Q1 21/22

Aug 6, 2021

Ladies and gentlemen, good day, and welcome to the Strides Pharma Science Limited Q1 FY 2022 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Singhal. Thank you and over to you, sir. Thanks, Melissa. A very good afternoon and thank you for joining us today for Stride's earnings call for the Q1 ended financial year 2022. Today, we have with us Arun, Founder and Non Executive Chairman Doctor. Anand, Managing Director and CEO and Badri, Executive Director in Finance and Group CFO to share the highlights of the business and financial for the quarter. I hope you've gone through our results release and the quarterly investor presentation, which have been uploaded on our website as well as the Stock Exchange website. The transcript for this call will be available in a week's time on the company's website. Please note that today's discussion may be forward looking in nature and must be viewed in relation to the risks pertaining to our business. After the end of this call, in case you have any further questions, please feel free to reach out to the Investor Relations team. I now hand over the call to Arun to make the opening comments. Thanks, Abhishek. Good afternoon, good evening. Thank you for joining today. It's been a difficult quarter for Strides. And incidentally, it's the Q1 in its history that we have an operating loss that makes it even more harder. Having said that, we are in the midst of a situation that is not exclusive to Stripes. Based in Bangalore, we have had a very difficult quarter operating our manufacturing facilities leading to significant supply chain disruptions in our contractual obligations to customers worldwide. This has resulted in significant amount of failure to supply, which we have never incurred as a company typically strides before we had a failure to supply ratio of less than 0.5% of its revenues that has gone up quite significantly in the last 2, 3 quarters and it magnified in the last quarter, especially because of the shutdowns that we had in our plants in Bangalore. But more importantly, it's also impacted our contracts, which led to airfaring significant amounts of products that we would normally ship only by sea, resulting in an incremental cost of almost $6,000,000 only in our U. S. Operations. More importantly, as it's now visible to most of you, we are seeing significant competitive landscape on acute therapies and Sykes being predominantly an oral dosage company and focused on acute therapies predominantly as had been hit quite severely. We chose strategically given that we have a principled approach to pricing to let go of businesses, considering that as most of you know that if we accept to lower our pricing and stick to contracts, we sign up with most favored nation conditions with the other buyers, which will result in significant price drops. Consequently, we let go of several businesses as competition in the absence of product approvals was fighting for larger share of the wallet. Obviously, we had sight of the Endo transaction in terms of the very significant pipeline that we were acquiring and that gave us more confidence in taking these kind of bold decisions, which we think are very temporary in nature. And if you look at our guidance, I mean, what Endo what the Endo transaction has done for us is not only doubling our approved A and Ds, but most importantly adding a very significant amount of portfolio products that is magnified for the fact of lack of Indian competition, which requires dedicated manufacturing capabilities with the Chestnut Ridge facility brings to the group, including products like hormonal gels, gels, nasal sprays and significantly increasing our controlled and sorry, our extended release programs. Most importantly, we have a DEA license to manufacture and this portfolio includes several specific products in the Category 2 controlled substance product range, which will significantly add to our business. As Endo is re strategizing its focus to become more a branded company, we have the ability to have structured this deal, which we think is significantly accretive to strides, which will include the transfer of 20 commercial products on closure. You will notice that we have been a little sketchy in terms of exact details of sales, number of A and D programs, specific products. And this is because we are still in agreement with Endo to conclude the contract in the next 60 or days from a signing to closing. And we will be more than delighted to give you more color around the specifics of the products. Having said this, we are now in a very strong position to confirm that we have achieved 2 significant goals. We have had a dry run with our product portfolios in the last 2 years considering that COVID related travel restrictions meant that the instructors were not inspecting facilities or even the B centers. Although this has now commenced in the last few days, this has led to significant drop in product approvals not only for us, but for everybody. From an average of 15 to 20 launches per year, 3 years ago, we are now down to 4 to 5 relevant launches. This is not material, especially when we are we have an onslaught of price intense pressure on our portfolio. So the transaction that we announced today not only adds a very significant number of products, but