Gland Pharma Limited (NSE: GLAND) Q1 FY23 Earnings Concall dated Jul. 20, 2022
Corporate Participants:
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Srinivas Sadu — Managing Director & Chief Executive Officer
Ravi Shekhar Mitra — Chief Financial Officer
Analysts:
Tarang Agarwal — Old Bridge Capital — Analyst
Dheeresh Pathak — WhiteOak Capital — Analyst
Amey Chalke — Haitong Securities — Analyst
Anubhav Agarwal — Credit Suisse — Analyst
Sudarshan Padmanabhan — Analyst
Neha Manpuria — Bank of America — Analyst
Kunal Dhamesha — Macquarie Group — Analyst
Mayur Patel — IIFL AMC — Analyst
Ashish — IIFL — Analyst
Tushar Manudhane — Motilal Oswal Financial Services — Analyst
Saion Mukherjee — Nomura — Analyst
Prakash Agarwal — Axis Capital — Analyst
Rakesh Naidu — Motilal Oswal — Analyst
Sameer Baisiwala — Morgan Stanley — Analyst
Alankar Garude — Kotak Securities — Analyst
Presentation:
Operator
Good day and welcome to the Q1 FY23 Earnings Conference Call of Gland Pharma Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Sumanta Bajpayee, Vice President, Corporate Finance and Investor Relations. Thank you, and over to you, sir.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Good evening and warm welcome to Gland Pharma’s earnings conference call for first quarter of financial year ’23. I have with me Mr. Srinivas Sadu, Managing Director and Chief Executive Officer; Mr. Ravi Shekhar Mitra, Chief Financial Officer to discuss the business performance and to answer queries during call.
We will begin the call with the business highlights and overview by Mr. Sadu, followed by financial overview by Mr. Mitra. After the opening remarks from the management, operator will open the bridge for Q&A session. Before we proceed with the call, please note some of the statements made in today’s discussion may be forward-looking and based on management estimates and this must be viewed in conjunction with market risks, uncertainties involved in our business. The Safe Harbor language contained in the press release also pertains to this conference call. This call is being recorded and the playback shall be made available on our website shortly after the call. The transcript of this call will be submitted to the stock exchanges and made available on our website as well.
I will now hand the call over to Mr. Sadu for his opening remarks. Thank you all, over to you, Mr. Sadu.
Srinivas Sadu — Managing Director & Chief Executive Officer
Thank you, Sumanta. Good evening, everyone. Thank you for joining our earnings call for the first quarter of fiscal 2023. My best wishes to all our shareholders, analysts and the families. I must say it is a tough start to FY23 with few supply chain issues, which were ongoing for the last couple of quarters, hit us hard on our quarterly dispatches.
We faced delay in receipt of APIs and primary packing materials, which caused delay in production. We are making all efforts possible to minimize the impact of these disruptions by qualifying new suppliers, as well as optimizing our production planning. We lost productivity during the quarter on account of delays in material supply. At Dundigal facility, we lost nearly 7% to 8% of our available production capacity of [Indecipherable] liquid vials during the quarter owing to supply chain disruption, but we should be able to go back to normal utilization levels from next quarter.
In spite of the ongoing supply side disruption, we ensured the new product launches were not impacted during the quarter, which are key to our business growth. We also initiated cost optimization and productivity initiatives as part of which two lines at our Dundigal facility were shut down during the quarter to make the modifications and mitigation of production bottleneck thereby improving production output. Both lines became operational from July and the lost production will be covered in the next three quarters on account of improved productivity.
We closed this quarter Q1 FY23 with a revenue of rupees INR8,569 million as against rupees INR11,539 million in Q1 FY22 and our PAT stood at INR2,292 million for the quarter against INR3,507 million in Q1 FY22. We have generated INR3329 million of cash flow from operations in Q1 FY23. We continue to make progress on our key focus areas to build a differentiated portfolio along with the expanding geographic penetration.
We continue to make investments in R&D and we’re able to complete six ANDA filings during Q1 FY23 in line with our plan. The progress on the complex portfolio also is in line with expectation. We have also finalized next set of products and filings in the China market upon detailed assessment of our parent, Fosun Pharma, and with this, we are confident of building a robust portfolio for the China market. The addressable market share for the next set of products in the China market is $1 billion.
We ensured timely new product launches and managed to launch 14 Product SKUs during this quarter. To highlight a few, we commercialized products including bortezomib, pemetrexed, pantoprazole and cyanocobalamin in the U.S. market. We were granted 180 days CGT exclusivity for zinc sulfate injection in the U.S. market from its first commercial marketing date of 27 June, 2022.
We also launched other products including bortezomib in Australia and oxaliplatin in the Canadian market. During Q1 FY23, upon excluding capital R&D expenditure, the R&D expenditure stands at 4.1% of our revenue for the period in line with our historical trend. As on 30th June 2022, we along with our partners, have 316 ANDA filings in the U.S. and 1567 product registrations globally.
We are recruiting talent to further strengthen our capabilities in biosimilar manufacturing and complex development. We are seeing increased attrition and hence are ensuring to build enough resources, keeping in mind anticipated growth initiatives of the company.
Let me summarize our performance across various geographies. Our Rest of the World markets accounted for 12% of our Q1 FY23 revenue for the quarter as against 19% in Q1 FY22. The delay in material supplies has hit our ability to take up Rest of the World orders with lower delivery times. The good aspect is that the demand stays strong. We are working while ensuring we can build inventory to meet the demand for our Rest of the World portfolio.
We anticipate another quarter for us to go back to normalized levels of inventory for this market. Our key markets continue to remain MENA, LATAM, and APAC. We registered our products, ethacrynate sodium, ganciclovir, Foscarnet Sodium, and labetalol hydrochloride in new geographies during the quarter. Our core markets, namely, U.S., Canada, Europe and Australia remain strong during the year, despite market challenges. Our core markets accounted for 82% of revenue during Q1 FY23 as against 65% during Q1 FY22.
We continue to maintain our new launch momentum in our core markets. There is visible price wedge in the U.S., which is impacting profitability for certain products, but ass our new launches scale up, the impact will normalize. The quarter was impacted by shortage of API and primary packing materials, which should over the next couple of quarters. We remain confident of our launch pipeline that will ensure sustainable growth in the market.
The key products in the core markets contributing to the sales were Enoxaparin Sodium, ketorolac tromethamine, ertapenem. India market accounts for 6% of our Q1 FY23 revenue. The Indian market sales were impacted by shutdown of dedicated insulin line during the quarter to accommodate line modifications. The demand for insulin remains strong and we will cover the loss in production by improved productivity during the rest of the year.
