Biocon Limited (NSE: BIOCON) Q3 2025 Earnings Call dated Jan. 31, 2025
Corporate Participants:
Saurabh Paliwal — Head, Investor Relations
Peter Bains — Group CEO
Shreehas P Tambe — CEO & Managing Director
Kedar Upadhye — Chief Financial Officer
Siddharth Mittal — CEO & Managing Director
Matthew Erick — Chief Commercial Officer
Unidentified Speaker
Analysts:
Damayanti Kerai — Analyst
Neha Manpuria — Analyst
Shyam Srinivasan — Analyst
Amey Chalke — Analyst
Love Sharma — Analyst
Surya Patra — Analyst
Vivek Agrawal — Analyst
Nitin Agarwal — Analyst
Bharat Sheth — Analyst
Alankar Garude — Analyst
Presentation:
Saurabh Paliwal — Head, Investor Relations
We will begin now good morning everyone. Thank you for joining us on this call to discuss Piacon’s 3rd-quarter results for fiscal year 2025. I’m Saurab Paliwal from Biocon’s Investor Relations team. To discuss the financial and business performance for the period, we have on the call today are Mr Peter Bains, Biocon Group CEO; Mr Siddharth Mittal, CEO and MD Biocon Limited; Mr Sambe, CEO and MD Biocon Biologics Limited, along with other senior management colleagues across our business segments. Before we get started, few housekeeping points. All participant lines will be in a listen-only mode and there’ll be an opportunity for you to ask questions after the opening remarks conclude. If you need to ask a question, please use the raise hand option under the reactions tab of your zoom application. You will call-out your name and unmute your line to enable you to ask the question. While asking, please begin with your name and your organization. Please note that this conference call is being recorded. The recording will be made available on our website within a day and the transcript will be made available subsequently. There is a safe-harbor led to this conference call. Comments made during the call may be forward-looking in nature and must be viewed in relation to the risks that our business faces that could cause our future results, performance or achievements to differ significantly from what is expressed or implied by such forward-looking statements. With that, I would like to turn the call over to Mr Peter for his opening remarks. Operator, over to you, Peter.
Peter Bains — Group CEO
Thank you, Sarab, and good morning, everybody. Before presenting the results in detail, I’d like to start with some high-level remarks. The 3rd-quarter of fiscal 2025 has been both important and progressive across the group companies, reflecting continued executional delivery as well as strategic strengthening in our regulatory, operational and financial platforms that will underpin our short, medium and long-term growth objectives. Highlights include successful outcomes in four separate FDA audits across three sites in Biocon Biologics and Biocon, key product approvals in both our biologics and generics businesses with launches commencing in Q4 this fiscal and completion of all BBL’s deferred milestones under the acquisition agreement with Viatris, marking the full and final remittance of considerations toward the acquisition. The overall Group financial performance for the quarter was in-line with our expectations and led by year-on-year operating revenue growth of 10% on a like-for-like basis after adjusting for revenues and a divestment gain from the India branded formulations unit in-quarter three ’24 performance for the quarter was driven by sustained growth in biosimilars and a return to growth in research services with both verticals reporting healthy double-digit growth rates. Generics recorded a marginal year-on-year decline.
On a sequential basis, all three verticals delivered growth. With performance delivery in-line with our expectations and with the strengthening of building blocks for future growth across our businesses, we maintain our outlook for a transition to growth in the second-half of this year and into next fiscal with improved visibility across all businesses. Syngene has returned to growth this quarter is on — and is on the right trajectory for the rest of the financial year. Biosimilars has maintained its good growth momentum and now has clear line-of-sight for new and important product launches, while recovery in the generics business will be driven by the launch of our first GLP generic in the UK and EU, coupled with new launches in the United States. Moving on to present the financial highlights for the quarter. Revenue from operations was INR3,821 crore, up 10% year-on-year and up 6% sequentially on a like-for-like basis. The like-for-like basis excludes revenues and a divestment gain from the India branded formulations unit in Q3 ’24, and I will use this adjusted reference for comparisons in the course of my remarks. As mentioned in my opening, this top-line performance reflects the balance of performance at the segment level, where on a year-on-year basis, biosimilars revenues from operations grew 14%, research services grew 11% and generics saw a marginal decline of 2%. On a sequential basis, all segments reported operating revenue growth with generics growing by 10%, research services by 6% and biosimilars 5%. Total Group revenue for Q3 ’25 was INR3,856 crore, a growth of 7% last year and 6% sequentially.
Group core EBITDA for the quarter stood at INR1,007 crore, up 4% from last year and with a healthy core operating margin of 26%. Quarterly R&D investment spend stood at INR199 crore, corresponding to 7% of revenues excluding Syngene. Reported EBITDA for the quarter stood at INR787 crore with a margin of 20%. This represents a growth of 16% on a like-for-like basis. Profit before-tax and exceptional items was INR138 crore, improving on a like-for-like basis from a loss position last year. Reported net profit is INR25 crore. Adjusting for exceptional items, net profit for the quarter stood at INR13 crores. And here again, there was an improvement in performance as compared with net losses last year when adjusted for the one-off incomes. Let me now turn to the business segment highlights and start with the generics business. And summarizing the quarter’s financial profile, revenue from operations was INR686 crore, growing a healthy 10% on a sequential basis, while showing a marginal decline of 2% year-on-year. This performance was driven by higher API sales and supported by an improvement in the performance of generic formulations. While we still see pricing pressures that have persisted, we did see some volume recovery in the product mix. Core EBITDA for the quarter was INR102 crore with a margin of 15%. R&D spends at INR73 crore and representing 11% of segment revenues was up from INR65 crore in the same-period last year, reflecting our continued investments in the strategically important peptide portfolio and our complex molecules to fuel mid and longer-term growth opportunities. EBITDA for the quarter stood at INR39 crore compared with INR91 last year and INR31 the previous quarter, impacted by these higher operating expenses linked to new facilities and the increased R&D investments. EBITDA margin stood at 5%.
Profit before-tax for the quarter was a loss of INR14 crores compared to a profit of INR50 last year and a loss in Q2 of INR9 crore. Now moving on to important updates, let me start with regulatory, where on the regulatory front, there have been significant milestones crossed during the quarter. We made progress with multiple market filings, including two ANDAs in the United States and we received seven approvals, including one in the United States. Notable amongst these approvals was the receipt of the decentralized procedure or DCP approval for generic — for the generic GLP lyriglutide in the European Union for both diabetes and obesity indications. This approved — this approval positions Biocon for strategic growth in the region and we are preparing to commercialize the product in fiscal ’26. Additionally, in China, approval was received for capsules in various strengths, marking the second important drug product approval for Biocon in this strategically important market. Another highlight in the quarter was the successful closure of the US-FDA inspections of our Bengalorum API sites conducted in September 2024. For both sites, we received Establishment Inspection reports EIRs with a voluntary action indicating classification from the agency. Coming to operations, I’m pleased to share that the oral solid dosage facility in Cranberry, New Jersey, which Biocon had acquired in September 2023 to strengthen its manufacturing infrastructure and footprint in the United States is now qualified by the US-FDA for three of our vertically-integrated statin products and we have commenced commercial supplies. We’ll be adding more products for commercialization from this site on an ongoing basis.
