For today's call, we have with us Dr. Sharvil Patel, Managing Director, Mr. Tushar Shroff, Chief Financial Officer, Mr. Arvind Bothra, Head of Investor Relations, and Mr. Alok Garg from the Managing Director's office. To begin with, let me talk about the key developments during the quarter. I am happy to report that we maintained upward momentum during the quarter, with all our businesses delivering strong double-digit growth. A deep and resilient portfolio, coupled with strong execution capabilities, led to robust performance across the markets. With this, first of all, let me walk you through the financial performance for the quarter under review. We registered consolidated revenues of INR 79.1 billion, up 29% on a year-on-year basis. Our operating profitability remained robust, with an EBITDA margin of 24%, despite continued investments towards saroglitazar launch-related activities in the U.S. Adjusted for this investment, our EBITDA margin was higher by 150 basis points.
EBITDA for the quarter stood at INR 18.9 billion, while net profit for the quarter stood at INR 9.3 billion. Our net debt-to-EBITDA ratio stood at 0.62 times as on 30th September 2026. Now, let me take you through the operating highlights for the second quarter of FY 2027 for our key business segments. In the pharmaceutical space in India, our branded formulations business sustained market outperformance with a strong 19% year-on-year growth during the quarter. Growth during H1 FY 2027 stood at 20% year-on-year. The business has, in fact, consistently delivered above-market performance during the last three financial years and has maintained this momentum through the first half of the current fiscal as well. In terms of secondary sales performance, the business grew 20% year-on-year, with volume and new products accounting for around two-thirds of the total growth.
In terms of therapies, the business gained share in cardiology, diabetology, respiratory, dermatology, gastrointestinal, anti-infectives, and in super-specialty areas of oncology and nephrology. Our ranking improved in cardiology, diabetology, gastrointestinal, and anti-infective therapies, while on the super-specialty front, we continued to retain leadership position in the oncology therapy. Contribution of chronic and sub-chronic portfolio has increased consistently over the last several years and stood at 56.9% as per AWACS MAT September 2026, an improvement of 450 basis points over the last four years. International markets formulations business is an established growth engine for the company, consistently delivering strong performance over the last several quarters. Building on this momentum, the business reported revenues of INR 10 billion during the quarter, up 33% year-on-year. Growth was broad-based across markets, supported by strong underlying demand and focused execution.
North America business, comprising of the U.S. and Canada, delivered strong performance during the quarter, with revenues of INR 33.1 billion, up 21% year-on-year and 7% quarter-on-quarter. The growth was driven by sustained volume expansion in the base business, supplemented by continued scale-up of the U.S. specialty business. On the U.S. generics front, we filed four ANDAs, received 12 approvals, and launched five new products during the quarter. Recently, in the month of October 2026, we launched the first generic version of riociguat tablets. Our U.S. specialty business delivered strong sequential growth during the quarter. This was driven by addition of ROLVEDON following the acquisition of Assertio Holdings during the last quarter and sustained traction seen in 505(b)(2) products portfolio. We remain confident to build a robust specialty platform and transition towards a more differentiated innovation-led business model.
Consumer wellness business recorded revenues of INR 11.2 billion, up 76% year-on-year. In this business, on the domestic front, demand trends indicated sustained positive momentum across categories, driven by a steady urban recovery and improving rural offtake. As a result, the business delivered strong performance during the quarter with 29% year-on-year growth. Both skin and hair care and food and nutrition portfolio delivered strong performance with growths of 37% and 25%, respectively. International business, including the Comfort Click portfolio, delivered a like-to-like growth of 12% during the quarter. In the medical devices space, the business registered revenues of INR 2.2 billion during the quarter. We are investing in enhancing our capabilities in focused segments which offer long-term growth potential to create differentiated value.
On the operations front, recently the US FDA inspected our formulations manufacturing facilities at SEZ-2, Ahmedabad and Moraiya, which concluded with one observation and five observations respectively. We are working closely with the regulator to address the observations expeditiously. Post-inspection in Moraiya, we have received an important transdermal patch approval on the 21st of October 2026. First, Dr. Sharvil Patel to take you through the key drivers across businesses as well as our initiatives in our innovation program.
