Emcure Pharmaceuticals Ltd (NSE: EMCURE) Q3 2025 Earnings Call dated Feb. 06, 2025
Corporate Participants:
Piyush Nahar — Executive Vice President, Corporate Strategy and Development
Satish Ramanlal Mehta — Chief Executive Officer and Managing Director
Tajuddin Sabir Shaikh — Chief Financial Officer
Samit Satish Mehta — Whole-time Director
Analysts:
Bharat Shah — Analyst
Kunal Randeria — Analyst
Alankar Garude — Analyst
Alok Dalal — Analyst
Gagan Thareja — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to MQ Pharmaceuticals Q3FY25 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing then 0 on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Piyush Nahar, EVP Corporate Strategy and Development. Thank you. And over to you sir.
Piyush Nahar — Executive Vice President, Corporate Strategy and Development
Thank you. Ruthaja. Good evening everyone. Earlier today we released our financials for the third quarter of fiscal 2025. Along with the press release, these are also posted on our website. We hope you all had the chance to review it. I would like to bring to everyone’s notice that this call is being recorded and the recording and transcript will be available on our website to discuss the company’s business performance and outlook. We have on the call our Group CEO Mr. Satish Mehta, CFO Mr. Sajuddin Sheikh, President Corporate Development Strategy and Finance, Mr. Vikas Thapar and Executive Director of Operations Mr. Samit Mehta.
Before we begin, I want to remind everyone about the safe harbor related to today’s investor call. Today’s discussion may include certain forward looking statements which must be reviewed in conjunction with the risks that our business faces that could cause our future results, performance or achievements to differ significantly from what is expressed or implied by such forward looking statements. At the end of the call, if any of your queries remain unanswered, please feel free to contact us at Investor Relations.
I will now request Mr. Satish Mehta to provide the opening remarks. Thanks. And over to you sir.
Satish Ramanlal Mehta — Chief Executive Officer and Managing Director
Thanks Piyush. Good evening all. It’s a pleasure to speak to you all today and present our third quarter 25 results update at the outset I would like to thank you all for joining the NQR family which has grown substantially post listing. Before listing we had 2025 equity holders and now you know the family is more than 140,000 and that puts enormous amount of responsibility on me as CEO and and all of us at NQR decisions maker are acutely conscious of our responsibility post lifting. We at NPURE have worked on five year plan to deliver industry leading growth and personally I’m very excited about this. This will be led by in house innovation. R and D is one of the major strength that we have. It will also be led by MNA and in licensing in this endeavor.
Today I will talk about what we are doing on Dharma as we go along and also tell you about our strategy as to what we intend doing in ophthalmology and other key products that we launching intend launching in near future. There are other areas we are working on which we’ll talk as we go forward. Just to get back to the results that we released today, I’m sure you guys had a chance to look at our results. Our 3Q revenue grew by 18% year on year and our adjusted PAT grew by 36% year on year.
Let me give you some key business updates for your consideration. Of course we will have question answer session Post my opening remarks. Let me start with international business which continues to do very well on the back of our differentiated portfolio. Our Canada business which I spoke last time about, the acquisition that we did of mantra last year in the month of November is now fully integrated and doing exceedingly well as shown in the results of North America in the emerging markets. The matter which previous us is the strong growth that we have seen and non ARV segment in EU as we guided earlier. The growth in the current year will be muted but as we go along for the next year is concerned I am sure that as far as EU is concerned that would also be back on track as far as the growth trajectory is concerned. As far as the international business is concerned, I expect the growth on the back of differentiated products and I would like to draw your attention to one key opportunity that is on the verge of getting completed in due course of time that is Liposomal Amphotericin B. We have filed a product across several of our target markets and we are now seeing approvals flow through. We are very positive on this opportunity. Incidentally I told you in the last meeting as well that the product has been approved in UK and is doing exceedingly well.
Now having spoken about the international business let me now turn my attention to domestic business which is very very close to my heart and it means a lot to all of us in the company. The domestic business in the quarter has grown by 12% and now I would like to draw attention on following. During the quarter we restructured our cardio diabetes portfolio by cross pollinating our Sanofi products. This is very important because one of the things that has happened that I want Sanofi guys more than 240 people joined us and they come with huge background with great connect with cardio diabetes. So to that extent my initial goal and strategy was to ensure that they get assimilated with the N cure culture and eventually we would like to make use of this highly talented respected field force to promote our products of high margin. So we saw some restructuring and pollination in the current quarter. And this will obviously have some impact because as you know, when the products are transferred from one division to another, it takes some time to get the traction. So we are going through that particular phase. Also. As far as acute is concerned, acute segment continues to have anemic growth, mutual growth for the industry.
Our objective in India, and as I told you in the beginning, this Indian market is very, very close to our heart, is to grow faster than the industry. If you look at the NQR success, it has been essentially driven by differentiated products. And my company has given lots of first launches to name chirality or iron preparations or even for that matter, tnk, TPA for both MI and stroke. And as far as for leukemia, to name a few. Very many products have been given to the country for the first time and they have made great success. Now some of the areas on which we are focusing, I would like to draw your attention.
