Ladies and gentlemen, good day and welcome to the Sun Pharma's Q2 FY 2027 financial results conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Dr. Abhishek Sharma, Vice President and Head of Investor Relations and Strategic Projects. Thank you, and over to you, sir.
Thank you. Good evening and a warm welcome to our second quarter FY 2027 earnings call. I am Abhishek from the Sun Pharma Investor Relations team. We hope you have received the Q2 financials, the press release, and the earnings presentation 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, 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, and respond to any questions that you may have. We will refer to the consolidated financials during management comments. The call recording and call transcript will also be put on our website shortly.
The Organon acquisition is subject to satisfaction of the remaining customary closing conditions and is on track to close by early 2027. Organon has already announced their corresponding quarter results. Since Organon remains a separate public listed company, we will not be taking any questions today regarding Organon's business performance. 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 all for joining us for the earnings call after the announcement of the financial results for the second quarter FY 2027. The financials are already with you. Let me take you through the key consolidated financials. During the second quarter of FY 2027, sales were at INR 161,000 million, registering a growth of 11.8% vis-à-vis Q2 FY 2026. Gross margin was at 80.8% for the quarter, higher than the same period last year, largely on account of a better product mix and favorable currency tailwinds. EBITDA for the quarter was INR 47,439 million, an increase of 4.8% over Q2 last year. EBITDA margins came in at 29.3%. While EBITDA margins are lower year-on-year, please note that Q2 FY 2026 had some benefit from lenalidomide sales. Adjusted for lenalidomide, EBITDA growth has outpaced revenue growth.
Forex gain for the quarter was INR 785 million, which is lower than Q2 of last year. Reported net profit after tax for Q2 FY 2027 was INR 19,885 million, while adjusted net profit for the quarter was INR 31,620 million. EPS for the quarter was INR 8.3 per share. Exceptional items for the second quarter includes provision towards a litigation settlement and on account of Organon-related acquisition costs. Effective tax rate for the quarter was 28.3% versus 24.7% in Q2 FY 2026. Balance sheet continues to be strong with a net cash of $3.3 billion at the consolidated level. Now, let me take you through the half-yearly performance. For the first half, sales were at INR 312,836 million, registering a growth of 11% over the first half last year. Gross margin was at 80.6% for the first half.
EBITDA for the first half was INR 91,615 million, registering a growth of 3.8% over the first half of last year. EBITDA margin percentage was at 29.1%. Adjusted net profit for H1 was INR 62,515 million. The successful subscription of Sun Pharma's debut NCD issue underscores the strength of its credit profile and the broad investor confidence in the company's financial position. I will now hand it over to Kirti, who will share the performance of our global innovative medicines business and India business.
Thank you, Jayashree. I shall first provide you an update on global innovative medicine. In Q2 FY 2027, our innovative medicine sales were up 6.9% to reach $ 356 million. The business accounted for 21.1% of Sun sales for the quarter. Performance in innovative medicine continues to be driven by growth across U.S. and ex-US market, across products notably ILUMYA, XUS, CEQUA, ODOMZO. We are pleased to note that ILUMYA is now approved in the U.S. for the treatment of adults with active psoriatic arthritis. Introducing a healthcare provider-administered IL-23 inhibitor broadens our treatment portfolio and creates new opportunities to strengthen patient support and healthcare team engagement. We are planning for a soft launch in November, with a full launch in the following months. ILUMYA continues to do well across international market.
As a highlight, recently, Japanese Society for Psoriasis Research announced that ILUMYA to be number two across all biologics in the new patient across 73 main hospital in Japan, making a significant improvement over last year. During the quarter, partnership with LIB Therapeutics strengthened our innovative medicine portfolio and expanded our presence in the rapidly growing PCSK9 market outside U.S. and China. Lerodalcibep adds to a differentiated once-monthly therapy that can help address significant unmet needs in cholesterol management. Now, coming to India business, the sales of India formulations were INR 55,523 million for the quarter, recording a growth of 17.3%. India sales accounted for 34.5% of total consolidated sales for the quarter. Sun Pharma is ranked number one and holds 8.6% market share in over INR 2,618 billion Indian pharmaceutical market as per PharmaTrac MAT September 2026. Corresponding market share for the previous period was 8.3%.