Thank you, Mr. Nayak, and good afternoon, everyone. It is a pleasure to have you all here on the call. I am pleased to note that we sustained our strong growth trajectory during the quarter, delivering impressive double-digit growth as each of our businesses executed exceptionally well. Importantly, share of our branded business has expanded to around 57% of our total revenue in this quarter, which is an increase of 150 basis points versus the last quarter. The strategic decision undertaken over the years and the capabilities built along with the position as well to achieve our medium-term aspirations of branded business to account for 2/3 of our consolidated revenue. As we prepare for the U.S. launch of saroglitazar, we continue to invest strategically in the capabilities and infrastructure required to deliver a seamless, differentiated, and an impactful market entry.
Despite these investments, our operating profitability remained robust, and we are on track to deliver a 24% plus EBITDA margins in line with our FY 2027 expectations. On the pharmaceuticals front, our India branded formulations business delivered a strong 19% growth during the quarter, significantly outpacing the IPM. More importantly, this outperformance is sustained with the business consistently outgrowing the industry and strengthening its market position quarter after quarter. Our strong chronic and super specialty portfolio, coupled with the innovation-led growth and focused execution, continues to drive sustained market share gains. Our international markets formulations business continues to be a powerful growth engine for the company, anchored by our therapy-led approach and strategy in emerging markets and sustained portfolio expansion in Europe. The business is delivering strong broad-based growth and steadily strengthening its presence across the geographies.
Our U.S. business is evolving into a diversified and durable growth engine built on strength of generics franchise and an expanding specialty portfolio. Backed by a broad portfolio, strategic partnerships, a resilient supply chain, and strong execution, we continue to deliver sustained prescription growth, gain market share, and strengthen our market position. We are making significant progress in reshaping our U.S. business beyond generics and towards a higher value specialty and biologics portfolio. Our differentiated 505(b)(2) products, rare disease offerings, and the biologics pipeline are creating powerful new growth vectors. ROLVEDON continues to gain momentum, while the US FDA's acceptance of the BLA for pembrolizumab biosimilar represents a major milestone in our biologics journey. Alongside the upcoming launch of saroglitazar, these catalysts position us for the next phase of growth.
Notably, specialty products accounted for 16% of U.S. revenues during the quarter, up approximately 550 basis points sequentially, underscoring the pace and success of our strategic transformation. In the consumer wellness space, our focus remained on building a future-ready portfolio powered by strong brands, innovation, and customer-centric execution. We are enhancing brand relevance by addressing evolving needs across health and nutrition and personal wellness while driving premiumization and differentiated offerings. Alongside, we continue to strengthen our omni-channel presence and expand international positioning us to deliver sustainable and profitable growth. In the MedTech, we continue to execute our strategy across orthopedics, cardiology, and nephrology through a combination of capability building, portfolio expansion, and strategic partnerships. Our focused approach reflects our commitment to strengthening the foundation of this business while creating avenues for sustained long-term growth. With this, let me share some material developments on our innovation effort during the quarter.
On the NCE front, we presented new analysis for the phase III clinical trial of saroglitazar magnesium in PBC indication at the American College of Gastroenterology, ACG, 2026 annual meeting. The analysis demonstrated consistent biochemical response benefits versus placebo across geographic subgroups, including both the U.S. and non-U.S. patients. The finding built on the clinical profile of saroglitazar in patients with PBC who have inadequate response or intolerance to UDCA. We successfully completed EVIDENCES-X global [phase II-B] trial evaluating saroglitazar magnesium in MASH indication. The study successfully met its primary endpoint, demonstrating resolution of steatohepatitis with no worsening of fibrosis at 52 weeks. We also observed encouraging improvements across several key secondary and exploratory efficacy measures. On the biotech R&D space, we received regulatory approval to initiate phase III clinical trial in India for one of our important monoclonal antibodies.
On the global specialty initiative front, we achieved an important milestone in our biologics journey with the US FDA accepting for review the BLA for KEYTRUDA biosimilar developed by our partner Formycon. This is the first publicly announced KEYTRUDA biosimilar filing accepted for review in the United States. During the quarter, our wholly owned U.S. subsidiary, Sentynl Therapeutics, entered into a licensing agreement with Mereo BioPharma for alvelestat, a late-stage asset being prepared for phase III development in alpha-1 antitrypsin deficiency-associated lung disease, a rare genetic respiratory disorder. alvelestat has the potential to become the first oral treatment for this condition. This transaction further strengthens our rare disease portfolio. Thank you. Now we will start with the Q&A session. Over to the coordinator.
