Cipla Limited (CIPLA) Q4 FY23 Earnings Concall Transcript

Cipla Limited (NSE:CIPLA) Q4 FY23 Earnings Concall dated May. 12, 2023.

Corporate Participants:

Ajinkya Pandharkar — Investor Relations

Umang Vohra — Managing Director and Global Chief Executive Officer

Ashish Adukia — Global Chief Financial Officer

Analysts:

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Kunal Dhamesha — Macquarie — Analyst

Prakash Agarwal — Axis Capital Ltd. — Analyst

Damayanti Kerai — HSBC — Analyst

Rohan Vora — Purnartha Investment Advisors Private Limited — Analyst

Suryanarayanan Patra — PhillipCapital (India) Private Limited — Analyst

Neha Manpuria — Bank of America — Analyst

Bino Pathiparampil — Elara Capital plc — Analyst

Nithya Balasubramanian — Bernstein — Analyst

Puneet Pujara — Helios Capital India — Analyst

Tarang Agarwal — Old Bridge Capital Management Pvt. Ltd. — Analyst

Kunal Randeria — Nuvama Group — Analyst

Ankush Mahajan — Axis Securities Limited — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Cipla Limited Q4 FY ’23 Earnings Conference Call.

We’ve been joined by Mr. Umang Vohra, MD and Global CEO, Cipla Limited; Mr. Ashish Adukia, Global CFO, Cipla Limited; Mr. Naveen Bansal, Head, Investor Relations. Cipla Limited; Mr. Ajinkya Pandharkar, Investor Relations team, Cipla Limited.

[Operator Instructions]

I now hand the conference over to Mr. Ajinkya Pandharkar from Cipla Limited. Thank you and over to you, sir.

Ajinkya Pandharkar — Investor Relations

Thank you, Dovin. Good evening, and a very warm welcome to Cipla’s Q4 FY ’23 earnings call. I’m Ajinkya Pandharkar from the Investor Relations team at Cipla. Let me draw your attention to the fact that on this call our discussion will include certain forward-looking statements which are predictions, projections or other estimates about our future events. These estimates reflect the Management’s current expectation of the future performance of the Company. Please note that these estimates involve several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied. Cipla does not undertake any obligation to publicly update any forward-looking statement whether as a result of new confirmation, future events or otherwise.

I would like to request Umang to takeover.

Umang Vohra — Managing Director and Global Chief Executive Officer

Thank you, Ajinkya. Good evening to all of you and I appreciate your joining us today for our fourth quarter earnings call for financial year ’23. I hope you have received the investor presentation that we posted on our website.

I’m pleased to share that we continue to make significant progress across our strategic priorities. In fiscal year ’23, we recorded the highest ever revenue and EBITDA, including several major milestones in our One-India and U.S. businesses, pivoting our business on an accelerated growth and a strong margin trajectory.

We also continue to invest capital across multiple growth initiatives, including investments in the complex pipeline in new science, into our big brands and expanding our consumer portfolio amongst other.

I would like to cover some key themes that have played out in our financial performance for the last year. One of the key themes is delivering market leading growth in our focus markets of India, South Africa, United States and some of the large emerging markets. Our India Branded Prescription business delivered sustained momentum across all our therapies, achieving 13% excluding COVID year-on-year growth, while the IPM growth was 8% as per IQVIA MAT March ’23. Importantly, our overall share of chronic therapies expanded year-on-year by 300 basis points to 59% of the total portfolio, and 80 basis point increase in the market share from — in the market share for the chronic therapies from 7.5% to 8.3%.

We do not expect the NLEM pricing impact to influence our growth significantly as it will be balanced via allowed price increases and continued volume growth. This business has posted market-beating growth for two consecutive years as per IQVIA.

In South Africa, Cipla grew at a three-year CAGR of 8.9%, faster than the market which is growing at 4.4%. Our focus continues on driving market-beating growth and increasing our share in the market of South Africa. I will cover the U.S. market subsequently.

Within India, the other focused area for us has been growing a big brands across all our businesses. In India Branded Generic, we now have 21 brands featuring in the Top 300 brands and which are INR100 crores of sale, as per MAT March ’23. In our Trade Generics business, we have 8 brands that are about INR50 crores of sale and much larger in volume terms — volume tons catering to the length and breadth of the country.

Cipla Health has successfully transitioned and consumerized some of the existing brands into megabrands with sales of over INR100 crores. This has been achieved through leveraging brand strength to its maximum, deepening market penetration, significantly higher consumer oriented packaging and positioning. Our India Consumer franchise is already tracking at INR1,000 crore plus on an annual basis, and we expect the EBITDA margin to move closer to mid-teens, in FY ’24, and grow sustainably from thereon.

I’d now like to talk a little bit about our U.S. market. One of our core themes has been to broaden our pipeline in this market. We are pleased to share that our U.S. business has cross $200 million for the first time in this quarter. The full-year for this business stood at $733 million, growing over 23% from last year. This has been achieved through our pipeline and execution. We had announce the Peptide pipeline earlier in FY ’23 and this has added a new muscle of institutional capability and portfolio which we aim to further enhance.

Our lead asset of Lanreotide now has 17% share in this market. While launches are a focus area for all markets, noteworthy are 50-plus launches in India Trade Generics market and the 32 brands launched across multiple therapies in South Africa. This new let of revenue in South Africa is likely to offset the reduction in the Tender business and the margin pressures we have seen recently.

We continue to invest in growth franchisees. In line with our strategy to continue our focus on expanding our One-India franchise towards the higher share of chronic therapies, we recently signed a perpetual license agreement with Novartis for Galvus, and its combination brands which as per MAT March ’23 IQVIA had reported sales of nearly INR270 crores. This will be a strong strategic fit to strengthen our diabetes portfolio. We also entered into a strategic partnership to market and distribute Capo, a human IgG1 monoclonal antibody used for the treatment of Psoriasis. In Cipla Health, we acquired Endura Mass, a renowned nutritional supplement, which has a niche positioning in this market.

While we continue to invest in brand, we also focused investments in enhancing people capabilities in the field force. Over the last two years, our field force in India has grown by over 800 people. Our R&D investment continues to increase. In terms of pipeline, we’ve made significant progress on initiation of trials across some of our complex products. On the pipeline front, we have three differentiated products undergoing clinical trials with filings targeted in FY ’24.

Our last but most critical theme has been to derisk our U.S. portfolio. Our U.S. supply continues to be well diversified across all our sites and partner sites in — and partner from our partners. On a compliance front at, Fall River, Massachusetts, we recently completed the cGMP audit, which resulted in zero 483 observations. We have approval to produce our respiratory assets in this facility. Respiratory assets are being derisked to this in-house facility.