I would like to touch upon little about our growth initiatives. The geographic growth, as has been seen from our performance. We have expanded our penetration in the Rest of the World markets. China remains a key geographic focus and we expect to start receiving approval in the current year. On the portfolio front, we are progressing well on a complex injectable portfolio and have completed installation of manufacturing lines. We are also in the process of evaluating manufacturing lines for technologies involving microspheres and combi-vials. On this front, we have made significant progress in building internal capabilities and are also exploring opportunities for external partnerships.
And another key focus area remains biosimilar CDMO business on which again we are seeing a lot of interest from our partners. With this, I wish everyone, good health. I would like to now hand over the call to our CFO, Mr. Ravi Mitra, who will share details about our financial performance for the quarter. Thank you.
Ravi Shekhar Mitra — Chief Financial Officer
Thank you, Mr. Sadu. Good evening, ladies and gentlemen. Thank you very much for attending our first quarter earnings call. Our earnings presentation has been uploaded on the website. Let me begin with sharing the financial performance of first quarter of financial year 2022-23. Revenue from operations for the quarter one FY23 stood at INR8,569 million, declined by 26% due to various reasons as explained by Mr. Sadu in his opening remarks. But, some of these are transient in nature and we would like to restate that our differentiated business model remains robust, with a focus on supplying quality products to our customers.
In spite of the continued challenges in non-availability and delayed supply of critical materials, our efforts were to ensure that sufficient level of inventory remains available at our customers end in our core markets. Other income for the first quarter of financial year 2023 was INR744 million, which includes foreign exchange gains and operations of INR342 million and interest on fixed deposit of INR376 million.
Gross margin for Q1 FY23 was 56%, an improvement of 284 basis points as compared to Q1 FY22. Higher percentage of sales from regulated markets and the approval business model mix, along with focus in optimizing cost levers, have positively impacted the gross profit margin. We have reported an EBITDA of INR3,443 million in Q1 FY23 and EBITDA margin of 37%.
During the quarter, we have managed to maintain EBITDA margin in higher band of our earlier communicated target range. In Q1 FY23, we have witnessed increase in power and fuel cost by 53% year-on-year basis and 36% from last sequential quarter due to increased power tariffs and oil and gas prices. During this quarter, we faced shortages of power resulting in increased purchase of power at higher tariff. The situation has normalized now and we expect the cost of power to come down.
Manpower related cost has increased by 22% on year-on-year basis due to recruitment for the additional lines coming in and yearly salary increment impact. If you compare the staff cost on a sequential basis, it increased marginally due to increase in headcount.
Our net profit for first quarter was INR2292 million and PAT margin of 25%. Effective tax rate was at 25.7% for the quarter. Total R&D expenses for first quarter were INR410 million compared to INR438 million of the same period, previous financial year, which is a decrease of 6% and stands at 4.8% of the revenue.
Cash flow from operations for the first three months of current financial year was rupees INR3,329 million. Cash conversion cycle stood at 241 days for the quarter, same as first quarter of last year. In anticipation of business recovery for the rest of the financial year, we are building up our inventory and that is the reason for higher inventory and resultant higher payable days. Due to supply related issues, most of the sales during the quarter were back ended and hence you see increase in receivable days, which we expect to regularize with normalization of business.
Total capex incurred during the quarter was INR414 million. Our ROCE on ex-cash basis stood at 21% for Q1 FY23. The reduction is primarily due to substantial decrease of post-tax EBIT during the quarter. As on June 30 2022, we had total IN37,892 million of cash in equivalents. We had evaluated a number of M&A targets in the recent past. Current market dynamics, making the valuation of target assets more reasonable, has provided impetus to our goal of acquiring right strategic fit for our growth plan. With this, I would request the moderator to open the lines for questions. Thank you.
Questions and Answers:
Operator
Thank you very much sir. [Operator Instructions]. First question is from the line of Tarang Agarwal from Old Bridge Capital. Please go ahead.
Tarang Agarwal — Old Bridge Capital — Analyst
Hello, sir, good evening. Three questions from my end. First, if I look at each of your markets, business loss seems to be material. Will it be safe to presume that a significant proportion of business loss was owing to supply bottlenecks rather than changing front end market environment, because in your presentation and in your opening remarks, you have also alluded to price erosion in some markets, impact of high base in the other markets. So, just wanted to get some sense as to whether it’s really on the demand side or it’s on really the supply chain bottlenecks for each of your markets? [Speech Overlap]. Yes, sir, please go ahead.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
So primarily, it’s a supply chain issue, right? I mean if you look at the three baskets, the U.S, we are — if you look at the revenue — it’s, if you look at quarter-on-quarter, we still grew by about 4% and year-on-year, it’s de-grown by 4%, but then there is a timing issue of certain products. But I would say it’s still lot of products in the U.S. that have grown substantially, right? And because of the syringe shortages, we have allocated most of our supplies what we got, to the U.S. market to cater to the contract what we got like I mentioned last time. So we kind of didn’t have enough syringes to supply to domestic and Rest of the World market. So that has impacted sales in other markets.
And from domestic perspective, you see two major issues. One, of course the syringes what I just told. And the other is taking a shutdown of a couple of lines to increase the productivity. So, that has contributed about INR30 crores to INR40 crores of loss of domestic sales. While there is a large base last year on the domestic –if you look at first quarter of last year is almost INR180 crores out of which about INR70 crores to INR80 crores was related to products like Remdesivir and Inoxa, which were COVID products.
So if you remove that, we are still probably off by about INR7 crores to INR8 crores, but major impact. I would say in domestic is because of the shortages of syringes and also the ROW business also because of this.
Tarang Agarwal — Old Bridge Capital — Analyst
Okay, that’s helpful, sir. Just a second follow-up. Sir, in the U.S., despite the kind of launches that you had in this quarter — growth has been nice, but one would have presumed that the sheer size of these products would translate into maybe better business. So, is there a lot of heightened competition out there in the U.S. even in the supposed big products?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Yeah, so the competition is there. But if you look at the percentage wise, the new product, the growth has contributed — about 4% of the growth came from new products. But also you need to see when the product got launched. Many product got launched in either May or June. So, it’s kind of not 100% recognized. That’s one aspect. And also, while large products have some competition, there also smaller products 20 million to 30 million products where the competition is not there, where we just mentioned zinc has, the smaller product, about 28 million, but still we have exclusivity for that. But you will see more of that coming in the next few quarters. So that way, I think it’s a combination of competition in some large molecules and not being able to recognize for the entire quarter because most of the launches happened mid of the quarter or end of this quarter.
