Gufic Biosciences Limited (GUFICBIO) Q1 FY23 Earnings Concall

Gufic Biosciences Limited (NSE:GUFICBIO) Q2 FY23 Earnings Concall dated Nov.13, 2022

Corporate Participants:

Ami Naresh Shah — Company Secretary and Compliance Officer

Avik Das — Investor Relations

Devakinandan B. Roonghta — Chief Financial Officer

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Analysts:

Keshav Kumar — RakSan Investors — Analyst

Rajat Setiya — ithoughtpms — Analyst

Rohan Ravindra Agarwal — Loop Advisory Ventures LLP — Analyst

Bhavya Sonawala — Prime Asset Source Private Limited — Analyst

Saurabh Beria — Axanoun Investment Management — Analyst

Nitya Shah — Kamayakya Wealth Management Private Limited — Analyst

Aman Vij — Astute Investment Management Private Limited — Analyst

Unidentified Participant — — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Q2 FY ’23 Earnings Conference Call of Gufic Biosciences Limited. As a reminder, all participant lines will be in listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions].

I now hand the conference over to Ms. Ami Shah, Company Secretary from Gufic Biosciences Limited. Thank you, and over to you.

Ami Naresh Shah — Company Secretary and Compliance Officer

Thank you, Yeshashree. Good evening, and a warm welcome to the Gufic Biosciences Limited Earnings Conference Call for the Second Quarter of FY ’22-’23. I have with me Mr. Pranav Choksi, Chief Executive Director and Whole Time Director; Mr. Devakinandan Roonghta, Chief Financial Officer; and Mr. Avik Das from Investor Relations team to give the highlights of the business performance of the Company and to clarify all the queries of the investors during the call. We will begin the call with business highlights and overview by Mr. Avik, followed by financial overview by Mr. Roonghta.

After the opening remarks, the operator will open the breach for Q&A session. But before we proceed with the call, please note that some of the statements made in today’s discussion may be forward-looking and are based on management’s current expectation, and this may be viewed in conjunction with risks and uncertainties involved in the business. The company assumes no responsibility to publish or update or amend, modify, and revise any forward-looking statement based on any subsequent development, new information in future or except as required by the applicable laws in force. This call is being recorded, and the playback of the call shall be made available on our website shortly after the call. The transcript of this call will also be submitted to the stock exchanges and will also be made available on our website.

I’ll now hand over the call to Mr. Avik for his opening remarks. Thank you. Over to you, Mr. Avik.

Avik Das — Investor Relations

Thank you, Ami, and good afternoon to one and all, and thank you very much for joining on this call. So I’ll quickly begin the call and give you all a highlight of what happened in the past quarter.

For the past quarter, we have started gearing up to take our Indore facility live, and in view of that, we have started investing in R&D for new molecules and job delivery systems which will eventually smoothen our entire process of going live at Indore. With respect to that, we’ve already started taking validation batches to create the data and build up closures for the pipeline products. And this will definitely help us reduce our time to market significantly once our plant is up and ready at Indore, so this has been the broad theme for the last quarter for us.

And now diving into our divisions, our Critical Care division, we have an update over here where we’ve launched a sub-division within this flagship division by the name of Sparsh. This division will use the most advanced technology and smoothen the supply chain process for delivering 100-plus high-quality injectable products, primarily to untapped hospitals and nursing homes, which include not only the suburban, but also the rural market. And as per our initial estimates, the addressable market size of this market is roughly INR9,500 crores, and it is growing at a CAGR of 12%.

We are also very pleased to inform you all that Gufic has received the DCGI approval for manufacturing and marketing Biapenem in dual-chamber bags, which is our proprietary technology. And as we all know, given the industry trends, the Critical Care segment by and large face headwinds due to reduced hospitalizations and excess inventory in the trade channel. And we’ve taken some strategic decisions to mitigate that, and we’ll use to [Phonetic] form that as the call progresses.

We are also very glad to announce that we are planning to launch Ceftazidime-Avibactam soon, and Gufic will be the only Indian company to launch this product other than the innovator with an in-house manufacture API. So this is again in line with our strategy to go backwards for all our critical products and new products and have the API manufactured in-house. We are also launching the novel once-a-week anti-infective Dalbavancin for the first time in India in Q4 in FY ’23, and very much on track to achieve our target date for the launch. We have also received the DCGI approval to conduct Phase III clinical trials for thymosin alpha injection for sepsis.

Now coming to FortiCare division. This division has done phenomenally well for us this year, and it continues to register double-digit growth. And especially some of our flagship products like Puregraf, which is HMG and Puretrig, which is HCG. We continue to have dominant market share in these products. We’ve received DCGI approval to conduct Phase III trials with Thymocin Alpha for Endonetrosis. And as we had updated last quarter as well, we have launched Dydrogesterone with our own API. And this is a vibrant market, and it’s gone above INR800 crores now and growing at a healthy pace of 60% year-on-year. So, our initiatives to develop the recombinant alternative to derisk geopolitically is also going on track. And within the next 18 months, we should be able to launch the recombinant products as well.

Another update is that we’ve increased our market penetration with enoxaparin in the infertility segment, and we created a good brand within this molecule in this segment, and we’ve also come up to second rank in the high-growing Cetrorelix market.

Now coming to our other divisions. Some key updates over here is we’ve launched a cannabis-extract based topical solution for muscular and arthritic pain. And we’ve also initiated development of a unique liposomal iron formulation in these divisions.

Now coming to our international business. I’d like to highlight that we’ve received two new product approvals from REG markets, and we’ve also received one product approval from Health Canada. And as informed earlier, we are gearing up for many more approvals to come primarily for our Indore and our new approved plant at Navsari. And in order to further our alliances with our partners, globally, we very recently participated in CPHI, which was held in Frankfurt. And in the coming quarters, we’ll make announcements of the developments that happened there.

And with respect to Ardisia [Phonetic], our Central of Excellence targeting toxins and new age therapies, but we’re very happy to inform that we have developed 20-plus combination therapies, which are unique to Ardisia-only. And these will be used for skin and body transformation using FDA-approved technologies. So coming to our Aesthaderm division. Here, we partnered with the ICCG in the field of cosmetic vaginal tightening and rejuvenation and we’ve organized training camps for — to use Botulinum Toxin for these indications.

Now with this, I’ll hand over the call to our CFO, Mr. Devkinandan Roonghta, to quickly take you all through the highlights of the numbers of the past quarter and H1.

Devakinandan B. Roonghta — Chief Financial Officer

Thank you, Avik. Good afternoon, everybody. First thing, I would like to inform you that the quarterly levels of Q2 of ’22-’23 versus Q2 of ’21-’22 is not comparable because last year Q2, we are having a COVID-related sales. The total sales for last year, Q2 was INR194 crores, out of which INR471 crores was related to COVID-related sales. If I relate the COVID-related sales, the sales for last year was INR147 crores against this year’s sale of Q2 is INR175 crores, which is 19% higher than the last year’s provision. EBITDA of last year was INR36 crores, this time the EBITDA is INR33.4 crores. Basically, this year, we are — this quarter, we have conducted a lot of validation batch for our Indore plant. And therefore, the R&D expenses is slightly higher as compared to the previous two quarters. EBITDA margin last year was around 18.6% this year, 19%.

