Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Dr. Reddy’s Laboratories (NSE: DRREDDY) Q4 2026 Earnings Call dated May. 12, 2026
Corporate Participants:
Aishwarya Sitharam — Head of Investor Relations
Mannam Venkata Narasimham — Chief Financial Officer
Erez Israeli — Chief Executive Officer
Analysts:
Neha Manpuria — Analyst
Tushar Manudhane — Analyst
Damayanti Kerai — Analyst
Bino Pathiparampil — Analyst
Surya Patra — Analyst
Unidentified Participant
Shashank Krishnakumar — Analyst
Presentation:
Aishwarya Sitharam — Head of Investor Relations
Mr. Erez Israeli, our Chief Executive Officer and Mr. M.V. Nasimam, our Chief Financial Officer. Our quarterly financial results have been published earlier today and are available on our website. For your reference, we will start today’s call with Emvian providing an overview of our financial performance for the quarter as well as the year following that. Aries will share his insights on key business highlights as well as the Company’s strategic outlook. We will then open the floor for questions.
All commentary and analysis during this call are based on our IFRS consolidated financial statements. Please note that certain non GAAP financial measures may also be discussed including reconciliations to the corresponding GAAP measures are included in our press release. I would like to remind everyone that the safe harbor provisions outlined in today’s press release apply to all forward looking statements made during this call. Before we proceed, I would like to call out a few housekeeping points.
All participants will be in the listen only mode during the opening remarks. Should you need any technical assistance during the call, please use the chat function in your Zoom application. The chat however will not be monitored for any questions to the management. The session is being recorded and both the audio and transcript will be made available on our website. Please note that this call is the proprietary material of Dr. Reddy’s Laboratories Ltd. And may not be rebroadcasted or quoted in any media or public forum without prior written consent from the company.
With that, let me hand the call over to MVN to present the financial highlights for the quarter over to you. Ambian
Mannam Venkata Narasimham — Chief Financial Officer
Thank you Aarya Greetings to everyone on the call. It is my pleasure to walk you through our financial performance for the fourth quarter and full year FY26. FY26 reflected a resilient operating performance delivering highest ever annual revenues amid product specific headwinds and certain one time impacts. The underlying base business continued to deliver double digit growth for the quarter as well as for the full year FY26. At the outset I would like to highlight a few items impacting the quarter.
Number one a self stock adjustment or SSA related to linomide of rupees 453 crores taken as a reduction in revenue. Number two an additional provision of 114 crores related to potential VAT liability in one of our subsidiaries included in as any expenses impairment of 135 crores including a R&D charge of 6 crores on account of discontinuation of RD programs related to CAR T therapy as part of the portfolio prioritization impairment of 93 crores on account of discontinuation of a trial by our partner immutep of an unlicensed asset following an interim futility analysis.
The full year performance was further impacted by provisions related potential vat liability of 70 crores as well as the impact of new Labor Law code in India of rupees 117 crores. After factoring these items, the adjusted profit before tax was 994 crores for the quarter versus the reported number of 199 crores and for the full year 6463 crores versus the reported PBT of 5482 crores. Now I would like to discuss the underlying performance in detail. Margins in this section are expressed as a percentage of the revenues before the impact of SSA unless otherwise stated.
For the reported figures please refer to the respective earning releases. All financial figures in this section are translated into US dollars using a convenience translation rate of Rupees 93.83 the exchange rate prevailing as of March 31, 2026 excluding SSA, the adjusted revenue stood at 7,969 crores which is 849 million US dollars for the quarter, a decline of 6% year over year and 9% on QAQ and at 34,046 crores which is 3.63 US billion dollars for the full year representing a growth of 4.6%.
The decline was primarily on account of lower linolamide sales, while the base business excluding linolamide delivered double digit growth on year over year basis. We expect the base business to sustain its growth momentum in the year ahead. The gross margin on the adjusted revenue base after excluding the one offs for the quarter was at 48%, lowered by 60 basis points on euro year and 615 basis points on sequentially and at 53.5% for the year, lower by 498 basis points on year over year. The decline in margins was largely on account of lower lenovide sales and price erosion in our unbranded generics businesses.
The gross margin for Global generics was at 51.7% for the quarter and 57.4% for the year as a percentage of its adjusted revenues, while that for psi stood at 19.9% for the quarter and 17.2% for the PSA for the fiscal on its reported revenues. Given our focus on the cost efficiencies and productivity improvement, we expect the margins to improve and be above 50% in FY27 excluding 1 of provocations mentioned earlier SNA spends over at 26. 62 crores for the quarter, an increase of 11% on year over year and 1% sequentially and 33% of the adjusted revenue base and Rupees 10,435 crores for the year, an increase of 11% on Year over Year and 31% of the adjusted revenues.
The increase was primarily an account of ongoing targeted investment to support long term growth of our branded franchise namely the acquired NRT consumable healthcare business and branded genics. We expect the spends to be around the same level as FY26 for the year ahead. The adjusted R and D spend for the quarter was 541 crores a decrease of 26% year over year and 12% on sequential and a margin of 6 point percent of adjusted revenue for the year. The spend excluding one time labor code related provision was 2,385 crores for FY26 a decrease of 13% and 7% adjusted revenues.
