Ladies and gentlemen, good day and welcome to the Q4 FY 'twenty one Earnings Conference Call of Sun Pharmaceutical Industries Limited. As a reminder, all participants 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. Anush Desai, Head of Investor Relations team.
Thank you and over to you sir.
Thank you. Good evening and a warm welcome to our Q4 FY 'twenty one earnings call. I am Nimesh from the Sun Pharma Investor Relations team. We hope you received the Q4 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 Sangri, Managing Director Mr. S. S. Muralidharan, CFO Mr.
Abhay Gandhi, CEO of North America and Mr. J. C. Ganorkar, CEO of India Business. Today, the team will discuss performance highlights, update on strategies and respond to any questions that you may have.
As is usual, for the ease of discussion, we will look at the consolidated financials. Just as a reminder, the call is being recorded and the replay will be available for the next few Call transcript will also be put up on the website shortly. The discussion today might include certain forward looking statements and this must be viewed in conjunction
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 Mr. Sangli. Thank you, Nimesh. Welcome and thank you for joining us for this earnings call after the announcement of Financial results for the Q4 and full year of FY 'twenty one.
I hope you and your family are safe and healthy. Let me discuss some of the key highlights. Consolidated sales for the quarter were at 84,340,000,000 recording a growth of about 4.4% Year on year and a decline of 4% quarter on quarter. Most of our businesses have done well over Q4 last year with India Emerging Market and rest of the world businesses as the key growth drivers. We continue to focus on growth, Operational Efficiencies and Business Continuity.
For the full year FY 'twenty one, Sales were
3331,392,000,000,
recording a growth of about 2.5%. All of you will remember that last year sales included a one time special business in the U. S, which is not reflected this year. All our businesses have recorded growth for the full year Despite the challenges related to global COVID-nineteen pandemic, the major impact of the pandemic was felt in the first half of the year as many countries imposed their lockdown to counter the Spread of COVID-nineteen. Second half witnessed a gradual recovery as most countries gradually lifted the lockdown restrictions in a phased manner.
For Sun Pharma, the sales in the second half were higher by 8% compared to the first half. EBITDA was up by almost 13% And adjusted net profit was up by approximately 17%. Let me now update you on our Global Specialty business. For 4th quarter, Our global specialty revenue was approximately US139 million dollars across all markets. Specialty R and D accounted for approximately 23% of our total R and D spend for the quarter.
For the full year FY 2021, Global ILUMIA sales were at US143 $1,000,000 up by about 51% over last year. We've recorded a good growth Despite the closure of doctors' clinics in the U. S. In the first half of the year, but supported by gradual recovery in the second half. Abhay will give you more details on the Specialty Business Letter.
I will now hand over the call to Murali for a discussion of the Q4 financial performance.
Thank you, Mr. Shanghvi. Good evening, everyone, and welcome to all of you. Our Q4 financials are already with you. As usual, we will look at the key consolidated financials.
Q4 sales RMB 84,314 million up by 4.4% over Q4 last year. Material cost as a percentage of sales was 26.6% lower than Q4 last year due to product mix and other efficiencies. Other expenditure was at 30.2% of sales Lower than Q4 last year, mainly due to lower selling and promotional expenses in U. S. As indicated in our past earnings call, these expenses will see an increasing trend in future Once the market situation reaches full globalization, SOAREX loss for the quarter was RMB107,800,000 compared to a loss of RMB1420,700,000 for Q4 last year.
As a result of the above, EBITDA for Q4 was at INR 19,568,000,000 up by 55.8% year on year with resulting EBITDA margin at 23.2% compared to 15.5% for Q4 last year. Let me now briefly discuss The exceptional items for Q4, Taro has made US80 $1,000,000 additional provision related to its ongoing multi jurisdiction civil antitrust matters. Further in Q4, The Court of Justice to the European Union issued the final judgment and upheld the European Commission's decision Dated June 19, 2013, that a settlement agreement between the Runbaxy UK Limited and Runbaxy Laboratories Limited The Lumbak relating to citalopram was anti competitive. Lumbakci had made a provisional payment The tune of 10,300,000 on 20 September, 2013. Since there are no further rights of appeal, This amount of this RMB 895,600,000 has been debited to the consolidated profit and loss account in Q4.
There is no cash outflow related to this as the amount was already paid. Exceptional tax for the quarter is on account of recognition of Deferred tax assets amounting to INR112.3 million arising out of the Caro settlement. Excluding the impact of exceptional items and deferred tax, the adjusted net profit for the quarter was at RMB13,430,700,000 up 103% for adjusted net profit of Q4 last year. Reported net profit for Q4 was at INR8,941,500,000 up 124% Year on year, while reported EPS for the quarter was INR3.73. Let me now discuss The key moments versus Q3 FY 'twenty one.