Profit before tax was INR30.4 crores this year, INR27.3 crores. PAT was 15.6%. This year, this quarter, it was 15.5%. Profit after tax was last year INR23.3 crores. This year, it was INR20.2 crores. PAT margin was last year 12%. This year, it was 11.5%. Thank you.

Operator

Shall we begin the question-and-answer session?

Ami Naresh Shah — Company Secretary and Compliance Officer

Yes.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. We have our first in from the line of Keshav from RakSan Investors. Please go ahead.

Keshav Kumar — RakSan Investors — Analyst

Hi, good afternoon. Sir, it’s very fascinating to see so many things Gufic has been trying to do. So we are a substance manufacturer in that we are expanding our capability to biologics or expertise in NDDS and injectables. We have a branded portfolio, so we need to be reasonably agile on marketing spend as well as on manpower for that. And on top of that, we are doing innovation as well. So we have clinical trial management capabilities.

And so lastly, we have a portfolio that is predominantly injectables, and we are intending to get into regulated markets such as US, which puts an even more quality burden on us and on our quality control where will then have to be top class. So is it not that we might be spreading ourselves too thin because all of this has a monetary bearing and all sorts of R&D spend after all it come with and ROI? So if you could help understand the overall vision as to what puts us in a position to succeed in such a wide array of endeavors. And why not have a limited but more focused approach instead of that?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Hi Keshav. Pranav here. Thank you for the questions. I think very well put. I think you summarized our, I would say, a company in a nutshell, but all there you a reason why we are a little bit going wide. And I would say more than hearing why, if you can see the core competency of the company is still injectables and new drug delivery systems and innovation, which has been there in the past. But what we feel as — if you see in the last five years, and this is what I have spent since the last decade, actually, Pharma is getting more and more commoditized.

And that’s why, if we keep on sticking to the same thing day-in and day-out, there will always be a, I would say, an economic of scale or there might always be an evolution or there always might be some people who can we are ready to do it at a much cheaper rate. And that’s the thing which will always affect us. Today, what you have seen US was always an attractive market before, but if you see the way erosion has happened not only in India, Europe, or rest of the world, you have to also want to see this very soon. The reason we are getting into a little bit of I would say, biological line is because, first of all, the entry barrier for anyone to get into — what was the entry barrier of pharma, maybe 10, 15, 20 years ago, the biological will be a little bit more tougher and more complex to get into.

At the same time, the core competency of the people working in this company, including me and my team, is also doing complex molecules and biologicals, where we feel that it’s more of a capital cost initially to be taken care of. And I agree. I mean, we are still not doing NCE, so let me please clarify that the R&D work, which really is not — it is capital intensive, yes, for sure. But it’s not, I would say, like a 50/50 or maybe like a — there is more than a 50% chance of failing in this because this is doing something which has already been proven, but it’s a much more efficient way and a much more, I would say, organized way. And plus we have the Board of Directors like Dr. Balram Singh, who have more than 35 years experience in handling that. It’s something which we are doing as proof of contract. So sorry, I’m using all these fancy words.

But in a nutshell, if I tell you, we are doing mostly biological R&D work which has — which uses our core competency, but will be still a big entry barrier for others to get into because we foresee that the margins in the future, especially, since enter into injectables as a core competency, we’ll get affected more and more, and we will have to be in other things, which not only offset them, but also give us more fodder and more revenues down the line, which will help us to invest further in line.

So just to give a nutshell. Our Botulinum toxin might have taken 4 years for us to get invented, but the margins which we achieved in Botulinum toxin and the level of penetration that we go through can easily fund our foray into biologicals going forward. Right now, what you see, like I think what Roonghta also said, apart from the validation cost, which we see right now, one-time for the Indore things. So there are — whenever we go for a regulated market there is, of course, a three-batch validation to be done on an R&D level, then there is a tech transfer, then the skill of batches [Phonetic] happen. So initially, for the first for the next eight to 12 months, you will see cost increasing of validation.

But once the validations are done, they are basically our dose — or we have basically our assets, which you can use for the next five, 10, 15 years, till that molecule has that relevance in the geography area. So what we are investing right now in validation, the same thing we’re doing in biologicals and what are you going to spend other things. We are doing something and we’re creating data, we’re creating relevance which can either be encashed any moment or moment, if we can ride the entire wave of regulatory post-development, then we can get a much bigger share out of it. We sometimes definitely feel that we are maybe biting on things which are a little bit on a higher side, but that has been always the DNA of Gufic from day one. Today, when we — I think in 2008-2009, when we were maybe around INR40-crore, INR50-crore company also, we are doing complex molecules and working on R&D comps and working on NDDS, which was not even companies of our size were not doing.

And hence, today, also a lot of big companies or even companies from abroad look to us for innovative products and look to us for new things which they can out-license for certain geographies also. So I feel that the DNA is something which we don’t like to change, which has been a success mantra. At the same time, of course, we have Roonghta sir, and we have the right team that we should not go overboard. Sometimes there is always going to be, I would say, a pressure for us in terms of I would say, allocating the resources much, I would not say managing is the issue. It’s mostly allocating the resources is when and when, the timing is the most crucial, but we reassured that we will not go slow out of box that there will be a big transfer period [Phonetic].

So we feel for long-term sustainable, we have to go into something which is more unique and which gives us a better margins, which can sustain the next cycle of growth also. So we will, as I feel, this is what we all feel and we should continue to do so.

Keshav Kumar — RakSan Investors — Analyst

Thank you for that answer, sir. Just one clarity. So when you say that we have the capabilities to get into biologics, so is lyophilization a critical factor because the rest of it, we are in-licensing, right?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

No. So I’ll explain how. So if you see when the botulinum toxin also came, the strain of the botulinum toxin was in-licensed from US, but the entire development work in terms of lyophilization, in terms of formulation also was done in-house. Also, when I see right now, once the strain comes, there is a master strain, you have to work on a reference strain. The first step of stabilizing the strain is lyopholization, but then, when we — tomorrow, we are working on the topical format, that is topical linings like cream or a lotion or a gel, then that you also involved some sort of a unique formulation, I would say, core competency, which we possess.

Third example, we are working on, let’s say, tomorrow we are working on an oral form of a vaccine. Now the formulation development capability is in-house. The entire work on the genome and the entire work on the thing is something which is a collaboration between Gufic and Prime Bio, by which we do most of the work in our R&D center here. So because of the background we have in biotechnology, it’s not that we are in-lising the technology. We’re in-lising the strain, getting the right strain and the right genetic code is important for us. How do you then — I would say, express that in the right vehicle and then you expand — and then you, what you call, scale it up in a more efficient way, that is a strength of Gufic as a company.

