Biocon Limited (NSE:BIOCON) Q1 FY23 Earnings Concall dated Jul. 27, 2022.
Corporate Participants:
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Siddharth Mittal — Chief Executive Officer and Managing Director
Matthew Erick — Chief Commercial Officer – Advanced Markets
Susheel Umesh — Chief Commercial Officer – Emerging Markets
Shreehas P Tambe — Deputy Chief Executive Officer, Biocon Biologics Limited
Indranil Sen — Chief Financial Officer
Chinappa M.B — Chief Financial Officer
Analysts:
Damayanti Kerai — HSBC — Analyst
Surya Patra — PhillipCapital — Analyst
Shyam Srinivasan — Goldman Sachs — Analyst
Harith Ahamed — Spark Capital — Analyst
Neha Manpuria — Bank of America — Analyst
Prakash Agarwal — Axis Capital — Analyst
Yash Tanna — ithought advisory — Analyst
Sameer Baisiwala — Morgan Stanley — Analyst
Nithya Balasubramanian — Bernstein — Analyst
Shirish Jain — DX Capital — Analyst
Tushar Manudhane — Motilal Oswal — Analyst
Presentation:
Operator
So good morning, everyone. I’m [Aishwarya Sitharam] from Biocon Investor Relations team, and I would like to welcome you to Biocon’s earnings call for Q1 FY’23. [Operator Instructions] While asking please begin with your name and your organization. Please note that we will not be monitoring questions on the chat box, but you can raise any technical concern that you may be facing for your — for our support team to help. I would also like to bring to your attention that this conference is being recorded. The recording will be available on our website within a day, and the transcript for this call will be available within the next five working days. To discuss the company’s performance and outlook we have with us today the Biocon leadership team comprising of Dr. Kiran Mazumdar-Shaw our Executive Chairperson and other senior management colleagues. I’d like to take this opportunity to remind everyone about safe harbor. Today’s discussion may be forward-looking in nature based on management’s current beliefs and expectations. It must be viewed in concurrence with the risks that our business faces that could cause our future ores or achievements to differ significantly from what is expressed or implied by such forward-looking statements. After the end of this call, if you need any further information or classifications, please do get in touch with [Indecipherable].
I would now like to turn the call over to Dr. Kiran Mazumdar-Shaw. Over to you, ma’am.
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Thank you, Aishwarya, and good morning, everyone. I welcome you to Biocon’s earnings call for the first quarter of fiscal 2023. And I’d like to start this earnings call on a note of optimism. On the resilience displayed by India, while a large part of the global economy is bracing itself for a potential slowdown next year. Business since the world over are reshaping their supply chains at a time when the world is facing uncertainties due to various geopolitical tensions. Every economy is trying to offset the impact of pandemic spend by lowering health care pain. Backed by strong domestic demand and steady global investments, I do believe that India is on its way to becoming the world’s fastest-growing economy in the years to come. As the pharmacy of the world, India has a key role to play in driving inclusive and equitable growth globally, particularly in health care. Policy support, such as the production linked incentive scheme, and more recently, the proposed research-like incentive scheme, will, I believe, boost investment in innovation. Inhibited by continued investments in capacities, capabilities and R&D over the last few years, the Biocon group has a window of opportunity to surge ahead into a stronger leadership position in biopharmaceuticals. Another important differentiate of global leadership in times of uncertainty is ESG. And as we transform into a future-ready leader, the Biocon group is poised for strong and sustainable growth. Our vision towards environmental stewardship, diversity and inclusion and governance have been articulated in our recently published ESG report for FY’22. Let me start with some organizational announcements.
And before I discuss the business performance, I would like to make a few announcements. [Indecipherable] and Daniel Bradbury, independent directors of Biocon, have completed the second term of tenure with the company and have stepped down from the Board and will step down from the Board at the conclusion of — rather they have stepped out from the Board and the conclusion of the company’s Board meeting yesterday. On behalf of Biocon’s Board of Directors and management, we expressed our deep appreciation and gratitude to both Mary and Dan for their extensive contribution and stewardship. I would like to share a management update. I’m pleased to announce that Michael [Indecipherable] has joined Biocon Biologics as the Chief Quality Officer. As part of the executive leadership team, Michael will be responsible for leading the global quality organization across all locations and will be based in Bangalore. Michael brings the team over three decades of experience across quality control, quality assurance and pharmaceutical manufacturing, setting the right quality, culture and building credibility with global regulatory agencies. I would now like to present the key financial highlights of the quarter. At a consolidated group level, revenues for Q1 FY’23 were up 23% on a year-on-year basis at INR2,217 crores. Revenues from our biosimilars business delivered a strong year-on-year growth of 29%, while that of our generics business grew at a healthy rate of 19%, and research services revenues grew by 8%. Core EBITDA, which is a very key part of our business performance, grew at 25% with a margin of 31% versus 30% in the same quarter last year.
Profit before tax for the quarter stood at INR197 crores, up 9% to INR166 crores during the same quarter last fiscal. And net profit for the quarter stood at INR144 crores versus INR84 crores in Q1 FY’21 — ’22, reflecting a growth of 7%. During the quarter, we also recorded a ForEx loss of INR38 crores, primarily due to restatement of Goldman Sachs OCD investment in Biocon Biologics as compared to a gain of INR [17] crores during the same fiscal — same quarter last fiscal. Our gross R&D spend was at INR223 crores versus INR136 crores in the same period in the last fiscal, an increase of 64% corresponding to 50% of revenues [Indecipherable]. Of the INR223 crores, INR198 crores is expense in the P&L, while the balance amount has been capitalized. INR120 crores were expensed in the P&L in Q1 FY’22. With this, the reported EBITDA for the quarter was INR [478] crores versus INR437 crores, reflecting a 9% year-on-year growth, while margins stood at 22% against 24% reported in Q1 FY’22. EBITDA was primarily impacted by the ForEx loss, as mentioned earlier, higher operating costs, particularly due to the inflationary impact on raw materials and freight as well as personnel costs linked to new hires and annual increments, which obviously will be at a higher level in Q1 but will get normalized over the year. Furthermore, R&D investments increased by INR78 crores, reflecting pipeline progression for future growth. Now let me turn to segmental business performance during the quarter. Let me start with generics. The Generics segment delivered revenues of INR580 crores during the quarter, which is a year-on-year growth Profit before tax for the quarter was at INR63 crores versus INR29 crores during the same quarter last fiscal, a year-on-year growth of 116%.
