaries. Broadly, I think, almost 50% is in India books, and another 40% is in our U.K. books. The rest is spread across U.S. and Australia.
Okay. Understood. Thank you so much.
Thank you.
Thank you. The next question is from the line of Dipesh Sancheti from Manya Finance. Please go ahead.
Hi. Am I audible?
Yes, you are.
Okay. Congratulations on the set of numbers. Wanted to understand from you, what will be the effect of Trump Rx program, whether it'll affect any of our products within the prescription segment?
No. It's not going to affect any of our products. We don't fall in that category. And again, our Rx portfolio is relatively very, very small compared to our overall revenue. So it has no significant impact on us.
Going ahead, when we are trying to double our revenues from U.S., will that portfolio be affected?
No. No, no. It won't.
Oh. Okay. Now, you gave a strategic roadmap about the INR 3,000 crore. I'm sure you'll be able to achieve that in this year. Going ahead, you mentioned in the last phone calls that INR 5,000 crore by FY30 will be, is a possible figure. Do you still maintain that?
No. It's mentioned in the next 2 to 3 years is INR 4,000-odd crores, no, INR 5,000 crores. But yeah, we then after that, obviously, we will go to the next milestone, which will be INR 5,000-odd crores. So we are working towards those two milestones that, you know, that we have set ourselves out to.
INR 4,000 crore by FY28?
next 2-3 years. Yeah.
Okay. Thank you. Thank you.
Yeah. By 2020, yeah, by 2028 or whatever, 2029.
Right. Right. And what is the order book right now?
It's 220+.
220+. Okay. Great. Thank you so much.
Yeah. For the U.S. For the U.S. All right.
For the U.S.? Okay. No, I'm talking about the overall as a order book?
Well, there are different markets. It becomes difficult to know which market has what order book. So, normally, we always talk of the order book for the U.S. market because that's where the growth outline is.
Right. Because last time, you mentioned that it'll be around FY by FY28, we are expecting $300 million order book. So.
Yeah. That was for the, FI that's for the U.S..
For the U.S. Yes.
Yeah.
Great. The new subsidiaries which we have in Ireland and Canada, how big is the market, which you feel will it be bigger than the Australian market, I mean, what we are doing in the next one or two years?
Yeah. Europe. So Europe by itself is a huge market. It is bigger than the U.K. market also because it's a cluster of many countries. It's not one country. So it's a cluster of many countries. Canada is relatively a smaller market, but definitely it will add value to our business. But I mean, Europe by itself, hopefully, maybe in the next 5, 5-plus odd years, it could be a very prominent contributor to the company.
With this EU deal signed, will it affect, or that doesn't have any implications on our sales?
No, it does not.
It does not. Okay. Going ahead, what CapEx we are looking to do?
So, basically, we normally spend our regular CapEx of INR 50-INR 60-odd crores just on, you know, automations and everything of that stuff. But if we are going to look at a new block or a new manufacturing plant depending on how well our order book shapes up and the demand creeps up and, you know, for us to go to another level altogether, then obviously, the CapEx could be anywhere between INR 150-INR 200-odd crores. But as on today, we have not yet reached that benchmark to trigger that off.
Okay. The UAE acquisition which we did, I mean, has it fruitified, or we have not invested anything else on it?
No, we have not invested much, but we have done a lot of filings out there. So those approvals and returns have yet to come.
Okay.
But it's a standalone profit-making business, and it's still the return on investment. We've already got the return on investment on what we have initially invested in that company.
Right. So are we looking at any other bigger acquisitions, especially in Europe or something?
Yeah, we are. We are looking at Europe actively.
All the very best, Mark. Thank you so much.
Thank you. Thank you.
Thank you. The next question is from the line of Aditya Pal from MSA Capital. Please go ahead.
Hi. Am I audible?
Yes, you are.
Hi. Thank you so much for the opportunity. Good set of numbers. Just wanted to double-click on the U.S. performance. So even though we've grown at good double-digit revenue, but there has been a deceleration of growth. So is this growth a new normal, or is this just a pause before we come back to our older growth rates? And more importantly, is this because of a base effect?