So I would say scale is in-licensed. I’m saying the genetic strain is in-lisenced, the remaining development is done in-house by the company.

Keshav Kumar — RakSan Investors — Analyst

Understood, sir. Clearly. And sir, secondly, can you help understand the nature of relationship with Selvax? Are we a development partner, would we be playing a CRO role in clinical trials? Or if you could help understand [Speech Overlap].

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

So Selvax a little bit different of a model. Selvax where the product has already been developed by them. It’s not something where we have contributed in the development part of the concept, which is about this InterLeukin-2. The thing we have collaborated with them that we are working on certain PD1 inhibitors of our own. And then we saw the technology, which is used by them, which is a combination of anti-CD, I mean, anti-CD40 antibodies with InterLeukin-2. So that technology which we are working on is very unique, which can also complement our development going forward only on the condition that they trigger certain milestones as they have committed to us. So Selvax is basically, I would like to say, a product developed by them for solid tumors. And if that works with certain, I would say, milestones which we need to see in the next one year or two years, then we will be using that as a platform to combine as top PD-1 inhibitor to go for much more superior option.

Keshav Kumar — RakSan Investors — Analyst

Okay. Okay. Understood, sir. Sir, can I take one more question or should I come back in the queue?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

I don’t know. I think moderator — I think I don’t know, I’ll leave it to the moderator. Yes, ma’am.

Operator

Please go ahead, sir.

Keshav Kumar — RakSan Investors — Analyst

Okay. Yes. So sir, it’s — I’m not very much aware of how clinical trials work over here. What the time lines are like. And so, if you could elaborate and also be forgot about where we fit in, in the thymosin Phase III trials that are happening for a couple of indications. So are we handling the clinical trial management bit of it? Or are we the innovator for the repurposed indications?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

If you see thymosin alpha, we are the innovator for the repurposing factor by tweaking the peptide in a depravin [Phonetic] formulation, we did it for COVID initially. Now we have lifted in a separate way for sepsis management because sepsis and if you severe patient or a moderate patients had the same, I would say, implemented parameter is getting paid up plus something else, which happens normally, that’s why we are doing for the repurposing part of it.

To answer your question, we are actually the, I would say, a company who is working — who are got the molecule done. And then we outsource a third-party agency to run the — so there is a CRO basically, a Clinical Research Organization, which runs the, which gets the mandate from us and then they coordinate with — I mean, either private or public institutions all around India, based on the permission of the honorable DCGI. So they are under tiles, we are just the company whose molecule is being tested; and eventually, we wait for the results.

Keshav Kumar — RakSan Investors — Analyst

And so, what are the timelines like?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

It depends on the — sir, you are asking about sepsis or endometriosis? Because if you see sepsis is something where the patient is there around 10 to 14 days. And there is a monitoring of another — totally it comes around 28 days to 45 days, depending on the patient’s health. So, endometriosis is for a longer time because we not only have to see — actually the three cycles of a women has to be seen post administration, so that is kind of four months [Phonetic]. So based on that, depending on the recruitment were depending on the patient size, the patient pool it takes time. So it can be anything between a minimum of around 15 months to a maximum of 24 months, I guess. Depending, again, depending on the patient size, the recruitment and the catchments area and also the duration of treatment.

Keshav Kumar — RakSan Investors — Analyst

Okay. So if it’s indeed succeeds so we cannot expect anything for the next three to four years. Is that correct?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

For sepsis, we already have started earlier, because with independent trials also. I hope that should be obtained by mid of next year, and we should see the product being sold post, I think, October 2023. For endometriosis, definitely, we will be able to see visibility of the commercialization of that indication, I mean, 2024 end or maybe early 2025.

Keshav Kumar — RakSan Investors — Analyst

Okay. All right, sir. I have one more question, but I will come back in the queue. Thank you so much, sir.

Operator

Thank you. We have a next question from the line of Rajat Setiya from ithoughtpms. Please go ahead.

Rajat Setiya — ithoughtpms — Analyst

Fine. Thanks for the opportunity. First of all, thanks to the management team for taking the inputs that we gave last time and for the quick initial remarks in the beginning. Thank you so much for that.

Sir, first question on the Sparsh subsegment that we have recently launched. So under the Critical Care segment. So this basically segment is different from the sense that — in the sense that it will be focusing on the untapped hospital segment side, right? But it will still be selling the same products and sales team will be the same? Or how will that be?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

So actually Sparsh — Hi, Rajat. So Sparsh is a little bit different. What we realized in the last 7 years in Critical Care. Our most of the business comes from Class A markets that is from tertiary hospitals or maximum secondary hospitals. Our presence into small nursing homes or even I’m saying forget the Class B or Class C towns. I mean now in India, you see a lot of development happen. I cannot say anything is Class B or Class C. You get my point. I’m saying up any city beyond Mumbai, beyond Bangalore, beyond Delhi and those eight to ten metros what we have now, they are considered to be a tier-2 or tier-3 for us.

So getting there, we were mostly if we have a team of, let’s say, 180 people in Critical Care, we first went to — we had so many molecules coming in, we first send it to specialty depreciation that — first, it was Critical Care, then a micro care came, then a separate taskforce from ZAR board [Phonetic] and then separate task — even in Critical Care, they be divided it into Critical Care live, which was handling around a good set of antifungals and the other divisions was handling separate antifungals. But if you see your primarily around 64 molecule, which was handled by this 180 team.

Now with Indore coming in and with the existing channel, what we have, we have more than 103 molecules, which we are working on, which we also want to take on the international markets also. Now if I have to take on international markets, again keeping the [Indecipherable] subset A, I mean we did a subset of A and B, where international market potential and in domestic market potential. And then in the subset we came to know these 103 molecules, which then work from these factories going forward, which will be having a good market and good growth in either of these geographies.

So we thought that why don’t we take them in a different way, where we don’t want to — we already have a pipeline and are, I would say, market set up for critical care division in the next two to three years, where I’m staying we have these dual chamber bags and we have Ceftazidime-Avibactam and we have Ceftazidime and the others. But as these new modules are being loaded up, the old molecules either are getting neglected or maybe the erosion in margin is happening so much that the Critical Care cannot sustain their PCPM in terms of keeping these, I would say, tail-end brands also. So we created the Sparsh, which will be a unique way by which we don’t want to be dependent on the channel for our business that is normally you have a C&I, then you have a stockist, and you have a retailer. And sometimes beyond stockist, you will have control. We tell them to give it to the hospital, but they will also buy some goods from us and we can sell it anywhere in the open market also, which might be maybe a small percentage, but still it’s substantial when I consider 20% of INR200 crore figure. So we thought that we cover the funds with a little but more on the lines of an international approach where we directly have only four to five company, and then we have only four to five distributors all around India. And then we go for the last-mile approach where we not only, I would say, integrated or in a system in an IT setup, each and every pin code wise hospitals or nursing homes or even having the whole setup of five ICU beds also or maybe just a basic ward also.