they are unique products, which we are now very confident to tell to guide and confirm that our Phase 1 strategy of achieving $400,000,000 of revenues on small niche and difficult to manufacture programs is now fully secure and we are now not dependent on any incremental R and Ds or product approvals to get there. Consequently, on closure, we are confident that in spite of a very weak Q1 in the U. S. And what we think will be a subdued Q2, we will rebound in H2 as a very significant player to confidently guide that we will grow our business at least by 10% to 15% over the last year. You will also appreciate that strides guidances of the U. S. Sales have been achieved in every year that we have provided and we do not see any reason why we will not achieve that this year. I will let Anand speak on specific accretion and transaction details. But today, while we are not happy with our performance, which is some in a hand, many not in a hand, we think that we are now well poised from a strategic play to deliver on what we think will be a very compelling story in the near term. And with this, of course, I will also take a minute to just quickly give an update on Stellis. First of all, I'm delighted to welcome Mark as our new CEO. As many of you have seen in the releases, Mark comes with stellar experience and success in the business having run ACT Biological, which is one of the largest CDMOs in the world. Mark is relocating to India. He's on his way to India and he's invested here in Bangalore, which is great given the need of a leader of his type to be operating from Bangalore. We're also delighted that we have incent in the Board by inducting Doctor. Venita Rai onto our Board, but also for Aditya Puri to have kindly agreed to be the Chairperson of Stellus as we build Stellus into a very exciting journey. As regards Sputnik, as guided in the previous earnings call, we are we have successfully now completed our scale ups for both the RAV-five and the RAV-twenty 6. Like most partners of the RDE-five, we continue to have challenges on the ease for the RDE-five, but we believe that this is something that will be fixed. We should be there is no change to our guidance to start commercial production, large scale commercial production in October. And we are in spite of COVID and a 40 day delay in our manufacturing projects, we have now received all our equipments at site or at ports and we are now confident to get started for commercial production in that scale soon. So with that, I'm going to let Anand speak about the business, the business he runs. But today more as representing the Board, I thought it's necessary for me to give a little more color than I would normally do in an opening statement. So thank you for your patience and be rest assured that we are in a strong wicket to rebound very strongly. To this, I pass it on to Anand and then and Anand later to Badri, who will give you an update on the finances. But and then we are obviously open for questions. We also understand that today is a crowded day for calls. So we will try and make this meeting short. And as always, we will be available to take your calls and answer any questions you may have anytime next week or whenever you want us to get on to a call. Thank you. Thank you, Arun. Good afternoon to all of you and hope all of you and the loved ones continue to remain safe and healthy. As Arun mentioned, Q1 has certainly been a disappointing quarter for strides amidst multiple headwinds with the recent wave of COVID. The sector has certainly seen significant headwinds on multiple counts. Just to give some flavor, we've seen drop in prescription rates below historical levels in the U. S, significant drop in prescription rates in the UK with lockdown throughout the entire quarter, and there has been continuous drop in product approvals for the industry. All of this has resulted in a heightened competitive intensity, of course, to capture a higher wallet share, which has resulted in significant price erosions this quarter. Also, with the rise in the COVID cases in this quarter leading to the lockdowns, there has been a disruption in supply chain that necessitated increasing cost of operations, particularly logistics. We have seen significant impact of these dynamics on strikes. Our U. S. Portfolio has seen a double digit price erosion and higher competitive intensity resulting in significant drop in revenues. We also had an impact where some of our new product launches from the last quarter have not played out as anticipated due to the steep erosion in those products. While there has been a gain in Q4, it has resulted in a steep drop in Q1. We also saw for our products in the pipeline delays in product approvals. And of course, our manufacturing sites in India were impacted with a number of our employees getting affected by COVID and that's led to operational and supply related impacts. With all of these elements, it was at an opportune time that we do have the transaction, which is the acquisition of a basket of ANDAs from Endo and the manufacturing site at Chestnut Ridge, New York. This certainly comes to us in a way to be able to enable us to mitigate these headwinds. So what does this transaction mean for Strides? And I'd like to give some color to this. Firstly, adjusting for overlapping