The decrease reflects reduced biosimilars developmental expenditure as a significant portion of investments related to aborticept has been completed. We expect the spends to be in the range of 7 to 8% percent in the fiscal head. Other operating income for the quarter was 344 crores as against 247 crores in the corresponding quarter last year and rupees 763 crores in FY26 as against 436 crores in FY25. The increase during the quarter was largely on account of divestment of non core brands in India business for net of rupees 189 crores.
The underlying EBITDA including other income stood at 1,554 crores for the quarter which is 166 million US dollar a decline of 37% on year over year basis and 28% sequentially and reflecting a margin of 19.5% of the adjusted revenues. For FY26 the EBITDA adjusted one off was at 8,419 crores which is $897 million. That is like 24.7% on the adjusted revenue base. Impairment charge for the quarter was 259 crores as compared to 77 crores during the same quarter last year. The higher charge this quarter was largely on account of discontinuation of TATI assets and partner product EFT like a mode alpha as mentioned earlier.
Impairment charge for the year 352 crores as compared to 169 crores last year. The net finance income for the quarter was 62 crores versus 235 crores during the same quarter last year and rupees 413 crores for FY26 versus 472 crores for FY25. The decrease was primarily on account of lower foreign exchange gain in comparison to to the corresponding period last year. As a result, the underlying profit before tax was at Rupees 994 crores, I.e. US$106 million representing a margin of 12.5% and for FY26 at 6463 crores, I.e.
USD 689 million, a margin of 19%. Effective tax rate for the quarter was negative of 10.8% compared to 20.8% in the corresponding period last year while for FY26 ETR was at 22.5% versus 25.4% in FY25. The ETR for Q4FY26 was lower primarily due to recognition of a deferred tax asset on carry forward losses in one of our subsidiaries and a favorable jurisdictional mix for the quarter in comparison to the same period in the previous year. We expect the ETR to be 24 to 25% for fiscal FY27. Profit after tax attributable to the equity holders of the parent for the quarter stood at rupees 220 crores which is 23 million US dollars, a margin of 2.9% on the reported revenues and for the year 4285 crores which is 457 million US dollars, a margin of 13%.
Before adjusting for one of items mentioned earlier. Based on the company performance, the Board recommended payment of dividend 8 rupees for equity, share of face value 1 rupee each. This is equivalent to 800% of the face value for the year ended March 31, 2026 subject to approval of the shareholder of the company. Diluted EPS for the quarter Rupees 2.64 and Rupees 51.42 for FY26. Operating working capital as of 31st March 2026 was Rupees 14,434 crores which is US$1.54 billion, an increase of 29.20crores which is 31 million over 31st December 2025.
Capex cash outflow for the quarter stood at four hundred and thirty eight crores which is forty seven million and twenty three oh two crores which is 245 million for FY free cash flow generated during the quarter before acquisitions will pay. Related payout was 600 crores which is 64 million and 2004 crores which is 214 million for FY26. As of March 31, 2026 we have a net cash surplus of 3271 crores which is 349 million US dollar foreign currency. Cash flow hedges executed through derivative instruments during the period are as follows.
USD 462 million hedged using combination of forwards and risk reversal options scheduled to mature by March. These contracts are hedged at rate of 91.37 to 93.46 per US dollar ruble 1.6 billion hedged at a fixed rate of 1.12 for Russian ruble with maturity falling within the next three months. With this now I request Eresh to take us through the key business highlights.
Erez Israeli — Chief Executive Officer
Thank you MVN and good day everyone. We appreciate your participation on this call today and value your continued interest in our company during the year. We remain focused on advancing our two strategy of strengthening the base business while investing in our future growth drivers across peptides by a similar consumer, health and innovation. Our FY26 performance reflected consistent disciplined execution of our strategic priority, namely scaling the base business, advancing our key pipeline programs simaglutte and Batacept and targeted business development efforts to support our growth ambitions while continuing to enhance efficiency across operation.
I am pleased to report that the first quarter in this first quarter without one of our key products LID and Dulamide, the company delivered an EBITDA margin of around 20% after adjusting for certain items indicated by MVN. Earlier launches of products offering meaningful opportunity BD and continued cost optimization efforts will take us closer to our aspiration. 25%. For FY26, the adjusted EBITDA margin was in the neighborhood of 20% consistent with our stated aspirations. Further, the underlying base business delivered double digit growth in Q4 as well as for the full years of FY26.
All geography beside North America recorded double digit growth while performance in North America was impacted due to Lena Dolemide sales and one time shelf stock adjustment related to this product. Let me now walk you through some of the key highlights of the quarter. In line of our strategic priorities, we made progress on our key pipeline assets Immaglutide and Abatacep during the quarter we are pleased to announce that Dr. Redis became the first company to secure regulatory approval of semaglutide ejection for type 2 diabetes in Canada, reinforcing our in house expertise in peptide science and complex product development.