Tarang Agarwal — Old Bridge Capital — Analyst
Okay. Thank you, sir.
Operator
Thank you. The next question is from the line of Dheeresh Pathak from White Oak Capital. Please go ahead.
Dheeresh Pathak — WhiteOak Capital — Analyst
Yeah, thank you for the opportunity. The profit share number for the quarter, if you can share please?
Ravi Shekhar Mitra — Chief Financial Officer
So, it is about 10% of the revenue.
Dheeresh Pathak — WhiteOak Capital — Analyst
Okay, the capex number to flow, so what is the guidance for the full year and where are you spending the capex money this year.
Ravi Shekhar Mitra — Chief Financial Officer
Yeah. So, capex full year guidance remains same at INR300 crores, what we told last time. So, we are building up this microspheres and combi-line as Mr. Sadu was talking about a little while ago for our complex products and that ordering and spending, which should start soon. And first quarter was more of a timing thing. So, we will end up at INR300 crores. And other than that, complex injectables line in Pashamylaram, we are also adding of more API capacity and also one bag line [Phonetic] we need to add because of the increased demand we have seen. These are the large items where the capex would go.
Dheeresh Pathak — WhiteOak Capital — Analyst
Thank you. And last question, in terms of the biologics CDMO, if you can share any further progress you’ve made from the last communication about that?
Srinivas Sadu — Managing Director & Chief Executive Officer
So, there are four customer visits have happened during the quarter and we are discussing about the commercial terms and [Technical Issues]. That’s where the status is.
Dheeresh Pathak — WhiteOak Capital — Analyst
But first revenue when do we — should we expect to see the first revenue with the P&L?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Yeah, I think this is too early to comment at this point of time. So we have like — just now we are discussing that we have seen lot of traction and ongoing discussion with the parent also. So, but at this point of time, we would refrain from commenting at which particular month or quarter this revenue will start coming in. But, capability-wise, team-wise, we are all ready. And that’s why customers are coming and visiting us.
Dheeresh Pathak — WhiteOak Capital — Analyst
Okay. Thank you so much.
Operator
Thank you. The next question is from the line of Amey Chalke from Haitong Securities, please go ahead.
Amey Chalke — Haitong Securities — Analyst
Yeah, thank you for taking my question. I have few questions. First is, this is Mr. Sadu, is it possible for you to quantify how much of the impact on the supply shortages in the plant shutdown is there during this quarter and how much of the sales loss is recoverable in the coming quarters.
Srinivas Sadu — Managing Director & Chief Executive Officer
So if you look at the market-wise, I would say U.S., we lost because of syringes, we lost about INR25 crores. ROW, about INR100 crores we lost. And domestic, we lost about INR40 crores, I would say. And recovery wise — yeah, go ahead.
Amey Chalke — Haitong Securities — Analyst
So, even if we add these numbers, the total is still lower, right, from what the growth trajectory we were hoping to be on. So, is there any also impact on the demand side of the business. That’s what the second question is?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
So I would say, not the demand side — if you look at the timing, right — last year if you see micafungin is a big product. If you look at last year first quarter, almost INR126 crores came from that product whereas this quarter, we didn’t supply anything on that. It’s more of inventory issue where the customer is liquidating it and we don’t want to supply more now. But if you look at the end market, the sales what the customer — our partner is selling is consistent. So that will come back in a quarter or so. That’s more of the timing issue because last year, they were — normally our partners have those three to six months inventory because our model is little different. So that’s what is happening, so it looked a little bulky last year, but that will come back in a quarter or so.
Amey Chalke — Haitong Securities — Analyst
The second question is related to our PFS suppliers. What I understand is that even these PFS suppliers are struggling to cope up the demand to provide — so even in coming — next one year or so what I understand, we will be operating at full capacity utilization. So what could be the way out for us? Is it — if you have any thoughts on the same?
Srinivas Sadu — Managing Director & Chief Executive Officer
For Rest of the World, we’re already qualifying other suppliers because the U.S. still I think we have enough supplies commitments from BD [Phonetic]. But, we are qualifying a Chinese supplier, as well as Italian supplier for Rest of the World market. So, we want to use those for this. So, I think that can be mitigated by this.
Amey Chalke — Haitong Securities — Analyst
Do you think that whatever growth expectation we have from our business, that would be fulfilled by these suppliers as well in the coming years and there won’t be any supply disruption?
Srinivas Sadu — Managing Director & Chief Executive Officer
Yeah, yeah, we are pretty confident, yes.
Amey Chalke — Haitong Securities — Analyst
Just last question on the staff cost side because the last quarter when had asked the same question, I was told that there were some one-time item in the staff cost and it was expected to normalize from this quarter onwards. However, rather it has gone up during this quarter. So if you can provide some guidance of the staff cost.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Yeah, what we earlier referred was for one-time bonuses given off. But if you compare now with Q4, I think it’s the incremental staff costs which has come is on account of additional headcount and normal yearly increment. But that impact is not that additional one time bonus, which we talked about earlier. That is now not there in this quarter.
Amey Chalke — Haitong Securities — Analyst
So should we assume that INR98 crores to be normalized base for the staff cost.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Yeah, that’s correct.
Amey Chalke — Haitong Securities — Analyst
Sure. Thank you so much. I will join back.
Operator
Thank you. The next question is from the line of Anubhav Agarwal from Credit Suisse. Please go ahead.
Anubhav Agarwal — Credit Suisse — Analyst
Hi, good evening. One clarity on this India revenue. So this quarter, we have done about INR51 crore. But if I look at the March quarter or the December quarter, we were doing very close to INR200 crores. You talked about INR40 crore impact from the supply disruption, right, from that insulin facility. So, still trying to understand the decline from INR200 crore to this INR50 crore.
Srinivas Sadu — Managing Director & Chief Executive Officer
So if you see the last quarter, there was export restriction on Enoxaparin product. So, we were supplying a lot of domestic supplies to third parties. So, most of the revenue came — almost INR100 crores revenue came from supplying to third parties, but with lower margins. And we could supply with the different syringes. But if you look at the logistic cost, the input cost, and also the dollar, it does not bring any sense to operate at the the price levels that they’re, which are under price control in India. So we didn’t continue to supply to those. Because of the restriction last quarter, we did that. But at least, we had some margin at that point of time, but this quarter because of increased costs and also the dollar not helping us because we have to pay duty for the import of materials, so, we actually stayed away from those supplies.
Anubhav Agarwal — Credit Suisse — Analyst
So you’re saying that that business largely is you’re not taking up now, it’s not that that business is getting booked in some other segment, that business itself, you are not taking up?
Srinivas Sadu — Managing Director & Chief Executive Officer
Correct, correct.
