Dr. Reddy’s Laboratories (NSE: DRREDDY) Q4 2025 Earnings Call dated May. 09, 2025
Corporate Participants:
Richa Periwal — Head, Corporate Analytics, Corporate Strategy and Investor Relations
M V Narasimham — Chief Financial Officer
Erez Israeli — Chief Executive Officer
Unidentified Speaker
Analysts:
Neha Manpuria — Analyst
Kunal Dhamesha — Analyst
Madhav Marda — Analyst
Amey Chalke — Analyst
Bino Pathiparampil — Analyst
Unidentified Participant
Tushar Manudhane — Analyst
Abdulkader Puranwala — Analyst
Surya Patra — Analyst
Shashank Krishnakumar — Analyst
Shrikant Akolkar — Analyst
Saion Mukherjee — Analyst
Presentation:
Operator
Ladies and gentlemen, good evening, and welcome to Quarter Four and Full Year FY ’25 Earnings Conference Call of Dr. Reddy’s Laboratories Limited. [Operator Instructions]
I now hand the conference over to Ms. Richa Periwal. Thank you, and over to you, ma’am.
Richa Periwal — Head, Corporate Analytics, Corporate Strategy and Investor Relations
Thank you. Good morning and good evening to all of you. Thank you for joining us today for the Dr. Reddy’s Earnings Conference Call covering the quarter and full year ended March 31, 2025. We appreciate your time and participation. Joining us today is the leadership team of Dr. Reddy’s Limited, comprising Mr. Erez Israeli, our CEO; Mr. M V Narasimham, our CFO; and the Investor Relations team.
Earlier today, we released our results, which are now available on out site. We will begin today’s call with MVN presenting the financial highlights for the quarter and the year. Following this, Erez will share his thoughts on the business performance. We will then open the floor for the Q&A session. Please note that today’s call is a copyrighted material of Dr. Reddy’s and cannot be rebroadcasted or attributed in press or media outlet without the company’s expressed written consent. This call is being recorded, and both the playback and transcript will be available on our website soon.
All discussion and analysis in this call will be based on the IFRS consolidated financial statements. Additionally, today’s discussion include certain non-GAAP financial measures. For the reconciliation of GAAP to non-GAAP measures, please refer to our press release. Before we continue, I would like to remind everyone that the safe harbor provisions outlined in today’s press release also applies to this conference call.
Now, I hand over the call to Erez.
M V Narasimham — Chief Financial Officer
Thank you, Richa. Greetings to everyone, and I hope you’re all doing well. I am pleased to present an overview of our financial performance of the fourth quarter and full year FY 2025.
Fiscal year 2025 was another milestone peer for the organization, marked by strong financial performance, we achieved record high revenue exceeding $3.8 billion and crossed the $1 billion threshold in EBITDA for the first time. Both revenue and EBITDA registered double-digit growth for the year. Please note that all the figures in this section are translated into US dollar using convenient translation rate of INR85.43, the rate prevailing as of March 31, 2025.
Revenue performance: consolidated revenues for Q4 FY ’25 stood at INR8,506 crores which is equivalent to $996 million, reflecting year-over-year growth of 20% and a sequential increase of 2%. For the full- year, our revenues were at INR32,554 crores and $3.8 billion, representing a growth of 17%. These results include contribution from the acquired consumer health care business in nicotine replacement therapy, which added INR597 crores in Q4 and INR1,202 crores for the full year. The overall revenue growth was driven by this strategic acquisition and contribution from our generic portfolio across geographies, excluding sales of the NRT business, revenue growth was at 12% on year-over-year for both the quarter and the year and 2% sequentially for the quarter.
Gross margin: the consolidated gross profit margin for Q4 was at 55.6%, reflecting a year-over-year decline of 300 basis points and a sequential decline of 312 basis points. The decline was mainly due to reduced manufacturing overhead leverage and higher milestone income recognized in the comparative period. Gross margin for the Global Generics and PSAI segments stood at 59.3% and 26.3% for the quarter. For the full fiscal year, the consolidated gross margin remained stable at 58.5%, consistent with FY ’24. Gross margin for Global Generics and PSAI were at 62% and 27.1% for the full year, respectively.
Selling and general administrative expenses: SG&A expenses for the quarter amounted to INR2,406 crores, which is $282 million, marking a year-over-year increase of 17% and the remaining broadly flat quarter-over-quarter. SG&A as a percentage of the sales was 28.3%, representing a decline of 63 basis points year-over-year and 57 basis points on Q-o-Q. For the full year, SG&A expenses amounted to INR9,382 crores, in dollars, $1.1 billion, up by 22% year-over-year. This increase is primarily driven by recently acquired NRT business in the Consumer Healthcare segment, investment in other commercial activities and higher prices impacting logistics costs. We continue to maintain disciplined cost structure while strategically allocating resources to strengthen existing business and expand into the new growth segments.
