Alembic Pharmaceuticals Limited (APLLTD) Q3 FY23 Earnings Concall Transcript

Alembic Pharmaceuticals Limited (NSE:APLLTD) Q3 FY23 Earnings Concall dated Feb. 01, 2023.

Corporate Participants:

R.K. Baheti — Director, Finance and Chief Financial Officer

Shaunak Amin — Managing Director

Pranav Amin — Managing Director

Analysts:

Prakash Agarwal — Axis Capital — Analyst

Damayanti Kerai — HSBC — Analyst

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Rahul Jeewani — IIFL Securities — Analyst

Chirag Dagli — DSP Mutual Fund — Analyst

Harith Ahamed — Avendus Spark — Analyst

Tanmay Gandhi — Investec — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Q3 FY ’23 Earnings Conference Call of Alembic Pharmaceuticals Limited. We have with us today Mr. Pranav Amin, Managing Director; Mr. Shaunak Amin, Managing Director; Mr. R.K. Baheti, Director, Finance and CFO; Mr. Mitanshu Shah, Head of Finance; Mr. Jainil Shah, Head of Strategy; and Mr. Ajay Kumar Desai, Senior VP Finance.

[Operator Instructions]

I now hand the conference over to Mr. R.K. Baheti. Thank you, and over to you, sir.

R.K. Baheti — Director, Finance and Chief Financial Officer

Good afternoon, everyone. Thank you all for joining the third quarter results conference call of Alembic Pharmaceuticals. I will start with the financials. During the quarter, our total revenue was up by 19% to INR1,509 crores. EBITDA was INR236 crores and net profit is INR122 crores. EBITDA margin for the quarter was 16%. For nine months FY ’23, EBITDA was INR476 crores and net profit was INR189 crores.

The company, like in the previous few quarters, continued expense out previously amortized R&D in [Indecipherable] Aleor, now Derma division, amounting to INR13 crores in the current quarter and INR144 crores for nine months period.

The company’s profit before tax would have been higher by INR13 crores in the quarter and INR144 crores in nine months and profit after tax would have been higher by INR11 crores and INR119 crores respectively before considering this effect.

Residual intangible assets and books is now just INR11 crores — only INR11 crores. Our consolidated profit before tax would have been INR168 crores and INR382 crores for Q3 and nine months period before considering above effect. EBITA on likewise basis for nine months FY ’23 would have been INR574 crores, which is 14% of sales. EPS for the quarter before [Indecipherable] is at INR6.76 per share versus INR8.74 for the previous quarter– previous corresponding quarter, that is Q3 of last year, while for nine months, that’s INR5.68 per share versus INR25.39 in the previous year.

Our models [Phonetic] continues to be in almost the same zone. As on 31st of December, it is INR686 crores. As on March 22, it was INR630 crores, but we have a cash on hand of INR146 crores. March ’22 was INR61 crores. So net debt equity gets further improved to 0.10.

Now I’ll request Shaunak to take you through the India business presentation. Shaunak.

Shaunak Amin — Managing Director

Yeah, thank you Mr. Baheti. Good afternoon, everyone. For the quarter, I think we continued with the same level of performance. I think we had a top line growth of 12% with –[Technical Issues]

Operator

Ladies and gentlemen, we lost the connection of Mr. Shaunak Amin. Please stay connected while we reconnect him. Ladies and gentlemen, thank you for patiently holding. We have Mr. Shaunak Amin back on the call.

Shaunak Amin — Managing Director

Okay. So we did INR545 crores for the quarter. As per the IQVIA, IMS numbers, industry grew by 10% and Alembic reflected as 15% growth, which is again in line with outperformance compared to industry. On the specialty segment, our performance was significantly higher. And we recorded 14% growth versus 10% growth in the industry, largely driven by three key therapies, gynecology, anti-diabetics and ophthalmology. On Q3, the acute part of our business grew by 21% versus industry growth of 11%. And within that I think [Technical Issues] components of anti-infective we recorded 25% versus 12% for the industry, as well as in cough and cold, which is another large important segment for the industry — Alembic. We grew by 16% versus industry growth of 10% as per the IMS.

Animal health care continues to run a strong performance by recording a growth of 19% over last year quarter three internally. I will hand over the discussion to Pranav for his comments on the international business.