Anubhav Agarwal — Credit Suisse — Analyst
So when things recover now, let’s say 2Q or 3Q, so India business will be about INR100 crore base a quarter level.
Srinivas Sadu — Managing Director & Chief Executive Officer
Yeah, So on front end B2C is around INR60 crores and then around INR30 crores of insulin — INR25 crores to INR30 crores; INR90 crores and another INR10 crores of miscellaneous. Yeah, around INR100 crores, correct.
Anubhav Agarwal — Credit Suisse — Analyst
Okay, thank you. That’s helpful. Second question is just clarity on the R&D spend. So, we annually and if I look at the revenue expenditure of the company, we are doing about INR160 crores to INR80 crores R&D spend a year right now and we are filing about almost close to 25 ANDAs in the U.S. market. That’s almost like very simply, a $1 million spend per product. As now you’re changing business model more towards your own filings, not doing partner filings, do you think that in two to three years, this INR180 crore can become a INR400 crore R&D number for you, I’m not talking about [Technical Issues]. I am just talking as you file more complex product, etc., do you see a step jump in this R&D becoming two times in two years or three years.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
So, we’ve been filing our own products since, I would say, last three years, not just now. So the — if you look at our initial percentages, with a lower base, the percentage was same, but the absolute number was lower than what we are doing for last two to three years. So, we don’t think that will increase that much. Even for the complex products, we always collaborate with our partners. They do pitch in. Some of the studies, there do upfront. So, we don’t anticipate that to go that high. So, we still keep that as a percentage of the revenue, around 4%.
Anubhav Agarwal — Credit Suisse — Analyst
Okay. Thank you.
Operator
Thank you. The next question is from the line of Sudarshan Padmanabhan from JM Financial. Please go ahead.
Sudarshan Padmanabhan — Analyst
Yeah, thank you for question.
Operator
Mr. Padmanabhan, If you can speak closer to the device., please. Your audio is not audible. Yeah, can you hear me? Yes. That’s better.
Sudarshan Padmanabhan — Analyst
Yeah, my question is to understand the extent of shortage. I mean, we have been hearing the shortage from the third quarter to the fourth quarter and seeing a significant part in the first quarter. Now that we are into the second quarter, I mean in terms of intensity, how do we see things easing up say from the second quarter and when you’re talking about say the second half to kind of normalize, what gives us that kind of a confidence in that kind of commentary?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
So while the syringes is a major impact, which has happened, there are also issues around four or five products where we have filed alternative tubing filters with [Indecipherable]. We also lost some productivity on that — about 16 to 18 productivity days across sites and across lines. So, that kind of sorted out. Syringes, we have seen some quantity is coming at the end of the quarter. So that’s why we are able to cater to the U.S. market, without impact. Still it could probably impact about INR20 crores to INR25 crores. And we have delivery schedules from BD for this quarter as well. So looking at that, I think we are more comfortable on the syringe side
The Heparin product has got impacted with stoppers from west. That still we have not got the resolution yet. That has impact, about INR40 crores to INR50 crores. So we are working around alternative stopper for that. So we see that that’s only risk about INR40 crores or INR50 crores of heparin which we couldn’t supply. We don’t have a solution for that yet, which we are working with West for alternate supply. But otherwise, we are good with other components.
Sudarshan Padmanabhan — Analyst
Okay. So I think barring this INR50 crores a year, I think you are saying that the most of the issues are sorted and that should come in the second half.
Srinivas Sadu — Managing Director & Chief Executive Officer
Yeah. So, it’s not INR50 crores for year, I am saying the quarter INR50 crores was lost. So that’s what we are now trying to see an alternative stopper, So the schedule we got from West is in November, but we wanted that actually the last quarter and at least push to this quarter. So that will help and the schedule we got is in November.
Sudarshan Padmanabhan — Analyst
Sure. And my second question is on the demand side specifically. I mean I know, you don’t share the order book and towards that. But when I look at, say, the U.S. business or the ROW business specifically, with respect to number one, the newer customers and existing customers are increasing the wallet in terms of volumes and whatever that we have missed because if you look at the ROW we’ve lost about INR100 crores to INR120 crores odd. I mean is this sales kind of recoupable say in the next nine months. So, would this INR120 crores be added say in the second quarter or the third quarter in an addition to the typical INR230 crores, INR220 crores kind of run rate that you [Technical Issues].
Srinivas Sadu — Managing Director & Chief Executive Officer
With the capacity constraint, I don’t know whether we can recover everything what we lost in this quarter, but at least the growth what we told in our normal business, that can be maintained. But what we lost about INR250 crores or INR300 crores this quarter, could be difficult to recover 100% of that.
Sudarshan Padmanabhan — Analyst
Okay. And in terms of the demand, as far as volumes, whether are we seeing increase in the volumes on a year-on-year basis as far as the demand is concerned, across our RWA in the developed markets?
Srinivas Sadu — Managing Director & Chief Executive Officer
Yeah, the demand is really, you know, go by molecule wise. right. I mean, Inoxa, we almost from quarter-on-quarter basis, we almost like three times we sold in the first quarter. Last quarter was about INR47 crores in the U.S. We did almost INR160 crores this quarter. Demand is there. Same like, ketorolac is almost like 90% growth. Six or seven molecules have grown almost 90%, 100%, 200% like that. So that way, we don’t see demand dropping off But you know, pre COVID, there are some products which are doing prior to COVID, which has not — really the total market has not come back. Vanco was one of a top five products. If you look at the total market 30% to 35% market has never come back and what we hear from the market is more people moving to RTUs because of the compounding business, issues with the labor force and all that. So, there are some issues with the older products. But, there are lot of other products, which are actually doing extremely well compared to others.
Sudarshan Padmanabhan — Analyst
Okay and one last thing, I mean, earlier we have been talking about that 18% to 20% kind of a growth. Would this year be a kind of given that the first quarter is pretty bad and we are seeing a recovery in the second half, so what is something that you are looking at and would this year be significantly lower and probably FY24 and FY25 should be relatively better? Any color on that?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Yeah. So if you can just forget one quarter, then probably the growth will be stronger. But if you include this quarter because it’s difficult to recover what is lost in this quarter, 200%. So it could be lower growth year, but moving forward, with the demand what we are seeing and the growth what we have even shown for lot of other products other than what we face shortages, we are still confident that we can maintain the growth what we told before in the next two years.
Sudarshan Padmanabhan — Analyst
Okay. Sure. Thanks a lot. I will join the queue.
Operator
The next question is from the line of Neha Manpuria from Bank of America. Please go ahead.