Research and development investment: R&D remains a key pillar for long-term growth. We continue to enhance our internal R&D efforts with strategic external collaboration for innovation assets. R&D expenditures for the quarter stood at INR726 crores, $85 million, representing a year-over-year increase of 6% and quarter-over-quarter increase of 9%. As a percentage of revenues, R&D investment was at 8.5%, lower by 118 basis points year-over-year and higher by 57 basis points sequentially. Full year R&D investments was INR2,738 crores, $320 million, reflecting a year-over increase of 20%, but investment largely focused on building differentiated pipeline, expanding small molecules, biosimilars, complex generics, including [Indecipherable] and novel oncology assets.
Other key financials: impairment loss is INR77 crores in Q4 and INR169 crores for the full year. The impairment pertains to certain product-related intangibles from main portfolio and other product-related intangibles forming part of the company’s global generics business in India and Europe due to adverse market conditions.
Other operating income is INR247 crores in Q4 versus INR66 crores for the same quarter last year and INR436 crores for the full year versus INR420 crores in FY ’24. Q4 increases primarily on account of reclassification of foreign exchange gain related to foreign operations from FCTR, full form of FCTR is foreign currency translation reserve. Post divestment of Freeport Manufacturing Facility. The net benefit to P&L on account of FCTR reversal after addressing severance cost and other onetime costs is INR121 crores.
Ending EBITDA: EBITDA for the quarter was INR2,475 crores, $290 million, registering a year-over-year growth of 32% and a quarter-over-quarter growth of 8%. EBITDA margin was at 29.1%, an increase of 267 basis points on year-on-year and 160 basis points sequentially. For FY ’25, EBITDA stood at INR9,213 crores, $1.1 billion, reflecting year-over-year growth of 11%. The annual EBITDA margin stood at 28.3%, down from 29.7% in FY ’24, reflecting a decrease of 143 basis points.
Finance income and profitability: net finance income was INR235 crores in Q4 versus INR102 crores in previous year and INR400 crores for full year as compared to INR399 crores last year. Higher year-over-year income is due to net foreign exchange gains. Profit before tax was INR2,005 crores, in USD235 million in Q4, up 25% year-over-year and 7% Q-o-Q. PBT for the year was INR7,678 crores and in terms of dollar, $899 million for the full year, a year-over-year growth of 7%. PBT margin was 23.6% for Q4 as well as for FY ’25.
PBT includes INR89 crores for the quarter and INR101 crores for the full fiscal from the NRT portfolio. The effective tax rate was 20.8% for the Q4 and 25.4% for the full year. ETR for the quarter is lower due to reversal of previously recognized tax provisions pertaining to prior year and [Indecipherable] transfer to the income statement is not subject to taxation. The full year ETR is higher than the previous year, mainly due to the reversal of previously recognized deferred tax assets related to land indexation and the recognition of previously unrecognized deferred tax asset on operating tax losses compared to the period ended March 31, 2024. We expect the ETR for FY ’26 to be similar to the current fiscal year.
Profit after tax is attributable to the equity holders was INR1,594 crores, in dollars, $187 million in Q4, up 22% year-over-year and 13% Q-o-Q, translating to a margin of 19%. Full year profit after tax was at INR5,655 crores, reflecting year-over-year growth of 2% and a margin of 17%. Earnings per share stood at INR19.1 for the quarter and INR68.1 for the full year. Based on the company’s performance, the Board has recommended payments of dividend of INR8 per equity share of face value of INR1 each. This is equivalent to 18% of the face value for the year ended March 31, 2025, subject to approval of the member of the company.
Cash flows and balance sheet, operating working capital as of March 31, 2025 stood at INR12,590 crores, a reduction of INR192 crores compared to December 31, 2024, primarily driven by improved receivable management. Capital expenditure was INR767 crores for the quarter and INR2,699 crores for the full year. Free cash flow for the quarter was INR1,110 crores and for the full year, INR1,332 crores for the full year before acquisition-related payouts. At the year-end, the company maintained net cash surplus balance of INR2,454 crores post NRT acquisition payout in September [Phonetic].
Foreign currency cash flow hedges executed through derivative instruments as of March 31, 2023 are as followed: an amount of $786 million has been hedged using structured derivative contracts maturing over a course of the next financial year. These contracts provide a minimum production rate of INR85.9 for US dollar while retaining the potential for outside participation in the event of US dollar appreciation. An amount of INR2,500 million has been hedged with a minimum production rate of INR0.91 for Russian ruble. These contracts are scheduled to mature within next three months.
With this, I now request Erez to take us through the key business highlights.
Erez Israeli — Chief Executive Officer
Thank you,, and a very good morning and good evening to everyone. The Dr delivered another year of robust performance marked by highest-ever annual revenues and profits. Fiscal year 2025 was characterized by double-digit growth across all business segments. During the period, we continued to strengthen our generic businesses, while investing and building our three strategic growth area, namely Consumer health, innovation and biosimilars. Our efforts remain focused on driving operational efficiencies, strengthening our pipeline and enhancing organizational capabilities. In parallel, we execute on value as accretive inorganic initiatives to complement our organic growth in alignment with our stated strategic objectives.