Thank you, sir. We will now open the call for Q&A session. We will wait for a few minutes until the queue assembles. We request participants to restrict to two questions and then return to the queue for more questions. Please raise your hand from the participant tab on the screen to ask questions. The first question is from Kunal Dhamesha.
Hi. Thank you for the opportunity, and congratulations on a good set of momentum in the branded business. Dr. Sharvil Patel, the first question on saroglitazar. We now have also built up some bit of commercial infra. Where do you see that expenses from quarter to over the second half of FY 2027? Do we see meaningful ramp-up there, or is it going to stay there and then probably increase as we launch the product? Also an update on the approval cycle, where we are, what kind of queries we are getting from the agency at this point in time.
Yes, we have been continuing to invest from last quarter to this quarter on the commercialization effort, and we will also see some growth in the next two quarters also for the commercial launch. This is in expectation that our queries have all been answered as they have come through, and we are being able to clear most of the queries that have come from the regulators, and we are seeing potentially a goal date approval for saroglitazar if everything goes right and if there are no further last-minute queries.
Would it be fair to say that these queries would be more related to labeling, et cetera?
Yes.
Okay, sure. Second question on the riociguat launch. How has that launch been faring for us? Would we have gone with a good amount of inventory in the market?
It has been a good launch. There are only two specialty distributors, and both are working with us, so we have gained good share with them. We hope to get a good market share with this.
Sure. Lastly, for the domestic business, we have seen a very strong growth in this quarter. For H2 and probably a comment on the overall IPM as well, how do you see IPM growth faring in the second half or maybe next year, given that IPM growth itself has been strong, and for us, we have been gaining market share? What is the kind of outperformance that can Because I think the delta between our performance and IPM is even bigger this quarter, right? How should we think about the sustainable outperformance? Thank you.
The last two quarters have seen very strong performance versus IPM. I think last, obviously, there was some base issue to the IPM also because of GST and other things. We still believe that the market will grow between 10%-11%, and we will definitely grow at 200-400 basis points consistently more than the IPM from the future point of view. Obviously, currently, our growth trajectory is faster, and I think we will see that momentum continuing.
Sure. Thank you and all the best.
Thank you. The next question is from Neha Manpuria.
Yeah. Hi. Thanks for taking my question. My first question is on SARO. So if I got the numbers right, we are already spending close to about INR 115 crore-INR 120 crore on the SARO commercialization. Sharvilbhai, did you say that this cost would increase for the next two quarters? There is more investment required?
Yes. We are looking for a March launch, and obviously, we would still see hiring of field force and other things continuing, the front-end teams. So we expect our commercial expense to be around $100 million every year.
Okay. This is the number. Okay, understood. This includes pre-launch cost, et cetera, everything included in this $100 million. Would that be a fair assumption?
Yeah, the commercial spend.
Okay, got it. In terms of SARO, I think we had a goal date in November. Is it fair to believe that we would be able to launch this, if not in November, probably before the end of this fiscal year based on the queries that we have received?
We currently are on track with our responses. November is our current goal date, and we are, as I said, our current expectation is to launch in March.
Okay, understood.
Because obviously, you cannot launch in December. It is the year-end. It does not make sense to launch at the end of the year.
Okay. I think for the other product in generics, IBRANCE generic, right? Palbociclib. I think that also we were to determine whether we have pediatric exclusivity or not. So in your assessment, could that be an earlier launch versus the September timeframe, September 2027 timeframe? Is that a possibility?
No. Our estimate is for the September and October launch.
Understood. In which case, sir, how should I think about the US revenue from the 250-odd million dollar sort of number that we have done this quarter going into the second half as well as next year? Obviously, we have Adempas, then SARO will obviously see uptake slowly. Is this a sustainable base? It seems like you have seen very good base business momentum. Just trying to understand how sustainable this base is, and should we expect, is the mirabegron competition impact already factored into this 350 number that we have seen in the quarter?
Yeah, so the mirabegron is factored in already. As I said, we are still guiding for a single-digit growth on constant currency terms on the high base of FY 2026.
For 2028, what would this look like?