products, this our product portfolio of about 100 approved ANDAs will more than double after this transaction. We do get access to immediately to 20 commercial products that get added to the portfolio upon closing. Since these ANDAs are approved, it mitigates any delays in approvals that is normally needed for launch of new products. And hence, we are going to be pretty busy after the closing to ensure that our velocity of launching about 5 to 6 products from the acquired portfolio every quarter is set up in motion. This acquisition adds additional dosage forms and capabilities that currently do not exist in our portfolio. Some of these are hormonal products, controlled substances, particularly the Schedule 2C2 category, gels, nasal spray and also significant enhanced presence in modified relief and liquids apart from solid orders. The portfolio also enhances significantly our middle of the pyramid market, which is the area where we have limited competition products with superior margins and that market will now increase almost by 2x to over 100 plus products. This facility being in the U. S, we now have 100 plus TAA compliant products to enable U. S. Government supplies. We also get access to IP through the acquisition of this basket that can be leveraged to expand product offering for global markets through our portfolio magnetization approach. The scale of this combined portfolio now will help us to refocus our R and D and therefore, spends in the R and D will be now more towards complex and specialty programs since building the portfolio of ADA for launches in the U. S. Gets covered through this acquisition. Given the scale and capabilities at this site, we have decided to exit our West Palm Beach site in Florida and consolidate the softgel facility at Chestnut softgel capability at Chestnut Ridge, which will give us manufacturing cost synergies. Also, being in the U. S, TrisTite will help us mitigate supply chain and logistics disruptions by NUS for the U. S. Capabilities. Clearly, now we have sufficient approved products as Arun said that will enable us to achieve our stated target of US400 $1,000,000,000 revenue for the U. S. As our Phase 1 approach over the next 24 months. And despite the impact in Q1 and a likely softer Q2, we remain confident of achieving growth in FY 2022 over the USD 215,000,000 that we reported in 2021. Coming to the other regulated markets. Our other regulated markets was certainly impacted by the lockdown in U. K. And over or around 20% lower prescription generations for the prescription and OTC products. And we also saw supply disruptions, particularly for our partnered business in the other regulated market. However, we do see an improved order book as well as we are pretty confident of a bounce back starting in Q2 of FY 2022 for the other regulated markets. The business outlook continues to remain robust there and will continue to be on its growth momentum. We will continue to focus on portfolio building and product launches for the other egg market. From an emerging market perspective, the Africa business delivered a steady performance despite lower demand for acute portfolio. Our institutional business did show a sequential decline. 1 was on account of lower offtake of TLD in this quarter as well as the sheer lumpy nature of the business. However, we do expect growth for the full year. We've taken several initiatives organization wide on cost control programs to deliver operating leverage and have also put initiatives in place to bring down logistics cost and FTS during the Q2 of the year second half of the year. In summary, we are confident that with the basket of approved ANDAs and the manufacturing facility in the U. S, we will bounce back in the other regulated markets and the U. S, our core business areas, and we will demonstrate recovery in H2 driven by growth across all our businesses. With this, I'd like to hand over to Badri for financial highlights. Yes. So good evening, ladies and gentlemen. We had degrowth across revenue as well as margin metrics. Our price erosion in the casino base portfolio of key products for U. S. And U. K. Dragged the gross margins by 10%. And we also had a negative operating leverage during the quarter mainly because of the lower sales as well as the gross margins. Employee cost moved in a range, and operating cost increased because of logistics as well as some COVID related expenses plus the failure to supply. OpEx continues to be we'll continue to see operating costs at a similar range going forward. We also had an impairment of West Palm Beach to the tune of about INR 1,400,000,000. And the overall, the exceptions were at INR 915,000,000 in the current quarter. And this will help us to save the operating cost going forward to the tune of about $6,000,000 to $7,000,000 of running the factory. This is a cost avoidance. And overall, the debt stood at about INR 14,400,000,000 and it's and it will be expected to go up slightly with the acquisition of Hess Palm Beach. But with the growth returning back in H2, we should be able to come back to the original levels, and we'll be able to see a big reduction in the next two quarters in H2. And overall, if you see from a tax rate perspective, this quarter, we had a tax writeback of about INR 320,000,000, mainly because we created a deferred tax on the Palm Beach impairment. And ETR is also expected to be in the similar range like in the past. With this, I will forward it to Abhishek and open the floor for questions. Melissa, can we take the questions, please? Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. We have the first question from the line of Alankar Garode from Macquarie. Please go ahead. Hi, good afternoon, everyone. Sir, well, almost all companies have seen an impact in regulated markets in this quarter. The extent of impact on us seems much higher than peers. So among the reasons which you discussed, are there any specific ones which where we were impacted much more than the other companies? So the couple of things as I said. One is, yes, across the sectors you've had, you've seen drop in prescription rates. Two elements that it impacts us. 1 is, as we said, our product portfolio predominantly being in oral solids is in the acute product segment. And number 2 is the lockdown in U. K. And with the lockdown as well as with the vaccination, there's clearly been an impact on the acute portfolio and that has had a bigger impact to us, number 1. Number 2 is that clearly with number of product accruals coming down, competitive intensity on existing portfolio has gone up, which has resulted in a steep price erosion. And that's played out to our portfolio. So follow-up to that would be, if I look at the U. S. Guidance, it suggests a significant ramp up from the Q1 levels even as we have indicated a subdued second quarter. So what is giving us this confidence for the second half? And broadly, how much would Endo contribute in this? So Anantar, we can't get specifics. Like I said, we can't get into specifics of the Endo transaction till it's closed, right? But clearly, as you will see from the releases, the portfolio of over 100 new ANDAs adjusted for overlap the ANDAs, right, which means that the portfolio is obviously more than that. Adjusted for overlap the ANDAs, almost every single product fits into our specific criteria of the niche. We have seen price pressure, very intense price pressure on the bottom of the pyramid where volumes are very high. Either our competitors are sitting on too much inventory or and they wanted to sell out. So like I said, we chose not to protect the lower pricing and let go of it. And that is why you'll probably see our drop to be significantly more than the others. So but as trend goes and when we're allowed to be when we are in a position to speak more, a lot of it the lot of the growth is definitely coming from the endo portfolio. And if I can add to what Arun said, as I said, our H2 is certainly going to be a busy H2 driven with the velocity of product launches that we will have once the acquisition goes through because we will have 5 to 6 product launches that we aim every quarter. So that's also one that will give a positive uplift. Understood, sir. And the second question was generally scaling up manufacturing of the AD5 dose has been a challenge as far as PUTNIKB is concerned for most of the manufacturers and plus also there's the cross contamination issue. I think Arun, in your opening remarks, you also shared you also talked about this. But is it possible to share more details on Telesis' relative progress on these two fronts? So basically, the R and D 5 has challenges of cost determination at large scale. It's not that and typically if you do the volumes that sputnik is expected to get supply from India, you need to scale this up to the 1,000 liters and the 2,000 liters for it to be viable. At this stage, people have with their difficulties moved from 5 liters to 20 liters to 50 liters and now to 200 liters. We are in that evolution phase. But what is interesting is that the Russians have worked on the technology and they have transferred new improvements, which is resulting in better yields. So we are seeing that it will be now viable in the near term. But our contract is for the global supply and they're also getting Sputnik Light in several markets approved. So we do have a call back to even at least not if not just Sputnik, we can at least send the Sputnik Life. Understood. Thanks. I'll get back in the queue. Thank you. We have the next question from the line of Anmol Ganjhu from J. M. Financial. Please go ahead. Yes. Hi. I have two questions. One is to Anant. Anant, obviously, we knew that last quarter directionally at least was supposed to be impacted by COVID. But if you look at the trajectory reverting back to normalcy, what has been the experience so far? And how have the 1st few months panned out? I'm not looking for numbers, but any directional sense on the route back to normalcy would be helpful. So Anmol, on as far as I'll split that response in 2 or 3 ways. 1, our manufacturing facility has got back on track with a number of our employees being vaccinated as well as recovered. And obviously, the operations have started, which means the supply issues that we had for our partnered business is resuming back and we are getting to fulfill the requirements there, number 1. Number 2 is, we are also continuing to be able to see a good healthy order book that we need for the other egg markets. And hence, we've indicated that we will see a bounce back for the other egg markets in quarter 2. The U. S. Will