I would like now to highlight some of the key financials for the fiscal year, as well as important updates from the 4th-quarter. One, we sustained momentum and delivered healthy double-digit revenue growth of 20% in Q4 and 17% for the full-fiscal year. EBITDA margins remained resilient, exceeding 29% for the quarter and closing the full-year at over 28%. Return on capital employed ROCE reached 27.7%, underscoring our continued focus on capital efficiency and value-creation.
First, we concluded the fiscal with a net cash surplus of $287 million US dollar, thereby enhancing our financial flexibility to support future growth initiatives. Our biosimilar strategy progressed this quarter to key strategic partnerships. We secured exclusive commercialization rights for the biosimilar candidate from use in the United States and Europe, reinforcing our oncology portfolio. We signed an agreement with Biothera to commercialize, and, biosimilar candidates with a primary focus on Southeast of Asia markets.
The US-FDA also accepted the filing of our partner biosimilar, making a key milestone in our investment within regulated biosimilar markets. The phased integration of our newly-acquired nicotine therapy NRT business is moving forward as planned. The United Kingdom was successfully integrated at the start of the month and we are on-track to complete the integration of the Nordics in the next phase.
We are demonstrating our commitment to bringing innovation to India and improving healthcare access to strategic partnership. We extend our collaboration with Sanofi to introduce Bayfocus, which is a near, a novel drug for preventing RSV. In partnership with ALK, we launched a Sensimum, an immunotherapy product for house that might induce allergies.
We commenced participation in the Government of India, a general Ashwadi program with one of our products. We divested our manufacturing facility in Louisiana, United States. On the regulatory form, our API manufacturing facility City of two located in Bolaram, Hyderabad received a VAI from the US-FDA following a successful GMP inspection conducted in November 2024. We continue to deliver industry-leading performance in sustainability, earning multiple recognition for environmental, social and government ESG initiatives.
Our improved to 73, positioning us among the top 15% of the company assessed globally. We were able — we were also honored with Climate Action action program 2.0 degrees in the world by CII in the highest resilient category with the within the life manufacturing sector. We recognising the leadership category on the Indian corporate government 2024 a by institutional Investor Advisory services.
I will now walk you through the key business highlights for the quarter and the full-fiscal year. Please note that all figures referenced in these section are presented in the respective local currencies. Our North-America generic business generated revenue of $418 million for the quarter, reflecting a year-on-year growth of 7% and a sequential growth of 4%. For the full-fiscal year, revenue stood at $127,000 million — sorry, million US dollar, representing a 10% increase over the previous year. This performance was primarily driven by increased volume in key products and successful new product launches, partially offset by price erosion.
This quarter, we launched seven new products bringing their total for the fiscal year to 18. We expect this growth momentum to continue into FY ’26. Our European generic business reported revenues of EUR140 million for the quarter, reflecting a year-on-year growth of 142% and sequential increase of 4%. For the fiscal year, revenue stood at EUR395 million, representing a growth of 73% compared to the previous years.
Our strong performance-driven by contribution from the NRT business, higher base business volumes and gains from new product launches helped offset pricing pressures. Excluding the contribution of the NRP business, the General business recorded a year-on-year growth of 29% and a quarter-on-quarter growth of 11% in Q4 and a full-year growth of 15%. This quarter, we launched 10 new generic products in Europe, bringing the total for the fiscal year to 39%.
Our Emerging market genomics business reported revenues of 1,398 CR and Indian CR in Q4, reflecting a year-on-year growth of 16% and sequential decline of 30%. For the full-fiscal year, revenue stood at INR5,477 crore rupees, representing a growth of 13%. The performance was mainly driven by higher-volume and new product launches, partially impacted by unfavorable toys.
During the quarter, we launched 26 new products across various emerging market countries, bringing the total for FY ’25 to 85 products. Within this segment, our Russia business posted a year-on-year growth of 27% in constant-currency for the quarter, although it experienced a sequential declines of 13%. On a full-year basis, the Russia business recorded a growth of 24% in constant-currency terms.
The India business recorded revenue of INR1,305 crore rupees in Q4, reflecting a double-digit year-on-year growth of 16% and 3% sequential decline for the quarter. For the full-fiscal, the revenues were INR5,373 crores, representing a 16 year-on-year growth, excluding the contribution of the in-licensing vaccine portfolio, the business recorded a 6% growth in Q4 and for the full-year, driven by and for the full-year, driven mainly by successful new product launches and favorable pricing. According to IQVIA, we have maintained our position as the 10 largest player in Indian pharmaceutical market, IPN and have marginally outperformed the IPN with a moving annual total M&T growth of 8.4% compared to the IPM growth of 8%. In addition to the Sanofi and portfolio, we have launched 23 brands during the fiscal.
Our SAI business recorded revenues of $112 million in Q4 in FY ’22, reflecting an year-over-year growth of 13% and sequential growth of 15%. For the full-fiscal year, revenue stood at EUR401 million, representing growth of 12% compared to the previous year. The growth was primarily driven by increased volume contribution from new API launches and growth in our contract development and manufacturing organic organization CDMO business.
