Ladies and gentlemen, good day and welcome to Sun Pharma's Q2 FY 2026 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star then zero on your touchstone phone. I now hand the conference over to Dr. Abhishek Sharma, Vice President and Head of Investor Relations and Strategic Projects. Thank you. Over to you, sir.
Thank you. Good evening and a warm welcome to our second quarter FY 2026 earnings call. I'm Abhishek from the Sun Pharma Investor Relations Team. We hope you have received the Q2 financials and the press release that was sent out earlier in the day. These are also available on our website. We have with us Mr. Dilip Shanghvi, Chairman, Mr. Kirti Ganorkar, Managing Director, Mr. Aalok Shanghvi, Chief Operating Officer, Ms. Jayashree Satagopan, CFO, and Mr. Richard Ascroft, CEO North America. Today the team will provide an update on the financial performance and business highlights for the quarter, pipeline updates. In response to any questions that you may have, we will refer to the consolidated financials for management comments. The call recording and call transcript will also be put on our website shortly.
The discussion today might include certain forward looking statements and these must be viewed in conjunction with the risk that our business faces. You are requested to ask two questions in the initial round. I also request all of you to kindly send in your questions that may remain unanswered today. I will now hand over the call to our CFO, Ms. Jayashree Satagopan.
Welcome and thank you for joining us for this earnings call. After the announcement of our financial results for the second quarter FY 2026, our Q2 financials are already with you. Let me take you through the consolidated financials of the second quarter. Q2 FY 2026 sales were at INR 144,052 million recording a growth of 8.6% vis a vis the second quarter of FY 2025. Gross margin was at 79.3% for this quarter. EBITDA for the quarter was INR 45,271 million registering an increase of 14.9% over Q2 last year. EBITDA margin percentage for the quarter was at 31.3% against 29.6% for Q2 FY 2025 and 31.1% during the first quarter of FY 2026. Net profit after tax for Q2 FY 2026 was INR 31,180 million which is up by 2.6% over the reported net profit of Q2 last year. EPS for the quarter was INR 13 per share.
Effective tax rate for the quarter was 24.7% vis-à-vis 15.8% in Q2 FY 2025. During the first quarter of 2026 the ETR was at 24.3%. forex gain during the quarter was INR 4,305 million compared to a gain of INR 1,281 million during the same period last year. Balance sheet continues to be strong with a net cash of $2.9 billion at a consolidated level. This is after our investment in the business, acquisition of Checkpoint Therapeutics and settling the GX MBL case. Now let me take you through the half yearly performance. For the first half, sales were at INR 281,913 million registering a growth of 9.3% over the first half last year. Gross margin was at 79.4% for the first half. EBITDA for the first half was INR 88,287 million registering a growth of 17% over the first half of last year. EBITDA margin percentage was at 31.2%.
Adjusted net profit for H1 was INR 61,141 million, up by 4.1% over the adjusted net profit of H1 during the last year. I will now hand over this call to Kirti who will share the performance of our global innovative medicines and India business.
Thank you, Jayashree. In Q2 FY 2026, our global innovative medicine sales were up by 16.4% to reach $313 million. U.S. sales of innovative medicine surpassed generics for the first time during the quarter. Our ex-U.S. innovative medicine business also continues to deliver strong growth. Our largest brand, Ilumya, is now commercialized in all the major markets and is available across 35 markets. Coming to India business for Q2, the sales of formulation in India were INR 47,348 million, recording a growth of 11% over Q2 last year. India's formulation sales accounted for 32.9% of total consolidated sales for the quarter. Sun Pharma is ranked number one and holds 8.33% market share in over INR 2,350 billion Indian pharmaceutical market as per Pharmarack MAT September 2025. Corresponding market share for the previous period was 8%.
For the quarter ending September 25th we grew higher than IPM and we have done well across all major represented therapy areas. We are happy to note that on MAT basis the sales growth has been led by volumes and new product launches versus the IPM growth which is predominantly price led. As per SMSRC March-June 2025 report, we continue to be number one brand company based on the prescription volumes. Sun Pharma is also ranked number one by prescription with 13 different doctor categories. For Q2 FY 2026 the company launched nine new products in India. I will now hand over call to Rick for the updates on the U.S. business.