Looking ahead, we expect performance in the 4th-quarter and into the next fiscal to build upon the sequential revenue growth in Q3, driven by new product launches across markets, including the launch of our generic GLP neuroglutide in the UK and the EU as well as additional new product launches, particularly in the United States. Let me now move to the biosimilars vertical, where I’m pleased to report a strong quarter with Biocon Biologics delivering sustained double-digit like-for-like operating revenue growth last year, delivering strong in-market product performances, particularly in the United States market, securing multiple new product launch approvals to fuel growth in the coming year and the successful closure of both the Bangalore and Malaysia FDA facility inspections with the receipt of VAI status for both sites. We also continued the consolidation and strengthening of the biologics vertically-integrated model. Let me now look at these highlights in a little bit more detail and start with commercial execution, where we’re continuing to deliver a strong performance across our product portfolio in the United States. Our oncology franchise comprising of OGIVRI, biosimilar Trastuzumab and fulfiller, biosimilar pegfilgrastin have seen significant increases in-demand with the market-share for OGIVRI doubling to 22% from 11% last year, while fulfiller rose to 23% from 19% last year. Market shares of our Assembly and insulin glargine franchise also continued to be in the mid to-high teens, including all channels. Turning to Europe, our market shares have remained stable at a regional level with strong uptake in key markets like Germany and France, where we hold double-digit shares for many products and in particular, Julio biosimilar Adalimumab and where we’re also now beginning to see the results of our focus on both geographic and product expansion, for example, in the Mediterranean and UK Nordics clusters.
We’re also seeing positive traction in the Japanese and Australian markets through our commercial partnerships. The emerging markets business continues to expand the depth and breadth of its patient reach with eight approvals and 40 new launches this quarter across key markets in the, LatAm and APAC regions. The company also won several tenders for its key products, further strengthened its insulin franchise and has witnessed strong demand in both self-led and partner-led markets, leading to overall market-share expansion. Looking at the financial performance and a regulatory update, the biosimilars revenue from operations was INR2,289 crore, up a healthy 14% year-on-year on a like-to-like basis, again after adjusting for the revenues in Q3 ’24 from the branded Formulations unit in India and the divestment gain of INR350 crore. Sequentially, revenue grew 5%. EBITDA for the quarter was INR487 crore and this includes a non-cash ForEx translation loss of INR20 crores. Excluding the ForEx impact, the EBITDA margin stood at 22%. Last year’s EBITDA was INR714 crore on a reported basis, which included the gains mentioned related to the BFI investment.
On a like-for-like growth basis, EBITDA grew 44% compared to last year. We continue to invest in our pipeline with R&D spends at 6% of revenue to fuel the mid and longer-term portfolio growth. The company also crossed the milestone in fulfilling all its obligations towards all deferred milestones under the acquisition agreement with Viatris. Turning to regulatory, where I’m pleased to share that the US-FDA has classified our multi-product Biocon Park facilities in Bengaluru, India and our insulins facilities in Johur in Malaysia as VAI voluntary action initiated following the inspections held in July ’24 and September ’24, respectively. These outcomes both reinforce the commitment of Biocon and Biocon Biologics to the highest standards of quality for our products and they also importantly pave paved the way for the approvals of biosimilar bevacizumab and products in the United States. Further strengthening our new product launch outlook, we also received US-FDA approval for, a biosimilar Ustecimumab, a biosimilar to the reference product STELARA and are preparing for a February 2025 launch next month. Yessentech also received a positive opinion from the European Medicines Agency Committee from additional products for human use, the CHMP and approval from Japan’s Pharmaceuticals and Medical Device Agency, the PMDA through our commercial partner.
On the pipeline front, the US-FDA has validated our biologics license application filing for biosimilar denuzumab, which has also been filed in several other geographies. Looking ahead, now having successfully secured the VAI classifications for all our manufacturing units from the US-FDA and with multiple new product launches now clearly in-line of sight. Biocon Biologics’ operational focus will balance but also evolve between consolidating and strengthening the business, leveraging our vertically-integrated model and global footprint and launch planning and preparation for commercial excellence delivery of the very strong pipeline that we’ve now — that we’re now building up.
Our priority will be to ensure that we bring our new products expeditiously to the market to provide patients with access to affordable treatment options. Of course, these new launches will serve as key growth catalysts for both revenue and for margin. Now coming to Research Services or Syngene, Syngene’s performance for the 3rd-quarter built on its second-quarter performance with revenue from operations coming in at INR944 crores, up 11% on a year-on-year basis and up 6% sequentially. Reported EBITDA at INR302 crore was up 16% on a year-on-year basis and 16% also sequentially. The reported EBITDA margin improved to over 31% from 29.5% in the comparable quarter last year and 28.8 in Q2 this year. Profit before-tax was up 27% from last year and 32% sequentially to INR181 crore.
PBT margin stood at 19%. Business performance during the 3rd-quarter was broad-based with a return to growth across all divisions within Syngene. Growth in the quarter suggests that market dynamics, particularly in US biotech are now stabilizing, albeit slightly later than expected. Discovery services contributed to growth during the quarter with continued collaborations with many large and midsized pharma companies on pilot projects and the initial China Plus One pilots starting to convert to longer-term contracts during the quarter, providing visibility for growth for the next year. These conversions are a demonstration of Syngene’s scientific capabilities and high operating and quality standards. The performance of development and manufacturing services was also steady, driven by biologics with repeat orders from existing customers and also through new collaborations on integrated projects. Overall, performance in Q3 was positive with momentum across all business divisions, positioning Syngene on the right track for future growth. So in conclusion, and as I said in my opening remarks, this was an important and very progressive quarter for the Biocon Group.
The strengthening of operational building blocks for future growth has now provided us with clear improved growth visibility across all our businesses. Syngene has returned to growth this quarter, is now on the right trajectory for the rest of this fiscal. The biosimilars business, while maintaining its strong growth momentum, now has clear line-of-sight for multiple new product launches beginning in-quarter four and the recovery in the generics business will be driven by the launch of our first GLP generic in the UK and the European Union, coupled with new launches in the United States. We maintain our outlook for a transition of growth in the remainder of this year and into next fiscal.
With this, I conclude my remarks and would like to open the floor to questions.
Questions and Answers:
Saurabh Paliwal
Thank you, Peter. We will now wait a minute for the question queue to assemble. Once again, ladies and gentlemen, please use the raise hand option in your zoom application. We’ll take the first question from from HSBC. Please go-ahead.
Damayanti Kerai
Hi, good morning. My first question is on your upcoming launch of STERA biosimilars. So few weeks away from now, you’ll be launching. So good.,
Peter Bains
We’ve lost you or at least I have.
Saurabh Paliwal
Yes, we can’t hear you.
Damayanti Kerai
Hello.
Peter Bains
Try again, please., we lost you there.
Damayanti Kerai
Okay. Hi. My question is on STELARA biosimilar, which you’ll be launching soon. So just want to understand based on your discussion with channel partners, what kind of sense you are getting for like potential uptake of this product? Because we understand this is a Part-D product and what we heard from J&J is that they are expecting similar dynamics to play-out, what we have seen in case of adalimumab or Humira biosimilar plus any change from the Part-D redesign. So just want to get some sense what you have heard or any like feedback which you might have got from the channel partners?
Peter Bains
Great. Thank you, Daniel.. Let me address that question to Shrihas and the US team and Matt., can you pick-up on that?
Shreehas P Tambe
Yeah, sure. Thanks, Peter. Thanks, for the question. And as you can imagine, we are very excited about the upcoming launch for biosimilar. We will be amongst that wave of products that will be coming to the United States. But I also want to draw your attention that this is a global launch. So we will be looking to bring this product to Europe as well. So there is a huge opportunity that we are looking-forward to. I do acknowledge what you said about the Part-D and the — and the past that has been the case with the biosimilar adalimumab. And obviously, we are very conscious of that. Our teams are working very hard with customers, both commercial as well as the government customers as well. And we believe we will — we will be very competitive in this space, both for and even as we progress the adilimumumab asset as we go-forward. So very exciting times for us as we get into a global launch for a very, very large asset.
