Q1 21/22

Aug 12, 2021

Ladies and gentlemen, good day, and welcome to Natco Pharma Q1 FY 2022 Earnings Conference Call hosted by Investec Capital Services Private 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Anshooman Gupta. Thank you, and over to you, sir. Thank you, moderator, and good evening, everyone. On behalf of Investor Capital Services, I welcome you all for Natco Pharma's 1Q FY 2022 earnings call. Today, we have the senior management represented by Mr. Rajiv. He is the Vice Chairman and CEO and we also have Mr. Rajesh, a Vice President Investor Relations in Corporate Communications. Over to you, Rajesh, sir. Thank you. Yes. Thank you, Anshooman. Again, good evening, everyone, and welcome to Natco's conference call discussing our earnings results for the Q1 of FY 'twenty two, which ended on June 30, 2021. During this call, we may be making certain forward looking statements, which are predictions, projections or statements about future events and anything said on this call which reflects our outlook for the future or which could be construed as forward looking statements must be reviewed in conjunction with the risks that the company faces. I'd like to state that the material of the call, except for participant questions, is the property of Natco and cannot be recorded or rebroadcast without Natco's express written permission. We will begin the call with broad highlights and follow them interactive Q and A session. We hope you've received the financials and accessories that were sent out earlier. These are also available on our website. So we will open up for Q and A and then we'll discuss the details. Over to you, Rajesh. Thank you. The first question is from the line of Ravi Dhamshi from ValueQuest. Please go ahead. Sorry. Just wanted to check what is the status on the Molnupiravir trials and what is the time line and when can we expect kind of an emergency use authorization for that? Ravi, we already filed for approval, Ravi. So all the data has been shared. We have shared our interim clinical data and it has been filed with TCJA's office. They are evaluating the file. At this time, I don't have any feedback on when they will any time lines or not at this time, but we have filed all the data, I think, and we have filed our clinical data and all the chemistry data and all that stuff is already done. So we just the ball is where BCC assist. Right. One more question on the recovery on the domestic business front. If you can give us some sense on how the things are now today, now that the second wave has also subsided, is the business back to normal or where are we in terms of recovery? I think the domestic has done extremely well last quarter driven by the pandemic. So we had a few products which were used in the pandemic. So I think we had a good spurt of we had good earnings in the month of especially month of April. May, we had very good earnings. May kind of peated out sorry, June, it peated out. So I think April, May, we had very good sales. Regarding the pandemic, I think June has slowed. July dropped dramatically. August, we are seeing things are slowly this slow increase. I think that's what I'm feeling, I think it's based on the secondary sales of our product from what I'm getting. Things are I think there is some increase in cases. I think that's what we are seeing. Again, it's true. We never predict the pandemic that we are. I mean, when it happens, it happens. And but our sense is that I think in the next few months, I think there'll be an increase in sales. Just one last question from my end. In one of our previous interactions, I think you had mentioned that there were some gaps in your overall strategy. 1 was domestic piece and second was maybe a front end in U. S. So just wanted to check if there is anything happening on that front. Have you taken any steps for the same? We are shopping for a U. S. Front end. I think we said that in the past. I think we're still shopping. So we're looking at quite a few transactions. But nothing definite at this time where I can say that we are close to transaction, but we are shopping. So I think that is clear. Regarding domestic as well, I mean, we are always looking for opportunities as well and we are shopping there as well. So I think but between the two, I feel U. S. Valuations are far more reasonable than what's happening in India. So I think that's my sense. But again, we're always looking for an opportunity, and I think that's very helpful. Okay. Thanks. Thanks. And I'll join back for the queue for any further questions. Thanks. Thank you. The next question is from the line of Nishal from SIMPL. Please go ahead. Yes. Hi, good evening. Am I audible? Yes. You are. You are. Please go ahead. Thanks for the opportunity. Rajiv, would you spell out how much of the domestic sales would be from COVID and from our regular onco and other businesses, would it be fifty-fifty or something? For strategic reasons, we don't like to spell out literally how much we made in a particular product. I think if you look at the base sale, a good increase has happened on the base sale. So I would attribute a lot of it to COVID. Percentage itself, I don't have an answer to your question, my friend. So I think that's the best I can do. But I think good percentage of the growth has come from I think a good trend you can see from last Q and the present Q, and I think you see a dramatic increase in domestic. So I think if I remember percentages, almost a 70% increase compared to the previous quarter. So I think a lot of it is attributable to COVID. Okay. Okay. And on the export side, if we go by the sequential run rate, in March, we were at 150 and this quarter, we are at 145. And if we look at it, we had a few product approvals, which we had mentioned that we have launched. So is it like a lot of profit contribution or the partnership sharing will come in Q2, Q3 or is there a good Even though we got every approval in last quarter, the actual launches happened in this quarter. So logistically, it took us a while to complete all the 3 validation batches and send. So we didn't launch literally on the day of the approval. There was a lag between the actual approval and the launch. So the actual launch of Evirunimis, the immunosuppressed, where the 2nd generic happened in this particular quarter. So there was a bit of a lag there. And strictly, it's not comparable because we had the upside of chloroquine and oseltamabiv. And now we don't have any sale on those two products. So we have minimal sales, so to speak. So I think that's the reason why you're seeing a variance in the numbers. But I think the exports will get better. I know they've been soft last quarter, but I think there was 2, 3 things happened last quarter. I think same quarter last year, there was COVID was raging and there was a lot of supply