Our consolidated sales were lower by 4% quarter on quarter at 84,314,000,000, material cost and staff cost at 26.6% 19.9% of sales respectively are flat over Q3 FY 2021. Other expenses at 30.2% of sales are higher than Q3, mainly due to increase in SG and A across markets. We had a ForEx loss of about RMB107,800,000 for Q4 at Against ForEx gain of about RMB RMB716,300,000 in Q3. As a result of the above, EBITDA for Q4 At rupees, RMB19,568,000 was lower by 16.8% compared to Q3. EBITDA margin for Q4 was at 23.2% compared to 26.8% for Q3.
Adjusted net profit for Q4 stands at INR 13,430,000,000 was lower than the net profit of Q3 by about 27.5%. Now we will discuss the full year performance. The full year FY 2021 sales were at 333,92,000,000 a growth of 2.5% over FY 2020. Despite the nearly 10% sales recorded in Q1 due to the global pandemic, we have been able to recover sales growth in subsequent quarters and have achieved an overall positive growth for the full year. Also as indicated in the past, the full year of last year included Contribution from a non recurring special business in the U.
S. And hence the year on year sales numbers are not strictly comparable. Excluding this one time sales contribution during the last year, the year on year sales growth would have been higher. Material cost as a percentage of sales was 26.2%, which was lower than the same period last year mainly due to product mix and efficiency initiatives. Staff cost of 20.7 percent of sales were higher than last year mainly due to annual merit increase, Addition of field force in India impact from other regions and include some currency impact.
Other expenses were at 28.6% of sales, Lower than the same period last year, mainly driven by reduced marketing, selling and distribution and traveling expenses Across markets, as a result of the above, the EBITDA for the full year was at INR 81,324 1,000,000, The growth of 25.5% over the same period last year was resulting EBITDA margins of 24.5% versus 20% of last year. Excluding the exceptional items for both FY 'twenty one and FY 'twenty And the non recurring tax credit for FY 'twenty one, the adjusted net profit for FY 'twenty one was at INR 59,317 800,000 up 47.4 percent year on year with resulting net profit margin at 17.9%. Reported net profit for FY 2021 was at INR29,38,200,000 with reported EPS at INR12.1. The company has repaid debt of about US580 million dollars in FY 2021, the benefit of which is visible Reduction in finance cost, as of 31st March 21, the ex Taro net debt stands approximately 179,000,000. Let me now briefly discuss Taro's performance.
Taro posted Q4 FY 'twenty one sales of 148,000,000 and adjusted net profit of US31 million dollars On a year on year basis, Sales for Q4 FY 2021 were lower by 15.3% while the adjusted net profit was lower by 42.6%. For the full year FY 'twenty one, sales were at US549 $1,000,000 and the adjusted net profit was at US141 million dollars I will now hand over to Mr. Kriti Gunokar, who will share the performance of our India business.
Thank you, Murali. Let me take you through the performance of our India business. For Q4, 4, sales of branded formulation in India were INR 26,709 million, recording a growth of 12.9% Over Q4 last year, India business accounted for about 32% of consolidated sales for Q4. For Q4, while the chronic segment continued to show steady growth, the subchronic segment witnessed a recovery. Tattoo segment is still facing some challenges due to lower incidence of infection and less patient flow to the doctor's clinic.
For most part of Q4, we saw a normalizing trend and pharmaceutical companies had started spending on traveling, branding and promotion. Travel costs for MRs increased in Q4. However, there is some uncertainty now given the significant increases on account of 2nd wave and the lockdown in many parts of countries. For Q4, we launched 31 new products in the Indian market. Let me now discuss our response to the COVID-nineteen pandemic.
We will get to fight the pandemic. The steps that we took include Ensuring continuous supply of medicine to the patients, supply of multiple therapeutics used in the treatment of COVID-nineteen Like Remdesivir, Fravipiravir, Itolizumab, ivermectin, methylprednisolone. We have also ramped up production of Liposomal amphotericin B, which is used in the treatment of black fungus post COVID complication observed in patients And Faram was the 1st company to develop generic liposomal products in India. We have donated equipment since and many other items Like PP kits, masks, sanitizer, growth, etcetera. At the same time, we have entered into 2 different licensing agreements, one with Eli Lilly for paracetamid and another with MSD for a drug called polonupiravir to help alleviate the burden of COVID-nineteen in India.
Sun Pharma is the largest pharmaceutical company in India, holds approximately 8.2% market share in the domestic market as per March 2021 AIOcd, Ivette's math report. For Q4, our market share was at 8.3% As for AIO CDX, we also continue to remain the partner of choice for in license products You've worked on a strong number one position in many therapy areas, including therapies for the treatment of COVID infection, coupled with our large I will now hand over the call to Abhay.