slowly start seeing improvement. But having said that, we will see a quarter 2 softer quarter 2 or subdued quarter 2 and then come back in H2 stronger. And that's what we were indicating in the earlier commentary because you can't move from one day with a high price erosion and start the next quarter beginning over coming back. So it will be a softer quarter too and improve as we get into H2. Thanks. That's really helpful. My second question is to Arun. Arun, congratulations, Mark Womack. Looks like a price catch as far as STELIS is concerned. But just wanted to understand what is the roster of priorities that Mark will be having and what are some of the milestones we should be watching out for as he tries to replicate his past success with the current asset or the current assignment? No. I think today we do have a significant CDMO contract with Sputnik, but we have capacities and capabilities outside of other vaccine expression systems. And ATG was one of the largest is one of the larger vaccine contract manufacturers. So we think Mark will bring his network at play here that is important. Our mammalian block of 8,000 liters is the largest CDMO capacity in the country. That will go on stream in March as scheduled. I mean, as in the mechanical completion will be over by March. And this is the right time for somebody like Mark to come into the system and bespoke those capacities for customers who would sign up long term contracts, because sometimes customers ask for very specialized and dedicated manufacturing facilities. So this is the right time from that perspective. And I think his networking around services and other things that APG does will definitely give us the advantage that we're looking for. But more importantly, it was somebody who was more than willing to operate from Bangalore, which we think was very important as we're building the teams for our scale up. So all of that would be the priorities, building up the team, building new capabilities, creating the organization for a strong BD outcome and probably announce some big wins in the next 6 to 9 months. Thank you. Thank you. That's it from my side. Thank you. We have the next question from the line of Nitin Agarwal from DAMP Capital. Please go ahead. Yes, okay. So, I'll start on the core business for this quarter, one big apart from the revenue drop, there has obviously been a sharp drop in the gross margin about 50 odd percent versus 60% that we were doing all through the last year. Now as a business sort of normalizes, I mean how a, is this something that structurally changed in the business in terms of the gross margin of the business or do we see going back to these sort of levels at some point in time? So, Nitin, Arun here, how I see this that it's a little too early to predict. Will it be in the mid-60s that we were used to for the last 12 quarters? Looks like it's not. But will it be 50 as is reported? The answer is surely not. I think you need to give us at least until Q3 for us to confirm that we should be back to a certain level, which is neither the 65%, but clearly not the 50%. Got it. And just on that point, so is it just our portfolio, which has got more impacted or there has been been a broader industry wide dynamic which has happened in the last quarter or so which has brought this kind of impact? I think it's very profound for companies which is a portfolio which is broad based and not necessarily focused on products and does not have anything which is either in the CGT or exclusivity period or in speciality. So anybody, like I mentioned, yesterday reported 25% drop in sales. Somehow everybody seems to be going through that difficulty in this quarter. I think it's that everybody is chasing the same product with aggression either sitting on inventory, the flu season not playing out the way it was supposed to. There's just too much inventory in the system. And either we can behave irrationally in that process or we can just stay put with our strategy. I think that's what we've done. Like I said in my opening, we had sight of the transaction with Endo. So that gave us a lot more flexibility to take some strong positions with certain price drops. And I think the new portfolio will ensure that we should get back to a healthier gross margin than what we reported. But this will pan out only in Q3. Secondly, on the portfolio that we talked about, so we talked about going back to meeting our $400,000,000 revenue aspiration over the next 24 months. Now the $400,000,000 was essentially under a different strategy and with a much larger portfolio coming on board, does that end goal for the business change now from a size perspective? Well, one is that, obviously, the strategy of the $400,000,000 if you recall, when we articulated the strategy, we said that we needed 70 to 80 products to get there. Almost 100 products is what we mentioned, an average revenue of 4,000,000 3.5000000 to 4,000,000 dollars All we are saying is that we have out secured that portfolio. It's not normal for us to launch every single product. So I think between our portfolio and the portfolio of the products that needs to get approved in the next year, We are now very confident of achieving our 1st phase goal of $400,000,000 We have also mentioned in today's commentary that we are now reallocating