Alivus Life Sciences Lt (NSE: ALIVUS) Q3 2025 Earnings Call dated Jan. 23, 2025
Corporate Participants:
Unidentified Speaker
Yasir Rawjee — Managing Director and Chief Executive Officer
Tushar Mistry — Chief Financial Officer
Analysts:
Ahmed Madha — Analyst
Sajal Kapoor — Analyst
Harsh Shah — Analyst
Karthik Swaminathan — Analyst
Nitin Agarwal — Analyst
Unidentified Participant
Damayanti Kerai — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Alivus Life Sciences Limited, formerly Glenmark Life Sciences Limited Q3 FY ’25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star 10 on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms Shaomi Rao. Thank you, and over to Ms Rao.
Unidentified Speaker
Good evening, everyone. I welcome you all to the earnings call of Eliz Life Sciences Limited, formerly Glenmark Life Sciences for the quarter ended, 31, 2024 from Life Sciences, we have with us Dr Yasir Rawjee, our MD and CEO; and Mr Tushar Mistry, our CFO. Our Board has approved the results for the quarter ended, 31 December 2024. We have released the frame to the stock exchanges and updated it on our website. Please note that the recording of the transcript of this call will be available on the website of the company, www.erlys.com. N
Ow I’d like to draw your attention to the fact that some of the information shared as part of this call, especially information with respect to our plans and strategies may contain certain forward-looking statements that involve risks and uncertainties. These statements are based on current expectations, forecasts and assumptions that are subject to risks, which could cause actual results to differ materially from these statements depending upon economy conditions, government policies and other incidental factors. Such statements should not be regarded by recipients as a substitute of their own judgment. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Our actual results may differ materially from those expressed in or implied by these forward-looking statements.
With that, I invite Dr Yasir Rawjee to give his opening remarks. Thank you, and over to you, Dr. Rawjee.
Yasir Rawjee — Managing Director and Chief Executive Officer
Thank you,. Good evening, everyone, and welcome to our Q3 earnings call. I would like to extend our warm wishes from for the new year to each of you. It marks a notable milestone for us as we officially transitioned to Life Sciences. This name change reflects our deep commitment to creating life-enhancing solutions. Derived from the root word life embodies our aspiration to kindle hope, improve health and help people live fuller lives. This rebranding signifies a new phase-in our journey as we continue to innovate and grow. Moving on, let me turn to the broader industry shaping our business. So within the pharma industry, we observed steady growth, driven by increased outsourcing, rising demand for specialized APIs and supply-chain diversification to reduce dependency on single regions. The industry is also witnessing growth in the areas of sustainable manufacturing and advanced technology.
Now focusing on our performance for the quarter, we reported revenues of INR642 crores, a growth of 12% Y-o-Y and 27% Q-o-Q. This was driven by both GPL and non-GPL business, which grew 15% Y-o-Y and 11% Y-o-Y, respectively. Generic business grew by 16.9% Y-o-Y. From the geography perspective, regions like India, Europe, ROW and Japan have contributed to this growth. While we were able to recover some of the spill revenues of Q2 during this quarter, some portion will be recoverable in Q4. Our CDMO showed encouraging Q-o-Q growth of 25%, whereas the year-on-year growth is subdued due to the cyclical nature of the demand.
Coming to our profits for the quarter, we reported gross margin of 55.6%, which is in-line with our earlier guidance. Our EBITDA margin for the quarter was 31.3%, up 90 bps Y-o-Y and 310 bps Q-o-Q. This is essentially a result of better product mix with stable expenses. Our pipeline remains robust with over 548 DMF and CEP filings globally as on December 31, 2024. Our high potent API pipeline with a significant market opportunity continues to advance with multiple products in various stages of development. We have 21 products today with a total addressable market of $45 billion with six products having been validated and six more products in advanced stages of development. Our quest for high-quality innovative solutions and scalability continues in order to build a sustainable business over the long-term.With this, I now turn the floor to our CFO, Mr Tushar Mistry, to provide a detailed overview of our financial performance for the quarter. Over to you, Tushar.