chain disruption. So a lot of people bought a lot more stock than normal. That was one reason. And then the growth was getting back and of course, it was into May impact. So these are missing now. So I think that's the reason why they look a little soft. But the business is fairly solid. I think you'll see in Q2 and Q3 things will be fairly steady. Of course, we have our jackpot coming by end of the year. So overall for the year, I think we're very excited about our export business. And last question on Nexavir, if you look go by their own presentation, they themselves are saying that the sales are dropping year on year. Do you think that it's still a good enough product for us or would you say by the time we launch, how do you see the position on that product? I think the good product is a reasonable size product. I don't remember the sale numbers. I think it's like 300 odd 1,000,000, if I remember right, in that range. I don't remember the exact number, so I don't want to guess. But I think in that region, this plusminus this figure, right? The reasonable launch, see, look at it like this, we have the sole FDA. So we have the 180 days. So we'll have a reasonable upside. So whenever that happens, I mean, we aren't supposed to discuss the date, but whenever it happens, it will be a good one. Nothing at all. Sure. Thanks a lot. I'll come back in the queue. Next question is from the line of Mr. Purnavala from Anuraghi. Please go ahead. Hi. Two questions from my end. First on the India business. So what is the status on Apaktoban and what is the kind of traction we are seeing considering I think we have relaunched this product in Q1. So could you throw some light on the new launches on the India business? I think as I said earlier, I think the COVID portfolio did very well. I think apixaban, Ampatersen B, Postconazole, bacitinib, these are the 4 major COVID products that we've had. I'm not going to split as a sale for strategic reasons, but I think these 4 are the key products. And I think in all of them, a lot of the products had very little competition, so that's why we did very well in that particular quarter. And my next question was, is there any update on the crop protection or the Agrochem segment? I mean, could you provide some highlights on what is the status of the litigation? And are we prepared for launch maybe by next year or so? Okay. So I'll let me play it out. So basically, we have already announced, as you know, in early July that we got in January by the High Court. So we have appealed the decision. So and I think the judge is slated for hearing in, I think, around September last week. If I don't remember the date exactly, I think around September 20 21, I think. He gave one day to them and one day to us. So hopefully, I mean, again, this is all subject to the hearing going on time and everything going well. So the hearing is concluded in September assuming, I mean, again, that's a big issue with courts, you can never guess. But all goes well and we're able to conclude the hearings by September end, then the double bench will reserve division bench will reserve a judgment and then we'll hopefully we'll get a decision which is in our favor. So and we'll see how it goes. We'll update hopefully by the next quarter call. We'll have some clarity where the case is. And so I think we are hopeful about our legal position, and we believe that we have a very good case. And our view is that if the hearing goes well and we're able to conclude on time, I think we could come back for a week subject to the court decision, which is end of the year, that we see soon. Thank you. Next question is from the line of Shivram Gupta from Aster Mine. Please go ahead. Mine. Hello, Rajiv Garu. My name is Shivaram. I have two questions. First question is with some of the cash generating that's that is that are going off our portfolio like the Tamiflu and Hepti and Tolopin, What is our next portfolio going to be in the next 2 to 3 years? That's my first question. And second question is we've heard some information from the social media and all that the Morgant Southern plant has been shut down, which basically does some faulty checks for COPAXONE. How are the COPAXONE sales and how is it going to impact our sales and is there any impact at all? Okay. I'll start with the portfolio. I think in the near term, obviously, we lost the big ones. But I think we have survived reasonably well. I think I know we have not grown, but our profits have stayed flat in the last couple of years in spite of the fact that we lost blood vessels. In terms of portfolio update, I mean, we already spoke about it, but I'll just reaffirm it again. So for this year, my friend, I think there are 2 big ones. So I think the Chlorantripol appeals verdict will be a very critical vertical verdict to look out for. So if that launch if that appeal goes in our favor, then there's a reasonable upside that could happen this financial year. And another product that the other gentleman referred to was molnuprivir. Again, we are very bullish about this product. So we are well prepared for the launch of this product. So and this is another this is used in anybody who has mild COVID or in the first line. And we all know COVID is going to be around for a very long time. So we believe that this product has very good potential for the coming few years. So in addition to these 2, obviously, we have lenalidomide launch in some major markets. And publicly, we already disclosed that the U. S. Launch is in the March quarter of 2022. So some of the earnings will come from there. And the other market is also going generic. So we'll disclose the data as we get closer to the launch date. So I think I'm overall fairly bullish. And every Limous portfolio also should do reasonably well. So we have very good reasonable launch point that we have sold in this quarter. So I think that will stabilize the business. But I think the for a reasonable upside, I think these three things will be very important: molloprevir, the agro product and lenalidomide. I think these three are big things to watch out for the next few months. Okay. And the last question you had was on the Morgan Down shutdown. We have an alternate site where they do the testing. So Morgantown shutdown has no A request from you, please. Yes. So to answer your question, they have Mylan has an alternate site for testing the products. So the shutdown has no impact on us. Okay. Thank you. Next question, please. Thank you. Thank you very much. The next question is from the line of Ankush Sadavan from Artifex Capital. Please go ahead. Hi, Ajay. Just one quick one. In case the acquisition and decision doesn't hello, unaudible? Go ahead, yes. Yes. Rajiv, in case the acquisition ticket payer decision doesn't go in our favor, in that case, what kind of cost or damages are we