And these, I would say, unique primary centers are being tracked on a pin code basis on all India basis, by which we track them by a system in terms of what is the purchase on a monthly basis. And then we know I mean the distributors work is only to buy from us and make it reach there. How much to sell what to sell, at what rate to sell is a determined by us end-to-end by which we can control the margin much better. Otherwise, there’s always a scope of more erosion because of the channel getting more greedy in the entire process, plus there is less chance of substitution also. So when Gufic [Phonetic] was handling high-end products and new edge products, the old products, which can be easily substituted because of XYZ reason, it’s not related to quality or pricing is something which we want to get into.

And that is where this Sparsh has come up in a way which is mostly electronically guided. We have a team in HO who we’ll be running with along with, of course, a team in the field. But here, we can talk about higher PCPMs where we have a target of the — every person has to handle minimum 300 centers, the PCPM target is around INR12 lakhs to INR15 lakhs in 1, 1.5 years, where it’s more of a availability of the entire 103 SKU basket in a much more efficient way, using a very lean and mean channel in the middle. So just Gufic, a single distribution point and directly the hospital. And that both the pressure has come, and we are trying to monitor electronically or on daily basis. So every transaction, every purchase can be tracked on a, I would say, a minute-by-minute basis and see that can we come up with the business productivity model also? And then also a lot of new molecules which you want to launch, we can get more active directly to the trade because of this.

Rajat Setiya — ithoughtpms — Analyst

Understood. Thank you so much for this detailed answer, I understood the concept here. Now moving on to the two launches that we have done, one in the anti-infective side Dalbavancin and then the other one, Ceftazidime+Avibactam. I just wanted to understand how much did take us to come up with these two products in terms of R&D and efforts that have gone into it, coming off in deep products? How much money have we spent in the R&D here? How big is the market? And what kind of growth rate for these two particular products here? And at what price differential are we going to sell this product vis-a-vis our competition? I mean we are the first ones, I think, in terms of generic here, right?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Yeah. So I think, firstly, we have to clarify, we’ll be launching separately Ceftazidime-Avibactam in the month of November. We have built up the inventories in the last six to eight months to keep all the APIs and all the formulation side because the patent expires in January 27, 2023, but we are coming with a unique protection soil to offshore by which we can launch it three months before anyone [Indecipherable], that’s why Avik sir mentioned, Ceftazidime-Avibactam innovator is Pfizer in India. We have the brand name as Zavicefta and they are the only 1 who are selling it in India right now. And like you rightly said, we are the first generic for that molecule in India, and we are going to launch it on our own and then maybe offset it to three, four of our, I would say, associates also in terms of PMR also.

So just to answer your question, the good molecule started around two years ago, because we knew that it was going off beaten 2022 to 2023. We first got on the API. API had to sustain this on a longer version, it’s always better to work on the API because keeping in mind the antibiotic market price erosion is inevitable and especially for lyfticaloscorin [Phonetic] it, it can give you also high revenue, but if you’re not good enough, strong enough in the backward integration of Avibactam, then it would not make sense for us. But Avibactam and Ceftazidime is just one combination. We are going to work on multiple combinations with Avibactam down the line. That’s why we worked on the API on our own. That’s why it took us two years.

And then, of course, first, we started developing the API. Can you work on a different port to differentiate ourselves at the innovator to start of it by which we can get a two, three months headway to launch it before the other competition? And currently, we also came up with a pricing, which is much more unique. I cannot share the strategy with you how much you’re going to launch it and all that because it’s going to be launched next month and I don’t want to make it public right now. And next one, I mean, in and of November end, we are going to launch it in December is going to be in the market. So of course, maybe in the next call, I will give you more insights, and I’ll give you the feedback also of the launch by then.

Coming to Dalbavancin, Dalbavancin is a product which is not available in the Indian market. It’s a very unique — two inject on the first day and then followed by maybe if required third injection on the fifth or seventh day depending on the patient. This is only molecule available internationally. The innovator has also not got this molecule into India because they feel that right now it’s being sold internationally at around $1400. We want to launch this molecule in India as a fraction. Here with this molecule, it’s not want to give us, I would say, the volume that is going to give us a bit I will give a good reputation because in the entire basket, what we have, we have almost all antibiotic, antifungals in our basket. And we feel down the line when the resistance is going to come up for other brand positive options like Teicoplanin, Vancomycin. It can be very unique, I would say, proposition advantage for certain patients where these other molecules are not responding. And getting them at a fraction cost for the Indian market always makes it much more sweeter in terms of affordability.

More importantly, this molecule is going to be a big focus for us for the international market because resale in India, more than gram-positive, gram-negative is more of significance. Dalbavancin for us next year will be a very important product for Indore because we see the markets in US and Europe and other countries being — taking this product in a much more gungho manner. So Dalbavancin, I would say, is more of an international product in the short term and then coming to India on the long term, even though we launch it next year together, but I think you will see the actual numbers and values coming up maybe in the next three to four years. Maybe Tigecycline and Clarithromycin in the millions only it is taken care of.

Ceftazidime-Avibactam of course will be a product for short term where you’ll see a better volume growth and, as you say, revenue growth also because cephalosporin, I would say, being broad spectrum for gram-positive and gram-negative and cephalosporin normally also for the Indian market is always preferred for various reasons. This is my — did I answer that properly? Or I hope I did not miss any point.

Rajat Setiya — ithoughtpms — Analyst

Yeah, yeah. Just wanted one or two things that — I mean, the follow ups here.

So how big is the market for Avibactam, which we are going to sell in India?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

So the Ceftazidime-Avibactam market, a numbers are not in my mind, if you know cephalosporin as a whole is around a big way. This molecule is priced properly almost like a big share of the entire cephalosporin market. Again, I may be wrong. I don’t want to give any wrong market. I know that people are sporting for a fact is more than INR1,000, INR1,200 crores thing. Ceftazidime-Avibactam might not be more than around INR80 crores, INR90 crores. I don’t know it might be around — I’ll just give you exact numbers in the next five minutes, plus or minus. But just to give you a feedback, the reason that Sectorial in India has not grown you still you have a cheaper cephalosporin that you handle. Our foray, will be there to make this be more affordable because doctors need this molecule. And we for that see this market of Ceftazidime-Avibactam at least a multiple of INR100 crores in two to three years, itself. That is our projection for the market. I just come back to you with the current market size of Ceftazidime-Avibactam. Only 1 player is there and that’s where the product is imported into India and with the peaking protection. So buildout, the market is quite limited.

Rajat Setiya — ithoughtpms — Analyst

And we will — how much money would we have planned in the R&D of Q2 products?

Operator

Sorry. Sir, can I request you to come back in the queue?

Rajat Setiya — ithoughtpms — Analyst

Sure. Thank you.