No. So, I think, yeah, I think, you know, 2025, there was a lot of geopolitical uncertainties that revolved around the U.S., right? So technically, you are looking at, you know, the tariff uncertainties. You look at different other angles. So it was, it was challenging for six months, let's put it this way, until dust settles. So, we, we are quite optimistic that it will come back to its normal growth rate. And we are seeing that difference happening once a trade deal has been signed and everything of that stuff. So, we, we are quite optimistic where that is concerned.
Okay. And some question to this would be that, you said that $220-odd million of order book. And if I look at INR 400 crore of Q3 revenue, that is INR 1,600-odd crore of annualized revenue on it, which is roughly 177 170 by 177 million dollars. So how should we.
Yes.
How should we think of the $220 million in terms of visible on our P&L?
Yeah. You'll see it in the next financial year because when we talk of these order books so once you get an award, it takes us about anywhere between 5-6 months to commercialize those awards. And that's where there is a bit of a lag that goes on. But I think by the first or second quarter, you should see that trending happening to that.
Understood. On your Europe and Canada operations, so.
Yeah.
When can we expect revenues to be visible from both these geographies? Obviously, more importantly, from the European geography because that seems like a much larger pie and more it looks like an inflection point for company for the company.
Yeah. So Canada, you may see it trickling, maybe in the next financial year. It's trickling in because we've done a lot of filings out there. Europe is a bit more complex because it's a cluster of many countries. And there, you know, you're starting from setup to everything, has to be put in place. Even getting a wholesale license has to be put in place, especially when you're doing certain greenfield startups. But that's said and done. Yeah, I think Europe will make up for some lost time with some M&As and some platforms that we plan to acquire. So that will help us. But once it crystallizes, I think you'll have a better shape and color on that.
Is there any timeline you would like to share?
I think 2026 will be turning point where that is concerned. So we are quite.
Understood.
Hopeful that 2026, we may see a couple of M&As happening out there.
Understood. Just a couple of bookkeeping questions. So, when I look at your employee benefit expenses, so one thing, does it take into consideration the European and Canadian team that we would have hired because of which this number is looking elevated?
No, no. See, the Canada, we haven't hired anyone as of now. And so we will be doing hiring in this year. And for Germany also, we right now have just two employees, and we may have more in coming quarters. So that way, it will increase, to the extent of new employees in newer geographies. But so far as our current operations are concerned in EU and in India specifically, we don't see any significant increase in our hirings.
Understood. The reason that I'm asking this is because if I look at your EBITDA margin, it has come to a good level of 21%. But majority of the pull has come from our increase in gross margins. So I'm just trying to understand that when will our employee benefit expenses streamline, and we will come back to our old 13%-13.5% of revenue?
I think we should be able to see that number pretty soon, maybe by the second quarter of next financial year. You know, we don't see any incremental hiring. Of course, you know, the annual increments and, like, you know, the wage the minimum wage, again, like, you know, are increasing.
Yes.
Across the geographies, you know, everywhere in U.K., in U.S., even in India also. So there is a pressure on employee cost for sure. But at least in terms of the headcount, we don't intend to increase it further. And we will basically see some better numbers out there, maybe from the second quarter of next year.
Perfect. Perfect. Wishing you and the team all the very best. Again, very good set of numbers.
Thank you.
Thank you. A reminder to all participants: anyone who wish to ask a question may press star and one on their touchscreen telephone. The next question is from the line of Riddhansh from Unifi Capital. Please go ahead.
Yeah. Hi, team. Team, two questions. You know, in the third quarter, especially for the U.K., could you call out how much of the proportion was on account of, you know, attributed to new launches, how much of the stabilization took place because of the currency tailwind, and how much came because of the boost the base portfolio recovery, actually?