Tushar Mistry — Chief Financial Officer
Thank you,. Good evening, everyone. Welcome to our Q3 and nine months FY ’25 earnings call. I would like to briefly touch upon the key performance highlights for the quarter and nine months ended 31st December 2024, and then we’ll open the floor for questions-and-answers. Our revenue from operations for the quarter stood at INR642 crores, a growth of 12% year-on-year and 26.6% on sequential basis. The gross profit for the quarter was at INR357 crores, up 7.9% year-on-year and 26.6% sequentially. The gross margins for the quarter stood at 55.6%. EBITDA for the quarter was at INR201 crores, up 15.2% year-on-year and 40.5% sequentially. EBITDA margin for the quarter was at 31.3%, up 90 basis-points year-on-year and 310 basis-points quarter-on-quarter, driven by better product mix. And the PAT for the quarter stood at INR137 crores with PAT margins coming at 21.3%.
Let me quickly discuss nine months financial year numbers as well. Revenue from operations remained flat over nine months FY ’24 at INR1,737 crores. Gross profit was at INR939 crores and gross margins were at 54.1%. EBITDA at INR509 crores with margins at 29.3%, PAT was at INR344 crores with PAT margins of 19.8%. Looking at the therapeutic mix, CVS and CNS continued to lead to growth during the quarter with both therapies contributing 58% to the top-line. R&D expenditure for nine months was at INR56 crores, which was 3.2% of our sales. For the quarter, it was INR20 crores. Touching upon the balance sheet and cash-flow moment, the working capital days were at 182 days as of December 30, 2024. Coming to capital expenditure, we invested INR33 crores during the quarter, while the total investment for nine months were INR119 crores. We continue to remain a net-debt free company and I am happy to inform you that we have generated strong cash-flow from operations of INR184 crores in nine months FY ’25 with cash-and-cash equivalents, including short-term investments of INR499 crores as of 31st December 2024.
In conclusion, I would like to say that we are optimistic of the future trajectory on the back of steady demand environment. With that, let us open the floor for Q&A.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question, press star and one on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 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. First question comes from the line of Ahmed Madha with Unifi Capital. Please go-ahead.
Ahmed Madha
Thanks for the opportunity and congratulations on good set of numbers. My first question is on the CDMO business. The — despite the contribution from the fourth project, the absolute number still looks subdued. So can you explain on this? And secondly, do you expect this number to scale-up materially in Q4 the new project?
Yasir Rawjee
Yeah. So CDMO, the fourth project has kicked-in, but it’s just kicked-in, right? So materially, it’s not that significant in terms of contribution, okay. And the three projects that we have, we’ve explained before that they do have a cyclical nature in terms of demand. And so owing to a weaker demand, right, we’ve seen CDMO not pick-up as much as we had anticipated. But going-forward, I believe that this is going to get better, you know from next quarter onwards. But again, on a quarter-to-quarter basis, just given the fact that we don’t have that many number of projects, we would see a cyclical of performance on the CDMO segment.
Ahmed Madha
Okay. Okay. Thank you. And second question is, if you look at the — what will be our current capacity utilization and did?
Yasir Rawjee
The 208 KL addition in Anklesh were contributed in the current quarter also? The 208 KL contribution — the addition of capacity has contributed, but mind you, that’s an intermediate capacity. And typically, you know, we look at our finished API capacity when we are looking at sort of scaling up. However it does matter but still in terms of connecting right we look at the API finished capacity with the utilization has been around the 90% level that we usually are at.
Ahmed Madha
Okay. Perfect, got it. Last question, if I look at the OpEx number, the OpEx growth is slightly ahead of our top-line growth. So is there any element of one-off or anything as such or is this just…
Tushar Mistry
So I some part of it is in-line with the growth in the revenue numbers, but of course, there is some element of one-time as we are looking at some transition costs getting incurred in the — in Q3 as well as in Q4. So some small element of that is there and there was some higher-cost on the sales and marketing front also in this current quarter.
Ahmed Madha
Got it. Can you quantify the one-off transition cost?
Tushar Mistry
Transition costs would be in the range of about INR3 crore to INR4 crores in this current quarter.
Ahmed Madha
Okay. Okay. Got it. Yeah, that’s it from my side. Thank you so much.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Sajal Kapoor with Antifragile Thinking. Please go-ahead.