Operator

Thank you. We have our next question from the line of Rohan Agarwal from Loop Capital. Mr. Agarwal, can you please unmute your line?

Rohan Ravindra Agarwal — Loop Advisory Ventures LLP — Analyst

Hi. Can you hear me?

Operator

Yes.

Rohan Ravindra Agarwal — Loop Advisory Ventures LLP — Analyst

I had a couple of questions. My first question is I’m not sure if you’ve discussed this already about the commissioning of the Indore plant. Could you just give us a little more color on when it will start impacting our P&L?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

It has already started impacting our P&L in terms of salaries which are being paid right now to the people there. But the revenue impact of the P&L would come by around first quarter 2023. We have started the construction in December 2021. We have finished the construction. I think when I finished the main building and the R&D building has been done by October 2022. The machines are under the process of getting installed. We feel the installation should be get mostly completed by around February and that will be around 2, 2.5 — so we all installation and validation happening. But we feel the entire validation and entire, I would say, commissioning should be completed by March or April 2023. And then we should see the revenue coming in by June, May or June 2023 for us.

Rohan Ravindra Agarwal — Loop Advisory Ventures LLP — Analyst

Sure. And another question I had was, I already you mentioned about dual-chamber bags, Could you just tell us more about it and what sort of market size are we targeting with regards to that?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

We, so dual-chamber bag is basically a drug delivery system by which I need to explain the product asset. We just want me to talk about the market aggression, right? Is that right?

Rohan Ravindra Agarwal — Loop Advisory Ventures LLP — Analyst

Sure. I believe it’s a mechanism by which the transmission mechanism for the medicine.

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Yeah, yeah. Basically it’s a drug delivery system. I would say it’s just makes the entire, I think, very aggressive as well as patient compliant in terms of — most than the patients, it’s more compliant for the nursing staff and the hospital stuff, they say almost at least three to five minutes depending on their efficiency on every administration of every injection. So it’s a single bag where IV bag and the powder is in the same way, and you can just press it and mixes. There is a good video on our website, if you have time, please go to through it, that is a very self-explanatory video, which shows about the dual-chamber bags.

Answering your next question. We were supposed to launch dual chamber bag in this quarter. That is, I mean, maybe around September itself. In October, where we already had the permission very recently. And then the government came up with the NLEM [Phonetic] in terms of putting the — I would say, Meropenem also in this list. Our target was Meropenem and then dori and then imi. And of course, we’ve got a biapenem license also. So we just have now decided to launch the product maybe in December or January to get more clarity from the government that even though we know for the fact that the pricing will not have any impact on the margins or in our strategy we launched.

But now since become the schedule, we just have to go to them and now we have to get an NOC from them that since your normal viles are under price control — NLEM we are going to come up with a dual chamber bag approach. So why don’t you give an exception and allow us to put the MRP, which we desire, so that process is there. For the market addressable thing is penem as a market is close to, we are going to start with penem and then we are go with other antibiotics also like cosmomyocin [Phonetic], piperazine, tazobactam and even product-wise we might explore other antibiotic like vancomycin on an export basis, not in India. India, it won’t work. Even Ceftazidime-Avibactam what we are trying to launch right now, will be eventually launched in a dual-chamber bag once we get the necessary permission.

So this approach can be applied to all these molecules, which are, I would say, a little bit expenses than the routine ones as well as it’s something which you have the right administration, I think, volume of 50ml or 100ml to guide them. So we hope that we can get this in multiple products, but starting off, you want to start with meropenem, biapenem and penem injectibles [Phonetic], which should be around I think INR2000 crore market side.

Rohan Ravindra Agarwal — Loop Advisory Ventures LLP — Analyst

Got it. And my last question is just regarding the Center of Excellence that you have started. Just wanted to know how it will help fulfill our business objectives?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Okay. So I think — sorry, I’ll repeat this, but I think that for — So the reason we went for is also something which we thought about was when we see the toxin market you have a toxin and then you have fillers and you have these different, I would say, machinery available, which are mostly non-invasive, which mostly help for body and face contouring. Internationally, the toxin market is close to $7 billion to $8 billion. US is around to $5 billion to $5.5 billion, I believe. I’m talking about numbers, which are in the outer-med [Phonetic]. It is somewhere mentioned four to five, that is 2017-18, now which comes to almost five. And I saw Indian market, which is still very small. I think got a fraction of what we have. If you see the US market around 0.4 billion people; India market, 1.4 billion people. Still, the market is very fraction. So we thought the reason why we are heading the market, and this is already decided and why we wanted to get in the Center of Excellence. A lot of doctors want to use it. They aspire to use a toxin or a filler or these things, but they don’t know how to use this in a combination.

At the same time, a lot of people and we have great doctors in India, but we have very few a lot of few doctors have the power and have the expertise by which they can use this in a much more efficient way. We don’t want any face or body drop to go bad also. So there’s a particular way and then particular SOP, by which we can use the toxin as a filler and also using some machines like Altera, or you use certain machines like radio frequency, ultrasound or something, we can actually mould a face or a body depending on what you desire, if you do it in the right way. And that is something which we thought is something maybe Gufic as a thing, because we have a doctor working with us who was earlier working in [Indecipherable], who has worked in Merck, and we have a big team who has worked in these specific therapies, and that’s what Avik mentioned.

They’re almost 20-plus and we are in a process to getting around close to 35 different, I would say, techniques by which you can use toxin to use these machines and use maybe in some cases, fillers, not in all cases filler, but toxin in some case. Most of them get a toxin, and come get the fillers and these machines, and you can uniquely go for a body and face contouring, which you desire. This can also involve in terms of, I would say, getting rid of some excess fat or getting rid of wrinkles and getting some depression or some bits [Phonetic], I mean, some, I would say, undercuts taken care of. But this is something which has to be trained and that is a — Center of Excellence has been created in a single vision that we want to actually train the doctors and we want to-hand hold them, and we want to actually give these.

We have invested potato money on center we want people to come for themselves to see how it can be done also annual then even our team will go that to them and make them train them for around maybe five days, seven days and then once they we know they are free to go, we will certify that also with a particular thing which we have tied up with not only Indian, I would say, training thing from AIIMS, we have tied up the doctor from Germany, were tied up with the doctor from US. And then now we’re getting someone from Australia to work specifically on some cadaver [Phonetic] training also we want to do by which the hands of these doctors in India get to. So we get a lot of inquiring from the dermatologist and these other doctors who I want to use the toxin or something I would add in my arsenal, which I can give to my patient, but who will train me, who will hold my hand and that is the thing we have come up with this Center of Excellence which, of course, eventually, it will help us to sell our toxin, our fillers and our entire cosmetic range.

Rohan Ravindra Agarwal — Loop Advisory Ventures LLP — Analyst

Got it. Thanks, and good luck for the quarters ahead.

Operator

Thank you. Ladies and gentlemen, in order to ensure the management is able to answer queries from all participants. Kindly restrict your questions to two at a time. We have our next question from the line of Bhavya Sonawala from Prime Asset Source Private Limited.