Thank you, Kirti. I will update on the performance highlights of our U.S. business. Our overall U.S. business declined by 4.1% to $496 million for the quarter. growth in innovative medicines was led by Ilumya, Cequa, and Odomzo. Innovative medicines growth was offset by lower sales in our generics business due to additional competition for certain products and lower sales of lenalidomide. The U.S. accounted for 30% of consolidated sales for the quarter. For the second quarter, we launched three new generic products in the U.S. We also launched Leqselvi this quarter, and we've been pleased with our initial access and the response from healthcare providers and patients that they've had to the product. We anticipate access will continue to improve as well as overall uptake of the product. I will now hand over the call to Aalok, who will cover emerging markets and rest of world.
Thank you, Rick. I will provide an update on the performance highlights of our other businesses. Our formulation revenues in Emerging Markets were $325 million, up by 10.9% over Q2 last year. The underlying growth in constant currency terms was 8%. In Emerging Markets, we have seen broad-based growth both in the generic and innovative medicines business, aided by favorable currency movement. Emerging Markets accounted for 19.7% of total consolidated revenue for the second quarter. Amongst the larger markets in local currency terms, South Africa and Brazil have done well. Formulation revenues in Rest of World were $234 million, up 17.7% over last quarter. Over Q2 last year, we have seen growth both in the generic and innovative medicines business in Rest of World, and Rest of World markets account for approximately 14.2% of consolidated revenue. I will now hand over to Mr. Shanghvi.
Thank you Aalok. Let me take you through our R&D initiatives. We continue to invest in building an R&D pipeline of our innovative medicines business. Consolidated investments towards R&D for Q2 FY 2026 stand at INR 7,827 million or 5.4% of sales. Innovative R&D accounted for 38% of our total R&D spend and stands at approximately 10% of global innovative medicine sales for the quarter. Regarding updates on innovative medicines, we are awaiting FDA decision on Unloxcyt updated labeling and we remain on track to launch Unloxcyt in the U.S. in the second half of FY 2026. We are also planning to file Ilumya psoriatic arthritis during the second half of FY 2026.
Operator, we can open for Q and A now.
Sure. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to only use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from Saurabh Mukherjea from Nomura. Please go ahead. We cannot hear you, your voice is breaking. Mr. Saurabh Mukherjea may go ahead with the question. We seem to have lost the line for Mr. Mukherjea. We will move to the next question. The next question is from Kunal Dhamesha from Macquarie. Please go ahead.
Hi, good evening. Can you hear me?
Yes. Yeah, Kunal, go ahead.
Yeah, thank you for the opportunity. The first one on the intangible assets which seem to have moved sharply from the March 2025 level almost around $950 million +. So I can see there is $300 million intangibles which have moved from under development to other intangible head. If you could provide a broader moving pieces here.
Thank you Kunal for your question. The increase in the intangible assets is also due to the Checkpoint intangible that has got added during the quarter. We also had a milestone payment for Odomzo.
Okay, so Checkpoint would be close to $400 million+ , right?
Yeah, it is about $471 million.
Then rest of the $500 million, what is selling that?
We had Leqselvi related apart from Checkpoint, which is another larger piece if you know.
Kunal, like, shall we move from intangibles under development into intangibles?
Okay, so that's another $300 million and this should be order.
No, then the rest are several small items. So it's largely Checkpoint and Excellent.
Okay, okay, sure. Thank you for that color. Secondly, on the incremental specialty spend that we had suggested that we're spending around $100 million in this year related to the launches of Leqselvi and Unloxcyt. So is it fair to assume that some of that has started in Q2? And should we see the run rate to be more similar in quarter three, quarter four or should we expect some acceleration, deceleration? Any color would be helpful.
Yes, I'm happy to address that. So we did see a slight increase in Q2, and we would expect to see further increases in Q3, Q4, particularly as we launch Unloxcyt.