I told you in the last meeting that we have started Dharma subsidiary under the name nqtix. Now it is fully operational. I spoke to you about Satya who was the chief executive of Galderma. He has now built up a team of 200 plus. And now all the new launches will start from FY26. This will include both in house and partner products because Sathya comes through with a lot of expertise and experience in global alliances. And I do expect in house and partner products going forward. As you all know, Dharma has a big market of $3.6 billion. Not necessarily conventional Dharma that we talk of, but at the same time we also talk about the cosmetology, the products geriatric and so forth and so on. So obviously we are very excited about about the Dharma. The other segment that we will take up in next few months is ophthalmology. And the reason being the in house product that is Bevacizumab for WAM ebitda, which will help us to enter in this particular market. And we have a patented device.
As far as Bevacizumab is concerned, currently we are going through phase three and in due course of time, as far as this particular product is concerned that we launched in the market. And if you look at the strategy that NPR has pursued, what we have done in every segment, we have an anchor brand on the back of that. We have launched very many products. And as far as Debussizumab is concerned, it should be the anchor brand. Tomato Florian Ophthalmology in due course of time, as and when it completes phase three and gets approved as you all know we are leaders in the Women Health. Before I say that, I spoke about dermatology and ophthalmology, and obviously, we’ll build on our strength, double down on our strength. And that is something which I would like to say in the Women Health segment. We are recently launched products in key important segments and spaces of pcos and pre and post menopausal support where we had some therapy gap that we are doing, you know, whatever needs to be done.
I spoke about for ophthalmology but at the same time on biosimilar lot of other work is going on. We are on the verge of getting recombinant Asperger’s cleared by the office of dcgi. It should happen in next six months time because we have completed most of the studies and this product is very important because currently the asparaginase we are getting is from natural source. And this recombinant will be a major breakthrough because it will give a product of absolutely outstanding quality.
Finally, as I have been telling all along, ours is one company which is very strong in both biologics and chemistry. So obviously we are also working on GLP1 and I am very confident that we will be in the first wave of semaglutide launches in India and the product will be vertically integrated because we are working on whatever needs to be done. And apart from that, as I told you last time, we already have a facility which is approved by EU for filling the product and also tablets as and when we launch. And while I’m talking about the domestic market where we are taking a lot of initiative in terms of entry Dharma making it big, then apart from that Sanofi initiative and making our position stronger in the field of cardio diabetes, then having plans to go in for ophthalmology in due course of time and even as far as oncology is concerned, where we have a reasonably good position to strengthen that portfolio by giving some biologics as we go along, we will do that. But at the same time we are also extremely mindful about the productivity of my field force on which we are receiving attention.
I am very sure with these new initiatives and new launches, we will be accelerating our organic growth momentum and also improve our margins. I have been in the industry for more than 40 years. As you all know, I am the founder member of this company. Yes, we are doing exceedingly well in the international market. But for me the main objective is to put the domestic, domestic market on track and we need to grow, you know, more than the industry growth. And that is my very, very immediate goal and objective for which, you know, I’m giving my undiluted attention to ensure, you know, that the domestic growth also picks up in next few months.
With this, you know, I would now request, you know, my CFO Tajuddin to give you more details on financials and after that we will more than happy to feed any questions that you may have. Thank you very much for patient hearing.
Tajuddin Sabir Shaikh — Chief Financial Officer
Good evening everyone. I will provide you some of the key financial before we open for Q and A. Our revenue from operations for Q3 grew by 18% year over year to 1963 crores. Our domestic business grew by 12% year over year to 888 crores. Our international markets grew at 23% to 1075 crores led by our non ARV business to emerging markets and the Canadian markets. Canada grew 34% to 352 crores in quarter three. As you are aware Mantra business was consolidated from November 23rd. Base business continues to do well and for the nine months has grown at mid teens. Emerging market sales for quarter three saw very strong growth of 40% to 365 crores. Led by growth in both non ARV and ARV segments. Europe grew 2% to 358 crores for quarter three.
Coming to gross margins. Gross margins for the quarter stood at 60.1% against 62.7% in quarter three of 24. This decline is due to business mix. Sanofi business is at lower margins. The base business GC are stable year over year. Our our EBITDA without other income grew 23% year over year to 362 crores. EBITDA margin stood at 18.4%. The margins are up. ROI led by operating leverage and better productivity. Depreciation and amortization expenses increased to 97 crores from 84 crores year over year. Due to the Mansa acquisition and other and operationalization of four new plants. Qoq depreciation is flat. Our interest cost for the quarter was at 32 crores led by reduction in our borrowings. Our effective tax rate for 3Q was at 32%. This is higher due to the one time adjustment of 15 crores. X of this the tax rate stood at 26% adjusted PAT before the one time tax impact stood at 171 crores. A growth of 43%. Reported pack stood at 156 crores. Our net debt at the quarter end stood at 600 crores down from 705 crores in quarter two. Our working capital days remain stable at 96 days.
We will now begin with the Q and A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press time Star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants who wishes to ask a question may press star and one now the next question is from the line of Bharat Shah from Ask Investment Managers. Please go ahead.
Bharat Shah
Hi. Two or three questions. You in the initial remarks mentioned that MQR is likely to be the first one to launch semaglutide in India. But I heard the similar point being made by Aries Life Science two days back. You also talked about the strongest or the largest portfolio in the women healthcare, but I thought that that number probably belonged to the mankind. So I’m bit confused about both of those.
Samit Satish Mehta
So this is sameth. I’ll take your question on semaglutide. So as you’re aware Semaglutide, the loss of exclusivity is in March of 2026 for India and we expect there would be quite a few approvals and we will be one among them is the endeavor that we are making. So it’s not that we will be first to market, we will be in the first wave of entrance that will be able to enter at the loss of exclusivity
Bharat Shah
And women healthcare portfolio.