Thank you, Triti. I will briefly discuss the performance highlights of our U. S. Businesses. For Q4, our overall sales in the U.
S. They grew by 1.3% over Q4 last year to US370 million dollars Mainly due to decline in taro sales as the market is not yet fully normalized. U. S. Accounted for about 32% of Our specialty revenues in U.
S. Have grown over Q4 last year, mainly driven by Filumia, Sequa and Absorica AD. For the full year FY 2021, The specialty business has grown over previous years despite the sharp reduction of sales in Q1 on account of the global pandemic. Road drivers include Kalaemia, Sequa, Absorica, LD and Johan Saa. As you may be aware, The generic of Absorica has entered the market in April and simultaneously we have also launched our authorized generic.
Doctors' clinics have been opened during the quarter, although the situation is yet to fully normalize. However, compared to the 1st 9 months of the year, the travel and branding and promotional costs increased in Q4. Let me now update you on our U. S. Generics business.
As you have all seen, the U. S. Generics business continues to be competitive. The Sun Extero Generics business has recorded year on year growth driven by a combination of new launches, better supply chain management and incremental upside from shortages. I will now hand over the call to Mr.
Shambhir. Thank you, Abhay. I will briefly discuss the performance highlights of our other businesses as well as give you an update on our R and D initiatives. Our sales in emerging markets were US192 million dollars for Q4, up by about 2.7% year on year. The underlying growth in constant currency terms was higher at 5.3%.
Emerging markets accounted for about 17% of total sales for Q4. Formulation sales In rest of the world markets, excluding U. S. Emerging markets were RMB163 1,000,000 in Q4, up by about 5.5% over Q4 last year. Rest of the world markets accounted for approximately 14% of consolidated Q4 revenues.
API sales for Q4 were at 4,357,000,000, down by about 9.9% over Q4 last year.
Our R and
D efforts Spends across both specialty and generic businesses and we continue to invest in building the pipeline for various markets including the U. S, emerging markets, for rest of the world markets and for India. Consolidated R and D investment for Q4 That was at INR5571 million, accounting for 6.6 percent of sales. For the full year, R and D investment was RMB2149 1,000,000 accounting for about 6.5% of sales. Our current Generic pipeline for the U.
S. Markets includes 94 ANDAs and 9 ANDAs awaiting approval with the U. S. FDA. In addition, we are evaluating development for some biosimilars, which can be classified amongst the 3rd wave of biosimilars.
The Board has proposed a final dividend of INR2 per share For the year FY 2021, in addition to the interim dividend of RMB5.5 per equity share declared on January 29, 2021. And lastly, on the Guidance for FY 2022. Given the uncertainties of the pandemic in the near term, We are refraining from giving a guidance for FY 2022. However, all our businesses are well positioned And our endeavor will be to grow all of these businesses, notwithstanding the near term uncertainties related to COVID-nineteen. With this, I would like to leave floor open for questions.
Thank you.
Thank you very much. We will now begin the question and answer session. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the questions queue assembles. Please go ahead.
Thank you for taking my question. On the specialty revenue in the quarter, there seems
I think it's a combination of 3 factors. Like I said on my last call, December, which is the end of the financial year in the U. S. Context, There is a higher buy in. Also in Jan, a lot of insurance sets in or resets rather.
Patients change either the provider or the kind of insurance they have and then the verification process takes a little more time And it goes into Feb before real sales normalize. And the third, I think which is also important for us to remember is that During the period of the pandemic situation in the U. S. Was Into what we see today, really new cases over 300,000 almost on every single I am quite sad to say that we are Well poised to deliver on our objectives.
Okay, understood. And I have a question on specialty. If I look at the traction in CEQA, there seems to be some definitely The market share seems to have stabilized over the last few weeks and months. Is there Anything specific that we are seeing there now that U. S.
Is open, are we not seeing enough traction on CECO?
So I think CGuard will continue to grow and my personal sense is that doctors have accepted the product. The team is also now able to make a lot more of face to face calls and participating in live conferences, Which for a new company, I think is important to be able to be seen by your customers. So I think that will help us. So the initial phase for a newer product to be able to do this all in a virtual environment was a challenge. That's gradually growing in the U.
S. So I feel pretty good about it for that.
Okay. So you expect continued momentum on the market share front?
We certainly hope so.
Understood. Thank you, Thomas.
Thank you, Nina.
Thank you. The next question is from the line of Nithya Balasubramanian from Bernstein Research. Please go ahead.
Hi, thank you. So my question is also on the U. S. Portfolio. So the first one is on Taro.
So we have seen that for the last several quarters, It continues to contract both at the top line and the bottom line level. So just want to understand what is your outlook for the business? How do you see the shaping over a, let's to the short term assembly?