Sure. Lastly, on the generic rev limit, it seems to have kind of gone down even on a sequential basis. Is it a fair assumption and would it be now a meaningful contributor in this quarter? In the quarter that follows, in quarter two versus quarter one, the movement of lenalidomide.
Yeah. Okay. On lenalidomide we have said that year over year there is a drop, quarter over quarter the number is flat.
Sure. Thank you. All the best.
Thank you.
Thank you. Next question is from Neha Manpuria from Bank of America. Please go ahead.
Yes, thanks for taking my questions. We have two questions in the specialty business on Leqselvi, when should we start seeing contribution revenue contributions from the improving payer coverage and payer access that you talked about? Would a more meaningful revenue contribution from this be evident? Let's say in the later part of this fiscal or more so, would you say in fiscal 2027? What would be your assumption there?
We're already starting to see paid prescriptions through commercial channels, and we would expect that to continue to grow throughout the year.
Understood. On Ilumya, is it fair to assume that the prescription growth that you're seeing, I know as a category biologics in psoriasis is growing, but even as we wait for psoriatic arthritis approval to come through, we can continue to see the momentum in prescription growth over the next two years.
Was the question related to Ilumya for psoriasis?
Yes, that's right.
We do expect to see continued growth. As you shared, the IL23 market continues to grow, as does the overall psoriasis market. We continue to release new data on Ilumya and sharpen our sales and marketing tactics. We would expect to see continued growth.
Understood. The last one I have is on R&D spend. If you look at R&D, we are obviously tracking below the guidance that we had revised down last quarter. You know, how should we think about R&D spend for the full year? You know, do we expect a pickup going into second half or would it remain at the current, you know, 5.5% level that we see?
Neha, I think we should come in the lower end of the guidance overall. That is what is our assessment today.
Lower end of the 6%-8% g uidance that you've mentioned. Right, sir?
Right.
Oh, thank you so much.
Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. Ladies and gentlemen, to ask questions you may press star and one. The next question is from Vishal Manchanda from Systematix. Please go ahead.
Hi, good evening everyone. I have a question on the balance sheet. If I look at the other current assets, almost doubled since March 2025. Sorry, March 2025. From INR 2,500 crore to almost INR 5,000 crore. Would you clarify on this? What led to this?
This is mainly on account of the GX MDL settlement which has gone into an escROE account.
Sorry, which settlement?
Last quarter we had a settlement on the GX MDL case and that amount has been deposited in an escROE account.
Okay, understood, understood. Second one on Cosibelimab, wanted to understand whether it has been filed for European markets and whether our competitors Getrud and Liberty, or do they have a European approval already?
Yeah. We are in the process of compiling the dossier for Europe. Once it's filed we will share the update with investors.
Thank you, sir. And just one final one. On Odomzo, if you could share what would be Odomzo share in the basal cell carcinoma market between. So among the BRAF inhibitors.
It's not a BRAF inhibitor. No, it's a hedgehog inhibitor.
Sorry, Hedgehog inhibitor. I'm sorry.
I think it all depends on different geographies. Rick can update on the U.S. market share but in Europe I think it's in excess of 60% market share.
It depends on the customer. In dermatologists we have over a 50% s hare in the United States.
And in the overall market, including the oncologist.
The oncologists are slightly less. I don't have the exact figure for the overall market at this time.
Would dermatologists be the primary prescriber here?
It's both.
Okay, thank you.
Thank you. Next question is from [Harith Ahmed from Wendish Park]. Please go ahead.
Good evening. Thanks for the opportunity. On semaglutide where we have a filing in Canada as per Health Canada disclosures, based on your previous experience with filings in that market, what are the timelines that we can look at for approval of this product? And on semaglutide again in India where the market formation is expected in March 2026, do we plan to have our product ready with an approval by the market formation time?
India, I will ask Kirti.
Yeah, India, I think what we had told you in the last call also, India will be ready for the launch in the first wave when the LOE happens or the patent expires.