For the quarter ending September 26, we grew higher than IPM, and we had done well across all major represented therapy areas. Sun Pharma's 51.1% PharmaTrac September 26 growth was driven primarily by strong volume expansions. Sun's volume growth was 6.7% for the quarter, compares favorably to IPM growth of 1.8%. As per SMSRC March-June 26 report, we continue to be number one company based on prescription volumes. Sun Pharma is also ranked number one by prescription with 12 different doctor categories. For Q2 FY 2027, the company launched 15 new products in India.
Regarding Organon, integration planning for the Organon acquisition continues to progress across functions and work stream in line with plan. Regulatory approvals have now been secured in majority of the regions, with the remaining jurisdiction tracking on schedule. We are now on track to close the transaction as per earlier communicated timelines, that is Q4 of FY 2027.
I will now hand over call to Richard for update on the U.S. market.
Thank you, Kirti. Let me share performance highlights for our U.S. business. Overall, the U.S. business reported sales of $155 million for the quarter, declining by 8.2%. This decline is largely due to lenalidomide erosion. On a quarter-over-quarter basis, the U.S. business has grown by 6.5%. The U.S. accounted for 27% of consolidated sales for the quarter, and we launched five products, generic products in the U.S. during this quarter. This quarter, we saw a slowdown in ILUMYA business in the U.S., driven by a mix of factors. This is a key reason behind slower growth in global innovative medicines. We've put actions in place to improve performance and anticipate further growth from these, as well as the new psoriatic arthritis indication that Kirti mentioned earlier. The rest of our innovative medicines portfolio in the U.S. continues to show strong growth.
I also want to provide some recent updates on UNLOXCYT. UNLOXCYT elevation to a category 2A preferred recommendation in the NCCN guidelines reinforces its growing clinical relevance in advanced CSCC. Subsequently, we presented long-term follow-up data on UNLOXCYT at a leading scientific conference in Europe. Long-term data showed complete responses in 34% of locally advanced and 17%-21% of metastatic patients on UNLOXCYT. Additionally, the product profile continues to excel in tolerability, with a very low level of high-grade immune-related adverse events. These data reinforce the potential of UNLOXCYT in advanced cutaneous squamous cell carcinoma. During the quarter, Sun Pharma also announced agreements with the U.S. government aimed at prioritizing access to affordable medicines for American patients. According to the White House, 25 other pharma companies have signed similar agreements. As part of the agreement, Sun Pharma will extend most favored nation pricing to state Medicaid programs.
This agreement delays Section 232 tariffs on innovative products for over two years and exempts Sun Pharma from the GLOBE and GUARD Medicare models. I will now hand over the call to Kirti for updates on the rest of our business.
Thank you, Richard. I will provide an update on the performance highlight of our other businesses. Our formulation revenue in emerging market were $350 million, up by 7.6% over Q2 last year. The underlying growth in a constant currency term was 7.4%. Emerging market accounted for 20.7% of total consolidated revenue for Q2. While branded generics has continued to grow, innovative medicine has been an important driver for growth in emerging market, with ILUMYA doing well across several markets such as Romania and Brazil. Our partner also launched semaglutide generics in Brazil during the quarter. Formulations revenues in rest of the world for the quarter were $241 million, higher than Q2 last year. Rest of the world markets accounted for approximately 14.3% of consolidated revenue. I will now hand over call to Mr. Dilip Shanghvi for updates on R&D.
Thank you, Kirti. Let me discuss various R&D initiatives and how we are doing. We continue to invest in building an R&D pipeline for both the global generics and innovative medicine businesses. Consolidated investments towards R&D for Q2 2027 stands at INR 7,784 million or 4.8% of sales. Innovative R&D accounted for 32.4% of our total R&D spend. These numbers are tracking lower than our intended R&D spend, but we expect the second half of the year to catch up some of this R&D spend.