Pranav Amin — Managing Director

The U.S. business, as you all know, it continues to remain challenging on account of the competitive intensity, but we did manage to grow the business at 10%. Some of it was led due to the current strong flu season that we saw in the U.S. market. Our goal is to work on improving the efficiencies and execution in the midterm. We’re looking at cost reduction, as well as reducing R&D grid going forward for the U.S. market. R&D expense is INR157 crores, an ex of one time Aleor product write-off is INR144 crores, which is 10% of sales in the quarter, whereas for the nine-month period, R&D expense is INR586 crores. And ex of the Aleor onetime, it is INR442 crores, which is also 10% of sales.

We filed four ANDAs during the quarter and cumulative ANDAs are 226. We also received nine approvals in the quarter and cumulatively have 178 ANDA approvals. We launched two products in the U.S. and plan to launch another two in the fourth quarter. In terms of regulatory agencies and compliance, the USFDA conducted an inspection at our Onco facility F2 and issued four observations. We have replied to the observations already and sent the responses. After that, we have already received three ANDA approvals from this particular site.

That USFDA also inspected a new oral solid dosage facility F4 in December. They showed five observations. We have sent in our responses, and we have already received an approval for one product from this facility. In terms of pure numbers, as I mentioned, the U.S. generics grew by 10% to INR432 crores for the quarter and 10% to INR1,200 crores for the nine-month period. In dollar terms, we were at $52 million, which was a growth of about 1%.

Ex-U.S. generics grew by 7% to INR206 crores for the quarter and it grew by 3% to INR602 crores for the 9-month basis. The API business had a good quarter, robust quarter and grew by 65% to INR326 crores for the quarter, and it grew by 19% to INR853 crores for the nine months. What’s important is both the[Indecipherable] and the API business had both come off strong base of the last year. Hence, it’s been a decent performance in these verticals.

With that, I’d like to open the floor open for Q&A. Thank you

Questions and Answers:

Operator

Thank you very much. We will now begin the question and answer session. [Operator Instructions]. We have a first question from the line of Prakash Agarwal from Axis Capital.

Prakash Agarwal — Axis Capital — Analyst

Yeah, thanks and good evening to all. First question on — you had some 7 to 9 approvals and there are two launches. So are we waiting for the launches for the new facilities that we have already started launching in January to March quarter? And if so, the expenses quarterly run rate would be how much?

Pranav Amin — Managing Director

So Prakash, from the new facility, we haven’t launched as yet. We will launch from one of the facilities in the quarter, hopefully this month, and the rest are in progress right now. So we will see from F2 as the Onco facility is where we will launch this quarter.

Prakash Agarwal — Axis Capital — Analyst

Okay. And this Diclofenac product is from — have we launched this and from which facility is it?

Pranav Amin — Managing Director

So Diclofenac is Aleor product, and we haven’t launched this yet. It should be in the next couple of weeks as we launch it.

Prakash Agarwal — Axis Capital — Analyst

So can this be sizable on our list?

Pranav Amin — Managing Director

It’s a decent product. As far as I believe I don’t have the exact figures, but it’s a good product and decent opportunity.

Prakash Agarwal — Axis Capital — Analyst

Okay. And what would be the quarterly run rate since you start — Aleor is already on, I think, in terms of expensing, but a couple of other facilities also understand they will start expensing out or

R.K. Baheti — Director, Finance and Chief Financial Officer

So up to 31st of December 2022, no extent was charged off. It continues to get capitalized because now the commercialization of these facilities will start from this quarter onwards. And we will start charging off as and when they get into the commercial production. But as was informed by Mitanshu earlier multiple times, our annual run rate on all these facilities is about INR200 crores.

Prakash Agarwal — Axis Capital — Analyst

INR200 crores all the facilities put together?

R.K. Baheti — Director, Finance and Chief Financial Officer

All the facilities together. Yeah, yeah.

Prakash Agarwal — Axis Capital — Analyst

But it will be not fair to understand that it would be a INR50 crore kind of cost every quarter. It will be in tranches before it touches the run rate of INR50 crores, right?

R.K. Baheti — Director, Finance and Chief Financial Officer

That’s right.

Pranav Amin — Managing Director

Prakash, Mr. Baheti is talking about cash expenses here of INR200 crores, and that would be another depreciation on that.

Prakash Agarwal — Axis Capital — Analyst

Yes, operating expense and the depreciation on the overall gross loss.