Peter Bains
Damayanti?
Damayanti Kerai
Hello. Hello. Hi, yes, sir, thanks for that response. My second question is on your existing biosimilars where you continue to see market-share gain. However, when we look at the profitability side, it’s not in-line with, I think the kind of pickup seen on the revenue side. So can you just comment like whether most of the market-share gain is on low realization channels? And how should we look at like further scope of increasing market-share for these existing products?
Peter Bains
Yes, again, I think I’ll pass that question to you.
Shreehas P Tambe
Thanks, Peter. I think,, I wouldn’t say that it’s a low-margin business or we’ve probably seen growth only in terms of the low profitability channels. If you look at the two large markets and we also have seen huge gains even in emerging markets. If you look at how growth has panned out, let’s start with that perspective. I think growth has come because of the large increase in-market share that you just referred to in the United States. And that growth not necessarily coming from low-margin business. We have two products in the oncology space that operate in the Part B or the medical benefit space and we’ve seen significant growth there in terms of how our products have performed both for, which has seen a huge improvement from low say double-digits to actually mid-20s, which is a very, very substantial shift and that’s come very profitably. So it’s not coming through the low-margin channels. Likewise with trustizumab as well. So this is in the medical benefit space. Our growth in glargin remains very strong, both in commercial as well as in the government channels and that’s remained the backbone. So that’s the United States. It’s not come at a lower-margin. We had also said and guided in the past that growth will come from new geographies that we will expand into both in Europe, which is where the EU5 is and you’re seeing us play — that’s starting to play-out this quarter. And you’re also seeing us win tenders in emerging markets and there are eight of those that we had outlined as self-led and you’re starting to see that those are playing out. So I would say that the margins for the Biologics business have been quite healthy. And we continue to invest in R&D in that 6%, 7% to 9% range that we had guided. So that’s been also quite healthy. And we continue to have a — an EBITDA margin of 12% — 22% to 23%. So that is in my view, a very sustainable guidance that we had given in the past and Biologics stays to that.
Damayanti Kerai
Thank you for your response. I have more questions. I’ll get back-in the queue.
Shreehas P Tambe
Thanks,.
Kedar Upadhye
So maybe one thing me and Peter, just to add. So, I think for the quarter, you should model about 150 basis-point of revenue as overhead charge on the inventory. So that’s timing in nature. We’ll recover it in-quarter four. So as we adjusted inventory, I think the overhead hits the gross margin line. So that’s the adjustment and modeling you need to do.
Damayanti Kerai
Thanks. This is at consol level, right, or at the BBL level?
Kedar Upadhye
This is for, this at a PBL level.
Damayanti Kerai
Okay. Thank you.
Kedar Upadhye
And costs are in control compared to Q2, Q3 and Q4 of last year. Total opex, which includes staffing and other opex is down by almost 10%. So I think once you model this overhead charge on the inventory adjustment in BBL, I think the number should stack-up properly.
Damayanti Kerai
That’s helpful. Thank you.
Kedar Upadhye
Thanks. Thanks.
Saurabh Paliwal
Thank you,. We’ll take the next question from Neham Manpuria from Bank of America.
Neha Manpuria
Yeah, thanks for taking my question. My first question is, I think there was a separate announcement about Biocon buying 1.5% stake in BBL. I just wanted to understand, you know, what would be our diluted holding — fully-diluted holding in BBL after this deal? I think the last number was about 70%. And secondly, what would be our net-debt and how this purchase has been funded?
Peter Bains
Sure. Naya, thank you for the question. Let me start and may want to add-in here as well. So, just to pick-up on that. This is the instrument we use was a short-term bridging loan. The purpose was to support meeting an obligation to an investor and who exercised a liquidity option. And as you’ve pointed out, the conclusion of that would be that Biocon would pick-up the shares. That would be about a 1.5% increase in the holding in BBL, which would move said we’ll provide the numbers, but from roughly 70 to then add-on 1.5%. Cindy, is that roughly correct? Do you want to clarify?
Siddharth Mittal
Yeah, Peter. I think we’ll get to closer to 73% 74% after the acquisition.
Peter Bains
Okay.
Neha Manpuria
Said, but we were at 70%, right, and we are adding one, but on a fully-diluted basis, wouldn’t that number be lower or have I got
Siddharth Mittal
Closer to 70 — a little over 71%,
Neha Manpuria
So now after this, will it be closer to 73%
Siddharth Mittal
73%.
Neha Manpuria
Yeah. Okay, understood. And what would be our net-debt post the short-term bridging loan to fund this stake purchase at the consol level?
Peter Bains
It’s about, I think 1.2 billion 3 billion, say it again, you can clarify.
Siddharth Mittal
Yeah, that’s the right number. So Syngena’s EUR100 million net-debt — net cash-positive in generics, we have roughly similar amount of net-debt. And at Biocon Biologics, it’s roughly 1.25 billion. This is now December. So you’ll add another 65 million of the commercial paper, so that will get you to 1.3 billion.
Neha Manpuria
Okay, 1.3 billion. Got it. And my second question is on the generics business. Obviously, we are starting to see some improvement quarter-on-quarter on that business. But if I remember at one point, we had alluded to this business probably growing 15%, mid-teens sort of growth at some point. One, what takes us there? When do we get there? And when do we start seeing? I think leraglutide launch in the UK was supposed to happen in the 3rd-quarter. What’s the timeline for that? And how should I think about the recovery in generics?
Siddharth Mittal
As you’ve seen in this quarter, we have had a 10% sequential growth and a large part of that growth has come from increase in APR business. So very little contribution from peptides yet during the 3rd-quarter. And as Peter mentioned in his opening remarks, leraglutide would be launched in UK in 4th-quarter. We’ve already shipped the material to our testing site in Europe, the product is getting tested and will get released and launched by our partner and us in the 4th-quarter. We are also opposed the national approval of in Europe, we are doing national registries in each country and we expect that launch to happen in the first-quarter of next fiscal year. We also mentioned that there are a couple of other launches in the United States in 4th-quarter. So some total of these would drive a growth in 4th-quarter. But I think coming back to your point on teens growth, that definitely next year is going to be a big growth driver, lenaglutide contributing to that growth in UK. And of course, UK is not that big a market as a standalone country. But when you look at Europe and then subsequently during the second-half of year, we also expect an approval in the US and that product was filed from our — the injectable facility in biologics, which is now — we received the VIS status and the review of the DMF for the API was complete and FDA is now reviewing the other data packs and we expect that review to complete by middle of this calendar year, followed by a launch. When you look at the additional capacities also that we’ve created in our API sites, which will drive incremental volumes. So a combination of leraglutide in UK, Europe and subsequently US plus the regional API volumes and some of the other OSD launches will drive that growth in next fiscal.
Neha Manpuria
So we should get back to mid-teens growth possibly in fiscal ’26, if not — I mean fiscal ’27, if not earlier at least.
Siddharth Mittal
Yeah. So fiscal ’26 itself, you’ll start seeing this growth.
Neha Manpuria
Understood. Okay, got it. And one last question on the BBL business. On — now that the Malaysia facility is cleared, we also saw the biosim listed SELARA approval for both Beva and Aspart. Is there anything else that is pending from the USFDA? Have we heard anything on the filing? You know, is there anything else pending for us to get approval for those two products?