R and D from our gendered portfolio to most specialized portfolio and that should lead our Phase II growth of what we want to be. We would be able to articulate this a lot better with our Q3 results. Got it. If you can just take one last one on that. On the portfolio, so we said there are 100 odd sort of products, which are complementary products in the portfolio that you've acquired and there are 20 commercialized products. So 80 are what to be approved ANDAs or these are products which are approved but not commercialized? Every product is approved. Texas 2, which is in the process of being approved. Okay. So these are products which are approved but not launched yet, which we can sort of bring to the market? For whatever reason, because Endo, as you know, has moved the strategy from generics, which they announced in 2020. So they progressively decided to move out of generics and keep only some special products, which fits their brand strategy. Okay. Thank you. Thank you. We have the next question from the line of Karan Rathore from AUM Advisors. Please go ahead. Hello. My question was regarding Ranitidine. We saw some news that, again, it may be approved for usage. Does that in any way affect us? Will we be again going to redaunch that in the next few quarters? So on branchedine, it's different for different geographies. We are certainly looking at and we are engaging very closely with regulatory agencies in different parts. So for example, we are engaging with agencies in Australia to see if we can get an approval. We are engaging with agencies in Europe to look at what their outlook is and we are engaging differently in the U. S. U. S, of course, is a bit more stringent in what they are asked about the product given their view of the NDMA content and that's something that will take much longer time. So while we continue to understand that landscape better and understand the expectations from FDA, which we have started reviewing, We are engaging into very detailed conversations in Australia and Europe. And if there is some positive clearances that comes in, of course, that's a product that we'll certainly look to maximize. So I mentioned the U. S, I thought there was some announcement that the NDV and everything was nullified by some judge and certain manufacturers were out both And that has to do with the class actions, which is now being dismissed for generic companies. And the FDA has come up with I mean, there has been studies now published saying that its low dose of NDA mentality doesn't create any of the issues that led to the decisions that the FDA took. I can not read the industry, but surely we will appeal to see what is their status on that, but it's very early days. These are recent events. Okay. Thank you. We have the next question from the line of VP Rajesh from Banyan Capital. Please go ahead. Hi. Thanks for the opportunity. Am I audible? Yes. So my question was regarding Spanish, what is the plan to realize the Randi for our shareholders in that access? Will it take a couple of years before it gets listed and then we do what we have there? Or is there some other time if you can just share some thoughts on that? Well, understand we do not have any specific ideas. We just have a new Board with Aditya Puri becoming the Chair. We will be engaging with bankers in this quarter to figure out what's the best value that we will we can get for the business lifestyle. And we'll keep you posted on development. But at this stage, we look we are looking at all options. Understood. Okay. And then second question is regarding our mail business. So like other participants have asked, I'm just trying to understand that is there something structurally different happening in the U. S. Market, which is going to be an impact on our business for the next several quarters? Or it was just 1 quarter or 2 quarter issue? Yes. So as I said, I again want to split this across the two core business areas. As far as the other rig markets is concerned now with UK opening up as well as our manufacturing facilities returning back to normalcy and supporting the partnered order book that we always have visibility for, we clearly see bounce back coming in quarter 2 and that is certainly an element that we did have a bad quarter 1, but we will come back in quarter 2 and continue on the growth momentum there. As far as the U. S. Is concerned, this is significantly impacted on our portfolio with the price erosions that we've never seen before. And given that we will close the transaction in the next 60 days, the Endo portfolio will play out for us in the H2. So from Q1 to Q2, Q2 will continue to remain a softer Q2 for the U. S. And from there on, we'll pick it up as we get busy in H2. What I was clarifying is that what you're saying is that Endo portfolio will make up for all the price erosion that we have either experienced in Q1 or are experiencing in Q2. Is that sort of the right way to understand that? It's the significant number of products there, right, and products that are in the niche area with lower competition and therefore better margin profile. And as that kicks into play, obviously, it is going to help compared to the existing more acute solid dose product portfolio that we have where we've seen a high erosion. Now, will this price erosion be