Neha Manpuria — Bank of America — Analyst
Yeah, thank you for taking my question. Just on the China business. I think in the presentation, you mentioned that our inspection has been [Indecipherable] been based off. So when do we expect to start seeing revenues from China come through? And what’s the filing that we expect from China over the next year?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
So for two products, I know, they are in the clearance phase. They confirm that there is no need of inspection. So something should come by the third or fourth quarter. That’s what we are anticipating and now five products getting filed in FY23 and other 67 products in FY24.
Neha Manpuria — Bank of America — Analyst
Got it. And in terms of margins for the full year, now that — given your commentary that supply chain would partly get resolved in the second half, the mix should improve. How should we look at the margin, in light of the higher cost and this is ex other income — margins ex-other income — would it be similar to what we have done in the current quarter?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Yeah, it should be around that range, yeah, I would say so.
Neha Manpuria — Bank of America — Analyst
And going forward, sir, what would drive this margin higher because given the uncertainty in the cost environment, how much of that would be dependent on the new launches coming through versus existing products in growth?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
So once we start getting some complex product approvals with a higher margin products — so we should be able to get the increase in margins and also once you start leveraging more lines in this facility — we just added three or four new lines, which we need to start manufacturing. Like I said, the fixed costs are there already. So this will start adding to the additional margins for the coming years.
Neha Manpuria — Bank of America — Analyst
Okay, so what would be the guidance then for the, let’s say, the next two years in terms of margin?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
I would say some 33% to 35%, maybe.
Neha Manpuria — Bank of America — Analyst
Understood. Thank you so much.
Operator
Thank you. The next question is from the line of Kunal Dhamesha from Macquarie Capital. Please go ahead.
Kunal Dhamesha — Macquarie Group — Analyst
Good evening and thank you for taking my question. So first question on the biologics business. You have shared that we have got four visits. But typically what’s the process, let’s say, from site to actual contracting? What are the steps and the visits that we are getting from clients — are those new clients for us or some of the existing clients, but their biosimilar division or biologics division us. So, how should we think about that.
Srinivas Sadu — Managing Director & Chief Executive Officer
Three are new customers and one is the known customers with different division. And typically they — I think it varies from multiple clients. If you are looking at transferring the technology and looking at making the clinical batches, the other is looking at doing more analytical development for the — what they have done. One client is looking at taking us line for like two months and putting up their own — some of their people for the technology plan. So, it depends on who the customer is, but it’s a various kinds of discussions happening.
Kunal Dhamesha — Macquarie Group — Analyst
Okay. And secondly, in terms of I think the clarity on the earlier participants question on the margin, you said FY24, FY25, or FY23 beyond, we are targeting 33% to 35% range. So is this, would you say is this including other income or is the like to like without other income plus core operating profit that we are targeting?
Srinivas Sadu — Managing Director & Chief Executive Officer
So hopefully, the other income, if you really look at today, it’s — part of it is on interest and other is operational income. And if you can utilize these to get a good asset, this will go down if we acquire a good profitable asset. So an overall basis, other than the other income, we are looking at 33% to 35%.
Kunal Dhamesha — Macquarie Group — Analyst
So and the acquiring the assets, what’s the priority now. I think at some point the priority was Complex Products followed by some backward integration. Is it the same or [Indecipherable] on that front.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
I mean we are looking at, ultimately, we don’t go one by one. It’s three of the options we are looking at, whichever asset we find, we have to go after because all these are important for either for profitability or for growth of the business. So it’s not like one. It’s not a sequential thing. So we look at everything at the same time. And whenever we get an opportunity, we try to look at it.
Kunal Dhamesha — Macquarie Group — Analyst
Okay, thank you.
Operator
Thank you. The next question is from the line of Mayur Patel from IIFL AMC. Please go ahead.
Mayur Patel — IIFL AMC — Analyst
Yeah, hi, thanks for the opportunity. And most of the questions got answered, but on the margins side, 31.5% core EBITDA margins, which you managed to in this tough environment to maintain at least QoQ, should we see that the worst is behind from the margins perspective or this API related pressure and the syringe related disruption can lead to some more downside in the short-term before it starts moving up to your desire 33% plus levels?
Srinivas Sadu — Managing Director & Chief Executive Officer
I would say it’s one of the toughest quarter in terms of everything, right, I mean the cost of utilities are high, power shortages in our states are very high. So, we have to use utilities for that. And then I know we have the airlift lot of goods too because of the shortages of materials. So that has been absorbed. So, I would say, the worse things have already happened, and I think hopefully some of these come back to normal, the margins should only improve.
Mayur Patel — IIFL AMC — Analyst
And just one more question if I can. You very nicely explained about all the problems across markets, mostly supply chain driven. So earlier, ROW market was growing at a very sharp — very significantly higher rate than the other markets, which was also helping us to report very 18% to 20% kind of growth or even more in some of the quarters. So ahead, except for the supply chain issues on the demand side, so whenever the syringe supply normalizes, ROW can come back to that same high growth rate in your view?
Srinivas Sadu — Managing Director & Chief Executive Officer
Yeah. So, we have clear visibility on ROW because most of the tenders are won for couple of years. So, we know how the order books look like. It’s mostly the supply constraints what we have and already explained. So that way, we’re not too concerned about the growth in ROW. It’s more to do with how much you can supply,
Mayur Patel — IIFL AMC — Analyst
And you were expecting around September or so, the syringe supply would normalize, what is the expectation currently?
Srinivas Sadu — Managing Director & Chief Executive Officer
I think it is the same thing, right. I mean, while we are also qualifying other syringes for other markets, but even with BD, this quarter, we should be good enough to to normalize the supplies. At least if you look at from April perspective, today we better off. In one way, we’re able to cater to the most of the U.S. needs except maybe couple of million syringes. But this quarter, we should be able to cater to the demand.
Mayur Patel — IIFL AMC — Analyst
Okay, thanks a lot.
Operator
Thank you. The next question is from the line of Ashish [Indecipherable] from IIFL. Please go ahead.
Ashish — IIFL — Analyst
Yeah, thanks for the opportunity. So we have guided for launching seven products in the U.S. over the next few quarters, which has an addressable market of around $1.3 billion. So what’s our take there. Are we still on it?
Srinivas Sadu — Managing Director & Chief Executive Officer
Give me a second. Yes, we have actually — no, we have approvals of the products which are planned to be launched and the rest, we have a goal dates of I think next month. So, we should be able to launch most of it, yes.
Ashish — IIFL — Analyst
Okay. Okay, fair enough. And sir, like the other participant had this question on biosimilars, so while we understand that know three to four clients, you are in active discussions with, but some timelines as to when can we see the first dollar revenue coming in, broadly roughly in your expectations versus where your are engaged with your client currently, some flavor on that part would really be helpful.
