Alkem Laboratories Ltd (NSE: ALKEM) Q3 2025 Earnings Call dated Feb. 07, 2025
Corporate Participants:
Purvi Shah — Head of Investor Relations
Vikas Gupta — Chief Executive Officer
Nitin Agrawal — President and Chief Financial Officer
Analysts:
Tushar Manudhane — Analyst
Saion Mukherjee — Analyst
Kunal Dhamesha — Analyst
Rashmi Shetty — Analyst
Amlan Das — Analyst
Bharat Celly — Analyst
Madhav Marda — Analyst
Neha Manpuria — Analyst
Foram Parekh — Analyst
Srikanth — Analyst
Naman Bagrecha — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Laboratories Q3 and 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. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Tushar Manoudane from Motilal Oswal Financial Services. Thank you, and over to you, sir.
Tushar Manudhane — Analyst
Thank you, Sam. Good evening and a warm welcome for 3Q FY ’25 earnings call of Laboratories. From the management side, we have Dr Vikas Gupta, CEO; Mr Nitin Agarwal, CFO; and Ms Purvi Shah, Head of Investor Relations. Over to you,.
Purvi Shah — Head of Investor Relations
Thank you. Thank you, Pushar. Good evening, everyone. We appreciate you joining us for our Q3 and the nine months FY ’25 results call. Earlier today, we released our financial results, press release and investor presentation, all of which are available on our website and the exchanges as well. We hope you’ve had the chance to review them.
Before we continue, we want to remind everyone that this call is being recorded and the transcript will be made available on our website afterward. Additionally, please be aware that today’s discussion may include certain forward-looking statements, which should be considered in light of the risks our business faces. Now, I hand over the call to our CEO, Dr Vikas, for his remarks. Over to you, sir.
Vikas Gupta — Chief Executive Officer
Good evening, everyone, and thank you for joining us today for our 3rd-quarter earnings call. We are pleased to share that the actions we have taken to improve the overall profitability continue to deliver positive results by concentrating on higher-margin offerings, better aligning with the market needs and implementing various cost-saving strategies to reduce inefficiencies, we are seeing growth in our EBITDA margins. Within the domestic market, our focus is on expanding the presence of our flagship brands and strategically enhancing our portfolio.
Looking ahead, we are confident that these initiatives will continue to drive sustainable growth and strengthen our market position. We have also announced two acquisitions, Android, a pharmaceutical healthcare company with a focus on dermato Cosmetology at a cash consideration of INR140 crores. And second is Bombay Ortho, a manufacturer and supplier of orthopedic implants such as hip and knee implants, which are extensively used in orthopedic fields at a cash consideration of INR147 crores.
I will now present the key highlights of Q3 and nine months FY ’25 financial performance. The total revenue from operations for Q3 was INR33,743 million with Y-o-Y growth of 1.5% and for nine months, it was INR98,208 million with Y-o-Y growth of 0.9%. Q3 EBITDA was INR7594 million, resulting in a margin of 22.5% for the quarter and an increase of 7.3% Y-o-Y. On a nine-month basis, INR21,208 million, resulting in EBITDA margin of 21.6% and an increase of 15% Y-o-Y. Q3 FY ’25 net profit was INR6 million to $58 million with a Y-o-Y growth of 5.2% and for nine months was INR18,596 million with a Y-o-Y growth of 23.8%. In Q3 FY ’25, according to IQVIA, the company registered a growth of 6% Y-o-Y against a market growth of 7.2%. Outperformance was seen in seven therapies, which are VMN, anti-diabetic, GI, Neuro CNS,, Respiratory and Urology.
Our top-50 brands have collectively registered 8% value growth and 32 brands have increased their market-share Y-o-Y basis. Our company registered a positive volume growth of 1.1% in a challenging market that witnessed a marginal 0.3% volume growth in Q3 FY ’25. Among the top 12 IPM brands, Pan D has recorded the highest-growth rate of 15.5% in Q3 FY ’25. Pan saw a 1.9% increase in-market share, rising from 38.5% to 40.4% Y-o-Y, achieving its highest market-share to date. As we move forward, we remain focused on delivering strong results, positioning the company for continued growth and driving long-term shareholder value. I want to thank our teams for their hard work and commitment to excellence. We are well-positioned to capitalize on the opportunities ahead and I’m excited about the future. We can now open the floor for questions-and-answers. Thank you.
Questions and Answers:
Operator
We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and then one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use only handsets while asking a question. Participants who have a question may press star and then one on the touchstone phone. The first question is from the line of Sayan Mukherjee from Nomura. Please go-ahead.
Saion Mukherjee
Yeah, thank you and good evening. My first question is, I think at the last call, you mentioned that there would be some overhead expenses of around INR70 odd crores. Has those expenses started to come through? And secondly, you had guided for 19% EBITDA margin for the full-year. In nine months, it’s 21.6%. So it seems like you are on course to sort of beat that number. So if you can give a revised guidance for fiscal ’25.