For Indore, we expect classification by mid-May. However, we do not see any risk to commercialize product portfolio. Generic Advair is already being derisked to another in-house facility. Remediation efforts are ongoing for our Goa facility and we expect our Kappa completion by end of Q1. Re-inspection is required for plant clearance, which has been targeted for Quarter 3.

Our generic Advair file is now solely dependent on the facility approval, having cleared all other questions from the agency. We have already commenced the derisking process for this product, as I mentioned earlier, to our other in-house facility. The value stays intact as no new generic is expected before we launch.

Nanopaclitaxel is being derisked as I mentioned earlier to our partner CMO [Indecipherable]. And exhibit batches are being taken. We expect to supply — we expect to be able to supply from two sites by fiscal year ’25. We don’t see any change to the value of this product as well as there are clearly no generic launches to-date.

With this, I would now like to invite Ashish to present the financial and operational performance.

Ashish Adukia — Global Chief Financial Officer

Thank you, Umang. This quarter, we witnessed strong performance across all our core businesses with overall expansion and profitability. The quarter reflects our consistent performance in One-India with better-than-market growth, and our performance in our differentiated product launches in U.S, which was done earlier this year.

Coming to the key financial highlights for the quarter. Overall, we are pleased to report a quarterly revenue of INR5,739 crores, with full-year revenue closing at INR22,753 crores. The overall revenue growth for the quarter was at 9% y-o-y on reported basis, and on ex-COVID basis, a strong 14% growth. And for the full year, the same number on a y-o-y growth stands at 5% on reported and 11% on ex-COVID basis.

Our One-India franchise further expanded its market share in a traditionally weaker seasonal quarter by growing a healthy 16% on an ex-COVID basis on back of extended countrywide flu season. The North America business reported our highest ever revenue driven by traction in the differentiated portfolio, with revenue of $733 million, growing at 23% y-o-y.

Our free cash flow generation and operating efficiency continue to drive a healthy net cash position. Our reported ROIC for the trailing 12 month stood at about 24%, which is over our long-term range of 17% to 20% that we’ve talked about earlier. In line with our expectation, EBITDA margins stood at 20% plus for the quarter on a reported basis whereas we ended full year at a robust 22%. This EBITDA margin is not including Other Income. Our EBITDA margins for the year subsumes the impact of lower than anticipated SAGA performance, a high inflationary market and a higher R&D spend and certain COVID provisioning.

Adjusted for COVID, the margin for the full year stood at 23%. Higher R&D investments driven by ongoing clinical trials on differentiated assets as well as other the developmental efforts including contribution to buy [Indecipherable] JV was higher in the quarter by 15% versus last year as part of our profitability model. Our reported gross margin after materials cost stood at 64% for the quarter, which is 480 basis points above last year’s figures, driven by contribution from new launches and overall mix change. As you may recall, last year we had one time COVID charge of inventory provision in Quarter 4, which had impacted the reported COVID margins.

Total expenses for the quarter, including employee cost and other expenses stood at INR4,565 crores, up by 3.7% on a sequential basis. The other expenses which includes R&D, regulatory quality manufacturing and sales promotions are at INR1,537 crores, increased by 6.1% sequentially, driven by judicious, promotional and growth-linked investment. Total R&D investment for the quarter are at INR371 crores, about 6.5% of revenue, and were 15% higher, like I said, on a y-o-y basis.

R&D expense for the full year stood at INR1,344 crores which includes material cost, depreciation, et cetera, et cetera. Profit after tax for the quarter is that at INR526 crores or 9.2% of sales. Adjusting for one time impairment charge on account of divestment of certain non-core assets in Africa and Middle East, adjusted PAT stood at INR708 crores, which is 12.3% of sales. The adjusted growth rate over last year is 436 basis points and adjusted ETR is at 24%. Full-year PAT is at INR2,802 crores, while adjusted PAT is INR2,984 crores, which is 13.1% of sales.

As of March ’23, our debt primarily constitutes BRL720 million in South Africa. We have repaid our working capital loans about $50 million in the U.S. given the interest cost environment.

Turning now to our outlook. We have established strong threshold for revenue growth and operating profitability with core margins trending in the 22% range. To close, we saw a robust momentum across portfolio and geographies for FY ’23. The growth levels in the subsequent quarters will include continued market-beating growth across One-India, Prescription, Trade Generics and Consumer Health, full-year operating profit in line with our guidance of about 22%, which includes continued investment in R&D programs, robust traction in our North America franchise across complex portfolio and continued contribution from respiratory and peptide products, creating a more resilient business through derisked portfolio and supply. And lastly, incubate and drive growth in stable geographies and international market.

I would now like to thank you for your attention and we’ll request Moderator to open the Q&A.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Thanks for the opportunity. So, first on Advair. While this is derisked to another in-house site, will that require re-inspection?

Umang Vohra — Managing Director and Global Chief Executive Officer

For which asset, Tushar?

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Advair — Generic Advair.

Umang Vohra — Managing Director and Global Chief Executive Officer

Yes, it will probably require re-inspection at that site since this will be [Technical Issues] CPI product [Technical Issues]

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Understood. So, secondly, while this might take some time, even Nanopaclitaxel, I think pushed to FY ’25, and at least as per the presentation, we have seen, maybe just two to three final approvals in FY ’23. So, how should one think about FY ’24 growth prospects for North America business?

Umang Vohra — Managing Director and Global Chief Executive Officer

Yeah. I think we are signaling fairly — signaling a fairly significant growth. Even this year as compared to the rest of the reporting universe.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

[Technical Issues] sales run rate, primarily?

Umang Vohra — Managing Director and Global Chief Executive Officer

I’m talking about all of last year, and I think that is on the back of continued traction in Lanreotide continued traction in some of our existing product family, and where the market itself may be expanding as well as the — so I think those two factors should result in continued progress in the U.S. portfolio.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Sure, sir. And just on this depreciation, quarter-over-quarter from INR270 crores to INR346 crores, so, if you could clarify this?

Ashish Adukia — Global Chief Financial Officer

Yeah, no, so, I think the depreciation figures that you’re talking about, some increase that you’re seeing out there is on account of some of the impairment in the intangible assets that we’ve taken.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Alright, sir. Sorry, go ahead.

Ashish Adukia — Global Chief Financial Officer

[Indecipherable]

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Sure, sir. Thanks.

Operator

Thank you. The next question is from the line of Kunal Dhamesa from Macquarie. Please go ahead.