Bhavya Sonawala — Prime Asset Source Private Limited — Analyst

Just two questions. With regard to the dual chamber bag, I just wanted to understand how different is the international market, what we are envisaging domestic market to be in terms of dual chamber bags in terms of usage, if you can throw some light on that?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Sorry, Bhavya. So you mean to say the market size or?

Bhavya Sonawala — Prime Asset Source Private Limited — Analyst

Not the market size, but how well accepted is it? And how is it — is it in use since a while. I just wanted to understand how the international market is in terms of [Indecipherable]?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Yes. What is the response of the internationally? And why do I feel confident that we can do a contingency any more, we can do anything here, that’s your question, right?

Bhavya Sonawala — Prime Asset Source Private Limited — Analyst

Yes. That’s right.

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

So basically, there are two companies who are working on this. One is, of course, B Brown and second one is, I believe, Baxter. But if you see the price difference between a vile and their bag is almost three to five times. So internationally, the costing is the big impact — even what I feel for them because they have not — and also it’s a good registration process, which has to be done in each and every country, which might be your financing [Phonetic]. So again, I will not comment on how they are doing and what we are doing. But I feel the pricing difference between a vile and bag if it crosses a particular position doesn’t make any relevance for them to do that.

Why would given these are anti-infective mostly where the products are being used, where price is always a big factor. What we have done right now, we have tried to get the product launched right now almost close to the current MRP revenue, the maximum around 15% to 20% above that for the penem market for Ceftazidime-Avibactam we are asking for a little bit higher pricing because the product is anyway NCPA control. So we feel since the current pricing for us is not as high. I mean I get one time, two times, or three time we’re talking about only percentage over the current thing. And this economic of scale, we have a real clear cut road map. In the next 10 years, we’ll start manufacturing these bags also in-house because once we reach the critical marks. So at that time, we have already done our homework and we have done our research that eventually in the next two years, we foresee that the bags and the viles should be at the same size once we reach that critical mark at the same price, so what I mean.

So again, I don’t know if internationally, I know there is no relevance of the international for us to get into this markets in India. We saw a good solution, and we saw that the current pricing supports our strategy. And in the next two years, if the market — critical marks is achieved, and we are almost seeing that whether it can replace the vile overall as such also.

Bhavya Sonawala — Prime Asset Source Private Limited — Analyst

Okay. Yeah. Thank you sir. Thank you so much.

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Yeah.

Operator

Thank you. We have our next question from the line of Sourabh Beria from Axanoun Investment Management. Please go ahead.

Saurabh Beria — Axanoun Investment Management — Analyst

Thank you. My question was, over the last five years, our contingent liability as a percentage of net worth has been very high. It majorly comprises of letter of credit and bank guarantee. Can you elaborate more on both of these types, like the nature and the purpose of this activity?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Sure. Saurabh, I will request Roonghta sir to this question. Sir, just to understand, most of our raw materials sometimes which we use in a unique way is imported. That’s how a lot of our RM, which is coming — which Baxter said, we’re trying to get back to the recombinant form and that’s why maybe in the next two years will be a little bit, I would say, derisked from us. But if I understand it correctly, a lot of material comes from Korea, from Italy and of course, from China. And for that, we open LCs and then buy it [Phonetic], I think is this the thing. Roonghta sir, can you throw some light. Whether I understood the question right or wrong?

Saurabh Beria — Axanoun Investment Management — Analyst

Yes, yes. Just following on the question. Can you elaborate the exact nature of these transactions?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Sorry, Roonghta sir, do you want to say something?

Devakinandan B. Roonghta — Chief Financial Officer

Yeah. I can. Basically, we import our raw material from China, Europe and other countries against the LCs. And sometimes the LC period, may buyer given a credit period of 30 days or 70 days or 180 days. And accordingly, if he given a credit period of 90 days, for remaining 90 days, sometimes we take a buyer credit because it is cheaper. And we are also having a export. And because of our export auto-ADS [Phonetic] so we do not require to pay raising costs. So our borrowing costs will be 3% to 4%, compared to [Indecipherable] around, 7% to 8% that is the reason we are purchasing a buyer credit for the bank.

Saurabh Beria — Axanoun Investment Management — Analyst

Okay, Thank you. And my next question was our R&D expense as a percentage of sales has been quite low when compared to the other pharma companies. So is this because of the nature of the business or any other reason?

Devakinandan B. Roonghta — Chief Financial Officer

Basically there are two types of R&D expenses. One is, we call as a, validation bags. The validation bag is basically consumption of raw material and packing material, that basically goes under the head of raw material consumption. Then there is second type of expenses, which we are giving to doctors for conducting the trials, that is going on other expenses. And only exclusive R&D expenses as we incurred from third parties, is we are showing under the R&D expenses. So therefore our — overall our R&D expenses are in the range of around 8% to 10% of the turnover, whereas the direct payment of R&D expenses is hardly around INR4 crores to INR5 crores.

Saurabh Beria — Axanoun Investment Management — Analyst

Okay. Can I pose it with another question if the moderator allows?

Operator

No, sir. I request you to come back in the queue.

Saurabh Beria — Axanoun Investment Management — Analyst

Okay. Thank you. Thank you.

Operator

Thank you. We have our next question from the line of Nitya Shah from KamayaKya Wealth Management Private Limited. Please go ahead.

Nitya Shah — Kamayakya Wealth Management Private Limited — Analyst

Hi, Pranav, sir. Congrats on the DGCI approvals and entering some lead segments in the sector. So my question is regarding Botox. I saw in your presentation that the market size for Botox is between INR150 crores and INR200 crores, which is very miniscule. So I want to understand from you, where do you see this market size and demand reach in the next five years, especially in the cosmetic application of Botox? And what is the cost of — and since the cost of treatment is lower in India in comparison to all the other countries, so do you see this as an export opportunity for Gufic? Thanks.

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Yeah. So [Indecipherable] along with cosmetic, neurological conditions and medicine use also will be equally important for Botulinum toxin. So Stunnox and Zarbot is our brand names. So Stunnox has been strategically launched for cosmetics and Zarbot has been launched for the medicinal uses. So yes, the current market is small and that’s why I feel that at least we hope that we can contribute in also not only — minimum or target is in the next three to five years, the growth will take time to gain momentum. But like you see, even countries like Thailand, forget US and Europe and other things, but countries like Thailand and Vietnam and even our neighbors surrounding in the Southeast Asian market and even in South America or even in Middle East, the penetration has been due diligent.

So just to give you an indication. We were in a seminar some time ago. A market like Iran has a consumption of around 800,000 vials. A market like Russia has a consumption of around one million vials. A market like Thailand, again, on what I have been told, but of course, these are all data from the IMS there, whatever is there, is it more than around — it’s also around anything between 800,000 to one million vials with that population as such. So more than — again, I feel it’s not a question of affordability. I think affordability is always there. Is this a question of accessibility and the more options available. And one is awareness, of course. People should be aware that why don’t you do it? But I think awareness is building up quite faster than what we feel.