So, Uday, in his calls on Taro has actually been speaking to this. The only thing which I will not
I mean, so on Taro, I
will not get into, but I can see that overall this data, metrology portfolio and market, There is definitely less of a patient in growth even up to the end of the year.
Taro, of course, has
a lot of sort of which are either number 1 or number 2 with positive high market share. And therefore, the pressure on CERO to hold on to its market share is higher. So I think it's a combination of all this. But We recognize your point and I think the task for us as a company is to try and find ways to grow the Tata business as well.
So I think all of us are hoping that things will hop back to normal at some point of time. And I think you also commented that clinics have started operating. So if COVID is not a factor anymore. Do you continue to see this as a business will continue to shrink because prices will keep eroding because the commentary we We heard from Taro as well that said the environment is not big. Do you see this resolving at some point of time?
So I will speak to the dermatology segment. I mean even today, if you have 8 different reports and different reports obviously in cold numbers, But I think the maximum number that I see of patients who falls referring to the doctor's clinic in term is around 70%. So that is the addressable market now in terms of the patient visits to doctors in the DUM space. So that's a challenge that Businesses, the agenda, will continue to chase around. We hope going ahead, the situation will improve Because of the higher rate of vaccination in the U.
S. And certainly loosening up of Social distancing norms which are now taking place, but that's ahead of us.
Got it. Thank you. Can we also assume that So I think Levulin was a bit of a drag in FY 'twenty one for you for the same reasons. So now that again Volumes are kicking up and patient referrals are increasing. Is it likely to become a meaningful contributor again?
So I clearly saw a little bit of an uptick in the Q4 as compared to the previous quarters. And going ahead, of course, if the situation harmonizes in terms of elective surgeries And procedures, then I think level N should pick up. But will it happen? I think it's anybody's Yes. I mean, the situation is fluid, not just in the U.
S, but I think globally.
Got it. Thank you so much. I have one last one on biosimilars. It was briefly mentioned in the opening remarks. If you can give some color on what you meant by 3rd wave.
Are you looking at it more as a portfolio which will support your specialty portfolio or is this a standalone business that you're trying to develop?
I think we are looking at products which have significant future patent expiry dates, So that we can be amongst the first approvals. That's the focus and priority. And that's not the only. There are multiple priorities and also finding a way by which we can Leverage our presence in market so that we can successfully build Biosimilars portfolio.
Understood. Can we take that to mean it's beyond 2028, 2030 timeframe, that's the kind of launch date you're looking at?
That's correct. Thank you so much.
Thank you. The next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead.
Yes. Thanks for the opportunity. Just wanted to understand the scale up in R and D from here, given that we have started additional trials. How do we think the R and D and other expenses going forward for the year 202223? So they will gradually go up.
2 things will happen. 1 is total R and D expenses will go up And within that, the percentage of the money spent on innovative R and D also is likely to go up. So I think we've not because since we're not giving any specific guidance, but generally we've Try to keep our R and D spend between or let's say 8% to 9% of our turnover. This year because of the significant disruption in the clinical studies, The clinical trial spend this year was much more subdued than what we would have liked it to be. Some color on other expenses in terms of the scale up is largely done under specialty or when we see the impact of Lockdown and pandemic going down, it will again come up?
So general guidance is that What you see as a significant reduction in the marketing spend in all markets is likely to go up. We will try and see that we don't go back to the previous percentage spend. But in some markets, That may not be possible. For the U. S, maybe I'll break at this point.
Okay. Thank you. And second question On Adzaurica, so how do you see in terms of,
as you said, April, we have started to see competition. I mean, is it since it's a single player entry, have you seen a bigger impact or it's a very marginal impact? So we don't have clarity because this was launched only in Towards the end of April, May has not closed for me, so difficult to access impact. Fingers crossed and watchful of what is likely to happen. However, having said that, we also launched our own authorized generic And we have locked up a few customers whom we had targeted for our share of the market.
Okay, perfect. I said, after we just did a comment on guidance that we are well positioned to grow across Business segment, so we do that for Chaldea as well. That's it. Yes. Abhay, would you like to respond?
No, I'm not clear what the question was at the end. Sorry, despite the competition in Absorica And EV coming in, which I assume would be India based business, U. S.-based business. The question was, since we made a comment on guidance well positioned to grow across I lost you again. Sorry.
I lost you again. So question is on the growth guidance well positioned to grow across business segments on the backdrop of You know the Adzorica generic competition coming in. Right. So I mean if you're talking about if I understand you correctly, I think that will the Pharmaceutical business grow despite the competition we had, I am sorry, is that the question? Yes, sir.
Yes, I think we will be that's the idea, that's the plan and that's how we are approaching the whole issue. Absorica is one of the products that we had in the There are avenues and opportunities for us to find ways to grow in other products. And of course, As an organization, you also have to be always looking at another BD opportunity. So that we will continuously evaluate and keep Any good opportunity that comes our way. Right, sir.