R.K. Baheti — Director, Finance and Chief Financial Officer

Yeah.

Prakash Agarwal — Axis Capital — Analyst

And this gross loss pertains to how much, is it in the range of INR2,000 odd crores?

R.K. Baheti — Director, Finance and Chief Financial Officer

So we have about INR1,200 crores of what you say hard assets and the rest is pre-op expense, accumulative pre-op expense.

Prakash Agarwal — Axis Capital — Analyst

Okay. Understood. And this product also, this Pregabalin also comes from Jarod. So that also you’re awaiting EIR or it should be ready for launch for this quarter?

Pranav Amin — Managing Director

So Pregablin is a product that we are already selling currently from an existing facility, the F1 facility. It’s already commercial product. This was [Technical Issues] that we did from here. So we’ll just decide when to start commercial operations from F4. We’ll probably bundle up a few products together and then we start the commercial operations.

Prakash Agarwal — Axis Capital — Analyst

Yes. So there’s no worry there. Okay.

Pranav Amin — Managing Director

Yes, that’s a worry there. Yes.

Prakash Agarwal — Axis Capital — Analyst

Okay. And lastly, on the API piece is doing fairly good. So you mentioned that fiscal ’23, there is sufficient visibility. If we want to look at beyond and how does it look? So this quarter is a little lumpy because as you know, we do a CMO business for a large MNC. And sometimes those orders come once in a while. So that was a big chunk of that order came in this quarter. But ex of that also, there’s been a growth of about 30%, 40% if you take that part of it out. On a year-on-year basis, as I’ve been saying, the API business should grow at least 10% — 10% to 15% for the year. From fiscal ’24, I mean.

Pranav Amin — Managing Director

I think we’re seeing that trend. I’m seeing that so even next year, you’ll see about it, I would expect it at least a 10% growth in the API business.

Prakash Agarwal — Axis Capital — Analyst

Okay. But this run rate is possible in Q4 also?

Pranav Amin — Managing Director

No, it won’t because as I said, it’s really lumpy. This one big business that we had and then a few more dispatches in this quarter. Sequentially, it is if we take a one-off, it’s still lower than last quarter.

Prakash Agarwal — Axis Capital — Analyst

Okay. But y-on-y growth is possible?

Pranav Amin — Managing Director

Yeah, yeah, absolutely.

Prakash Agarwal — Axis Capital — Analyst

Lovely, thank you, thank you.

Operator

We have our next question from the line of Damayanti Kerai from HSBC.

Damayanti Kerai — HSBC — Analyst

Thank you for the opportunity. My question is for Pranav. So you mentioned in your opening remarks that due to persistent challenges in the U.S. market, you’ll be more efficient in R&D costs going ahead. So what’s your thought process here? Because right now also we are spending around 10 percentage of top line towards R&D. So, how or where you can bring efficiencies? And if you can also tell us like what kind of returns you are seeing over for investments, which were done, say, last four, five years back? That’s my first question.

Pranav Amin — Managing Director

Yeah. So two things, one is what we’re doing is the R&D spend, we’re trying to optimize the projects that we have in terms of R&D in terms of short-term issues that we’re facing in the U.S. market. So some of the high-risk projects is where we are putting on the back burner. At the same time, we’re also increasing some of our projects for the ROW markets because there, we’ve been doing pretty well and consistently growing at about 10% for the last few years. So we will start adding projects there as well. In terms of ROE [Speech Overlap]

R.K. Baheti — Director, Finance and Chief Financial Officer

So on a percentage basis, a couple of quarters back, I think last year, it was about 14% of sales, which has come down to 10%. But also, that’s not a right reflection because sales has not — our sales is a depressive if I can say so because of the U.S. situation. Volumes have gone up, but the price realizations are low. In absolute number, in spite of all these cost increases, inflation, we have reduced the expense. And I think we will further prune the projects and prune the fixed costs so that effect or that impact would come in ’23, ’24. That’s what Pranav wanted to convey.

Damayanti Kerai — HSBC — Analyst

Okay.

R.K. Baheti — Director, Finance and Chief Financial Officer

It’s very difficult to do that ROE analysis of R&D because a couple of products can take care of the entire R&D expense. And so — but you are right, I mean, many of these new launches, which we have done in recent past, except a handful of them, have not been great success because of the price erosion.