More importantly, if I know about it, how do I get it done from, and who can help me to do this particular procedure in a very confidential manner or in a clandestine manner or a secret manner? But still, I don’t want to go out and talk about because I have got this one. That’s the normal Indian psychology what I feel, I may be wrong. And that is where we feel that if we can get more and more people trained to have this treatment available in their regional or in the neighborhood, I would say, trusted medical space, then we will have reached the penetration. So if I give you the numbers of 800,000 or one million vials, the market has a potential to become even INR2,000 crores or INR3,000 crores for India from the current market at INR150 crores. But someone has to do the hardwork of starting that initiative and that will be tough, but we’ll work on that.

Nitya Shah — Kamayakya Wealth Management Private Limited — Analyst

Definitely. Thank you for that answer. And my second question was on like the last candidate asked about avibactam. So I wanted to understand that what is the R&D cost and the market size for avibactam?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

So market size, again, like — I’ll answer you after the call, I didn’t get time to see the ORG IMS data as of now, but I’ll ask my team member if they can do that. But I think it should be around anything between INR60 crores, INR80 crores. But again, I’ll reserve my comment until I actually give the number. But it has a bigger potential very frankly, because the cheaper cephalosporin is available as such. So I just feel that avibactam — coming to your first question, I cannot — I don’t know, I cannot give you a specific number as of now. But if you can give me time, you can send us a query, once again I’ll specifically try to give you numbers. Every molecule has much overlapping cost of manpower in terms of batches, in terms of things. So maybe R&D and consumption is something I can tell you materially. But how much growth has happened, how much trial has been done, clinical data has been done? Because we did also a certain sort of not only in vitro but now we’re in the process of doing some in vivo study also that we are — product is matching the innovators one.

So there are sort of many different factors which come on it. But on an average, we see any molecule which has to be launched, specifically injectables, from a commodity product to around INR3 crores to maybe a specialized product like dalbavancin around INR13 crores. This is a normal range which happens for any R&D development for any molecule. So this, of course, includes the prohibitor [Phonetic] cost and the clinical data also is required. So this is a normal average cost which goes behind every, each and every molecule which we work on.

Nitya Shah — Kamayakya Wealth Management Private Limited — Analyst

Okay. Thank you so much for your detailed explanation. I wish you all the very best for the next two quarters.

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Thank you.

Operator

Thank you. Ladies and gentlemen, in order to ensure management is able to answer queries from all participants, kindly restrict your question to one.

We have our next question from the line of Aman Vij from Astute Investment Management. Please go ahead.

Aman Vij — Astute Investment Management Private Limited — Analyst

Yeah. Good evening, sir. My question is around FertiCare and Critical Care segment. So first on the FertiCare segment. You had talked about we have an aspiration to reach the top three players in the next three to four years. So could you talk about the — what is the sales of the, say, third player currently in this segment?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

The basket size, what they have, you are saying, right?

Operator

Mr. Choksi, I’m sorry to interrupt. You are not audible. Can you repeat, please?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Okay. Sorry. So Aman, if I understood your question right, you’re asking me the actual crores of value of what the third player is saying?

Aman Vij — Astute Investment Management Private Limited — Analyst

Yes, yes, yes.

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Again, I think, what I suggest, is all the numbers, I reveal — If you want, please write to us and we’ll give you specific numbers. But yes, I.

Aman Vij — Astute Investment Management Private Limited — Analyst

A rough estimate is okay. Even rough estimate.

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

So again, I see — I just tell you that I’m around maybe INR30 crores, INR40 crores away from them. I’ll just give you that indication. So I think with the HMG what we have, and on HCG we have, coming with the entry of dydrogesterone and also the entry of recombinant molecules coming in, I think we can achieve that very easily. Again, reasons are because we have the backward advantage of manufacturing, which is something which will take us a little bit faster. So again, I think that is the gap, what I see right now. And of course, there’s a bigger gap with the top two, but which we foresee that in the next 24 to 36 months, it can help us to compete that in a much more efficient way.

Aman Vij — Astute Investment Management Private Limited — Analyst

Sir, one clarification on this and then Critical Care question. So you had talked about our current market share roughly, offset market is around 3%. And you have talked about taking it to 10%.

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Yes.

Aman Vij — Astute Investment Management Private Limited — Analyst

So that means we are talking about Fertility segment becoming like 4x to 5x. So are you expecting this kind of growth in the next two, three years for us? And if yes, then sir, in terms of molecule launch because one of the big molecule we have launched is dydrogesterone. But there you are talking about we are only targeting very less sales compared to the core market. So we will require like INR50 crore plus kind of product. So if you can talk about your thinking, okay, how will we reach this 4x to 5x sales of Fertility segment in the next three, four years.

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Yeah. Aman, dydrogesterone is, of course, one of the product, but I would not say the main product to get it through. It is actually Infertility segment which you talked about. We normally talk about the stimulating hormones and we normally talk about down-regulation or up-regulation of these different body cycles. So more than there would be more of even the HCG, HMG, FSH, and the [Indecipherable] the new product that recombinant molecules of, again, FSH and HCG coming in, which would become a game changer for us. Dydrogesterone, like I said, they’re already a player in the market. And that’s why we are a little bit, I would say, guarded on that estimate because dydrogesterone, I think two, three companies have done a wonderful job.

We are actually a little bit late in that, and that’s why we are being a little bit conservative because you don’t know how much we’ll save. But more importantly, to answer I think why they’re looking from 3% to 10% is because of the hormones, the peptides and the recombinant molecules coming in and the scale which we are getting into manufacturing and the backward integration once the recombinant molecules come, that we will foresee. The market as such, if you see, has already consolidated much more in the Infertility segment, but there are a lot of players who are actually just buying from a manufacturer and then trying to sell it in the market and take the share.

So we see a lot of penetration of these buyers — sorry, medical companies happening in the next two to three years. And that is where we feel that there will always be a scope of much, I would say, better penetration going forward. So I would say recombinant molecules, expansion of efficiencies of our hormones and peptides, plus the launch of certain peptides for endometriosis, along with the combination of orals, plus, I would say, some unique molecules we are working on reoccurrence implantation failure, and also on, again, endometriosis, which already we have spoken in the past. These are the things which will help us to take that market share much more.

Operator

Thank you. We have our next question from the line of Keshav from RakSan Investors.

Keshav Kumar — RakSan Investors — Analyst

Sir, in your presentation, there is a mention of us building capabilities for peptides and cyclopeptides. And earlier, you had also alluded about vancomycin. So are we currently sourcing the drug substance or — and we are just formulating, is that the correct understanding?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

So vancomycin is not the peptide I was referring to. Vancomycin is normally — even though it’s a [Indecipherable] peptide derivative, but it’s more of a fermentation thing. That is something which we are outsourcing-only because — for the regulated markets and there are already players who have better efficiency in terms of fermentation in that. It’s not our trend. On the peptide, I was referring to is mostly these biological peptides, which are going to be used for infertility. Also they’re going to be used for sepsis management. Also they going to be used for female, I would say, female, I would say, sexual drive also, which are going to replace certain oral things also.