Sajal Kapoor
Yes. Thank you for the opportunity. Interesting name team alig. I like it. And so congratulations on a good set of numbers. Happy to see some recovery in CDMO and hopefully you know it should — it should get better from here. Just a couple of questions really. One, which two, three things will not change in this new Avatar and what do you think must change to strengthen the business.
Yasir Rawjee
So our approach to the portfolio, right, in terms of chasing higher-value opportunities is something that we will continue. Okay. The geographic diversification that has made our business very stable, I would say, right, is also something that’s a win and that’s also something that we would continue to drive. Okay. As far as operational efficiency, I think we do a good job, but there’s certainly room to do more, okay. So these are the sort of business operations and R&D elements that would stay intact because these are the things that have really helped us to continue to build a sustainable business, right? What will change though is that given the fact that we are able to invest more in the business, our approach will be to build new levers to drive further growth.
So this is important, especially in light of the fact that in the past, the investment that we have made has been largely limited to increasing capacities just to service the business. But the only exception I would say is that when we introduced the oncology platform, this was 2.5 years ago and that also has paid rich dividends in terms of, you know the portfolio that we’ve been able to build and the business interests that we’ve been able to generate. So given that kind of a uptick potential in the business by building new platforms, it’s very clear to us that we need to build-in that direction in terms of new platforms so that can fuel further growth. And then we are positioned well because we do have the ability now to invest more.
And I would say, now do me a favor, don’t ask me what that is going to be, okay, because I’m not going to tell anyone this, right? Simply because I mean we have with too many — I mean, we have a lot of things in the pipeline that we are thinking of, some of them we are even ready to implement. But it’s a generic business and you know, there’s a lot of copycat culture in our industry. And so we’d like to keep it a little quiet while we build these platforms to fuel further growth. So I think that summarizes it, Sajal. This is how we are going to sort of go-forward while keeping — while keeping a very strong element of our current DNA intact.
Sajal Kapoor
That’s a very thoughtful response and I wasn’t expecting anything less from you, Dr Rawjee. So thank you for illustrating your vision out there. And I also appreciate why you need to keep this strategy close to your heart for now you’re not revealing it and I completely appreciate that. And last question is, US-FDA has not audited our plants for several year. And so I understand how difficult it is to estimate the time of the audit. But how can we interpret the relatively low frequency of USFD audits on our facilities, vis-a-vis and some of the other API plants that they have visited and twice in two years kind of a frequency. So I mean, what — how do you read into this?
Yasir Rawjee
Well, we do understand a little more than just sort of guessing, right, and that is these agencies talk to each other, okay. So they and I happen to have interacted with some investigators, right, informally. And basically because they share information, right, they — it’s the risk ladder that they build, right? So their frequency goes up when they sense a riskier company and their frequency — you go down in their ladder in terms of the frequency of audits. We’ve had successful audits from Japanese PMDA recently. We’ve had successful audits from — and Visa Brazil recently and these are all agencies that talk to each other.
So we expect that FDA should come, it’s been a while you know, and so based on the fact that it’s been a while and we’ve had quite a number of filings, we believe that this will happen. The good news for us is that our approvals in our facilities are not being stopped, okay. So we continue to get — our customers continue to get approvals and so it’s not hampering business. But yeah, I mean, it would be nice-to-have, you know, the US-FDA come in and take a look at us and you know sort of we can move forward from there. Sure, sure. And this PMDA was that for Dahej or Antal? PMDA was the hedge and Visa was Ankleshwar.
Sajal Kapoor
So both are good agencies. I mean, even Brazilians are very particular. So that’s good to hear and look-forward to the next quarter and of course understanding what platforms is it that you would be revailing. But yeah, congratulations and best wishes. Thank you.
Yasir Rawjee
Thank you.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Harsh Shah with VEER Holdings. Please go-ahead.
Harsh Shah
Hi, good afternoon, sir. I just wanted to get an understanding about how much Oncore blocks are contributing? Because when I look at revenue, I would presume that Onco would be sitting somewhere in the other maybe other segment line items this segment at around 33% 34%. So just want get understanding that how much is the contributing and is there a that we can give out a separate line-item for the onco block just like we give it for cardio CNS that case?