That's the end of our prepared remarks. Operator, if you can request for Q&A lineup.
Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and then one on their touch-tone phone. If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Your first question comes from the line of Kunal Dhamesha with Macquarie Capital. Please go ahead.
Hi, good evening, and thank you for taking my question. First one on the slowdown in growth for ILUMYA in U.S. Richard, can you highlight what is driving that and what kind of actions we have taken, and what's the timeline in terms of the recovery in the growth?
Yeah, I don't want to get into all the details, but we have identified a few key things that have led to the slowdown. We put key interventions in place already, and as I mentioned, those interventions, coupled with the launch in psoriatic arthritis, we believe will return ILUMYA to more typical growth patterns.
Over any time period you would like to suggest? Like couple of quarters, one quarter?
Over the next few quarters.
Sure. On the psoriatic arthritis front, I feel that maybe the prescription would be generated by a different specialty of doctors. That kind of investment that needs to be done in terms of sales force or access personnel, is it already there in quarter two?
It is. It is already built into our existing sales force model. Some of the prescriptions will be generated by dermatologists, but using the existing sales force, we will increase our reach and also begin calling on rheumatologists.
Sure. Do you foresee any one-off kind of launch expense for the psoriatic arthritis indication?
We have expenses, but they have been built into our overall budget. They are not extra.
Sure. Second one on the guidance for FY 2027. Since the first half, we have been clocking at around double-digit top-line growth. Also, there are FY 2027 guidance of high single digit. At this point in time, is there an update that you want to share? R&D, I assume that there will be a ramp-up in second half. Just looking at the specialty R&D, seems like as a percentage of specialty revenue, it has declined to single digits in this quarter. Is this the ongoing run rate, or there is a phasing out and then there will be some phasing in of clinical trials? How should we think about it?
I think you are asking two questions. I will respond to the R&D. I think the R&D investment is a function of the start and our ability to recruit subjects in the clinical trial. We expect that to pick up because we are putting in place appropriate infrastructure in place for that. Mr. Kirti Ganorkar will respond to the other question.
Yeah, regarding the guidance, I think we will stick to what guidance we had given at the beginning of the year.
Sure, sir. I have more question in general today. Thank you.
Sure, sir. Thank you.
Thank you. Your next question comes from the line of Neha Manpuria with Bank of America. Please go ahead.
Yeah, thanks for taking my question. Richard, on the specialties for the U.S., just wanted to understand since it's been over a year since you've launched LEQSELVI and close to nine months since you've launched Nidlegy, when should we start seeing meaningful contributions from these two launches? For the psoriatic arthritis indication, is it fair to assume that the contribution from that should be much faster than, let's say, some of these new launches because we already have ILUMYA already present in the market for psoriasis, so that should help bring in prescriptions earlier? Would that be a fair assumption?
Maybe let me start with LEQSELVI and Enjaymo, and then I will move into ILUMYA. I think we feel confident about both of the launches. If we start with Enjaymo, we had some very encouraging news, I think, as you heard me share. We recently had an update to the NCCN guidelines, and really what that means now is Enjaymo is a preferred agent, and that will really help us continue to accelerate access for patients and guide clinician confidence. That is quite important. The other thing we shared is that we released long-term data with Enjaymo. Not only was the efficacy impressive, but the tolerability, which has been one of the key strengths of Enjaymo, has been durable over time. We saw a deepening and a durability of response and the tolerability as well.
I had a chance to meet with a number of key opinion leaders at ESMO, and they were very impressed with this new data. We believe both of those two things will be a catalyst for Enjaymo and will continue to accelerate growth. Already, we see month-over-month improvements in share. I would say the same for LEQSELVI. We also recently announced new data for LEQSELVI. Right now, what we hear from physicians is the speed that we have talked about LEQSELVI is playing out in their patients. What is nice about the new data is it also shows that in addition to the speed, we see a durability of the efficacy that we saw in our initial published clinical results. As it relates to psoriatic arthritis, it is a new indication for us. The benefits of the product remain the same.