So these are mostly peptides, which we’re working, which are different from that and for which already some trials are going on in terms of endometriosis. Then it will be something for sepsis. And down the line, we’re also trying to work on peptide for some other indications, I cannot disclose right now, but that is what I refer. And then we are looking at new drug delivery systems by which we are trying to get these peptides in the form of these implants for specific methods, which have a international market. Once in a month or once in three months or once in six months options available. You could just take a simple, I would say, depo intramuscular, or I would say, sub-dermal or a sub-dermal implant, which are much more longer-term.

Operator

Thank you. We’ll take our last question from the line of Narendra [Phonetic] from White House Capital [Phonetic]. Please go ahead.

Unidentified Participant — — Analyst

Hello. Thanks for the opportunity, sir. My question is on Ceftazidime-Avibactam. As I understand, this is basically used as an alternative to our existing antibiotics that is carbapenem and drug-resistant organisms. But does it mean once the ceftazidime-avibactam is more easily available, our existing carbapenem sales will be impacted to some extent?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Sir, I still — a very good question. I think, sir, you already have a background knowledge about the, I would say, the — again, I’m seeing, pharmacology part of it. So I feel more than they get affected, there are a lot of conditions where people are using a cocktail of products going forward. So instead of that cocktail, this will be a little bit more of a drug-of-choice in certain cases where you don’t want to go and try-and-error. I mean you don’t want to go trial-and-error.

Yes, penems, I would say, penems in the market is so huge that I don’t think much impact will come. If the affordability of Ceftazidime-Avibactam becomes more cheap, which will take some time, and we’re all trying to work on that. And definitely, you will see some dent happening in the penem market. But right now, because of the pricing difference between both, I still think there is enough space for both, and they will survive.

Unidentified Participant — — Analyst

Okay, sir. Sir, the next question is on Thymosin Alpha and sepsis. So as I understood, there is already reasonable data over the last 10 years to suggest that this may not make much impact in sepsis treatment as such. Are we doing something different here? Why you are going ahead Phase III trials when there is already some evidence?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

So if you see that on the contrary, we went through almost 200 publications and that we’ve seen that the Thymosin Alpha, if used in a much more, I would say, efficient manner because ulinastatin always have the issue of working and not working depending on the timing when it’s used and there’s a big debate, I will not get into the debate right now. But if you talk about Thymosin Alpha, we have seen the results in COVID. And even the 200-plus publications of sepsis has shown that when used in the right time, initially, it can really help to, I would say, suppress the infinity parameters, which we have seen in COVID also like certain cytokine storm and certain CD4/CD8 or even — I would say, specific of infinity parameters were taken care of. So we feel like that it still has a role to play because if you see our Immunocin Alpha was the only product which was approved in moderate-to-severe patients during the COVID thing.

And that is mostly because of infinity parameters where we see in a normal case, maybe three people who are dying out of four. In case of Thymosin Alpha, only one patient died of four. So we — I mean, that’s a big — right now, we feel still one patient died, but we have survived — two people survived on the contrary. So that way, we feel we are still quite bullish and the data — what we did independent trials before also via some doctors who have tried it in the past, they are quite gungho and we still feel. I think what — if you need, we will try to send you some publications which we have, and maybe I would like to understand for me what publications you have also to actually go through this data. And maybe you can teach us something which we are not aware about. I will be more than happy to see what you are looking into.

Unidentified Participant — — Analyst

Okay. I’d like to go through in detail, sir, let me see if there anything. Sir, other question is, which was mentioned in Q2 presentation. Actually, channel checks do suggest that Q2 impacted highest occupancy for hospitals and ICU in particular.

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Sorry, sir. Your voice is a little bit unclear. Can you specify that point again? I did not hear your last question — last sentence.

Operator

Narendra, please use any handset.

Unidentified Participant — — Analyst

Can you hear me now, sir?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Yeah, better. Please go ahead.

Unidentified Participant — — Analyst

Sir, in the presentation, it was mentioned that Q2 sales were impacted because of low hospital occupancy.

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Yes.

Unidentified Participant — — Analyst

But the channel checks do suggest that Q2 impact was one of the highest points in Critical Care admissions and occupancy. Can you throw some more light on it, sir?

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

So your question is that in Q2, we have mentioned that the Critical Care sales in Q2 were impacted because of less hospitalization and channel, what do you call, stocks — inventory levels, right? That’s what we have written. But do you feel that hospitalization has gone up in Q2? That’s what you feel? Or that’s what you have read?

Unidentified Participant — — Analyst

That’s what I feel, sir.

Pranav Jayesh Choksi — Chief Executive Officer and a Whole Time Director

Okay. So what we feel, I think, Narendra, very frankly, there were two issues in a lot of cases, what I feel and what we have worked in the thing. What was pre-COVID conditions in terms of planned surgery and other hospitalization, that still has to come and irrespective of [Phonetic] couple in the same area [Phonetic], I don’t deny but there is a lot of inventory in the channel, which is blocked. So a lot of people post-COVID has also had maintained very high inventory, not only — everyone, including us hoping that, I would say, being prepared for if something comes back again. And that high inventory has led to a lot of, I would say, inventory in the channel. And that is also one way which is affecting us. That’s my opinion. Because right now, so many companies had the anti-infectives, antifungals. So it was not only COVID, but even mucormycosis has also led to a lot of increase in antifungal inventory also.

And then, we spoke to doctors and all that, we have it, but in the hospital stock, in the distributor level stock and other, we have so much stock, but even if hospitalization is happening, firstly, we are trying to use that inventory first and then we’ll go to the new one. So that’s what we got the feedback. And that’s what we felt that our Critical Care could have done much better. So even though Roonghta sir said that from, one, if I remember the COVID sales last year and I do a normal Critical Care or two Critical Care, we have still seen not that much growth, which we have seen in other divisions’ part of it. So that’s why we feel that our Critical Care should have been much more, but we do feel it was affected because of these two factors.

Operator

Thank you. I would now like to hand the conference over to Ms. Ami Shah for closing comments. Over to you.

Ami Naresh Shah — Company Secretary and Compliance Officer

Thank you. Thank you, everybody, for joining this call. I hope all your questions and queries are satisfactorily answered by us. And in case if there are any further questions that have remained unanswered, you can reach out to us or Mr. Deven Dhruva from SGA, our Investor Relations partner. The contact details are already provided on the last slide of the presentation uploaded on the website of the stock exchange and also of the company. Thank you, once again, hope to reconnect in the next investor call.

Operator

Thank you. On behalf of Gufic Biosciences Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.