Yeah. Hi. So, see, new launches have started contributing, definitely. And so has the currency also helped. But again, I don't see that, you know, having a significant impact during the quarter. It should, you know, keep giving us better numbers in coming quarters. Specifically, new launches, again, taking market share, it will happen gradually. So we will see, you know, incremental revenue coming from new launches, on a quarter-on-quarter basis. But again, nothing significant per se in one quarter. And so far as the foreign exchange is concerned, you know, we definitely have, like, you know, some better, you know, revenue or impact on margins, due to foreign exchange. Rupee depreciation, it has helped.
But again, I think that so far as we take average, like, you know, in the quarter, and we haven't seen any, you know, very major, significant, like, you know, improvement on that front as well. But yes, as, as the. Okay. I understand. Yeah.
Sorry. Please continue.
Yeah. No, so as we get into the next quarter, I think, you know, definitely that, you know, the rupee depreciation will help. But let us see. The level should sustain. So if these level sustains, then definitely, we will have better numbers in coming quarters.
Understood. So, sir, thanks for that. So is it is it a fair assessment that there is recovery in the base portfolio, and, the price erosion that we had witnessed is, is bottoming out in the U.K.? Is that a fair conclusion?
Definitely. Yes, definitely.
Okay. Done, sir. Thanks so much, and all the best.
Thank you. Thank you.
Thank you. The next question is from the line of Hitaindra Pradhan from Maximal Capital. Please go ahead.
Yeah, hi. So my question is, like you guys called out, this prescription products, you know, the price erosion that is happening in both U.S. and U.K.. But your gross margin has stayed intact. So what has, you know, contributed to your gross margins?
The gross, I mean, it does have an impact. Obviously, our portfolio is very small in the U.S. So the impact is slightly lesser. But in U.K., it is much larger. The Rx portfolio is much larger. But the price erosion does have an impact both on the top line as well as the bottom line. But it just depends on which geography we are talking about.
Sir, what is our, like, in the U.K. market, what is the strategy to navigate that? Are we launching products that.
Yeah, new product, that's what we explained in the first half, that new product launches are absorbing some of them. It's too early for it to contribute a big time. But it is absorbing some factors out there. And as new products do get approved, it will just get healthier, you know, quarter-over-quarter basis.
Okay, sir. And, sir, the milestone or the target that you described earlier, INR 4,000 crore, so, so that, that is only for our current portfolio, or, that is including our, like, EU, Canada, and all those things as well?
No, it's on their current portfolio right now.
Okay. Okay. Thank you, sir.
Thank you.
Thank you. The next question is from the line of Miten Lathia from Fractal Capital. Please go ahead.
Yeah. Thanks for the challenge. The employee cost question has been asked a couple of times already. But I just wanted to understand one thing. I mean, if by 2023, we were at 13% of employee cost to revenue, and since then, our sales have grown at a healthy clip, while employee cost has moved to almost 15% of revenue, what should we keep in mind that would have led to that sort of an increase?
See, so far as the new facility at Goa is concerned, you know, we have done, you know, maximum hiring. And the capacity utilization right now, we are still at around 50%. And, that's where, like, you know, when the capacity utilization goes up, we don't see we, you know, the as a percentage, the employee cost will start coming down. So, that's what I have said earlier, that by second quarter of next year, we will definitely see a reduction, you know, in terms of the employee cost percentage to sales.
Got it. Thank you.
Thank you.
Thank you. The next question is from the line of Mihir from Prudent AMC. Please go ahead.
Yeah. Hi. So I have one question. Your R&D spends seems to have been very elevated this year. So this year, in the first nine months, you spent more than what you spent in FY 2025. Almost 3% of your total spends are towards R&D. However, we've not seen material escalation in growth. So when do we see that translating to growth, and whether you would expect this 3% R&D percentage to sales as the new normal?