Kunal Dhamesha — Macquarie — Analyst

Hey, hi. Thanks for taking my question. So first one on the Domestic Consumer Health business. It seems like nine-month run rate was around INR975 crores plus and, full-year, we have done around INR1,022 crores. So, there is, I think significant q-o-q deceleration because H1 was INR675 crores. So, from INR300 crores a quarter, we have gone down to INR47 crores. Is it seasonal or there is more to it?

Umang Vohra — Managing Director and Global Chief Executive Officer

It is seasonal. Quarter — we have a portfolio which is fairly large for the summer months in terms of things like ORS. And I think that’s the reason why you see a fair — the amount of sale in Quarter 1 and Quarter 2.

Kunal Dhamesha — Macquarie — Analyst

Sure. So, it’s expected to recover, right?

Umang Vohra — Managing Director and Global Chief Executive Officer

Yes, yes, yes.

Kunal Dhamesha — Macquarie — Analyst

Okay. And as far as Generic Advair is concerned, I was under the impression that it requires a specific production line. Now, we are transferring it to another site. So, would it mean that we would be putting another for it, or — how does it work?

Umang Vohra — Managing Director and Global Chief Executive Officer

Yes, there will be another line that will be put up, a different line that will be put up in the new facility.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

And would you be sharing what could be the expense related to that, capex?

Umang Vohra — Managing Director and Global Chief Executive Officer

Not much, not significant in the scheme of things for the product or for our overall franchise or BPI because now our strategy is to try and file every product that we are doing on the respiratory side from two segments, and not one.

Kunal Dhamesha — Macquarie — Analyst

Okay. And last one from my side. U.S., we have reported $200 million-plus. Do we believe that this is expected to be sustainable in the coming quarters or there’ll be some variation here and there?

Umang Vohra — Managing Director and Global Chief Executive Officer

I think we had guided last time that in the range of $190 million to $195 million, we expect that should — that’s a good trajectory for the base business.

Kunal Dhamesha — Macquarie — Analyst

Sure, perfect. Thank you. I’ll join back the queue.

Operator

Thank you. We have the next question from the line of Prakash Agarwal from Axis Capital. Please go ahead.

Prakash Agarwal — Axis Capital Ltd. — Analyst

Yeah, hi, good evening. Just trying to understand this better. So, we mentioned about Nanopaclitaxel in ’25, Advair, is there a timeline guidance that we’re giving or we’re just saying that, okay, we are derisking, and we have another facility and probably in next 12 months we’ll see something, or — just in terms of some timeline would be useful.

Umang Vohra — Managing Director and Global Chief Executive Officer

I think from now, Prakash, a timeline of about 12 months or so for most products is something which is we — a good average to take.

Prakash Agarwal — Axis Capital Ltd. — Analyst

Okay, got it.

Umang Vohra — Managing Director and Global Chief Executive Officer

So, if we’re faster than this, it will be — if the facilities get clear, where they are filed from right now, then the launches are imminent. If the facilities do not get clear for whatever reason, then this derisking operation will result in a product in the next 12 months.

Prakash Agarwal — Axis Capital Ltd. — Analyst

Specifically Advair, so, unlikely to be within 12 months.

Umang Vohra — Managing Director and Global Chief Executive Officer

Yeah, Advair would be slightly longer than 12 months, but Nanopacli has a good chance within this. And there is a third product also that is being de-risked.

Prakash Agarwal — Axis Capital Ltd. — Analyst

Yeah, so that was my second question. In terms of — in the last couple of quarterly calls, you had share presentation which had know some color on the pipe on Respi and Peptide products. So, how are we on the remaining products?

Umang Vohra — Managing Director and Global Chief Executive Officer

So, I think for every product that we are going to be filing for which the trials may have started or what, we will be filing from two sites now. So, I think that is a decision we have taken, which is the big products will all be filed and will — have derisking within the filings. But the three products that we have guided to earlier, there is a large share of our product pipeline that comes from outside, including — which includes most peptides in our pipeline. And then in these two specific things rather than keep waiting for the outcome of the inspection, et cetera, we are now moving to a strategy of derisking them at the fastest pace that we can.

Prakash Agarwal — Axis Capital Ltd. — Analyst

And that would be what, sub $2 billion, $3 billion kind of additional costs or it’s higher cost than this?

Umang Vohra — Managing Director and Global Chief Executive Officer

No, I don’t think they’re better cost. There is not — there is no clinical trial of this — on any of these products that we think is required.

Prakash Agarwal — Axis Capital Ltd. — Analyst

Okay, okay. And just to tie that up, so R&D, the new or the increased efforts, which is a y-o-y increase et cetera, so while Respi and Peptide pipeline you showcased, so what is the new or the existing areas we are investing in for the next three year growth.

Umang Vohra — Managing Director and Global Chief Executive Officer

So, no, so I think it is largely respiratory. Respiratory, Peptide, so I think between these, there is a fair number of assets that we have.

Ashish Adukia — Global Chief Financial Officer

So, yeah. Just to further clarify. See, one is what stages these assets are in. So, some of these assets are in clinical stages, so that’s why the expenses are higher. And then there is biosimilar as well, the development cost that is included in that. So, biosimilars beyond these Respiratory and Peptide.

Prakash Agarwal — Axis Capital Ltd. — Analyst

Okay, okay. Perfect. And if I — if you allow, I will ask one more question. So, Q3 around December — November, December, we had this DPCO impact on few of the products, inhalation products also. And price has come down. So, how has been the response in the Jan to March quarter for those kind of products, have you seen material change. And obviously, in April, you would have taken price hike, you mentioned that you don’t expect the volume to come down. So, if you could just give more color on these two aspects, it would be great.

Umang Vohra — Managing Director and Global Chief Executive Officer

Yeah, I don’t think we’re seeing any significant change in the market because of either the impact on pricing either — let me put it that way. I think the volume growth continues to be strong irrespective of the reaction, and the price decreases are already in the numbers.

Prakash Agarwal — Axis Capital Ltd. — Analyst

Yeah, already in the numbers, but price hikes will take time to — or it would start coming in from the current quarter itself?

Umang Vohra — Managing Director and Global Chief Executive Officer

That’s right. So, the price hike impact will start coming in from Quarter 1. It will start coming, but it builds up depending on when the price hike were taken for the product in the previous year. So, the real impact of price hike will start showing up in Quarter 2 and Quarter 3.

Prakash Agarwal — Axis Capital Ltd. — Analyst

And finally, any read on the volume decline seen in April month. I mean, while respiratory, anti-infective did fairly well, but on a market level, volume was surprisingly low.