Satish Ramanlal Mehta
Yeah, I think you are correct that mankind, particularly post acquisition of the Bharat Serum portfolio in absolute magnitude would be larger. I think we were basically highlighting that historically we’ve always enjoyed a leading position in women’s healthcare.
Bharat Shah
Yeah, that clarifies. Secondly, you also mentioned that margins would improve going ahead. But when I look at the margins they are so modest that they only can go up. They are so much below the industry margins that or rather than industry margin, let me put it comparable model firms operating in this area. So margins in any cases about 18% are quite underwhelming and therefore would be curious to understand what kind of long term trajectory you think these margins can be.
Satish Ramanlal Mehta
Sure. So I think when you look at our margins it’s important to look at kind of the current mix of the business, which is obviously a mix of roughly half of the business being a domestic business, which includes both fairly. Strong chronic as well as an acute segment. So obviously you know what typical industry margins in those segments are and we believe that we are more or less in line with that blended average of industry margins for the domestic portfolio. At the same time we took on a significant portfolio of products for the diabetic cardiac range of Sanofi, which obviously comes at a different margin profile as we had indicated in the past that as we unlock some synergies and our CEO mentioned some of the restructuring efforts that we undertook even in the current quarter, we think that the blended margins of the India business will definitely improve as we see higher productivity and some of the near term exciting launches over the next 12 months. In the Indian context as well, we also have roughly half the business on the international side where some portion of that business does include the ARV segment where the margins tend to be more like mid teens profile. So one has to look at the blend of the overall international business. And then of course there are certain new areas that we are investing in. So for example, our new subsidiary and QTIX for the Derma division is a brand new initiative. We’ve already hired 200 team, will be launching several products over the next few months. And so that division for example will take some time to ramp up and get to what we would consider decent margins. And finally, as we had highlighted in the past, 4 of our facilities were recently operationalized over the last 18 months. And so those obviously as they continue to ramp will further lead to some operating efficiency. So it’s really a blend of all of these aspects where we believe the margin profile will continue to improve going forward.
Bharat Shah
So if I look at let’s say next three to four years, would you like to have some benchmark or an idea as to where you think you belong and where the margins would reside eventually?
Satish Ramanlal Mehta
See I think looking at our own, you know, trajectory of where we think the different verticals are going to ramp, we believe that we should definitely be Getting about a 300 to 400 basis point improvement in the margin profile over that time horizon. That’ll be the endeavor.
Bharat Shah
Okay, one last bit. There was probably, I could not hear it clearly. There was a mention that reported pay profit after tax is 156, but the adjusted one is 171. I, if I heard it right, I wanted to understand what was that they just went all about.
Tajuddin Sabir Shaikh
So it’s a triaped tax start which has been tagged to the P and L in the. This quarter with respect to the prior years.
Satish Ramanlal Mehta
This was a 15 crore one time tax charge relating to a prior period.
Bharat Shah
Okay, fine, that helps. Thank you.
Operator
Thank you. The next question is from the line of Kunal Dunderia from Axis Capital. Please go ahead.
Kunal Randeria
Good evening. I hope I’m audible. The first question is a domestic business, so can you share what is your organic growth excluding the Sanofi portfolio and how much of the impact is there of the FCM issues that you had?
Satish Ramanlal Mehta
So if I look at the organic x FCM we have grown at about 4% and FCM would have impacted the reported growth by about 3 odd percent.
Kunal Randeria
Right. So your growth should be organic growth around 7%. Is that my, is that my understanding correct?
Satish Ramanlal Mehta
4%. Organic XSTM is 4%.
Kunal Randeria
All right, got it, got it. That was helpful. Secondly, I think ISRA mentioned that you’re pouring into ophthalmology and mentioned that you are going to get AMD as one of the indications. So just wondering whether you’ll be targeting these niche areas or your portfolio would be a lot more broad based.
Satish Ramanlal Mehta
Yeah, so you know in ophthalmology the entry would be through this product bevacizumab and within that this wet AMD indication we see as a reasonably sizable opportunity post that also there are two or three more indications for bevacizumab itself within the ophthalmology that we will be pursuing. And in addition to that we will also build our portfolio. Given that MPUR has inherent strength in sterile products and most of the ophthalmology products are also sterile in nature, it’s going to be fairly straightforward for us to build a portfolio around it. So between bevacizumab, some of this portfolio and where we are also looking at some active and licensing opportunities within the entire basket for ophthalmology should be pretty robust.
Kunal Randeria
But if that is not used for ophthalmology in India, I’m not sure because globally I don’t think there’s any acceptance versus not conducted trials for it.
Satish Ramanlal Mehta
So globally bevacizumab for wet AMV is already approved in UK and it is globally used off label rampantly for wet amv. In fact in a few countries it has already been, you know, added in the essential list for the ophthalmology indication. What we are doing in India through this clinical trial is get it on label but also through our patent delivery and device system, create some IP around it which will have much better patient compliance as well as ease of use for the healthcare practitioners.
Kunal Randeria
All right, and just second, follow up on this only. Are there other players who already have VS MAP approval in India marketing for this indication or is it just oncology for them?
