Glenmark Pharmaceuticals Limited (GLENMARK) Q3 FY23 Earnings Concall Transcript

Glenmark Pharmaceuticals Limited (NSE:GLENMARK) Q3 FY23 Earnings Concall dated Feb. 13, 2023.

Corporate Participants:

Utkarsh Gandhi — General Manager, Investor Relations

Glenn Saldanha — Chairman and Managing Director

V. S. Mani — Executive Director and Global Chief Financial Officer

Brendan O’Grady — Chief Executive Officer, Global Formulations Business

Analysts:

Nikhil Mathur — HDFC Mutual Fund — Analyst

Saion Mukherjee — Nomura — Analyst

Shyam Srinivasan — Goldman Sachs — Analyst

Kunal Randeria — Nuvama — Analyst

Tarang Agrawal — Old Bridge Capital — Analyst

Prakash Agarwal — Axis Capital — Analyst

Nitin Agarwal — DAM Capital — Analyst

Charul Agarwal — Bank of America — Analyst

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Vikas Sharda — NTAsset Management — Analyst

Ajay Vora — Nuvama — Analyst

Presentation:

Operator

Good morning, ladies and gentlemen. Welcome to the Q3 FY ’23 earnings conference call of Glenmark Pharmaceuticals Ltd. [Operator Instructions]

I now hand the conference over to Mr. Utkarsh Gandhi, General Manager, Investor Relations for Glenmark Pharmaceuticals. Thank you, and over to you, sir.

Utkarsh Gandhi — General Manager, Investor Relations

Thank you, moderator. Good morning, everyone, and a very warm welcome to the Q3 FY ’23 results conference call of Glenmark Pharmaceuticals Ltd. Before we start the call, a review of the operations for the company for quarter ended December 31, 2022. For the third quarter of FY ’23, Glenmark’s consolidated revenue from operations was at INR34,639 million as against INR31,734 million in the corresponding quarter last year, recording a growth of 9.2%. For nine months of FY ’23, Glenmark’s consolidated revenue was at INR96,164 million as against INR92,858 million, recording a growth of 3.6% year-on-year.

We’ll start with the formulation business, and we’ll start off with India. Sales from the Formulation business in India for the third quarter of FY ’23 was at INR10,745 million as against INR10,069 million in the previous corresponding quarter, recording growth of 6.7%. India business contribution to consolidated revenue was 31% in Q3 of FY ’23 compared to 32% last year. As per IQVIA Q3 FY ’23 data, Glenmark’s India formulation business continues to record strong growth of 11%. As per the IQVIA data, Glenmark’s India business continues to be ranked 14th with a market share of 2.2%. During the quarter, Glenmark’s India business significantly improved its share in the key therapeutic areas of cardiac and dermatology.

As per the IQVIA data, cardiac market share for Glenmark increased to 5.37% from 4.85% last year, and the dermatology market share also went up to 8.15% from 8.05% last year. Glenmark’s market share in other key therapy areas also remained strong. So, the Company’s share in the respiratory market was 5.34% and in the diabetes market was 2.38%. As per the IQVIA data for MAT December 2022, Glenmark is ranked second in dermatology, third in respiratory and was ranked actually second in the third quarter in respiratory. Glenmark is ranked fifth in the cardiac segment and 14th in the diabetes segment. Company continues to have nine brands in the IPM Top 300 brands in the country on the basis of IQVIA MAT December ’22 data.

The Company launched multiple new products during the quarter and continued to gain share in some of its key launches across segments. In the third quarter, Glenmark launched the fixed dose combination of Teneligliptin, Pioglitazone and Metformin SR under the brand name, Zita PioMet. This is a novel and affordable FDC to help improve glycemic control amongst adults with high HbA1c and high insulin resistance, and it also improves adherence through a single pill.

Earlier in FY ’23, Glenmark also launched Sitagliptin and its fixed-dose combination, followed by Lobeglitazone and FDCs of Teneligliptin, including combinations with Pioglitazone and Dapagliflozin, emphasizing its focus on the diabetes segment. In the cardiac segment, Glenmark recently launched Sacubitril + Valsartan under the brand name, Sacu V, for the treatment of heart failure. This combination belongs to the class Angiotensin receptor neprilysin inhibitor. This drug helps reduce the risk of cardiovascular-related deaths and hospitalizations. The Company continues to have a healthy pipeline of differentiated products, which it will launch in the market going forward.

For India, consumer care business, primary sales for the GCC business, the consumer care business was — in Q3 was INR431 million with a growth of 16%, which was mirrored by a strong secondary growth of 13%. For the nine months of FY ’23, the GCC business revenue stands at INR1,634 million with a YTD growth of 34%. Our flagship brand, Candid Powder, delivered revenue growth of 9% in Q3 and about 38% in the nine months. Our La Shield portfolio delivered strong growth of 36% in the third quarter and about 80% in nine months. We also expanded the La Shield product range through La Shield Moisturizer. Finally, Scalpe+ portfolio recorded 12% growth in Q3 and about 13% growth in nine months of FY ’23.

Moving on to North America, the North America business registered revenue of INR8,373 million, which was about $102.3 million for the third quarter of FY ’23 as against INR7,533 million, which was about $94.8 million for the second quarter of FY ’23, which essentially translates into a quarter-on-quarter growth of 11%. North American business contributed 24% to the consolidated sales in Q3 of FY ’23.

In the third quarter of FY ’23, Glenmark received final approval for Nicardipine Hydrochloride Capsules. Glenmark also received final approval and launched Sodium Phenylbutyrate Tablets USP 500 mg. In addition, Glenmark also launched Fingolimod Capsules 0.5 mg and a new pack size for Olmesartan tablets. Glenmark filed one ANDA in the third quarter and plans to file six to eight applications in the forthcoming quarter. Further in Q3, Glenmark also reached a settlement with Pfizer for Axitinib Tablets 1 and 5 mg, the generic version of their Inlyta tablets. Glenmark had previously announced that it had received a tentative approval by the US FDA for their Axitinib tablets on November 30, 2020.

As per the IQVIA data for the 12-month period ending December 2022, the Inlyta tablets market achieved annual sales of approximately $657.1 million. Glenmark’s marketing portfolio consists of 178 generic products authorized for distribution. The Company currently has 46 applications pending in various stages of the approval process, of which 21 are Para IV filings.

Moving on to Europe, Glenmark Europe operations revenue for the third quarter of FY ’23 was INR4,932 million as against INR3,807 million, recording a growth of 29.5%. The Europe business contributed 14% to the total revenues in Q3 FY ’23 compared to 12% in Q3 FY ’22. The strong European business growth was driven by markets in both Western Europe and Central Eastern Europe. Key markets in Central Eastern Europe such as the Czech and Poland recorded strong secondary sales double-digit growth during the quarter. Growth was driven by uptick in base business, as well as new product launches in the CEE markets in the third quarter.