Umang Vohra — Managing Director and Global Chief Executive Officer

I’d say our categories on volume, they were — they seemed okay, even beyond respiratory and anti-infective. We haven’t seen much of a concern. We — actually, our volumes are higher than the market based on what we know.

Prakash Agarwal — Axis Capital Ltd. — Analyst

Yeah. Okay. Thank you, and all the best.

Umang Vohra — Managing Director and Global Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of Damayanti Kerai from HSBC. Please go ahead.

Damayanti Kerai — HSBC — Analyst

Yeah, hi. Thank you for the opportunity. Coming back to Advair, Umang, could you clarify — like, I missed your initial comments. So, you mentioned Indore, FDA status will be known in mid-May, and this plant will be likely audited in third quarter. Did you mention that?

Umang Vohra — Managing Director and Global Chief Executive Officer

No, no, what I mentioned was that right now — so, there are three things I said on Advair. I’ll just read them for — again. First is that, the file has cleared the entire — everything else from the FDA other than [Indecipherable] So, there are no other pending questions from the FDA on the file from what we received so far.

The second thing is, if Indore clears, then there is the imminent launch for it, I said. Having said that, we are also derisking the asset because it’s always good to have two sites of manufacturing for an asset of the type of Advair or Nanopaclitaxel. And so therefore, this asset is being transferred to another in-house site, which is — which will take perhaps another 12-odd months. And that’s what we are doing.

So, the asset will get transferred and there’ll be new batches and then we will file. So, the timeline for Advair shifts by a year if there — if the Indore outcome is unfavorable.

Damayanti Kerai — HSBC — Analyst

Okay. When is Indore plant audit due? Do you have any date?

Umang Vohra — Managing Director and Global Chief Executive Officer

No, no, the Indore plant audit has happened. I think we will hear the final — the FDA classification of it, hopefully sometime in May.

Damayanti Kerai — HSBC — Analyst

Okay, okay. Got it. And you have derisked it to another plant, so there also you need fresh FDA audit or since that plant is clear, it’s not required, it’s required?

Umang Vohra — Managing Director and Global Chief Executive Officer

No, probably, probably, there will be an audit needed at the new site as well, because this will be the first DPI from that new site, yes.

Damayanti Kerai — HSBC — Analyst

Okay, is it from Invasin unit, like where you are…

Umang Vohra — Managing Director and Global Chief Executive Officer

We’re not actually giving that level of detail, but yes, it will be a not in India.

Damayanti Kerai — HSBC — Analyst

Okay, okay. Thanks for the clarification. My second question is, what is the rationale for Galvus deal, because we understood, there are multiple competitors, although brand is big, but nonetheless, it’s a very competitive space. So, what is the rationale for going into this perpetual deal?

Umang Vohra — Managing Director and Global Chief Executive Officer

See, these chronic therapies brands never die. They keep increasing in scale and size. And the second — so that’s number 1. Number 2, this is a relatively large plant in the diabetes segment and Cipla’s historically always been a big respiratory player, but not that big in the diabetes area. That’s 2. 3, the market actually for Galvus was formed almost two years back or three years back. So, we are not buying at a time when the market is just about the general sites. Relatively stable market. And 4, we believe that with our reach and our penetration, we will be able to impact and increase the sales of Galvus year-on-year.

Damayanti Kerai — HSBC — Analyst

Okay, my last question is, you mentioned you have added 800 MRs in last two years and your presentation mentioned that you’ll be adding another 1,000-plus people between ’23 and ’24. Is that correct, and what kind of, I’ll say cost build-up we should expect for these kind of salesforce expansion?

Ashish Adukia — Global Chief Financial Officer

Yeah, so, Damayanti, just a quick clarification. So, what Umang mentioned of 800-plus, so that is basically FY ’22 and ’23. And the number that you see on the presentation is 1,000, which is FY ’23 and ’24. So, there is obviously an [Technical Issues] year between the two statements [Technical Issues] So, it’s only be incremental which will be added in FY ’24. And in terms of the focus areas, as we’ve mentioned, the idea here is not to add field force across the board, we’re basically investing behind therapies and largely chronic as Umang mentioned, which includes Respi, Diabetes et cetera.

Damayanti Kerai — HSBC — Analyst

Okay, so between ’22 and ’24, what is the total increase in headcount, if you can specify that?

Ashish Adukia — Global Chief Financial Officer

Damayanti, maybe we can come back.

Umang Vohra — Managing Director and Global Chief Executive Officer

It’ll be over 1,000.

Ashish Adukia — Global Chief Financial Officer

Over 1,000, yes.

Damayanti Kerai — HSBC — Analyst

Okay. Thank you. All the best.

Operator

Thank you. The next question comes from the line of Rohan Vora from Purnartha Investment Advisors Private Limited. Please go ahead.

Rohan Vora — Purnartha Investment Advisors Private Limited — Analyst

Hi, yes, Rohan here. So just one question. So, I just wanted to understand how do you look at transferring the asset to some other site versus transferring it to — so you said that you are transferring it to an in-house site. So, do you consider options of an other CMO probably and getting it manufactured from there, and have you considered for your existing products? Thank you.

Umang Vohra — Managing Director and Global Chief Executive Officer

Yes, we have considered this, and, yeah. I am Nanopaclitaxel is going to a partner site. It’s not going to our own site. So yes, we do consider options of others as well.

Rohan Vora — Purnartha Investment Advisors Private Limited — Analyst

Okay, okay. And Advair is going to your own site.

Umang Vohra — Managing Director and Global Chief Executive Officer

Yes.

Rohan Vora — Purnartha Investment Advisors Private Limited — Analyst

Okay, okay. Thank you.

Operator

Thank you. The next question is from the line of Suryanarayanan Patra from PhillipCapital (India) Private Limited. Please go ahead.

Suryanarayanan Patra — PhillipCapital (India) Private Limited — Analyst

Yeah, thanks for this opportunity. Sir, just first question is on the U.S. business as well as the India business. So, based on the prescription trend what we have witnessed for, let’s say, Revlimid in the U.S.in the — as per the data in India. So, the growth number for both, U.S. as well as India looks relatively lower. How should we read this because, let’s say, for Revlimid, if I talk, then for a specific set of prescription account, one of your competitor has reported a much higher number and relatively much lesser. So, there is a timing gap in terms of the booking and prescription trends for U.S.? And in India, the numbers what we have reported, the single-digit growth in the domestic market, it is compared to the prescription trend what is relevant, not matching.