looking at in terms of sale litigation costs, damages or inventory write off, you can highlight something on that? There are no damages, no, because we have not launched the product. So there cannot be damages when you have not caused any damage to anyone, yes. So legal costs are the only ones. They are already expensed in the balance sheet. So it's In terms of inventory? So that is not much. Inventory, yes. We have built up inventory. I think we are very clear that if you want to launch a product like this, you need to build inventory. I think the best case scenario is if we get the favorable verdict, then otherwise we need to carry the inventory into next financial year. The patent goes out in August 2022, so that's the worst case scenario. So the launch will get delayed to August 2022. I think that is my understanding. Right. But we won't be able to write off the notes here. One moment, let me complete answer the question. Yes, yes. So write off and all, I'm not taking a write off. We believe that if we don't sell it now, we'll be able to sell it in the next financial year. So it should be fine. Okay? Okay. Got it. Thanks. You bet. Next question, please. Thank you. The next question is from the line of Nathan Agarwal from BAM Capital. Please go ahead. Hi. Thanks for taking my question. Rajiv, on the U. S, there has been talk across various companies who reported around significant pricing erosion in the U. S. Now that is largely for the OUS portfolios. But in your portfolio, have you seen anything dramatic on the price erosion side in your in line product? I think the other products have been fairly stable. It's been all right. I think we've taken a little bit of hit on dolxilubicin. So that is one of the big profit share that we've seen a reduction compared to the last year. So there's been a dramatic drop on that one. But see, Nitin, I think that's how U. S. Business works. If you're going to see competition, you're going to lose profit. And this business is all about trying to launch difficult to do generics and try to be in the 1st phase. And that's how it works. And I think you just need to come up with a new rabbit or your hat every time. So and that's the nature of the BCCI. Okay. Okay. And secondly, on our non U. S. Businesses on the formulation side, obviously, you talked about the lenalidomide launch in a few geographies that will happen. Ex of that, how do you see these geographies fees in terms of the growth visibility for the next few, 3 years? It's doing well. I think all our subs are profitable. So Brazil has done profitable as well. Canada is doing reasonably well. Our other smaller subs like Singapore, Philippines are doing well. We're happy with our strategy of focusing on non U. S. Markets. So these markets now are even in the base case are representing about 10% 13% to 14% of our top line. So there's been a good diversification of our revenue, which was in the lease market contributed almost nothing 3 years ago. So I think we're happy with how we are progressing and we're also looking to expand other markets, we're looking for assets in other markets. So I think the way this business works is, I mean, these are the sweet spots. I think, 1, you have a smart U. S. Portfolio, which are difficult to do. You need to have a smart branded generic business. And 3, you need to have a geographical diversification. I think you get these three things right, I think then you can have a successful generic business. I think that's how it works. That's a formula for success, if you ask me. So I think that's what we need to work. Okay. Thank you. Thank you. Thank you. The next question is from the line of Rahul Veera from Abacus. Please go ahead. Hi, sir. I just want to understand like in terms of the domestic formulations, where I mean our earlier top line used to be around INR 800,000 crores. How soon can we get back to that? I mean understand the COVID impact, but ex of COVID impact also, when do we see returning back to that domestic formulation? I think our peak sales were about 800. And I think out of which 500 was Hep C Rahul, so at that peak year. So that hep C has now dropped to like annualized has dropped to, I would say, about CHF 40,000,000,000,000. So there's almost a 90% difference in business. So in terms of coming back and all, see, we are doing well in these segments that we're operating in. And I think we repositioned our portfolio and focused on the COVID products. So I think you've seen the pre positioning that we've seen on the COVID and it has done wonders for us last quarter. And we have a good position in the COVID portfolio going forward the next few months. See, what COVID has done, it's done a lot of disruption honestly. I mean, what has happened as a whole today 20% to 30% of growth of the business is COVID or COVID related drugs or COVID related supplement and so on and so forth. So without being in COVID, you can't grow in businesses, okay, that's one. So I think in COVID, we have a fairly reasonable strategy. And but on the other businesses, I mean, we are doing reasonably well in cardio and onco and gastro. So what we have done is to increase sales, we have launched a division called Natco Reach. So we're going to have about RUB 150 to RUB 200 is what we're targeting. So what we believe is this division will focus only on COVID products and other diabetes and all for GPs, because one of the biggest things that I've seen in COVID is a lot of patients don't go to corporate hospitals, they actually get in touch with their GPs who treat COVID initially before they go to corporate hospitals. So we have actually launched a division which focuses on general physicians for COVID and also the allied portfolio of diabetes for the basket. So that is one of the measures that we have taken. To increase dramatic sale, I mean, this is one way. And another way, you need to look at an acquisition, a strategic acquisition, which can help you build that momentum. So I think it's one of the 2 things you have to Right. So over the next 3 to 4 years, cumulatively, our cash flows are going to be 3 to 4,000 calls at a minimum in my view, in my estimates. So I was thinking why not maybe expensive variation on the domestic side, but why not? It can be a high cash flow driven business, right? You don't want to buy something just because you want to buy something. I mean, you have to be very careful with how you will have some minimum return on capital expectations. See, even if you pay more, then you need to have an idea with that portfolio where you want to take that portfolio. Just because for the sake of doing valuation and acquisition, you don't want to do. And I think, see, I mean, a lot of people have said this to me many times, you get so much cash on books, you never did the acquisition. But see, if you don't find the right