Yasir Rawjee
Okay, you know what you — you’ve been pretty muddled your voice that came through, but I understand you’re asking us about how much has Onco contributed. Is that your question?
Harsh Shah
Yes, that is correct.
Yasir Rawjee
Okay. So see, the thing is that with Onco, right, we are currently in the seeding stage, okay. So we’ve got six products validated and these are all going to customers who would eventually launch with these APIs. And we have another six that we will be validating soon. So that will be 12 APIs in a short-time that would have been seeded with multiple customers. Commercially, they have not contributed a lot because we have only supplied exhibit batch quantities to customers. There has been some revenue from Onco as a result of that. But we are not yet in the commercial phase with respect to oncology — our oncology pipeline as yet.
Harsh Shah
Okay, okay. And so when you say that the — the market size of the 12 drugs, which are under various stages of development is $45 billion. So what would be the API market size out of that?
Yasir Rawjee
Okay. Now you know what, this is a surrogate markup, okay? Let’s understand that most of this $48 billion, right, is basically an innovator marketplace. So let me help you to break it down, okay. So if you if you then look at what would this market size look like when the commercial — when the generics happen, it’s going to reduce very significantly. And then the API is a subset of that, okay. So you have price erosion when generic launches happen to the extent of 95% plus, okay. So — but what this does, why we sort of give you the total addressable market, right, is basically to give a sense in terms of what we are going after in terms of the potential. You know, that’s the reason for putting out such a number. But I do understand it sometimes can cause a lot of excitement, right, and you know, in terms of how much we could sort of do on the API side, but it’s a substantial market that we would be catering to even after generic penetration happens.
Harsh Shah
Yeah, would it be fair to assume it would be somewhere in the range of 10% to 20% would be the size of generic API market from the — if you have to derive it from the surrogated market size.
Yasir Rawjee
No, like I said, it could go down to 5%, right, of what it is today as a generic happens. So say 48 billion becomes like 3 billion, okay. And then API is part of that, right, in terms of the overall market. You get there.
Operator
Thank you. MR. Shah, please rejoin the queue for more questions. Next question comes from the line of Kartik with Katmaran. Please go-ahead.
Karthik Swaminathan
Hello, sir. Sir, can you help us understand what is the long-term strategy on the CDMO business segment?
Yasir Rawjee
Sure. So in the CDMO spectrum, which is pretty wide, I mean, we are looking at end-of-lifecycle projects, okay. So that commercialization is relatively quick. And the other part that we focus on is the specialty segment where again basically, it’s not a full clinical study repeat, but you know short clinical studies that specialty companies do are with an enhanced formulation, okay, but they still end-up getting a quite a good exclusivity period. And this basically gives us again a relatively quick entry into the market along with a pretty good realization. So that’s the strategy that we’ve been following so-far. And we would continue to do that. We — again, we see a fair amount of traction, right, with newer projects, especially because we’ve got a pretty big portfolio that helps us in both the end-of-life cycle as well as specialty.
Karthik Swaminathan
Thank you, sir. And in terms of people in the team like have you hired more manpower force to specially focus on CDMO and how many would these people be — how large would this team be?
Yasir Rawjee
Currently, it’s the same team that drives the generic business in Europe, North-America and Japan. But these are the three large regions where we get traction on the CDMO side.
Karthik Swaminathan
Yeah. And sir, is there any perceived conflict of interest between CDMO clients giving you business because you’re working for a lot of generic clients as well.
Yasir Rawjee
Not anymore. I mean, I’ve had this issue crop up years ago, right? But I think again because of the segment that we are in, right, there is no real threat, okay. In fact, they prefer to go with an established manufacturer because we’ve achieved you know economies of scale, we’ve achieved a pretty strong supply-chain security. I mean we’ve ensured that. So the combination of a strong supply-chain as well as optimized costs on manufacturing and materials procurement basically gives them a significant advantage for their end of lifecycle business.
Karthik Swaminathan
Understood. Thank you, sir.
Operator
Thank you. Next question comes from the line of Nitin Agarwal with DAM Capital. Please go-ahead.