Western European business also clocked high double-digit growth for Q3 with markets like the UK, Netherlands, and Germany all growing significantly. In the UK, the overall pharma market witnessed some supply disruptions which helped Glenmark gain additional share through continued supply to key customers. Also six new products were launched in the Western European market. Growth was also led by our respiratory portfolio, which continues to do well in all the European markets. Key brands such as Ryaltris and Salmex have gained market share, both in volume as well as in value across the Central Eastern European market. And the product continues to do well in the Western European markets also through our partner. Tiogiva also continues to grow in the Western European market.

Moving on to the ROW region, which consists of Asia, Middle East, Africa, Latin America and RCIS business. For the third quarter of FY ’23, revenue from the ROW region was INR6,541 million as against INR5,348 million for the previous corresponding quarter, recording a growth of 22.3%. ROW business contributed 19% to the total revenues in Q3 FY ’23 compared to 17% in Q3 FY ’22. Glenmark’s Russia business recorded secondary sales growth of 26% in value and 3% in units in Q3 versus the same period last year.

Strong growth has been driven by all the key brands in the market, including Ryaltris, Montlezir and Candiderm. Ryaltris continues to gain share and has now been included in the guidelines for Russian Rhinology Society as well. Dimetindene gel, Fenismart, was launched in October 2022, and additional registration approval has been received for the oral drops of this product as well. These two launches will further boost the dermatology segment.

As per IQVIA MAT December ’22 data, Glenmark’s Russia business growth was about 15.9% in value terms, in line with the overall market. Volume growth was also in line. And amongst the dermatology companies, Glenmark ranks 12th as per the MAT December 2022 data. And amongst the companies present in the Expectorants market in Russia, Glenmark continues to maintain a strong position, ranking second as per the MAT December 2022 data.

Moving on to Asia, amongst the key markets in the Asia region, Malaysia and the Philippines continued to record double-digit secondary growth. Certain macroeconomic headwinds are slowly easing out in other key markets like Sri Lanka. However, Myanmar continues to have challenges related to currency depreciation. And in the Asia market, dermatology and respiratory are our key therapy areas, contributing to majority of our sales. Ryaltris continues to do well in the overall market, and we hold about 15% share in Australia. And our partner in South Korea, Yuhan, also launched Ryaltris in the third quarter of FY ’23. The product has already shown a very strong pickup in the market with 30-plus percent share in the combination market in a very short time span.

The Middle East and Africa region recorded close to 30% growth in secondary sales during the third quarter. While the Kenya market continued to be impacted by some instability, Glenmark achieved strong secondary sales in South Africa and Saudi Arabia. On the back of key launches, Glenmark continues to gain scale in other markets of the region such as the UAE, Uganda and Tanzania. The company has also signed multiple business development deals to further augment the business growth.

Latin America witnessed strong growth for the nine months of FY ’23. Respiratory again remains a key therapeutic area and a key contributor for Glenmark and its growth in the Latin American markets. Glenmark has high-single digit market share across the chronic respiratory products in Brazil, is actually ranked fifth as per IQVIA MAT data in the covered market for the chronic respiratory segment. And Glenmark is growing faster than the covered market across all segments in Brazil. And in Mexico as well, which is another key market, secondary sales growth has remained strong, growing at about 15% for Glenmark compared to market growth of 8% in terms of value. This is as per the IQVIA MAT December ’22 data.

This gives a brief overview of our respiratory — key respiratory products, starting with Ryaltris. At the end of third quarter, marketing applications for Ryaltris have been submitted in 58 countries across the world, while it is commercialized in 23 markets, including major markets like US, Europe, where we have marketing approval and commercialization in the UK and 10 different markets across Europe, Australia, Russia, South Korea and South Africa. Glenmark’s partner in the EU, Menarini, initiated the commercial launch in the Nordic countries of Denmark, Finland, Sweden, and Norway, and Germany as well in the third quarter and intends to launch the product in additional European markets in Q4.

Our partner in the US, Hikma, has launched the product. Glenmark is now — sorry, Ryaltris is now stocked at all major wholesalers. Discussions are also ongoing with insurance companies to increase coverage for Ryaltris. During the third quarter, Glenmark submitted marketing authorization applications for Ryaltris in Hong Kong and Morocco. Glenmark received marketing authorization grant for Ryaltris in Tanzania and is awaiting approval in other key markets like Brazil, Mexico, Vietnam, etc. Glenmark’s partner in Mainland China, Grand Pharmaceutical, aims to complete enrollment of the ongoing Phase III study in China for Ryaltris and submit the marketing authorization by the end of 2023. And Glenmark’s partner, Bausch Health, intends to soon launch Ryaltris in Canada as well.

In terms of other key products, the clinical trial continues for our generic Flovent pMDI product, and we expect to file the NDA in calendar year ’23. And we also plan to file at least one more generic respiratory pMDI in the US in calendar year ’23 and continue our filing momentum beyond that.

In terms of our innovative R&D pipeline, we’ll cover GRC 54276, which is our HPK1 Inhibitor. It is being developed as an orally administered IO-adjuvant treatment for patients with solid tumors. So, for GRC 54276, it’s a novel orally active HPK1 inhibitor that demonstrates excellent stand-alone efficacy and enhances current immunotherapy efficacy. A Phase I dose escalation study is ongoing in India. Successful recruitment of patients in Cohort 3 was completed in third quarter of FY ’23. No dose limiting toxicities were observed or had been observed till date. IND submission and DCGI submission is planned in the fourth quarter of FY ’23 to initiate a Part 2 combination study of GRC 54276 with pembrolizumab and atezolizumab in the US and India. GRC 39815 is ROR-gamma t inhibitor and using the Company’s respiratory pipeline asset, which is being developed as an inhaled therapy for mild to moderate COPD and currently undergoing Phase I development in the US.

Moving on to our API business, Glenmark Life Sciences, so revenue from operations, including captive sales for GLS was INR5,407 million as against INR5,225 million, recording a year-on-year growth of 3.5%. Generic API revenues increased by 5.9% Q-on-Q and increased 1.8% Y-o-Y. Regulated market business continued strong growth momentum for the contributions of about 76.5%. CDMO business decreased by 9.6% Q-on-Q, but demand is expected to pick up from Q4 onwards. And multiple projects are either completed or ongoing for capacity expansion across the manufacturing sites, Ankleshwar and Dahej. External sales for GLS in Q3 FY ’23 were at INR3,756 million as against INR3,032 million in Q3 FY ’22, recording a growth of 23.9% Y-o-Y. For further updates on GLS, you can log on to the website of glenmarklifesciences.com.

Covering Ichnos Sciences, Glenmark has invested INR1,518 million, which is about $18.5 million in the third quarter of FY ’23 compared to INR1,520 million, which is roughly $20.5 million in the corresponding quarter last year. For the first nine months of FY ’23, Glenmark has invested INR4,880 million compared to INR4,987 million, which was as invested in the corresponding period in the previous financial year. For further updates on the pipeline and the organization, please log on to the website ichnossciences.com. The pipeline update for the third quarter of FY ’23 has already been published on the website.