Vikas Gupta
So on the overall margins, I would say we are pretty much on-track for the guidance that we had given earlier., as you know, Q4 is our lowest quarter and we have lot of filings that we are going to do in Q4 because of which our spend is also higher in Q4. So Q4 generally is sluggish, whatever — but whatever our estimates are, we should be around 19% or no guidance. We continue with our Arment, you know that guidance. Your second part was on —
Nitin Agrawal
I think it was about our, say, spend in Engine US and for medical devices, right, INR70 crores?
Saion Mukherjee
Yeah, overheads you mentioned, I think INR70 crore will start coming in.
Nitin Agrawal
So at YTD level, both engine US plus medical devices together there was a loss funding of around INR35 crore to INR40 crores including both engine US operations because that is yet to begin and also the MedTech dividend.
Saion Mukherjee
No, so I’m just wondering — so you’re saying this is for the full-year. I mean in this quarter, is there going to be a step-up in the expenses because I was thinking there will possibly be a step-up?
Nitin Agrawal
Yes, maybe in-quarter four, it may go up. But level, it was INR35 crores to INR40 crores. And for the quarter, it was INR15 crores to INR20 crores. So in-quarter four, yes, you can see additional expense of INR20 crores to INR30 crores, including both additional engine US and MedTech.
Saion Mukherjee
Okay, additional 20 to 30. Okay. And my second question would be on launches. So firstly, on the US, if you can indicate if you can name products or otherwise, are you looking at any low competition, high-value launches over the next 12 months. And also, do you have any plans with respect to GLP-1 in India?
Vikas Gupta
Okay. So first on the GLP-1, we should be amongst the first wave of players who would come in with GLP-1. We have already represented ourselves to the regulator in India. And I think we are pretty much on-track to be amongst the first few players who will come up with semaglutide in India at the time of launch. The other question was on the US. In US, we have got a approval for –, that market that product is under I think there is a — it’s a matter subduedice. So the market should open up by July and we should be there on day-one. As far as the new launches are concerned.
There are other — this year we had generic Suprep, but if you ask me, there are some other launches like carbon extended-release, but it’s not a very-high this thing, which is in ’25, ’26, for next year, we will have topyramid oral solution, which may — which we introduce which may come up in the coming year, but no other major launches that we see next financial year.
Saion Mukherjee
Understood. Thank you, sir. I will join back to queue.
Vikas Gupta
Sure. Thanks, Anne.
Operator
Thank you. The next question is from the line of Kunal Dhamesha from Macquarie. Please go-ahead.
Kunal Dhamesha
Hi, thank you for the opportunity. Sir, one question on other expenses. Is there any forex-related charge or anything that is baked-in?
Vikas Gupta
So at YTD level, we are still — we booked an income with ForEx gains. But for the quarter there was a loss. But since at YTD level, there is a gain. So we have reported ForEx loss under other income. So other expense is not impacted by any ForEx loss in-quarter three. All the losses on account of ForEx has been booked under other income.
So there was a loss of around INR20 crores because our exposure in Chile is high and the currency in Chile, the are so actually depreciated against dollar. So we booked a loss, but that is reflected in the other income.
Kunal Dhamesha
Okay.
Nitin Agrawal
But at YTD level, we don’t have any loss. Actually, there is an income on account of that.
Kunal Dhamesha
And sir, YTDL, what is the income.
Nitin Agrawal
Around INR10 to INR20 crores.
Kunal Dhamesha
Okay, sure. And one for doctor you know the GLP one, while we are expecting it to be you know, in wave one in terms of, let’s say manufacturing, etcetera, how are we positioned fully-integrated, partnered and a broader question on India growth that has remained subdued for us, right? So where do we see this growth for India business in the next one or two years? And what are we doing to combat, let’s say, acute therapies continuing to grow slower and let’s say, if I look at the broader healthcare ecosystem, I would still say quarter two had seen a lot of acute related infections at least in the hospital side, but the acute therapies in on pharma side was lower. So is there something that is happening at a ground level, which is why the acute therapies are slower, how to think about it?
Vikas Gupta
So Kunal, I’ll take it one-by-one. I think your question is more on the overall growth in India. See, yeah. Our growth in India, even in this quarter, we have reported around 6%. If you see the branded generic growth is even more — is even stronger at around 7.5% or so. If you look at even IQVIA in Q3, you know, there has been a general slowdown in the acute market. But in this quarter, we have — our performance has been at par or a shade better than acute market. And acute market grew at around 5.7%, we grew at 5.9%.
So our growth in India is on-track. We are very bullish about it. The difference that you see in the market is because a large part of our portfolio is under NLEM. If you look at the volume bodes, the market has grown only by 0.3%, whereas our volumes have grown by 1.1% as far as IQVI is concerned. So going-forward, I would say, in fact, Q4, we are expecting even stronger growth as far as our portfolio is concerned for domestic. So when it comes to the overall, you know, year end, our sense is that we should be broadly in-line with the market. As far as overall India growth is concerned, the market is growing at around 7%. We should be pretty much in-line with the — with that kind of growth as far as India is concerned.