Likewise, as the first company to receive approval in India for the same product in November last year, we successfully launched our brand Obeda on day one of market formation, a port patent expiry in India. Our oral version of Semaglutide is being approved by the CDSCO in India. We continue to engage with an visa in Brazil to address its concern related to our generic Semaglutide filing and remain committed to making this important therapy available to patients across several markets subject to approvals.
Further, in February 2026 the US FDA accepted for review our VLA for the intravenous IV presentation of Arabata Cell by similar candidate following its filing in December 2025. In line with our strategic focus, we to bring innovation to patients in India with already in hormones replacement therapy segment. With the acquisition of Progeno, ANOVA and Cycloproginova in India, Our partner product COIAS302 received fast track review status. In addition, the operation integration of our required consumer healthcare business in nicotine replacement therapy is now largely complete.
On the regulatory front, in March 2026 the US provide the VAI classification for Formulation Facility FQACZ in Sri Kakulam, Andhra Pradesh following a GMP and Pre Approval Inspection PAI in December 2025. We continue to build on our leadership in sustainability. Dr. Reddy was awarded the Gold Medal for EcoVadis for FY26, achieving its highest average score of 80, placing us among the top 5% companies assessed globally during the quarter. We were named by the Business World Among India top five sustainable companies ranking first in the Indian healthcare and pharmaceutical industry for 24 and 25.
We’ve been recognized in the leadership category of 2025. Indian corporate governance called a card for the third consecutive year. Let me now take you through the key business highlights for the quarter and the full year. Please note that all financial figures mentioned are reported in the respective local currencies. Our North America Generic Business report revenue of $199 million for the quarter and $1.3 billion for FY26. Excluding one type shelf stock adjustment, revenue were 251 million for the quarter, a decline of 40% and 26% sequentially at 1.36 billion, a decline of 21% year over year.
The decline was primarily on the count line and Dolomite. During the quarter we added seven new products to our portfolio taking the annual of total 25 products. We aim to continue to launch momentum in the fiscal ahead. Our emerging Markets reported revenue of 1806 crores rupees in Q4FY26 reflecting a robust growth of 29% year over year and a decline of 5% sequentially and 6761 crores rupees in FY26, a growth of 23% year over year. The growth was led by new product launches across markets and higher volume particularly in rest of the world, further aided by favorable currency movements.
During the quarter we introduced 49 new products across countries taking FY26 total to 129 within this segment. Our Russia business reported growth of 8% year over year and a decline of 23% sequentially in concert currency terms. Our India business process revenue of 1566 crores rupees in Q4.26 delivering a robust double digit year over year growth of 20% and a decline of 2% sequentially while Foley revenues were at 6219 crores growth of 16%. This performance was largely driven by revenues from our innovation franchise, new brand launches, price increase and volume growth.
A QVA data as of March 31st, 2026 shows that we continue to outperform in the Indian pharmaceutical market IPM with a moving quarterly total growth of 15.2% compared to AIM IPM growth of 11.6% and moving annual total MAT growth of 12.1% compared to IPM growth of 9.9%. Our IPM rank stood at 9 for the quarter and 10 for the year. We launched 10 new brands during the quarter and 28 over FY26 reflecting our continued focus on strengthening our domestic market presence. Our European business, which include our required consumer health business in nicotine replacement Therapy posted revenue of 136 million for the quarter, a decline of 3% on year on year basis as well as sequentially and 542 million for FY26 reflecting an acquisition led growth of 77% year over year.
The decline this quarter was primarily on account of price erosion in generics. During the quarter we launched seven new generics products across market taking the full year total to 38, further expanding our European product portfolio. Our PSAI business reported revenue of 101 million US dollar in Q4 FY26 resulting in decline of 10% year over year and a growth of 10% sequentially. The decline was primarily on account of lower API volume uptake during the quarter. During the quarter we filed 48 ragmaster files globally taking the total number of filings to 128 for the year.
Looking ahead, we remain focused on delivering on our strategic agenda of strengthening our core business while building future growth drivers underpinning this strategy Future ready organization structure aligned to our business model with dedicated leadership across global generics, biologic, consumer health and innovation enabling sharper focus, relevant capabilities and more effective execution across each growth pillar. Within this framework, we will continue to advance our differentiated pipelines.
Programs such as Imaglutide and Abatacept drive operational efficiency and pursue value accretive inorganic opportunities that support sustainable long term stakeholder value. With that, I invite your question as we move to into the Q and A sessions.
Questions and Answers:
Aishwarya Sitharam
Thank you very much. Erez we will now begin the Question Answer session. To join the question queue, please raise Please use the Raise hand option available on the bar at the bottom of your Zoom application. If you wish to exit the question queue, you may click on the lower hand option. Participants are requested to not ask more than two questions at a time and to rejoin the queue in case of any incremental queries. I would like to reiterate that the chat will not be monitored for any questions to the management.