Just want to cover our key objectives for FY ’23. So, revenue growth of 6% to 8% during the year, sustaining EBITDA margins at similar levels or as they were in FY ’22, a capex of INR700 crores to INR800 crores. Strategic priority is to enhance our free cash generation and further debt reduction, and we continue discussions with protection partners for out-licensing of our innovative assets.

Some notes to the results before we begin the Q&A. Forex gain for the quarter was at INR47.6 crores, which is recorded in other income. Total R&D expenditure in the third quarter was around INR276 crores, which is 8% of total net sales. For the full year, we expect R&D expense to remain around 10%. Investment in Ichnos, as noted earlier, was $18.5 million in Q3 compared to $20.5 million last year. And for nine months, the investments were $61.3 million in FY ’23 compared to $67.5 million in nine months FY ’22.

The exceptional item in consolidated results is a net gain of INR33.9 crores, arising from sale of cardiac brand, Razel, for the India-Nepal business, net of expenses, trade receivables, inventory write-off and some other reinvestable expenses, as well as remediation costs related to the Monroe manufacturing site.

Inventory for the period ended December 31, 2022 was at INR3,010 crores as against INR2,865 crores as of September 30, 2022. Receivables was at INR3,359 crores as against INR3,328 crores as of September. And payables as of December was INR2,367 crores compared to INR2,348 crores. Thus, there was a net working capital increase of about INR158 crores as of December 2022 when compared to September 2022.

Total asset addition in the quarter was INR139 crores, of which tangible asset addition was about INR107 crores and intangible asset addition was about INR32 crores. Gross debt for the period ended December 31, 2022, was at INR4,210 crores as against INR3,954 crores as of September 30, 2022. Net debt for the period ended December 31, 2022 was at INR2,615 crores as against INR2,715 crores as of September 30, 2022. Hence, the net debt has been reduced by INR100 crores as of December when compared to September 2022.

Before we open the floor for Q&A, I would just like to induce the management of Glenmark Pharmaceuticals on the call today. We have with us Mr. Glenn Saldanha, Chairman and Managing Director; Mr. V.S. Mani, Executive Director and Global Chief Financial Officer; and Mr. Brendan O’Grady, Chief Executive Officer, Global Formulation business.

With that, we would like to open the floor for Q&A. Over to you, moderator.

Questions and Answers:

Operator

[Operator Instructions] The first question is from the line of Nikhil Mathur from HDFC Mutual Fund. Please go ahead.

Nikhil Mathur — HDFC Mutual Fund — Analyst

Yeah, hi. Good morning, everyone. My first question is on the recent divestments of brands in the Indian market. I have two questions tied to this. The first question is that what’s the logic behind divesting brands in India? When — if I understand correctly, Ichnos is where you are looking to make — the capital allocation to Ichnos is going down. The US itself is actually challenged. So, why is this pressing need to divest brands, especially in areas like cardiac and derma? And the question tied to this another point would be that the company, which are acquiring these brands, they are the ones which are the challengers to the larger companies in Indian market in the next five, six, seven years. Why hand them over such brands so that they might get a platform to launch more brands on these platforms, and they might actually threaten companies like yourself only at some point in time? So, I just want to understand this entire brand divestment strategy in Indian market.

Glenn Saldanha — Chairman and Managing Director

So, I think, Nikhil, our — this is Glenn, our top process is basically, we — what we’ve divested is some of our tail-end brands, right, which are not getting actively promoted because of the sales reps concentration going to the core brands, right? And we are re-channelizing that capital into driving our front-end brands much harder, right? So, it’s more a portfolio rationalization effort, right, basis which we have taken out those brands and we are channelizing the capital into our front-end brands and growing them faster.

Nikhil Mathur — HDFC Mutual Fund — Analyst

I understand that, but the point being that why don’t treat those brands as cash cows to further your initiatives, whether in India or even certain other differentiated assets globally? You have taken time and effort to build those brands. There must be something attractive in those brands, why some of these smaller companies are kind of pursuing those brands. I’m just not trying — able to understand that.

Glenn Saldanha — Chairman and Managing Director

See, our scale — we are operating at a very different scale, right? Our India business is almost INR4,000 crores — INR3,500 crores, INR4,000 crores business, right? Our objectives in terms of brand size and brand potential is very different from a smaller company, right? They would look at it very much, much more differently. We are not able to provide the kind of time and energy involved in growing those brands. And if we just keep them in the portfolio and we don’t resource them, over time, they’re going to keep declining, right? So, we think it’s better to take that capital and redeploy it into growing the front-end brands much faster. And if you see, brands like Telma and some of the others that we have, we are still launching new variants. They’re still growing at a much, much faster pace, right, than the market, right? And they have — there’s still a lot of potential that’s untapped, right, which we are now going after.

Nikhil Mathur — HDFC Mutual Fund — Analyst

Okay. And how much is the net cash inflow from Razel divestment?

V. S. Mani — Executive Director and Global Chief Financial Officer

Yeah. So Nikhil, this is Mani here. So, just let me address this a little more complementary rather than just — so first and foremost, our net debt in this quarter is INR100 crores lower as compared to the previous quarter. And as far as — you have to understand this in a holistic way. So, our EBITDA was INR620 crores. We had our cash interest of about INR94 crores. We had cash tax of about INR182 crores. We had asset — basically increase in our assets of INR139 crores. Working capital increase was INR158 crores. And dividend we paid during this quarter was about INR17.5 crores. So all in all, this is about INR646 crores. So, against our EBITDA, this is higher. As far as Razel goes, we got about INR314 crores. But again, as we have put across around INR150 crores is the — basically, the expenses and the write-down against that. And we — obviously, there was a remediation cost also, INR129 crores. Broadly, I think this should answer your question. So, we got INR314 crores.

Nikhil Mathur — HDFC Mutual Fund — Analyst

Mani sir, I couldn’t catch the number on net cash inflow from the Razel divestment?

V. S. Mani — Executive Director and Global Chief Financial Officer

So, there are two ways you can look at it, INR314 crores, and then the various expenses and the write-down of inventories, etc. After that, net gain is INR162 crores. But if you look at some of the — if you look at inventory or something of the past, and in that case, you would have got at least about INR245 crores, okay, from this transaction as of that point of time.

Nikhil Mathur — HDFC Mutual Fund — Analyst

And what is the Monroe remediation cost? I think in the footnote it’s mentioned as Monroe…

V. S. Mani — Executive Director and Global Chief Financial Officer

Yeah, that is INR129 crores.

Nikhil Mathur — HDFC Mutual Fund — Analyst

So, the entire consol to stand-alone, exceptional — expense difference is Monroe basically?

V. S. Mani — Executive Director and Global Chief Financial Officer

Not stand-alone. Consolidated is Monroe.

Nikhil Mathur — HDFC Mutual Fund — Analyst

Consol [Phonetic] to stand-alone differences is Monroe on the exceptional side?