Umang Vohra — Managing Director and Global Chief Executive Officer

I am not sure what your sources for prescription trend is, but our numbers seem to suggest on India that both the prescription trends as well as the IQVIA numbers that we are getting, both are actually in moving in the same direction. So, I’m not sure — you can send us the details and we’ll take a look at it and try and come back to you with a more informed answer.

Suryanarayanan Patra — PhillipCapital (India) Private Limited — Analyst

About Revlimid?

Umang Vohra — Managing Director and Global Chief Executive Officer

Yes, on Revlimid, see, it is all dependent on the arrangement the companies have with the branded player. So, some others may have arrangements which allow them more volume than potentially what allows us. So, that’s the reason, you will see higher sales and contribution for some others versus us.

Suryanarayanan Patra — PhillipCapital (India) Private Limited — Analyst

Okay, and the volume number — just a clarification here is the volume numbers and the prescription counts, both are significantly different to really consider our, they should move parallelly.

Umang Vohra — Managing Director and Global Chief Executive Officer

This is for which market, the U.S.?

Suryanarayanan Patra — PhillipCapital (India) Private Limited — Analyst

US.

Umang Vohra — Managing Director and Global Chief Executive Officer

Yeah, the volume number, because this is an ad — there can be a lead lag here, I think the reason is that the volume number may lag the prescription number because of the fact that these are through specialty pharmacies as well.

Suryanarayanan Patra — PhillipCapital (India) Private Limited — Analyst

Oh, yeah. Yes. Sure, sir. Sir, my second question is on the profitability of the Consumer Health division. So, obviously, we are seeing is kind of a consistent progress and therefore it’s a full year presentation and discussion. So, if you can give some sense, what is the kind of profitably progress of that and how is that you’re seeing going ahead, let’s say, next one or two years contributing to your overall margins?

Umang Vohra — Managing Director and Global Chief Executive Officer

So, our objective is for this business to get into the higher range of the mid-teen to double-digit profit growth — double digit EBITDA level in the next — in this year. So, we are hoping that that’s where the profitability ends up for the Consumer franchise. And once that level is hit then I think it will slowly, over a period of next two. three years, graduate towards the Company average.

Suryanarayanan Patra — PhillipCapital (India) Private Limited — Analyst

Just last question, sir, on the U.S. business again. So, how bigger would be the concerns for your growth in the U.S. in FY ’24 due to Albuterol, means whether Albuterol is a concern for you, the kind of competition, what we are witnessing, and how big an opportunity that you are factoring with the Revlimid for your FY ’24 drop.

Umang Vohra — Managing Director and Global Chief Executive Officer

I think Revlimid is in the numbers. And it’s all as per the agreements that people have signed, as I said earlier. So, it’s already in our numbers. I think on the other question that you raised on Albuterol, the market is constantly growing, there is one category which is constantly going in the U.S. and we hope to participate in the growth there.

Suryanarayanan Patra — PhillipCapital (India) Private Limited — Analyst

Okay. Yeah, thank you. All the best.

Umang Vohra — Managing Director and Global Chief Executive Officer

Thank you.

Operator

Thank you. We have the next question from the line of Neha Manpuria from Bank of America. Please go ahead.

Neha Manpuria — Bank of America — Analyst

Thank you for taking my question. Umang, on Lanreotide, if I were to look at the latest data, we are close to about 18% market share. I know we guided to about 15% exit rate, doing much better than that now, how should we look at market — sort of the volume share that we can get in this product given there’s not too much — there is no competition at the moment? Or is — are we — is incremental market share for this limited by capacity?

Umang Vohra — Managing Director and Global Chief Executive Officer

Neha, not completely by capacity, but it will be limited by how the market accepts the product. So, I think it will be a gradual rise, which is what we had guided even earlier, it’s not going to be — because it’s a B2 product. So, I think it will be a gradual rise. I think we’re slightly better than what we had thought we’d do. And our objective is to keep it — so, I don’t think it will be a — we’re not suddenly going to increase share in this category. But over — the share increase will be there gradually over the next couple of quarters.

Neha Manpuria — Bank of America — Analyst

Understood. Nothing — if the product continues to be accepted by the — okay, we’ll be able to grow the share further.

Umang Vohra — Managing Director and Global Chief Executive Officer

Yes.

Neha Manpuria — Bank of America — Analyst

Okay, understood. And second, on the India market, as I look at FY ’24, and given the competitive intensity in the market, peers adding field force et cetera, what’s your view on how much Cipla can grow, but keeping in mind the industry growth and the NLEM changes? There’s also talk about change — regulating the multiple brands in a same molecule, et cetera.

Umang Vohra — Managing Director and Global Chief Executive Officer

I think the India market — there, we see the growth — I think there is no competition. There is no doubt about it. But what we’re also seeing — we are seeing two aspects, Neha. The first is, we are seeing a pretty strong Tier 2 to 6 growth. And that is feeding some of our products that are in the areas of respiratory and anti-infectives, because those are the type of products that will people in India. We’re also seeing a very strong growth on our Generics business in this side of the market.

And I think on the Tier 1 markets, we are seeing a trend where therapies are getting up-skilled, which means that somebody is taking for example, a diabetes drug, which was an oral, they’re now migrating to perhaps take obesity drugs and better diabetes drugs that could be injected, like which are slightly more costlier. So, we’re seeing this migration constantly in Tier 1 towns where people are moving up the therapy ladder. And in Tier 2 to 6 towns, we are seeing a pretty a deepening of healthcare.

So, a lot of our expansion is in Tier 2 to 6, and in the areas of respiratory and anti-infective.

Neha Manpuria — Bank of America — Analyst

And this should allow us to continue the market-beating growth that we’ve seen in the last two years?

Umang Vohra — Managing Director and Global Chief Executive Officer

Yes, that is — we are hoping for that, yes.

Neha Manpuria — Bank of America — Analyst

Okay, okay. And lastly, if I may, Ashish, what would be the R&D guidance for FY ’24?

Ashish Adukia — Global Chief Financial Officer

Yeah, so, it’ll continue to be in the same range of about 6.5% because — for the reasons that we’ve talked about, the derisking strategy, et cetera.

Neha Manpuria — Bank of America — Analyst

In which case, given that we’ll see growth in India, U.S. — given on Umang’s commentary, U.S. is growing, any reason for keeping the margin guidance at the 22%.

Ashish Adukia — Global Chief Financial Officer

No, so there are other place as well. So, your R&D is there investing in people cost as well, which goes into the P&L and not necessarily as an investment. So, given all those things, and plus if you look at the material cost because of the inflation that you’ve seen in the last year, we have of course taken lot of steps to control that cost increase. But that also seems to be more — at a stable rate rather than reducing. So, given all those things, I think we’d continue to be — to maintain about 22% range.