Going-forward, as we make new introductions, as our portfolio continues to become more contemporary with launches like GLP-1s, etc., in times to come, we clearly look-ahead to surpass the market growth. We are also evaluating how the NLEM, how the WPI price and this whole index is moving. And if we get a favorable — this year, as you know, we got a 0% of almost 0% kind of price growth on that large portfolio. So I guess our intent has always been on growing the volumes. So I don’t see fundamentally anything you know, grossly changing, of course, there are a there is a generic market, there is a Jan market, there is a lot of government spending, that’s happening in healthcare.
So I’m sure these areas are also taking away some part of the growth, but I don’t think from our business perspective, we have any reason to worry about it or slow-down because we are in branded generic business. And all our top brands, as I mentioned, they are gaining market-share in their respective categories. We are going pretty strong on our big brands getting even bigger, starting from whether it is a pan, whether it is a, where we have outperformed, whether it is uprise D3, where we have outperformed, whether it is A2Z, where we have outperformed. All these big brands that are there for us.
N fact, the 32 brands amongst the top brands for the company have gained market-share on a Y-o-Y basis. So I think our — our brand business story is pretty strong and we will see a growth of getting even better in time to come as far as that portfolio is concerned. So India, we are very bullish. We are going strong. We are introducing new launches. With regards to semazutide, I think we are fully prepared. I cannot diverse where we will manufacture what we will do. But I can tell you we are fully prepared with our strategy to get to the market. So it’s a product which our R&D has developed and we will be launching it we — I will say we will be first among prequels. That’s the way I look at it.
Kunal Dhamesha
So sir, just a follow-up on that, if let’s say, our branded generic was up like 7.5%, then probably our trade generic would have degrown in a way because trade generic is roughly 20%.
Vikas Gupta
It has been flat.
Kunal Dhamesha
Okay. So what has changed here because this business used to grow at least slightly faster than prescription business, you know, not just you, but one of your big peers as well grow slightly.
Vikas Gupta
Yeah. So in generic business, actually a lot of newer players have come in. There are lot of — there’s a lot of pressure on the pricing and there’s a lot of pressure on a lot of competition. Our emphasis there has been to not dilute our margins. In fact, we have improved our margins as compared to previous years as far as generic business is concerned.
So we are not going after a top-line, but we want to have the right balance of a top-line growth as well as the margins. So earlier, you know, the margins were very low as far as this business is concerned, now our margins are only a shade lesser than our overall corporate you know margins. So that’s why you can see that — and of course, in generic also a large part of it is acute.
So when the whole overall acute market has slowed down with increased competition, you know there is there is this pressure on-top line growth for the last one or two quarters that we are seeing. But — but I’m sure going-forward, that business should also continue to grow at the pace of the market.
Kunal Dhamesha
Sure, sir. So margins are lesser than consol margin or the India margins.
Vikas Gupta
Consol margin.
Kunal Dhamesha
Consol margin. Okay. Okay. Thank you. Thank you and all the best, sir.
Vikas Gupta
Thank you.
Operator
Thank you. The next question is from the line of Rashmir Shetti from Dolat Capital. Please go-ahead.
Rashmi Shetty
Yeah. Thanks for the opportunity. Just again on India business, you know earlier used to basically be very strong in the paint segment, but we have underperformed this entire year. Also in your cardiac and dermatology therapy, we are underperforming the market. So what are the challenges over here and how should we really look at this? Is it a temporary thing which we have faced in this year and it’s going to be strong next year or how should we look at it?
Vikas Gupta
Yeah. So I — two reasons. As far as pain is concerned, last year, we had taken certain price corrections in our portfolio. So if you look at our volume growth, especially in brands like XT, we have reported significant growth in volumes. And that price should now it’s — it should start reflecting in the coming quarters in terms of the overall growth in terms of value as well, right?
So I think that was more of a strategic call to grow the volumes and to grow the units. So I — on that front, I don’t foresee any challenge. See, when it comes to cardiac, we have never been a strong cardiac player and this is what I think I have always maintained on the call. Even in our CVD portfolio, diabetes is our major player. And if you look at the anti-diabetic market, we are outperforming. So wherever we are — we are present, we are going very strong over there. Cardiac has never been a very strong play for us any which ways though internal numbers are different from IQVIA numbers and we have no reasons to worry as far as cardiac growth is concerned. But anyways to the overall scheme of things, it doesn’t — because cardiac we are not a strong player any which way. So it doesn’t affect us much. We are going strong where we are present. So that’s how I’ll address it.
Rashmi Shetty
Understood. So your domestic guidance for this year is around 7%, right?
Vikas Gupta
Yeah. Yeah. Okay.
Rashmi Shetty
Okay. And on US, you know, any — the quarter-on-quarter improvement in the growth is — you know, is due to any launch, any new particular launch you have done in-quarter three? And you know if you can also comment on the price erosion in the US market for your erosion?
Vikas Gupta
Yeah. Price erosion has stood at tune of around 5% though in the NRV basis because we had some forex gains because of dollar, it’s 2.5%. But if you look at — it’s backed by more of our supply getting regularized. Like I had mentioned last year, if you look at March, till March, we used to have a 38% backorders in US. This quarter ended, we have only 2% backorders in US so if you remember Q2 we had reported a de-growth of around 22% as far as the US market is concerned, but this quarter, it’s only minus 7.