Yeah. The R&D spend has gone because we are doing quite aggressive filings in U.K.. We are working on a portfolio for Europe also. So, as and when we talk of new geographies, we have to spend on development based on country specifics. But U.K., we are literally filing 4-5 products, you know, every month. So it's quite, we've taken an aggressive approach looking at the dynamics that we are seeing prevailing out there in U.K.. But this is again based on our objective of what we expect the U.K. market to perform, you know, in the coming years.
It'd be fair to say that this 3% R&D to sales will remain there for at least next year?
Yeah. Yeah. I mean, it will probably be between 2.5%-3%, you can say, for the next year.
Got it. Second is, you highlighted a couple of times that you might you are looking at closing out two acquisitions in the European region. Would you also like to quantify the amount because there's a difference between acquiring, like, an acquisition of INR 100 crores versus INR 800 crores, and you have a substantial amount of cash flow? Combined acquisition, what, what can be the net outgo which you are expecting, that can happen in calendar year 2026 or FY 2027?
Again, it just depends on the target company. So, I mean, if you're looking at a company which has a pan-Europe because, you know, Europe is not a country. It's a cluster of various countries. So having distribution all over Europe is always a challenge. Those companies are much more premium and much larger in size that have operations out there. But if you look at cluster of countries, then basically, again, it just depends on what deals we close. It's difficult to give a number right now. But because we are in talks, and you know, once we come closer, we'll have a better understanding as to what amount of money would be spent in M&As out there in Europe. Maybe in the next 3-4 months, we'll have a better visibility on that.
Got it. And just one bookkeeping question, there seems to be a reclassification of around INR 8 crores from other income to other expenditure, in the base quarter. So can you highlight what, what exactly has happened there? I think, in the country.
Yeah.
Yeah.
Yeah. Yeah. You're right. So basically, it is just a reclassification of, you know, the mark-to-market provision on foreign exchange which we do. So earlier, like, you know, it used to go into other income or other expenses. So we have done a bit of reclassification. And now, we are netting it off in other income itself. So due to that, you know, that impact you are seeing. And it is appearing. Got it.
Yeah. It is appearing in the note also in the results. We have, you know, specifically shown that number separately in the notes.
Got it. Okay. Thank you. And all the best.
Yeah. Thanks. Thanks.
Thank you. The next question is from the line of Aditya Pal from MSA Capital Limited. Please go ahead.
Hi. Thank you so much for taking up the follow-up. Just wanted to double-click on the previous participant's question on U.K. geography. A couple of quarters back, or even last quarter, you had mentioned that the new products that we are introducing in U.K. market have higher gross margins than our current base company margins. So just wanted to.
Yes.
Just wanted to understand, so this 58% of gross margin that we have today has come in because of raw material prices softening. But now that we are introducing, launching new higher-margin products, how should we think about gross margins, say, maybe, 18-24 months, thought process, and the resultant EBITDA?
Yeah. So, Aditya, this, when everything is going normal, it would be have been a much more easier question to answer. However, these better products, obviously, we've just launched a couple of them right now. So it has to take shape. needs some time to take shape. But, you are right. The profitability and the margins are much better on the products that we are launching. It is not so much from a value, top-line point of view. It's more from a bottom-line point of view. However, you know, that gets negated if there's a price erosion and volatility at the other part of the portfolio which is obviously much more larger part of it, right? So it just depends on how the market dynamics plays out for maybe a quarter or two that, yes, the price erosion has stopped.
Now, we see some correction, or we see at least some stability on the price erosion happening. So that we basically then you can define what the new products are actually contributing. But historically, if there is no price erosion or no predictability of price erosion, then obviously the profitability would have improved substantially.
Understood. So my thinking is, sir, that there are two levels that you are playing with at this moment. One is our new product launches which have better margins. And the other is the operating leverage which will come in once revenue growth normalizes and the U.S. market sees, and again, a higher growth rate from here.
Yes.
Perfect. Perfect. No, thank you so much for this. Thank you so much.
Thank you.
Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead.
Hi. Thanks for taking the question. Mark, Mark, just on this Canada and the EU geographies that you're looking to enter now, here, the product portfolio is gonna be largely OTC-driven, or this is gonna be RX-business-driven business like the U.K.?