Satish Ramanlal Mehta
No, no one, no one has this indication approved on label. However, anecdotally we are aware that, you know, some of the bevacizumab products that are approved in India are getting used off label for this indication. However, given the nature of the product and the fact that it is not ophthalmic grade, there have been many serious side effects including losing vision and eyesight that have been reported in the press.
Kunal Randeria
Right, got it. And this last one if I can, regarding NQTIX, just as wondering since you’ve already had 200 people on board now, what kind of portfolio do you intend to commercialize? I mean, is it medical derma or would it be osmoderma? So if you can share a bit more details.
Satish Ramanlal Mehta
So we already have a portfolio of the prescription derma products. We are supplementing that with a few cosmeceuticals as well, cosmetology products. And the idea also is eventually in the medium term target a few OTC brands as well. So it will be a pretty comprehensive portfolio. And again, as is MCUR’s standard way of looking at a market, a lot of the product portfolio will be differentiated. So some of the areas like geriatric dermatology, which has not fully been exploited or is somewhat of an unmet need and cure, will create some niche products there as well. And there is also going to be active in licensing that will happen for this portfolio.
Kunal Randeria
Would you then also be then just you know, like division, would you also be doing maps for let’s say psoriasis or these kind of integrations,
Satish Ramanlal Mehta
Maps for Derma or ophthal?
Kunal Randeria
So just as you have will you also do for Derma psoriasis for example.
Satish Ramanlal Mehta
So you know they are not immediately in our in house portfolio. But you are right, there are a few MABs approved especially for indications like atopic dermatitis and psoriasis. And we are talking to a few innovator companies to evaluate if we could partner with them for specifically these products in India.
Kunal Randeria
Understood, that’s very helpful. Thank you. And all the best. Thank you.
Operator
Thank you. Participants who wishes to ask a question may press star and one. Now the next question is from the line of Alanka Garude from Kotak and Institutional equities. Please go ahead.
Alankar Garude
Hi. Thank you for the opportunity, sir. You identified cardiac as a key focus area and especially with the Sanofi portfolio coming in, we would have imagined that. I mean the numbers look better, but if you look at secondary sales data, growth clearly doesn’t seem to be very strong. You spoke about that restructuring earlier, but is there any other challenge you might want to highlight on the cardiac side?
Piyush Nahar
So I think Satish implied in this quarter because we did this restructuring. Right. So the idea for Sanofi for the first six months was to stabilize the business because we’re transitioning to a new company, stabilize the team. This quarter is when we actually started working on getting synergy benefits out of there. Now, as you can imagine, moving around products across division, there was a bit of impact that we had on the sales for the current quarter. That is where you’re seeing an impact on the secondary South. I think they are quite positive as now the team is. Products are stabilized in their new divisions and all. You will see a lot of cross sales, cross co prescriptions coming through and that should see an update going forward.
Alankar Garude
But piyush, I mean not just for say this quarter or maybe the last few quarters. Right. I think in general, if I look at growth in the cardiac segment for us, as reported by qia, the numbers have not been at par with what the therapy growth has been. So just trying to understand, I mean there was a senior leadership change as well a couple of years back on the chronic side. So any steps you might want to highlight even before say Sanofi came in, any impact of that coming in addition of Mrs. As well, any other changes which should help give us more confidence on the growth trajectory in cardiac going forward.
Piyush Nahar
So I think there’s one. In terms of the IQA and aicd, our tracking has been a bit lower than what we tracked looked at internally. I think we discussed this earlier also before this quarter we were tracking closer to 10% out in the cardiac segment that this quarter has been slowed down out there. I think in terms of the measures and all, there’s been a lot of work which has gone off in terms of Dr. Lissa improving out how we promote our products. A lot of work on scientific detailing. As you said, there’s been a lot of team building exercises which have done. There’s a full new team on the cardiac segment which is now driving that, including some of which have come up from the MNC side. So there are multiple initiatives that we have taken out there.
Alankar Garude
Understood. And this impact of restructuring which you spoke about is likely to normalize from the fourth quarter, or it could continue for some time before it normalizes completely.
Piyush Nahar
I think we should start seeing some improvement from fourth quarter onwards. So it may not be fully getting utilized, but it should improve up. Versus what we have seen in this current quarter, you will see an upward trajectory there.
Alankar Garude
Understood. The second question is Satish Bhai, you were alluding to the in licensing initiatives in the previous call as well and you spoke about it earlier as well. Now which are the key therapeutic areas of focus for us and maybe a sub question there is given. Many companies are actively looking at in licensing opportunities. What are the IRR thresholds we are working with?
Satish Ramanlal Mehta
As far as the therapeutic areas are concerned? I think oncology, nephrology and metabolic flow. These are the three areas and obviously supposedly derma or epidemiology in which we are making some foray. So these are the areas we are looking at. If you recollect last time also I told you that as far as I am concerned I have grown because of the support of multinationals. We are in poor position, number of discussions are in advanced stage so I’m not in a position to disclose. But these are the things which should happen in due course of time. So these are the areas on which I am focusing to reiterate Oncology, nephrology, metabolics, cardio and so that’s what we are doing. Very focused.
Samit Satish Mehta
And in terms of payback and all right. I think even if you look at with Sanofi, I think the idea is where we can get the brand, synergize them with a team and have a both in terms of our products and growing those products. Right. So if you look at Sanuki, there wasn’t an upfront payment that we made out there. So I think there will be quite conscious of where it fits out strategically well for us. Where I think the payback becomes what and where we take a lot more closer look is if you’re looking for very innovative products which you want to get first time to the market.