ILUMYA, in treating psoriatic arthritis, will be the only IL-23 that is physician-administered, making it the perfect choice for patients that require extra care and benefit from HCP administration. It is also the only HCP-administered product for psoriatic arthritis that rheumatologists can use to treat patients quarterly. The other HCP-administered products are used on a much more frequent basis, making them more inconvenient for patients. We are increasing, as I mentioned, to cover rheumatologists, and those customers are familiar with products like ILUMYA. We call them buy-and-bill products in the U.S., and we would expect that they would begin to use the product quickly. As was mentioned earlier, we are training actually our sales force today on the updated package insert, and we will be launching over the coming months.
That is very helpful. Second, Dilip sir, on the R&D, is it fair to assume we are beating the 6%-7% guidance for the full year for R&D spend when we mention the second half catch-up?
What I said is that we expect the R&D spend to significantly ramp up in the subsequent quarter. Our expectation is that as that ramps up, we should be able to meet the overall guidance that we've shared with people.
Understood. That is very helpful. Thank you so much.
Thank you. Your next question comes from the line of Damayanti Kerai with HSBC. Please go ahead.
Yeah. Hi. Good evening, and thank you for the opportunity. My question is regarding the new licensed PCSK9 inhibitor, which you will be launching in ex-US and ex-China market. Just wanted to understand two points here. First, you have moved into cardiology now. In the past, obviously, we saw you have been focused on oncodermatology and eye care space. Going ahead, whether you will be expanding into more therapies beyond what you have right now in your portfolio? For the marketing part, what kind of spend we should assume for this particular product? Do you have to build a separate sales and marketing team for this product?
Your question is quite broad. I would say there are a couple of things. Like, you know our emerging market business, which contributes almost 20% to total business. There are many markets where we have capabilities and field force to promote product to cardiologists, and that is what we will leverage. There are some markets where we don't have capabilities, where we need to go and add those, and that is what we'll do in next couple of months. Regarding expenses, we cannot give exact detail on how much we'll spend on launching PCSK9, but it will be part of our overall guidance and the budget, what we are tracking right now.
Sure. It will be like across the world launch except these two markets, right? You will try to launch in as many market as possible. Okay. That's helpful. My second-
Ex-U.S., ex-China, and we have approval in Europe. Yeah. Yeah.
Okay. My second question is on semaglutide, where you mentioned your partner has launched in Brazil. Can you update us regarding how you are looking to file this product in other markets? Which will be the key market where you intend to enter in next, say, one to two years' time frame?
I think in last call also, we guided all of you that we do not inform where we have filed and will get approval for semaglutide. But at the same time, you know we are present in India, we have approval in South Africa and Brazil, and all the market, we have commercialized the product.
Sure. Thank you for your response. I will get back in the queue.
Thank you. The next question comes from the line of Bino Pathiparampil with Elara Capital. Please go ahead.
Hi. Thank you. It is a bit of a repeat, but I am just trying to get a little more color on the slowdown in ILUMYA. Is it something to do with the market getting saturated, or is it something related to the sales strategy or some sales execution? For example, salespeople leaving, et cetera. Is it an execution problem, or is it something to do with the market getting saturated and the strategy of selling?
No, it's really a variety of things. I think there's a bit of market, but frankly, part of it is execution as well, and that's the intervention we put in place.
Okay. Thank you.
I should just add, though, we continue to see plenty of opportunity for ILUMYA. It's quite unique in terms of being able to treat patients that require extra care, and there are a large number of those patients in the U.S. on Medicare, which is where we do quite well with the product.
Thank you. Thank you very much.
Thank you. The next question comes from the line of Krish Mehta with Enam Holdings. Please go ahead.