Nitin Agarwal
Hi, thanks for taking my question. DR. On — in the past, you’ve talked about post the transition, are you looking to sort of step-up some of the growth investments. Have there been any specific areas where some of this activity is already underway? And if you can sort of highlight that?
Yasir Rawjee
Yeah. So we’ve — I was answering Sajal right earlier, where I said that we’ve already started looking at things, right, and started work-in R&D already. Okay. We hope to move into — we hope to have our own R&D facility in about a year, year and a half, but we are not waiting for getting that extra space in order to expand. We’ve already started doing work-in a couple of areas. Okay. Unfortunately, I won’t be able to tell you what all that is, but work has begun in earnest on two areas, areas okay you know basically new platforms that we have already started working in and we will be adding a few more right in the next six to eight months. We hope to sort of commercialize these kind of these you know some of them in you know early FY ’27 right so you know it’s work-in progress and we’ve started making early investments, small investments because it doesn’t yet involve manufacturing, but it’s certainly happening at the R&D level at this point.
Nitin Agarwal
And given the fact that we’ve got now relatively unfettered access to the cash that we have. In the past, we’ve been giving out larger dividends, you know, given the structure that we were in. How are we looking — and we continue to generate a pretty reasonable free-cash even at this point of time. So any thoughts on how would we look on the cash utilization for the business? One part is R&D you mentioned will take-up some amount of incremental cash. Where else does the money really go from here beyond this?
Tushar Mistry
Yeah. That is also the greenfield expansion that is coming up in. So there is a good amount of investment that is happening in that area as well. So CapEx for next three to four years is well laid out, should be in the range of another INR400 crores INR500 crores easily. And so that’s how the surplus cash will be utilized. Of course, post that also there will be some surplus cash on the balance sheet. The dividend will not be as high as what it used to be in the past. But obviously, there will be some element of dividend also that will come.
Nitin Agarwal
Thanks. And secondly, Dr on — on the slide where you talked about the cumulative filing status. We’ve got 168 DMFs which are there in North-America. Now all of these are — I mean, are these — I mean, what proportion of these products you would be sort of supplying literally on an annual basis or have some sales are coming through on a regular basis?
Yasir Rawjee
About half is a little more than half.
Nitin Agarwal
Okay.
Yasir Rawjee
And so because the thing is that patent expiries also have not happened, right? So many of these are not commercial. I mean, they are filed, okay, but the patent expiries are going to happen in the next few years and that’s when we’ll be supplying commercially you know. So you get it right why it’s about half.
Nitin Agarwal
And third link point is what’s the filings are there in North-America, the number of filings in other regions are far lower, especially like countries like Japan and Brazil. So I mean how much of an opportunity is it for us to sort of geographically expand the current basket?
Yasir Rawjee
Yeah. So that’s a good question. I mean, the thing here is that these markets, Brazil, Japan and so on, we’ve been — we’ve been filing or on the basis of customer interest, okay because you see what happens is that we’ve already got all the data in-place, right? And we also have either validated material at the commercial-scale or we are supplying commercial quantities to other regions. So here it’s a relatively easy sort of thing to do to make the filings happen because you’ve got the stability data, we’ve got everything in-place, so then you don’t want to have an empty file, right? If there’s customer interest, they want to go-ahead, yeah, we are ready to file, we file, you know, they take our material, file, you produce exhibit batches and then file the dossier. So that’s the way things have been going. And I think it’s a — it’s a good optimization in terms of resources, right, how we plan our resources.
Nitin Agarwal
And so when we look to the next three to five years, you will see most of your growth if you were to break it up will be coming from your existing portfolio or it’s going to be largely driven by the newer launches?
Yasir Rawjee
Oh, a big part is going to come from newer launches. I mean a big part is going to come from new launches. And if I look at four, five-year horizon, I mean half the revenue will be from new, right? Right. So about half the revenue that will come in, let’s say, year four or year five from now will be from new launches.
Nitin Agarwal
Okay. Okay. And last one, if I can squeeze in up. In terms of the competitive intensity in the business, have you seen any changes over the last few quarters?