Satish Ramanlal Mehta
I mean just to give you an example, you know, as Samit mentioned sometime back, you know we also are thinking of being in the first wave of Semaduti, so having a competent field force with metabolic that would be a great advantage going forward for doing the scientific detailing. So to that extent this cross pollination about which I spoke. So these type of products are even for that matter our product like Edaxim which we launched few years back for mi. That particular product is also being given to this particular team because I believe they will be in a position to do a better scientific detailing to the doctors. So lots of initiatives are being taken and as I said in my opening remarks, this is very important to me. So personal attention is being given. So as Piyush rightly said we should see some positive this one result in Q4, but definitely 1Q25 for sure.
Alankar Garude
Understood, sir. That’s helpful. And maybe one question before I come back is can you elaborate on the utilization levels across the four new facilities, Unesanan, Mesana and Kadu?
Samit Satish Mehta
So Pune is now, Pune has been largely now at peak utilization and that has been even last year. That’s what led us to setting up our kadu and mesana plants. Coming, coming specifically to those plants. Sanan is now closer to about 60, 60 odd percent utilization. That will be at the oncology is still in early stages because there we are still ramping up the, the filings are still coming through in terms of kadu that is now getting more closer to break even. I think by end of the fiscal year that should be at breakeven levels there. Mesana, there are two lines there. We have an injectable block and the orals. The orals is now again at 50% clutch utilized. Injectables still I think will take probably another 12, 18 months before we get to optimal utilization.
Alankar Garude
Understood, thank you.
Operator
Thank you. Anyone who wishes to ask a question may press star and one. Now the next question is from the line of Alok Dalal from Jeffries India Private Limited. Please go ahead.
Alok Dalal
Yes, thank you. Good evening everyone. The first question is on the guidance. So in August the company had given a guidance of achieving 20% revenue growth and margin in the 20 to 21% range. Are you on track to achieve that for the full year?
Samit Satish Mehta
So I think given the domestic has been a bit slower, I think on the top line side will be probably closer to about 18 to 19%. On the margins front I think we’re guided for 20% including the other income. I think what will end up is without the other income, closer to about 19%. 18 and a half to 19% without the other income.
Alok Dalal
18 and a half, 19 without other income,
Samit Satish Mehta
Without another income.
Alok Dalal
Okay. And piyush for the nine month, what is the contribution of ERV sales to the company?
Piyush Nahar
Give me one second. Nine months would have been roughly about, for roughly half of our emerging sales would have been the ARV
Alok Dalal
Half of emerging.
Piyush Nahar
Yeah.
Alok Dalal
Okay. And at the start you mentioned that emerging market growth is being driven by non ERV product segment. So which are those product categories and markets where the growth is coming?
Piyush Nahar
So non arv if you look at it, we are present across four key areas, right? In Latam is a big market for us. Second is the MENA region and third is the Asia which is more than neighboring countries like Sri Lanka, Mauritius, Philippines, Myanmar and all. In terms of the product portfolio, I think it’s the more differentiated product. Chiral products, some of our biologics, the complex injectables, those are the ones and this differentiate portfolio is what is leading to this growth out there. So especially some of our biologics we are now seeing approvals coming through in key market that is driving that out. Even some of our more injectable pipeline including Amphotericin which has started getting approvals now in some of the markets out.
Satish Ramanlal Mehta
I mean just to add to what my colleague has said as far as the business in emerging markets is concerned as the function of approvals. So the company had taken a very conscious deliberate decision to file differentiated products and whatever we have filed 18, 24 months back now we are getting the traction. So that’s the reason you are seeing that uptick as far as the market is concerned emerging. And as I told in my opening remarks through me at nqr, we are very optimistic about Mpoter Hindi and which is getting traction in countries. We are getting virtually one or two approvals every month.
Alok Dalal
Got it. And Satishpa you mentioned current year for Europe will be muted. Should we expect a pickup in FY26 towards the high single digit growth mark?
Satish Ramanlal Mehta
Yeah, that’s correct.
Piyush Nahar
So I think Alok, as we mentioned the key products we were expecting approvals, those have been more back ended and so those we’re expecting start of the fiscal year 26 so that should drive the growth going forward.
Alok Dalal
Okay. And last question is on semaglutide launch in India in 2026. So assuming few companies launch at the same time, what will be the edge for MQR amongst all the competitors?
Samit Satish Mehta
Couple of things I think the fact that you know there’s a large degree of vertical integration that’s something that should help us. And the other thing also is that like was mentioned earlier, the fact that we have a very trained field force in the metabolics area is something that should help us to get a head start for this product.
Satish Ramanlal Mehta
I mean one more thing I will tell you. Typically what happens is that some of the manufacturers who get the approval they are inclined to give it to five, six people at a time and they keep on competing with each other. So it’s my belief for products of Simon Glutidex, if you want to stay in the market and do a good job in that case you must have complete control of the supply chain. So that’s one area we are vertically integrated whether it is API or for that the injectable tablets that we’ve been making and as Samik rightly mentioned, it will be in the hands of highly competent trained people. So that’s the reason we are pretty bullish about it. And the market is huge. So I think you know there are good scope going forward.
Alok Dalal
And Satish bhai, any plans to take semaglutide overseas, Any markets being targeted? Get it?