Srinivas Sadu — Managing Director & Chief Executive Officer
We are actually not meaningfully adding to near-term numbers for this, but at least the first dollars hopefully we’re trying to get in the last quarter of this year. If the discussion everything goes well.
Ashish — IIFL — Analyst
Okay. And sir, typically — you typically would say about — anything to say about the tenure of the contract? The duration, where you would like to begin with?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
See what happens with this is initially people want to test waters, right. These are all new businesses we are entering, new technology we are entering. So they would like to give us smaller contracts for the year or so or it could be a project based thing and some of these get converted to commercial scale after they do the clinicals and they come back to us for [Indecipherable] technical batches and stuff like that. So once they start up and normally once they start taking batches here, of course they have to continue till the product reaches a conclusion. So that’s how all these contracts remain.
Ashish — IIFL — Analyst
Fair enough. Thanks, and all the best.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Thank you.
Operator
Thank you. [Operator Instructions]. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead.
Tushar Manudhane — Motilal Oswal Financial Services — Analyst
Thanks for the opportunity. Sir, just on this biologics again. So how much would be the operational cost already into the P&L related to this biologics.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Give me a second, Tushar. So INR15 crores Tushar for this quarter.
Tushar Manudhane — Motilal Oswal Financial Services — Analyst
So broadly INR15 crores per quarter [Technical Issues] at least for the next one to two years and it is fully reflected?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Sorry, your voice is not clear. Can you repeat.
Tushar Manudhane — Motilal Oswal Financial Services — Analyst
So INR15 crore as a normal quarterly run rate to consider for biologics at least for next one to two years.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Yeah, we are already — all manpower is there. the team is full there. So this will be there.
Tushar Manudhane — Motilal Oswal Financial Services — Analyst
Got it. And sir, would we — because of this constraints on account of syringes, how much of the or would there be any penalty on account of delay or failure to supply or that is taken care of despite shortage of ancillary materials?
Srinivas Sadu — Managing Director & Chief Executive Officer
No, no that’s why the priority was given to U.S. and normally penalties exist. So there we don’t — we are not losing anything, but other markets, we are not catering because of the shortage issue. So domestic and other markets is no [Technical Issues]. Just one more, typically these syringes or stoppers, we will be having a long-term contracts and because irrespective of the product, these materials would be any which required. So what is it that went wrong or this is more like a phenomenon which has been staged by the other companies as well. And how do we take care that this doesn’t repeat going forward? So we do have contracts for syringes. But always because there is a single supplier, especially for the U.S., it is also lead to be safety device. So, it has to be discussion with the supplier how to manage it. But it’s not like one stopper fix all right, hundreds of different stoppers depending on which product — which stopper is compatible with which product. So the R&D decides which stopper to use. So, it’s not that all stop us are under shortage. And, we if are supplying 150 products, there are only like five or six stoppers, which are getting into this issue. So it’s not like it’s a problem with all the stoppers. But, syringes, unfortunately, there are very players and especially in the U.S., very few approved suppliers. And also because we need to put a safety device for this and it’s a combination product so we can change the syringe without the device being changed and there is only one device, that’s the restriction we have.
Tushar Manudhane — Motilal Oswal Financial Services — Analyst
Sorry, I am dragging on this, but one last question on this aspect. Given that there are limited number of suppliers for such kind of materials, we would also have their order book kind of filled already from the other global players. So, even if we get into contracts today, what could be the lead time to get the material in place?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
We already have a contract with them Tushar. We already have a contract with them for almost 50 million syringes per year, but still they are not able to supply. So it’s more to do with how much is the demand and how much they have. And they have also added new capacities, which are saying they’re going to get online by September or so. So the overall demand across the globe has gone up in the last couple of years and that’s why the [Indecipherable]. So I would say they are more — I think they’re giving as a ratio of how much orders versus how much they can supply and that’s been the case. But I think that getting resolved now, now that there is a gap of almost six to seven months where they did not supply much.
Tushar Manudhane — Motilal Oswal Financial Services — Analyst
Got it, got it. Any [Indecipherable] trends in 4Q?.
Operator
Sir, sorry to interrupt, but for any follow-up questions, may we request to rejoin the queue, please. We have other participants waiting in the queue.[Operator Instructions]. The next question is from the line of Saion Mukherjee from Nomura. Please go ahead.
Saion Mukherjee — Nomura — Analyst
Yeah, hi, thanks for taking my question. Sir, on the partnership, typically for the products that you have launched in the recent past, let’s say, over the last two years or so in the U.S., typically how many partners you sell the product in the U.S. market. And are these like exclusive contract or more of them are non-exclusive in nature.
Srinivas Sadu — Managing Director & Chief Executive Officer
Some products are exclusive and some are semi-exclusive., I would say. So, especially the big products or wherever there is an patent litigation or some BE study need to be done, there it will be exclusive because they also pitch in with the upfront cost, but otherwise normally, the other will give semi-exclusive or even if we give exclude, then we will have a clause if they don’t get hit a percentage of market share, then it become semi-exclusive.
Saion Mukherjee — Nomura — Analyst
So, on an average, would you say so far for the less complex products, you would have multiple players, right. So would that be like two, three players or typically — how many players you generally have a contract with for relative less.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Normally, we do with two people, but if they’re not performing, then we go and give for the third person also. Because not only our product, we also sometimes get the same product for tech transfer wise in other model. So ultimately the product, which we are manufacturing might be for three or four players. Right, sir, in the past, you had seen long-term contracts for bulk — for a large number of ANDAs with Atonex with Fosun, etc. So, do you like have you signed any such large contracts, which you can disclose in the recent past, either for the U.S. or maybe for the non-U.S. markets.
Ravi Shekhar Mitra — Chief Financial Officer
You mean a set of products?
Saion Mukherjee — Nomura — Analyst
Yeah.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Not as a set of products, but two, three products like bunch of three products at a time, that’s how we signed, but not like 15 products, 17 products like that, no. Normally we do that when the new company starts their own business, when they looking at our portfolio and so where they also look at some old products also where we have option to give them. But for the companies that are already there, they normally look at two products, two products depending on the portfolio what we have. So we sign up like three products at a time or two products at a time or one product at a time, but but as a portfolio like atonex also, when they started the company, that’s when we have signed up. Likewise, [Indecipherable] when they started the company, we have signed up a portfolio of products. same like Alvogen. These are all newly formed entities where we have been with the portfolio.