However, in case of any technical concerns, please do feel free to use the chat option to reach out to us. The first question is from the line of Neha Manpuria from Bank of America. Neha, please go ahead.
Neha Manpuria
Yeah, thanks for taking my question. Just wondering on the shelf stock adjustment that we had in the quarter a fifty million dollar number for, you know, a product like Rev Limit where we knew that the, you know, patent cliff is coming seems very large. So if you could just give us some color in terms of why the shelf stock adjustment was so large. You know, given that we knew we were expecting competition in Jan,
Tushar Manudhane
We were also surprised by this.
Erez Israeli
It was not part of any arrangement or anything like that. I cannot speak on the details on the relationship or the customers, but it came from them, I guess certain planning issues or mistake at their end and that’s the outcome of it.
Neha Manpuria
Okay, understood. And my second question is on Semaglutide. Now that we have Canada approval, I think they’ve mentioned a 12 million you know, unit sales for across markets. You know, in FY27 it is in your view what could be the competitive landscape now that you know, Reddy’s and the second play have gotten approval, when do you expect more players? And out of the 12 million in based on your assessment, what could be the rough breakup between let’s say Canada and ems?
Erez Israeli
So I believe that. So the current landscape of basically Novo Nordisk as well as the two of us Will stay there probably for several months and then likely that others will come. I believe that the market in Canada is give or take, it’s about one third in for what we call public, one third cash and one third one what they call private. So it’s a kind of public private cash. So what I believe will happen is that the Rembrandtson price will go over time as expected. The launch quantities, at least in a couple of years, we should be very, very healthy.
Obviously I cannot surprise, but they should be very, very healthy.
Neha Manpuria
And you know, given that we have had a setback in Brazil, are we still confident of the 12 million units or you know, sale for sema in fiscal 27 or do you think that would depend on us getting approval in Brazil as well?
Erez Israeli
So Brazil will be. Is part of it. I believe it’s still in that number, but the number moved by several months. So. So if we are still. I’m still with the same number, but probably it will have like 12 months. That will probably result in summer in the beginning of FY28 as well. Specifically for the next. Let’s say until the end of calendar 26. I believe that the number is somewhere between 6 to 7 million units.
Neha Manpuria
This is for calendar 26?
Erez Israeli
No, this is for the markets that will get approval and Canada will be obviously a big part of it, but understood, but it will be. This is give or take the. The numbers.
Neha Manpuria
All right, thank you so much.
Aishwarya Sitharam
Thanks Neha. The next question is from the line of Damayanti Kirai from hsbc. Daventi, please go ahead.
Damayanti Kerai
Hi, thank you for the opportunity. Continuing on semaglutide. So just to clear this 6 to 7 million units which you expect to market, it’s by end of this calendar year, right? By 26.
Erez Israeli
Correct.
Damayanti Kerai
Okay, so can you talk a little bit about your pricing strategy in the market where you’ll be coming in say another 12 months and specifically in Canada, after entry of second generic. How do you position yourself versus Novo Nordisk pricing?
Erez Israeli
So our list price will be a give or take about half of what Novo Nordisk will be. So that’s can be shared because it will be listed. Obviously the rest is arrangement that we have with the customer that will not be able to disclose. But let’s say it will be the normal arrangement that you normally have the. In terms of a. I’m not sure I captured. Sorry, the rest of the question. Sorry, I lost it. Can you remind me.
Damayanti Kerai
Yes. I was asking about the pricing strategy in all the market. Where do you. Where do you intend to Come in say another 12 months or so. 12 to 15 months.
Erez Israeli
Sure. So we believe that all the prices will be let’s say at the neighborhood of let’s say $30 plus. Why I’m saying that number also is because in some markets we are going to work with the partner and this reflect the net price that we left for them. Obviously they will have their margins and these numbers may go down if the competition intensified. But I don’t envision it to at any case to be below 25.
Damayanti Kerai
Okay. So somewhere 25 to $30 per unit is the price you are working with
Erez Israeli
And there will be market obviously that it will be much more than that. But I. I just wanted to share with you the kind of the neighborhood of the floor area. Obviously the we are planning to have in markets also prices that are much higher than that.
Damayanti Kerai
Okay, that’s helpful. My second question is on SGNS spend. So you mentioned next year, sorry, this year FY27 it could be similar to what we what we had in FY26. So just wanted to understand in NRT or some of the initiatives which had which you had started few years back, you have been spending for last few years if I may say so where you are looking for investing more and more this number, do we have any room to take a cut or see any reduction there? So if you can just talk a bit on that part. Thank you.
Erez Israeli
Sure. So we will have absolutely places that will have less and we’ll have places that will have more. But just to address the NRT is a place in which we will have more. At the same time the growth will well more than finance it. So the level of profitability of the asset will stay the same and even maybe go. But in terms of HNA percent we will have more. We are also launching innovative products in India and in certain emerging markets. And actually we are investing in the marketing of those new products.