PBT margins were higher at 11% as against 6% in Q1 FY’22. The year-on-year growth during the quarter was primarily due to ramp-up in API sales particularly our standards and immunosuppression portfolios and continued performance of recently launched generic formulations. The corresponding period last fiscal was significantly impacted by COVID related operational and supply chain challenges, which are now behind us. However, the business does continue to encounter headwinds in the form of pricing pressure and rising input costs. Sequentially, revenues declined by 19%, largely due to temporary shutdowns undertaken during Q1 to facilitate capacity expansions which will augment growth for the business in the second half of the fiscal. During the quarter, we launched our vertically integrated formulation [Indecipherable] acid [Indecipherable] tablet, an antimetabolite immunosuppressant, indicated for the prophylaxis of organ rejection in adult patients receiving a kidney transplant. In line with our strategic priority to expand the generic formulations business beyond the U.S. We have received approvals for our oncology drug lenalidomide in the EU, [Indecipherable] capsules in the UAE and those are [Indecipherable] tablets in Singapore. During the quarter, we received a GMP certificate from MHRA U.K., following their on-site inspection of our oral solid dosage formulation facility located in Biocon Park in Bangalore. We continue to be on track to qualify and validate our greenfield fermentation-based immunosuppressant API manufacturing facility in [Indecipherable] in FY’23.
Growth in our generics business in FY’23 is supported by a strong product pipeline, expanded manufacturing capacities and continued efforts to digitize processes and optimize costs. Let me now turn to biosimilars. Biocon Biologics recorded a revenue of INR977 crores, a year-on-year growth of 29%. Adjusting for the one-off COVID-19 related sales of itolizumab and [Indecipherable] Q1 last year. The business witnessed an even stronger year-on-year growth of 46%. On a sequential basis, however, revenues were flat, impacted by lower realization of European profit share from the Viatris business due to the devaluation of the euro against the U.S. dollar. Core EBITDA, which excludes R&D, ForEx, licensing income and mark-to-market movement on investments, stood at INR361 crores, up 33% year-on-year. Core EBITDA margin remains healthy at 37% versus 36% last year, in line with our guidance of being in the mid to high 30s. It is also important to call out increased personnel costs this quarter. We have made good progress on our R&D pipeline with biosimilars [Indecipherable] and danosumumab in global clinical trials and advancements in other assets. These are unpartnered assets where in the full R&D costs are borne by us as compared to the shared cost model that we have had in the past. Consequently, R&D investments for the quarter increased by 120% year-on-year to INR130 crores, representing 13% of BBLs revenues versus for the full year FY’22. These R&D investments to secure our future growth, coupled with a noncash foreign currency translation loss of INR43 crores on Goldman Sachs OCD Investment in BBL, led to a 12% year-over-year decline in EBITDA for the quarter to INR10 crores.
Profit before tax stood at INR71 crores. The Viatris business has delivered strong year-on-year performance, underpinned by the successful launch of our 351,000 interchangeable biosimilar insulin glargine in the U.S. In Europe, the market share for our biosimilars [Indecipherable] and trastuzumab continues to grow. In Canada, following the launch of our biosimilar bevacizumab last year, Viatris will be launching biosimilar glargine and [Indecipherable] later this year, opening new avenues of growth. The Biocon Biologics led business continues to see strong demand. In FY’22, we had entered 44 new partnerships, which will drive growth in the coming quarters. After a panic like his, we expect site inspections to be conducted by the U.S. FDA in August which hopefully will pave the way for our biosimilars, bevacizumab and [Indecipherable] approvals later this year. Our new state-of-the-art B3 Mass facility has recently been EU GMP certified. Our strategic deals with Viatris and [Indecipherable] are progressive progressing towards closure as planned. And on the operational front, efforts are underway to ensure a smooth integration and transition. In summary, the business fundamentals continue to be strong, enabling us to ramp up revenues and sustain core EBITDA margins in the mid-30s. There are multiple near-term catalysts, including ramp-up of biosimilar [Indecipherable], potential approvals of biosimilar bevacizumab and as part of the U.S. and approval of new manufacturing capacities. The strategic deals with Viatris and [Indecipherable] will transform Biocon Biologics into a leading vertically integrated global biologics company.
Now let me turn to normals. During the quarter, our partner Equillium initiated patient dosing for the pivotal Phase III clinical trial, clinical for itolizumab in patients with acute graft versus host disease. While recruitment continues for the pivotal Phase Ib clinical study of itolizumab for lupus nephritis, which will read out interim data this year. Our Boston-based associated [Indecipherable] lead molecule [BCA 101] has demonstrated encouraging safety pharmacokinetic, pharmacodynamic and efficacy group trials based on the findings from the dose escalation [Indecipherable] of the ongoing Phase I [Indecipherable] trial, which was initiated in February this year. The recommended dose have been established at 1,500 milligrams weekly for BC 101 as monotherapy and in combination with [Indecipherable]. The combination of BCA 101 and pebrolizumab is currently being evaluated in frontline systemic patients with unresectable recurrent or metastatic head and neck [Indecipherable] carcinoma and as a second-line therapy in patients with advanced squamous cell carcinoma of the [anal canal] who have received prior chemotherapy. BC 101 is also being evaluated as a monotherapy in patients with advanced or incurable cutaneous squamous cell carcinoma of the lung who have received previous anti-PD-1 therapy. Primary results for the dose expansion arm of this study are expected in the second half of calendar year 2022. [Indecipherable] the first round of seed funding, Viatris continues to secure funding from external investors to support its clinical development activities.
Now turning to Research Services or Syngene. Revenue from operations stood at INR645 crores for the quarter, indicating a year-on-year growth of 8%. Profit before tax for the quarter was at INR93 crores as against INR95 crores in Q1 FY’22. The first quarter results were against a strong quarter last year due to sales of core treatments where indeed in the midst of the second work wave of the pandemic was a key product. No sales of as we were recorded in the first quarter this year. Excluding the impact of [Indecipherable], the underlying revenue from operations growth in the quarter was around 30% year-on-year. The first quarter results reflect strong underlying performance across all our business divisions. A recent highlight was the signing of a 10-year agreement with [Zoetis] with the commercial manufacturing of the drug substance for [Librela], a first-of-its-kind injectable monoclonal antibodies to ended pain associated with osteoarthritis in dogs. This deal is expected to start generating revenues in the second half of the fiscal, and will be worth up to $500 million over its term of 10 years. This is a strategic move for Syngene’s Biologics business, providing a pathway towards the FDA and EMA regulatory approvals anticipated retail year.
The company continued to invest in infrastructure, including a kilo lab in the Development Services division as well as a large housing over 150 scientists and analysts in Hyderabad dedicated to pro tax. Syngene’s [Indecipherable] cancer drug discovery strategy for its clients. Syngene has raised its revenue guidance for the year from mid-teens to high teens taking into account a variable change in the rupee-dollar exchange rate and, of course, the recent agreement with [Indecipherable]. I would like to conclude by saying that FY’23 will unlock the potential of several of our investments across businesses, be it in capacities, pipeline or partnerships. New launches and enhanced capacities will drive growth for our API and generic formulation business, while the strategic transaction with Serum Institute bias which are track towards closure will accelerate growth of our biosimilars business. We see strong growth and contract extensions and the new inflection point in contract manufacturing catalyzed by the Zoetis biomanufacturing contract will drive the growth momentum for Syngene. In line with our focus on sustainable growth, we continue to processes to ensure value creation for all our stakeholders.
And with this, I would like to open the floor to questions. Thank you.