Yeah. For Canada.
Yeah for Canada. I don't believe we share that information.
Yeah, yeah. One is that. I think it's still not very clear.
Right. How Canada has been?
Okay. In the ROE segment we've seen very strong growth this quarter. Constant currency terms around 17%-18%. In the last quarter we had alluded to some one-time sales. Has that continued into the second quarter?
Before we answer the drivers for t his one, there is no one-off i n this quarter, sales for ROE. Basically, the growth has been led by both generics as well as innovative medicine. There is no one.
Okay. A couple of months back there was a n announcement by the U.S. president on 100% tariffs on patented drug imports into the U.S., you know, there's no final policy that's been released yet. Is this a risk for our immigration products given that we are manufacturing these products outside the U.S. and at the same time we are manufacturing these in geographies where the U.S. already has a trade deal and these trade deals cover pharma as well? How should we look at this particular risk?
Look, as you say, there's a lot of uncertainty at this point. I mean we don't have any additional tariffs that we're paying today. The original announcement has been put on pause and we're still awaiting the outcome of the Section 232 investigation.
Okay, I'll get back to the queue. Thanks for taking the questions.
Thank you. Participants who wish to ask questions, please press star and one to join the question queue. The next question is from [Bharat from Equitas]. Please go ahead. [Bharat from Equitas], you may go ahead with a question.
Yeah, hello.
Yes, we can hear you.
Yeah, hi. Just wanted to understand that there is some investment into subsidiaries which is showing up in the cash flows amounting to almost INR 3,400 crore. Can you explain what is it all about?
This is mainly Checkpoint acquisition, right.
Because this amounts to almost like INR 390 million. Whereas we have paid almost like more than INR 500 million for Checkpoint. It was five months like that. There was big difference?
No, the Checkpoint consideration is not INR 500 million, it's less, it's already disclosed, was yeah, INR 355 million +.
Surely that's helpful. Thanks a lot.
Thank you. Next question is from Shyam Srinivasan from Goldman Sachs. Please go ahead.
Thank you for taking a question. Just the first one again on the consolidated cash flow statement, just the net cash generated year over year has declined despite similar profits. I can see it as working capital, but if you could explain why are lower cash generators, please.
There is some amount of increase in the working capital which we believe will get normalized in this quarter. As I was also mentioning in the initial commentary, there have been settlements that have happened towards GX MDL plus our brand acquisitions that have happened which is the reason why the cash flow overall has come down compared to the last from the 1st of April 2025.
By the end of the fiscal we expect this to be the generation to be in line at least with the growth here in PBT. Let's assume I missed.
Yeah, I think the cash generation to clarify has been good. Working capital changes happen during the quarter and it has happened during this quarter. Other than that there have been two other items. One is a business acquisition, the other one is a settlement. They should get normalized.
Helpful. Just on the opening comments now I think called out that the U.S. business formulation we have now innovated higher than generics. Obviously you do not call it out but of a $500 million U.S. formulation. Sorry, zoom, $250 million-$260 million is now innovative. That is 70%-80% of global innovative business. Just maybe the question is the other way around. What is the prognosis now for the generic business? Do you foresee that this kind of stipulum continues? That it still makes sense for us to be. It is still significant. Your thoughts on how we should look at the U.S. generations going forward?
Our strategy is to grow both our innovative medicines business as well as our generics business.
Got it. Helpful. Last question, just in light of the tariffs and U.S. based on localized manufacturing in the U.S., what are your thoughts? Is there any move for us to move supply chains back into the U.S.? I know policy is still uncertain, but just your thoughts. We have enough cash. What about looking at U.S. manufacturing assets?
Yes, we already have a manufacturing footprint in the U.S. We are constantly assessing that manufacturing footprint and we are open to considering moves to the U.S. in due time.
Thank you. All the best.
Thank you. Next question is from Kunal Dhamesha from Macquarie.
Please go ahead. Hi, thank you for the opportunity. Again, just on ROE, is there any particular new launch that we have seen or particular geography which has done good, and what would be the constant currency growth?