During the quarter, we filed 52 drugmaster DMFs including seven for the United States, bringing the total number of filing for the year to 111. We remain committed to investing in our pipeline to drive future growth, further supported by strategic collaboration, focus on innovation. Our R&D investment for the quarter amounted for 726 goes, reflecting a year-over-year growth of 6% with growing emphasis on complex assets such as GLP-1 and biosimilars. Additionally, we completed 95 global generic filings, bringing the total for the fiscal year to 249 million.
In FY 2026, we continue to expand and strengthen our core businesses, drive value through portfolio management, grow our process in consumer healthcare, innovative therapies and biosimilars, leveraging our commercial footprint and explore value-accretive acquisitions and partnerships and maintain financial discipline to build the foundation for sustainable fuel.
And with that, I would like to open the floor for questions-and-answers. Shall we open the floor for questions. Yes, please.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Neha Manpuria from Bank of America. Please go ahead.
Neha Manpuria
Hi, thanks for taking my question. My first question is on tariffs. It has — given you speak with the policymakers and customers, what is your sense on the extent of tariff or to what level the tariff could be implemented or? Could it be in the API, could case and be included? And the second part is given that does not have any manufacturing in the US what are the mitigation factors that we are looking in case tariff is implemented for genetics.
Erez Israeli
Thank you first obviously I wish I knew and how much tariff will come. We are preparing ourselves for the scenarios and we obviously watching carefully the information as it will come. At this stage, the main efforts is to ensure sustainability of supply. And so the main activity as we speak is to work closely with our customers and see what is the need in terms of inventories, future inventories as well as new product demand, identify products that may have supply disruption and try to help them to address it and we are all waiting to see what will be after that the new policies and accordingly, we will address as if it’s the API, if the country will be based on API or pharma, I don’t know Most of the people that believe that it’s for API, but we need to wait-and-see for formal communication in the district.
As for the production footprint in the US, I don’t think that at this stage, the generic industry is having a short-term issue here. And as a company, we would love to have a footprint in the United States. It just has to be the right asset. We are always looking for an asset, but we are not going to do at this stage specific activities build footprint is more — if the right opportunity will come to us, we will be more than happy to engage it
Neha Manpuria
And based on your composition with customers, would they be open to absorbing an impact of any potential tariffs depending on how much it is or what’s your sense on who bears the burden in case of the tariff?
Erez Israeli
My sense is nobody wants to absorb the. I think what will happen is there will be certain adjustment period in which people will have to work together to see what to do with it. So it is primarily about working together. What I want to emphasize is that under any scenario, we will not create a shortage of supply or supply disruption to the US market. This is very, very important to us. We want to stay-in the United States for many years that’s something that was also clarified in order of our discussion with our customers.
Neha Manpuria
Okay. Understood. My second question is on our cost base. And then as you know, given that our cost base has balloon quite a bit, even though our margins are great, as we look at Rev limit 3/4 out how much flexibility do we have to actually reduce this cost once Rev limit goes away? So just trying to get to how we get to that 25% margins. I know you have a lot of products, et-cetera, which should come through, but from a cost perspective, how much flexibility do we have from an R&D and SG&A perspective to reduce cost?
M V Narasimham
So even though that I think suppose revenue will happen in January 2026 based on our current modeling and we will continue to have as much, suppose what we have guided is like a sales double-digit growth and then EBITDA ROC 28% or above at this point of time.
Neha Manpuria
But in terms of R&D and SG&A costs, would it still be at similar levels?
M V Narasimham
Yeah, R&D and SG&A will be in the similar zone. I think the SG&A now is like somewhere 28% of the sales, R&D 8% would be in the similar zone.
Erez Israeli
So, yeah, the main way to do is we are planning to just go faster the sales and the expenses. This is one mean and we have delivers to do that in all the development market, as well as obviously using — so if you want to just put the levers that will allow both the growth as well as the margins first are trying to grow the base. We are going to grow the base significantly faster than the expenses while using all kinds of productivity measures on the cost. It’s not a cost cut, it’s all kind of productivity measures. And of course we are planning to have some nice products that are coming up, both in as well as the that will come and planning to continue to do busy and we are engaging with quite a few opportunities likely that. So the combination of all of that, I believe that will help us to grow also from the potential decline because of and to keep our margins.
Neha Manpuria
Understood. And then, you see double-digit growth, I assume we a limit.
Erez Israeli
Yeah, we believe that FY ’26 double-digit growth is possible as well as maintaining the margins results.
Neha Manpuria
Okay. Thank you so much.
Operator
Thank you. Next question is from the line of Kunal Dhamesha from Macquarie Group. Please go ahead.
Kunal Dhamesha
Hi, thank you for opportunity and good evening. The first question on the gross margin, which has kind of changed quite a bit dramatically on the Q-o-Q basis and you have highlighted the reduced operating leverage. But as far as I see like our revenues have grown, right? So I kind of fail to understand how the operating leverage has kind of worked other way for us. So if you can provide some more color on that would be great. That’s my first question. Thank you.