Questions and Answers:
Operator
[Operator Instructions] The first question is from Damayanti Kerai from HSBC.
Damayanti Kerai — HSBC — Analyst
Hi, good morning. Ma’am, you mentioned that pickup in market share was simply will be one of the key near-term driver for biosimilar sales. So what we have seen in last few months that the market share seems to have saturated in low single-digit number. So what will be factors which will improve pick up in Semglee market share from current label? And also for other two launch biosimilars, oGivri and Fulphila, again, we see some kind of saturation in the market share. So just wanted to understand what are the key hurdles which are stopping you to improve market share from current levels? So this is my first question.
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Thanks for your question. I will turn this over to both [Indecipherable] to respond to. But all I can say is that we are seeing a good pickup of all these products you mentioned. We are tracking in the right direction. And I think what we are really seeing is a strong performance in the second half of this fiscal.
Siddharth Mittal — Chief Executive Officer and Managing Director
And Matt, please see free to the questions. I think [Indecipherable] will let answer your question product by product in the U.S. I think — starting with [Indecipherable], and I think your comment was saying the market share seems to have saturated. I think just to correct the data point, we — starting this year with a sub 3% market share, and we’ve moved that towards 9%, just a shade of that 10%, which we did in July. So when we started this fiscal, we have guided that towards — the second half of the year, we’ll be seeing this move towards the mid-teens. And the way Pat has been progressing. We see that growth from 3% to 9%, moving to 10% and then towards the mid-teens in the direction that we had projected earlier. So do you see that move happening in the direction that we had projected. — is has also recently added significant plans beyond the extra scripts prime therapeutics that we had talked about earlier [Indecipherable] move into regional pharmacies. We’ve also got original formularies. We’ve also got a significant addition towards the beginning of this month. And these are all the right steps, which will help us get towards that mid-teens market share that we have guided towards at the beginning of the fiscal.
Now you talked about the other two products, which is trastuzumab and [Indecipherable] and we talked about them in a bit. But starting with trastuzumab, there was a particular situation where in April, May, we’ve seen the market share kind of dip from that 10%, 11% to 7%, 8%. And that’s because trust did lose a customer during the process. And they have gained that in June and July, and we’re again starting to see those market shares move up towards 10% and back to where we are. So I think these are normal course of business activities that you win a customer, you lose a customer or you do some share in a particular formulary or a particular account. And effectively, what we need to see is that they have been able to be resilient in the market and held down to its market share despite increased competition. Likewise, [Indecipherable], where market share has helped on that 8%, 9%, even though we’ve seen the innovator themselves lose market share as well as [Indecipherable], which is a big market player at one time significantly lose market share to new competition. So I think overall, if you look at it, we’ve held the market. And that market is steadily moving towards where we had guided at the beginning of the fiscal. But anything else, Matt, that you may want to add, please go ahead.
Matthew Erick — Chief Commercial Officer – Advanced Markets
Yes. Thank you, [Indecipherable]. I think that was a really good explanation, and I would just call out the Viatris commercial team as we continue to look at how this industry, especially within the U.S. ebbs and flows, the team is rightfully situated to address those hurdles. And I think you’re seeing that particularly in [Indecipherable] As you know, every company kind of goes through a potential pullback, but I think what is important here is you’ve seen a great comeback. So I would just say that, [Indecipherable], but everything else is exactly what I would say.
Damayanti Kerai — HSBC — Analyst
So we have — do you believe that we have ample headroom to improve on market share from current label a few factors which you mentioned should be helping from here on?
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Yes, I certainly believe that this is the case. I’d also like to sort of draw your attention to the fact that we are in a very strong and bold position to actually drive growth because of all the capacity that we have put into place. And I think that now that the worst of the pandemic challenges are behind us. I think growth is something that we will pursue very strongly.
Damayanti Kerai — HSBC — Analyst
Thank you, ma’am. And my second question is on R&D. So in last two quarters, we had seen a sharp jump in R&D expense purchase due to the and partner asset, which ma’am mentioned in the call previously. So once we are done with major trials for these two assets, should we see some moderation in R&D cost or should continue to improve — continue to increase from this level also?
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
So Demayanti, if we want to future-proof our business and if we want to really attain global leadership I think it would be not very prudent to cut back on R&D. R&D drives growth for us. What is important for us to drive EBITDA growth, which is what we are pursuing. And I think what you must also understand is that the bias deal actually gives us the ability to invest more and faster in R&D pipeline. So the pipeline is our — is very fundamental and integral to growth and pipeline progression is what drives growth. So to cut back on R&D, I don’t think would be prudent. And we should be — at these kind of levels of R&D spends and it might even increase over the coming quarters, but I think for the investors and analyst to expect us to cut back on R&D would not be the right thing to expect because that is why we keep harping on core EBITDA because I think core EBITDA is always very, very important to really get to the understanding of where our business is heading. The fact that we are making such good clinical progression will actually tell you that our R&D is delivering very well for us.
Damayanti Kerai — HSBC — Analyst
Sure, ma’am. So R&D should remain in the 10% to 15% range, which you earlier indicated?
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Absolutely. Absolutely. Anything lower than that actually is not something that we would prefer.
Damayanti Kerai — HSBC — Analyst
Thank you. I get back in the que.
Operator
Thank you. [Operator Instructions] Next question is from Surya Patra from Philip Capital.
Surya Patra — PhillipCapital — Analyst
Yeah, thanks for this opportunity. This is Surya from Philip Capital. Ma’am [Indecipherable], just two clarifications, first of all. One is that [Indecipherable]
Siddharth Mittal — Chief Executive Officer and Managing Director
Surya I think we lost you.
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
I think You should move on to the next till he gets back.
Operator
Sure. The next question is from Shyam Srinivasan from Goldman Sachs.
Shyam Srinivasan — Goldman Sachs — Analyst
Yeah, hi. Can you hear me? So yeah. Good morning everyone and thank you for the presentation. I think just first question on biosimilars again Kiran and team. If you could just help us understand the geographical split of how this business is currently, where are the growth rates are. I think a lot gets discussed about the US market shares. But we know less about say Europe, Europe, I think you called out Canada in your opening remarks, just help us understand geographically how the biosimilars used to give us a split of rest of the world and developed world. So, any color there would be very helpful.
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
That’s a very good question, Shyam. And I’ll ask [Indecipherable] to really tell you about how well our emerging markets business is also tracking.
Susheel Umesh — Chief Commercial Officer – Emerging Markets
Thanks, Shyam. The emerging countries actually is the potential, very often we realize very good returns from the emerging countries. So the entire emerging country model for biosimilar is growing, and it’s growing quite fast. That is mainly because of two reasons: One, patients and doctors, both are getting aspirational and they want to use the biosimilars more and more. Second, more and more tenders open up for our biosimilar. So going forward, while we increase our number of countries that we operate in and the depth in the countries that we do businesses, the biosimilars business is quite is going to grow up significantly and to ramp up. Right now, it is much smaller than the U.S. and the European markets, but many of the places in many other countries, the prices that we get is much better than even Europe. So the emerging countries is quite big.