So I can say that because of our improved supply, that we have — it’s not backed by any new launch that we have done in US, it’s just that some of the contracts that we had got out of some of the accounts that we had got out of, we have again, you know slowly and slowly getting back. So if you look at even for Q4, you know, we are expecting it to be a say flat, lakh because as we are moving ahead from a minus 22%, we are at minus 7%. My sense is that by Q4, we should be neutral as compared to last year. So that’s the kind of outlook that I have for US. US and for next year, again, that market has its own challenges, the market has its — the prices keep getting eroded. We look at price erosion at mid-single digit kind of price erosion that — and we expect that to continue even next year. But that should be offset more or less by the new launches that we would do one or two and the volume growth because of the better stock situation that we have in US market now. So next year should be better than this year as far as US market is concerned.
Rashmi Shetty
So product launches, you are saying we’ll be doing only one to next year.
Vikas Gupta
Yeah, so — but there are one or two products like where we are doing pretty well over there. Product launches will be one or two, but because of a better supply situation now, you know, which we had our stocks in US had come down to very low levels. Now we have good in-market stocks. So the — whatever orders we will receive, we will be able to sell. So I expect that also to contribute in the coming year.
Of course, it will not be a very-high growth market any which ways. What I’m saying is our performance will be much better than what it has been in this year as far as the US market is concerned.
Rashmi Shetty
Okay, got it. And one last question on the margin. You said that guidance is around 19%. Even in your quarter-four FY ’24 EBITDA margin was around 13.7%. So even if I take no expansion and a flat margin, still our average EBITDA margin goes beyond 19%. So is it fair to understand that quarter-four EBITDA margin, there would be a contraction Y-o-Y?
Vikas Gupta
See, there may be slight contraction, but while we will try, we are still in the quarter, we will — we are making efforts because there are certain expenses that we are going to do in-quarter four because of additional filings. So there may be a higher R&D spend that we may have to do because we have to file a lot of products in Q4. We are looking at least five filings in Q4. Because of that, our expense spend may look a little more, more which — so we may be a shade lesser than last year as far as our margin expansion is concerned, but we are making efforts to see, you know if we can keep it at that level.
Rashmi Shetty
Okay. Thank you. Thank you. That’s it from my side, sir.
Vikas Gupta
Thank you.
Operator
Thank you. The next question is from the line of Amlan Das from Nomura India. Please go-ahead. MR. Das, your line has been unmuted. Please go-ahead.
Amlan Das
Yeah, hi. Sir, sir, my question is regarding yours. So have you done your filings this quarter, what is the number of ITD — filings YTD?
Vikas Gupta
Three filings we have done so-far in this year and total till Q3 and we are expecting another five to happen in Q4?
Amlan Das
Okay. And sir, any launches this quarter?
Vikas Gupta
This quarter loan, lower launch.
Amlan Das
Okay. And sir, my next question is regarding the acquisitions. So regarding Bombay Auto, so I’ve seen that you have recorded for around INR147 crores, which turnover is around INR5 crores. So how do you expect this business to pan up in the near-future?
Nitin Agrawal
So a few months back, we announced our entry into auto business by licensing the Exact technology. Exact is one of the most popular hip and knee replacement brand in US so in the premium segment, we continue our strategy to launch Exact, which will be sometime in December ’25, we are going to launch those — that product. But that will be in premium segment.
Bombay Auto, we have acquired to actually capitalize the growth in the value segment because the value segment in medical devices is growing at a very fast pace and we wanted to capture it. And so this particular acquisition give us a manufacturing capability also because we didn’t have any manufacturing setup for our auto business. So this will give us a capacity of around 2,000 knee replacement, which can be manufactured on a monthly basis and will allow us to reduce our cost of production of these instruments further or this implant further so that we can capture good market-share over next five years in the value segment of auto hip and.
So just to give you the market size, it’s around INR2,400 crores of annual market, which is in India for hip and knee. And look at the segment, the value segment is growing at a very fast rate and also maybe going-forward this implant can also be covered under Ishman Bhara. So this — so considering all these factors, we have required or two. Again, I’ll repeat. One is that it provides us a manufacturing capability. And second is since we want to also get into the value segment and also maybe gradually into ROW market because the exact deal which we signed was only for the India market, but this deal will allow us to manufacture and sell our if any replacement products also outside India, mainly the of the market.
Amlan Das
Okay. So on a market size you said this INR2,400 crore today in India.
Nitin Agrawal
Only of India.
Amlan Das
Okay. Okay. Okay, sir. Thank you.
Operator
Thank you. The next question is from the line of Bharat Kali from Equirus. Please go-ahead.
Bharat Celly
Yeah, hi, sir. So sir, just wanted to get a sense on the overall margins. So how — since we are expecting our domestic growth to be almost like 7% for this fiscal, so we are expecting almost like 10% to 11% for the 4th-quarter and probably our expenses also, even if I take it will be there — so how we are projecting it to be 9% margin for the year because unless we achieve 10% to 11% margin in the 4th-quarter, that sort of margins or 19% margins will not be possible. So are we expecting 4th-quarter margins to fall as much as to 11% for the.