V. S. Mani — Executive Director and Global Chief Financial Officer

Stand-alone is basically what you’ve got from sale of Razel and all the expenses attached to that. That is a stand-alone gain. And that at the consolidated level, you spent on Monroe, so the net gain looks at about INR33 crores. That’s how it is.

Nikhil Mathur — HDFC Mutual Fund — Analyst

Okay. Understood. And one final question is that EBITDA margin guidance continues to be reiterated at FY ’22 levels. But if I look at nine months, I’m looking at reported numbers, both FY ’22 and this year. Last year, it was 18.9%. And this year, nine months, the Company is at 17.4%. So, this implies that ask for fourth quarter is pretty huge. So, I’m not sure what I might be missing here.

V. S. Mani — Executive Director and Global Chief Financial Officer

So Nikhil, we have guided to about 18% to 19%. So, so far, we had about 17.5%. So, I believe by the end of Q4, we should be past 18%.

Nikhil Mathur — HDFC Mutual Fund — Analyst

Okay. But Q4 has to be much beyond — much more than 18%, right, to…

V. S. Mani — Executive Director and Global Chief Financial Officer

Yeah, absolutely. Yes, I agree. So, we are working towards that. As we can see, quarter-to-quarter, there has been an improvement. And also, I’m not getting into the adjusted EBITDA side. If you look at it in the one or two quarters, we also have got those Favi inventories, etc., which when adjusted for, they were better. So, I’m not purely talking from pure EBITDA.

Nikhil Mathur — HDFC Mutual Fund — Analyst

Okay. Understood. Thank you so much.

Operator

Thank you. The next question is from the line of Saion Mukherjee from Nomura. Please go ahead.

Saion Mukherjee — Nomura — Analyst

Yeah. Hi, thank you. Good morning. Mani sir, that I couldn’t understand the net cash inflow from the JB Chem Rosuvastatin divestment? Why there is an inventory write-off in that?

V. S. Mani — Executive Director and Global Chief Financial Officer

There will be — because you — there are inventories in the channel, so as of a particular date, you sort of only take as much as you can. Beyond that, you write down. There will be some expiries. So, all that comes back. So, those are the reasons, that’s the reason.

Saion Mukherjee — Nomura — Analyst

No, those inventories won’t be transferred to JB, is it?

V. S. Mani — Executive Director and Global Chief Financial Officer

Not all of it. Some of them will only go, not all of them. It will take at a particular level only. They don’t go for all of it.

Saion Mukherjee — Nomura — Analyst

So, what you’re saying is the net realization is INR150 crores from…

V. S. Mani — Executive Director and Global Chief Financial Officer

Yeah, INR150 crores, yes. Not — yes, INR162 crores.

Saion Mukherjee — Nomura — Analyst

INR162 crores. And similarly, for the transaction on the derma brands, which is at INR340 crores would be realized this quarter. So how much will be the cash inflow in that?

V. S. Mani — Executive Director and Global Chief Financial Officer

So that, again, we’ll — there will be some amount of expenses, etc. So, I would allude to answering that during that quarter.

Saion Mukherjee — Nomura — Analyst

So, it could be like half of it, you think, like…

V. S. Mani — Executive Director and Global Chief Financial Officer

Yeah, maybe a little more than half of that. Yeah.

Saion Mukherjee — Nomura — Analyst

Okay. And also on Monroe, INR129 crore, this remediation cost, why is it treated as an exceptional item? It’s an operational expense, right? Most companies…

V. S. Mani — Executive Director and Global Chief Financial Officer

No, I wouldn’t look at it that way because it’s not something that we keep spending regularly, right? These are based on — basically we have to do — needful to do regulatory action, right? It’s not something that on a year-on-year basis, I will keep on getting this, right? So, this is coming up at — based on that — you have to remediate your sites, so we’re spending on that. So, that’s why it’s an exceptional item.

Saion Mukherjee — Nomura — Analyst

No, it is a one-time expense, I understand, but this is not exceptional, right? This is part of operations.

V. S. Mani — Executive Director and Global Chief Financial Officer

No, but you don’t get these every quarter or every year, and that too this — you have to remediate the site for a couple of quarters and again, that’s why — so people come to clearly know what it is, right? Otherwise, if I put it up, then we will ask me the next question, why is it higher and my expenses are higher. So, I have to respond to that. So, I made it very clear. I put it — how you look at it is differently, but I have to put it separately, and it is an exceptional item because it’s not something that I’m going to have every quarter or every year. So therefore, it clearly comes to the — for a person who is looking at the financial statement, very clear that this has happened.

Saion Mukherjee — Nomura — Analyst

Okay. And on the US sales, there is an increase quarter-on-quarter. We had import alert at the Baddi site. So, how should we — is the impact already there? And how should we see revenues for the fourth quarter in the US?

Brendan O’Grady — Chief Executive Officer, Global Formulations Business

Yes. So this is Brendan speaking. The Baddi impact is already — already input into our thinking. So, we don’t expect any further impact as far as our guidance. But if you think about the US quarter, quarter two was better than quarter one. Quarter three was better than quarter two. And we expect quarter four to be slightly better or in line with quarter three. So, we see the US businesses certainly recovering and about $100 million business, give or take, a quarter as we go forward.

Saion Mukherjee — Nomura — Analyst

Okay. And any outlook on how should we think about it for FY ’24, given we had Monroe, which is still sort of under — it’s not cleared from a regulatory perspective?

Brendan O’Grady — Chief Executive Officer, Global Formulations Business

Right. So going forward, again, we expect low-to-mid single-digit growth going forward. I think we’ll see the quarter-on-quarter, things look strong for the business. And we’ll see how things turn out with new product launch and so forth. But, we do see recovery in the US business. And as we bring Monroe back online, which we expect to do later this calendar year, then that will even add to the growth in the US.

Saion Mukherjee — Nomura — Analyst

Okay. Thank you. I’ll join back.

Operator

Thank you. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.

Shyam Srinivasan — Goldman Sachs — Analyst

Yeah. Good morning, and thank you for taking my question. Just the first one on Europe and ROW. I think we have seen very good strength in both Q-o-Q and Y-o-Y for both those. So, just want to understand what’s happening there. Any specific products or anything you would like to — I’m just looking at the presentation but — it talks about Ryaltris. But if you could give us some granular details on both these markets, please.

Brendan O’Grady — Chief Executive Officer, Global Formulations Business

Sure. I’d be happy to address that. So again, this is Brendan. So, I’ll take Europe first. And if we look at Europe, overall, our respiratory portfolio is doing well across all of the markets. So our brands there, we also continue to launch through our partner, Menarini. And of course, we have a [Indecipherable]. That continues to be well accepted across all of Europe. As I mentioned, our respiratory portfolio with products like Salmex and Asthmex continue to gain scale. And we’ve also done a very good job with our big generic business as far as gaining volume there. So, that’s really fueling the European growth.