At the same time we are putting a lot of productivity activity, salesforce excellence as well as additional marketing excellence program and this will go up. So that’s why we said that give or take in terms of nominal value should be the same level. Our sales will go by in percentage wide it will go down. But in terms of to understand the range of the of the spend it will be about give or take the same range that we we have now
Damayanti Kerai
In nominal terms. Right?
Erez Israeli
Yeah. While of course the sales will go double digital.
Damayanti Kerai
Okay, thank you and all the best. I’ll get back in the queue.
Aishwarya Sitharam
Thanks. Damayanti. The next question is from the Line of Tushar Manodane from Motilal Oswal Tushar, please go ahead.
Tushar Manudhane
Thanks for the opportunity. Am I audible?
Aishwarya Sitharam
Yes.
Tushar Manudhane
So firstly on gross margins even after adjusting the shell stock for the quarter it is 48% while X linoledomide. Also we have talked in the past that the gross margin has been 50 plus. So is there anything which I’ve missed as far as gross margin for the fourth quarter is concerned?
Mannam Venkata Narasimham
So this quarter is there is a product mix impact. That’s why it is at 14% and we believe our gross margin range is in the range of 50 to 55.
Tushar Manudhane
So what will drive this in the subsequent quarters? And are you including semaglutide sales for those gross Magic?
Mannam Venkata Narasimham
Yes, semicolon sales of course. And then there is a cost improvement product. Cost improvement programs also are on. And considering what the new products we are going to launch in FY27 including semaglutide plus product mix, considering all these things I think certainly our gross margin will be 50 and above.
Erez Israeli
I just want to make sure. I want to make sure that that we are planning to launch also products like Sugarmades, Usitinib. See the clip team. Sorry for my. My reading and sorry. Yeah. So in addition to that there are additional key products to do so. The mix of the product, the mix of the market as well activities that we are taking now on our APIs we are very confident about our ability to manage the gross margins.
Tushar Manudhane
And just on these products which you mentioned sir. So currently US revenue even after including the self stock adjustment it is to $36 million. So effectively maybe 944 million if I normalize that. So will we sort of grow over and about this X in FY27?
Erez Israeli
We will absolutely grow in North America exide in double digit.
Tushar Manudhane
Got it sir. And just lastly for India market if you could just share what has been organic and inorganic growth for the quarter.
Erez Israeli
It’s organic. What do you mean inorganic? We did not licensing and consider organic brands.
Mannam Venkata Narasimham
What we acquired is not a significant impact in this quarter is a just recently acquired brands.
Erez Israeli
No, just to clarify, we consider if we license a product from China and we are launching it in India as organic in this. In this terminology it’s mostly organic. It’s a. Let’s say the inorganic is neglectable.
Tushar Manudhane
Got it. Thanks. Thanks a lot.
Aishwarya Sitharam
Thanks Tushar. The next question is from the line of Dr. Bino Patiparampil from Elara Capital. Dino, please go ahead.
Bino Pathiparampil
Hi, good evening. Could you give an update on the status of denosumab and Orangia a better served
Erez Israeli
So the no superb will launch in Europe and we are awaiting for approval in the United States. Our partner has a deficiency letter that they need to address for the United States but accept the IV was approved for review so it was accepted and so it’s going after the timelines and now we are also awaiting an FDA inspection in batch Pulley Hyderabad for the same so the abatacept so far in the right direction and then of course we are working on the sub Q that will be submitted later and also will be launched later as we discussed in the past.
Bino Pathiparampil
So the IV is online for potential launch this calendar year
Erez Israeli
IV will be likely at the beginning of calendar 27 hopefully this fiscal only hopefully in this fiscal that’s the plan but of course we need to see the approval for that but right now that’s the plan.
Bino Pathiparampil
Got it. And do you expect denisumab in the US before that?
Erez Israeli
I don’t know. It depends on the ability of Alvotec to get a puma.
Bino Pathiparampil
Got it. Second on you said that you have wound down your car t related investments and and. And taken a write down. Could you just tell us a bit about what your investment was and why it failed in that area?
Erez Israeli
No, the investment give or take is what we MVN regarded it’s 150,
Mannam Venkata Narasimham
135
Erez Israeli
Cr that that’s what we took down. We saw that we have issues with the clinic and we decided to kind of deprioritize it at this stage and we. And we just impair it as a per appropriate accounting. But this is give or take what we invest in.
Bino Pathiparampil
Sorry, I got the figures but my question was more technical. Do you is it something wrong with the specific product you used or with the technology itself?
Erez Israeli
I’m not sure I understand the question. It’s what we invested in the clinical trials and getting the products. Yeah,
Bino Pathiparampil
The products. Okay, so your product doesn’t work but car t technology as such.
Erez Israeli
I don’t know what is the. The product is the carti. Sorry. So I. Yeah,
Bino Pathiparampil
No problem. Thank you. I’ll join back.
Erez Israeli
Okay,
Aishwarya Sitharam
Thank you. Bino. The next question is from the line of Surya Patra from Philip Capital. Surya, please go ahead.