For 2028, we have not given guidance right now, but as I said, our pipeline is good. We have palbociclib launch coming and other things, and we are obviously our base business as well as the new product that we are planning to launch will continue. So, I think nearer after the closer to the year end, we will get a better idea to that. But we have a good traction on the portfolio of products that will come through. Also, we have a good upside on transdermal patches and others, which are also significantly helping, which is not a short-term, but a long-term opportunity, so.
Understood. Sorry, one other follow-up. On the gross margin, given we saw an improvement in the U.S., but we do not seem to see that much of an improvement in the gross margins. I understand that obviously there is mirabegron competition, but with the increase, with the ROLVEDON launch and the base business improvement, should not that have reflected in better gross margins in this quarter? Or am I missing something here?
No, see, we have. One is obviously part of it also has wellness in it, and wellness does not have the company gross margins. So when wellness sees such a high growth, obviously, its gross margins are not in the 70s. The second thing is also that we had also very significant gross margin products that came down. So these have compensated for those gross margins that have gone.
Understood. Okay. Thank you so much, sir.
Thank you. The next question is from Bino.
Hi. Good afternoon. A few quick questions. In Q2, have we seen any sort of benefit from the riociguat launch, or would it all be in Q3?
It is an October launch, so Q3.
Okay. This partnered product, CABOMETYX, cabozantinib, it is a late opportunity, I understand, FY 2030, 2031. Originally, we were expected to have sole exclusivity, but we have seen a couple of other approvals of late. Does that still remain one of sole exclusivity opportunity?
There can be other filings, but the whole point on this would be there is a patent litigation going on right now. That is still Once the appeals court decision comes, we can talk more about it later.
Okay. Generally, if there is a sole exclusivity, others don't get final approval, only tentative approval. That's why I asked. Next, in MedTech revenue, I see a quarter-over-quarter sharp dip. Was there any particular reason for that?
It's seasonal, right? Europe, the July, August is a very lean season because of summer holidays.
Got it. And one last question on depreciation and amortization number that has sharply gone up in the quarter. Is that because of Assertio, and would that be similar levels going forward?
Yes. So yes, you are absolutely right. That includes amortization related to Assertio acquisition. We expect this at current level will have that depreciation to continue with a marginal increase because there will be some kind of depreciation on capital work in progress that will likely to get capitalized. So, I think overall, we tend to believe that we will be at the current level run rate up to September 2027 because that also have mirabegron related depreciation on the licensing of that particular deal.
Got it. And the guidance for the full year, 24% plus EBITDA margin, do you maintain that?
Yes. Yes, we maintain that guidance of 24% EBITDA margin for the full year.
Thank you. I will jump back to you.
Thank you. The next question is from Niharika Agarwal.
Thank you for the opportunity. My question was towards the costs. We are seeing an increase in employee costs and other expenses. Just wanted to understand what is exactly driving this increase and how much of it is linked to investments in new businesses versus higher underlying cost base?
On personal expenses on a quarter-on-quarter basis, if you look at it, there is, excluding R&D expenses, there is a marginal de-growth. On year-on-year basis, there is a growth mainly driven by the acquisitions that we have done for the last one year. That is driving the overall HR-related expenditure, excluding R&D-specific expenses. The second is on other expenses. I think if you look at the commercial launch for saroglitazar and R&D expenditure, we see the sequential, there is a marginal de-growth in terms of an overall other expenses. I am talking about excluding R&D spend and ZTI commercial spend that we are incurring. What we are expecting is that, excluding R&D and the saroglitazar commercialization cost on other expenses would be in the range of INR 2,000 crore-INR 2,050 crore, that kind of a spend that we are expecting on other expenses side.
Thank you. For the acquisitions, when can we expect operating leverage to kick in?
I think if you look at our acquisitions, CCL is already going to be accretive very soon. Amplitude, we have said, is a long-term investment which we are building the whole platform on that side. ROLVEDON already are very, from day one, they are profitable.
Okay, thank you. Towards the KEYTRUDA biosimilar, now that it is accepted for U.S. review, what is the expected timeline for launch?
There obviously will be all patent litigation that will go through, so I do not think we can give any update on when the launch will be. All we can say is we are one of the first filers on the product, and we are under review with the US FDA. But the launch will depend on the IP litigation.