Okay. Thank you and all the best. Thank you.
Thank you. The next question is from the line of Sameet Vaishwala from Morgan Stanley. Please go ahead.
Thank you very much and greetings everyone. So first question is on ILUMIA. Can you share Some color on the repeat prescribers and repeat patients in this? How is the underlying dynamics? It's a great question, Sameer, to be honest, but I really do not have that kind of granular Details, because it is not as simple to get that data.
And even if we get, it's quite expensive. So in the recent past, internally, we have tried to do our own kind of modeling and made assumptions and trying to come to a Certain picture. Even now, to be honest, Sameer, it's quite sketchy as far as I'm concerned. And a lot of exemptions going So for me to give you an answer would never really be correct. So I'm not trying to sidestep your question, Sameer, but I really do not have.
I wish I had, that would have made my life much easier, but I don't. That's a fact. No worries on that, sir. So what will get you to next $100,000,000 Increment to $100,000,000 on this product in the U. S, I'm thinking that is it the mining of the current prescriber or do you think you So we
need to go out and get more and more doctors in the fold.
As far as I'm concerned, it will be a combination of Three things. And I think one of the most important things is not mining of customers, but mining of data that we have on the product And be able to continuously communicating something new to the customers, which keeps the interest alive As far as they are concerned in our conversations with them. So I think that's the first and most important thing as far as I'm concerned. The second is continuous involvement of key opinion leaders to give us podium time and Speak favorably on the products. And third, of course, is a combination of both mining of existing customers as well as expanding the prescriber base.
So I think it's All of these put together and therefore I think execution by the team on all these fronts becomes so much important. Okay, great. Thank you so much. With your permission, one last question from my side. And just can you just update us on Halol, Any tentative timelines over there?
And how should we think about new launches until HALO opens up? So, I think as we have shared with you in the past, I think we are waiting for the agency to We've requested for an inspection. Now I think it's up to them to run and inspect the facility. And hopefully, this time, we should be able to clear it successfully. That's the focus.
I think we are, as I said in the beginning, But we expect all our businesses to do well and grow. So we are also expecting the Generic business in the U. S. Also to grow and that's based on the visibility that we have with Approvals that we can expect. So in case if when HILOL gets approved during the year, Then and if we get new approvals that will potentially add to our plan for growth.
Okay, great. Very clear, sir. Thank you. Thank you.
Thank you. The next question is from the line of Ramayanti Kirai from HSBC Securities and Capital Markets. Please go ahead.
Hi, thank you for the opportunity. My question is on Illumina trial for another indication psoriatic arthritis. So we understand COVID has disrupted the progress, but can you provide how where we are in that indication studies? When we are expecting to complete the Phase 3 N2 filing?
So I think we got affected at 2 levels. 1 is because the patients would fall in the clinics, which We had already started as a clinical trial site had come down. So Their ability to recruit patients had come down. And the second was out the CRO's ability to Start multiple new sites. And that also got affected.
Hopefully, We have seen some pickup in starting new sites in last few weeks and hopefully That should help us during the year. But in this uncertainty related to the recruitment, difficult to give you any kind of Specific timeline for the completion of the enrollment, because I think you have to first enroll the subjects and then the subjects we have to monitor for a year.
Okay, got it. My second question is on specialty spend. So some clarification there. So in earlier communication, you have indicated that we have broadly optimized DTC and other marketing costs for kiwi specialty brands. And you also commented with The U.
S. Market opening up, we expect these costs to go up. So how should we look at the specialty Thanks over next few quarters.
My answer would be, I think, So, Gunitai said a while ago. If I look at current trends, I think with more and more doctors allowing In clinic visits and some of these virtual conferences going back to being face to face and live, Cost will increase. However, we make every attempt to see that we don't go back to the original level. But in a fluid In Fenjermic situation, I think as a company and as a team, we need to be constantly agile and nimble to be able to Make change in decisions very rapidly if we have to.
Okay. Got it, sir. Thank you. Thank you for your answers.
Thank you.
Thank you. The next question is from the line of Surya Patra from Philip Capital. Please go ahead.
Yes. Thanks for the opportunity. So my first question is on the U. S. Is it fair to believe, sir, US portfolio should be seeing a kind of profitable growth In FY 2022, driven by at least 2 factors.
One is that kind of a steady progress what we are witnessing On the specialty front, and the second part could be possibly bottoming out of the operating Underperformance or bottoming out of the Taro's operating performance, what we have already seen in the recent past. Because what you mentioned, of course, it is correct, sir, that the prescription trend seems like almost down 29%, 30% in last entire 1 year period due to COVID in the derma side in the U. S. But It seems that Taro has significantly outperformed that with a practice kind of a prescription trend. So Is my understanding is correct that we could be driven by these 2 large components of the U.