Damayanti Kerai — HSBC — Analyst

Okay, sir. That’s helpful. I just wanted to check any number in your mind like where you would like to build down your R&D as a percentage of sales say three years from now?

R.K. Baheti — Director, Finance and Chief Financial Officer

So like the scale up takes time, even the pruning takes time, you need to do it carefully. But I think, okay, we can target a reduction of 15%, 20% from the current cost in the next year.

Damayanti Kerai — HSBC — Analyst

Next year expense 15%, 20% reduction can be seen in the R&D cost from current level.

R.K. Baheti — Director, Finance and Chief Financial Officer

Yeah.

Damayanti Kerai — HSBC — Analyst

Baheti, sir, I have just one clarification on — about tight residual R&D for Aleor. So you mentioned INR11 crores is remaining, which will be say done in next quarter or so and after that, nothing is left on the [Indecipherable]

R.K. Baheti — Director, Finance and Chief Financial Officer

Yes, that’s it. You are right.

Damayanti Kerai — HSBC — Analyst

Okay. My second question is on input cost pressure. So can you comment like what are we seeing in terms of pricing trend for raw materials,

[Indecipherable]costs, etc., compared to last year quarter.

R.K. Baheti — Director, Finance and Chief Financial Officer

So in international business, we have not seen a significant increase in raw material cost. But as a percentage of sales realization, the cost has gone up largely because, as I said, largely because of erosion in prices. In domestic market, as far as this quarter is concerned, they are pretty stable. They’re still not gone to the pre-COVID level, but I think they are stable or has come down a bit from the domestic market.

Damayanti Kerai — HSBC — Analyst

And my last question is on India business so most of the therapies, you have seen outperformance versus the market except Gastrology. So anything specific to call out there?

R.K. Baheti — Director, Finance and Chief Financial Officer

So Shaunak, are you responding or you want me to continue?

Shaunak Amin — Managing Director

[Technical Issues]

Operator

Sorry, I’m not audible. Damayanti, can you use your handset, please?

Damayanti Kerai — HSBC — Analyst

Yeah, so I was just asking like anything specific on the Gastrology segment where we have seen as a store performance versus the market growth.

R.K. Baheti — Director, Finance and Chief Financial Officer

Shaunak? [Technical Issues] So you are right. I mean you are very [Technical Issues] observed. Gastrology is the only probably division — large division where we have done — we have done worse than the market and worse than our own expectation. There were some leadership issues. There were some inventory issues over time. We have done all these corrections and we expect that ’23, ’24 should be much better results for that division also.

Damayanti Kerai — HSBC — Analyst

Okay, sir. Thank you. I’ll get back in the queue.

Operator

Thank you. [Operator Instructions]. We have our next question from the line of Tushar Manudhane from Motilal Oswal Financial Services.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Thanks for the opportunity. Just a clarification first, the one–off that has been called out with respect to only Aleor or is there anything else? I joined the call late. So, if you could clarify.

R.K. Baheti — Director, Finance and Chief Financial Officer

Sorry, it’s only INR13-odd crores this quarter.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Okay. And just secondly, among the peer side, a couple of companies have got significant regulatory issues and that has to some extent led to shift of the supplier base, particularly on the injectable side. So are we going to see a good business benefit out of it? I mean historically, we definitely have tried to do a good benefit of such event. So anything going forward?

Pranav Amin — Managing Director

Yes. So it’s a good question. I think strategically what — where we’ve done well is when there are regulatory issues in the industry that leads to shortages. And we’ve been able to do well on the shortages when we do see it. Injectables are still early days for us because it’s just that we just got the first few product approvals. Once we commercialize it and then once our rest of our portfolio earnings pick up in injectables, yes, definitely, we could see that. Strategically, one of the reasons we did get into injectables is because there is — there has consistently been shortages and compliance issues. So we thought there would be opportunities. So long run, yes, we do hope to see some.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

So anything over the next 12 to 15 months, given that [Technical Issues] or given current quarterly run rate of INR50 crores, INR52 crores, how do we see FY ’24?