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
And maybe, Matt, you’d like to comment on the non-U.S.
Matthew Erick — Chief Commercial Officer – Advanced Markets
Yes, sure. Thank you for the question. I think we still see continued good growth within Europe, especially from the [Indecipherable] clusters Germany as well as in France. You’re going to see those continued launches of new products that we talked about in R&D. And also as we progress within our integration with [Indecipherable]. We’re going to be looking at new markets and expansion there. So Europe is still a very key focus for our Biocon Biologics and has a tremendous amount of opportunity for us as well as you know, the U.S. and North America.
Shyam Srinivasan — Goldman Sachs — Analyst
Got it. My second subquestion on this, I’ll be brief, is on the pricing dynamics in these different. I think EM was briefly touched upon. But if you can also help us understand there is market share progress, but there is not value share progress, if I can use the term, maybe the only data we have is U.S. So what is happening to pricing in some of these markets, including the U.S.?
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Shreehas, maybe you want to take this?
Shreehas P Tambe — Deputy Chief Executive Officer, Biocon Biologics Limited
I think, Shyam, these things would be from — for two things. One is from the market and other is on the product category that we are talking about. [Indecipherable] to look at the oncology products in the U.S. We’ve typically seen — if you were to take the pre biosimilar entry launches of products, you would see discounting anywhere in the region of about 50% to 60%, 62% from that pre-biosimilar days. If you were to move that into Europe, you see that is counting to be much lower in the range of about 30% to 35% for the markets that we operate in. And that’s also a factor of competition of the market, of the tenders, also the base pricing that these molecules are vis-a-vis where discounting would be. You’d also see different categories of product attract different this outline if you were to look at insulin, which is in the U.S. product, which is more a contracting cycle type of molecule and where the [Indecipherable] was able to [Indecipherable] test and move into a formulary position, those discountings will be probably slightly sharper than what we have seen for the bill kind of category in the oncology space. But if you really broadly across the category of products that we’ve launched in the ongoing with biosimilars as well as the insulin, more or less, the pricing discounting has been reasonable. We’ve not seen any cliff despite the competition of oncology, you see about 4, five players per molecule, but there has been pricing sanity overall, so to say, and it’s being in the U.S., particularly, as I said, in that 50, 60 range. And then in Europe, probably it’s in that 30%, 35% range. So there has been some respect for the kind of work that has gone in developing the products, and it’s reflecting in the stability that you’ve seen overall, that’s prevailing.
Shyam Srinivasan — Goldman Sachs — Analyst
Thank you and all the best.
Operator
Thank you, Shyam. The next question is from Harith Ahamed from Spark Capital.
Harith Ahamed — Spark Capital — Analyst
Hi, good morning. Thanks for the opportunity. On [Indecipherable], last quarter, you had talked about starting Phase III trials in the first quarter of FY’23. So can you update us on the status of those two trials? And trying to understand if the R&D spend for the quarter reflects the Phase III expense? And will there be a further step-up in spend R&D in the coming quarters?
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Shreehas, Do you want to take this?
Shreehas P Tambe — Deputy Chief Executive Officer, Biocon Biologics Limited
Yes. I mean, Harith, the question wasn’t very clear. I think you were pointing towards saying that we progress ustekinumab and biznezumab into the clinic. I think you were looking for an update on where these products are headed. Is that what you were looking for?
Harith Ahamed — Spark Capital — Analyst
Yes, there we started Phase III trials already.
Indranil Sen — Chief Financial Officer
Yes. So we have, I mean, I would like to confirm that those things are progressing as we announced. And we would be looking to move these products further. We have started these global clinical trials, Phase I and Phase III and we should be looking to get the filing towards the end of calendar year ’23 for [Indecipherable] and end of calendar year ’24 [Indecipherable]. So they are progressing as per plan and we expect them to move through the quarters, you’ll see those R&D expenses come up as we progress these molecules.
Harith Ahamed — Spark Capital — Analyst
Got it. My second question is on the fund raise at Bicara. So what’s our commitment we’ve talked about continuing to raise funds through the first quarter. So my question is on our current stake in this associated entity as of June.
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Yes. So I think they have raised $26 million in the first round, and we expecting to reach a larger — managed to raise about $6 million in the second, but they expect rates are even higher amount, which they believe they’ve taken deals by the middle of September. But these amounts, as you know, are day required to see the clinical trials get it to a certain level, and we’re very confident. We also have entered into various business development discussions because the data is trending in a very promising direction. So there’s a lot happening at [Indecipherable], and we will keep reporting it over the coming quarters.
Harith Ahamed — Spark Capital — Analyst
Okay. So from the disclosed stake in Baccara, which was around 74% at the end of March, has there been a further reduction. I’m trying to understand if we share of losses from the associate will decline for the lower number in 1Q versus 4Q? Trying to understand if this will…
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Well Siddharth will respond to this, but we — Siddharth, you might want to respond to this.
Siddharth Mittal — Chief Executive Officer and Managing Director
Right, so stake in as of June was roughly 60%. And I think as the fund raise continues, we will see the stake further go down below 50%.
Harith Ahamed — Spark Capital — Analyst
Okay.
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
No, I think he wanted to ask you about share of loss.
Siddharth Mittal — Chief Executive Officer and Managing Director
Share of loss, of course, we are taking the 60% share of loss in our P&L. And this quarter, because of the fund raise, there was also a step-up in the valuation of the investment. And I think the P&L impact of the step-up of valuation less the share of loss was not significant. It was a very low number.
Harith Ahamed — Spark Capital — Analyst
Okay. Okay. Last one with your permission. This INR38 crores ForEx loss at the consolidated level, that includes the INR43 crores loss at Biocon Biologics related to the Goldman Sachs OCD Instrument, right?
Siddharth Mittal — Chief Executive Officer and Managing Director
That’s correct. So there were gains in other parts of the business.
Harith Ahamed — Spark Capital — Analyst
And then the other income for the quarter at INR78 crores, there’s been a bit of a spike. Are there any MTM gains related to Adagio there?
Siddharth Mittal — Chief Executive Officer and Managing Director
No, at Adagio I assume there’s no gain. I think the main gain is that mark-to-market or the step-up of the [Indecipherable] investment. So that’s the main flux compared to previous.
Harith Ahamed — Spark Capital — Analyst
Okay, got it. Thanks for taking my questions
Operator
Thanks. Next question from Neha Manpuria from Bank of America.
Neha Manpuria — Bank of America — Analyst
Thank you so much for taking my question. Siddharth, on the Viatris funding, have we decided on what would be the amount that Biocon would have to put in after the private equity and the data DBL?
Siddharth Mittal — Chief Executive Officer and Managing Director
Yes, Neda, we do have a commitment of $250 million to invest in backbone biologics, and we will invest that amount. And the rest, of course, Biologics will be increasing directly as a combination of debt and new private equity investments.
Neha Manpuria — Bank of America — Analyst
And this EUR250 million would be a combination of our subsidiary stake sale and debt?