Surya Patra
Thank you for this opportunity. So my first question is on the biosimilar business. So what is since it is the closure of the means the fourth quarter of the year and full year data is there so just wanted to have sense. What is the size of the biosimilar Right now and whether it is already a broken even or it is a loss making. If not then what are the timeline for the the breakeven for this business?
Mannam Venkata Narasimham
So overall our global biologic sales is about. It is not very high. This is above 100, 100 million sales. So at this sales certainly whatever investments we are doing for the development of avatacept other products Pembroke also we are with alotech. So definitely it’s not a break even once we launch about accept certainly I think post that I think suddenly we can see the breakeven
Surya Patra
FY29.
Mannam Venkata Narasimham
It is in certainly could be in like era said if our watershed, everything goes well, our inspection everything and we’ll be launching in calendar year 2020, 27. That would be like FY28.
Surya Patra
Okay. Okay. Second question was on the NRT2 thing here observation wise. So last two quarters, since last two quarters we have been seeing a strong growth. Last quarter it was 25 y growth. This quarter it is around 16%. So what is driving this growth and whether this is sustainable? One and secondly a fourth quarter. Is there any seasonality? Because last year also there was a kind of a sequential decline that we had witnessed for nrt.
Erez Israeli
So the NRT business is indeed growing more than we expected it to be. So we expect it to be kind of mid single digit is certainly more than that specifically for the 16%. So there is some impact of the fact that in the transition some customer take more stock. So it’s not fully let’s say in that respect sustainable. But I believe that the right place for it is either high single digit or even low double digit. We will be somewhere in this neighborhood.
Surya Patra
Okay, just last one point. What is your experience about the hemaglutide penetration here in India? Because generally it is understood that of the target patient population for weight loss application, let’s say the penetration is very low. It is around 2% or even less than 2%. So what is the trend that you are witnessing here in India in terms of the penetration of semaglutide?
Erez Israeli
Yeah, so I. I don’t recall exactly the market share but so far it’s a great launch.
Surya Patra
Okay,
Erez Israeli
So
Aishwarya Sitharam
We, I think our market share is about 10% more than 10% on a standalone basis.
Surya Patra
In that light, are we talking anything about the growth for the domestic business?
Erez Israeli
I believe that it, it will grow. Plus in the next coming days we will launch also the oral products. So the combination of both should be. Should give us a very healthy goal.
Surya Patra
Sure. Okay. Yeah. Thank you.
Aishwarya Sitharam
Thanks Surya. The next Question is from the line of Lavanya Tutala from UBS Lavanya. Please go ahead.
Unidentified Participant
Hello. Hope I’m audible. Thanks for the opportunity. It’s just one question from my side. So even after adjusting for SSA in US sales, sequential decline of 25% QQ despite having a limited drug limit in Q3 seems quite high. So am I missing something? Is there anything other which is one off here?
Mannam Venkata Narasimham
No, in Q3 we had a little numbered sales. Right. This little bit sales, yeah. Hence I think definitely from Q3 to Q4 there will be a natural decline.
Erez Israeli
So I don’t think I, I, we don’t see a pattern of a loss of market share or price erosion or anything like that. There is a, there could be that there were certain, you know, by buying patterns by some customer. But overall it’s very consistent the way we see it. So the, the primary difference between the quarters is Lena.
Mannam Venkata Narasimham
Yeah.
Unidentified Participant
Okay. So the one which is adjusted For SSA in Q4, one can consider this as base sales for us from here on. Is that right? Way to look at it.
Erez Israeli
Yeah. I will not come because I don’t know exactly the origin of the SSA specifically. But let’s say that if you look, there might be some customers that bought a little bit more as per their patterns of acquiring products in terms of dates and stuff like that. But overall, if you look at market share prices, this kind of stuff, it should be about the same.
Mannam Venkata Narasimham
And Also this is A1, we will be also going to new launches today. This is from the existing products and then going for rest of the year, we’ll be launching like a 27 new launches overall for the full year.
Unidentified Participant
Oh, got it, got it. Thank you. Thank you so much for the opportunity.
Aishwarya Sitharam
Thanks, Lavanya. The next question is from the line of Shayan Mukherjee from Nomura Shine. Please go ahead.
Shashank Krishnakumar
Hi, thanks for taking my question. So just one question on sema, if you can indicate when you expect approval in Brazil and what are the key market approvals that you’re looking at? And you know, you mentioned, I think 6 or 7 million units for this calendar year. What’s your expectation for the full fiscal year? FY27.
Erez Israeli
Yeah. So the, the additional markets besides of course, first of all, we are expecting to get approval also in Brazil. We have a partner in Brazil that is also there and he got also our comment. So we hope to get approval to our clone product that is there. And in parallel to that, of course we are seeing approval for our initial submissions. So we will be in Brazil probably. I don’t know if it will be three months delay or four months delay, but that’s still the expectations. In addition to that you have markets like Turkey and then you have a bunch of relatively high number of smaller markets that we have a partner that will probably serve like in Latin America or in southeast of Asia.