There is very little forex impact and the growth was led by both the generic and the innovative medicine, particularly by Ilumya and Odomzo.
Sure. Yeah. The second question I have is on the India semaglutide market once it is generic with Sun Pharma being with the dosage forms, and slightly longer horizon question is expectation of how the GLP-1 market is expected to grow in the medium term. Any color would be helpful.
Sure. I can tell you broadly the GLP market is very exciting and it will continue to grow, but very difficult to give any specific numbers and what it will be, it will grow in the future. What we can say, we want to participate in the market whenever the first opportunity is available.
Will we be there in both the dosage forms, injectable as well as oral?
I don't want to disclose that much is what, but we will remain competitive. If others launch, we will also launch along with them. That's what we are saying.
Sure sir. Thank you and all the best.
Thank you. Next question is from Damayanti Kerai from HSBC. Please go ahead.
Hi, good evening and thank you for the opportunity. My first question is on your $100 million spend for supporting the two launches in this fiscal. If you can explain how cost will build up, say, majority of hiring for salespeople etc will be done in this year itself. Going forward in 2027, what kind of cost you assume to continue, some color on that will be helpful?
Yes, we have already obviously we've launched Leqselvi so that sales force is in place and we do now have the sales force in place for Unloxcyt. We will start to obviously see those expenses. Some of these expenses will continue to occur in 2027 and beyond as we continue to support and grow these two very important products.
Is it reasonable to assume that majority of the fixed cost will be covered within this $100 million budget which you have put aside and then going ahead it will be more variable cost in line with how products gain market share? Will that be logical assumption to take?
I think so. What I would say is that the sales force, obviously that cost will continue, our marketing expenses will continue, the patient support programs will continue, some of the upfront marketing costs will not. Those are more one-time costs, but we'll continue to have the carrying cost of people, as well as our marketing and patient support programs.
Okay, that's helpful. My second question is a clarification on prep limit opportunity. Should we assume September was the last quarter when you had some meaningful sales coming from that product and going ahead? There will be virtually no sales or how should we look at that?
We'll have a small amount of sales for the rest of the fiscal year.
Okay, but majority is done in first half, right?
Correct.
Yeah. Okay, thank you.
Thank you. Next question is from Vishal Manchanda from Systematix. Please go ahead.
Thanks again. On a clarification on [Fibromin], is the phase III and phase II data on soft tissue sarcoma and glioblastoma, is that yet to come out or it's already there?
Yeah, I think both the data are y et to come out. This is also something which will be disclosed by Philogen, who is managing the studies.
Any timelines, like, would this be announced this fiscal year or it will take longer?
I mean, I don't want to announce on their behalf, but I, I'm not aware that there is any delay in the recruitment or conduct of the study.
Okay. Okay. Second, on the GLP-1 compound, GL0034, we have been kind of pushing this like a bit, and considering the competitive landscape, we are probably pushing it later. I think we are hurrying to develop this. Is there a reason to this or.
I think we are quite excited with the early data that we are getting with patients both for MASH as well as for diabetes. We would be presenting this data shortly. The phase II study also, I think we disclosed that should be in the press release we've given, that should start shortly. Global phase II.
Okay. Are we doing this through the recombinant route or the synthetic route?
As on today, I think the initial, all the studies have been done with synthetic, but at some point of time, we might even consider switching over to recombinant.
Okay, thank you very much.
Thank you.
Thank you. Next question is from Neha Manpuria from Bank of America. Please go ahead.
Yeah, thanks for taking the follow up. Quickly on Cequa, I know that Restasis has already had enough generic players, but, you know, there is anticipation that you could see some more competition. Does that impact our ability to grow Cequa at all? You know, if you do see additional competition in resources, you know, what do you think would be the impact on Cequa given how well you have been doing in that product?
We continue to see good growth for Cequa even as new competitors have come to the market. We believe it has a good value proposition for patients and we put in the right programs to support patients as well. Even as new competitors have entered, we have continued to grow and would expect to continue to do so.