Unidentified Speaker
Yeah. Thanks, Kunal. Here, like when like the one-off cost in this quarter are there part of the manufacturing overheads as per our policies that like a — it’s impacted adversely. Like in the plant we divested, we have just had a cost that is a one-time cost and it impacts the part of the manufacturing overhead. And similarly, the second gift I articulated earlier, this is a — as compared to the Q3 — in the Q4, our out-licensing winker is lower. That will have a direct impact on the gross margin that way like 300 basis-points is lower in this quarter. We believe this should be — this would be like a one-off and then we’ll go back to our normal levels.
Kunal Dhamesha
Now can you please quantify the severance cost one-time impact for this quarter?
Unidentified Speaker
That is not — we will not give, but it not a very small amount. It’s not what I’m just saying, maybe if I had to say out of 300 basis-points of manufacturing overhead, this is a one plus another our accounting provisions, I think overall it has impacted 0.8% of out of 80 basis-points out of basis-points.
Kunal Dhamesha
There’s a severance cost. And then maybe another 50 basis-points.
M V Narasimham
It’s just pull-up. It is not the severance cost alone, there are other costs also.
Kunal Dhamesha
Okay. 80 basis-point is one-off. And then the proprietary product milestone not coming is incremental to that 80 basis-point.
M V Narasimham
So yeah, that is the one. And then like a little bit on the inventory also, there is a overhead overall put together, I think that all happened in 1/4, that’s why you see there is a 300 basis-point.
Kunal Dhamesha
Sure, sure, sure. And, just a related question, if I look at the NRT business, the PBT margin between the two quarters has a meaningful delta of around 500 basis-points, right? So is there a seasonality and when we look at this business on a full-year basis, how should we kind of think about the — I mean, this business because based on two quarters, really difficult for us to understand.
M V Narasimham
Okay. So overall, for this business earlier, we also spoken our EBITDA margin in the zone of like 25%. This and because I don’t know why the fluctuation between the Q3 versus Q4, there are a lot of integration costs, that’s where it’s impacted. Otherwise, when you’re modeling the EBITDA, you can take it at like 25%.
Kunal Dhamesha
Okay, sure. And then one question for Rives, if you could provide update on our GLP-1 or let’s say, generic semaglutide product across various market and also the set product?
M V Narasimham
We are gearing up to launch it during the calendar ’26 in all the — all the markets that the IP landscape will allow us to launch. And so this is still intact and we are progressing nicely in our preparation for that. As for said, so-far so good, we are close to — we are deep into the Q — end-of-the Phase-3. And so-far, it looks like it’s the timelines is not change to submit the product somewhere in the end of this calendar year end of ’25 to be ready to launch the IV at us immediately after expiration and the same for the subcu, which will become a year later because of the patent-related issue. So once the IP landscape will allow us to launch it, we will do so fast.
Kunal Dhamesha
Right now, it’s Phase 3, which is currently going on right?
Erez Israeli
Yes, the Phase 3 is going on and we are planning to submit by the end of this calendar year, by the end of ’25.
Kunal Dhamesha
Perfect. Okay. I have more questions. I’ll join back the queue. All the best.
Operator
Thank you. Next question is from the line of Madhav Marda from Fidelity. Please go ahead.
Madhav Marda
Hi, good evening. Just a follow-up to the previous question. Could you help us maybe understand the sizing of the generic opportunity for us in-markets such as Canada, Brazil and the other larger EMs where it goes off next year. We obviously have invested in capacity for genetic semaglutide. But — and what we understand, looking at penetration rates in, let’s say, Canada, Brazil, it’s severely underpenetrated because supply was short and obviously it was very much higher price point. So as some of this product supply comes through and prices go down, how do we see the volumes expanding for this product, let’s say, in Canada and could give us some sense will be great yes.
Erez Israeli
So naturally Canada is is one of the markets that we look in early and what people from is that exclusivity that will be finished in the beginning of January 26 to the best of our knowledge-based on the marketing reports is going nicely and at leasing according to IQVIA and the financial reports and the market price is around $1.8 billion, which suggests that it’s around give or 10 million tons and it’s of course give or pick. So the — it’s a very nice market. The CAGR is the big and somewhere between — in some report, I saw 28% and another report I saw 39%. It’s a very, very-high level of growth eventually and when we saw the prevalence of the disease versus the use compared to other markets, it looks like that in Canada there is a room for growth also quantity-wise. So it’s an interesting market. And once the IP landscape will allow us to launch it in the assuming approval, we are planning to go, we are — we see ourselves as one of the companies that have the opportunity to be a first or among the first in Canada. We are planning to do the same in India, in Brazil and the other markets in accordance to, of course to versus the IP landscape would allow us.
Madhav Marda
Thank you. So the 10 million tons that you mentioned that the Canada market size today, right? Did I understand that
Erez Israeli
What to you, the numbers that I mentioned, really to the sir
Madhav Marda
So that’s what I was trying to understand that this is at a much higher price. So would you have any sort of sense in terms of this 10 million pens, can this you know given that the — if you look at the obese population or the directed population in Canada, the size of the potential market can be maybe three, four, five times. So yeah, could you give us some sense of the market.