Peter Bains
Yes, I think if you want to take that, obviously a very important question with line-of-sight of up to five product launches in the US. Maybe you can step Nehar through that.
Shreehas P Tambe
Yeah. Thanks, Peter. Thanks,, for that question. We’ve said in the past as well that the — the only thing that it really of — which was open, there was no open question on the science or the dossier both for bevacizumab or for aspart that and the agency had indicated that. The only piece that was remaining was the site GMP status. With that achieved, we have responded to them saying that we’ve now completed this and we want them to reconsider our application at the earliest. So that is the process that is ongoing and our regulatory team is in conversation with them to see how we can move this in an expedited manner.
Neha Manpuria
That’s helpful. Thank you so much thank you.
Saurabh Paliwal
Thank you, Neha. We’ll take the next question from Shyam from Goldman Sachs. Please go-ahead.
Shyam Srinivasan
Yeah, thank you. Thank you for taking my question. Just the first one, just the slides 12 and 13 on Biocon Biologics, looking at-market share and revenue growth, right? And I’m just doing very simplistically and maybe I’m getting something wrong. Most of our market shares for our commercial molecules in the US have actually doubled like maybe close to doubled. We’ve also seen, say, for example, in Europe go up in the last 12 months. So I’m just trying to reconcile that with the revenue growth. When I do it in dollar terms, it’s probably like 10%, EUR240 million going to some EUR265 million, something like that. So just want to understand, has there been price erosion? What is the — what is the delta on our volume shares have gone up significantly, but we have not seen the corresponding revenue growth, that’s point one. And if you were to look at our quarterly trajectory, I think Peter talked about the five launches and as well. So what should we be looking at a trajectory of in absolute terms of where our business could look like in the next 12 to 18 months?
Peter Bains
Should we ask you want to take that one?
Shreehas P Tambe
Yes, certainly. And I’ll let Kedar be in as well. Shyam, great question. Part of it, I did respond when I was not responding to at the beginning. See, these market shares have grown significantly across geographies. And if you would note, they have come at a steady, healthy contribution to the bottom-line. So the EBITDA margins have stayed consistent. The market-share growth reflects the volume growth and I think that is certainly a factor of how the market confidence has played out. Now whether that increased volume directly reflects an increased revenues as a proportional thing is not an expectation because as you look at how markets evolve, not every product will retain the value that it has a year-ago. So we have obviously in any market when you have competition, you will see a steady erosion, but it is not something that has been unexpected or unplanned that has impacted the gross margins, which have moved like Kidar pointed out in the previous call that have moved from Q3 to Q4 to 150 basis-points. But beyond that, we’ve seen a very healthy contribution. To give you a more additional color, maybe Kedar, you can comment on that as well.
Kedar Upadhye
Yeah, that’s right. I think the price erosion is in-line with what we had budgeted for. And in addition, Shyam, I think one adjustment you need to make in the reported numbers is the removal of the BFI revenues. So that.
Shyam Srinivasan
I’m doing that. Yeah, Kedar, I’m doing the like-for-like growth that you have given, that’s 14%. Yeah. And then and do whatever rupee change depreciation, it comes to 10%. So I did the — I did the right number, I think, but yeah.
Kedar Upadhye
Got it. Got it. There are two. I think like what has answered, I think there is an erosion, but that’s in-line with what we had budgeted for. And once you make this BFI adjustment, that gets you the like-for-like number.
Shyam Srinivasan
Yeah, Keda. So the price erosion is, would we say low double-digit kind of price erosion or is it even higher?
Kedar Upadhye
See, it varies product-by-product. Actually, the oncology portfolio is holding very strong in fact. So I think it varies product-by-product, geography-by-geography and the mix also comes in. So it’s going to be difficult to give you one answer. But like what said, we are a very value-based player, as you would know and will work-based on the existing philosophy in the market.
Shyam Srinivasan
Understood. Understood. Thank you. And just a second question is on, you know, we have bought back some stake in Bicon Biologics. We are selling stake in Syngene. So just from an overall capital allocation, can you walk us through what’s happening? I know this is probably one of the investors asking using the put option, but just want to understand how should we look at some of the shareholdings in our subsidiaries?, can we go below 50%? I’m just — so just help us understand and our measures to reduce net-debt, right? So it seems to be going up, not down.
Peter Bains
So, yeah. Thank you. Sure. Thank you. I’ll start on that question., you may want to come in as well. So Shyam, I mean it’s a balancing act over-time and we’ve had a series of obligations that we’ve had to meet and we’ve and we’ve been meeting them properly. Obviously the Viatris, a full and final settlement on the acquisition we’ve spoken about. We’ve had other financial obligations, which we’ve met, that’s been balanced with the investment in the business to prepare for this next wave of growth, which is now much more clearly in-line of sight both with the work that’s been done to get these new products in-place like and like generic and others. And of course, now with the release on Bangalore facility in the Malaysia facility, we can look at Aspart and Bever in the US, but many, many other product improvements that were held up there. Those CRLs were a break on those two major facilities for biologics. The brake is now being released and we’ll see that coming through. We will continue to balance meeting the obligations that we have as and when they may come due as we’ve done very recently as you pointed out with this short-term loan to meet an obligation for an investor in BBL who exercise their liquidity option, that’s a short-term measure of bridging loan and but we are committed to and will continue to look to pay-down debt as we move forward. But it’s not a straight-line. There will be occasions as this is one where there will be a slight increase, but overall, our commitment will be to continue to pay-down debt as we move forward. And of course, there are a number of options and we continue to review that and we’ll move forward on that basis. I mean, in regard to the specific question about the holding in Syngene, I think we’re down now to around 52% and I think we would like to keep it there and we’ll be exploring other options going-forward. Sid, do you want to add anything to that?
Siddharth Mittal
I think Peter, got it. Thank you. Thank you and all the best.
Saurabh Paliwal
Thank you. Thank you, Shyam. We’ll take the next question from Alket. Please go-ahead.
Amey Chalke
Hello am I audible?
Peter Bains
Yes.
Amey Chalke
Yeah. Thank you for giving my opportunity. Just I have two questions on one on and another one on insulin plant. So on SEMA, what would be our status at present? We are seeing a patent expiry starting from Jan in Canada, then Brazil, China and India. So how we are positioned in this product??
Peter Bains
Sid?
Siddharth Mittal
So my the development is going well. We have already filed our DMF in the US that’s already listed on the MDA website. We have done the drug product development batches and charged it on stability. We’ve also completed India bioequivalence study, which is important for filing in many markets because certain markets require bioequivalence and that’s successfully passed. So from a scientific perspective, the file is ready to file and we will be looking at filing it in the markets, some of the markets that you mentioned in first-quarter of next fiscal year. And of course, the review cycle varies in each of these countries and depending on the approval, we will be looking at entering may not be on day-one, but may not be too far from the other competitors who might launch the product on day-one. So my expectation is that we should start receiving approvals in some of these markets end of calendar ’26.
Amey Chalke
Got it. So, okay. And we will be partnering for any of the value addition, let’s say, assembly or anything or everything would be in-house like?
Siddharth Mittal
Well, right now the product is manufactured in a CMO, we are building our own injectable facility, which will be commissioned in the first fiscal quarter of next fiscal, followed by, of course, the qualification and then we will take the batches. The idea is to bring up the products, especially for the US and Europe in our own facility, but our launch would be from a contract manufacturer where we have already manufactured these batches and the assembly will of course happen at the same-site.