A new competition coming into rescission does not impact pricing at all for [Fiqva]. Would that be a fair assumption?
Can you re-ask the question, please?
What you're saying is that generics for Restasis, that affects your growth of Cequa?
Not really, no. I think the, you know, what currently is in place for Restasis, it will just be eroded by further generics. As you know, they've been able to hold on to quite a bit of share, but the generics will largely compete with Restasis and won't have a meaningful impact on the other brands within the category.
Understood. Second question, I know there's a lot of uncertainty on the tariff situation, but I think there was another new investigation under the Section 201 that was, you know, mentioned recently. Does that in any way impact Ilumya? Even though we don't sell Ilumya in your office, it's through the partner. Do you think that could be under consideration as a part of this investigation? Any views you have around that?
I don't think we have any views at this time. I think as we shared before, the tariff situation as you know is very fluid and uncertain. It's hard for us to predict what the impact will be on either our generics or innovative medicines portfolio at this t ime.
Thanks so much.
Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Surya Narayan Patra from Phillipcapital India. Please go ahead.
Yeah, thanks for the opportunity sir. My first question is on the specialty business in the non-U.S. See in fact what we are observing that the ROE and emerging market growth looks really strong in the recent quarters. Is it mainly driven by the fundamental growth triggers that we are witnessing in those markets or is it also a role played by the specialty business in the non-U.S.?
Both actually. I mean I would say you know. Both of them are factors in how. The growth plays out.
Okay, can you elaborate a bit on your specialty in the non-U.S. market business? Although it has already been indicated that brands of U.S. are likely to see newer markets and hence growth, any incremental initiative or thought process about expansion or extension of these brands, if you can.
What I said is like Ilumya, we are launched in 35 countries and some of the countries the launch has happened over a period of last one year. This launch will also get picked up and we see there will be good commercial traction. X U.S. I believe that Ilumya will be a strong franchise for us t o continue to grow.
Okay. Okay. Second question is about the semaglutide entry in Canada, although we have filed for that. How, whether we will be there in the first round of commercialization or how later that we would be even if our filing is relatively recent. Any sense about your timeline about the commercialization of the product in Canada?
Yeah, we really don't have any further comments on that at this time.
Sure. My next point is about the tariff one, so whether we have any negotiated price the way innovators are offering to Trump for their Medicaid program. For our innovative brands, whether we have any negotiated price with the TrumpRx.
We do not. As you probably are aware, we were not one of the 17 companies that received letters from the Trump administration.
Okay, so then this tariff concern is kind of overdone now considering the kind of arrangement what innovators are trying to have with TrumpRx.
We don't know is the honest answer. I think it's unclear what will happen with the tariffs after the investigation. What we know now is that there's a pause. We believe that generics are already excluded. We believe that will continue to be the case, and it's unclear at this point what the impact will be on brands. Certainly we'll be prepared to have discussions when the time comes.
Awesome. Just one vocabulary question.
Can you get back in the queue please?
Y eah, sure. Thank you.
Thank you. Next question is from Alankar Garude from Kotak Institutional Equities. Please go ahead.
Hi, good evening everyone and thank you for the opportunity. First question on Leqselvi. Even though the penetration of targeted treatments for alopecia areata is quite low in the U.S., you've seen some stagnation in prescriptions for one of the other two molecules for this indication in particular. From a market standpoint, is there any aspect that could hinder growth for targeted treatments like Leqselvi?
We expect the market to continue to grow. You're probably commenting one of the competitors has stopped promotion. As well as you know, we've launched, there's been another competitor that have launched that are having an impact on that product's growth. We believe the market will continue to grow. We see that. We see new physicians that are starting to provide JAKs, are starting to prescribe JAK inhibitors, and over time we would expect that confidence to grow, the number of prescribers to grow, and more patients to be treated.
Understood. The second one is more of a clarification. I missed your response on the U.S. manufacturing presence. You spoke about already having a presence. You also spoke about open to c onsidering a few further manufacturing presence in the U.S. Did I hear it correctly?
That is correct.
Open for all options.