Vikas Gupta
So Maharat, you know, I’ll be very happy if we are able to report more than 19%. At this stage, what I said, our guidance looks like which we had given earlier of ’19 standstill. But if we may — see, we are going ahead with these filings in Q4. So if our R&D spend, you know gets to be in control, then we may even go-ahead. But at this stage, I would refrain myself from giving any guidance beyond ’19, that’s the whole intent because in Q4, we have a lot of expenses any which ways that we have to cover. Yes, on the overall growth guidance, that’s fine. We do not know-how international business is going to shave, we should be shape better on that front. So our product mix might change. There may be a change in the overall margin profile for Q4. So that might impact you know, maybe a little bit here there, but let’s wait for Q4 to really get over on that front. 19 is what we are — because we had given our previous guidance of around 19. So we — that holds the probability of that is very-high is what we I mean.
Bharat Celly
Right. And sir, how we are — how our international ex-US margins look like, whether those margins are far lower than our consolidated margins or probably in-line with what we report consolidated.
Vikas Gupta
Non-US margins are better, very much better than much better than the US margins and much better than console as they are much better than our corporate EBITDA now.
Bharat Celly
Right. And are we calling out our trade generic business for this quarter, if we could?
Vikas Gupta
Could — sorry.
Bharat Celly
How big change are we building it yeah.
Nitin Agrawal
So separately, as it still this business is being carved-out from 1st April as per the estimation. So we have separately reported in our notes to account the numbers for this business because in a standalone, this is considered as a car-out business for us. So the numbers are available in the notes to account for standalone business.
Bharat Celly
Right. But can we call-out how big was for the 3rd-quarter, if possible?
Nitin Agrawal
So the route number was around INR488 crores.
Vikas Gupta
INR488 crores for quarter three. And at level, it is INR17 — INR1,378 crores.
Bharat Celly
Sure. That’s helpful. That’s it from my side. Thanks a lot.
Operator
Thank you. The next question is from the line of Madhav from Fidelity. Please go-ahead.
Madhav Marda
Hi, good evening. Thank you so much for your time once again. On launch, I just wanted to understand that given that a lot of companies are planning to be in the first wave of launch, obviously, given it will be a large opportunity for the country. I’m just trying to understand what is like the right to win for any player? Is it a like manufacturing capability to sort of being backward integrated to make the product or is it like prescriber access where you kind of — I’m assuming you would having to have specialty doctor or KOL access to kind of get the initial share given it will probably be a slightly more premium product at least in the initial years. So what will differentiate one player versus the other as this kind of launch comes through next year in the country? That’s my first question.
Vikas Gupta
See, we are looking at a big opportunity in the market and I don’t think any one player will be able to service the entire market fully. So there is enough opportunity for many players as far as this market is concerned. As you rightly said, it’s both. It’s the ability to have your own product with good relationships with the prescribers in the market, which will ultimately define how big or how small you know any player would be in that market.
My sense is it will not be as crowded as any other oral anti-diabetic that gets off-patent and then there is a sea of players, you see almost 50 to 100 players entering with any molecule that goes LOE. My sense is that this will be not as crowded, but of course, still there will be many players, but I’m sure the opportunity for everyone, you know is quite substantial as far as this market is concerned. Balance we will see how it goes when we see the different players coming in.
Madhav Marda
Are we planning to have any production in-house or any — I mean, there is a fairly like maybe three, four different parts of the value chain that helps you make the final product, but will we do anything in-house or it will be completely outsourced from perspective.
Vikas Gupta
We have all of this solved for. We’ll give you the details closer to the launch, but our strategy is very clear as far as this product is concerned.
Madhav Marda
Got it. And my second question was just on the — if you correct me if I’m wrong, has there been rise in 10 prices recently? And if there has been like how do we anticipate impact from that? And just on the second one was a bit on the ForEx. Does the forex depreciation, is it like net positive or negative from perspective. Thank you.
Vikas Gupta
So I’ll first take the part., we see in the last two months, the price is going up. So there is around, 20% to 25% price increase from where it used to be a couple of months ago. We are seeing that trend, but we’ve not had a recent. As I always said, month-to-month fluctuation doesn’t affect us to that an extent because we continue to hold certain inventory, right? So I think on a — if this trend continues over a period of time, then we will have an impact. Our sense is that it should stabilize at some level going-forward. What was your other question on —
Nitin Agrawal
Just sir, the ForEx bit like there been like 4%, 5% depreciation in the country. So for our business, given that we have some export, but we also probably import some raw-material, given you have a large India business. So is forex a net positive or negative for us or is it like neutral doesn’t impact net since our international business is around INR4,000 crores. So definitely it is positive for us because our export is higher than our import. So on an average, it’s 1%, say, appreciation in dollar, we gain between INR10 crore to INR20 crores on — depending upon the mix.
Madhav Marda
Okay. Got it. Understood. Thank you.
Operator
Thank you. The next question is from the line of Neha Manpuria from Bank of America. Please go-ahead.