Thank you for taking my question. I just had a question on ILUMYA's psoriatic arthritis indication. If you could provide some color on the size of opportunity in terms of the market potential, as well as what it could add to our current ILUMYA franchise, as well as the specialty franchise, it would be helpful, directionally, to understand how much this adds to us.
Yeah, we don't provide product-specific guidance. What I can share is about a third of patients that have psoriasis also have comorbid psoriatic arthritis.
Okay, that's helpful. Thank you.
Thank you. Your next question comes from the line of Shashank Krishnakumar with Emkay Global. Please go ahead.
Hi. Thanks for taking my question. My first one is again on ILUMYA. Just trying to understand if we look beyond STELARA and probably at other biologics which we might also include in the competition set for ILUMYA, those might also see a loss of exclusivity probably sometime over the next four or five years. Now, two factors, one is our channel dominance in Part B, and then the second is the fact that probably the treatment regimen itself has moved towards IL-23. Now, do you see these two factors sort of helping us defend our ILUMYA franchise in the medium term, or what is it that you think could change in terms of the market dynamics when you sort of take a four or five-year view here?
There certainly are changes in the marketplace that we've seen and will continue to see. I think you mentioned the most important two points, though. The IL-23 class remains the dominant class and the preferred class amongst clinicians in treating psoriasis patients. ILUMYA is quite unique in that it's HCP-administered and that it really supports patients that require that extra care, and that is very much a unique attribute to ILUMYA that no other product has.
Got it. Just a related question here. What is the loss of exclusivity for ILUMYA itself that we should be factoring in? Should it be 2030, or would secondary protection sort of extend beyond that?
It's not in the foreseeable future, Shashank.
Okay, got it. Just one last one, if I could squeeze in. It seems like this quarter, the U.S. generic business, probably on a quarter-on-quarter basis, has gone up. Was there any short-term opportunity that we benefited from, or was it business as usual in U.S.?
Yeah, you may have missed it, but I did share in my opening that we launched five new products this quarter, which led to the growth.
Okay, got it. That's helpful. Thank you.
Thank you.
Thank you. Your next question comes from the line of Tushar Manudhane with Motilal Oswal Financial Services. Please go ahead.
Firstly, on the ROW emerging market, where we have been doing quarter-on-quarter on a constant basis, growth has been mid-single digit. When do we see the pickup, and what will drive this pickup in the business? Maybe if you could share ROW aspect separately.
I think your voice was breaking, Tushar. You were asking for EM and ROW growth.
Am I audible?
Yeah.
I was referring to the mid-single-digit growth in a constant currency basis in emerging markets and ROW markets. If you could share what is happening there and what would drive growth going forward.
As far as EM is concerned, I think there has been a pickup on a quarter-on-quarter basis. This year, this quarter, we did a constant currency growth of 7.6%, and this was again driven by product launches across several markets. I think your question would be more directed towards ROW, where the growth is lower.
Even in EM, this is the kind of sustainable growth to think about?
No, we don't guide to any particular growth number. I think if you look at our historical trend in terms of constant currency, which we report every quarter, broadly, this is the range, plus or minus.
Got it. On ROW side? Hello?
We are not guiding to any specific guidance.
No, no. It's covered in the overall.
Overall revenue growth guidance. Yeah.
Got it. Secondly, on R&D, while the medicine pipeline, which is giving the flexibility, there is one program which we will have start of phase III. Rest of it are in a stage where either regulatory filing is to happen or let's say the top-line data has to come out. Just trying to understand where, on the monetary side, where the R&D step-up would happen.
You are asking for a level of detailing which generally not something that we share, because we guide for an overall R&D budget. We do not guide for where we are going to on which product, which market.
Fair enough.
Thank you.
Thank you. Thanks.
Thank you. Your next follow-up question comes on the line of Kunal Dhamesha with Macquarie Capital. Please go ahead.
Hi, thank you for the opportunity again. Just one on the India business. This 17% growth, and in the past couple of quarters also we've seen strong growth. Is it broad-based in terms of therapy areas? If you could also share some details on volume growth versus the new product introduction versus pricing.