Saion Mukherjee — Nomura — Analyst
Yeah, so, yeah, that’s what I was referring to. So you like these bulk contracts, you didn’t have any in the recent past?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
No, no.
Saion Mukherjee — Nomura — Analyst
Okay. And sir, just one bookkeeping. I know you’ve given the inventory days receivable and payable, is it possible to sort of mention that in rupees million. at least the inventory and receivable numbers as of end of June.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
I don’t have right now with me, but I can give you offline. You can also back calculate it based on the sales. So the method and format was given in the presentation, but will give it to you offline.
Saion Mukherjee — Nomura — Analyst
Thank you.
Operator
Thank you. The next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead. Yeah, hi, [Technical Issues], you mentioned the employees [Technical Issues]. Mr. Agarwal. Sorry to interrupt, but your voice is breaking up. May we request you to move to a better reception area, please?
Prakash Agarwal — Axis Capital — Analyst
Is this better?
Operator
Yes, sir. Please proceed.
Rakesh Naidu — Motilal Oswal — Analyst
The costs.
Operator
Sir, sorry, but your voice is breaking up once again, sir.
Prakash Agarwal — Axis Capital — Analyst
Trying again. [Technical Issues] high because of addition of employees, it has been higher. What about other expenses, I missed that. So other expense are substantially higher despite low revenues. So are these operating cost here to stay and how do we think about it or is it due to escalation of freight, etc., which is coming down now lower?
Srinivas Sadu — Managing Director & Chief Executive Officer
Other expenses for this quarter is INR808 million. March was INR899 crores. So this quarter, it has come down actually. And last year June was INR783 crores. So it’s about 3% up actually, not so much. Only power and fuel has gone up substantially.
Prakash Agarwal — Axis Capital — Analyst
[Speech Overlap] have gone up, right, so, the reference was percentage to sales?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
So most of our cost is fixed in injectable facility. So will not so much vary, especially other expense in relation. Th’s why we have a leverage effect whenever our sales go up or down.
Prakash Agarwal — Axis Capital — Analyst
Okay. And trying to understand is [Technical Issues].
Operator
Sorry to interrupt once again. But your voice is breaking up once again, sir.
Prakash Agarwal — Axis Capital — Analyst
Okay, is that better?
Operator
Yes.
Prakash Agarwal — Axis Capital — Analyst
Okay. In terms of timing for qualifying from other injectable syringes players, so I heard saying that U.S. is largely in place with BD and you are trying to qualify others with respect to ROW markets. So how long does this qualification takes because you mentioned some normalization from next quarter. So, reference was the upcoming quarter or the current quarter.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
The current quarter for domestic and some of the Rest of the World markets. It’s — because it’s a [Technical Issues], so we don’t take much time. We can quickly replace it, but some markets like Brazil or Saudi were more regulated, there we need to submit the data and that might take three to four months.
Prakash Agarwal — Axis Capital — Analyst
Okay. And lastly on the clarification [Technical Issues].
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
We are losing you.
Operator
It seems like we lost the connection for the current participant. We move to the next question from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead.
Sameer Baisiwala — Morgan Stanley — Analyst
Hi, thank you and good evening everyone. So can you talk a bit about the pricing pressure in the U.S. that you mentioned, and especially in the context that I thought that your partnerships and your business model is fair bit sort of insulated from the end market competition.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
So, the impact of price for us, I think is about 1%. So it’s not much. And that’s been the case over the years, either there is no impact or 1% or something. So there is not much impact for us on that front.
Sameer Baisiwala — Morgan Stanley — Analyst
How does it percolate down to your P&L? Is it through profit share or how does it work?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Yeah, I think it’s through profit share, yes.
Sameer Baisiwala — Morgan Stanley — Analyst
Okay, sir. I’m just wondering if the end market product pricing falls 10% or 15%, would the impact not be much bigger for you?
Srinivas Sadu — Managing Director & Chief Executive Officer
So overall, the revenue wise, it’s only about 10% for us. So even that fall, it won’t impact much.
Sameer Baisiwala — Morgan Stanley — Analyst
Okay, okay, exactly. So that was the question that if you are having 1% impact, what does it mean for the end-market pricing, so that would be about 10%, right, it is 1:10, that’s what you’re saying.
Srinivas Sadu — Managing Director & Chief Executive Officer
Yeah, correct.
Sameer Baisiwala — Morgan Stanley — Analyst
Okay, that’s all from my side. Thank you so much.
Operator
Thank you. The next question is from the line of Rakesh Naidu from Motilal Oswal. Please go ahead.
Rakesh Naidu — Motilal Oswal — Analyst
Yeah, thanks for the opportunity. My question is to Sadu, sir. Sir, until about a few weeks back, we were regarding about a high teen kind of growth trajectory overall. What exactly has changed in few weeks that we are looking at these kind of numbers that is number one. And second question is, you talked about disruption led sales loss of around INR250 crores of which the COVID impact seems to be around INR150 odd crores. So it should be, when we build numbers, take additional INR400 crores of the estimates for FY23, I mean is it a fair way to look at it?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Rakesh, can you just repeat the question again? Both the questions, can you just split and come come back, again.
Rakesh Naidu — Motilal Oswal — Analyst
Sumanta, my question is until about three weeks back because of silent period, we are guiding for high-teen kind of growth trajectory overall. I mean what essentially has happened that we are seeing such a sharp contraction in the numbers overall across all the segments. What exactly is that we have missed out?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
One is what we anticipated to get delivered got delivered late in the quarter. We were anticipating to get the syringes delivered the beginning of June, end of May and it got shifted to third week of June. So that has a big impact. that’s when over 6 million to 7 million syringes couldn’t get telework. So that got shifted but from line down perspective, it was there even prior to this quarter. So that was a planned one, but we were probably discussing for the entire year, not for the particular quarter but that impact was there just because of the delay of the supplies.
Rakesh Naidu — Motilal Oswal — Analyst
Sir, I mean, to understand it very clearly, the syringes issue, is it for the U.S. market. I mean in the last call, you had alluded to the shortage being in for the U.S. market and now you’re telling that the same shortage issue is there in the Indian market as well and then obviously the cost dynamics has changed. How should we actually look at this, I mean should we expect a resolution of this in the current quarter or in the immediate foreseeable future or something which will take some more time?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
So, the syringes are used for not just U.S. market. The syringes are used for U.S., and some of the [Indecipherable] regulated markets in other markets also, right, other than the domestic and also other markets where we can’t. replace the syringes overnight. So we have actually supplied most of our U.S. demand with what we got. The impact for the US. was lesser, probably INR20 crores to INR25 crores impact for the U.S. But the impact was large in other markets where we couldn’t supply because of the shortage. So it is not different thing going on. So that way, there is no separate set of syringes what we get for the Indian market or for the U.S. market. Now Indian market, we can use other syringes. But we also need to see because we have a contract for 50 million. We have better pricing and if you go and buy from others, it is a little higher cost and with the added logistic cost increase, the dollar fluctuating, the margin profile was not helping us to sell in Indian market. That’s why we stayed away from selling in Indian market with other syringes.