Erez Israeli
So I heard five times, but my knowledge is not different than yours the, the, the prevalence is still, the turbulence is still high. The use relatively to the turbulence is still low. And if it’s three, four or five times I don’t know eventually what will happen that it is going to be an important for Canada and obviously we are very keen on it.
Madhav Marda
Thank you.
Operator
Thank you. Next question is from the line of Amey Chalke from JM Financial. Please go ahead.
Amey Chalke
Yeah, thank you for taking my question. The first question I have, there is a gross margin drop, but the — there is also reasoning given that there was a price erosion one of the reason for the gross margin drop. So is it possible for the management to give us some understanding what is the US business price origin for the year and how the US business has done for the year for FY ’26, excluding revenue.
M V Narasimham
So this gross margin, the price erosion is like on year-over-year basis. And in US, I think the price erosion is very stable. That’s why we have put it in the press conference. We do not see any challenges even. In fact, the price erosion is like a much lower as compared in — during FY ’25 compared to FY ’24.
Amey Chalke
Sure. And the US business, how it has done for the year it has grown, it has like how it has performed.
Erez Israeli
I the US business grow it’s it’s grow very, very nicely and it’s primarily due to the usual new launches, market-share gains and just to make sure that in addition to what the said the price erosion that was in the US was relatively low primarily as most of the product kind of I believe exhausted the potential of the price erosion. So it’s normally when there is no price erosion in United States, it’s not always a good time but in our case, it was a very low-single digit in the price erosion within the business.
Amey Chalke
So second question I have is on the. In FY ’26, I understand that Jan would be of when the exclusivity is ending. But if we consider over the quota-related quantities, which we would be booking before the Jan, how the distribution some we should expect to happen over next few quarters? Is it evenly distributed or you think that your first-half of the FY ’26, we should expect revenue mix sales to be booked?
Erez Israeli
So obviously, it’s in accordance to the demand of the customers, but likely that we will be — we will finish the — what we can sell a few months before the January in order to make sure that our customers will not be with the goods on the shelf in order to avoid the shelf adjustments. So likely before this.
Amey Chalke
Sure. Just last question, if I could squeeze in. We spoke on Canada market-related to semaglutide. However, traditionally, we have seen a generic a generic or capturing the branded market where the prescription is typically marketed by the innovators. However, here, the market is severely underpenetrated. Do you think there would be any need for you to-market the product even despite being a generic.
Erez Israeli
We believe that the demand from the customers will be strong enough that we go into a market will introduce it to the market what I believe can happen is that us the product will be much more affordable and some of the use is without reimbursement so I know that it will create an additional demand. But no, we are not planning to actively market the product that is.
Amey Chalke
Sure. Thank you so much. I will join back thank you.
Operator
Next question is from the line of Bino from Elara Capital. Please go ahead.
Bino Pathiparampil
Hi, good evening all. Just following-up on. What is — are you seeing any price erosion — significant price erosion in as of now compared to six months back.
Erez Israeli
So there is a price erosion and there is also increase in quantity, so it’s a combination of those. Yeah, I will not be able to tell you exactly the amount, as you know. But yeah, there is a certain level pressure.
Bino Pathiparampil
Okay. And just to reconfirm what I heard earlier, you — I believe you said that for financial year ’26, you can do a double-digit growth and maintain the EBITDA margin at the same level of FY ’25. Did I hear that correct?
Erez Israeli
Yes, that’s what I said.
Bino Pathiparampil
Okay, okay. And once the grip happens, which may be FY ’27, the margins may settle down back to your long-term target range of around 25% or so. Is that how we look at it?
Erez Israeli
Yeah. So we always said that the 25% is indication for the place that we feel comfortable to be giving enough total shareholder return, but also allowing us to invest in the future. So we will continue to aim for that amount. It may fluctuate from quarter-to-quarter, something will be above sometime below. But yes, we are planning to be in road also in the future and post Lina era.
Bino Pathiparampil
I understood. And one last question on capex. So this year’s capex was, I think more than double the previous year’s level. Where has it mainly gone through? And for next year, what’s the level we should look at?
M V Narasimham
So largely this major capexes are going-in two fronts. One is for the peptides, both for two creative infrastructure for both APA and formulations and also to create a biosimilar facilities. Largely, these two are the major investment are driving factors. Apart from that, certainly, it seems like as we are in the complex molecule journey, then there is a product-specific investments as well. So that’s where I think it is overall capex and then you’re asking for FY ’26. We believe at this point of time would be in the similar range for FY ’26 as well.
Bino Pathiparampil
Got it. Thank you. Thank you.
Operator
[Operator Instructions] Thank you. Next question is from the line of from [Indecipherable] Quantum Mutual Fund. Please go ahead.
Unidentified Participant
Yeah, hi, can you hear me? Hello?
Operator
Yeah.
Unidentified Participant
Thank you for taking the question. Just quickly, could you talk about the India a bit in the
Operator
Sorry to interrupt and they are losing your audio.