acquisition, it's better not to do a bad acquisition. I think that is my philosophy. I think we'll do it at the right time. I think we just have to we have to find something strategic. We just have to be patient. That's all. The next question is from the line of Kunal Andheria from EagleWise. Please go ahead. Good evening and thanks for giving me the opportunity. Rajiv, you have been mentioning, right, that you want to buy from specific assets. So can you, I mean, share with us what exactly you have in mind and what kind of deals you're looking for? I mean, will you co develop a filing with a partner or in license rate or buy it outright? I think we've mentioned that in the call earlier. I think what we're looking for are 2 things, Puneal. I think one is we're looking for a front end presence in the U. S. I'm not looking for any large front end. I just need a reasonable front end basket so that we can launch our own label. I think we've done a lot of licensing deals for large ticket in the U. S. And I think especially for the tablet products and all, you need to have your own front end. The complex genfix and all, I'm still comfortable doing out licensing deals with bigger companies because the regulatory and the expenses and the fast paper that is not as straightforward. So we have changed the model in the U. S. I think we'll do front end for our straightforward portfolio, but we will do alliance for complex generics. So that's one acquisition target. Another one is the branded generics space, I mean, anywhere India or any other market. So these are 2 areas I believe we need to do, which is I think the 2 big things we need to fill in our portfolio. Okay. So clarification here, Rajiv, so any other market I believe it could be maybe a Dalzil, right? So that's the biggest branded market maybe outside of India? Not right. I mean any reasonable market. I mean, we look at a lot of opportunities. But yes, I think the core markets are India and U. S. I think these are the big markets. We don't mind looking at other markets also because I'm also very keen on diversification of revenue. But see, it all you test the transaction by its merit, I think. So we're not averse to any particular market. But anything that there are only 2, 3 we need to diversify our revenue, build a good brand and generic business and have direct access to the market. If it meets the criteria, we'll look at it. Okay? Sure. Sure. And just one more on domestic oncology. Has the competition really intensified or hospital visits haven't picked up? So do you think that you'll probably be able to go back to a sort of INR 400 crores kind of peak revenue that you had hit a couple of years back? I think the portfolio is doing reasonably well, but there is price competition, absolutely what you said is right. The hospitals are okay now. Right now, you asked me this month, things are fairly normal. So at the peak of the pandemic, again, sales dropped a bit. So there's a lot of yoyoing in the sale in Onco. And so I think I'm not able to predict anything. But we have good pipeline, we have good launches. So the portfolio is doing reasonably well. I will not say it's not doing bad. But again, we have seen we faced some brunt of the pandemic and the erosion in the portfolio, both we have seen. The next question is from the line of Kunal from Alum India Discovery Fund. Please go ahead. I only understand on the CCR judgment. Could you please post some light on specific I mean, I don't want the exact we don't want the exact details, but could you please post some light on the reasons why the judge decided to rule against us and grant the injection to the innovator? Why the judge decided to rule against us is your question? Yes, because we had fair amount of I mean as a company an accurate fair amount of confidence that this would work in our favor. So just I mean, I don't want to know the exact legal thing aspect of it, but just I mean, does it reduce does it materially reduce our chances of getting the budget decision as we appeal to this given what I personally believe we have a very good case, but obviously the judge disagreed with us. And I think we believe we have some very good points. And I think we're taking it up in the appeal. And I think but that's the nature of the beast. See, in business, when you do patent litigation, you're going to get some decisions in your favor and some decisions sometimes go against you. That's the nature of the year too. That's the nature of the business. And regarding the judgment, I mean, our lawyers still believe that we have a good chance. We are appealing and we'll see how it goes. Sure, sure. And just one question. The FDA in Canada, would it be launched in this year itself in the March quarter along with the ELZIMID in the U. S? Or would it be launched at a different time line, either this year or next year? Yes, I think we have gone by confidentiality about the date. I will discuss it I will speak about the date as soon as we close it to the launch. And just last question from my end. I wanted to understand whether are we looking to augment our A and D pipeline given that when I look at the paradigm, we do have high value assets like ibrutinib and Revlim, I mean Revlim are coming up in the brief focus. Revliment is there and it will take after 2, 3, 3, 4 years. But do we have any more plans to add more medium sized assets, which are more niche in nature so that we may have more continuity and less peaks and troughs in our U. S. Revenue? I think we have as a portfolio, we have a lot of initiatives. I mean, those are 2 year side effects. I mean, we have few other initiatives where we have FTLs. They're obviously not as large as their limit. So we have a very good pipeline. We have about 8 or 10 handlers that we intend to file this year. So I think we have a robust pipeline. In terms of the approval date and launch and on, there are some things 2, 3 years away, but some things are 7 or 8 years away depending on how the litigation goes. See, you need to invest for the future. That's the nature of this business. If you really want the big jackpot, you want your 2028 earnings to be very good or 20 30 earnings to be very good, you need to invest today. You need to balance it out. I mean, like you look at all the big products that we have filed, the benefit of that, these are stuff was filed about 10 years ago. So unless you the really good stuff, you need to do 8, 10 years ago. And that's how the business works. You need to mix it up a little bit. So you need to take care of your future 7 to 80 years and again balance it out in the near term. So we will try and do that with our pipeline. But we like doing things which are more long term than near term, I think, because I believe that's where the real value is. The next question is from the line of Jay Shah, an individual