Neha Manpuria
Yeah, thanks for taking my question. Sir, I just wanted to check on the trade generic comment that you made. If I look at the year-to-date number, we seem to have grown about 7% in this business. And I think there was a presentation that you guys have put up where you said that you expect the market growth to be more in the low-to mid-teens sort of a number. So is it just the competition that is impacting the growth or has the overall market growth slowed? And as we think about our trade generic business, should that then therefore, because of this competition continue to lag industry growth? Just trying to understand how I should think about the trajectory for this business.
Vikas Gupta
So in the absence of any organized data being available for generic market, I can’t give you specific numbers, but what I can tell you is what we are seeing in this business. In this business, we see one because the large part of this business is acute business. The large part of this business is in Tier-2, Tier-3 business — sorry, Tier-2 to 3 or Tier-3 town, right?
We have seen a slowdown over there in the last two quarters owing to either you can — you may Call-IT a seasonal slowdown or you may Call-IT economic slowdown, whatever may be the case. We have — we are seeing some pressures on that business in the last two quarters. I don’t think going-forward on a long-run basis, there should be a big slowdown over there because traditionally this business has behaved in-line with how the branded generic business has been. Of course, there were certain internal measures also that we have taken.
As I mentioned that our focus was not only on-top line, but also on improving the margin profile, which meant that we wanted to maintain pricing, which meant that we wanted to, you know be you know, don’t do business at certain level of margins. So I guess that is the reason that the recent quarters have shown some sluggishness over here. We are pretty — very bullish about this business in the coming years. Of course, it will not be a very-high mid-teen kind growth kind of growth business in the coming years. But yes, somewhere a high single-digit kind of no outlook is what I will have for a mid to mid to-high single-digit kind of growth outlook is what we will have for this business.
Neha Manpuria
Understood. And from our — for the branded generic business, just wanted to understand what’s our MR count now and do we plan to increase that and given the volume focused growth that we have?
Vikas Gupta
So our count has remained the same. It’s not a very-high expansion here that we have done. Going-forward, I’ve always maintained as and when there will be a right opportunity, we won’t shy away from adding people because this is our core business. This is our highest priority business. So whenever there is an opportunity to you know to add people over there, whenever there is a business need to do so, we would do that. Nothing in the near-term is what we are doing. In fact, we will add maybe when we will be launching some new products which need different teams.
Neha Manpuria
And even with the acquisition of the Derma cosmetology, you don’t think any incremental investment in terms of foot — field force, et-cetera is required to grow that business.
Vikas Gupta
So along with that business, we are also getting a team of around 90 people. So I think that should be, you know, sufficient to run that business. But there may be minor 10, 20 people here there that we may need to add or track, but nothing that puts a very-high load on. Of course, that’s a strategic move that we were looking for since long, it’s a — it’s a good business, it’s a nice brand that’s there in the market. Cosmetology was one area where we wanted to enter since long. So I believe this is the right strategic fit. You know, for us, this acquisition really gives us a better foothold as far as the dermacosmatology market is concerned. So I think it will add a lot of value to our business.
Neha Manpuria
Understood. And my last question from a capital allocation perspective, you know, while these deals are fairly small, we have a fair bit of cash. How should we think about Alkem looking at slightly larger acquisitions, you know, I understand why your priority will obviously has obviously been India, but is there any comfort level that you’re looking at from an acquisition perspective? And could we even look at larger deals probably in MedTech.
Vikas Gupta
So we’ve always said, you know, we’ve clearly defined our focus areas, right? Our first priority would be anything that we get-in India Formulation business if — because we believe that at our scale, we can clearly add synergy or clearly add value to any acquisition. And like you rightly said, we are building the as well. We have good cash on our balance sheets, in fact, our cash position has improved substantially in last one and a half year. So we won’t shy away from anything that makes it the right fit for us and adds a lot of value in the times to come. Of course, MedTech, we have just made one small, I would say, acquisition. But going-forward also, it’s an area of priority for us. If there is anything that comes at the right value, we would definitely consider.
Neha Manpuria
Yeah. And between branded Rx and MedTech, your preference would be for — which I mean, if I have to just rank the order of priority.
Vikas Gupta
See, of course, branded Rx is our core, branded RX is where we can create more value. But you know, acquisition is not something that you can do it at your will and there has to be a seller for there to be a right buyer. Of course, the seller has to have the right price. So we can’t — we are not going after any and every asset that’s there. We evaluate, we look at the strategic fit. And then we look at the various funding options. But if there is something where we feel that we can create more value in terms of even on the MedTech side, we would parallelly evaluate that as well.
Nitin Agrawal
And just to give more clarity, see, on MedTech, maybe over next three, four years, we may not go beyond INR2,000 crores to INR2,40 to INR5 crores of investment. That is what is the plan that at Max 2,504 is what we are going to invest in MedTech. And that is I think good enough considering the market size of auto and Cardiac in India. So — and also currently, we are at zero leverage. So we don’t have any loans in our books. The net cash position is around INR4,700 crores. This is a lot of say cash is available and also we can go for leveraging our balance sheet. So it’s all about the right opportunity which we are looking for in branded pharma business.
Neha Manpuria
And what’s the investment we’ve made so-far, sir, in MedTech, you know, the two acquisitions, the cost, it wouldn’t be more than INR200 crore INR300 crores, right?