sustainable? We do not believe so. But at least we need to be prepared over the next several months or into quarter 2 as well. And while we believe it's not sustainable at this level, what will help us is the portfolio from Endo, which is lower competition with a better basket that will make a significant help for us in stemming that issue. Okay. So sorry, just one more follow-up question. I want to make sure I understand this correctly. When you're talking about 10% growth for the financial year over last year, are you assuming that you will have benefit of prices coming back plus the Endo portfolio or just the Endo portfolio? It could be a combination of the 2 that we expect as we move into Q3 and Q4. The combination will help us get to that level. Okay. So your view is that the pricing that you are currently experiencing in the U. S. Is abnormal and it is probably inventory dumping by one of the competitors in some of your products. Is sort of the way to understand this issue? Yes, that is true. And hence, that will also have a normalization. Understood. Okay. Thank you very much. Really appreciate it. All the best. Thanks. Thank you. We have the next question from the line of Mitul Soni from GC Investments. Please go ahead. Yes. Hi. Just a couple of questions. You said in your remarks, you did let go some of our business in the U. S. Could you like quantify how much would you would have let go? The company has always done I mean, we let go in the U. S. Almost about $20,000,000 of revenues, dollars 15,000,000 $59,000,000 of revenues in the quarter, because we've never had a quarter less than $15,000,000 in a long, long time. Yes, so it's in that range. So you see about you're seeing about $15,000,000 of revenue you let go during the quarter? That's right. Yes. And second question on that with respect to you also said the price erosion, wanted to clarify, you said price erosion was much more in the products which were launched recently, right? Or was it more in the old products what we already have? So it's a combination. One set of products that is at the bottom of our pyramid, which is the large volume products had significant erosion, which we believe again is with competitive intensity kicking in for that basket and probably inventories playing out there. And on the second one was product that we launched in Q4 also had impact, which did not play out to our plant where we saw significant price erosion and competitive intensity. Okay. And my question on Endo is That was more for a delta from Q4 to Q1. We got it on that. Yes. And with respect to Endo, the production of those 20 products are already being commercialized in the market, right? Correct. And that's Currently being manufactured as well. So we will ship the production there for us? We will continue manufacturing there. All the products that are coming in as a part of the basket are all manufactured out of the Chistnet Ridge facility and therefore much easier for us to continue manufacturing from that same facility. Got it. And would you be able to give a number like what is the revenue of those products as of now? We cannot. Until closing, obviously, we cannot get into those details. Once closing is done and as we get into Q3, we'll be able to be a little bit more specific on the Endo portfolio. Perfect. Okay. Thank you very much. We have the next question from the line of Rahul Bharatwaj, an investor. Please go ahead. Hello. Thank you for the opportunity. I hope you guys can hear me. Yes. Okay. So my question is on Stellus. If you can provide more color on any contracts, new contracts on the vaccine front that Stellis may be getting? And secondly, on the approvals, I believe we had filed for some approvals in the EU related to on the biologic side. So if you could share more information on this, that would be much appreciated. Yes. Tell us, Mr. Singh, that we have now invested heavily in the vaccine capabilities. We are soliciting other partners. These are early days. We are working with other partners to see if we can bring in new contracts. We should have some updates soon. We continue to talk to other key players. The in terms of the programs, we are now only awaiting inspection for our facility for potentially our first product approval to be approved in Europe. Unfortunately, since the plant is new, the European authorities, which normally would accept mutually recognized regulatory bodies to previous inspections. In this case, our files will get reapproved post a physical inspection of the facility, which is likely soon. Once that's done, we expect our 1st program to be to get approved in Europe. I can also tell you that we have just received our Phase 1 readouts on our insulin lardine, which has come out very successfully and has met all the primary endpoints. So we are very happy with that and we continue to now take passes for our global filings. So we are progressing on schedule on those programs. Got it. Got it. Thank you. And one last question. And this is more like in terms of very future looking. So 3 to 5 years down the line, do you see Stellus operating as a separate listed entity or the likelihood of still being with strides? I think it will warrant there are conversations around that clearly. How what the process and timing is the only factor, Suneet. To answer your