Yasir Rawjee
No, it’s — the competitive intensity remains the same. It’s high. But then again, right, I mean, you we do have our differentiators, right, in terms of being in the regulated market space, offering a better service, better product, better cost many times, right? So all that is there, right? So we continue to sort of trend along the same lines in that sense.
Nitin Agarwal
Thank you so much.
Yasir Rawjee
Thank you.
Operator
Thank you. Next question comes from the line of Tang with Old Ridge. Please go-ahead.
Unidentified Participant
Hi, good evening. Couple of questions. One, how is the volume growth for this quarter? And second, for the CDMO business, you know you averaged about INR140 crores in FY ’24, nine months, you are at about INR100 crores. So would we expect some growth? I mean, given that we are already about three weeks into the quarter, so some view on the CDMO business in the immediate term? And secondly, given that the fourth project has just been commercialized and you’re expecting one more project to be commercializing in H1 of FY ’26, how should we see the trajectory of that business or for FY ’26 or is it too early to really forecast FY ’26?
Yasir Rawjee
So, FY ’26 is a little early because we are expecting approval on the fifth project, right? Just like any project, right, I mean, the initial uptake is a little slow and so I answered earlier, right, that the CDMO the fourth project started, right, but it’s not very significant, right? And then the three projects that we have, right, they do have a bit of a cyclical demand pattern, right? And so that is playing out essentially on the CDMO. On the volume growth, I’ll just come back to you.
Tushar Mistry
Yeah, volume growth, I mean price erosion that we have seen is around 6%. So volume growth is about 18% for us in the quarter.
Unidentified Participant
Okay. Second, just on the CDMO and overall business doctor, I mean, generally do you — what is the kind of vantage that you have on the business? I mean, do you have a good view of how the quarter or how the next six months are going to pan-out or generally, it’s really a monthly tab that you have on the business?
Yasir Rawjee
Good question. See, what happens is that when these kind of projects start, right, initially you get a lot of feedback because the customer wants to make sure that you want to service them. But as your service levels are at a high-level anyway, then they don’t worry about it and they just sort of take you as a regular supplier, right? So visibility in that sense becomes lower, okay, because it’s just like, yeah, we’ll get the material anyway, there’s a certain lead-time and that’s it, right? So that’s how it usually happens. So as you kind of get taken for granted as you know, get better at your work. Yeah. So that happens.
Unidentified Participant
Okay. Sure, last question on capex. I think FY ’25, my notes might be slightly incorrect, but were we anticipating INR300 crores to INR350 crores in FY ’25?
Tushar Mistry
Yeah, that’s right. Your notes are right. And the first-nine months is about INR1190 crores, right. As I explained earlier, the budget allocations are already there for the projects that we have. For example the greenfield project in as well as the new R&D center that doctor spoke about some of these are not yet fructified. I mean, while has started, the spends have not yet the balance sheet yet and the R&D center, we are still shouting for the rank pass once and then you have the outlook.
Unidentified Participant
Got it. So this is just a timing mismat there is nothing really changed?
Tushar Mistry
Like.
Unidentified Participant
Got it. Okay. Thank you. All the best.
Yasir Rawjee
Thank you.
Operator
Thank you. Next question comes from the line of Damayanti Kerai with HSBC. Please go-ahead
Damayanti Kerai
Hi, thank you for the opportunity. My question is for Dr Yashir. So just want to understand the generic business pickup a bit further. So very strong performance. So can you clarify a few things? First, whether the — like without spillover benefit from the previous quarter, how was the performance? And does 3Q number also reflect some sort of front-loading by the channel partners? And then on the broader industry part, if you can comment on the demand and pricing scenario. So I guess I just heard like 6% price erosion. How does this stand versus erosion in the prior quarter? So these are my questions. Thank you.