So, in Canada, it will be more tilted, like, similar strategy of the U.S. part of it. So we would have, probably, 80/20, 80 OTC, 20 RX. But in Europe, it will be, prima facie, 90 RX and maybe 10 OTC.
Why would you go in for a primarily an Rx strategy for Europe? Given, you know, any particular drivers for that?
Yeah. Yeah. Nitin, it's just country-specific. We have to adapt to, like, in Rome, do as the Romans do, right? So we have to adapt based on different geographies and different countries. And if you look at certain countries, they're very tender-prone, very tender-driven. They do not have those retail outlets like how you would have in U.K. or U.S. They don't have chains that, you know, you could play that private-label game. So they are very insurance-driven more on RX and very, very fragmented on the OTC front of it. So basically, certain markets do promote, and even in Europe, certain markets are only branded. They're not even generic. So I guess we have to, you know, define it based on country-specific.
But prima facie, all the big markets that you see, you know, they are more RX-driven, in terms of, value drivers than OTC.
Okay. Thanks. And secondly, on, you know, on the R&D, you know, if you can give us some more color on any specific areas where you're spending, investing more in R&D, what are you focusing on in R&D going forward?
Well, actually, our increase in spending has happened mainly in the filings, or the focused filings of U.K., where we have upped our, you know, filings per month. And the number of products we are developing, basically the products that we are developing and the pipelines that we are developing for the U.K. market, which we plan to leverage a decent amount for Europe also, taking into consideration that we are looking at, you know, Europe from a short-term to medium point of view. So we are looking at really focusing on developing a lot of niche and complex molecules for the geography by itself.
How are you thinking about portfolio expansion in the U.S.?
U.S. portfolio, that's that goes on, you know, that goes on continuously. We, we find about, you know, 7-8 ANDAs a year. So that, that continues going on. We do different dosage forms. We do different dosage forms. We are looking at different dosage forms for the U.S. market also, trying to differentiate ourselves. But, but I think U.S. is pretty much on track where strategy is concerned. Like I said, 2025 was a bit of a weird year because right from April onwards, this ongoing geopolitical uncertainties of tariffs came into play. But otherwise, everything else in U.S. is looking okay.
And if you can talk about the last one. On the, you know, on the U.S., this whole, there has been this thing going around that President Trump has been looking to push more, you know, substitution of OTC products. I mean, does that in any way influence change of strategy for the U.S. market? Does that change your product development strategy in any form?
No. I would say it does not, actually. He comes up with statements every, every day. It's difficult to keep a track of, you know, what he says. But it does not.
Okay.
Honestly, I don't see there any impact on that.
Thank you. The next question is from the line of Meet from Aquarius PMS. Please go ahead.
Oh, yeah. Thanks for taking my question. Sir, I just wanted to understand whether there is any seasonality factor present in our U.K. business in Q4. And considering that, prices are now stabilizing, can we expect a healthy QoQ growth in U.K. business in Q4?
Well, yeah. I mean, we are expecting a stabilized performance in Q4, let's put it this way. Seasonality, obviously, does help. We do have a lot of cough and cold items out in U.K., too. So seasonality does help in cough and cold and in pain segments. But that said and done, we are seeing a bit of leveling out in the price erosion, part of it. So, I don't know. Maybe, maybe, geopolitically, with the trade deal happening in so many countries, I think a bit of stability and markets are opening up. So people are not focusing on, you know, a certain market or different geography. So I think, if that happens, you know, predictability will be much better.
Okay. Okay. Got it. Yeah. That's all from me, sir. Thanks.
Thank you.
Thank you, ladies and gentlemen. That was the last question for today. I now hand the conference over to the management for closing comments. Over to you, sir.
I'd like to take this opportunity to thank everyone. I know it's late in the you know early part of the evening or late for those who are traveling. Please be safe. And thank you once again.
Thank you.
Thank you. On behalf of DAM Capital Advisors, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.