Siddharth Mittal — Chief Executive Officer and Managing Director
Yes. There are various options we are working on and subsidiary remains only Syngene [Indecipherable] and we — but we do have a couple of other structured options structure fundraise options that we are working on.
Neha Manpuria — Bank of America — Analyst
Understood. And second question, [Indecipherable], just wanted to understand from here while the R&D part of the investment is well understood. Outside of R&D, is there any incremental investment or large investment that we would require in the business to get it ready for the Viatris deal completion. How should I look at cost structure for BBL, let’s say, over the next few quarters other than the integration that would happen with the Viatris indiscernible?
Chinappa M.B — Chief Financial Officer
If you could talk to the organizational build, and I’ll cover the expense part.
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Neha, I think the overall from a big expense ticket perspective, there would be — we are looking at R&D being a big ticket item, which we’ve talked about. We’re also looking at the capex investments that we’ve talked about in the past that we’ve discussed investments in capacity for for our recombinant human insulin and the analogs. And that’s something that we’ve discussed recently. We’ve talked about that and we budgeted that. The integration costs that will come on as we get the platinum business coming on board and and we sort strengthen our commercial infrastructure in various geographies. We are — we could have — typically we could have build it out organically now because that would be far muted because a lot of this will come in to us through the acquisition dimension this, I will let Sid talk to you about and to see if you can give you a sense of what these investments would look like outside of R&D.
Chinappa M.B — Chief Financial Officer
Neha. The investments, there will be increased investment in people as we do the organization that will be absorbed by the higher revenue base and in these profits that will come to post the merger. We have, as has mentioned, in terms of capex, while most of on drug substance capacities will be up and running from this quarter, particularly the [Indecipherable], which gets confined in this quarter, that’s July to September. We have increased investments into expansion of Malaysia capacities and possibly — not possibly, and also the expansion of our product capacities for [Indecipherable] antibodies. So these are the large investments going into the business on top of R&D.
Neha Manpuria — Bank of America — Analyst
Of understood. Thank you so much. Understood. One last question. Any additional update on aspart. Is there a chance we get the approval before the current contracting cycle? Or do you think the probability of that is lower now based on your conversation with the agency?
Shreehas P Tambe — Deputy Chief Executive Officer, Biocon Biologics Limited
That’s an important part. I think the — we’ve been discussing with this group that the — we’ve responded to the agency on the CRM that we’ve received. And the agency has indicated that they will visit us in this quarter and there will be an inspection. We are quite confident that that we should be able to get the approval once they’ve visited us. So we are still hopeful that we — all of this should be done and as part approval should be in the back was the end of the year — the calendar year. Yes, there is, of course, the contracting cycle, which comes through July through, I would say, September, October, and there is that risk that we will not be able to be in the middle of a contracting cycle, taking us away from that big chunk of the commercial business that is available for this asset, but we would certainly have the opportunity to look at any mid-cycle contracting as well as any additional businesses like we did with [Indecipherable] and now that we’ve got presence with Semglee. I think there is an opportunity to see how we can quit pass the main commercial contracting national formularies into a more distributed phase. So I mean, yes, it’s not the bad situation that we could have been in, but we don’t also see that as a complete lost opportunity. The focus right now cases getting the approval in [Indecipherable]
Operator
The next question is from Prakash Agarwal with Axis Capital.
Prakash Agarwal — Axis Capital — Analyst
Yes. Am I audible?
Siddharth Mittal — Chief Executive Officer and Managing Director
Yes.
Prakash Agarwal — Axis Capital — Analyst
Yeah. Yeah, thanks for the opportunity and good money. I just wanted to understand a little bit on the margins better. I do understand R&D, you’re already guided, it will go up commercials, obviously, it will expand and so the revenue is expanding. More from second half when we add the [Indecipherable], which is expected to go at 30%, 33% margin business, as well as [Indecipherable] consolidation. So how should we think about margins there? I mean, last year margin was good this quarter, little — I mean, I would say it’s softer. How do we see the margins rolling in? And this I’m saying reported margins, not the core margins because R&D has to be there. Expansion has to be there. So just a little color would help.
Shreehas P Tambe — Deputy Chief Executive Officer, Biocon Biologics Limited
Chinappa, you might want to comment.
Chinappa M.B — Chief Financial Officer
Prakash, a couple of things. One, in terms of — let’s start with the core EBITDA margin. The core EBITDA margins this quarter is slightly softening compared in the sequential quarter, but it improved over last — or Q1 last year. the softness in this quarter versus Q4 is because of, as Kiran mentioned, is an impact of the increased salary cost as the increments kick in, which levels off over the quarters, and the second one is it’s been impacted by the eurodollar movement. So that reduced the profit and ITDA margins during this quarter. If you look ahead for particularly post serum and Platina and the Access acquisition. We expect to maintain core EBITDA margins in the mid- to high 30s. So there, as a consolidated, as you look across the three businesses, the core EBITDA margins remain the same, and we expect to remain in the mid- to high 30s. Coming to R&D costs, of course, the increased revenues coming both from Viatris and [Indecipherable] gives us the ability to spend more — invest more into R&D., and we have always guided for the 10% to 12% in terms of R&D costs. So we like to look at it from that range. Of course, it wouldn’t be quarterly. It’s just more on an annual basis or across the program. On a quarterly basis, things could go up or down. depending on the progress of the trial. But on an annual basis, particularly over the life cycle of the program. You would see the R&D cost to being 10% to 12% of the increased revenue increase. Of the increased revenue, which is indicating that we’re investing more into R&D, which [Indecipherable] of the pipeline products moving into the state.
Prakash Agarwal — Axis Capital — Analyst
Okay, understood. And secondly, on updates on the vaccines you have put out COVID-related and mosquito bond-related so I mean, globally, we are seeing that volumes are coming down and [Indecipherable], apart from Africa, the volume has been coming down. So is the deal includes the new range of vaccines, maybe the monkeypox or a lot of new things are happening globally on the vaccine side. So is the vaccine deal with old and new portfolio? How should we think about this as well as the second part to this is you mentioned about [Indecipherable] inspection poised around August. So aspart, is there any update?
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
I think, Prakash, first and foremost, as you know, viral diseases are becoming very rapid, and there’s a lot of concerns around viral diseases like — which wasn’t there in the past. So I think vaccines are going to become a very important segment. And I think [Indecipherable] is well placed to basically develop new vaccines and cater to these global needs. So from that point of view, I think even though the corporate vaccine demand has come off, I don’t think that it is completely come off because, as you can see, obits still very much in the air. And I think the annual covet shots like all shorts will become the norm. So I don’t think it’s going to completely fall off. And then you have many other viral diseases that are being looked at. Now when it comes to the bevacizumab and aspart, I think we mentioned that we are anticipating inspections in August. So both these will undergo inspections and that’s why we are hopeful that we will get approval for both these products by the end of this calendar year.
Prakash Agarwal — Axis Capital — Analyst
Okay. So aspart also in August, that’s what the clarification?
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Yes.