Satish Ramanlal Mehta
Yes. Again we look at it in two phases. So one is some of the nearby markets, you know, where of the clinical trials that we’re doing for India, you know, where the acceptance is there, those will be in phase one. And then it will also be, you know, for some of the more regulated markets, an entire different strategy that will be required which we are pursuing in parallel. So they will kind of be a phase two approach in some of those other more regulated markets.
Alok Dalal
Okay, in general, how big can this opportunity be? India plus International combined for MQ or rough ballpark. What are you guys thinking?
Satish Ramanlal Mehta
Anyone’s guess?
Tajuddin Sabir Shaikh
Yeah, it’s a very difficult number to put because you know, in India the products not really being officially available and the supplies have been so limited. So you know, at present the numbers look very small. But you know, given there could be a situation of unconstrained supply, it will also require some element of market shaping. So you know, it could turn out to be a very large.
Satish Ramanlal Mehta
I’ll just tell you that I regularly subscribe to Economists and sometime back Sema, look at it on the front page and the number one product in the world right now is Katruda of Merck Sharp. It does around 37 or 38 billion and economists are predicting a sale of something like you know, $100 billion, you know, for this particular product or this. And anyone’s guess, I don’t have a crystal ball but based on whatever you are doing and even for that matter the various indications for which Sema Butide is getting the approval, sometime back I read you it also got approval for chronic kidney, diabetic, diabetic even for that matter, heart ailments. And it also works. So I think you know, anyone’s guess, only thing that we can say, you know, appears underline the word appears to be a path breaking molecule and should have huge potential. So no wonder many people are chasing and we are one of them. And we are probably better placed because you know, we have complete control on the entire value chain.
Alok Dalal
Got it? Okay. Okay, thank you. Satish bhai, thank you for taking my question.
Operator
Thank you. The next question is from the line of Gagan Tareja from ASK investment managers. Please go ahead.
Gagan Thareja
Yeah, good evening. I hope I’m audible.
Satish Ramanlal Mehta
Yeah.
Gagan Thareja
Yeah. So the first question is around you know the brand which saw patent expiration. I think Orofer fcm. Yeah, you indicated the impact on the quarter sales was 3% because of the expiration. Can you also quote the same figure for nine months?
Satish Ramanlal Mehta
Give me one second. Nine months would have been about closer to 5%.
Gagan Thareja
You’re saying that. I mean, in the reported numbers there’s a 5% impact year to date of this one brand alone, which has brought down your sales. Yeah, for the domestic and the base business for the quarter grew by 4% excluding this one. And for nine months, how much would the base business have grown? Hexo, Sanofi and.
Samit Satish Mehta
About six and a half.
Satish Ramanlal Mehta
Six and a half percent. Six to seven percent range.
Gagan Thareja
Six to seven percent. Okay, so so essentially, I mean, for, for the year, the incremental sales is all Sanofi linked. I mean if I, if I do the math, roughly 6 1/2 netted off from 511 1/2% growth on your base business. And. And the rest coming from Sanofi?
Samit Satish Mehta
No, I think just to clarify, we’re seeing our base business ex FCM is growing 6.5% year to date would have been higher by another 5% if not for FCM. And of course Sanofi for part year adds to. Trish, I don’t know if you want me to just throw this first.
Satish Ramanlal Mehta
Yeah, so if I look at organic, including HPM and all our growth would have been closer to about 1 to 2%. Yeah, six and a half percent.
Gagan Thareja
All right. All right. So I mean, given that this has been, you know, an unusually weak year for acute, I mean, it’s a departure from the past growth in the acute segment. But is it reasonable to assume that this is the new normal in acute or do you feel that, you know, and come next year we might see a recovery in the market itself and how should then again, we think of MQR’s portfolio in the domestic market from a growth perspective next.
Piyush Nahar
So I’ll start up and then Satish can add us more. So I think acute this year has been a big piece of our view is that we should see some pickup going forward next year. And I think for us internally, what we’re working on is that is where some of the new initiatives and the product pipelines that we are working on to drive all the new growth. Right. So what we have done from derma side or the optal launches or even expanding out our white spaces in the women’s health or even the diabetes side and oncology side to give us drive better industry growth going forward. So that is going to be the target for us.
Satish Ramanlal Mehta
Our strategy will be that as far as the segments in which we are present, we would like to have growth which is in line with industry, maybe, you know, 50, 100 basis point more than the industry. But at the same time, you know, to grow more. We will be focusing on the areas which. Dharma, I am bullish about it. Ophthalmology or even for that going forward, oncology will hear a lot of things from our end. So that’s the way we will go about. So basically, you know, whatever base business we have has growth, which is in management industry, that needs to be fixed up. That is something I told you in my initial remark. And apart from that focus on ophthalmology, dermatology and double down on, say, your oncology, that would be the strategy that my company would be pursuing by which we’ll be having growth which is better than the industry average. And as far as equity is concerned, anyone’s guess. I agree with Piyush. Things should happen. But at the same time, if you look at the trends, generic generic is possibly making inroads in acute because shifting to generic generic in acute because the treatment is typically for five, six, seven days is possibly going to happen. Whereas chronic, once people are on a particular medication, they are reluctant or hesitant to change. This is my personal observation. I don’t have any data to substantiate this, but that’s the trend, you know, that I have been watching, you know, from a distance.
Gagan Thareja
Is it also possible to, you know, bifurcate your domestic sales to your subsidiary divisions, also in Genova and the other one, which is in acute and your own portfolio?