Nitin Agrawal
Exact same thing was for around INR133 crores and this is INR147. So altogether, it is INR370 crores.
Neha Manpuria
Got it. Okay. Thank you so much, sir. Thank you.
Operator
Thank you. The next question is from the line of Parik from Bank of Aroda Capital Markets. Please go-ahead.
Foram Parekh
Yeah. Thank you for the opportunity. My first question is on semaglutide. If you all can just explain or throw some light, like what is the size — the market size you are expecting in India and since there are many players who want to enter in the first wave, so how are we strategizing? Like is it end-to-end manufacturing, including the device or through some strategic partnership? Some sense if you could give us on semaglutide?
Vikas Gupta
So I think I’ve already answered this question. Only thing is on the market size front, see, currently the market is around INR500 plus crores already, right, but it’s a single-player market as of now and it’s only orals. The injectable GLP-1 is not even introduced in India. We expect that to be another large market has come in-line with what the oral market is, right? So I think that is on the market front. With regards to our strategy, like I said, we are — we have developed our own product. R&D has worked and, you know, made the product. So we will you know we are in-full control of this. We are not depending on any — like it’s not a P2P kind of product that we are looking at. So our files has already been there on the — on the regulator side where we will be — we will have to conduct a clinical trial, which we will do and introduce the product to the market.
Foram Parekh
Okay. So now since now we are guiding for in-line IPM growth, which is at 7%. So once this semaglutide gets launched, do we anticipate growing higher than the IPM because of the demand and maybe going north of 10% or so.
Nitin Agrawal
Of course not 10%, but yeah, because will also add to the market growth as well because it will be a new market which would have come. So I’m hopeful that the market growth would also move-up. But like I said, yes, these launches would definitely help us growing you know faster, especially on the — on the chronic side. And my expectation is that we should be surpassing the market growth by at least a percent or two. Now that also depends on the NLEM side, what kind of price lever we get-in the coming year as a growth because a large part of our portfolio is NLEM portfolio where we have only volume growth as a lever. And in volumes, we have surpassed the market.
But if that is more favorable for us, then our overall value growth also goes up. But yes, that’s how we anticipate this to play-out.
Foram Parekh
Okay. And sir, could you please quantify your NLEM portfolio percentage to sales right now? How much would it be?
Nitin Agrawal
Around 30%.
Foram Parekh
30%. Okay. My second question is on the non-US side. So I see there is a degrowth there. So could you please explain what went wrong? I mean, why is there a negative growth.
Vikas Gupta
At this point largely from one of our large markets, which is Chile. You know, in Chile, we have two issues. One, some tenders that we came out of. And second is the exchange rate. So the currency actually you played spoil sport over there. So because of that, Chile, which is our — one of the largest non-US markets, that has shown almost 30% degrowth, which is where, you know our overall non-US growth is looking sluggish. But if you look at the other markets, say, Australia, we have grown pretty strong. If you look at some other non-US markets, our growth are fine. It is largely on account of, you know, I would say, Chile, where we have had this.
Foram Parekh
So has the situation stabilized or do we expect this — I mean, same kind of situation and therefore, even in Q4, also we — should we anticipate negative growth?
Vikas Gupta
No, it should not be negative in Q4 because we expect the situation to be more stable. Of course, currency, nobody can predict how that will move. But our sense is that, you know the overall position should stabilize. So Q4, we should have a better performance as far as the non-US markets are concerned?
Foram Parekh
Okay. And one last question, if I may. So since we’re talking about five filings in Q4 and increasing the R&D spend, so could you please throw some color like what is the R&D percentage to sales we are anticipating? Is it like — I mean, is it likely to go up than the normal trend? And the five parts we are looking at around 4.5% to 5% from there. Okay, okay. And the five filings that we have done, could you just give us some nature of what are the filings?
Vikas Gupta
I mean, is it a pure generic one or the high-value. We have done three filings right now. We’ll tell you the filings after we file the other products. But it’s all — as of now, it’s largely generic in nature.
Foram Parekh
Okay. That’s helpful. Thank you. Thank you.
Operator
Thank you. The next question is from the line of from Nuvama. Please go-ahead.
Srikanth
Hi, good evening. Thanks for taking my questions. First question is on unit. So we have recently divested that unit. Sometime back, we also divested St. Louis after which there was lot of cost optimization benefit that we have got. Any such opportunity because of Pitampur unit.
Nitin Agrawal
So we have entered into agreement for selling of indoor unit because see for last years not using it. So strategically, it was not making sense for us to retain that unit and it was a kind of inoperative asset and so it was decided to sell-off. So I don’t see any impact on our operations because of this, because there was no sales happening from this unit for last three, four years.
Vikas Gupta
I think your question is around OpEx, is it?
Srikanth
Yes, yes. On the cost optimization benefits.
Nitin Agrawal
Spend of around INR8 crores a year, that was also mainly on account of depreciation. So at operating — at EBITDA level, there will not be any significant, yes.
Srikanth
Understood. Now on the NZ, now that our CDMO unit will be becoming operational in FY ’26. How should we think about the overall business because we have a Pune unit, which is — which has just brokeven, I think before R&D. So how should we think about this unit?