Prakash Agarwal — Axis Capital — Analyst
Okay. And on the vaccine, part of the question was on the future vaccines also. Is it covered in the deal?
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
The vaccine deal is covering all vaccines. Okay, perfect. Thank you and all the best.
Operator
Thanks. Prakash. Next question is from Yash Tanna from ithought advisory.
Yash Tanna — ithought advisory — Analyst
Hi, good morning. I hope I’m audible.
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Yeah,
Yash Tanna — ithought advisory — Analyst
So I went through the annual report, and I wanted to clarify a few things. So Biocon Pharma IMC USA, which is our U.S.-based facility for formulations of [Indecipherable] Pharma India. So it had revenues of INR472 crores and a PBT of INR30 crores for the year while last year, it had revenues of INR442 crores and a similar PBT levels. So is it the right understanding from my side that the U.S. generic formulations portfolio has just grown 7% year-on-year despite we launched [Indecipherable]
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Siddharth, you might want to take?
Siddharth Mittal — Chief Executive Officer and Managing Director
Yes, Kiran, maybe you can answer that.
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Sure, Siddharth. Yes, we’ve seen — we mentioned this before also. We’ve seen some headwinds on the base business that we had, but the growth will come from new product launches, some of them most — and while there has been headwinds on the base business, pricing pressure. With Everolimus, the revenue growth has been based on the market share we are seeing, we’ve also seen more launches on Everolimus coming in. And even on those accounts we are seeing that there is price erosion by we’ve held on to the market share.
Siddharth Mittal — Chief Executive Officer and Managing Director
And yes, let me just add that I don’t look at the profits of stand-alone entity because the profits are split between the Indian entity and the U.S. entity. But the revenues, what you reflected are the correct revenues for our U.S. business.
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
That’s the U.S. formulations.
Yash Tanna — ithought advisory — Analyst
Okay. Got it. And just relating to that, so [Biocon] So does that mean that U.S.A. formed approximately 70% of the generic formulation sales. Is that right?
Siddharth Mittal — Chief Executive Officer and Managing Director
So the U.S. is 100%, there is also a certain portion of ABI business in Biocon Pharma Limited. So the delta between what’s reported in Biocon Pharma Limited and Biocon Pharma Inc will be mostly the API business.
Yash Tanna — ithought advisory — Analyst
Almost the entire one is from U.S.?
Siddharth Mittal — Chief Executive Officer and Managing Director
Yes, I mean our emerging market revenues and European revenues would start in this fiscal year.
Yash Tanna — ithought advisory — Analyst
Okay. Got it. That’s helpful. My second question was — so there was this media article relating that Sanofi has reduced prices for insulin for uninsured patients to three a month supply, and there are talks to cap the insulin prices as well in the U.S. So how does this impact us and our competition, like will this is the profitability in U.S.?
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Well, I think Biocon Biologics is in a very good position to really play a key role in these market price expectations for insulins. And I think that’s what we believe will really increase our presence and market share in the U.S. And maybe, Matt, you want to add to this.
Matthew Erick — Chief Commercial Officer – Advanced Markets
Yes. Thanks, [Indecipherable]. Look, the RHI, there’s multifaceted channels. So you have your payer channel, you have your cash channel. You have even long-term care hospital being vertically integrated and well positioned. We’re able to play within all those channels. And then also what Viatris has already done and now moving over to Biocon Biologics allows us to continue to play on that leverage. So we’re well positioned within our diabetes therapeutic area as well as our RHI as we look at the full market within the U.S.
Yash Tanna — ithought advisory — Analyst
Got it, thanks.
Operator
Thanks Yash. The next question is from Sameer Baisiwala from Morgan Stanley.
Sameer Baisiwala — Morgan Stanley — Analyst
Yeah, thank you so much and good morning, everyone. Just continuing with the previous question on RHI. Is it possible to discuss a bit more. What’s the addressable market? And when do you see the approval cycle begins– begins for you? And when can this be a meaningful product?
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Siddharth you might want to take this.
Siddharth Mittal — Chief Executive Officer and Managing Director
As we said earlier, the RHI franchise is not one product, but for multiple products, multiple SKUs. So you have the soluble you have the mix, which is the 70-30 and you have the end formulation as they call it. Now they are over a vile in their available spend is also the highest trend 500 IO formulation as well. So it’s in all recognizant human insulin, but there are a whole bunch of products around it. So the whole insulin RHI is what we would call it a recombinant human insulin RHI [Indecipherable] franchise is somewhere in that $1 billion range, give or take a little bit. And the dominant share of cost is rely. So they’ve been running their matches. They have most of the market share. We’ve been working with the agency, bringing product from a PE perspective, starting with the soluble to the mix and then we would, of course, get the [Indecipherable] as they call it. We would do that as well and the high strength. So we are looking to progressively move into getting the full franchise in the U.S. somewhere in the next year. We’ve already got the agency to agree that you may not be a full-blown Phase III trial because we characterize the product very well. So we are expecting a waiver of a Phase III because of the kind of characterization you’ve done for the asset and the agency has agreed with our assessment of scientific evaluation of the drug. And most importantly, they believe that we have confirmation from the agency to say that these can be eased interchangeably once launched. So we believe that the full opportunity that is there currently in the U.S. is available to us, Sameer. And as these products get approved, we intend to launch the full franchise towards 2024, where all of this should get available. Does that answer your questions, Sameer?
Sameer Baisiwala — Morgan Stanley — Analyst
Yes, it does. Thank you. I got muted again. Okay. And just on the shares, how is the capacity utilization in Malaysia right now? And related to that is, are we having any supply capacity constraints either for Malaysia or for drug substance antibody here in India for near-term growth?
Siddharth Mittal — Chief Executive Officer and Managing Director
Yes, so I think in Malaysia, if you remember, we had invested substantial capacity for drug substance for drug product. We’ve also added on additional pen assembly line. So we don’t have a capacity challenge at all because we had also planned for the upcoming aspart launch coming up, which we were expecting this year. And we don’t believe that there’s an issue on either the drug substance or the 10 assembly or the win finished. Obviously, we are targeting a much higher capacity and which is why we are looking to invest in the drug substance capacity which we shared with you in the previous quarter, and we are further building up capacity so that further ahead into the decade. We should be able to launch more capacity across the world. On the non-insulin side, we’ve been making investments aggressively in drug substance facility, which was recently approved. But beyond our in-house capital investments, we have developed external manufacturing strategy, which is an asset-light model with not necessarily something where we invest in, but we partner in such a way that our manufacturing is then closer to the market and we supply in. And that’s a conscious strategy, which has begun from India, but then we will, of course, expand it to other geographies so that we don’t necessarily have to ship glass and water across the oceans. So that’s really how we intend to meet the demand, which we expect to grow volumes. So [Indecipherable] talk about it and maths having the same view. So we don’t see a capacity constrained, Sameer, to summarize.
Sameer Baisiwala — Morgan Stanley — Analyst
Okay, thank you so much. Okay. With your permission on one final question. What’s the time line to take [Indecipherable], which is arginine clinical trials?