S. Sales, FARO as well as specialty, can we see a kind of profitable progress on the U. S. Business front?
So, I don't stand alone, when you see the results, they are already a profitable business. And as far as Sun is concerned, we haven't given business line wise profitability numbers. So Difficult to answer your question. But broadly, of course, yes, I mean, you are in business at the end of the day to be running a profitable business and that's The objective for any given business, sir?
My point basically was that, obviously, we will see a sequential volume growth The opening of the U. S. Market, but will that be along with the margin expansion in that market? So basically that understanding I wanted to add Michael, one topic of this deal, please.
So I mean, I think my answer remains the same. I mean, that's the objective But you increase your margins as you go along. But specific business wise, we don't give the breakup. So that's the most I can do on this
Okay. Just a kind of additional point on that. See, generally work, it was understood that the specialty spend Was elevated obviously in the initial period of the launches. And having seen kind of your answers, So we possibly have to cut in the DTC kind of activities for alumina, Although there was a kind of additional decrease activity for CEQA, but generally it was understood that the overall specialty spend should see a gradual Correction, from the elevated level of let's say FY 2020. So are we on that front seeing a kind of Declining trend, although we will see some kind of a normalization in the overall SCNA cost front.
I understand. So I have said this in my earlier calls as well that we are now more or less optimized what we need to spend for each product group or a BU. And I think we are comfortable with where we are. And with the expansion of the increase in the top line, therefore, I think margin should definitely Improved.
Okay. Just second question, sir, on this. Dinesh and Sherry, if you can just respond on the COVID side, Do you see COVID this is an kind of opportunity by in any manner for Sun Pharma?
So in the sense that
there is a short term kid, he can respond faster, but There is a short term increase in the business for products which are specifically used in COVID. As shown today, I think we are not in vaccine manufacturing or distribution business and we haven't announced anything as yet. So I think, Kirti, maybe you can respond. Sure.
Yes. So let's see we can see opportunity for us. And as I
said in my opening remarks, Keti, you're not audible to me. Keti, you're not audible. You're breaking. Yes. Yes.
You're breaking.
Yes, you can hear me?
Yes, yes. Okay.
What I was saying is we have launched couple of new products for the treatment of COVID, which includes product like remdesivir, Italizumab and Sravitiravir. And last year, by the time we launched the product in the first wave, almost By the month of November December, number of cases were reduced. And then in the second wave from March April, the number of cases has been increased. So we will get some short term benefit in this next financial year. But at the same time, We have good number of COVID portfolio products with us, which have been used off labels And they are doing well in coming quarters.
Also we have yes, There are products which will give us some benefit, but it could be a short term and we don't know how long this second wave will last.
Okay. Yes. Thank you. Thanks a lot.
Thank you. The next question is from the line of to Sharmanudhanay from Motorola Lothoy Financial Services. Please go ahead.
Yes. Thanks for the opportunity. Just would like to understand on the biosimilar front, what kind of investment are we envisaging over next 3 to 4 years on the product development side and subsequently on the manufacturing front?
I don't think we have Crystallize this in specifics to be able to respond. But
As I see our overall
R and D spend, for us to be able to take care of Biosimilars, both in R and D as well as if I see our annual CapEx for Upgraduation, new capacities and burn fields to create additional capacity for biosimilars. So, it shouldn't be a big drain neither on our cash flow or on our profitability.
Okay, sir. So previously, we were restraining from getting into biosimilars because of the regulatory Lack of clarity on the regulatory front, now that is there, but at the same time we have seen experiences of other companies Like biosimilars also having considerable price erosion despite in addition to spending significant amount on the development as well as on the manufacturing front. So still do you see this as a good opportunity over next 4 to 5 years?
Yes, I think so, because depending again on the product and when you enter the markets, I am expecting that over Time with familiarity and confidence that doctors will develop on the biosimilars. We will see increasing Percentage of patients being treated with prior cylinders.
Okay. So that is, thanks a lot. Thanks, Eric.
Thank you. The next question is from the line of Sayantan Bharmik from Pine Ridge Investments. Please go ahead.
Thank you for the opportunity. Just wanted to understand, we recently And this company called ATCD Technologies along with a few other companies, so if you can just give us a thought process on this investment And what do we intend to do with this? That's the first question. And secondly, if you could just elaborate our efforts on ESG and what we have Dan, how the company has supported the community during the 2nd wave? Sure.
So, Keti, maybe you
could just
Regarding this development, some of the large pharma companies have come together to form ABCD Technologies, which will further invest in digitalization to make the distribution of pharma product more efficient. That is the objective. Over a period of time, it will result in Better inventory management and ensuring that the pharma products are available to patients at the right time and at the right place.