Nitin Agrawal
Talking about US?
Srikanth
Yeah. No, engine Pune because that has been — that is still struggling with respect to profitability.
Nitin Agrawal
So engine, I mean including sales of products which we do from for products which are manufactured in or say we have done a change of around INR200 crores at YTD level and our estimate is to close at around INR300 crores for FY ’25. So we can assume growth of around 15% to 20% in next year from the Pune unit. So we are also expecting approvals for few countries outside India. So maybe in next analyst call, we’ll be able to share more visibility on.
Srikanth
Understood. And one last question, following-up on GLP-1. Now this is — this looks like a large opportunity because when we see the numbers in the US in last two years, they have substantially grown. Now do you think that even in India, once the generics appear, substantial volume growth is possible and you might consider the potentially the other ways which are used to lose the weight, so that will also get converted in volumes?
Vikas Gupta
Sorry, I didn’t get — you mean it’s a large opportunity.
Srikanth
It might turn out to be a big opportunity?
Nitin Agrawal
Yeah, substantially large leading to maybe three, four, five growth within couple of years in volumes.
Srikanth
In terms of volume.
Nitin Agrawal
Yeah, yeah, yeah, for the drug. For the molecular. I would say, let’s wait for a few, four months, we’ll get to know-how large the opportunity turns out to be. Of course, it’s a no-brainer and no secret that world over, you know the acceptance of GLP-1 as a category has been very good. I don’t see any reason why India should be any different. But of course, it will have to be used for the right patients, you know, and that is what we would advocate. Moving ahead. So let’s see how it turns out to be. Our sense is also that it should turn out to be a fairly decent opportunity.
Srikanth
Understood. Thank you so much. Thank you.
Operator
Participants who have a question may press star and one now. The next question is from the line of Navan Bagaretha from IIFL Securities. Please go-ahead.
Naman Bagrecha
Hello.
Vikas Gupta
Yeah. Hi, it’s. Please go-ahead.
Naman Bagrecha
Thanks. Thanks. Thanks for the opportunity. Sir, just one clarification. I mean you highlight — you guided for 7% growth in the India business for full-year. And if you look at the first-nine months, I mean, you have grown at only around 6-odd percent. So I mean the implied growth for 4th-quarter comes at around 11% 12%. So just wanted to — wanted to know what are the growth levers for the same and is my understanding correct or not?
Vikas Gupta
So I think the calculations are fairly close. It comes to around 9.5% to 10% is on the overall domestic side. And we are pretty confident of delivering the same because of a lot of reasons, like I said, our secondary offtakes are good currently where we are standing in terms of the monthly run-rate, if we just extrapolate that, I think we should be — we should be — we are very hopeful we should be able to touch that kind of performance in Q4. Also, last year, quarter-four was not that good for us. So it’s also a maybe okay.
Naman Bagrecha
Secondly on ROW markets, you highlighted there are some issues in Chile. So I mean, is it that we didn’t have any tenders and we are going to get some, let’s say, contracts or supplies? I mean, so can you help me on that front? And how should we look, let’s say, on a sustainable basis of this piece of the business.
Vikas Gupta
So in the previous year, we had a — we were supplying as because we had qualified for one tender, you know now this year, the pricing has been such that it didn’t make sense to participate in that tender. So that is why we’ve — we’ve not had you know that business in this year. But otherwise, if you see on the retail side and on the other side, our base business continues to do well. The other reason has been on the currency side, which — which I also mentioned, which is the reason for the overall de-growth for Chile as a market, but I think that is also getting stabilized now. So that’s why we are pretty hopeful that Q4 should be better as compared to Q3.
And over, I think non — the non-US, I think we have given a guidance of 13% to 14% of growth going-forward. So you expect to participate in tenders, let’s say, in FY ’26 of tender plus retail, certain markets, certain tenders keep coming. So it’s more of — more of that.
Naman Bagrecha
Okay. Okay. And on the US piece, I mean we had highlighted in earlier call that there is one CGT exclusivity product which might come in 3Q or 4Q, so I’m not sure if that — I mean definitely, I mean 3Q we haven’t launched. So what’s the, let’s say, I mean, could you — could you help me out on that front? I mean, which product is this what could be the, let’s say our, you know sales opportunity.
Operator
The person you are speaking with has put your call on-hold. Please stay on the line please go-ahead.
Vikas Gupta
Hello. Yes.
Operator
There was a participant who had kept the line on-hold.
Vikas Gupta
Okay, understood. So I think the question was on CGT exclusivity of some product, is it?
Operator
Mr I think yeah participants who have a question may press star and as there are no further questions, I would like to hand the conference back to the management for closing comments.
Vikas Gupta
Yeah. Thank you all for participating in today’s call and contributing to a meaningful discussion. If you still have any unanswered questions, please feel free-to reach-out to us. Thank you all. Thank you.
Operator
Thank you, everyone. Thank you. That concludes this conference call. On behalf of Motilal Oswal and Alchemil Boratories. Thank you for joining the conference call. You may now disconnect your lines.