Amey Chalke
Got it. And the second question I have on the insulin plant expansion, where does it stand and how much capacity addition can happen, which will help going ahead for land?,
Peter Bains
Rhonda, do you pick-up on that one?
Shreehas P Tambe
Yeah. Thanks, Ame for that for that question. The insulin is the insulin overall is a very important product for us and I think it’s a — it’s a very strategic play globally for us. There is no real biosimilar competition that we see for insulins across geographies and we are seeing that with only the originator players ruling this for a very long-time, we see this as a very large opportunity ahead of us. We’ve made investments over the years and the most recent investment that you are referring to has doubled our capacity for drug product, which is expected to come online anytime end of this quarter. So that is something that we expect to significantly boost our capacity for drug product manufacturing. We’re also expanding our insulin drug substance, which we had guided in the past and that’s underway. Once that’s completed, we expect to see a doubling of that drug substance capacity in Malaysia as well. So that will take us another couple of years to do, but that’s something that we had started about a year-ago. And it’s important to note that Biologics is amongst the top three, four players of the insulins in the world and we believe that’s a huge opportunity and a differentiated play for Biocon Biologics going-forward
Saurabh Paliwal
Looks like we’ve lost it. We move on. We’ll take the next question from Sharma from JPMorgan. Please go-ahead love you had a question
Love Sharma
Hi I’m sorry I was on yeah. So I had a question regarding the liquidity option, which one of the investors have exercised. Could you elaborate what kind of other such options are still available with those investors? And what could we expect in the — in the near-term? Because I believe one of the condition attached to some of those agreements probably seems to be the IPO of Biocon Biologics, if I’m not wrong. So any color there would be very useful. Thank you.
Peter Bains
Sure. So we have a number — a number of investors. We’re working with all of them. We are looking to align their interest and satisfy them and IPO clearly is one of the options that we have to do that. I think it would be inappropriate to go into details individually here, but I think it would be fair to say that we are working with all those investors to ensure that we align to satisfy them as the business is progressing. And I think we’re making good progress on that front.
Love Sharma
Thanks, Peter. Maybe if I could just follow-up, up, would you say — would it be possible to share the amount which you think could be liable to be put back within this year or FY ’26?
Peter Bains
No, I think we can’t do that, Sharma. I think we’re working through that with our investor partners and ensuring that they’re going to be satisfied and along with the progress of the business. So I think that I can’t break it down and give you quantification on that.
Love Sharma
Understood. No worries. Okay. Thanks for that. Just one more last question from me. I think on the Viatris full and panel settlement, could you share what is the amount which has been settled there in December quarter.,
Peter Bains
Do you want to address that one to?
Shreehas P Tambe
I think we — so the settlement love was about the deferred payment that we had to work on. And like we’ve said, we’ve been able to close-out the entire 335 million, 175 million of that we had closed previously, which we had indicated and now we have closed the remaining $160 million. So with this now, there is a full and final settlement and closure of all transactions that was related to the Viatris acquisition that is now behind us complete.
Love Sharma
Understood. Thanks. And just curious, given this EUR160 million payment, could you give a sense of how this was funded?
Shreehas P Tambe
So I lost you in-between. I couldn’t hear.
Love Sharma
Just the EUR160 million payment, how was this funded from Biocon Biologics?
Shreehas P Tambe
Yeah. I think maybe,, you want to respond to that question? The funding is allows?
Kedar Upadhye
So now like what Ria said, there were two milestones this year and both we have settled. And it’s not that we have paid the full amount based upon the existing receivables that we had between both the parties. And based on other arrangements, I think that’s how the full settlement has been done. And the funding has been done through the existing liquidity sources that we had within the goal.
Love Sharma
Okay, understood. Okay. Maybe I can follow the data. Thanks for that. Thank you. I appreciate.
Saurabh Paliwal
Thank you, Laf. We’ll take the next question from Patra from PhillipCapital. Please go-ahead.
Surya Patra
Yeah. Hi, thank you. Thank you for the opportunity sort of.,
Shreehas P Tambe
If you are saying something, then at least I can’t hear you.
Peter Bains
You’re very, very low-volume, sorry.
Surya Patra
Okay. Is it now audible, sir?
Siddharth Mittal
Yes.
Surya Patra
Yeah. Thank you. My first question is on the biosimilar opportunities only. Could you give some sense of what is the kind of preparedness that you have done about and what is the likelihood or what is your expectation on that front? And second is on the, one is the launch expectation that you are having for this molecule for US market. So this is the first two questions.
Peter Bains
Srihas, I think those of you.
Shreehas P Tambe
Yeah. No, thanks, Surya for that question. I’ll invite my colleague, who is the Chief Commercial Officer for Advanced Markets to respond to this along with me. Surya, we’ve been in this space now having run the business for a full-year after we’ve integrated it and market shares for all our product have grown significantly over the course of the last year. So that tells you that there’s a lot of customer confidence in what we do. And a lot of it is what Matt has led and the North-America team is led there. So I’ll let Matt respond to that to your question on our confidence in our preparedness in the biosimilar rustitinumab launch. Matt, would you like to comment to Surya’s question?
Matthew Erick
Yeah. Thank you,. And I’ll add-on to the original question. We’re well underway in our launch planning with our customers — with our customers in regards to the channel strategies we have in Part-D, we’re leveraging the existing relationships we have and we’ll be driving the synergies that we have in the United States already established. I think what’s clearly different that’s probably on a lot of people’s mind is how is this different than Adali? And how it’s different than Adali is we’ve had plenty of time now to engage and also communicate to customers. Had a legal kind of hold where we couldn’t speak to them because of all the settlements. The other thing that’s different is that there is now a track-record in this immunology piece in which payers are more comfortable. And last thing I’ll say here is that — because of our active engagement, because of our sales force, we’ve already secured some important contracts that are part of our plan and we look to continue to expand upon that as it gets closer and closer to our launch date. So I couldn’t be more positive about the team, about the opportunity in our and we’re well-positioned. Last thing I’ll say is that I believe this is the power of our portfolio, meaning that not only do we have the oncology portfolio in the United States, but we also have our immunology portfolio and we can drive those synergies across and as we launch more products as you’re thinking about or Aspart, all that is additive to our strategy and our platform that we fully-integrated and consolidated and now you’re seeing the growth in our market-share numbers. So thank you for the question. Thank you,.
Shreehas P Tambe
Thanks., you had another question linked to it in terms of our expectation. I think we do definitely have very good clarity on what we expect from this asset. I only want to kind of guide you to the fact that this is a global launch for us. US is a significant market, but if you look at how our asset has performed for us, it’s a global asset. We’ve been leaders in Europe as well and that’s a market that is also strategically very important for Biopon Biologics. So while we will certainly focus on the US because it is a big market, we are looking at biosimilar as a global launch in several markets and we believe that there will be opportunity beyond the United States as well. Sometimes that gets clouded in just focusing on the United States.
Surya Patra
And the — launch timeline. So is it a FY ’26 opportunity in US for you?
Shreehas P Tambe
We have filed, the product has been filed with the US and with the European authorities and with Japan and we believe here too, we will be able to accelerate. If you noticed when I say the is global and we are looking to launch that product globally. We’ve been able to accelerate the launch by almost four months. So it’s moved from the next financial year, which is FY ’26 into maybe early FY ’26. And I think that’s been a good positive traction. We expect also to be something positive where we will be able to gain time so that we can bring the product closer to launch or market formation.