Will this be some sort of
competitive competitor positioning Compared to some of the online pharmacies, is that something is that the intent or is it just purely a back end optimization?
It's more to make the supply chain more efficient.
Okay.
On the ESG related front, We are working on both the sustainability and the ESG, which of course covers the energy, the water and other related Aspects of the GRE standards and we will be coming out with the first edition of our Initiatives and the report will be issued along with our annual report in this financial year, both on the sustainability, the detailed The report will be done by us.
Okay. Thank you.
Thank you. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.
Yes. Thank you for taking my question. Just the first one on the India business. If you can just tell us about the field force as it stands today in terms of EBITDA number And so that's the productivity that you are looking at, I think you put it out in your presentation. So just wanted an update On this Pharmaceuticals
21, In terms of you are saying number of reinforced or
Yes, yes, number of reinforced, maybe the PCCN that they are currently today and where do you think this can actually trend going ahead?
Sure. As we discussed in our last call, during the Last Jan to March, we have expanded our field force and we have added about 1,000 People in the field, which includes medical reps and managers. So now we are in excess of about 10,000 people, which includes Everyone in the field, right, from medical rep to all the managers put together. So since we have added the suite show last year and then we entered into a pandemic on quarter 1 and quarter 2, the performance in that 1st 2 quarter was not up to the mark and the field force was also new. They were to visit to the doctors That could not happen.
But from quarter 3 quarter 4, this new field force could visit the doctors and develop certain relationships. So generally, we don't view our PMPM, but what I can say, our PMPM due to expansion was almost flat or slightly lower than what it was in the last financial year. But more important is now the field force is well settled. So in the coming financial year 2021, 2022, We think that we will get the benefit of our expansion and our reach to the doctors and we'll also see the improvement in PMPM and productivity.
Got it. Very helpful. 2nd question is on capital allocation priorities. This year, it looks like we have used some of it towards Reducing our debt levels. Right, if I picked up the number right, ex Taro basis like RMB170 1,000,000 or so.
So how should we look at Fiscal 'twenty two in terms of capital allocation? And also a related question on what is the CapEx for fiscal 'twenty one that was reported and what are we looking at for Thank you. Sure. Murali, would you respond?
So in terms of the capital allocation, as we have maintained in our previous earnings call, Our endeavor will be also to become definitely a gross level ex Taro. So the 179,000,000 what we talked about, Just handling the net debt, overall gross level what we are pursuing will be our endeavor is to by March 22, we will continue to wind down the debt. At the same time, with the cash, what we have, the leverage we have, definitely for the growth of the business, We will be open to investments if any opportunities are attractive for growth top in business. Also CapEx,
he wants information on CapEx.
CapEx for the FY 2022?
Yes.
Average in terms of each year overall CapEx, we do about $200,000,000,000 plus across various geographies. So, but this year, we have worked out almost a bit of number, it will not be much, very high.
Got it. Thank you and all the best. Thank you.
Thank you. The next question is from the line of Krishnendu Saha from Quantum AMC. Please go ahead.
Yes. Hi. Thanks for taking my question. I just had a couple of questions. We talked about Tika, we talked about OTTA LD, but we don't talk about the Sprinkle family, the Marketing is behind them.
What is your thought there? How do you see that different? When we talk, we don't talk anything about the currency launch, They are previously mentioned in our report, wondering how to think about that, please?
It's a niche segment. The idea of having this Look at a very specific niche area of and especially within back patients who have dysphasia. So None of the products individually will be very, very big products. Our range will be a decent meaningful range when everything comes to market. And these are coming in tranches and phases, so not everything is at one time.
So it's a small part of our business. But it's an interesting area To be in because you are genuinely doing something which is needed by the patients in the long term care centers And those who cannot swallow their medication. So it's I personally like that segment, not for the dollar value, but because What it does for elderly patients?
But Okay. And one more question. We have this GLP, we are being charged on that. In the scheme of the specialty production, How does this So, how do you see a result going ahead?
So, clearly in India and emerging market, we have Essence in diabetology and cardiology, so this is interesting. For large markets like U. S, Europe as well as Other regulated markets, we will look at options for licensing it to somebody Because it's a product that will require a large field force in excess of 1,000 people and that's not the plan for us too. So our objective would be to develop it at up to a level and then look for a licensing partner. I can only say that the early readout that we are getting in the clinical trial in terms of Everything in terms of weight loss, in terms of triglyceride reduction as well as in terms of Potential aside from Hb1c, but it's very limited because these are all healthy subjects.
So we are quite excited with the profile that the product has demonstrated.
And just one last question. The reason I asked is because we launched Limon Japan. The ROW dollars from revenue has been going down. Has that been fixed meaningfully or is it because of other reasons that the ROW So I'll take some more time to write than the last time you did speak about it will take a couple of more months to a year to get the whole hospital business into the time done. Thank you.