investor. Please go ahead. Hello. Hi. My question has already been asked, so you can pass on to the next Rajesh sir. Thank you. Thank you. The next question is from the line of Nikhil from SIMPL. Please go ahead. Yes. Hi. Thanks for the follow-up, Rajiv. My question was for CTPR, as we understand that the patent will go off in August 2022. Would you say there is enough complexity on the product that even if it goes off patent, it would still be good enough for us as a revenue opportunity or would you say then it will not be very attractive for us? Just to understand. See, the thing with August 22 is, if the launch happens in August 22, there will be more competitors. So when there are more competitors, obviously, the value will not be as much. It will be more valuable if it happens in this financial year. I think if you were to weigh whether it's better this financial year as opposed to next financial year. To answer your question, it's better if it's done this year as opposed to next year. But we are we just have to go with what the judge says. We'll wait for the cohort vertex and then we'll see how the things fall in place. Okay. And just one last question. And this is in continuation with the previous question on the volatility. And I understand like the efforts which we put 10 years back have always really results faster to our Copesan and then now Revlimid. But on the domestic side in last year, similar quarter when we had discussed, are you looking at that the secular pillars of growth, which can sustain a 10%, 15% growth? How are you looking at building those pillars? Or would you say over a 5, 10 years, Netco will remain as a company which would more focus on one time big opportunities? How should I understand over the next 5, 10 years, not near 3 to 5 years, we understand there is a good near term tailwind, but beyond that how would the Netco be built as a company? I think I'm it is obvious to us as a company that we need to have more stability in our earnings. I think we reach when we're a smaller company, we could take these risks and when these things happen, there's a disproportionate increase in that earnings. But now I think we reach a more mature stage. And I think the more stable portfolio is required. I think absolutely right. I mean, we don't have an established portfolio, let's say, a larger Priyas of ours, like the disease or Lupin or some type of portfolio. But the thing is, see, so you have to put yourself in my position. See, I cannot you cannot recreate that benefit that they have in the branogenic space because these molecules have been announced for the last 20 to 30 years. And I can't launch, let's say, for example, an autoroxetine, try to do something dramatic on that because that shift has already passed. So what I can actually do is only do newer products. That's something that is in my control. So what you will actually see the benefit of what we're trying to do, I mean, it looks like we're being disruptive. But see, if you were to establish a very large brand of, for example, a product like apixaban, for example. This product is going to be around for many years. And the benefit of that, you will see in the next 7 to 8 years because Laudiere's brand, which are about 20 crores, 30 crores about a decade ago, have become 80 crores 100 crores because of general increase in the market and more acceptance and just in the secular growth that has happened. But I think the benefit of what we're doing, you'll see in the next 7, 8 years, which will bring about most everything. But in the near term, you'll see a lot of volatility because we are trying to do something we're trying to get into market where through litigation and also that's what it means about quality. But I think you'll see more severity as time goes. Thanks a lot. Thanks for that. Thank you. The next question is from the line of Shivam Gupta sorry, Shivram Gupta from Mastermind. Please go ahead. Sir, I came back in the queue. I have one more question, in fact, 2. How are the how is our business in the emerging markets like the Brazil and other countries that we are in right now, number 1. Number 2, we've been a replicator of complex molecules and all. Are we making any efforts to develop our own molecule or drug for any of these diseases that are prevalent in the industry in the world right now? To answer the regular question, the smaller market, I think we already spoke about that few minutes ago. I think this business now is contributing about 13% to 15% in that region. So we're doing well in this business and we're trying to scale this business up. Regarding we're a primarily generic company, obviously. So I think that's most of the Indian pharmaceutical market. I think most of our revenue comes from generics. In terms of your question specifically, are we doing an NCE? Well, we're doing some work. I think it's very early stage. There's nothing to I don't have anything to report at this time, but we're doing some work. To answer your question, yes, we're doing some work. Great, sir. Thank you so much. Thank you. The next question is from the line of Sameer Shah from ValueQuest. Please go ahead. Yes. Hi, sir. Two questions. One is on the agrochemical side. We are we seem to be following a similar strategy of targeting blockbusters. So what kind of ramp up or team size or you are looking at this as an optionality to the business or you will also make this as a sustainable larger business? How are you looking at this business? I think this is a reasonably large business. And I think this product is a very large product. And this product represents almost 15% of the whole Agro business. So it's a very important product. And so I think you sometimes as I said, these things work, sometimes they don't work. That's the nature of this business. We believe that if we bring about 10% to 15% of our top line coming from Anglo, it's a good diversification. So I think this comes back to the earlier question, the Arjun, when asked, we don't have stable earnings and how do you get stable earnings? I think how do you get stable earnings is when you have a more diversified portfolio, which is diversified in terms of therapies, segments and geographies. That's what gives you stability. I mean, that's what stable earnings in my words, that's what it means. I think these segments and these entries that we're trying to do in these markets are trying to bring about that stability. I think that's what we're trying to do. All right. And in terms of segments like Biologics or some other, these acquisitions, one you said is U. S. Front end where you can market your own molecules. But anything else that appeals to you? As of now, I think our focus is on our U. S. Front end and our focus is on diversifying our branded generics business. I think these are the 2 capital allocations I would