Yasir Rawjee
Thank you,. So as far as the servicing in this quarter, yeah, there was — we partially made it up, okay. It’s difficult to kind of give an exact number, but it’s even without that, let’s say, we had done that number in Q2 already, you would still have a pretty strong growth in Q3 as well, okay. So of course, like I said, right? And the reason for that is that we’ve got to meet customer expectations first, right? So if they — if we sort of slowed things down for a customer in Q2, we had to make it up in Q3. That was the most important part. And it’s a multipurpose facility, right, that our facilities are all multipurpose. So we had to sort of you know, know, stack that up depending on, you know to ensure that customer service — servicing happened. So I mean, short answer is, it would have still been a pretty strong quarter in Q3, right? Even if, let’s say, we have done some of the servicing in Q2. And that’s why we said in our commentary that some more will also happen in Q4, some of that servicing that needs to happen, that’s still sort of pending from Q2. So on the front-loading, you have to help me a little bit. I didn’t quite understand when you say — I mean, our customers are stocking up, is that what you’re asking?
Damayanti Kerai
Yeah. Yeah, actually in December quarter, which is a calendar end quarter, right? So I guess we have seen in the US that there is bit of front-loading or stocking up by the channel. So just want to understand if that was the case for your numbers as well.
Yasir Rawjee
No, I don’t think so. In fact, we’ve actually seen in the past a reverse kind of trend because it’s the last quarter and we are rationalizing inventory, right? So they — they want to sort of order less. But I mean, it hasn’t really happened, right? As far as erosion goes, erosion remains more or less steady at about 4.5%, 5%, right? It’s not and that’s on the bucket, okay? It doesn’t happen at a product level, right? We see that on more mature products, we see more erosion and on newer products, we see less erosion. So that’s — but as a function of the bucket, we see about 4.5% to 5.5% kind of erosion, you know on the overall.
Damayanti Kerai
And just on the demand perspective, are you seeing better demand from your customers or it’s more pretty compared to last few quarters.
Yasir Rawjee
So demand is stable in India, Europe, Japan, in fact, it’s really good in Japan, ROW and Europe, right? India is stable, but the US and Latin-America are a bit weak, okay. So we are — we are seeing a — we’ve been talking about LatAm for some time now that because of the Argentinian currency situation, right, our Argentinian customers are very conservative these days in terms of their demand, right? And so that is impacting LatAm demand overall, right? And then the US also, the demand coming from the US also is a little subdued. So overall, I mean, because we have got strong demand coming from Europe, Japan, ROW, right, it’s kind of covered it up. And going-forward, we’ll see this trend for a couple more quarters, right, with these regions that are performing well to continue to perform well and these other two regions that is basically the Americas, right, going to be a little subdued.
Damayanti Kerai
Understood. Thank you very much for explanation. I just clarify.
Yasir Rawjee
Sure.
Operator
Thank you. Next question comes from the line of Shubham Patidar with Tamaha Investment Managers. Please go-ahead.
Unidentified Participant
Hi, thank you for the opportunity. I just have one quick question on working capital cycle. So it is at 182 days. I just want to ask, is it — are we standing at the top-end of the spectrum? And is it going to go down from the next — for the next quarter or is it going to still go up for a little bit?
Tushar Mistry
Yeah, we believe this should put this should be the peakout for this working capital. From this level, it should ideally come down.
Unidentified Participant
Yeah, that’s it. Thank you.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Jay Patel, an Individual investor. Please go-ahead.
Unidentified Participant
Thanks for the opportunity and congratulations on the good set of numbers. My first question is regarding, sir, our thought process for backward integration. So we have backward integrated and now even at, we are doing a significant backward integration for 400K. So just wanted to get a thought process around that. Is it for — to protect our margins or you want to your raw materials from China. So thought process would be a good fit.
Yasir Rawjee
So it’s for both. I mean, there is a margin benefit also usually, but it’s also where we’ve got a pretty substantial business, right, and a narrower supply base there we don’t want to risk it. And so we are going to — we’re going-in that direction and buyback would indicate.
Unidentified Participant
Right, sir. And sir, secondly, there is a lot of chaper regarding US biosecuring. So many players are very much hopeful about Indian pharma industry. US really wanting to de-risk from China. So how do you see that, sir?
Yasir Rawjee
Yeah, it’s certainly going to be positive, right? The act has not passed, right, but with enough awareness you know, in the pharma community, right in terms of how the US is thinking about you know this whole thing right I think the word has already got around that people need to derisk if they are completely dependent on just China alone. So that has gone well, I would say and I mean that momentum has picked-up. So people you know it’s going to, I think be a positive thing for us going-forward. I mean, we’ve seen — we’ve definitely seen more interest, right, you know, even on existing commercial products, right, more inquiries. And I would say that it’s because of this?