That's my last question.
We're talking of sales going down in Japan.
No. The reason I asked Zapan is because the RWA market, the dollar revenue is going down from $178,000,000 to $173,000,000 $153,000,000 instead of us launching In the product in the tank. So, can you call it take up more time or has the product now picked up in the tank? I'm just trying to understand couple of the order of the numbers, If I'm picking up correctly.
No, I think introduction of a product like Eleumia in Japan will not be a huge impact in the first initial period of launch. So you should not look at the Q1 impact of the product in terms of sales. We believe that over time it will become an important and meaningful part of our business in Japan And that's the focus. The overall rest of the world market, Japan is an important component, but there are many other geographies which are also important in terms of size.
Thank you. The next question is from the line of Nitin Agarwal from DAN Capital. Please go ahead.
Hi, sir. Thanks for taking the question. Sir, on the U. S. Business, 2 parts.
1 is on the generic side. If you take a 2 to 3 year view, broadly speaking, Is a large chunk of our growth in this business largely continuing upon the approval that we get from Halun or there are other drivers in the business possible?
Sorry, I was on mute. I think the question is more to do with new product introduction, right?
Yes. Abhana, I'm just trying to understand in terms of When you look at the generic business, what is going to be the driver? Is it going to be different launches? Is it largely going to be the Halol portfolio?
I think
new product launches Clearly,
it's important to be able to continue to find ways to grow the business. And if you see, Despite Halol not having been inspected, in the financial year, we were able to launch around 18 new products And also a few relaunches. So there are different avenues by which we will be able to bring out new products from Different facilities. It's not only hollow dependent.
Got it. And secondly, on the U. S. Specialty business, again, we take To this broad brush, 2 to 3 year view, is it fair to say that the current portfolio of products that we have Will largely continue to drive growth for us or there are possibilities of product portfolio additions meaningfully contributing over this time frame?
First of all, I think the current portfolio that we have, we can still optimize and do Better. And there is clearly headroom for us to grow with the current portfolio. And in addition to that, as I said earlier in response to one of your questions,
I mean, it is
Any company which wants to grow in the long term, will companies look at opportunities to develop its business and look at any In organic way of growing the business. So it's a combination of both. But clearly, the products that we had in the basket today have a lot more headroom to continue to grow.
And lastly, Shani, you mentioned about the vaccine. We don't do anything in the vaccines currently. But from a capability perspective, do we have capabilities to do drug substance manufacturing or to do a full finish? I Given the very central manufacturing network, are there capabilities inherent in our network to work on this?
I think our preliminary assessment indicates that Vaccines will require a dedicated manufacturing facility and it cannot be produced in a Facility where you are making multiple other products. In addition to the specific Different design for those facilities depending on the type of vaccine that you are producing. So that's broadly our understanding. So we currently don't have any facility which we are looking at for It gives you back.
Okay. Thank you, Induspa. Yes.
Thank you.
Thank you. The next question is from the line of Kunal Vandervia from Edelwein. Please go ahead.
Good evening and thanks for taking my question.
A point is that on
CECOIA, there could be a likelihood that there might be a recession generated maybe later this calendar year. So I'm wondering if you could share your thoughts on how this potentially could affect Icoa outbreak? So we still have no visibility On when the generic? Okay. So it could have been launched over a year and a half, 2 years ago also, But we haven't seen.
So to put a timeline to it and therefore look at pre and pre situation is Thank you, because we don't know when it's going to get launched. All right. Okay, fair enough. So my second question is on EXORICA. So with this product now going generic and as we say, with size erosion becoming cheaper, Do you see that the axotica market including generics could show higher volumes maybe at the cost of some brands of tera or myelin?
Sorry, I didn't repeat you. So, Bryan, what did
you say? So, I was saying, with Absorica Going generic now. Why is it becoming cheaper? Do you see this market expanding
at the cost of Seva and Mylan's Danzig and Einstein Personally, I don't believe so because Isoceptic In moderate to CVS, for us, generally, we use other options before they go into The direction of Ebsarica, I don't think the market really will expand. That's my view, though. So Abhay, what I understand he is asking is that whether the overall share of Absorica or Absorica generic in the ISO 29 market group?
My answer was in the same
line, Felipe. If I look at TRx, Forget the value of the TRx, whether it's brand use or generic use, will the number of TRx for isotretinoin Increased because there are generic segment level. I don't really believe so. Okay, okay, sir. That's helpful.
Thank you very much.
Thank you. Ladies and gentlemen, due to time constraints that was the last question, I now hand the conference over to Mr. Nimish Desai for closing comments.
Yes. Thank you everybody Thank you.
Thank you. On behalf of Sun Pharmaceutical Industries Limited, that concludes the conference call. Thank you for joining us and you may now disconnect your lines.