like to do in the event of acquisition. I think these are the 2 things we are looking at at this time. In terms of Biologics and all, I mean, I'm always tempted. But again, that's a different again, it's a very how do I say this? It's a large capital allocation and with a long duration of return. And we're doing a lot of stuff, which is 8, 10 years return kind of stuff. I mean, a lot of the handles we're filing now are launches in 2028 2030. So I think we're already fairly investing in stuff, which the payoffs are 8, 10 years. If you add biologics to it and you're adding another one which will take about 7 to 10 years. So you have to be we'll be very if I see more cash next year, maybe I'll start making the capital allocation, but I'll just have I'm not making that allocation at this time. Got it, sir. Thank you. Thank you very much. Thank you. The next question is from the line of Nitin Agarwal from BAM Capital. Please go ahead. Thanks. Ravi Rajesh on CTCR again. So for your India, Adi Temple strategy, how critical is a favorable court decision in the launch in the Ravi season for this product? I mean, does it meaningfully derail our strategy for this business if you don't get a favorable verdict? So as we spoke about, I think if you don't get a favorable verdict, then obviously the launch will be in August of 'twenty two. So if the launch is in August of 'twenty two, then obviously the upside that we have got for launching this year, because if you launch now, that's where the real upside is, isn't it? So but you just have to wait, yes. So I think let's wait and let's see what happens. Okay. And secondly, in terms of your filings for the U. S, anything that you're looking at for filing? I mean, any large filings in your assessment due for this year that can possibly come through? I think so. We're targeting at least 2 to 3 first to files. So I think we'll speak about it as the year goes by. By March, I think we're hoping to report at least we have got 2 to 3 first to 5, and that's where we are and very interesting follow ups. Okay. 2 to 3 first to 5 before March? Before March is hopefully, I think if all goes well, yes. I think that's the target. Okay. Thank you. Thank you. Thank you. The next question is from the line of Viraj from Securities Investment Management. Please go ahead. Thanks, Bhakti. Most of my questions have been answered. I just had one question from January, I mean, just more from a mouth. It's very garbled your voice. If you can just can you carefully slowly speak and ask your question again, please? I'll look. So my question is on SME and it's more of a refining perspective. But one other thing, the voice is breaking terribly. May I request you to come in a better reception area and talk through the handset, please? Hello. I'm sorry, my friend. I'm not able to understand the question. Can you just dial back again, please, if you don't mind? Okay. Next question, please. The next question is from the annual Jaisha, an individual investor. Please go ahead. Hi, Rajiv. Just one question. So what kind of a strategy do we have for the agribusiness for the next 3 years? Like are we looking to scale up organically or are we looking to acquire some company? Like what is it? And also you're talking about some Ferron based product that we're planning to launch. So when are we expecting that to be launched? Yes, that's it. Thank you. I mean, we have a whole pipeline. I mean, typically, I don't reveal the pipeline. We announce once we make enough regulatory progress on these pipelines. So we have an interesting set of about 10 products, I believe, are very interesting and which could make a difference. In terms of pheromones, I think we launched 1 pheromone. So we're the 1st pheromone for that particular product. We launched a product called cotton for a pink bowlworm, which is one of the best that reflects cotton. So that product has been launched for this season. So we did a launch this year. So that is driving some of the revenues for this quarter. So we'll see some benefit of that. But so we are betting 1 on the Perammon platform plus our and also our chemical platform as well. So we have a portfolio of products. That's right. Just one question on this. Would the agribusiness be completely domestic or like what kind of sharing do we see between domestic and the international business? We are looking at both the opportunities, but at the near term, it's primarily driven by domestic. All right. Thank you. Thank you. Thank you. The next question is from the line of Viraj from Securities Investments. Please go ahead. Yes. Am I audible right now? Sir, we can hear you, but it's still the same. Okay. Hello? Go ahead. Yes. So I just had one question on Revlimab. So we have a volume sharing agreement with the innovator and similarly other competitors also have a similar agreement. If in the I mean, what happens if in the period between up to 2026, if any of the suppliers is facing a supply chain issue or has a have faced a regulatory ban or an oversight. So does the volume come to the 1st player who has filed the product or it goes to the innovator? I can't answer that question, Biraj. You're playing out a scenario. I can't answer that question. Okay. So in our case, I mean, how are we managing the supply chain or the regulatory risk in the loss? Any prospect or how are we kind of I can speak for myself, Viraj, okay. That's a very good question. What I've done, Viraj, is I have kept 2 plants. So I have our primary plant is out of Hyderabad, where we got the approval. And we also have a backup plant in Vishakapatnam, which is in the SCZ in Vishakapatnam. So we also have we filed a CB30 there. So even that got approved. So we actually are approved from 2 sites. Our primary site is Hyderabad. Our secondary site is Vishakapatnam. So to because it's such a large product, so we wanted to make sure that we have 2 facilities. So I'm happy to tell you that we have approval from both sides. Okay. And what are the challenges you see in terms of scaling this up and capitalizing on this coming? What challenge do we see in terms of capitalizing? There is a risk in terms of capitalizing it, yes. I think I covered the first risk. You asked me, do I have a backup facility? Yes, I have a backup facility and I have what we call and we have our crews from both the sides, so which is very good to be positioned to be in. In terms of the upside and all, I mean, let the market formation happen. So I mean, there's a simple rule in life. I mean, how much it depends on how the competition comes. There are many competitors and obviously, you will see further erosion. So we just had to see if any other guys come and then we can make a judgment of where we are. So I think I don't have an answer to that question. So I think only time will tell. Sure. Thank you, Anwar Shah. Thank