Sure. What you said is right. The India business growth is across therapy areas. All the therapy areas we are present, like there are 12 major therapeutic areas where we are present. We are doing well both in terms of performance on prescription as well as value. In terms of growth, if you have seen AWACS number, the IPM is growing by 1.6% in terms of volume, and we are growing by 6%. What I am trying to say, our growth is quite robust and we are growing by volume and new products. Almost like 50%-60% of our growth comes from volume plus new product, and rest is coming from pricing. It is quite a healthy growth in my opinion.
Sure. The other one for Richard, in terms of the drivers of specialty or innovative medicine, we generally highlight the top three molecules, which is basically driving the growth, right, in our commentary. Do you think that ONIVYDE and LEQSELVI are close to that top three set now?
I do not think we typically provide rankings of our top products. I think we can say that, we mentioned the slowdown in ILUVIEN. The rest of our portfolio is growing, and many products are contributing to that growth, including our new launches.
Sure. Thank you, and all the best.
But at the same time, Kunal, they are still smaller in.
Yeah.
In terms of absolute contribution, products like ODOMZO and CEQUA-
Love it.
WINLEVI would have a far bigger contribution.
Okay. So, it is basically probably the absolute addition versus the percentage growth, right? More or less?
It is a mix of both, yes.
Okay. Sure. Thank you.
Thank you. Your next question comes from the line of Vishal Manchanda with Systematix. Please go ahead.
Hi, good evening, and thanks for the opportunity. With respect to the Organon deal, can you share what should be our effective cost of borrowing and what percentage of the acquisition cost would be attributable to goodwill?
We've been working with our bankers and institutions in terms of finalizing the. I think the rate of borrowing should be more or less in line with the current borrowing cost of Organon. As far as your question on goodwill is concerned, I think this will go through the accounting standards and the resultant goodwill on the date of acquisition. I think it's too early for me to comment on it.
Got it. Just one more. There's a media article citing that the Indian drug regulator has asked Sun Pharma to discontinue production of ophthalmic products from its Assam plant. Can you comment whether this is true and whether this would have any material adverse impact on our numbers?
No, miss, I can't comment on what media has reported, but what I can say is that there are 11 ophthalmology products which we have voluntarily recalled. We voluntarily initiated a temporary cessation of our manufacturing activities, and we have kept the Indian regulator informed about it. I think what is most important for us is the product quality and patient safety. We have taken a remedial action so that we can put everything in place shortly.
Got it. Thank you very much.
Thank you. Your next question comes from the line of Niharika Agarwal with Nirmal Bang. Please go ahead.
Thank you for the opportunity. My question was on the antitrust settlement. How much of the historical generic pricing litigation exposure has now been addressed with this settlement?
You could possibly refer to our annual report where we have disclosed most of the particulars regarding the settlement. I think that will give a fair idea.
Okay, thank you. In terms of R&D, we have five novel entities in clinical development, right? How do we evaluate the commercial potential of these, and how do we look at these going forward? If you could give any color on it.
I think that is the uncertainty related to R&D, because there is, let's say, theoretically one potential of a product. How much of market share we can get is linked with what kind of final clinical outcome we will get. While we do the business development plan and investment plan, we presume a certain targeted therapeutic outcome. Sometimes the outcome is better than what we have planned. Sometimes we do not achieve what we were looking for. We have a process by which we decide to invest on a product only if we feel that there will be a decent return on investment after adjusting for risk-adjusted probability of approval. That is the process that we follow. It is difficult to give you, but if you look at many of the products, you see the size of the market.
That can also help you develop a better understanding.
Thank you. Beyond ILUMYA, LEQSELVI, and UNLOXCYT, which products in the pipeline have the potential to materially alter the specialty growth trajectory over the next 2- 3 years?
Kirti spoke about lerodalcibep, PCSK9 inhibitor. I think he.