If you can share some information on it, how will the economics be split between Zydus and Formycon?
Formycon or [Discom]?
[Your part.]
It is a profit share arrangement.
Okay. Okay. That was all for me. Thank you.
Thank you. The next question is from [Pratik Bhukar]. Hi, [Pratik], are you able to hear us? Hi, [Pratik], are you able to hear us?
Hello?
Yes, [Pratik], please go ahead.
Yeah, okay. Thank you. Thank you for taking my question. Sir, my first question is actually on desidustat and the commercialization progress for that. I mean, what are the key milestones that will trigger meaningful contribution either in terms of a large payout or maybe royalties on desidustat?
So, desidustat is a royalty arrangement. So, once the reimbursement pathway is set up in China, maybe in the next four, five quarters, then we would see the uptake. And it is a royalty, so it is mostly a profit share arrangement.
All right. And sir, on Usnoflast, what would be our commercialization strategy, particularly for ALS? I mean, would we give preference to our own existing U.S. infra, including Sentynl, or would we consider an outside partner for that?
I mean, it's a little too early to talk about it, but we do have plans to generally build our own content specialty business. As we come nearer to our completion of our clinical development, we can talk. But currently, it's a little too early because it's still in early clinic. It's in phase II-B clinical work.
Sir, just one last question, if I can, on the biologics CDMO side. I mean, we had also partnered for a company for biologics, the monoclonal antibodies. What is the progress that we are seeing there on the biologics CDMO?
That company has got funded and started a phase III clinical trial. We are helping them with the clinical supplies for the product till, and once the phase III, if it's good data and it gets approved, then obviously we have the commercial rights to manufacture for them.
Sir, any details if you could give about what would be the target disease or any details on exactly what drug that is?
It is a drug that has been tested in cancer, colorectal cancer, and one more cancer. That is a trial that is going on in the U.S.
Thank you, sir. That will be all. Thank you.
Thank you. Participants who wish to ask questions can raise their hand from the participant tab on the screen. The next question is from [Shreya Chatterjee].
Hello?
Yes.
Thank you for taking my question. Could you give some color as to the nature of observations that you have got for your Moraiya, and whether those include data integrity or cross-contamination of products, if anything related to that? How much of your current revenue and what will be the future product filings, if you could also give some color to that from your Moraiya facility?
Revenue-wise, Moraiya is around less than 30% of the U.S. revenue, and we do not have any filings from Moraiya. In fact, recently we had one transdermal approval post our audit, which has come through, and most of the CRLs that we are having, we do not see any facility concern. We have responded to the FDA with the observation.
Got it. Regarding KEYTRUDA and regarding your MedTech business, how big do you see this KEYTRUDA opportunity, as well as how big do you see this MedTech business going forward? What would be the margins, EBITDA margins, if you could give some numbers for MedTech business? That would be really helpful.
Today, the existing business, which is mostly the Amplitude Surgical's business, is around 20% EBITDA margins, which is a platform build. In the next five years, we hope to build both the scale, the orthopedic side, but also build on the nephrology and the cardiovascular side. That is going to be a build-out that we will do over the next five years. Specifically on KEYTRUDA, it is a very large biologics, $30+ billion of revenue. Depending on the launch and number of competitors, it will be a meaningful launch.
Still [$1+ billion ] kind of a revenue opportunity?
As I said, it all depend on the time of launch and number of competitors. I don't think we can give you that estimate today.
How many launches, like ANDAs and 505(b)(2) or FTFs, we are looking in the next two to three quarters? If you could just give some numbers to that.
About 15-20 in the next two to three quarters.
These are all ANDAs, or these also include 505(b)(2)s and FTFs?
Both.
Both. Okay. Thank you.
Thank you. The next question is from Nitin Agarwal.
Thanks for taking my question. Sharvil, you mentioned about the transdermal patches, the hormonal patches opportunity, the way it is playing out. If you can give us some sense on what kind of opportunity do you see here?
I mean, right now we are at capacity, so we are selling as much as we can make. The demand in the market is 50% more than what is currently served, so there is a significant unmet demand. Obviously, no companies have capacities to cater to it immediately, and building new capacity also takes time in transdermals. So, currently, its market is obviously having more demand than actual availability. So, that is where we are, and that is also in our businesses also meaningfully scaled up in this, and we are doing well. And with additional capacities potentially coming in a year, we could see that even scale up further.