Surya Patra
Sure, sir. My second question on the generic business, sir. So we have got now the China approval for. So simultaneously that we have got now this cranberry facility ready for US manufacturing. So how important these two developments are for our generic business progress?
Siddharth Mittal
Surya, both the developments are important. I think China is a very difficult market where Indian companies have not been able to successfully penetrate in a large number of drugs. But is an important drug for us and is an important drug in China. It’s still a large-value market in China with very limited number of local players. So our partner CMS is getting ready to launch the drug in the retail market. Of course, retail penetration is not that easy. And of course, we are looking at the tender, which opens up for this drug China major volumes are driven by the tender, the government tender or VBP tender, which is a three-year tender. And that’s where the maximum volume is driven from. And I think we are expecting that tender to open sometime end of this year. This calendar year with supplies commencing in ’26, we will, of course be up against some of the other local Chinese companies or there are only two or three other generic approvals. So we will work-out a strategy with our partner on how to secure a part or full of the tender. We do have capacities. You know that we have one of the largest manufacturing capacity of in the world. We have enough product capacity. So we are well-placed. In terms of US cranberry site was acquired because most of these drugs were manufactured and contract manufacturers in various parts of the world. We wanted to consolidate that and also be closer to our customers and the facility allows us to participate in the local government business, which requires manufacturing in the US. So we’ve got three approvals of in from that facility. We are also in expanding the capacity of that facility, which will be ready by middle of this calendar year and we’ll use that facility for our future filings. But in the meantime, there’s not going to be revenue increase on account of the facility because we are now going to manufacture the products in this facility, which we were manufacturing earlier at CMS. But it definitely allows us to win the government business. We recently secured a national government contract for one of the statin which of this facility sure.
Surya Patra
Yeah. Thank you. Wish you all the best. Thank you.
Saurabh Paliwal
Thank you, Surya. We’ll take the next question from Vivek from Citibank. Go-ahead.
Peter Bains
Maybe on-mute Vivek.,
Vivek Agrawal
Sorry. So just repeating the question, it is on biosimilars. So yes, you have mentioned that the margins are expected to be in the range of 20% to 23% on a sustainable basis. So I was just surprised that given that you have cleared the facility is expected to launch some of the new products like STELARA and some of the other products like the oncology segment, insulin, etc. So is it — is it not a conservative guidance or should we expect the margins to, let’s say, over the next, 18 24 months move-up from here on substantially. Thank you.
Shreehas P Tambe
And of course like the optimism Vivek and I accept the positive feedback. We certainly have a lot of things moving in the right direction for a company to be in this place where we’ve just integrated the business successfully, market-share is moving up, keeping that healthy EBITDA was very important for us and we maintained that. The year ahead, we have five new launches coming up in the US and three globally. So certainly, whenever you have a new product launch, you will see a slightly better-than-expected in our performance. So yes, your expectation is fair, but we also see that some of our products have been in the market for a while. So we want to make sure that we’ve always said that we will continue to invest about 7% to 9% in R&D. We’ll have healthy strong gross margins and core EBITDAs in the mid 30s, which is where we are and the EBITDA would be in the mid-20s, so some ’22 ’23, maybe ’25. I think we’ve been in that range and we want to make sure that we continue to deliver to that. Now as we progress the year, we’ll probably see how some of these things play-out. But I accept thank you for your feedback, Vivek. Thanks,.
Vivek Agrawal
This is quite clear. So one question I have on semaglutide. You have mentioned that you are expecting approval in some of the markets in 2026. So is it possible for you to outline which are the market — the markets you are expecting approvals in the year?
Siddharth Mittal
I think, Vivek, it will be very difficult to comment on which market the approval comes in. Each regulator has a different lens on how they’ll review a drug filing and also depends on number of approvals in that country for. So if the number of approvals are less, then they will fast-track the review. We do definitely expect Canada to be an important market. The Canadian regulator has been proactive in reviewing the files unlike maybe a Brazilian regulator or a Mexican regulator who might take little longer. We’ve — as I mentioned, we have successfully also completed our bioequivalence in India and we will soon be going for a clinical trial and then we’ll file in India sometime once the clinical trial is done. And various other markets, Europe where we will be — we or our partner will be filing. So we will be difficult to say which country would give the first approval. But I think the broad message is the drug has completed its development journey or we’ve got the scientific data, it meets the requirement, the API DMF has been filed, the products have — the product has been manufactured, charged on stability, the dossier is under preparation and we’ll start filing in various markets this year.
Vivek Agrawal
Thanks for that.
Peter Bains
Vivek, sorry enter. I mean, I’ll add a comment in here because I think it ties a few of the questions together. I mean the GLP market opportunity is clearly strategic for us and it’s going to come in waves. The first wave is Bluetide where Sid has described our market posture with approvals in the UK and EU, but that is a phased rollout depending on the national approvals and then into the US and then globally. So this is going to be phased rollouts that are dependent on the national registration timelines. Of course, we’re pushing everything we can to be as near the front of the queue and a day-one launch opportunity as we can. And there’ll be a wave that will be Learer and that will then overlap with a wave that will be which will follow a similar pattern, which is these are global opportunities, global assets, but they will roll-out across the global geographies and dependent on the regulatory approvals. But where we’re clearly very well-placed with Leara and I think we’re making strong advantages — advances with as the second wave and then there’ll be a wave beyond that. But Lear in-line of sight now, coming up to line-of-sight and getting exciting there.
Siddharth Mittal
Yeah. And if I may add one more thing that we know the volume or the market opportunity for semaglutide, which is pegged at almost $50 billion in global sales and not fully penetrated in many parts of the world. So the opportunity is huge. We know it and it’s a chronic drug. So even if you are not there on day-one in a particular market, but there is a huge opportunity in the years to come. And I think what is more important that we’ve seen from Lira is to get the right product in the market. And we have seen that for Lira, lot of companies had challenges for many, many years and given the technicality of the drug and the complexity of the drug, not every company filed were — was able to get the approval. So I think we believe that given our whole expertise and the credibility now that we have established with Lira, we are very well-placed in mid to long-term to capture on this opportunity.
Vivek Agrawal
Thanks,. Just one follow-up question on Canada market, right? So where we are in terms of filing, are we close to filing or whether we have already filed into the particular market? That is part one. Second, when you get approval or if you launch the product into the particular market, how you see the competitive intensity, right? So is it going to be, let’s say, a four, five player market or maybe I think the 8, 10 player market by the time we launch? Thank you.
Siddharth Mittal
So as I mentioned, the filing is not started in any of the country. It will start by first fiscal quarter of next fiscal. Canada will be more closer to the second-quarter because Canada has additional SKUs, which are not there in some of the other markets. So by middle of this calendar year’s when the filing would happen. Now in terms of competitive dynamics, it’s very difficult for me to comment. I have read actually analyst reports of which peg that by calendar ’26, there can be three to four players to be there in the market on day-one with five to six players by end-of-the year. Now it’s — as I said, that number of filings do not determine number of approvals and launches and it’s all about supply-chain, it’s about the complexity in manufacturing and getting the right profile of your product like that of an innovator. So I will not hazard a guess how many of our competitors will be able to cross the finish line and how many will not be. But at least we are ready to face the competition. We expect even if it’s not in ’26, but ’27, ’28, that time period, there’ll be many companies who will be there in the market. And finally, what is important is the cost leadership, having the right capacity, having the right device strategy, having the right focus. And I think we are very well-placed. We are one of the few vertically-integrated player who does her own drug substance manufacturing, product manufacturing and we have multiple devices off-the-shelf and customized for some of the markets and we think we’ll be very well-placed to face the competition?