you. The next question is from the line of Jayesh Shah, an individual investor. Please go ahead. Hi, Rajiv. One question on Revlimid. So we have an arrangement of revenue sharing about 30%, 70%. This might be a nice question, but does that arrangement stay even after the patent expires in 2026? So like is there any way that we can amend the agreement after the profit might be very profits remain very, very low? The arrangement is the way we have signed it, I think. If we make a lot of money, we'll share a lot of money, we'll make less money, we'll share less money. That's how it works. All right, guys. Thank you. Thank you very much. Next question is from the line of Rahul Meera from Abaqis. Please go ahead. So first, just one quick question on Revlimid. In terms of the backward integration, like securing the supply chain from KSNs to APIs, where do you see any do you see any risk there in the system in terms of our volume that has been reset for us? In terms of supply chain, in terms of the raw material supply, you're saying? Yes, yes. We have secured the raw supply. I think we have already ordered the quantity that is required for the launch. So we're good to go. I think we have secured everything. And because it's such a large product, we've bought enough APRs, we'll cover enough PMAC. So we're all set to go. I think I don't foresee any challenges on the launch. We have ordered the API, we've got the capsules, we've got both the sites approved. We have covered every possible base. So I think we've placed this out in our head and we have done all the investments which are required to cover to secure the launch. Right, right. No, just a thought process. Like because of the COVID, a lot of plants, KKR plants or even different facilities, we saw some shutdown. And as you mentioned out at the starting of the call that COVID is here to stay. And suddenly it shouldn't happen that because of a supply chain from our raw material suppliers, like the plant at the last moment or during our launch time is shut for 2 months India's start. No, no. I think we've been very cautious in this product. I think we have ordered the API. We already have stock. And as you can see, we have approved 2 sites for this product. So we have done everything that we should do to protect this upside. Sure, sure. Fair point, sir. Thank you so much. Thank you. The next question is from the line of Ashish Thakkar from Motilal Oswal Asset Management. Please go ahead. Yes. Thanks for the opportunity. So one question on this Cora Gen. So earlier we used to guide for about INR 200 crores to INR 250 crores in peak sales, if you have got a favorable approval in time. But opportunity approval comes obviously during the expiry time. Would you still say that whatever we have guided, we could still make 30% to 40% of that number? You're asking me something I have to judge. What I can tell you is this, okay? I mean, I'll be very straight with you. If the launch happens now, we'll make more money. If the launch happens later, we'll make less money. I think that's the best way you can answer that question. Okay. I believe that in terms of content like less would be far lesser, you are saying or you will still be satisfied at the end of the day? You are I'll be more it will be nicer if it happens sooner than later. But end of the day, AC, we have to hope that this is all subject to the court case. I think we have said that in our communication many times. What I can tell you is the opportunity, I can tell you that we are challenging the patent, but it's all subject to the court verdict. And I think if the court verdict is favorable, yes, of course, we'll have the upside. But that's how it works. I mean, if we get it right, we get it right. And if the court verdict is not in your favor, then that's the nature of the business. I mean, then you launch later. So but that's a risk that you take and sometimes they work, sometimes they don't. That's it. Yes, fair enough. So next question on this, obviously, our originate with the partner for Redmi made. So was it curious to know why are the terms more favoring the partner and not us in terms of when it comes to profit and revenue sharing? I signed that agreement many years ago. I signed it when I was a much smaller company. So I think at that time, we needed coverage of costs and so on and so forth. So I think that's the nature. We have signed it then. And at that time in life, you're not such a large company. Will I sign an agreement today? Obviously, no. But you have signed it then and you honor what you signed. So that's how it works. So would you be fair to assume before Indira Vika, the term would be in ARPU? Yes. Indira Vika is a higher profit share. It's more of a it's a fifty-fifty share. So that's the cost of API, which is captive. So it will then we actually get majority of the revenue in our paper. But that was signed much later, so obviously. So we got and we invested a little more on that. So and we're a bigger company out than so I think. It's a function of how much of the money you're putting on the table, right? If you put less expense on the table, then obviously the other partner will ask for higher share. But if you put more money on the table, then obviously you can ask for a higher share. It's all directly linked with what you're willing to risk. Yes. This is helpful. Thanks and all the best. Thank you. Thank you. Next question is from the line of Alicia Maharbha from Envision Capital. Please go ahead. Hi, sir. Good evening and thank you for taking my questions. So my first question is with respect to in the domestic business, what is the strategy to grow our Cardio and Diabetes portfolio because it has been we have been quite positive on it. So what is the strategy to really grow it? I think we spoke about that a few minutes ago. I think we have these 3 segments that we are active in, gastro, Onco and cardio, and I think we have a good pivot on the COVID portfolio. And I think I alluded to the products that we launched in the COVID portfolio. And last quarter, we did reasonably well. So I think we are there in all the major growth portfolios that as of this time. So we have a very good pipeline. I think we spoke about Molloprevir as well. So that's going to be a big product as well. So that's it. I think we're looking good. But it would really make it a very large business and we also need to obviously probably do an acquisition because we still have very limited coverage. For example, before we launched this new division that I spoke about, we only have 300 reps for whatever business that we do. So if you look at yield per annum, I think ours is probably one of the best in the industry. But again, I don't cover a large set of doctors. I mean, if we talk about our other peers, they all have 5,000, 10000 reps. We only have a fraction