On that, when do you see this additional capacities coming through for us? I mean, if you could give us a scale of the quantum of increase of capacity that we are planning?
It will take at least a year, but we could double our capacity.
Okay. Secondly, on this hormonal products, apart from the patches, do you have any other products where you are playing?
Yes, we have scopolamine, rivastigmine, scopolamine also.
Secondly, on the 505(b)(2) scale-up that you mentioned, apart from the JANUVIA sort of combination, are there any other 505(b)(2)s which are meaningful for us?
Sorry, could you repeat that question?
I am saying on the 505(b)(2)s, apart from the JANUVIA product launches, 505(b)(2)s, are there any other 505(b)(2)s which are right now meaningful for us?
Yeah, we have filed a significant amount of products in the 505(b)(2), some in the oncology supportive injectable space, some in the oral liquid space. Also, we have partnerships on products where we have filed for another product, some in the antiretroviral, I mean, HIV and other areas. So, we have a decently large pipeline of 505(b)(2)s.
Thank you so much.
Thank you. The next question is from Saion Mukherjee.
Hey. Hi. Thanks for taking my question. Dr. Sharvil, just on saroglitazar. You talked about some new data which you have presented recently. How significant is that? What are the key tailwinds and headwinds one need to look out for when you launch this product in the market in March?
I think on the tailwind side, obviously, the good thing has been that there have been more patients who have been found for PBC, so diagnosis has gone up. The second is the patients being put on PBC drugs, that also has significantly improved. There are a lot of patients who want to get treatment. The doctors preferring to treat with the new drugs on this PPAR class. Those are the two good positives. The market has expanded faster, both in terms of patients as well as in terms of more patients being put onto the drugs. That's, I think, are some of the good things that have happened. For us, obviously, we showed our data. We are one of the few companies who've shown strong data with ALP rising. We have shown a significant decrease in ALP.
That is some part of what we have shown in terms of differentiation and also on the side effects. Once we get the label, we can talk more about how the product is. Also, we had a good phase II-B readout phase for the MASH trial, and we have shown data on steatohepatitis ballooning and as well as also no increase in fibrosis. That is not the trial that we are pursuing right now for phase III, but it has good data to show how the product is efficacious as well as safe.
In terms of peak sales compared to the other two products, do you think you can kind of get to a comparable scale with the other products which are ahead of you in the market, given the efficacy and the safety profile that you see today and compare with others currently in the market?
We are third to market, and our current goal is to achieve a 20% patient share. We are not talking about equaling or beating competitors. We are assuming for a 20% market share.
Okay. For the MASH indication, you said you will not be pursuing a phase III trial at this point. Is that I mean, or you want to license it or-
Yeah, not yet, because I think the current expectation is a biopsy-led trial, which is almost impossible to do anymore.
Okay. That is also not a licensing candidate. I mean, there won't be interest by other companies also? Okay. Okay.
No, because it's. The trial is difficult to do. It's not a question of like.
Okay. Okay. So, basically, the phase II data that you got probably could have some rub off on your PBC indication and can help you in some form in the marketplace. That's the way to think about it.
Also other markets, including first, obviously, India. That data will have meaningful-
Because we have those indications in India also. Now, this is a US FDA-approved US trial.
Right. Right. Right. Okay. Okay. The other question I have, you had shared, but just because your R&D spend has gone up a fair bit, you are spending almost INR 650 crore a quarter now. If you can give some split of this, how much of it is going into innovative programs, how much into, let's say, development of biosimilar and vaccine, and how much is into, say, the remaining plain vanilla generic programs? An approximate split.
I would say just the very common generic vanilla programs is maybe only of the 30 products we file, around 10, 12 products. Most of the products which we do are either first to file or complex generics or biologics, vaccines, or specialties, and the NCEs that we are doing. So, large part of our development effort and the growth that is happening on R&D is happening on this. We have SARO trials continuing with the next trial for marginal ALP also. We have ALS phase II-B trial in the U.S. started and recruiting. Also, we have also trials happening on desidustat for sickle cell anemia. We have obviously a couple of biologics trials, biosimilars trials happening, and you have seen the success on biosimilars for us. So, those continue to do well. Obviously, vaccines or PQ trials that have completed, and we will obviously continue to add more programs.