Neha Manpuria — Bank of America — Analyst

Understood. Thank you so much for taking my questions.

Operator

Thank you. The next question is from the line of Bino Pathiparampil from Elara Capital. Please go ahead.

Bino Pathiparampil — Elara Capital plc — Analyst

Hi. Good afternoon, all. Umang, this Nanopaclitaxel has patent which expires in October 2024. Do you think that is a relevant data point from the perspective of competitive intensity in the market?

Umang Vohra — Managing Director and Global Chief Executive Officer

Bino, I’m not sure that the — that’s what’s holding the market formation at this stage.

Bino Pathiparampil — Elara Capital plc — Analyst

Okay, understood. Is there any update on the generic filing for Dulera from your side?

Umang Vohra — Managing Director and Global Chief Executive Officer

Bino, we’re not going to comment on specific — we are not going to comment on that. I think as and when we have more clarity, we will certainly come and give you more clarity on that, but we’re not commenting on it. I’m not sure at this stage — I do know, I can tell you that Dulera is there for the U.S., but not — for the E — for Europe, but not — I don’t want to comment on the U.S. specifically.

Bino Pathiparampil — Elara Capital plc — Analyst

Understood. Great, thank you. I’ll join back the queue.

Operator

Thank you. The next question is from the line of Nithya from Bernstein. Please go ahead.

Nithya Balasubramanian — Bernstein — Analyst

Thank you. Umang, can you give us an update on the partnered respiratory asset? I think a couple of quarters ago, you had mentioned that it’s now in the nine-months revenue cycle.

Umang Vohra — Managing Director and Global Chief Executive Officer

Yeah, Nithya, that’s the third asset we spoke about in the derisking. And that asset — I think that asset is — currently, batches are being taken for it in our facility in the U.S.

Nithya Balasubramanian — Bernstein — Analyst

So that was from Indore and therefor, you’re now adding another facility.

Umang Vohra — Managing Director and Global Chief Executive Officer

That was from Goa, actually, not Indore.

Nithya Balasubramanian — Bernstein — Analyst

Okay, got it. Umang, can you also talk about two other respiratory assets [Technical Issues] QR, which we know, there is a litigation out there, so we know you have filed it, Symbicort where you have registered a clinical trial. If you can talk about what is the current status of these two assets?

Umang Vohra — Managing Director and Global Chief Executive Officer

Nithya, I’m not sure we can give too much detail on QR considering the proceedings in the IP court. So, it’s very much part of the pipeline and there is progress on the product, but it’s currently in sub judice. So, we can’t comment on it.

Nithya Balasubramanian — Bernstein — Analyst

And Symbicort, what is your anticipated timeline on the filing?

Umang Vohra — Managing Director and Global Chief Executive Officer

Symbicort, I believe we should file Quarter 4 of this year.

Nithya Balasubramanian — Bernstein — Analyst

Understood. Thank you so much.

Operator

Thank you. The next question is from the line of Puneet from Helios Capital. Please go ahead.

Puneet Pujara — Helios Capital India — Analyst

Yeah, hi. Am I audible?

Operator

Yes, you are audible, sir.

Puneet Pujara — Helios Capital India — Analyst

Yeah, thanks for taking my question. So, sir, we had earlier indicated that for Generic Advair, we have localized the supply chain. Now that the product is being transferred to a facility that is located outside of India, how the cost structure and the unit economics change for Advair, assuming that the product is launched from outside-India facility? That’s my first question.

Umang Vohra — Managing Director and Global Chief Executive Officer

Yeah, so, I think what we have localized is the components that go into Advair. We have not localized — and the production of Advair at that point in time in Indore. So the comp — the localized aspect of whatever goes into Advair stays in India, that doesn’t have an issue. The issue is the final site, if Indore does not –if Indore meets an adverse outcome, then that particular manufacturing will happen elsewhere, but if Indore has an outcome which is fine, then we are ready to commercialize completely from India.

Puneet Pujara — Helios Capital India — Analyst

Certainly, certainly. Sir, my follow-up question to that is, if the components are sourced domestically, and if — assuming the product is manufactured outside — in outside-India facility, then slight cost should we — we’ll be incurring a higher cost, right?

Umang Vohra — Managing Director and Global Chief Executive Officer

Yeah, well, you could say production costs may be slightly higher in the U.S. Is that where — is that your question?

Puneet Pujara — Helios Capital India — Analyst

So, if source the components locally, then there will be some cost of transferring these components to the outside-of-India facility. That’s what’s — that was my question.

Umang Vohra — Managing Director and Global Chief Executive Officer

Yeah, so, I think the only thing I would say is that in any case if we had made this product in Indore, we would have had to ship it to the U.S. too, right?

Puneet Pujara — Helios Capital India — Analyst

Sure. My second question is does the localized supply chain include also the HFF propellants because if that is the case, I mean — so does it include HFF propellant, that should be my second question?

Umang Vohra — Managing Director and Global Chief Executive Officer

No, the propellant actually as an industry is pretty global. I don’t think there is any — it’s a commodity across. So, it will also be — it’s the same price available pretty much in the U.S. as it is in India. I don’t think there’s any change there.

Puneet Pujara — Helios Capital India — Analyst

Sure, that’s it from my side. I’ll join back the queue. Thank you.

Operator

Thank you. We have the next question from the line of Tarang Agarwal from Old Bridge Capital. Please go ahead.

Tarang Agarwal — Old Bridge Capital Management Pvt. Ltd. — Analyst

Hi, good evening. Couple of questions from my side. One, how much is Respiratory revenue for the U.S. for FY ’23? Hello?

Ashish Adukia — Global Chief Financial Officer

Just give us a moment, please.

Umang Vohra — Managing Director and Global Chief Executive Officer

Yeah, Respiratory portion, we’ll just come back to you on…

Ashish Adukia — Global Chief Financial Officer

It’s likely to be in the $150 million to $200 million range.

Tarang Agarwal — Old Bridge Capital Management Pvt. Ltd. — Analyst

Okay. The second question is in terms of the segment reporting, what all does New Ventures capture in the segment reporting?

Umang Vohra — Managing Director and Global Chief Executive Officer

So, it’s basically your new — like, we have TVHL’s right, so digital health, these are our new initiatives that have captured out there, some of the investments that we’ve done in the new ideas.

Tarang Agarwal — Old Bridge Capital Management Pvt. Ltd. — Analyst

Okay, the Consumer Health business doesn’t get captured there.