Pranav Amin — Managing Director

So it’s tough to say right now. I think the whole thing depends on how the new launches go. Like this time, as you’ve seen, we’ve got about in rupee terms, a 10% growth. That’s predominantly because while we had erosion in the quarter compared to last year, but we also had some new launches that picked up some steam. So it’s a combination — and with injectables, as we launch more and more injectables, that will keep adding to our basket. Of course, FY ’24 will be a little tougher one because we will have a little bit of a pressure on the profit due to the two new facilities coming up on stream.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Understood. Understood. But that is because of taking expenses from balance sheet, which you earned, but the opportunities on the U.S. side, you [Technical Issues]

Pranav Amin — Managing Director

Yes, at the [Technical Issues]

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Okay. For the next 12 to 18 months?

Pranav Amin — Managing Director

Yes, yes, absolutely.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

All right. [Technical Issues]. Thank you.

Operator

[Operator Instructions]. As there are no further questions, I would now like to hand the conference over to Mr. R.K. Baheti for closing comments. Over to you, sir.

R.K. Baheti — Director, Finance and Chief Financial Officer

Hello, Yeshaswi, there are three questions.

Operator

Yes, we just received it. I’ll take them. We have a question from the line of Rahul Jeewani from IIFL Securities.

Rahul Jeewani — IIFL Securities — Analyst

Hi, sir. [Technical Issues]. Allow me for the bad throat which I’m running. But sir, with this rationalization in R&D expenses, which you are targeting for next year, do you think that you can offset the incremental operating expenses from the new plans through this R&D rationalization, which you are talking about. And then given that scenario, how are you looking at your EBITDA margins for the next two-year period?

R.K. Baheti — Director, Finance and Chief Financial Officer

So I think no projections or no estimations, internal estimations, which we are doing are holding valid for more than six months. So it’s difficult to give any answer. But yes, wherever possible, we are trimming our costs. R&D, even in operations, wherever there is a possibility, we are trimming in the costs. [Technical Issues] But for the new facilities, the expense will start hitting the P&L. But do you think that with the rationalization in R&D and the fact that the API prices were also on the higher speed this year and some of those benefits coming into next year, you will be able to offset this impact of the new facility costs? So very difficult to make a comment on this — on the EBITDA side.

Rahul Jeewani — IIFL Securities — Analyst

Sure, sir. Otherwise, if you can just comment on the fact that have you started seeing any benefit from the API cost moderation?

Pranav Amin — Managing Director

So Rahul, I think in terms of immediate term, it’s little tougher to say. Midterm, definitely, yes, we’ll see all this offsetting whatever the additional costs. I think FY ’25 will be a lot more comfortable in my opinion.

Rahul Jeewani — IIFL Securities — Analyst

Sure, sir. Thank you. That’s it from my side. Thank you. We have our next question from the line of Chirag Dagli from DSP Mutual Fund.

Chirag Dagli — DSP Mutual Fund — Analyst

Yeah, sir, thank you for the opportunity. Am I audible?

R.K. Baheti — Director, Finance and Chief Financial Officer

Yeah.

Chirag Dagli — DSP Mutual Fund — Analyst

Okay, sir, thank you for the opportunity, sir. What do you make out of the situation where we have product approvals, but EIR is not in place. I mean it’s quite a unique situation. What is your reading or sense of what is happening here.

Pranav Amin — Managing Director

So my reading or sense is that, listen, FDA is came to approve facilities. As far as they see it, they feel that all responses are in place, they feel there’s no risk to anything, hence they’ve given it. The EIR, they’re waiting for a formal EIR. But I think we’ve seen this not just the first time. We’re seeing it because they want us to launch products in the market and they want new facilities. So that’s one of the reasons.

Chirag Dagli — DSP Mutual Fund — Analyst

Understood. So you’re not worried around potential of EIR coming through?

Pranav Amin — Managing Director

No, then they wouldn’t have given the approval also.

Chirag Dagli — DSP Mutual Fund — Analyst

Understood. Understood. And sir, do you see over the next two quarters, do you see products getting launched from all the new facilities that we have, onco onco-injectables the new oral solid block?

Pranav Amin — Managing Director

Yes. So not the new oral solid block that I mentioned earlier in the call that, that we will decide when to do it because that’s with a few approvals bundle up, and we’ll do that. But I think the first two that will go off the block will be the onco-injectables and then the second one would be the general injectables. Those two, we will start — those two are the big ones. We will start seeing those commercializations, one in this quarter, one next quarter, I believe.

Chirag Dagli — DSP Mutual Fund — Analyst

Understood. And sir, can you quantify the number of pending approvals from onco-injectables and the general injectables?