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
[Indecipherable], that’s a very interesting question because [Indecipherable] essentially the same drug substance as — it’s the same [Indecipherable] drug substance — it’s formulated differently in a higher stent, which is a 300 unit strength against 100 unit strength tend for Lantus. So it’s not a new clinical [Indecipherable] from a Phase III perspective, but it’s a new Phase I study that will need to be done. But there’s a different device, which is very unique, and we are making sure that we have that new device cover so that we can be prepared for a potential approval. Now this product currently has an IP which runs towards the later half of the decade. Now we will have to see what IT strategies that we come up with, which will allow us to decide what our loan strategies would be, which would be different than the approval strategies.
Sameer Baisiwala — Morgan Stanley — Analyst
And for [Indecipherable]
Siddharth Mittal — Chief Executive Officer and Managing Director
So pertuzumab, we are progressing well. It’s certainly an asset that we have probably a partner with [Indecipherable] we are developing that asset. We have a very good exchange going on in the ASC. We have a position where we believe we can develop this in a very economical hidden.
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
It’s echoing.
Shreehas P Tambe — Deputy Chief Executive Officer, Biocon Biologics Limited
Okay. So we have the opportunity to be amongst a few players are developing this asset. There are not very many players and we have the opportunity of probably being there at market formation with this asset. And it will be very synergistic with our other nonquality portfolio. So very bullish about that.
Sameer Baisiwala — Morgan Stanley — Analyst
Yeah. Okay, that’s fine. Thank you. Thank you so much.
Operator
Thanks Sameer. The next question is from Nithya Balasubramanian from Sanford.
Nithya Balasubramanian — Bernstein — Analyst
Thank you so much for the opportunity. One question on insulin aspart. So will you have the flexibility to launch two brands like you did in insulin [Indecipherable] one at a higher price point and at a lower price point. Because it’s that is [Indecipherable]
Shreehas P Tambe — Deputy Chief Executive Officer, Biocon Biologics Limited
Matt, would you like to respond? The high-level response first to that it would be, yes. It’s an established model in the U.S. to who will launch and authorize generic, so to say, an already broad way. So that model exists the precedent exists. There are other brands or other companies which have followed it. So that’s an opportunity we could look at. But maybe, Matt, if you will comment on that.
Matthew Erick — Chief Commercial Officer – Advanced Markets
Yes. Sure, Shreehas. 100%, I agree with you. I think you have to look at all those channels bringing non-branded. And I think the single set a unique path and one in which we have great experience. So not ruling out any of those options. I think what we’re looking at and always have at Biocon Biologics is accessibility and affordability and having those two types of situations drive that initiative for us in the U.S..
Nithya Balasubramanian — Bernstein — Analyst
My second question is on Europe. I think the biggest challenge in Europe biosimilars has actually been, say, the lower-than-anticipated price points for biosimilars because your stocking price is already lower. And if I look at the data, your price erosions have been in the range of 70% to 75%. But now that Biocon is fully integrated and that you don’t have to share economics with Viatris, should we expect you to — I mean I’m seeing very low market shares for your current in-market products. So should we — can we expect you to get a bit more aggressive about price discounting now that you have room in order to gain market share?
Siddharth Mittal — Chief Executive Officer and Managing Director
Again, if I can respond to that, Nithya. I think we can look at the data points one more time, but I think you’re right in the sense that the rates currently looked at Europe, there is certainly headroom for improvement and we are collectively looking at what are the strategies that could help us look forward. As we’ve discussed previously, Europe is not a [Indecipherable]. There are several different market archetypes and the therapy areas that we operate in are also vastly different in terms of how you realize these opportunities. Some of those could be trying to get those opportunities through realizing the retail opportunity in, say, Germany or in France, in products like the insulins or there could be oncology, which is largely a tender-driven market across Europe. And then there is, of course, the Nordics, where it’s a federal tender, whether there be not take all kind of a model where I think you referred to the 70% discounting, which even the originator companies have kind of subscribed to. So there are different models, there some therapy area models, the integrated option now with us that we will be one company will certainly allow us more headroom to look deeper and closer into this. And Matt and his team are closely connected into this to see how we can move this forward. Certainly agree with you, there’s a lot of headroom there..
Nithya Balasubramanian — Bernstein — Analyst
Thank you so much and all the best.
Operator
Thanks Nithya. The next question is from Surya Patra Batra from PhillipCapital.
Surya Patra — PhillipCapital — Analyst
Yeah, So just one clarification, just wanted, sir. Let’s say, you mentioned about the margin impact for the Biologics business was largely led by the R&D spend. And also what we are indicating now that post Viatris integration, the intensity of our R&D spend is likely to continue. So by that, are we indicating even the margin profile of the integrated operation will be similar what we are currently seeing?
Chinappa M.B — Chief Financial Officer
Surya, yes to clarify — I mean, we have started core EBITDA margins. You see that the core EBITDA margins will be sustained post integration and after all the eliminations. And with data revenue base, we will look to increase our investments in the R&D to fund our future growth.
Surya Patra — PhillipCapital — Analyst
Okay. Sir, in the initial period, is it like the benefit of this the end-to-end integrated operation will not that be an incremental benefit benefiting kind of a theme for the integrated organization.
Chinappa M.B — Chief Financial Officer
So as we have just put out guidance at the time of the acquisition, we had indicated that the Actis business has a potential to turn over $1.1 billion revenues in 2023 with a $250 million EBITDA. But as you go to all the eliminations, you look at the [Indecipherable] core EBITDA margins, that’s still pointing into the high 30s. When you combine the [Indecipherable] business, the existing BPL business and we acquired the [Indecipherable] business.
Surya Patra — PhillipCapital — Analyst
Okay. Sure. Second question is on the biosimilar business, again, sir. So in the presentation, ma’am, you have mentioned that the growth of the biosimilar business, excluding the excluding the COVID-related contribution in the current spend in previous quarter, the growth would have been 46%. Otherwise, it is in — the reported number is 23.
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
29.
Surya Patra — PhillipCapital — Analyst
29, yes. So I just wanted to know whether there was any correlated benefit that the biosimilar business had witnessed in the corresponding previous quarter.
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
No. So basically, what we’re saying is that year-on-year, if you look at the growth, it could have been reported at 46% as opposed to 29% because last fiscal, we had the benefit of COVID-related products.
Surya Patra — PhillipCapital — Analyst
Okay. But what — which product would have contributed? I believe that [Indecipherable]
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Itolizumab and [Indecipherable]
Surya Patra — PhillipCapital — Analyst
But whether that was part of the biosimilar sales, no?
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
It’s a part of our branded formulations business. We have an India business and that was part of that business.
Surya Patra — PhillipCapital — Analyst
Okay, so I was relating itolizumab to the biologic — novel biologic and [Indecipherable] Syngene business. So that’s why.
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
No. So Syngene actually sold product that is the drug — I mean they sold — they make the drug substance and drug product. And Biocon Biologics to its bare formulations business, marketed the product in India and also exported the product to many of the emerging markets.