If we look at the Rest of the World, Malaysia and the Philippines are doing well. Brazil, our respiratory portfolio continues to be strong in Brazil. We’re seeing strong secondary sales in Mexico. And our Russian business has been resilient and also had an early cough cold season in this year in the third quarter, which helped with Russia as well. So, across all the segments, whether it’s Rest of World or Europe, we’re seeing strong growth, and we expect that to continue.

Shyam Srinivasan — Goldman Sachs — Analyst

So, Brendan, nothing in terms of one-offs, right, other than the flu season, which could be different. But otherwise, these are levels on which we can show sequential growth, you think?

Brendan O’Grady — Chief Executive Officer, Global Formulations Business

Yes, not really one-off. If you look at our business, it’s been strong in all those markets across all products. I think one of the things that we’ll point out is the growth of Ryaltris, right. It is doing really well in Australia. It’s doing really well in South Africa. It’s doing really well in Russia and the Czech Republic. So, we continue to see the acceptance of Ryaltris. So that will fuel the growth going forward also. So, not really one-off opportunity. It’s more just kind of growth in our base business and new product launches.

Shyam Srinivasan — Goldman Sachs — Analyst

Helpful. Just second question on employee costs. Historically, I always remember Q2 to be the strongest one and then Q3 comes off. But we have grown like even on the Q2 base. So, I just want to understand, are we now making the employee wage provisions even through the year? Or how should we look at that?

V. S. Mani — Executive Director and Global Chief Financial Officer

Basically, we phase it out between Q2 and Q3. So, that’s why the Q3 also looks a little higher. Q4 will be lower. And also, just to — Shyam, just to tell you there are, it looks a little higher this year for two, three reasons. One is, obviously, the saving that came in. Also, the overall — especially outside the currency impact is also there, right? When you transfer to rupee, the overall thing is going to be 10%. So that’s another reason why it is higher. So, these are two, three reasons why it looks higher than last year. And also, obviously, the increment would happen in the second quarter.

Shyam Srinivasan — Goldman Sachs — Analyst

Helpful, Mani. Last question, I just want to get the capex numbers again. We have done INR440 million for nine months, and you’re guiding for another INR200 million, INR250 million for the fourth quarter. Where is this generally going towards?

V. S. Mani — Executive Director and Global Chief Financial Officer

So, this will be all — see, in a way, on a yearly basis, we’ve always been spending much higher than that also. So, routine capex, some lines that we put, essential lines that we require for some respiratory products [Indecipherable] coming in. So, those are the reasons why…

Glenn Saldanha — Chairman and Managing Director

Also I think GLS gets consolidated, so their capex also.

Shyam Srinivasan — Goldman Sachs — Analyst

Got it, sir. Thank you, and all the best.

Operator

[Operator Instructions] The next question is from the line Kunal Randeria from Nuvama. Please go ahead.

Kunal Randeria — Nuvama — Analyst

Hi, good morning. Sir, just one clarification on Razel. So, this was a INR70 crore brand, right? So, how come you had around INR140 crores of inventories lying in the channel?

Glenn Saldanha — Chairman and Managing Director

No, it’s not just that alone inventory or anything. It’s also to do with your transaction cost. It’s got to do with people we — sort of ex gratia to people. So, it’s multiple costs that is there in that.

Kunal Randeria — Nuvama — Analyst

The reason that I’m asking this, it is a very big number for a INR70 crore brand. So a bit more color would be helpful.

Glenn Saldanha — Chairman and Managing Director

So, the color that I’m telling you is that basically, there is a bankers cost, there will be employee cost. There will be other in terms of what we said about inventory, etc., the expiry. So, all that put together this is how the cost has come together.

Kunal Randeria — Nuvama — Analyst

Okay. But can you share how many employees have been laid or transferred to JB Chemicals?

Glenn Saldanha — Chairman and Managing Director

Sorry, we got about INR314 crores there.

Kunal Randeria — Nuvama — Analyst

How many employees who are promoting this brand?

Glenn Saldanha — Chairman and Managing Director

We’ve got about 50 to 60 employees we transferred.

Kunal Randeria — Nuvama — Analyst

50 to 60, okay, perfect. Okay. Secondly, in your presentation, you have mentioned some market share details for Ryaltris. I think 30% in Korea, 15% in Australia and so on. So, just for my understanding, what do you exactly mean by that? So, you compare against which standard of care treatment over here?

Glenn Saldanha — Chairman and Managing Director

So typically, we take the allergy rhinitis market for that specific market, right? So, a lot of these market shares are computed basis the allergic rhinitis market.

Kunal Randeria — Nuvama — Analyst

Right. Okay. So that means — the standard of care might be different. In some markets, it could be maybe not a combination product. So, but it would be fair to understand you’re taking the rhinitis market, as for the particular country?

Utkarsh Gandhi — General Manager, Investor Relations

Yes. So Kunal, basically, for example, in South Africa, it’s the overall allergic rhinitis market where we are — where we have 15% share. And in Korea, it’s particularly the combination market in the space because it’s just launched. So, we are — first direct competitor is, of course, the other combination products. So, if you take the Korea market, the share is essentially across the combination therapy for rhinitis.

Kunal Randeria — Nuvama — Analyst

Okay. I’ll take this offline. And just one last one. So Monroe, I think you spent around INR130 [Phonetic] crores in the quarter. So this is a fairly new plant, and the number seems fairly high for one quarter. So, maybe can you just share a bit more of the kind of improvement that you are doing here?

Glenn Saldanha — Chairman and Managing Director

I think Monroe, we’re pretty much done with our remediation effort, right? Q4, it will come to an end, right? And I think we’re hoping to start manufacturing late Q4, early Q1 of next year. So, I think the remediation effort is — it’s a cumulative impact, right, of all the work that we’ve done so far. And we’ve been working on the site for a long time. So, we’ve not been producing products for the last 18 months in Monroe, right? Just keep that in mind. And now we are almost done with the remediation work. So hopefully, from Q1 we will start early Q1 and Q4, we’ll start manufacturing batches again.

Kunal Randeria — Nuvama — Analyst

Okay. Thanks for that.

Operator

Thank you. The next question is from the line of Tarang Agrawal from Old Bridge Capital. Please go ahead.

Tarang Agrawal — Old Bridge Capital — Analyst

Hi, morning. Thank you for the opportunity. A couple of questions from my side. One, extra remediation expenses, what would be the per annum operational costs for Monroe currently?

Glenn Saldanha — Chairman and Managing Director

So, it will be roughly about $25 million a year. That will be the normal cost of running the facility.

Tarang Agrawal — Old Bridge Capital — Analyst

$25 million, right? Okay. The second is, just to get a sense on the US business, right, roughly about INR3,000 crores of revenue. Assuming a large proportion of your generic R&D gets spent to the US, almost 17% to 18% of that revenue is R&D spend. And at the same time, we’ve got Goa, Baddi and Monroe under FDA action. So, how should we look at it in terms of your capital allocation, whether it’s on the operational front or on the capital front going forward? And typically, do we expect this business to continue being a $100 million-odd business and it stays there? Just some flavor on this would be helpful.