Samit Satish Mehta
So you’re asking for the bifurcation of domestic between Genoa, Zovantas. No.
Gagan Thareja
Yes. Yes. Genova, Zuventus and MQR separately.
Samit Satish Mehta
I don’t think we’re breaking that out because there’s a lot of distinct. So annually, when you have the annual numbers, you’ll have that. But I think there’s a lot of interlinkages that we have in there.
Gagan Thareja
So I mean, I mean, if it’s difficult to enumerate, at least qualitatively or rank order wise, is it possible to give some flavor or some idea of how, you know, growth would have been for the three of them?
Samit Satish Mehta
So I think if I look at it. So a lot of the Genova. So if you look at it for us, Zuventus is largely an acute portfolio. Most of the semi, chronic and chronic is in the MQO side. So the MTOL is better out versus the Joventis side. The Genova portfolio gets mixed out. Where it fits in.
Gagan Thareja
Then for the Sanofi basket, how is the sales accounted for? Do you net off, you know, what you have to pay in terms of sourcing cost to Sanofi and then report the sales, or do you report the sales at ASP and then net out everything else in the cost?
Samit Satish Mehta
Yeah. So basically the net sales is booked in our sales, and then whatever we buy the product from Sanofi at that comes as your cogs level.
Gagan Thareja
Okay. And sequentially, why has the gross margins come down further from 2Q to 3Q?
Samit Satish Mehta
2Q 3Q is largely a mix driven between one is the international versus domestic and between the product itself in the international segment.
Gagan Thareja
And if I go back to your Q2 commentary, I think there was an indication that margins would sequentially keep improving. But from 2Q to 3Q there’s a drop. How should we, I mean, how should we think of Q4 and thereafter starting from here?
Samit Satish Mehta
So, yeah, I think for the current quarter they were slightly lower, largely because domestic, as we said, was a bit neutral out there. So that led to the decline that you are seeing. I think going forward we should see some improvement in the margin going forward. But I said I think for the full year we’ll end between that 18 and a half to 19%.
Gagan Thareja
Okay. I would presume that’s bringing it down a notch from where you had originally pegged it. Would that be a fair assessment?
Samit Satish Mehta
That’s right. I think what we had indicated earlier was including the other income, about 20%, which would have been closer to about 19%, is slightly lower. Eighteen and a half to 19 is what we’re not talking about.
Gagan Thareja
And other income has also come down very sharply in the quarter. Any reason for that?
Samit Satish Mehta
So that’s largely because there’s a forex loss about 7 crore, which is there, which is impacting out.
Satish Ramanlal Mehta
And last quarter there was a sale of an asset which showed the other income.
Gagan Thareja
Okay, okay. All right. And on semaglutide, since you are very strong in Canada and you know, Semaglutide goes off patent in the Canadian market also, you know, just about at the time, if I understand it correctly, broadly around the time it goes off in India, would you be there in the Canadian market? Semaglutide,
Satish Ramanlal Mehta
We’re definitely going to be filing our product in the Canadian market. But at this time, the way the timelines are looking at is likely that we will make it in the first wave. It’ll probably be in the second wave once some of the other patterns have also expired.
Gagan Thareja
That would be how further out from the first thing?
Satish Ramanlal Mehta
I would expect anywhere between eight to 12 months.
Gagan Thareja
All right. All right. And semaglutide, I mean, while, you know, there’s this talk about this being such a large market, once it, you know, once generic entry is there, I’m presuming there’ll be price erosion. And fairly steep price corrosion because it’s a product where everyone is very interested to get in. Given that circumstance and given also the circumstance that from a pricing perspective it may, you know, it may not suit the wallet of a fairly large chunk of the Indian population, how do you think of the uptake of Semaglutide? And third obvious point is that, you know, the innovators are also now talking of preempting generic entry and coming in, you know, with their own product in the market sooner. So between all of these three, how do you see this market, you know, unfolding over its launch in India?
Samit Satish Mehta
Sure. So today the price expectation is not really set right. Because the product is though approved in India, has never been made available. And I’m speaking specifically of the two injectable products. So in that context, I think the price will be determined by the players. It should also be said that the API is quite complex. So while there could be many brands, but in terms of number of companies making, and especially like mqr, being vertically integrated are likely to be limited. So there we should be able to have a COGS advantage. We actually see the entry or the availability by the innovators as very positive because A it will also set a price expectation, but B Innovator will be able to shape and create a much larger market. And also, you know, since we’re getting so many additional indications approved, the total market size in India should grow larger. And at the end of the day, like we said a couple of times early as well, if you have the right trained field force with the doctor Connects already present, you will have a head start. So I think across these three or four parameters, MQR is quite well positioned to have a reason to win.
Gagan Thareja
Final two questions from my side. One is, are you backward integrated on Semaglutide? Will you be doing your own API in this? And second is can you also give the PCPM for the third quarter and also, you know, compare it QoQ and YOY
Samit Satish Mehta
So semaglutide we will be vertically integrated. In fact, the API has already developed an R and D and we have given the samples to our formulation team for the development as well.
Piyush Nahar
On the ECPM for the quarter we were at about 6.1.
Gagan Thareja
And on 2Q what I think the number was closer to 6.5, 6.6 if I remember it correctly.
Samit Satish Mehta
Yes.