Umang Vohra — Managing Director and Global Chief Executive Officer

No, no…

Ashish Adukia — Global Chief Financial Officer

It is, it is. Sorry, Tarang, just a quick clarification in our segmental reporting yet. Our CHL business does get captured, and also the U.S. Specialty business, although it does not add significantly to the topline, but the cost structure of that business also is captured under that segmental reporting.

Tarang Agarwal — Old Bridge Capital Management Pvt. Ltd. — Analyst

Okay. And the third, again, bookkeeping. Saw quite a significant rise in the Other Income line item for FY ’23 versus ’22. If you could comment.

Ashish Adukia — Global Chief Financial Officer

Tarang, is your question related to Other Income or Other Operating Income, if you can clarify that.

Tarang Agarwal — Old Bridge Capital Management Pvt. Ltd. — Analyst

Other Income.

Ashish Adukia — Global Chief Financial Officer

See, it’s — I can give you a directional answer. It could be interest income that is coming on account of your larger capacity that we have.

Umang Vohra — Managing Director and Global Chief Executive Officer

We don’t consider that as part of our EBITDA calculation in any case.

Tarang Agarwal — Old Bridge Capital Management Pvt. Ltd. — Analyst

Sure, and the Respiratory figure for FY ’23?

Umang Vohra — Managing Director and Global Chief Executive Officer

$160 million.

Tarang Agarwal — Old Bridge Capital Management Pvt. Ltd. — Analyst

Thank you.

Operator

Thank you. The next question is from the line of Kunal Dhamesha from Macquarie. Please go ahead.

Kunal Dhamesha — Macquarie — Analyst

Thank you for the opportunity again. So, the first on the Kappa planning. Is there any remediation cost which is being built into our numbers in this quarter, because Other Expenses ex-R&D are up about INR70 crores?

Umang Vohra — Managing Director and Global Chief Executive Officer

Yeah, remediation costs are part of our numbers. They’re being spent, and our Quarter 4 numbers and our Quarter 3 numbers had them.

Kunal Dhamesha — Macquarie — Analyst

Okay. So — and do expect…

Umang Vohra — Managing Director and Global Chief Executive Officer

No, we don’t expect a spike from these levels. So this includes both your — there may be some capex, there may be some opex, also consulting costs, et cetera. These would be the broad categories. So, that’s all been included in Q3, Q4.

Kunal Dhamesha — Macquarie — Analyst

Okay, and that is — that should, if it happen in Quarter 3, FY ’24 it should go down from there?

Umang Vohra — Managing Director and Global Chief Executive Officer

Yes, that is right, that is correct. We don’t see a spike in the remediation costs from what is already out.

Kunal Dhamesha — Macquarie — Analyst

Sure. And what was stopping us from, let’s say, derisking this key products earlier? Was it cost, and how does U.S. FDA view it, because from U.S. FDA’s perspective it’s incremental administrative burden to visit two sites for the same product from company, right? So, how likely are they to re-inspect our new facility from wherever we are derisking?

Umang Vohra — Managing Director and Global Chief Executive Officer

No, I think if it’s a first generic or limited generic, the — there is a chance that the FDA will visit, especially, if that allowed the market to form for a generic products. That’s 1. I think to your other question, yes, it could very well have been something that we could have thought of earlier, but generally what happens is when file is under active review and scientific-based questions are not closed, that is not the time that you introduce a new facility, because it creates more complications and delays file review process.

So, in our case, frankly, if we have the ability to launch from Indore and Goa and the site clear, then we will launch from these sites while we continue the derisking in any case.

Kunal Dhamesha — Macquarie — Analyst

Sure, and last thing on — I think you alluded earlier in terms of production cost could increase a little bit, if we produce if from outside-India site, but will there be no material change to our cost competitiveness on that product, because at one point that we would — we’ll be the cost leader in Generic Advair. So does that change if we produce it from outside-India site?

Umang Vohra — Managing Director and Global Chief Executive Officer

I’m not sure, because I think a large chunk of the production cost is also the localized — localization of component in India. I think we will still be very competitive.

Kunal Dhamesha — Macquarie — Analyst

Perfect. Thank you, and all the best.

Umang Vohra — Managing Director and Global Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead.

Prakash Agarwal — Axis Capital Ltd. — Analyst

Yeah, thanks. Just two quick follow ups. One is on the MRs. What is the number for fiscal ’23?

Umang Vohra — Managing Director and Global Chief Executive Officer

You’re referring to number of MRs?

Prakash Agarwal — Axis Capital Ltd. — Analyst

That’s correct.

Umang Vohra — Managing Director and Global Chief Executive Officer

It’s about 10,000, yeah.

Prakash Agarwal — Axis Capital Ltd. — Analyst

So, this includes the supervisors and everything or this is a — just the field force?

Ashish Adukia — Global Chief Financial Officer

Yeah, I think — maybe, you can take, Prakash, for — I understand your question. So, maybe you can split that between 7,000 and 3,000 roughly in terms of MRs and the others.

Prakash Agarwal — Axis Capital Ltd. — Analyst

Okay, perfect. And second clarification, on the U.S. you mentioned that despite these two assets delaying, you would still expect a growth given the peptide products are still ramping up. Is that correct understanding?

Umang Vohra — Managing Director and Global Chief Executive Officer

Yes, that is versus last year. So, this year we’ve — let’s say, we’ve done $733 million as the full year revenues for U.S. We expect growth over that.

Prakash Agarwal — Axis Capital Ltd. — Analyst

Okay. And was there commentary on SAGA markets also?

Umang Vohra — Managing Director and Global Chief Executive Officer

Yes, South Africa, we will see growth this year, yes. And a lot of focus will be on the margins in the South Africa market.

Prakash Agarwal — Axis Capital Ltd. — Analyst

Yeah, so last commentary was that the private market is still doing okay, and the the tender market did volatility, and idea is to increase the private and reduce the tender market. So, that attempt to improve margins and improve the mix is there?

Ashish Adukia — Global Chief Financial Officer

Yeah, that’s going to be the focus. And I think the focus will be on new launches in the private market to compensate for the reducing tender market.

Prakash Agarwal — Axis Capital Ltd. — Analyst

Okay. So, overall basis, growth on that base as well as improvement in margins?

Ashish Adukia — Global Chief Financial Officer

Yeah, absolutely.

Prakash Agarwal — Axis Capital Ltd. — Analyst

So, just — some participant asked on the margin outlook, so SAGA had a drag down maybe this year, ’23 last year, in U.S., fairly okay, India, I think ex-COVID growth, so — I mean, the profitability could have been better because your cost initiatives are also there for the — next two, three years, you’ve called out. So, what else are you buffering in here, lack of large launches or how should we think about that?