Glenn Saldanha — Chairman and Managing Director

So, I think there are a couple of things here, right? One is, we think Q4, the remediation will be across Monroe, Goa and Baddi, right. But after that, from Q1 onwards, you will — the remediation cost will come down significantly because Monroe will be done, and then the other sites also will be very insignificant, right, from an overall perspective. So, I think the bulk of the remediation work is in Q3 and Q4, right, which is what we’ve taken up. The second point is talking about your US — the US business, see, we have some very exciting products, which we’re working on, right, like Flovent, we’ve got. We’ve got another respiratory product getting filed this year. We’ve got a couple of CGT products we just filed, which is in the drug device combination space. So, I think the portfolio looks good, right?

If you see beyond FY ’24, right, while Brendan guided to ’24 being mid-single digit, right? I think beyond ’24, from ’25 onwards, a lot of these products will start kicking in, right? And then if you see the outer years, we have some exclusive products where we’ve done some settlements, right, where we have the sole 180-day exclusivity, right, on almost three such opportunities, right, from, I think, ’26, ’27, ’28. So, I think the portfolio looks strong in the — as we go forward, right, both in terms of what we’ve filed and what we are working on filing, right in the next 12 months for the US. So I think — and then of course, Monroe, if Monroe starts kicking in second half of next year in terms of commercial sales, right, next financial year, then that will also add to the — give us an injectable site and that will further drive our US portfolio forward. So, there is a very clear path that we are working towards for the US business, which we’re building on as every quarter goes by.

Tarang Agrawal — Old Bridge Capital — Analyst

Okay. Then just one last question, GLS cash flows would largely be ring-fenced to — for GLS growth aspirations, right?

V. S. Mani — Executive Director and Global Chief Financial Officer

Yes, absolutely. In a way, it’s a listed public company, so are we. Everything is at arm’s length.

Tarang Agrawal — Old Bridge Capital — Analyst

Okay. Thank you.

Operator

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

Prakash Agarwal — Axis Capital — Analyst

Yeah. Hi, good morning. Thanks for the opportunity. First, clarification on this Monroe. So, you’re expecting exhibit batches to start from Q1, would this — currently, I understand [Indecipherable]. So, would this require an inspection or the remediation actions are good enough and you expect FDA to clear it?

Glenn Saldanha — Chairman and Managing Director

Prakash, all we’re saying is we are starting commercial manufacturing and manufacturing from Q1, right? Obviously, FDA will come in, we believe, and re-inspect the facilities, right? So, that’s part of the expectation.

Prakash Agarwal — Axis Capital — Analyst

Okay. But do you have a date or it’s post remediation? What is the process? I’m just trying to understand. Post whole remediation you will invite them?

Glenn Saldanha — Chairman and Managing Director

Prakash, we can’t comment on that specifically, right? All we’re saying is we expect an FDA inspection, right? And the process of remediation is underway as we speak.

Prakash Agarwal — Axis Capital — Analyst

And just a commentary on your R&D split. I’m sorry, if you’ve already said. There was another call. So, what is the current R&D split between GX and innovation?

V. S. Mani — Executive Director and Global Chief Financial Officer

So, GX is — innovation is about 4%-odd. GX is 6%. So, you have guided to about 10% for the full year. So, that’s how the split is.

Prakash Agarwal — Axis Capital — Analyst

And how does this look for the next financial year?

V. S. Mani — Executive Director and Global Chief Financial Officer

Prakash, it may trend a bit lower by about 0.5% or so.

Glenn Saldanha — Chairman and Managing Director

So, innovation Prakash, because of Ichnos, right, will come off quite significantly, okay, next year, right? As we said, Ichnos, the spend base will come to INR60 million from current INR80 million, INR85 million in that ballpark. So, there is a significant drop on innovation spend next year on account of cut back in Ichnos spend. And I think the overall R&D spend will trend at around 8-odd percent, 8%, 8.5% for the full year for next year. There is a significant drop coming out in the total R&D spend also.

Prakash Agarwal — Axis Capital — Analyst

Okay. But largely, GX remains similar, the innovation comes down by almost a quarter?

Glenn Saldanha — Chairman and Managing Director

Correct. That’s right. Savings are coming out of innovation cuts.

Prakash Agarwal — Axis Capital — Analyst

And what about the monetization or hive off plan, we always believe that, okay, we are at the fag end of monetizing one of the large assets, is that plan still on? Or what is the plan B for this?

Glenn Saldanha — Chairman and Managing Director

So very clearly, right, the way I see it is FY ’24, we have four strong innovative assets, right, three with Ichnos, right, 1342, 1442, 2001. All these three should get to a POC by end of FY ’24, right? And then you got the HPK1, right, which is doing really well, right? And which also will get to a POC, right, in FY ’24. So FY ’24 is a very critical year for the innovation work that we’re doing at Denmark. And even if two out of four, we get good POCs that we think will be transformational. And obviously, the path is then to partner out and monetize it and do all that, right, which is what we’re working on even as we speak.

Prakash Agarwal — Axis Capital — Analyst

Okay. Perfect. And what is the dollar debt today?

V. S. Mani — Executive Director and Global Chief Financial Officer

Sorry?

Prakash Agarwal — Axis Capital — Analyst

The dollar gross debt and net debt?

V. S. Mani — Executive Director and Global Chief Financial Officer

So in gross debt, the dollar will be about $440 million, okay, plus some rupee loans. And the net debt would be lower by about $100 [Phonetic] million in the currency part.

Prakash Agarwal — Axis Capital — Analyst

$100 [Phonetic] million currency you have?

V. S. Mani — Executive Director and Global Chief Financial Officer

Yes, foreign currency, yes.

Prakash Agarwal — Axis Capital — Analyst

And the divestment, which are largely rupee led, you would have…

V. S. Mani — Executive Director and Global Chief Financial Officer

Yes. Rupee-led only.

Prakash Agarwal — Axis Capital — Analyst

I think you would have knocked off some of the rupee debt?

V. S. Mani — Executive Director and Global Chief Financial Officer

So, if you look at it, obviously, net debt is lower than INR100 [Phonetic] crores. So, to that extent, some rupee debt would be lower, yes.

Prakash Agarwal — Axis Capital — Analyst

Okay, great. Thank you.

Operator

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

Nitin Agarwal — DAM Capital — Analyst

Hi, thanks for taking my question. Mani, sir, on the staff costs, I think in the last couple of years, we had done a pretty solid job on controlling the staff expense increase. And this year seems to be a bit of an outlier. Now barring the currency, is there anything which has changed? And how should we look at this staff cost as well as other expenses on a going-forward basis?