Because all together we are planning in this calendar to launch in more than 50 and in 12 months in more than 80. So in terms of number of markets but, but many of them we will do it with the partner that will do it for us. So between the, what we call the B2B in which we are selling to the partners or selling ourselves directly, we probably will be in a pace of 3 or 4 million pence per quarter. So if you add to that it will come to around 10 or 11, close to the 12 that we discussed last time, give or take one month.
So we are still in the same neighborhood but with a delay of the few months they took those approvals.
Shashank Krishnakumar
Understood. And there’s one question on U.S. Generics, I think if I heard you right, are you expecting 27 launches and you actually mentioned a few of those products, it looks like most of them are very competitive. Are there any chunky large product opportunity in the U.S. You know, outside of a BCEP that you expect in fiscal 27?
Erez Israeli
I believe that Botinib can be nice product and I agree with you about that. Most of them will be competitive. I fully agree with that. But overall it should give us a double digit growth without cleaner.
Shashank Krishnakumar
Okay, yeah, thank you.
Aishwarya Sitharam
The next question is from the line of Abdul Kadir Puranwala from ICICI Securities. Abdul, please go ahead. Abdul, you are unmuted now. Okay, in the interest of time we will move on to our next participant and we’ll come back to Abdul once he’s able to on mute. The next question is from the line of Vivek Agarwal from City. Vivek, please go ahead.
Unidentified Participant
Yeah, thanks. Thanks for the opportunity. So just want to understand out of this 3,4 million pence per quarter how much of this capacity that you are going to sell directly and how much of the sales you are expecting through partner, partners, etc if you can help us understand. Thank you. Population.
Erez Israeli
It’s if I need to guess and I must admit that I did not do any kind of calculations so top of my head I will say 50, 50, give or take in the neighborhood.
Unidentified Participant
Understood. So thanks. And one question on North America. If you look at in this quarter we have done close to 250 million dollar kind of revenues and it is again close to pre development levels. Right. So in the last three years we have launched many products but other US revenues haven’t moved up much. So is it fair to assume that there is a price erosion in some of the major baseline products in the US and how to look at overall profitability of the US business, Is it still lower than pre development levels or is it basically almost similar?
Thank you.
Erez Israeli
Yeah. So first obviously there was in this period of time there was price erosion and what it tells is that market share and new products give or take cover the. I see it as a kind of very low single digit growth and not flat. But. But in. I’m in agreement with you that that’s a. This market is not growing as the other markets that we have that are all going in double digit moving forward this year again without Lina, we will see double digit growth. And going forward the main growth in the United States will come from Biosimilars, Consumer Health as well as certain 505.
Over time the business will diversify itself but right now it’s a mostly generic product.
Unidentified Participant
Understood. So the double digit growth that you are highlighting for this year that includes SEMA in Canada. Right. So I’m just trying to understand how to look at only the usl. So what kind of the growth you are expecting in the US business? Exclaiming exclaimer this year?
Erez Israeli
Yes. So it’s eczema. It’s not with sema CMI is on top.
Unidentified Participant
Perfect. This is helpful. Thank you.
Aishwarya Sitharam
Thanks Vivek. The next question is from the line of Ashutosh Ja from Baliasney. Ashutosh, please go ahead.
Unidentified Participant
Hi, thank you for taking my question. I had two questions. Number one, so when you look at the next year I think you have given the breakup of the costs by line items but given that the base business business right now is at call it 1920 margin where do you see the overall margin for the business with SEMA etc in the next year and the year after versus our target of 25.
Erez Israeli
Yes. So we are planning to maintain the base without sema at around 20%. So this is the plan and then the. The SEMA is supposed to help us to get more than that. Now it’s obviously depends how much we will be able to sell in what price and what will be the mix? Because I shared already that it will be a range of price that can go let’s say between let’s say 30 or 25 to 30 all the way to 70. So obviously there will be a range of prices. But let’s say we see my should be closer to 25 but maybe a bit less.
Depends of how much SEMA we will sell.
Unidentified Participant
Understood. And sir, any thoughts on the number of pens that you can possibly sell in F28.
Erez Israeli
F128 potentially we will have a lot of capacity because we will be able to qualify in addition to the current cartridge suppliers that we have today, we will be able to qualify also capacity of FTO 11. So today. So it will. It can be any number. Let’s say it can be also 40 million or so. But right now I. I don’t see a demand for this. Hopefully.
Unidentified Participant
Thank you so much. Those are my questions.
Aishwarya Sitharam
Thank you. Ashutosh. The next question is from the line of Alok Dalal from Jeffries Alok. Please go ahead.
Unidentified Participant
Yeah, thank you. One quick clarification. It is on. On Semaglutide in Canada has. Has the innovator Novo already introduced an EEG in the market?
Erez Israeli
Sorry, can you repeat?
Unidentified Participant
Yeah, in. In Canada has Novo already introduced an EEG in the market.