Umang Vohra — Managing Director and Global Chief Executive Officer

No, I think, the way to look at it is look, we will want to also invest in new areas and new opportunities. So, while we expand people in India, the lead lag impact is almost six, nine months. So, we put people on the time they start becoming productive, it’s six, nine-month story. So, that’s one area of investment. The second investment will be happening in our Consumer Brands business. That also takes — from the time you invest till the time you begin to see higher growth, it is — there is a lead lag effect. Then also R&D is constantly investing. We’ve got three clinical trial going on. We’ve got two Respiratory products that is fairly significant as a clinical outlay for the products to get to market. That’s number 3. And number 4 are some of the initiatives on our biosimilars, et cetera.

So, I think all across, we are not wanting the business to get impacted by the lack of investment. And the other thing, like we mentioned on earlier call, so we would much rather invest for a higher topline growth if we are at the 22%, 23% margin level as against push margin to 24% and compromise topline growth.

Prakash Agarwal — Axis Capital Ltd. — Analyst

Okay. Fair enough. No, that makes sense. And R&D, you’re assuming 7% or 7% to 8%?

Ashish Adukia — Global Chief Financial Officer

About 6%, 6.5% is somewhere — that kind of range. It will continue to be there. And I think R&D expense has to be also looked at from U.S. revenue point of view rather than from overall revenue point of view because a substantial part of it goes to U.S.

Prakash Agarwal — Axis Capital Ltd. — Analyst

Makes sense. Thank you so much. All the best.

Operator

Thank you. Ladies and gentlemen, we will take the last two questions, the first from the line of Kunal Randeria from Nuvama. Please go ahead.

Kunal Randeria — Nuvama Group — Analyst

Hi, good evening, everyone. Umang, a few years back there were some attempts to expand the U.S. business to some specialty acquisitions like IV Tramadol and Pulmazole. It doesn’t seem to have worked out as you would have liked. So, just wondering what your thought process is now considering that you have a much more sizable balance — cash balance?

Umang Vohra — Managing Director and Global Chief Executive Officer

So Kunal, you’re right. I think we had a strategy to expand this on the basis of an in-license asset, which unfortunately did not meet the clinical outcome. So. I think we went back at that point in time and we reconfigured our strategy to say that even if we acquired an asset which is in late clinics we must have our own pipeline to add to it. And the time distance between — the time difference between when our pipeline comes to market and when we add in-licensed assets should not be more than two years because otherwise it’s very difficult to have — to make the business productive.

So, what we’ve been doing over the last two years, ever since we’ve had that negative news on IV tramadol is actually being investing in creating our own internal pipeline. These are not products that are going to be $100 million or $200 billion in sales, but we may have two, three products that could well be $20 million to $50 million in sales.

So, let’s say we invest in this for another year, and if we have a sizable pipeline of two, three products with the revenue profile of $30 million to $40 million, that’s the time where this business can then begin to build out for the future. So, it’s still about a year away from that vantage point, but we’ve gone back, retuned our strategy and are investing in developing our own internal pipeline.

Kunal Randeria — Nuvama Group — Analyst

Sure, I understand that but you now we’re $700 million in the bank, I mean, that gives you a bit more freedom to go the inorganic way or you — saving money for some one big acquisition. I just just wanted to understand what you going to do with the cash now going forward.

Ashish Adukia — Global Chief Financial Officer

Sure. No, so, I think if you look at our overall capital allocation priority, I think India continues to be our priority. So, the whole idea — the disproportionate part of capital we want to invest in India for the growth that is available out here, if you look at our overall share that we have, there’s still scope to increase the therapies and geographically as well. So, use — from use of cash point of view, that would be the topmost priority for us.

And then there are more bolt-on acquisitions that we may look at in other geographies, could be Africa, could be U.S., could be Europe as well for specialty asset or any other products. Yeah.

Kunal Randeria — Nuvama Group — Analyst

Got it. And just one more from my side on the India piece. I think, you’ve alluded to INR580 crores of revenue from in-licensed specialty products. I would assume the margins here would be lower than your normal India margins. So, what would be the sweet spot where you would say, enough of in-licensing, and you would rather build brands organically?

Umang Vohra — Managing Director and Global Chief Executive Officer

I think if the brands are relatively smaller, then it doesn’t make sense to pay a lower margin on it. So, you really want big brand franchisees that you can create, which is when we turn our thinking into trying to improve the margins by doing the brands ourselves. So, it’s a mix of both. If you’re getting a brand that is relatively smaller, then the interest to create — because sell the interest to take the low margin doesn’t make sense, but if you have a relatively higher size brand, which you can — which eventually you can grow much faster, that’s the time when your costs get amortized lot better.

Kunal Randeria — Nuvama Group — Analyst

Got it. And just one more if I can squeeze in, of the 43 pending ANDAs under Cipla Limited, how many would be Indore and Goa?

Umang Vohra — Managing Director and Global Chief Executive Officer

We can provide that data but if your question is whether both indoor have huge sensitivity to the launch calendar of the U.S. in the next two to three years, the answer to that is no.

Kunal Randeria — Nuvama Group — Analyst

Sure. Got it. Okay. Thank you, and all the best.

Operator

Thank you. We will take the last question from the line of Ankush Mahajan from Axis Securities. Please go ahead.

Ankush Mahajan — Axis Securities Limited — Analyst

Thank you, sir, to provide me the opportunity. Sir, any outlook on consolidated EBITDA margins for FY ’24? Any guidance, sir?

Ashish Adukia — Global Chief Financial Officer

Yeah, so for FY ’24 like I have said, I think, 22% or thereabout is what we are targeting for next year.

Ankush Mahajan — Axis Securities Limited — Analyst

Okay. Sir, I missed the initial remarks. So, what kind of number of molecules that we are launching in the next year, ’24, in the U.S. market?

Ashish Adukia — Global Chief Financial Officer

So like, Umang talked about, we are looking at three filings In the coming year, mainly in the Respiratory side. And there could be some in the Peptide, which is more third party — partner products, rather.

Ankush Mahajan — Axis Securities Limited — Analyst

Thank you, sir. Thanks very much.

Operator

Thank you. I would now like to hand the conference over to Mr. Ajinkya Pandharkar for closing comments. Over to you, sir.

Ajinkya Pandharkar — Investor Relations

Thank you for joining us, everyone. In case you have any further questions, please feel free to reach out to us at investor.relations@cipla.com. And wishing everyone a good evening ahead. Thank you.

Operator

[Operator Closing Remarks]