V. S. Mani — Executive Director and Global Chief Financial Officer

So, let me address the other expenses first. So, other expenses, we are pretty much at about 26% or so, give and take a few percentage here and there quarter-wise. So, there, we are not too much worse off. If you really ask me Nitin, last year, if you look at it, first quarter was a COVID quarter. Till July, we had COVID and all that. So, this year it is not there. Also, the other issue that you look at this year is because outside India, when you translate to rupees, there is a rupee depreciation of 10%, so that’s also looks a little on the higher side. So, that’s why these are there. Next year, when we you go to a full year, it will correct itself. So, I think other expenses, I don’t see it as broadly where we are.

In terms of the staff costs, basically, again, as I told, the first — the second and the third quarter looks a little higher because of the phasing of the bonus. Also, outside India, again, there is — when you translate, there is a good 10% increase in the overall cost because of the currency. Q4, it should correct itself. So, full year, we look at it at about 21% against 20% last year, there is a one percentage higher, which we are making up in other areas.

Nitin Agarwal — DAM Capital — Analyst

Sir, going forward, staff costs, about 20%, 21%, other expense 26%. You don’t see much opportunity instead of reducing these percentages to sale?

V. S. Mani — Executive Director and Global Chief Financial Officer

Maybe — yes, there will be some opportunities. You could see it a 1%, 1% lower as we go along. So, that will add to the improvement in EBITDA, okay? At least 1%, 1%, which is what we did. Like other expense used to be 29%, we brought it to 26%. Staff costs we’ll definitely get it lower by a percentage overall.

Nitin Agarwal — DAM Capital — Analyst

Okay. And secondly, on the — for the quarter, what was our mark-to-market impact of the currency on the loans?

V. S. Mani — Executive Director and Global Chief Financial Officer

It would be about INR1 what it moved from INR81.47 to around INR82, so it will be about INR35 crores to INR40 crores.

Nitin Agarwal — DAM Capital — Analyst

Okay, it wasn’t meaningful. And sir, on the working capital, looking beyond Q4, how should we look at working capital now? We’ve had some higher inventory working capital over the last few quarters. Do we see opportunities to bring it down further? How are you looking at the working capital front going forward?

V. S. Mani — Executive Director and Global Chief Financial Officer

So Nitin, actually, it’s a more of commercial call, okay as of now, we speak. Obviously, with our customer requirements being higher, especially some of our India sites where we have to work on remediation, etc. So obviously, the requirements of inventory has gone up. So, I think for a couple of quarters, we’ll see the inventory levels higher. So, after that, it will kind of come off. It’s been — in the first part of the year, there were more in terms of the situation in China, etc., that is why we had a higher inventory. I thought it would come down. But because of these, we need to keep it up. But I think it is worth it, Nitin, because it helps us to grow our business better.

Nitin Agarwal — DAM Capital — Analyst

And lastly, on the tax rate, any thoughts on the tax rate on a going-forward basis?

V. S. Mani — Executive Director and Global Chief Financial Officer

So as you see, during the last three quarters, it has come down. So, I think going forward, you’ll see the — there are two things. One, you will look at the effective tax rate, which I think should go lower than — it should be about in the — between 33%, 34% or so next year, and cash taxes anyway at about 30% only. India is much lower, but overseas because of the spend in Ichnos, which as we see it come lower and lower, both the ETR as well as the cash tax is lower.

Nitin Agarwal — DAM Capital — Analyst

Okay. Thank you.

Operator

[Operator Instructions] The next question is from the line of Charul Agarwal from Bank of America. Please go ahead. Charul, you’re line is in the talk mode. Please go ahead.

Charul Agarwal — Bank of America — Analyst

Hi. Am I audible?

Operator

Yes, ma’am. Please proceed.

Charul Agarwal — Bank of America — Analyst

So, thank you for taking my call — taking my question. I wanted to understand a bit more about the US business outperformance this quarter. What was driving it? Does it impact — does it include any benefits from some supply disruption or seasonality benefit? So yeah, what is driving the outperformance here?

Brendan O’Grady — Chief Executive Officer, Global Formulations Business

So, the performance in the US business this quarter is really due to just increases in volume and share gains in our base business. I think we’re doing a better job executing in the market. There have been some disruptions in the US market that we’ve been able to take advantage of, which overall is helping with the recovery in the growth as well as some new product launches. So, there’s nothing really kind of — I would say, it’s a one-time outstanding issue that led to the performance. It’s just kind of better execution in growth on the base business.

Charul Agarwal — Bank of America — Analyst

Thank you. That’s all from me.

Brendan O’Grady — Chief Executive Officer, Global Formulations Business

Sure.

Operator

Thank you. 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

Thank you for the opportunity. Just to know the overall Ryaltris sales for the quarter, now that we are kind of commercializing in 23 market, if you could give some ballpark number?

Glenn Saldanha — Chairman and Managing Director

So, this year, we are trending at around $20 million, $25 million for the full year, right, for the current year. Ryaltris, our view is over a four, five year time frame, right, to peak sales, we’ll get to about $100 million, $150 million, right, in revenues. So this year, it’s trending at around $20 million, $25 million, primarily driven heavily by Europe and Rest of the World markets.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

US is not yet — it’s just launched and not a meaningful contribution for this quarter?

Brendan O’Grady — Chief Executive Officer, Global Formulations Business

So, in the US, Ryaltris, we just launched at the end of last calendar year, and they’re working through insurance and payer coverage. So, there’s really not a lot of Ryaltris sales in this quarter, and probably we won’t see Ryaltris sales start to pick up in the US in the second half of this calendar year.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Okay. If I’m correct, it would be expect to pick up second half of calendar year, right?

Brendan O’Grady — Chief Executive Officer, Global Formulations Business

That’s right. Yes.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

And secondly, how many ANDAs have been filed from Monroe till date?

Glenn Saldanha — Chairman and Managing Director

So, we don’t have the exact number, but my guess is it’s around five, six, right, which are pending right now.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

So with this remediation measures, would you have to kind of revalidate these products and then re-submit or what’s the…

Glenn Saldanha — Chairman and Managing Director

Unfortunately, I cannot get into that level of detail, right? But we are working through the remediation, right? And we’re hoping to bring some of these products to the market.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Did that require a significant amount of infrastructure changes because — considering the amount that has been spent at Monroe?

Glenn Saldanha — Chairman and Managing Director

The amount is purely consultant cost, okay, bringing in third-party consultants to remediate the site. It is pretty standard. For all companies that go through remediation, right, especially the amount of remediation that we’ve done at Monroe is pretty standard. It’s not extraordinary.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Okay. That’s it from my side. Thank you.

Operator

Thank you. The next question is from the line of Saion Mukherjee from Nomura. Please go ahead.

Saion Mukherjee — Nomura — Analyst

Yeah, thanks. Just one follow-up. Glenn, on India business, these divestments that you have been doing, are we done with it? Or you think there would be more divestment that you are sort of considering the non-core brands?