Vivek Agrawal
Thank you, sir. Just last question, I’m dragging on here. So in terms of approval complexity, right, so in Canada, how different it is compared to US, right? Is it the similar in terms of regulatory requirements, timeline, etc., or is it relatively easier to get approval in Canada compared to the US? Thank you.
Siddharth Mittal
I would say it’s somewhat similar that there is no — the standards are equal or the same level and I mean, I don’t expect — I mean, maybe the number of filings in Canada compared to number of filings with the FDA would be less. So Canada — Canadian health regulator might be able to review the file more expeditiously versus FDA who has a huge backlog of files are under review.
Vivek Agrawal
Thank you that. Thank you very much. This is from my side.
Siddharth Mittal
Thank you.
Saurabh Paliwal
Thank you, Vivek. We’ll take the next question from Nitin Agarwal from DAM Capital.
Nitin Agarwal
Yeah, thanks for taking my question. Sure, my question is on the biosimilar business. We’ve had a favor of discussions around the US opportunity, but in your two things. One is, A, you know what in our business, what proportion are — is EU and RW for the overall of biologics? And how do you see these two geographies from a strategic perspective? I mean, are there — and in terms of the growth outlook for both of these geographies of overall biosimilar business?
Shreehas P Tambe
Thanks, Nitin, for that question. All three geographies, we’ve broken it up as North-America, which is US and Canada. We’ve got Europe and all this right here and then we’ve got emerging markets, which is not in this part of the world. So if you look at it, roughly our business is between advanced markets and emerging markets about 75 25 and between the advanced markets, if I were to take a split between North-America and Europe, Japan, Australia, you’d roughly see it biased slightly towards the US, maybe 40 35 is what it would be between North-America and the rest of advanced markets. So that’s the rough split, I would say, 40, 35%, 25, that’s how the split would be between these three regions. Now how is our view on Europe and rest of the world, I think we are very, very, very bullish on these regions because we feel we’ve got eight products approved. We’ve got three more coming in Europe. So we will have a double-digit portfolio. We’ll be amongst the one or two companies which is having that kind of a portfolio in Europe. We will be the only one which is fully-integrated. And the most important thing is that we haven’t really explored the full potential of that region yet because we aren’t present in very many countries given that each country is quite diverse. Our presence in Germany, France and a few other countries is very large, but we have devised a strategy where we feel we will expand into the 27 countries on a staggered basis, starting with the five large countries in the EU, including the UK. So we feel that there’s a lot of headroom for growth, Nitin. So that’s why we’re very bullish about it. In emerging markets, we feel there are certain countries which are very, very strong in terms of the demand in terms of the volumes, but also pricing is also quite healthy. So we feel that those eight, 10 countries that we’ve identified where we want to be straight with the patients, with the customers, I think those are the countries we feel we will find a lot more traction than we have so-far.
Nitin Agarwal
And as a proportion, do you see these proportions continuing or you see some of these sort of changing a bit from a revenue concentration perspective?
Shreehas P Tambe
We expect the ratios between this to be more or less the same because the size of the ticket between the US versus the others are skewed that way. So you’ll always start — you see the US taking a larger share than the rest. But given that we are fully-integrated as an organization, we have the ability to take advantage of working in the other regions also.
Nitin Agarwal
Thanks. Thanks. If I can squeeze one last one on that. On the insulin portfolio, you mentioned about it earlier. Now on the competitive dynamics in the insulin portfolio, you mentioned the innovators are there and not too many generic players are there apart from the innovators. You know with this increased sort of focus of the innovators on GLP ones, I mean, what kind of market dynamics are you seeing across in US and some of the other markets? Are you seeing certain degree of lessening of competitive intensity from the innovators or the other players on insulins? And what does it really mean for us on a more like a three, five-year view on the segment?
Shreehas P Tambe
Yeah. And I wouldn’t want to comment on what others are doing as a strategy, but I would certainly say that insulins are here to stay regardless of how the GLP-1 agonist strategy plays out because that is certainly an important therapy area and a segment and we are very bullish about the GLP-1 segment as well. And you just heard walk us through why we believe we’re very strongly positioned in the GLP-1 space. But the insulin space is very unique and we believe complementary to what the GLP-1s bring to the table. So we are seeing a continued demand. We are seeing an increased focus on this. Globally, there is a requirement for this product, which continues to be there. Now you are right there out-of-the three large companies which were making insulins, two of them have in their portfolio and clearly more remunerative in their mind probably in the near-term. So the focus and attention could be, like you said, being in another place. But we are very focused on both. Just talked about GLP-1s and Biocon Biologics is very focused on insulins. And given our full integration from drug substance, drug product to devices, we are seeing an increase in the opportunity, particularly in emerging markets and then in the United States as well, which is reflected in our market shares.
Nitin Agarwal
And for the first-class one on that. Barring, which is filed now, I mean how many more products are there in the development which can probably get commercialized in the portfolio next, say, three years?
Shreehas P Tambe
I mean, there would be other products, Nitin, that you could develop, but broadly, there are two segments that I would look at from an insulin perspective. One would be the basal or the longer-acting segment and the other one would be the rapid-acting or the short-acting segment. One is, which will maintain the blood glucose all through the day, which is where glargine falls in and the other one would be a post meal or a post-trandial insulin as they Call-IT, and we have aspart in that segment. So we are playing in both segments and we believe that these products could occupy the broader space like seen with the basal insulin, we believe we’ll see a very similar trend when we bring the insulin aspart, which is the rapid-acting analon.
Nitin Agarwal
Okay. Thank you so much.
Saurabh Paliwal
Thank you, Nitin. We will take the next question from Bharat Sheth from Quest Investment Advisors. Please go-ahead
Peter Bains
I actually may be on-mute
Saurabh Paliwal
Mr you’re on hello. Can you be louder please?
Bharat Sheth
Now is that clear?
Saurabh Paliwal
Yeah, it’s better now. Thank you.
Bharat Sheth
I have one question about this Rihaj. Yes is one of the recent time in the international forum we presented that biosimilar adoption is increasing globally as well as we expect that market to grow at that 75% CAGR from ’23 to ’28 and with coming back to our own company having a good amount of portfolio, having approval as well as the plants are clear. So how do I mean if you have to give little longer-term trajectory for our biosimilar business. So how do we see that business? There’s a growth
Shreehas P Tambe
Peter, if I can respond. Bharatbai, first-off, thank you for your continued patronage. You’re right. I think we presented recently at one of the investor conferences that there is a significantly large and exciting opportunity ahead of us. In fact, the opportunity ahead of us for biosimilars is much larger than the one that we’ve seen in the past five or six years. So we are certainly very, very bullish about it. We are also looking at the portfolio that we have developed. We have a large 20 product portfolio, eight of them are approved or commercial and we are looking to build — bring more products into the market. But these products, five of them in the US in the next 12 months, three of them globally. And then you’ll see more products coming post ’28 and thereabouts. And that’s where also the large assets that we’ve guided will move-out. The CAGRs that we mentioned are from 2023 onwards and you’re seeing us grow as well. And some of these things will tie-up because not all therapy areas are what we represent. We’ve grown at a healthy clip if you look-back from where we came. And while I do not want to provide specific guidance, we believe the future will also be predictably positive as we look to bring more products into the market. So even in the investor presentation at the conference, we haven’t given specific guidance, but it gives you a sense of where the opportunity is and how exciting the future looks like where we as a company are quite strongly positioned
Bharat Sheth
I mean, I mean ballpark, I mean whether we’ll be better-off than that 25 or maybe so if it can give trajector, I mean some kind of a range,
Shreehas P Tambe
Yeah, I would love to and I think we’ve kind of tried to avoid giving specific guidance. But I think it’s fair to say that as an integrated company with so many products being launched, with the opportunity opening up in the next few years. This is a very, very exciting space. Okay.