Understood. That's it from my side. Thank you.
Thank you.
Thank you. Next question is from Shashank Krishna kumar from Emkay Global. Please go ahead.
Hi. Thanks for taking my question. Just one question that I had on biosims. I know that we have been always steadfastly focused on scaling up a specialty portfolio in the U.S., but given the FDA's recent guidance, any rethink in terms of a U.S.-Europe biosimilar strategy given that a lot of our peers have been incrementally allocating more capital and R&D investments to biosims. Any rethink there in terms of our strategy for the U.S.?
I t hink we are studying the and possibly waiting for the clear guidance to come before we take a decision because clearly this would reduce potential investment but there will also be impact in terms of future competition. Also there is no complete clarity on substitution. All of that will help us finally take a decision.
Got it. Thank you. That's it from myself.
Thank you. Next question is from Anubhav Sahu from MC Research. Please go ahead.
Hello. Yeah, thanks for the opportunity. My first question is on the FEMA opportunity. Basically want to understand how calendar year 2026 will look at as far as this opportunity is concerned. Are we basically targeting Canada and India as the two geographies for the generic launch and at the same time I mean just trying to understand what capacity we are looking at for ourselves for the GLP-1 drugs. I mean and how much we plan to do it in house.
Sure. I think Canada, there are two questions already been asked. We are not giving any clarification on Canada. Coming to India, as I said earlier, we will launch once there is a LOE. Regarding capacity and where we manufacture, we are not disclosed.
Okay. Okay. And for our innovative molecule Ularitide, I mean could you mention which key indication w e are looking at? I mean, understand obesity is anti diabetes, one of them, but are there other indications also which we are looking at?
Yeah, yeah. I think the phase 2 that we are disclosed is a type 2 diabetes study.
Okay, thank you.
Thank you.
Thank you. Next question is from [Rashmi] from Dollar Capital. Please go ahead.
Yeah, thanks for the opportunity. Just one question. We have seen a spike in interest cost this quarter and if I see the balance sheet short term borrowings have also gone up. Is it because of the acquisition or you know it would be reduced i n the future or anything? If you can comment on it.
Yeah, you're right. This is a short term borrowing that we have taken for the acquisition. Since it is also short term in nature, it will get evened out in the coming quarters.
Okay. The amount will be more or less similar to, you know, last year level only. I mean, you will bring it down to that level.
It should get reduced over a period in time.
Okay. All right. Thank you so much.
Thank you. Next question is from Surya Narayan Patra from Phillipcapital. Please go ahead.
Yeah, thanks for the opportunity. One clarification about the tax rate. Quarter looks obviously higher with 27% plus kind of tax rate. Also, there is a kind of adjustment, kind of a one-time adjustment relating to the merger. If that is to be factored, then the tax rate will look even higher, more than 30%. First of all, what is that INR 140 crore time adjustment? Whether it is into the threat already and that is to be separated considering it is one-off, if you can give some clarity about that one. What is the ETR that you are expecting for the full year?
Yeah, our ETR has gone up to 24.5% and we expect it to be hovering around 25%. This is what we've been guiding. We used to get some benefits on account of carry forward tax losses as well as the benefits of having our facilities in Assam and Sikkim. Those are getting over and therefore the tax rate will get normalized.
Okay. Yeah. Thank you. Just one more point about the GLP-1 opportunity. How do we position ourselves in terms of the, let's say, whether our focus would be value-oriented to enter into the domestic market or it would be pen-oriented that we have followed.
Those are. I mean we have to remain competitive and we need to have a product can compete with the best product. Even the semaglutide which Kirti is talking about will be a pen product. So that's not an issue.
Thank you.
Thank you.
Thank you very much. That was the last question. I would now like to hand the conference over to Dr. Abhishek Sharma for closing comments.
Yeah, thank you. Thanks, everyone, for joining in. If you have any questions which remain unanswered today, you can always reach out to the investor relations team. Good evening. Good night to all of you. Thank you.
Thank you very much on behalf of Sun Pharma. That concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.