Erez Israeli
So I know that they are offering. I don’t know if it was already sold. I don’t know unit. Personally I don’t have a knowledge for that. But we are assuming that they will have. That’s my assumption.
Unidentified Participant
All right, so in. In that scenario will it be a three player market and lead to 75% discount to the innovative product? Is that the way to think?
Erez Israeli
I don’t think so in that way because the market is divided to public, cash and private and what you’re discussing is absolutely public. So yeah, likely that this will happen to the. To the public eventually but I do see it as a mix of markets. So we are not planning right now our assumption based on the number that you mentioned.
Unidentified Participant
Okay, understood. Thank you so much.
Aishwarya Sitharam
Thanks. The next question is from the line of Vishal Manchanda from Systematics. Please go ahead. Vishal,
Unidentified Participant
Hi, good evening and thanks for the opportunity. Could you outline how much would you expect in annual biosimilar sales by FY29?
Erez Israeli
I wish I could. A broad number, a broad
Unidentified Participant
Guidance
Erez Israeli
Abroad. Hopefully, hopefully it will be in the range of half a billion. 600 million, 700 million. Sorry that it’s so that. But it’s very much depends of course of how a battle shift will perform. It will be the lion’s share of those sales.
Unidentified Participant
And would this have margins above company margins? Like can this be on a. At a. The entire biosimilar portfolio? Can IT give you 25% plus margins
Erez Israeli
In the case that there will be no competition or low competition. Absolutely. It will be above the average margin that we have.
Unidentified Participant
Right. And we are on track to file the subcutaneous version this year in Europe and us.
Erez Israeli
Yes, we are in the US for sure. In the Europe there might be some delay.
Unidentified Participant
Okay, okay. And just if you could give the split of sales between IV and subcutaneous in the US by value
Mannam Venkata Narasimham
It is, it is 5050 in US is, but whereas in Europe IV is very less and SC is high.
Unidentified Participant
Got it, Got
Mannam Venkata Narasimham
It.
Unidentified Participant
And your capex plans for the next two years? Annual Capex plan.
Mannam Venkata Narasimham
So next year would be in the range of 2000 crores. Around 2000 crores.
Unidentified Participant
Got it. Okay. And would this largely be on biosimilars or you have other areas?
Mannam Venkata Narasimham
So biosimilar, certain. Like a product specific investments I think are there and then general capex.
Unidentified Participant
Got it. Thank you. Thank you very much.
Aishwarya Sitharam
So in the interest of time, we’ll, we’ll take one last question from, from Siddharth Nagandi from cwc. Siddharth, please go ahead.
Unidentified Participant
Thank you for the. Hi, thank you for the opportunity. On biosimilars you had mentioned that your RD spends were reduced. Given that the spends toward abatacept have been completed, you know, going forward, given the draft US FDA guidelines, how do you expect your cost per molecule to behave? How do you see competitive intensity playing out? And given that you’re guiding for a lower R D spend, should we assume this is because of those draft FDA guidelines or is it because the new set of launches post batacept and denisumab will be much later and therefore the spends will be lower?
Yeah, that’s, that’s one question on semaglutide. Just wanted to get your perspective on how you see dosage forms playing out. Given that you’re also launching oral in India, do you see oral being unique to India or do you see that having a play in other emerging markets too? And you know, between the three dosage forms, how do you see the likely salience, say two, three years out?
Erez Israeli
Yeah. So on the other. Those were my two
Unidentified Participant
Questions.
Erez Israeli
Sure. So on the R and D naturally we battle set. We paid for a phase three trial and going forward we don’t anticipate phase three. So obviously the level of R and D in this area will not be the same. In addition to that, the products that will come in the next coming years in biologics for us will come primarily with partners unless that something that will come in house. So obviously then we share the R and D cost as part of that and number three, we are becoming more productive. One day we’ll discuss it.
But we, we love AI and we love this kind of stuff. And the overall the R and D will have less cost and more output. So this is on the R and D question, on the symmagra type question, definitely. We believe that the oral will grow not just in India, for sure in India, but also in other places. Depends of course on how people appreciate the compliance of the overall product. So as time will go by also the overall will have probably additional because that’s what the innovator is doing, additional forms and we will have all of them.
So there is a life cycle management that we are looking and obviously we are following as well. And we will launch the same as IP will allow us to do that.
Unidentified Participant
And any, any thoughts around? How do you see the salience between pens, vials and orals in emerging markets for semaglutide?
Erez Israeli
I believe that in a places that you know, in the emerging market you have countries in which there is a full use of the pens and the innovator fully launched the product in a place that it was done partially or and also markets that not at all. And obviously the price point for each one of the market is a bit different. In the places with the lower prices we believe that the overall will be more successful than the in the lucrative markets. At least the way we look at it now.
Unidentified Participant
Thank you.
Aishwarya Sitharam
Thanks Siddharth. That was the last question. Thank you for joining us today. We value your time and participation on the call. If you have any further questions or need additional information, please feel free to reach out to me. With that we conclude today’s earnings call. Thank you everyone. Have a good evening.