Surya Patra — PhillipCapital — Analyst
Okay, sure. Just last one question. So whether am I right that the contracting cycle for most of the biosimilars for the [Indecipherable] season has been done? If that is so, then could we have some clarity about the progress in terms of market share for interchangeable insulin and [Indecipherable]
Siddharth Mittal — Chief Executive Officer and Managing Director
It’s still under the Surya, we should be able to talk to you in due course.
Surya Patra — PhillipCapital — Analyst
Sure. Okay. Yeah. Thank you.
Operator
Thanks, Surya. The next question is from Shirish Jain from DX Capital [Phonetic].
Shirish Jain — DX Capital — Analyst
Good morning, everyone. Just wanted to understand the double counting of revenues that might happen upon the integration of acres. So currently, based on Q1 numbers, Biocon Biologics run rate is roughly $400 million. And are has guided for $1.1 billion, $1.2 billion of revenue for whole year. So upon integration, what shall be the total ballpark range of revenue that might happen, eliminating the double accounting of revenue?
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Chinappa, you might want to answer this question?
Chinappa M.B — Chief Financial Officer
Roughly about 30% would get eliminated in the intercompany [Indecipherable] 30% of the $1.1 billion.
Shirish Jain — DX Capital — Analyst
Okay, understood. So the ballpark change would again come down to $1.1 billion, $1.2 billion for the combined entity. Is that correct?
Chinappa M.B — Chief Financial Officer
Yes. Excluding — so okay, on top of the [Indecipherable] business, what we have is our sales in the emerging markets that had — last year, we ended with about $240 million. These are sales directly to the emerging markets and not [Indecipherable] You could model growth on that. And then you have the [Indecipherable] business that we’re acquiring, which has a partitional $300 million of [Indecipherable].
Shirish Jain — DX Capital — Analyst
Thank you so much.
Operator
Thanks, Shirish. The next question is from Tushar Manudhane from Motilal Oswal.
Tushar Manudhane — Motilal Oswal — Analyst
Yes, thanks. Just on the generics side, while there has been some temporary shutdown for the quarter. Just like to hear your comment on the profitability, how much has been the impact of pricing from now? How much would come back with the revival in this [Indecipherable]
Siddharth Mittal — Chief Executive Officer and Managing Director
So price erosion, I mean, is of course, a continuing thing. We’ve seen our gross margins at still decent levels. We have seen increase in operating costs during the quarter, including the salary increments, which were given in the first quarter. And in terms of the overall revenue guidance, I think we had couple of capacity, brownfield capacity expansion projects going on, which are expected to complete in quarter two for our synthetic manufacturing blocks in Bangalore, and these would lead to incremental sales in in the second half of the fiscal. So quarter two would be more or less at similar levels at like quarter one for the Generics business.
Tushar Manudhane — Motilal Oswal — Analyst
Thank you.
Operator
Thanks. Next one is from Sameer Baisiwala, Morgan Stanley.
Sameer Baisiwala — Morgan Stanley — Analyst
Just a quick clarification. Can you just [Indecipherable] back? Did you say $300 million from CRM deal? I thought it was more closer to $400 million.
Chinappa M.B — Chief Financial Officer
300-plus, it’s all dependent on the pricing of the vaccines.
Sameer Baisiwala — Morgan Stanley — Analyst
Okay. But your initial communication and the deal happened was closer to $400 million. So you are sort of taking it down.
Chinappa M.B — Chief Financial Officer
It’s linked to the pricing of the vaccine, not taking anything down, which is — I [Indecipherable], which could go from 300 to 400. We’d like to really see — it’s a mix of thing. There are products that are at the $3 range, which $100 million [Indecipherable] $300 million, that are kind of minimum share revenues. And there are products that are priced higher that will take up the [Indecipherable]
Sameer Baisiwala — Morgan Stanley — Analyst
Okay. And for both the — both types of vaccines, your margin profile remains the same, which is 33%, 34%?
Chinappa M.B — Chief Financial Officer
Yes, there’s a minimum committed margins, which would give us at least 36.7% of [Indecipherable].
Sameer Baisiwala — Morgan Stanley — Analyst
Got it, thanks.
Operator
Thanks. Next one is from Bernstein.
Nithya Balasubramanian — Bernstein — Analyst
Yeah, hi. A follow-up on the vaccine B. If you can help us understand in FY’23 and ’24, what is the portfolio of vaccines that you will end up selling. Is it just the COVID vaccine, ScobiShield and gas understand the malaria, Dango, etc., still in the pipeline. Some color, please.
Siddharth Mittal — Chief Executive Officer and Managing Director
Next year, we are targeting to sell any vaccines that are offer, produced by Serum Institute and it goes beyond COVID vaccines. As you know, there are many other vaccines. In fact, recently the impact fact announced the HPV vaccines. There are few short pneumococcal vaccines. So there are a lot of options for the portfolio of vaccines.
Nithya Balasubramanian — Bernstein — Analyst
Understood. This will be– you will take a call based on the demand etc. to meet that 100 million doses number.
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Yes.
Nithya Balasubramanian — Bernstein — Analyst
Thank you so much.
Operator
Thanks. Prakash from Axis.
Prakash Agarwal — Axis Capital — Analyst
Yeah. Hi, thanks for the approach to you again. Question is on if there’s any update on the Sandoz deal that we had done. We have heard from our unpartnered two molecules coming in, but nothing from the Sandoz side for long.
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
So the two Sandoz programs are in a preclinical stage of development.
Prakash Agarwal — Axis Capital — Analyst
Okay. Understood. And secondly, on the two R&D programs that you disclosed last quarter, and saying that Phase III has already started. So these are simultaneous studies, which I understand, Phase I and Phase III. But when we see the competition who already started Phase I and then now entered Phase II how are we different in terms of approval and launch time lines? Are we in the second wave or we still have a chance to be in the first wave?
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
It all depends on the review process, and it depends on how the others are being reviewed and how strong their programs are I’ll just give you one example. For instance, Biocon was probably the third or fourth company developing [Indecipherable], and yet we were the first to be approved similar case was in the case of trastuzumab, again, we didn’t think we would be the first company to be approved, but we were. So it’s very difficult to predict or project what can happen.
Prakash Agarwal — Axis Capital — Analyst
Okay. Fair enough. And one more on the funding of $800 million, clearly mentioned $250 million from Biocon. But this $550 million — remaining $550 million, is it largely the existing guys or new guys or [Indecipherable] might also pitch in?
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Yes. So it’s a combination of both existing and new.
Prakash Agarwal — Axis Capital — Analyst
Okay. But [Indecipherable] could add more?
Kiran Mazumdar Shaw — Executive Chairperson Biocon Limited and Biocon Biologics Limited
Yes.
Prakash Agarwal — Axis Capital — Analyst
Okay. Lovely. Thank you so much. And all the best.
Operator
Thank you, Prakash. That was the last question. We thank you all again for joining us today. If you have any internal question, please feel free to reach out to Aishwarya or me. We’re looking forward to seeing you again next quarter. Have a good day.
Duration: ?? minutes