of that. So I think to achieve that, you need to cover more people and have a larger portfolio. So either you get that through more launches or you get that through an acquisition. Okay. Sure. Sure. And with respect to the agrochemical portfolio, so while we are expecting a repeat launch for CDPR and we do last call you did mention that there's a pink ball worm product that you have launched. What is our agrochemical pipeline looking like? What are the number of launches we're looking at doing, say, next year if you want to be in time for the curry season for this business to grow substantially over the next couple of years? We have a pipeline. I think the big one obviously the ThinkBoil 1 we already launched, okay. So that is already there in the market. So we just launched this year. I think hopefully I think it's a new concept we are selling. It's a first time in India. So we'll see the benefit of that in the next couple of years. Regarding chlorantecol, I mean, it is subject to the court verdict. So we'll see how that goes. In addition to that, we also have other products, but they'll start kicking in around 2020 to 2023. So we have a pipeline. As I said, we don't usually review our pipeline. I think once we are closer to a marketing approval, then we speak about that. So but to answer your question, we have a good pipeline, yes. Okay. Thank you, sir. Thank you. Thank you very much. The next question is from the line of Vishalman Chanda from Nirman Bank. Please go ahead. Thanks for the opportunity. On agrochemical, could you share what is the burn that you are taking in your numbers currently? What is the cash burn? I'll tell you top of my head, I can't recollect exactly, but I would say about INR 15 to INR 20 crores a year. I think that's the burn we're probably facing at this time. You said INR 50 crores? 1 lakh, INR 15 to 20, operationally. 15 to 20. Plus depreciation on the asset. I don't recollect what the depreciation on that asset is, but it's 150 crores to 200 crores CapEx and depreciation on that, plus the cash burn up about CL15 to CL20 at this time, which is yes, we already I mean, it's reflected in the balance sheet. Okay. And on the Fairmont product, are there entry barriers which would restrict the competition in the product going forward? And something on how fast this can scale up and what's your expectation on the scale up of this product? So we're working with our partner ATGC on this, the technologies from them. In terms of scale up or not, the Ping Pong one has been a reasonable launch. But the problem with the Peramond platform is the adaptation. You can't it is not like it's not like a generic when you already have a very large market and then you're cutting price and you're entering and the market is already well developed, so you just have to do a discount and you start paying market share. Theramonde is the exact opposite. So what it is, is essentially what you're trying to do is you're trying to build the concept and sell the farmer the concept of using the product. So that takes about 2, 3 years. So I think to say that there'll be a dramatic increase of revenue, probably not. I think it'll probably take a couple of years before you actually see the benefit. At this stage, I think we're just trying to get the adaptation going. So people have to adopt, so it takes time. So you'll see the benefit of that over a period of time. Thank you very much. Sorry, sir, go ahead. Yes. So I think so I'll take one last question, if anybody has. So the next question is from the line of Kunal from Mallam India. Please go ahead. Okay. Thank you very much for your opportunity. I have a single question. I wanted to understand commercially how hard would it be for any players considering after the last set of agreements, we have probably 8 to 9 players in development would come into the market gradually. So how hard would it be for any player to build share? I mean, the reason why I'm asking is that if it is hard for any and I'm not talking about building share commercially. So in terms of the commercial challenge, we are getting a market share. Versus if I mean the result, the rationale which I'm thinking about is that if it is hard for someone to commercially build share, then it will be it will have a higher incentive for them to really tune probably reduce the price of that and that will be value to all the players involved. So I mean because we saw the same case happening in the case of Copaxone where Mylan found it very hard to gain share because of XYZ reason and the price had to come down quite a lot for Mylan to gain a reasonably much share. So, effectively, Copaxone half the top of what it would have made if the pricing would have not been eroded. So I mean, just applying the same scenario to revenue rate, I mean, how do you think about that? I think, I mean, you can't really predict the future. I think what I can say is that we have the 1st mower advantage. I think that is worth something. And so we are the 1st generic, so that makes a lot of difference in our business. And typically, on these REMS type of products, we are the 1st generic and once the registry is and you have started the registry and you are the 1st generic that's getting dispensed, I think generally you tend to do reasonably well and you get to keep market share. So I think the price and all, I mean, you're selling gen rigs, my friend. I mean, price has to go down. That's the nature of the business. So I think initially when you're in the 1st wave, obviously you make more money. But as more competitors come in, prices do fall, but that's the nature of it. And I think you can't really stop that by any chance. You just have to come up with more interesting things and offset what you're losing. I think that's the nature of the beast as we are targeting it. Okay? Any thoughts? If the price declines much, much faster than what anybody would expect in a scenario like this, I mean that could also be profit additive, did you say that? Obviously, no, I think, yes. But the thing is, until the market formation happens, until we see how the other generics play out, it's very difficult to judge. I mean, so only time will answer that question. What I can only tell you is that we are we'll be the 1st generic from what I understand. Based on what is there in the public domain, I think we should do well. And we're hoping that we should do well with this product. Thank you very much. Okay. Thank you. That will be the last question. I will now hand the conference over to the management for closing comments. No, thank you so much, guys. Thanks for attending the call and very nice interacting with everyone. Thank you so much. Good night. Thank you very much. Thank you, Al. Thank you, Al. On behalf of Investor Capital Services Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.