Glenn Saldanha — Chairman and Managing Director

We have no more plans, Saion. We are pretty much done with it at this point. But again, just keep in mind, look, this is all being done in order to drive up, a lot of that capital has been redeployed into driving our front-end brands. So, India growth will continue to remain strong, right, even going forward, right, despite these divestments. They’re insignificant — if you see the total divestments we are talking of, around INR150 crores on an almost a INR3,500 crores, INR4,000 crores business, right? And that is just being done to redeploy capital into our front-end portfolios.

Saion Mukherjee — Nomura — Analyst

Okay. And the other one on Ichnos, you mentioned the proof of concept by end of ’24. There seems to be some delay in the time lines here. So, if you can clarify what’s happening? And any more granular detail in terms of quarter that we can expect?

Glenn Saldanha — Chairman and Managing Director

I think 1342 should come in Q1, 1442 maybe Q2, Q3 and 2001 in Q4.

Saion Mukherjee — Nomura — Analyst

Okay. So now with COVID gone, things are on track, you think, in terms of getting or meeting these time lines?

Glenn Saldanha — Chairman and Managing Director

Yeah, I think so, Saion. There are always hiccups in drug development, right? It’s not a linear path, right, so 1342, there are some delays clearly, but we think by Q1, we’ll have visibility.

Saion Mukherjee — Nomura — Analyst

Okay. Thank you.

Operator

Thank you. The next question is from the line of Vikas Sharda from NTAsset Management. Please go ahead.

Vikas Sharda — NTAsset Management — Analyst

Hi, good morning. Two questions. One, regarding your net debt, the medium-term guidance is zero net debt by FY ’26. But if you were to give any milestones, say, by the end of this year and FY ’24, so that will be helpful. And secondly, for this Razel transition that INR150 crore of transaction costs, the banker and the employee costs and the inventory, the three main items. If you could break it up will be helpful.

V. S. Mani — Executive Director and Global Chief Financial Officer

So, Vikas, the net debt, obviously, we have guided to 0 net debt by ’26. So, I think as we go along quarter-wise, you will see it come lowering. In the next quarter also, it will come a little lower. It’s not — it would not be appropriate to start breaking up everything into this. So, I’ve given overall what is the spend. So obviously, all this put together is what it came to, yes.

Vikas Sharda — NTAsset Management — Analyst

Okay, no problem.

Operator

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

Nitin Agarwal — DAM Capital — Analyst

So, just on the US business, Glenn, how are you looking at the approval pipeline for the next four to five quarters?

Glenn Saldanha — Chairman and Managing Director

I think, Nitin, it’s — the portfolio is looking strong, okay? FY ’24, as Brendan said, if we get to mid-single digit, I think we’ll be okay. But from there on, starting, I think, second half of FY ’24, we should see some good approvals coming through right for the US.

Nitin Agarwal — DAM Capital — Analyst

And for our respiratory filing of Flovent, it’s going to be a FY ’25 filing, if I remember the earlier guidance.

Glenn Saldanha — Chairman and Managing Director

So, FY is — calendar ’23, end of calendar ’23 is when we file, right. Launch is ’25.

Nitin Agarwal — DAM Capital — Analyst

Okay. And the other respiratory assets, you’re again looking to file in FY ’24 sometime?

Glenn Saldanha — Chairman and Managing Director

Calendar ’23, FY ’24, correct.

Nitin Agarwal — DAM Capital — Analyst

And again, we’re looking at FY ’25 launch, even for that asset.

Glenn Saldanha — Chairman and Managing Director

Correct.

Nitin Agarwal — DAM Capital — Analyst

So, two large respiratory assets sometime in FY ’25, that’s the expectation.

Glenn Saldanha — Chairman and Managing Director

Correct.

Nitin Agarwal — DAM Capital — Analyst

And these CGDs that you talked about, Glenn, what kind of time frame would you look for tower?

Glenn Saldanha — Chairman and Managing Director

So one could get approved in second half of FY ’24, and that could be a meaningful product for us. And the other one, probably Q1 ’25, FY ’25.

Nitin Agarwal — DAM Capital — Analyst

Okay. So that’s where — I think your commentary around second half onwards is when some meaningful additions can begin to come through.

Glenn Saldanha — Chairman and Managing Director

Exactly. And Monroe, right to add to that in second half.

Nitin Agarwal — DAM Capital — Analyst

Right. Glenn, so Monroe, how will it work? You will get — have you informed the FDA to come visit or it’s going to do it at some point in time?

Glenn Saldanha — Chairman and Managing Director

So we have a regular — we have constant updates to the FDA, right, on the remediation work that’s going on. So, I think that’s the only visibility that we can give at this point.

Nitin Agarwal — DAM Capital — Analyst

Okay. Thank you.

Operator

Thank you. The next question is from the line of Ajay Vora from Nuvama. Please go ahead.

Ajay Vora — Nuvama — Analyst

Yeah. Hi, good morning. So, if you look at you in the current quarter, in spite of high remediation costs and inventory loss and a lot of restructuring that has taken place, we are at an EBITDA run rate of close to INR620 crores. And now that if you are looking at some sort of cleanup in Q4 as well, from Q1 and then moving forward, we are looking at US improving and contribution from Monroe. Do you think somewhere in the second half, there’s a run rate of around INR620-odd crores of EBITDA can move to INR700 crores plus?

Glenn Saldanha — Chairman and Managing Director

It should definitely move here. I think if you see next year, right, if you are able to grow sales 10%, 12% margin expansion because of the lower R&D spend, right, or margins going up substantially, I think that will clearly translate into higher EBITDA, right? And hopefully, starting from Q1, you should see that flow through come in, some of it, at least in terms of sales growth as well as margin expansions coming through.

Ajay Vora — Nuvama — Analyst

From Q1 itself, can we be closer to the INR680 crores, INR700 crores of run rate?

Glenn Saldanha — Chairman and Managing Director

So I would not like to dwell on giving a number quarter-wise, but you are right saying next year, second half onwards, there will be bigger improvement, that should be there.

Ajay Vora — Nuvama — Analyst

And therefore, by end of next year, what can be our net debt level?

Glenn Saldanha — Chairman and Managing Director

It will definitely come down. I will not like to — because, see, there are here and there uncertainties that come in, instead of giving any number, all I can tell is we constantly will endeavor to bring it down, okay, and that’s what we’ve been doing.

Ajay Vora — Nuvama — Analyst

Okay. Thanks a lot.

Operator

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Utkarsh Gandhi for his closing comments.

Utkarsh Gandhi — General Manager, Investor Relations

Thank you, moderator. We’ll just read the disclaimer before we end the call. The information statement and analysis describing the company or its affiliates objectives, projections and estimates discussed during the call are forward-looking statements. These statements are based on current expectations, forecasts and assumptions that are subject to risks and uncertainties, which could cause our actual outcomes and results to differ materially from these statements depending on economic conditions cum policies and other incidental factors. No representation of warranty, either expressed or implied is provided in relation to this document and the comments discussed during the call and should not be considered as a substitute for exercise of recipient’s own judgment. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

With this, we end today’s call, big thank you to everyone for joining us today.

Operator

[Operator Closing Remarks]