Unidentified Participant
Sure, sir. And sir, last question is regarding the high potent API and as well as the iron complex molecules. So what is the competitive scenario domestically in India? And the broader question related to that would be, do we have or do we choose our products, newer products based on competitive intensity or market size? So just wanted to get a sense of how do we choose new products.
Yasir Rawjee
Okay, let me just address the iron complexes and high potency. Iron complexes are complex molecules. It’s very difficult for anyone, everyone to do it just like let’s say small molecules are done, simply because in order to establish equivalence with the innovator, the amount of characterization that has to be done has to be very significant, okay. So iron complexes, so basically the bar that agencies like USFDA put is very-high in terms of establishing equivalence. And that’s why the competitive intensity is pretty low okay in these complex molecules. As far as high potent goes it’s a different sort of it’s a different approach you take, we basically target a getting in early with customers, right?
And because the R&D investment is quite significant, basically, it’s how quickly you can lock-in the customers. And if we are able to lock-in a good number of customers at the beginning, then you end-up getting a sustainable business over the long-term. So that’s the — that’s how that game is played. As far as the domestic market, we don’t do much frankly in the domestic market in either iron complexes or in terms of high potent, right? We are largely targeting the export markets and sir, actually I was asking regarding competitors — Indian competitors in these segments. Yeah. So the high-end companies who are operating at our level in terms of quality, regulatory, you know, those players are competitors and — but then there’s a handful, right? You don’t have like everyone that you find on Google can be a competitor for us, right? That won’t happen. Yes.
Unidentified Participant
Sure, sir. Thank you. That’s it from my side.
Yasir Rawjee
Thank you.
Operator
Thank you. Last question comes from the line of, an individual investor. Please go-ahead.
Unidentified Participant
Good evening. Please congratulation to the company and the management for your good number to see in this quarter. I have a very specific two questions. The first question is that will the company pay the dividend this year as they pay last two years, good handsome dividends have been paid, but I think last year the dividend has been not paid. That’s one question. Whether they would be — I mean, they are in a position to pay because there were lot of cash available with the company almost close to INR500 crores as I could see from the. The second question, what I could see that the change in the management and the ownership from the to the of has gone to that company. And I believe the new management, they have a lot of expertise in chemicals, pharma and many other areas, supposed to be having a lot of keen interest in such kind of pharma companies. So probably they have acquired. That could be my guess. So any idea of being a top management you — any idea if they are going to have some kind of a forward increase in any kind of pharma formulation sectors in future they would like to go. The other very simple two questions.
Yasir Rawjee
Okay. So Tushar will comment on the dividend question. As far as the management of goals, right, the management remains the same. Okay, we have been — this management team has been running the company for the last six years and Nirma, who has come in as the majority shareholder, continues to back this management team simply because we’ve got the track-record and they like our approach with respect to the business so-far and the plans that we have to take the company forward. They do bring in a lot of very good experience and understanding about the chemical business and that will certainly play a very important role of you know, when we get into more automation in terms of handling, let’s say, if we get into larger high-volume product — larger — larger volume products. Products so that benefit will certainly come to us as a result of you know Nirma’s you know ownership of the company so you know but directionally, it’s the same approach with the same management team that is going to continue to drive the company. Okay. As far as dividend, I’ll hand over to Tushar, you know an answer. Thank you.
Tushar Mistry
Yeah, the dividend till last year as till the times that are part of Glenmark Pharma, but also from a requirement for upstreaming the cash to the parent company. And that’s why the dividends used to be higher at that point of time. There is no such duration at this point of time from Nirva. And in fact, as Dr mentioned in his earlier comments that the cash on the balance sheet is going to be used for a future growth capital investment. So dividend may not be as high as what it used to be in the past, but it will certainly be there to some extent moving forward.
Unidentified Participant
Okay. Thank you.
Operator
You. Thank you. Thank you. On behalf of Alivus Life Sciences Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.