Unidentified Participant
Can you hear me? Can you hear please? Yeah, yeah. Can you hear me?
Operator
No, sir. Sir, the line for the participant dropped. We’ll move on to the next participant. Next question is from the line of Tushar from Motilal Oswal. Please go-ahead.
Tushar Manudhane
Thanks for the opportunity. Sir, for the Europe market the FY ’25 was a great year. If you could sort of elaborate on the growth prospects for this region, ex NRT as well for ’26, ’27 region?
Erez Israeli
Yeah, I agree with you. You hope is a growing area for us. We are planning to grow by — first of all, we are expanding to more companies we are launching more products, primarily leveraging the pipeline for the United States. We are going to launch biosimilars in Europe, both rituximab, and after let’s say, the most asset and we are planning to obviously to grow the NRP business. So indeed Europe is going to be an important worst area for us.
Tushar Manudhane
Sir. So as far as among is concerned, like because it can be manufactured using biological route as well as synthetic route. But any color if you could share in terms of at least the initial countries like India, Canada, would they be okay to approve the synthetic route and the competitive dynamics would be different if that happens or you think the competitive dynamic should be similar even if it is accrued either through a synthetic route or a biological route?
Erez Israeli
Yes. So we believe that the synthetic can support for the injectable for the pens and the semi-synthetic route is going to be used for the overall product and that’s what we are planning to do. Synthetic for the and said before the other.
Tushar Manudhane
So, likewise, the price erosion basis competition would be higher for synthetic.
Erez Israeli
It’s a — it of course, depends on how many people we launch the product in each one of the markets. So it’s not so much because of the versus process. It depends who is — who has access to capacity at least at the beginning and who is going to obtain approval. So in terms of competition, I believe that in some of the markets, they may have some advantage for those that will have at least for a short period of time or longer period of time, depends on the scenario less competitive, maybe less players that will play in the market. And thereafter, it will be it will be very competitive because many companies are having this product and they will complete market-share. At the same time the product will grow. So we are preparing ourselves for the scenario in which we believe that we have a chance for relatively limited compensation, but as well as prepare for the scenario of high-volume, low-price, very competitive landscape and we are gearing for both.
Tushar Manudhane
Sure,, let me ask one more…
Operator
May I request you to come back, please?
Tushar Manudhane
Okay. Thank you.
Operator
[Operator Instructions] Next question is from the line of Abdulkader Puranwala from ICICI Securities. Please go ahead.
Abdulkader Puranwala
Yeah, hi, sir. Thank you for the opportunity. Sir, my first question is on your India business where you talked about 6% growth excluding the vaccine business. And so how should we see this portfolio ramp-up happening next year? Any areas where you think the growth was little lower this year? And then next year, how should we model this business for us to see similar growth overall for India also next year.
Erez Israeli
So we are planning to grow. This year we grew 16% in that kind of range of growth you are going to see also in FY ’26. Indeed, we highlighted to emphasize that although we highlighted the inorganic versus organic, but I want to highlight that most of our growth in India will be inorganic. We are licensing products, we are requiring products and we are introducing innovation to that it could not be by stressing the necessarily only the big brands, although — and I will in a second, but primarily by producing products that have better standards of care. Having said that, most of our big brands from the past two actually double-digit. There are two areas in which did not do as well. This is in as well as GI. And we have mitigation and also plans for those primarily by adding more marketing resources and as well as addressing the level product and introduction of life-cycle management so overall between new products, innovation, big brands, brands dealing with those big brands not well, we are — we believe that we’ll have a high-level of high double-digit growth in India next year
Abdulkader Puranwala
Got it. And sir, my next question is with regards to the I don’t know the recent updates coming from the US in terms of certain concession on the regulatory front being offered by the US agencies as well as they talking about increasing the intensity of surprise inspections for plants based out in India and China. So would love to hear your take on these developments coming from the US market.
Erez Israeli
Yeah, so it’s not new no just this year the inspection that we had in City and were unannounced inspection. Our facilities are ready for it this was always the guidelines in the United States for years and it’s unannounced. So all of our facilities are ready for that. That’s actually is the guidelines for a while and it will require two projects are not ready for that to upgrade their systems the queer has.
Operator
[Operator Instructions] Thank you. Next question is from the line of Surya Patra from PhillipCapital. Please go ahead.
Surya Patra
Yeah, thanks for the opportunity, sir. My first question is on the R&D spend front. What we have seen in the last two-year period, sir, there is a kind of back-to-back around 20% kind of growth annually on the R&D spend front that we have witnessed. So could you give some visibility about the kind of work that we would have done on the pipeline buildup front and the likely investment on those front — on the R&D side going ahead and what buildup that we would have created so-far as the future pipeline or the pipeline for us.