Yeah, most of the program is more on complex or differentiated pipeline. R&D cost will, as a percentage, we have guided that is around 8.5%, but we do not see R&D for us coming down, and it will continue to grow because we are investing heavily, and the future for the company is also to make sure that we continue to have a differentiated specialty portfolio, both in India and U.S. What we are gaining today, whether it is in India or any other market, is because of the portfolio that we have created. This is only doubling down on that.
Right. Sharvilbhai, this specialty bit of it, right, like the ALP trial, ALS that you mentioned, desidustat, how much of the R&D spend would be on this? I am not talking about FTF or complex generics or biosimilar, just these innovation assets.
I mean, that will only increase. I think probably I can come back to you, but I think over a period of time, $70 million-$80 million or close to $100 million will be spent on mostly this clinical, late-stage clinical program.
Understood. Thank you, and I will join back. Thanks.
Thank you. The next question is from Bino.
Hi. Thanks for the follow-up. Just a follow-up question on the margin guidance. Per your press release, the first half margin, EBITDA margin is 24%. Are we assuming that second half will be similar? Because as ROLVEDON comes in, shouldn't that be a higher number?
No, but our SARO spend will also go up.
Okay. Expecting a similar margin second half.
Yeah.
Thank you.
Thank you. The next question is from Kunal Dhamesha.
Yeah, thank you for the follow-up. Dr. Sharvil, on the specialty revenue contribution for our U.S. business, on sequential basis, the jump is primarily due to ROLVEDON. Is it fair assumption?
Yeah, the major jump is ROLVEDON and also better traction on Sentynl.
Yeah. Rolvedon, in terms of its contribution, should it be stable across quarter, I assume?
Sorry, it should be what?
Like stable across quarter, or there's no-
Yeah, yeah. I think it should be next couple of quarters, it should be stable, yeah. Then maybe in six to eight quarters, we'll see a bump up again.
Sure. Second question on our balance sheet leverage. Right now, net debt to EBITDA is around 0.6. What is the strategy there? Would we be focusing on delevering, or we are okay with where we are in terms of delever?
Whatever cash we are generating, we will use to pay down our debt, and it has come down versus the last quarter. From INR 5,900 crore, it has come down to INR 5,200 crore, net debt. That obviously will continue if we continue to do this. But as I said, for us also, there is an uptick on the CapEx cycle as well as all the investments. We are building for the future growth, and I think that is something that is very critical for us, what we want to do over the next five years. We have always said that we are comfortable for till one times net debt to EBITDA, and that is what we are guiding.
Sure. Thank you, and all the best.
Thank you.
Thank you. The next question is from Saion Mukher.
Yeah, thank you for the follow-up. Dr. Sharvil, you have invested, Zydus has invested significantly in the last three years. There is a step-up across various businesses. Do you have appetite for large acquisitions at this stage, or you would like to sort of consolidate the business before you make the next move? How should we think about inorganic appetite at this point in time?
Mostly, what we have seen and we are seeing success on is bolt-on acquisitions. Obviously, we did one on the platform side for the MedTech side. But beyond that, we are only looking to do bolt-on acquisitions that can help in terms of access or new portfolio. That is what is our strategy so far right now.
Okay. But you are still looking at more deals, or is there an appetite to sort of do large acquisitions? Because last three years have been specifically quite active when it comes to inorganic moves.
We do see a lot of deals. As I said, we are looking at portfolio, products, licensing, as well as buyout of portfolio.
We continue more on the specialty and the differentiated side. We are seeing a lot of opportunities, but not any big ticket items.
Okay. On SARO again, you mentioned about 20% patient share eventually that you would like to see. In terms of ramp-up, if you have to think about FY 2028, 2029, any color on how this ramp-up would be? Will we see any meaningful revenue in 2028, or we need to wait for at least one year to see some revenues coming in? Just on the trajectory.
FY 2028 will not be any meaningful revenue. It will mostly be starting from FY 2029, but more realistically, FY 2030.
Okay. Okay. I mean, you are looking at 20% share by FY 2030, or what kind of share you are looking at by FY 2030?
No, FY 2030, we are not looking. We are looking at a 10%-12% share only.
Okay. Understood.