Pranav Amin — Managing Director

Yes, just a minute, [Technical Issues]. So we haven’t given that plant-wise. We haven’t given the breakup of our injectables. I can give you just absolute amount or offline, I don’t have the figure with me. Understood, sir. But is it fair to say that over the next 12 months, there’ll be a lot of bunching up of approvals? So yes, there would be some bunching up and hence that’s why we’ve seen 2, 3 — 2 approvals in F3 and one in F2. But it could have been more bunched up more, but I think lastly, due to the compliance and the remediation, our filing pace also slowed. But hopefully, moving forward the next 24 months, we’ll see a lot faster approval rate there.

Chirag Dagli — DSP Mutual Fund — Analyst

Understood, sir. Okay, and on the two formoterol products, arformoterol, I can see we have a double-digit market share in formoterol. Is that also an indication of what we can get in arformoterol?

Pranav Amin — Managing Director

Yes. So formoterol, yes, we picked up some decent share. Arformoterol, we will be launching shortly. It’s a CMO products, which is waiting. We should launch it shortly in the next quarter or so.

Chirag Dagli — DSP Mutual Fund — Analyst

Understood. And for whom both these products are margin profile is feasible given that these are manufactured not internally built?

Pranav Amin — Managing Director

Yes, it’s a decent product.

Chirag Dagli — DSP Mutual Fund — Analyst

And we can stay in the market even if the market becomes competitive.

Pranav Amin — Managing Director

I believe so.

.

Chirag Dagli — DSP Mutual Fund — Analyst

Okay. Understood, sir. Okay. And the last question is this Aleor INR13 crores, in which line item in the financial recorded [Technical Issues].

R.K. Baheti — Director, Finance and Chief Financial Officer

Respective of what you call [Technical Issues] employee costs and other expenditure will be the main two items.

Chirag Dagli — DSP Mutual Fund — Analyst

Understood. Okay, sir. Okay. I’m done with it. [Technical Issues].

Operator

We have our next question from the line of Harith Ahamed from Avendus Spark.

Harith Ahamed — Avendus Spark — Analyst

Thanks for the opportunity. When you guided for 15% to 20% reduction in the R&D spend next year, does the base of FY ’23 includes the amortized cost from the INR140-odd crores for nine months FY ’23 or are you excluding it from the base?

R.K. Baheti — Director, Finance and Chief Financial Officer

If I take that then the reduction would be far ahead, no. So we’re looking at the regular recurring expenses and savings from there or reduction from there.

Harith Ahamed — Avendus Spark — Analyst

Okay, understood. So from a couple of years back you had set [Technical Issues].

Operator

I’m sorry to cut that up, but can I use your handset, please? Your line is not very clear.

Harith Ahamed — Avendus Spark — Analyst

Okay. So I was asking you about this $400 million to $500 million of targets that we have set for ourselves in terms of U.S. sales, do you still maintain that guidance? And if so, anytime by when we’ll get to those levels?

Pranav Amin — Managing Director

So when I used to say that, I also give a disclaimer that this is a company — historical companies of our peers in the industry, which have embarked on this, have seen this kind of a growth. And we could also see the number was over $300 million to $400 million, it was really optimistic or it could go $500 million. The $300 million to $400 million I still stand, $500 no. I still think there could be an opportunity to go to $300 million plus.

But as you see, everything’s has got push back by about two, three years, so because of the delay in the execution of the new plants and the pricing erosion has increased — has reduced some of the outlook. But I still believe that $300 to $400 million is still a potential for another three to four-year period.

Harith Ahamed — Avendus Spark — Analyst

Okay. And lastly, just to confirm the time lines around commercial supplies from three new facilities. For the onco facility, you said we will start supplies this quarter and for Jarod probably later beyond FY ’24?

Pranav Amin — Managing Director

Jarod maybe — I’m not in FY ’24 or even beyond, maybe, we’ll just see how it is, what makes sense for us if the products are bundled up, whether what kind of load is there on the F1 facility. And the injectable, the other general injectable is what we will see next quarter onwards.

Harith Ahamed — Avendus Spark — Analyst

Okay. Got that Thanks for taking my question.

Operator

We have a next question from the line of Tanmay Gandhi from Investec.

Tanmay Gandhi — Investec — Analyst

Hi, thanks for taking my question. Am I audible?

Pranav Amin — Managing Director

Yeah.