Erez Israeli
So here, suppose the R&D finishments are — has been increasing in biosimilars like, let us say about effect is in Phase-3, suddenly the investments are high. And then in case of our generics, we are continuously focusing on all the GLP-1 these are all the complex molecules and requires a lot of investment. Investments and it is also earlier spoken this about a once we highlight the revenue starts in calendar 2027 or somewhere. So you will just see the revenues from all the efforts what we are doing now, certainly a little later. It is not very far up, I think but definitely in the near-term, I think you’ll see some of the products will start showing up the revenues.
Surya Patra
Okay. On the complex…
Operator
Surya, can I request you to come back, please? Thank you. [Operator Instructions] Next question is from the line of Shashank Krishnakumar from Emkay Global. Please go ahead.
Shashank Krishnakumar
Hi, thanks for taking my question. Just wanted to check with respect to Revlimid, given the import alert that has been issued to facility. So could you see any meaningful benefit, particularly in the first-half this year or is it largely a non-event given that there are volume restrictions in-place?
Erez Israeli
I don’t think there will be any impact.
Shashank Krishnakumar
Got it. Thank you.
Operator
Thank you. Next question is from the line of Shrikant from Nuvama Wealth. Please go ahead.
Shrikant Akolkar
Hi, thanks for the opportunity. In the Canadian semaglutide market, there are four players who are filed. If you can talk about our approval timelines and do you think that all the four players would be there in the Canadian market when the opportunity opens up?
Erez Israeli
I obviously don’t know who is coming with or but we are planning to be there at the date that the market will be and approval timeline for us. The approval timelines will likely to be a little bit before end of this calendar.
Shrikant Akolkar
Okay. Thank you.
Operator
Thank you. Ladies and gentlemen, we’ll take the last question from the line of [Indecipherable] from Quantum Mutual Fund. Please go ahead.
Unidentified Participant
Yeah, hi. Can you hear me? Hello, can you hear me? Yeah, yeah. Just quickly, when I look at the European revenue for us, it sounds like UK has grown-up fairly faster. Is it because we try selling NTR out there and the entire number which we give out INR1,200 crores. Can I double just to get the whole revenue for the full-year? And the last question on Revlimint. When we speak to, they say that June, September could be a better a better quarter for us in FY ’26. Is it — is it — does it hold true for us also? That’s it. Thanks.
Erez Israeli
So you know, I cannot share numbers or guidance on the — on the regular med and so I can only say like we always do that is going to stay meaningful product for us. The — as for the UK, I’m not sure I got the question, it is primarily due to relatively high-level of launch of new products perhaps we launched the also in the sorry in United Kingdom so the combination of both allowed us to grow in the UK.
Unidentified Participant
Okay. And the NTR, the run-rate of INR1,200 crore — INR1,200 crores, is it that we simply double that is what the number we get for the full-year ’25.
Richa Periwal
Could you just repeat your question?
Unidentified Participant
If I — the number of NPR, which we — nicotine, which we have for the H2 is around INR1,200 crores. So if I double that, is it the number which I get for the full-year or some growth.
Erez Israeli
Give take that would be the range.
Unidentified Participant
So and when we start selling in the UK all by ourself, we’ll be next year with it?
Erez Israeli
Yeah, yeah, currently also we are selling in UK and then going-forward also, we’ll continue to sell-in the UK. But when what the numbers we are reporting for UK without consumer.
Unidentified Participant
Right. And if I just can squeeze a last thing. On the GLP launch like which happened in the US after, we could three have come in. Do you think the scenario could be the same when it happens for Shema or when it launches in the US? I think the has got an approval or launched. So is it possible that the market will still be a lot of, but could it be the two players like or it will be what large players, number of players out there?
Erez Israeli
Which product you are talking about? Yeah see in the US will be in 2030 today 2033. Side, the disclosure of. And have a list of questions.
Unidentified Participant
I’m actually trying to understand the number of players in the are very less even after has come in and have gone. Do you think the same amount of players — because the large number of filers for Sema in Canada and India and all, or do you think everybody will get an approval and there will be a large number of players or like with the GLP witnes in US right now because of the only three, four players, how do you think the landscape will be on the competition part? That’s what I’m trying to understand.
Erez Israeli
Need layer that the landscape of as will be very competitive. It could be a situation at time of launch or around the time of launch there will be people that may get later the approval or have later access to the supply-chain and so it will evolve and those players that may come before and be there on day-one may gain kind of a first launch advantage but overall, it’s going to be we believe a very competitive market and we are preparing ourselves in terms of cost, supply to-high volume, low-cost type of products over-time.
Unidentified Participant
Thank you.
Operator
Thank you participants, we’ll take one last question from the line of Saion Mukherjee from Nomura. Please go ahead. Saion, may I request to unmute your line and proceed with your question?
Saion Mukherjee
Yeah. Hello? Yeah, am I audible?
Erez Israeli
Yes, we can hear you now.
Operator
Sorry. Sir, the line for the participant dropped. With this, I now hand the conference over to Ms. Richa Periwal for closing comments.
Richa Periwal
We appreciate you joining us for this evenings call. If you have any further questions or require clarifications, please feel free to reach out to the Investor Relations team. Once again, thank you on behalf of Dr. Reddy’s Laboratories Limited.
Operator
[Operator Closing Remraks]