Our IP runs longer, and by the time, by 2033, 2034, we would have definitely peaked or gained a significant share, and that will then continue till the expiry.
Okay. Also in terms of large opportunities, you mentioned a few of them, like IBRANCE and possibly KEYTRUDA. Any other big opportunities you can talk about for the next FY 2029, 2028/2029, either in the U.S. or outside U.S., like vaccine, et cetera, anything, any big tender win, et cetera, that we should keep in mind?
So yeah, I think U.S., you will still see some more. We have many FTFs and exclusive files, so depending on IP and litigation and our launch, we can talk once it's more realistic, including some 505(b)(2), which can be early launches, like we had early Sita launch. Beyond that, vaccines is a big upswing for us. We have seen a significant uptake on vaccines. We have started seeing our registrations with the WHO and pre-qualifications, and we believe that in the future, rabies, TCV, MR tenders which are getting published, we should get a decent share of that. So we would see a meaningful upswing from where we are today. So in the next three to four years, we will definitely double our business from the current annualized INR 400 or INR 450 crore.
Okay. Thank you.
I think you will see similar opportunity on the biosimilar side also. So nivolumab has been a great success. We have many like these opportunities every year in India to launch, so we will see that momentum continuing also.
Biosimilar would be largely India-led, or when you talk about
Currently, it is India-led, but now we have U.S. also.
Yeah.
We have Russia a little bit, we used to have, but we have Mexico, we have South Asia, we have now some Latin American countries coming up. In FY 2028 onwards, you would see global revenues of biosimilars also.
Okay, this is a non-U.S. emerging market piece.
Emerging markets and U.S.
Emerging market and the U.S. And the total bio, how large is biosimilar today, if you can share?
India, we have already crossed INR 1,000 + crores.
Okay. Outside India, there won't be much at this point, right?
Yeah.
Okay. You expect, over the next three years or so, which you mentioned, a similar revenue from emerging markets, or I mean, ex-India?
I mean, next three, four years, I mean, pembro will be obvious. I am not considering pembro because that is a very large amount.
Right, excluding that.
Beyond pembro, this plus our also semaglutide, I think, will add meaningfully to our outside India, U.S. revenues.
Okay. Thank you.
Thank you. We will wait for a minute for queue to assemble. Anyone who wishes to ask a question, please raise your hand from the participant tab on the screen. The next question is from Rashmi Shetty.
Yeah, thanks for the opportunity. Sir, is it fair to assume that FY 2028, the expenses for the SARO as it will go up, plus we are also expanding our MedTech and Comfort Click business, it will be completely integrated. So you feel that this 24% EBITDA margin, maintaining that level will be little challenging also due to the inflationary scenario? Or you feel that the other branded businesses will be able to absorb it?
We have only guided till FY 2027. FY 2028, we haven't given our guidance yet. So maybe in the fourth quarter, we can talk about the next year. But as I said, all businesses are delivering strong growth, so we are confident to continue to do well.
Okay. Sir, and the two products, palbociclib and ribociclib, those are FY 2028 launch, right?
Palbociclib is 2028. I do not know which is the other one you said.
Ribociclib something.
I do not Ribociclib is already launched. I do not know which one you are talking about. We do not have ribociclib.
Okay. So only palbo will be there, and this product will be like a low competitive market for you, or it will be an exclusivity year you have?
Exclusivity.
It would be six months exclusivity, right?
Yes.
Okay. And sir, again, just on the U.S. business, this quarter we have done around $347 million-$350 million. So even if you exclude the specialty sales, there is a good delta which is coming quarter-on-quarter. And we are already taking the entire erosion that is coming from mirabegron. So whatever that delta is coming in the base business, is it because of the new launches or the existing products you have seen some market share expansion, if you can give some comment?
It has been a mix of both. The base business has continued to also grow Q on Q. The new products also are contributing also with the launches that have happened. Both of those have led to the better growth on the non-specialty part also.
This is likely to sustain in the subsequent quarters also?
Yes, at least for the next two quarters.
Okay. Got it, sir. Thank you so much.
There are no further questions. We will close the call. Thank you very much to the Zydus management team. Ladies and gentlemen, on behalf of Zydus Lifesciences, that concludes today's conference call. Thank you for joining us, and you may now disconnect your line and exit the webinar. Thank you.