Yeah, yeah. But that's, yeah, ex-US and ex-China, and that can be the next product, yeah.
Okay, thank you. That is all for me.
Yeah, thank you.
Thank you. Your next question comes from the line of Juhi Kumari with Narnolia Financial Services Limited. Please go ahead.
Yeah. Hi, thanks for the opportunity. I just had one question left. Rest of all my questions have been answered. It is related to Organon acquisition expense, like we have been recording it in the P&L and exceptional expense this time. Do we see any other exceptional expense coming from this acquisition in the coming quarter or not?
The acquisition-related cost will continue until day one, and some of these could be back-ended, right? As we close the transaction in Q4 of FY 2027, we will have a full estimate in terms of the acquisition-related costs.
Okay, so we will be seeing some other expenses also incurring in exceptional in the coming quarter as well?
Yes. That is normal as we go through the transactions.
Okay. Thanks for the answer.
I mean, if you want guidance, then you should look at other companies doing large transactions, because any transaction of this size will always involve one-time costs.
Yeah, correct. Thank you so much.
Thank you. Your next question comes from the line of Tara Ganatra with UTI MF. Please go ahead.
Thank you for taking my question. My question is more on the India business growth. We have seen in the last two years, the volume growth was hardly anything, and we are now seeing a 6% kind of a volume growth. What is driving this volume growth, and what would this number look like excluding semaglutide? What would this volume growth be? Going forward into H2 and FY 2028, do you think this kind of volume growth is sustainable for India business?
Maybe second part of your question I can answer. In any business, there are risks, so we cannot say in next quarter or following next two quarters the same growth will continue or not. It is very difficult to predict. But in terms of our volume growth and new product growth, I can say we cannot pinpoint only one thing why this growth is coming. We are continuously making effort to build brands, do scientific promotion, continuously expand the field force, improve the number of prescribers, and the prescription from the doctors. Finally, it is outcome of all of this effort, including launches of new product ahead of competition and gaining market share. If I put all of these things together, that is what is helping us to grow both in volume and new product, and which is our major growth in last two years.
Sure. Thank you, sir.
Thank you. Your next follow-up question comes from Vishal Manchanda with Systematix. Please go ahead.
Thanks for the follow-up. I have a question on NIDLEGY. I wanted to know the timelines for approval. Second, I also wanted to understand whether this is effective enough. There is another drug called nivolumab, which has also shown data in neoadjuvant melanoma, and that is probably showing better outcomes, but that hasn't been filed so far. I just wanted to understand your views on how this would compete with nivolumab or whether this would also be positioned as an add-on to nivolumab in the same setting, neoadjuvant setting.
What I understand is that the product is filed and we are awaiting approval. I do not have familiarity with the, what you call, nivolumab data. However, both of these drugs work through a very different approach. I expect, say, like my understanding is that there are some subsequent studies where NIDLEGY has been administered or given to patients after checkpoint inhibitor treatment, and it has produced improved clinical outcome. I do not know whether it complements or it competes with checkpoint inhibitor, and ultimately everything will depend on the label that both the products will get. My understanding based on my interaction with the company is that they think that the product has a useful place in the treatment options available to doctors for treating this difficult-to-treat patients.
Got it, sir. Can we say this can also be a large opportunity? Maybe like an UNLOXCYT, while UNLOXCYT has not shaped up yet, but can this be a large opportunity in your pipeline?
It will not be a comparable opportunity because of two reasons. One is that UNLOXCYT for us is a global product. We don't sell it today in other markets, but gradually as we start getting approval, we will start launching in other markets. Whereas Nidlegy, we've licensed only for Europe and few other markets.
Okay. Thank you very much.
Thank you.
Thank you. A reminder to all the participants, if you wish to register for a question, you may press star and then one now. Your next question comes from the line of Surya Patra with PhillipCapital. Please go ahead.