Rakesh Naidu — Motilal Oswal — Analyst
Okay. And sir, what component of this INR250 crore lost sales in this quarter is COVID related?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
You’re asking whether compared with last year first quarter, that’s what it is?
Rakesh Naidu — Motilal Oswal — Analyst
Yes, sir.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
So last year first quarter like I said, Indians sales last year was INR180 crores, out of which INR80 crores was COVID related where we made Remdesivir and additionally Inoxa. So those INR80 crores are from Indian market. Yeah.
Rakesh Naidu — Motilal Oswal — Analyst
So that segment could continue to see a similar kind of trajectory over the rest of the current fiscal, correct.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Yeah, correct. That that’s gone. Yeah, correct. That’s like a one-time surge.
Rakesh Naidu — Motilal Oswal — Analyst
So, sir, I mean, then help me understand your earlier guidance, I mean how are you confident that I mean even if we exclude this quarter as a one-off, how are we confident that we’ll be able to do high teen kind of growth for FY23. I mean also looking from the context of what Hepalink and Nanjing King is talking in terms of how they’re going to — you’ll see ramp up their production in heparin and other products, so how should we actually be looking at your guidance for FY23 now.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
So if you look at our last year sales to this year, our Inoxa itself in the U.S., additional revenue we are getting about INR300 crores, right. I mean last year, entire year, for the US, we did about INR250 crores. Now this year, the run rate is around INR160 crores per quarter. So, it’s almost like INR600 crores to INR620 crores. So there itself, we have a big surge in the numbers for that product.
Rakesh Naidu — Motilal Oswal — Analyst
And you are confident of maintaining the market share in the second half as well, right. I mean because I mean the dynamics could change in the second half.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
No, these are all contracted, right. I mean that’s why we’ve been — this contract was there for many couple of years and till we got enough syringes, we [Indecipherable] to that contract, and that’s why we have to start supplying in this quarter, compromising of the local supplies.
Rakesh Naidu — Motilal Oswal — Analyst
Okay. And there won’t be any penalty hits for not being able to deliver the earlier supplies.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
No, So, I mean if you know the history, the partner already had this contract for few years and was taking from the innovator and we had an agreement to move that contract to us because we licensed our product when we didn’t have approval. So when he took that from the innovator, then we give them the right to license that product till we get for our product approval. And so he got that contract. So, there was a time limitation on that. So it is more to do with us giving him the right to take the product from the innovator [Indecipherable]
Rakesh Naidu — Motilal Oswal — Analyst
Okay, thank you, sir. I will join the line.
Operator
Thank you. The next question is from the line of Alankar Garude from Kotak Securities, please go ahead.
Alankar Garude — Kotak Securities — Analyst
Hi, thank you for the opportunity. My first question is, can you help us understand what percentage of your IP led and tech transfer contracts have a profit share built into the agreement? And does this differ across markets?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
So this profit share model is only for the U.S. market, not for other markets. And our own IP led products, the profitable share might range from 40% to 50% were as the tech transfer model is more on the royalty where we have about 5% royalty on net sales. That’s kind of model.
Alankar Garude — Kotak Securities — Analyst
Okay, so basically no profit share as far as the tech transfer models are concerned.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Yeah, correct.
Alankar Garude — Kotak Securities — Analyst
Fair enough. And secondly, sir. we have seen some selling by key personnel, including you Mr. Sadu, In the last couple of months. Can you please help us understand the reasons for now completely selling off your stake in the company?
Srinivas Sadu — Managing Director & Chief Executive Officer
These are all stock options, which the employees got three years ago and it’s on tranches and as you know the taxation won’t help you to keep long ride. You have pay a progressive tax and you have to be exercise price. So there is a substantial amounts of money where we have to pay upfront. So if you don’t pay that, then you have to pay the interest on that. So that’s one of the reasons why employees have sold out.
Alankar Garude — Kotak Securities — Analyst
And so I thought, actually the tax obligation would be a small proportion of the overall ownership, but that was not the case.
Srinivas Sadu — Managing Director & Chief Executive Officer
Okay. Not really, because we have to at what price, people have exercised it. And you have to pay again exercise price plus the price at which this is exercised, minus the the price at which it got awarded. And on that, you have to pay a progressive tax, which for many people, it could be 35% to 40%. So, you will end up almost 50% to 60% of the price so that’s substantial amount. And if we wait for long, then there is no meaning and actually people getting any money because then they have to pay interest on the loans that they have to get this right.
Alankar Garude — Kotak Securities — Analyst
Understood.
Srinivas Sadu — Managing Director & Chief Executive Officer
And also internally, we also have an understanding that people should not trade stocks and all that. So it’s — people — actually employees cannot buy and sell. So, we also have that policies just as a good corporate governance, we don’t want that issue.
Alankar Garude — Kotak Securities — Analyst
Understood. And maybe one final question from my side, if you look at Fosun, specifically $40 billion dollars of debt. And then, there have been some concerns of late on cash flows. So is there any change at all as to how Fosun is strategically looking at Gland as an investment?
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
So, not that we are aware of anything. And Fosun is a strategic investment for them and Gland is like a injectable platform globally for Fosun. So it remains same and Fosun Pharma is also listed and a separate company and our parent is Fosun Pharma, direct holding and the board members are Fosun Pharma nominated. And there is no also any impact as gland is an independent company to perform business wise or financially wise because interdependence on the business side. There is no financially dependence on Fosun or any intercompany any deposits.. So, it’s gland as an whole will continue to operate like it was doing earlier, but that’s what we are.
Alankar Garude — Kotak Securities — Analyst
Sure sir. That’s all from my side. Thank you.
Operator
Thank you, ladies and gentlemen, due to time constraint, we take that as the last question. I would now like to hand the conference over to Mr. Sumanta Bajpayee for closing comments. Over to you sir.
Sumanta Bajpayee — Vice President, Corporate Finance and Investor Relations
Thank you. Thank you, Steven, and thank you all the participants for joining us today for our first quarter earnings call. If any questions still remain unanswered, please feel free to reach out to us. Thanks. I am looking forward to interact with you again in our second quarter’s earnings. Thank you. Good night.
Operator
[Operator Closing Remarks]