Tanmay Gandhi — Investec — Analyst

Yes. Sir, can you highlight the key reason for growth in U.S. as we have seen some bit sequential recovery there?

Pranav Amin — Managing Director

Yes. So I mentioned earlier in the call that — two reasons why we grew in the U.S. On one hand, you had price erosion in the quarter as well compared to last year year-on-year. So that was quite a bit. But in spite of — because we had some certain sales in Q3 of last year. But what happened is, this time, as I mentioned, there was a strong flu season. So some of the anti-infectives and also — Tamiflu is where we have a decent opportunity. And the second one is we have some new product launches where we picked up some share. So that’s where — both those put together has caused some — has given us some growth. One thing I have not mentioned though is in the U.S. business on a volume terms, the growth is much higher. But because of erosion, it’s only about 10% in rupee terms.

Tanmay Gandhi — Investec — Analyst

And for other companies as well, we are seeing some bit of sequential improvement, right, in their base, isn’t it, right? And so are you seeing some bit of stabilization in price erosion? And what would be your price erosion excluding pattern?

Pranav Amin — Managing Director

So exploring patterns, price erosion is still there. I wouldn’t say it’s gone away. It’s still there. It depends just on which product and which company. It’s still there. Maybe slowed down, but still around. I don’t have the exact figure because it just keeps changing. So it’s still there, though.

Tanmay Gandhi — Investec — Analyst

Any broad number which you would like to give?

Pranav Amin — Managing Director

No, it’s very tough to say because what’s happened the customers are bidding on the products a lot more often. And so hence, we’re seeing a lot of erosion there.

Tanmay Gandhi — Investec — Analyst

Okay. So broadly, for industry in general, are you seeing some bit of stabilization, some bit of improvement in price erosion versus last two quarters?

Pranav Amin — Managing Director

No, no, no.

Tanmay Gandhi — Investec — Analyst

Okay. Thanks. Got it.

Operator

Thank you. We have a follow-up question from the line of Damayanti Kerai from HSBC.

Damayanti Kerai — HSBC — Analyst

Thank you for the follow up. My question is, again, coming back to approvals from the plants F2, F3, where we are yet to receive EIR, but we saw some approvals. So are these products in shortage that’s why FDA gave a poll before we get the official clearance or as you said, FDA is more keen on approving new plants, and that’s why we got some approvals?

Pranav Amin — Managing Director

I’m not sure and to be honest. So they’re not all shortage, the products. One of them has been on and off in shortage. The other ones are not in shortage as well one of the other ones is possibly in shortage. But I think it’s just a matter of the audit and the audit and the report that was given and our responses, I believe.

Damayanti Kerai — HSBC — Analyst

But you’re confident you should be getting the official closure very shortly and then that could maybe boost number of approvals from the plant, as you mentioned, was some bunching up, ete.

Pranav Amin — Managing Director

So we’re already getting approvals from the plant as we go along. So whatever spending we’re getting approvals as we buy more products, then we’ll do it. So yes, but it seems okay because we haven’t heard back anything from the FDA. They’ve received our responses as well. So we haven’t received back anything.

Damayanti Kerai — HSBC — Analyst

Okay. And my second question is, can you comment on the pricing situation for your derma portfolio? Because I think last we you heard it’s very severe. So anything incremental there?

Pranav Amin — Managing Director

No, we don’t talk product portfolio-wise pricing on any of the — on anything.

Damayanti Kerai — HSBC — Analyst

But overall, as you said, not much change in the pricing situation compared to last two, three quarters?

Pranav Amin — Managing Director

No, no. I said there is still no erosion, I said nothing has changed. There is still as much erosion as before.

Damayanti Kerai — HSBC — Analyst

Okay. Same as what it was say a few quarters back that situation.

Pranav Amin — Managing Director

Yes, yes. So [Technical Issues] erosion is 40%, the regular erosion must be 10% or so.

Damayanti Kerai — HSBC — Analyst

Okay, understood. Thank you.

Operator

I would now like to hand the conference over to Mr. R.K. Baheti for closing comments. Over to you, sir.

R.K. Baheti — Director, Finance and Chief Financial Officer

Thank you. Thank you, everyone for joining the calls. It has been a tough day for you, analyzing budgets and then attending conference call. So still thank you for your presence and for your interest in the company, and we’ll say that have a good evening.

Operator

[Operator Closing Remarks].