Yeah, thanks for the opportunity, sir. My first question about this, the PCSK9 inhibitor. In the Europe market, since it is already approved, that looks like kind of a near-term opportunity for us. But considering the country-to-country price agreement, reviews, and all that, how quickly this could be a kind of a commercial benefiting kind of opportunity? How long that it will take in Europe to really penetrate and get the commercial benefit out of it?
Yeah, you are aware, once you have approval from EMA on European basis, then you have to go country by country and submit the dossier for pricing and reimbursement. And usually, this process goes from anywhere from six months to 12 months, depending on the market and depending on the dossier kind of queries we can get. So right now, what we said, we are in a pre-launch phase.
Okay.
We'll keep you updated as we move from one market to another market. And once we have commercial launch, we'll also announce it to you.
Okay. And how long it could generally take, sir, for taking it to key emerging market? Couple of years time?
It all depends on when we get approval, no? Our plan is to file in all the markets as soon as we can.
Different countries have different approval timelines. Some of the countries also require local studies.
Sure.
Some of the countries, we can also leverage the approvals in the U.S. and Europe.
Yeah.
This is all combination of too many things.
My second question is about the GLP-1 or the semaglutide. Am I audible?
We can hear you.
About the semaglutide. This year, since it is the first year of commercialization for a key market like India, that would have supported growth and all that. Considering the adherence, the patient adherence about it and all that, is it fair to believe that the product or the segment will see a growth in the subsequent year, second year?
I think, this is first year only. If you see the GLP-1 drugs, how they perform worldwide, they are doing phenomenally well. So in India also, we need to give some time, because you will build a new product over a period of time. Usually our experience is, it takes three, four years for you to build any new product. So GLP-1 will also go through that phase.
Okay. Generally, the penetration levels, even in the advanced market, looks really low. That is why this question also.
I cannot comment specifically on the penetration.
No, but I think you should look at, even if you get few percentage of the total patients it's still going to be a very, very large product.
Mm-hmm. Sure. If I just ask as my extended question on this, sir. See, the market like Brazil and South Africa, whether the price erosion scenario in semaglutide is similar like India?
See, like in Brazil, we have working with a partner on this product, so all the commercial decisions on this are taken by partner. Generally, we would not like to talk about pricing, because it's also proprietary information, and we cannot disclose about this in an investor call, yeah.
Sure. Yeah. Thank you, sir. Wish you all the best.
Yeah, thank you.
Thank you. Your next question comes from the line of Ashutosh Kumar Jha with Balyasny Asset Management. Please go ahead.
Hi. I had a question for the comment made by Jayashree ma'am earlier on the call. Is it fair to understand that the current borrowing cost, I think I am looking at the SEC filing of Organon, the latest debt that they raised was at 7.875%, and then I think you guys also filed a disclosure to the exchange saying that the latest NCDs were raised at 8.2%. Just wanted to understand what is the exact structuring of the debt piece of the transaction that we are thinking of on Organon.
First of all, when I spoke about the cost of debt, it is the weighted average cost of debt of Organon. You would see that some of your bonds were at a much lower rate, which were raised earlier, so one should look at it in totality. Secondly, the NCDs that we issued now is not part of transaction financing. This is part of our normal financing to repay some of our current borrowings. This is a rupee financing, and what we are talking of Organon is mostly USD and Euro. These are not apples to apples to compare. I hope that.
Understood. So when you say current borrowing cost, that is basically on the average cost of debt that we see on Organon, right?
Yeah, you should take the average cost of debt. Weighted average.
Understood.
Thank you. Ladies and gentlemen, as there are no further questions, I now hand the conference back to Dr. Abhishek Sharma for closing comments. Over to you, sir.
Thank you, everyone, for joining us at this late hour. If you have any questions which have remained unanswered today or you have any follow-up questions, you can reach out to the investor relations team. We are here to address your queries. Thank you, and a very good evening.
Thank you.
Thank you.
On behalf of Sun Pharma, that concludes this conference. Thank you, everyone, for joining us, and you may now disconnect your lines. Thank you.
Thank you.