Bharat Sheth
And same question with Sidar Siddat after investing so much in R&D as well as the capacity expansion and now some of the product that we have got approval. So how do we see from three years perspective standalone business?
Siddharth Mittal
We — I mean, I think I had addressed a previous question where I’d reaffirmed that we are looking at that mid-teens kind of growth. Of course, there could be periods when it’s highest, there could be periods when it’s lower. But overall, directionally, I think peptides is going to be an important growth contributor over the next couple of years, starting with Liraglutide in FY ’26 and start of semaglutide in FY ’27 and in FY ’28, we’ll see a significant contribution coming from both Lira Sema. And even on the synthetic side, whether it’s the OSDs or the other injectables that we have or the increased capacities that we are creating for a fermentation products or the synthetic products. So some total of all, we definitely expect good growth over the next two to three years.
Bharat Sheth
And how do — I mean, that will play-out as a — our margin or profitability side.
Siddharth Mittal
See, see margins, you know, as you’ve seen in this quarter, our margins did go down because the leraglutide facility of the drug substance leraglutide facility, which we had created, got commissioned, approved and that got capitalized during this quarter. So we did have expenses come in for that facility. We also had the new facility, which got capitalized in the second-quarter for which again we had expenses come in this quarter. So the margins are — have gone down a bit, but as you start seeing sales coming from these facilities, we will see margins go up and directionally, what I’ve guided for is a an EBITDA margin of 10% to 12%. I mean, of course, it’s gone down this quarter because of, again, increased R&D and expenses, but we will get closer to, 13% 14% in our — in one or two years. Of course, the new product launches, margins are dependent on number of players. If number of players are limited, we would see a better pricing and hence better margins. But if it gets competitive like you have seen in typical generic drugs, then the margins would be on an average of that 10%, 12% year. So a lot of unknowns are there to predict the margins accurately. But we are working on cost-improvement. I think that was one of the challenges that we had in the last couple of years with the increased raw-material prices, the strengthening dollar and the selling prices of our APIs go down. We had an impact on margin. We embarked on a journey of cost optimization, raw-material cost-reduction, CIPs and all of these initiatives over the last one to two years, we have started seeing the results and now we will see the volumes pick-up again. And that’s exactly what’s happened in-quarter three and over quarter two, we did see an uptick in our API sales and that momentum will continue. We will see lower raw-material cost with better processes in the coming quarters and all these things will add-on to margin improvement.
Bharat Sheth
Thank you and all the best to hold by your.
Saurabh Paliwal
Thank you, Mr Sheth. We are coming to the close of the call and we take the final question from Malankar Garude from Kotak Securities. Please go-ahead
Alankar Garude
Hi, am I audible?
Saurabh Paliwal
Yes.
Alankar Garude
Yeah, hi. Thank you for the opportunity. On the R&D front, we have spoken about the 7% to 9% range. But over the last few quarters, we have been more closer to the lower-end of that range. So can you take us through the R&D progress on the biosimilar side in the prefiling stage in our portfolio over the next, say, four, five years? And in that context, how should we look at the overall R&D spends going-forward?
Peter Bains
Sure. Yes, again, over to you, I think.
Shreehas P Tambe
Yeah, thanks. Thanks, Alankar. I think what we have guided is in-line with what the — what the expectation was. Many of these R&D spends, Alankar, as you know, are cyclical in nature. So as you take products past the clinical-stage, then you will see a slightly lower spend in our investment in R&D than you would see when products are in the clinical phase. Now incidentally for us, we had three products which had — which were in the clinic at the same time and which moved out of it also at the same time. So what you are seeing effectively we filed for aflibercept, we moved that out. We filed for, that got approved. We’ve done adenosumab and that’s got approved too. So you’ve seen products which would have then peaked at one-time and then it’s ebbed. And you see the next set of products which we are developing, some of them undisclosed until we actually move past that stage. Once it gets into the Phase-3 clinic where the larger amount of costs actually start coming in, that’s where you will see that move towards the higher-end of the range. So I think it’s just a matter of phasing is what I would say, but the programs that we’ve guided for, we continue to be on-track where we are in fact we moved some of them ahead of where we had initially guided.
Alankar Garude
So broadly, Srihas, how should we look at the timelines? I mean, I’m not asking for a specific a month or a year, but more in terms of how do you see the progress across some of the initial assets today? Is it going to be more two, three years from now that some of these enter Phase-3 or maybe even longer. Any color on that would be helpful.
Shreehas P Tambe
Some of the assets that we are — what we are currently developing in the next two years that are supposed to hit the market are — are already past their clinical phase or getting off it. The ones that are to come to the market post ’26, ’27 actually, I think those are the ones which will be entering the clinic. If your question is, are we on-track for it. To that question, the answer is yes. We would be tracking to it the way we believe. We’ve talked publicly about a few assets. I will reiterate the asset that we have publicly talked about. We’ve mentioned in the public where we’ve said we are developing that asset. And I can tell you that we are progressing as per the plan that we’ve made. And as these assets will move towards the clinic, you will see those clinical spend starting to reflect because we expense all our R&D through the P&L. So you will start seeing it there.
Alankar Garude
Fair enough. Got it. And the second question first sir, on the Wisack facility, is it being used more for captive consumption currently? And if you can help us with — do you have a bunch of plants lined-up to procure APIs from this facility over the next one, two years?
Siddharth Mittal
Yeah. So it will be used for our API customers as well as our captive consumption. Our API customer-base is much larger than our own formulations business. We have some very strategic customers in the US and Brazil who are qualifying as well and that’s also to derisk their own dependency on one site, which is in Bangalore. So that gives them a supply assurance of from a second site. And we are also locking in additional customers from and that will drive the volume growth. And we will of course also looking at additional products which we’re going to qualify from this facility. We recently validated a which we did not have in our portfolio, which is again a big product and that’s been validated now from. We’ll also be validating other immunosuppressant from this facility.
Alankar Garude
Understood. And are you commenting on the broader utilization of this facility at this point of time?
Siddharth Mittal
No. I mean, I think in the initial years, it will be low and we are looking at what’s the best way of increasing the utilization from this facility. And the reason for it is in Bangalore, we had a capacity and when we face capacity constraints couple of years back with huge demand and when we were maxed out when we were building. And when the was being built and qualified, we significantly increased the capacity of our Bangalore facility. So right now, Bangalore while is fully sold-out, we do look at additional volumes coming from, but we will, as I mentioned, we are qualifying additional customers and as these customers start taking the supplies from this facility, the capacity utilization will go up and we will be looking at supplying the new products, as I mentioned, also from this facility in the years to come.
Alankar Garude
Understood. That’s helpful. Thank you.
Saurabh Paliwal
Thank you. Thank you, Arankar. Ladies and gentlemen, that is the last question for the day. Thank you all for joining us today. And if any follow-up questions, please do get-in touch with the team. With that, have a good rest of the day. And thank you.
Peter Bains
Thank you.
Unidentified Speaker
Thank you.
Kedar Upadhye
Thanks.
Siddharth Mittal
Thank you