point, in that period, yes. Thank you. We will move to the next question from the line of Nitin Agarwal from DAMP Capital. Please go ahead. Hi, can you hear me? Yes. Yes. So on just to the U. S. Piece, I guess with the Endo transaction gets sort of played itself out now in a outlined, is that very clear? But now on the other pieces of the business which are there, on the other red markets, has anything changed from a strategic perspective or just a blip and our strategy remains where it was and goes back and we sort of start resuming growth in a couple of quarters to back to the old trajectory? Yes. Sorry. So, Nitin, we are already guiding in other rates that we'll bounce back in this quarter. And Alim, is there a synergy of the portfolio if you acquire to these other markets? Yes. So we have global rights on the portfolio and there is significant synergies. We obviously may have to do some bridging studies and work around small mining tweaking to meet the European standards. But yes, the portfolio is extremely complementary for us and especially the controlled substances you can export from U. S. Into parts of Europe. So we are excited with the portfolio maximization possibilities around the Endo portfolio. Thanks. And on the institutional piece as well as, I mean, we've talked about certain around cost optimization, cost competitiveness in that portfolio to improve our competitiveness. So I mean, any can you just place a more light on that? I mean, what are you looking at in the institution piece? Are we looking to have your much larger ambitions on the business now versus what we had earlier? Yes, Sunitin, we can. You see, our largest challenge obviously is that we because we do not make the APIs ourselves unlike the fully integrated players, we have now managed to completely rearrange our supply sources from newly approved WHO approved sources. And we are now in a strong position. As you know, these 3 centers are going through a cycle, but we are in a strong position to become a cost leader in this program. And you will see those results. I mean, it takes about 2 quarters for us to get significant velocity up, but we are now we have now completed all the work that is required for us to become to get into that position to bid and secure more contracts. And I think this business will bounce back to the historic 2015, 2016 numbers where we raised to close to $150,000,000 to $200,000,000 So I think we are in a good situation with this business from next financial year, but you will see improvements starting from Q3. And Arun, this would last you particularly with PLD part of the business or there are more components of the business beyond PLD? But PLD is about 80% of the total 70% to 80% of the total value ascribed to the entire business. So we need to pick up we need to solve for that. But all of these products have a limited span of 5 to 6 years to be fashionable as a cocktail. So we are now investing in what we potentially think would be the newer range of products that we need to stay invested. So we are investing in R and D considering that we can refocus a little bit on the U. S. Given that we have enough portfolio to launch for the next 2 years. We would refocus more of our capital and resources around these businesses to grow. Okay. Just to sort of complete that. And where does it leave the Africa piece in the overall business now? The Africa business is the only business that did well in the last quarter. That's the thing. I mean, there's growth. So that continues to be it's suboptimal in scale, but continues to be strategically important for us and we'll stay invested and grow that business from here. Okay. Thank you. Thank you. Ladies and gentlemen, we will take one last question from the line of Alankar Garode from Macquarie. Please go ahead. Hi. Thanks for the follow-up. Two questions from my side. Now with 100 compliant ANDAs, would the federal program be a meaningful contributor towards the $400,000,000 target in U. S. In the next 2 years? Yes, it should. This will certainly be a meaningful participation for us. Understood, sir. And the other question, sir, is if you look at our overall portfolio, it's still heavily skewed towards generics and regulated markets. Are you comfortable with the current revenue mix? Or would there be any significant focus in the future on increasing our branded and emerging market presence? So certainly on as Arun just mentioned in the previous question, we will certainly look to augment our portfolio both on the branded and the next regime or the newer products for the ARVs, that's 1. But also, we will refocus our R and D to also complex products and specialty products. Over the next few years, that is complex and okay. Okay, sir. Thanks and all the best. Thank you. Thank you all. Thank you. Ladies and gentlemen, that was the last question. I would like to hand the floor back to the management for closing comments. Please go ahead, sir. Thank you all for participating. Again, as if there are any specific questions or any further discussions that need to be done, we are more than happy to answer questions. Please reach out to the Investor Relationships team and have a good day. Thank you, gentlemen. Ladies and gentlemen, on behalf of Stride Pharma Science Limited, that concludes this conference.