Gagan Thareja
All right, thanks. Thanks for taking my questions. Thank you.
Satish Ramanlal Mehta
Thank you.
Operator
Thank you. The next question is from the line of Alankar Garude from Kotak Institutional Equities. Please go ahead.
Alankar Garude
Sir, firstly, do we have a hundred percent stake in the Dharma subsidiary?
Satish Ramanlal Mehta
Yes. Yes.
Alankar Garude
Okay. So we are not given any equity to the management team? The new management team,
Satish Ramanlal Mehta
No.
Alankar Garude
Okay. Secondly, can you provide the broad breakup of the 65 $70 million annual ARV sales which we’ll be doing broadly in FY25 across various agencies.
Satish Ramanlal Mehta
So I think it’s mostly going to be the South Africa business.
Samit Satish Mehta
And just to answer your question, no, because I know from where you are coming, Ankara, the dependence on perform is very, very limited. Couple of million dollars. So there is no dependence on the pesf. So that extent, you know, I think that business is not really going to be affected by whatever decisions through the Trump administration is taking. But at the same time I’m sure you must have read that this grant has been restored as soon as hi concerned that also you must have read but our dependence is practically negligible. You know.
Alankar Garude
Understood sir, that’s helpful. And maybe a final one. You spoke about the FHIR plan involving R D MNA in licensing. So possible to elaborate a bit on this. What does this entail? Is this specific to India or exports? Also is a big part of this five year plan.
Samit Satish Mehta
So I think what Satish highlighted is that we are looking at a more five year corporate level plan which includes both India and international. As you have earlier said, I think for us the focus more from an M and a perspective, especially a large ticket, is going to be India. And similarly in licensing, I think India remains open. I think on international we already do a lot of licensing work, especially in Canada and UK markets where we have quite a strong presence. But where you’re looking at more big ticket items, it’s going to be India.
Alankar Garude
Okay. And anything you want to highlight on R D, I mean currently we would be spending say about 10, $15 million on biologics biosimilars R and D if I’m not mistaken. So any plans to increase spends on biologics biosimilars going forward or any other differentiating areas within R and D which you would like to highlight.
Satish Ramanlal Mehta
So our RND spend is around that 4 to 5% and I think even going forward that is what we look at. And this includes the spend which we are doing on biologics, even some of the differentiated products and all because if you look at it, given the type of business RnD, ideally if you look at PSA it’s lower but the type of work that we do, it leads to about 4 to 5%. And that’s what we like to maintain it.
Alankar Garude
Fair enough. That’s it from my side. Thank you.
Operator
Thank you. The next question is from the line of Bharat Shah from Ask Investment Managers. Please go ahead.
Bharat Shah
I just wanted to understand the debt and cash levels.
Tajuddin Sabir Shaikh
Debt is close to 600 crores today. Net debt no cost is 800 and 200 is cash and then debt is 600.
Bharat Shah
And when do we think we’ll become or likely to become free of debt?
Satish Ramanlal Mehta
So outside of any sort of MA et cetera, we think that probably within the next couple of quarters there should be enough free cash flow generation to pare downward of cash next 2 to 3/4 max.
Bharat Shah
By March 26th are we likely to be cleared of all the debt? Is that what you’re seeing?
Satish Ramanlal Mehta
Yeah. From internal cash flow generation? Yes. To the extent that there’s any sort of M and A opportunity obviously that number could change
Bharat Shah
Subject to MNA or any other such action. Other than that the we should be net cash balance sheet is on March 26th.
Satish Ramanlal Mehta
Yes, yes, yes.
Bharat Shah
Okay, thank you.
Operator
Thank you.
Piyush Nahar
No more question. We can end the call now.
Operator
So we have one question in the queue.
Satish Ramanlal Mehta
Okay, we can take one last question.
Operator
Yes, this is from Gagan Tareja from Ask Investment. Please go ahead.
Gagan Thareja
Yes, thanks for the follow up. One question on Canada. While you know this year the number will look strong because of the acquisition. Is it possible to give some idea of how the lycon like growth in Canada would have been in the quarter? And how should we think of you know, this geography row and Europe come FY26 and also if you could talk a little on tenective pace, how do you see that product evolving?
Satish Ramanlal Mehta
I’ll take a part of your question vis a vis some sort of high level guidance on the various components of the international business. So we think that Canada will continue to grow a very healthy double digits mid teens sort of profile on a base business with the acquisition fully absorbed. Bush, you may have a specific number for like, for like for the quarter I think was his question. About 25ish percent for the quarter. But we think that once we have the benefit of having cross pollinated the portfolios, a mid teens sort of growth profile is what we’re targeting for the Canadian market for Europe. As you heard from a muted low single digit growth. We’ll be targeting a high single digit growth for Europe and then for the emerging market outside of the ARV segment where we think that will obviously be relatively flattish. The non ARVs will continue to grow fairly well for us. I think it should be in the ballpark of about aiming for 20% sort of growth profile of that business.
Operator
Thank you. Ladies and gentlemen that was the last question for today. I would now like to hand the conference over to the management for closing comments.
Satish Ramanlal Mehta
So thank you all for joining today’s Investor Call. If any of your queries still remain answered, please feel free to get in touch with us. You can write to us at Investor DOT Relations. Thank you and have a good night.
Operator
Thank you. On behalf of MQR Pharmaceuticals Ltd. That concludes this conference. Thank you for joining us and you may now disconnect your lines.