Jubilant Pharmova Limited (JUBLPHARMA ) Q3 FY23 Earnings Concall Transcript

Jubilant Pharmova Limited (NSE:JUBLPHARMA) Q3 FY23 Earnings Concall dated Feb. 03, 2023.

Corporate Participants:

Vineet Mayer — Investor Relations and Corporate Finance

Shyam S Bhartia — Chairman

Arun Sharma — Chief Financial Officer

Pramod Yadav — CEO – Speciality and Sterile Injectables, Jubilant Pharma

Jaidev Rajpal — Managing Director and Chief Executive Officer, Jubilant Generics Limited

Giuliano Perfetti — CEO – CRDMO (Jubilant Biosys Limited and API and CDMO)

Syed Kazmi — President and Chief Executive Officer, Jubilant Therapeutics Inc.

Arvind Chokhany — Group Chief Financial Officer and Whole-time Director

Analysts:

Vinay Jain — Karma Capital Advisors — Analyst

Raghav Vedanarayanan — JM Financial — Analyst

Mitesh Shah — Nirmal Bang — Analyst

Sumangal Pugalia — RaRe Enterprises — Analyst

Presentation:

Operator

Good evening, ladies and gentlemen, and welcome to the Jubilant Pharmova Limited Q3 and Nine Months FY ’23 Earnings Conference Call. [Operator Instructions]

I now hand the conference over to Mr. Vineet Mayer, Investor Relations and Corporate Finance, Jubilant Pharmova Limited. Thank you, and over to you, sir.

Vineet Mayer — Investor Relations and Corporate Finance

Thank you, [Indecipherable]. Good evening, everyone. Thank you for being with us on our Q3 and nine nonth FY ’23 earnings conference call. I would like to remind you that some of the statements made on the call today could be forward-looking in nature, and a detailed disclaimer in this regard has been included in the press release that has been shared on our website.

On the call today, we have Mr. Shyam Bhartia, Chairman; Mr. Hari Bhartia, Co-Chairman and Managing Director; Mr. Arvind Chokhany, Group CFO; Mr. Arun Sharma, CFO, Jubilant Pharmova; Mr. Pramod Yadav, CEO, Specialty Pharma and CDMO Sterile Injectables business; Dr. Jaidev Rajpal, CEO, Generics; Mr. Giuliano Perfetti, CEO, CRDMO; and Mr. Syed Kazmi, CEO, Jubilant Therapeutics.

I now invite Mr. Shyam Bhartia to share his comments.

Shyam S Bhartia — Chairman

Thank you, Vineet. Good evening, everyone. Thank you for joining us on Q3 FY ’23 earnings conference call of Jubilant Pharmova Limited. During the quarter. During the quarter, Company reported higher revenue year-on year, led by increasing sales in Radiopharmacies and Allergy business and stable revenues in Radiopharmaceuticals and CRDMO Sterile Injectables. In CRDMO, drug discovery services business reported stable volume and CDMO-API business reported higher revenues during the quarter.

The Company’s profitability stood lower in Q3 FY ’23 versus year-on-year and quarter-on-quarter due to lower COVID-related deals in CDMO Sterile Injectables business, industry-wide issues of generator supply outage that impacted Radiopharmacies business, lower production in CDMO-API business, and lower volumes in Drug Discovery Services business. In Generics, the Company has undertaken a large scale business transformation, focused on turnaround through cost optimization and driving growth in branded markets in India and select international markets.

In FY ’24, the Company’s profitability is expected to improve, driven by growth in Radiopharmaceuticals, Allergy Immunotherapy and CDMO Sterile Injectables businesses. Recovery in Generics, API businesses and Radiopharmacies will also contribute to better profitability. The Company has several growth levers across its various businesses of Radiopharma,, Allergy Immunotherapy CDMO Sterile Injectables, Generics, and CRDMO, which shall drive sustainable growth for the Company in the medium term. In our Proprietary Novel Drug business, we have several high-potential programs, which are at preclinical and clinical stage.

With this, I now hand over to Arun to discuss the performance of various businesses and financial performance in detail.

Arun Sharma — Chief Financial Officer

Very good evening to all of you. I will start by sharing performance of our businesses for the third quarter of FY 2023. In the Specialty Pharma business, Q3 FY ’22 [Phonetic] revenues were at INR760 crores versus INR635 crore in Q3 FY ’22 and INR814 crores in Q2 FY ’23. EBITDA in this business stood at INR117 crores versus INR116 crores in Q3 FY ’22 and INR198 crores in Q2 FY ’23 with a margin of 15.4% versus 18.3% in Q3 FY ’22 and 24.4% in Q2 FY ’23.

Radiopharma revenues were are INR613 crores versus INR510 crore in Q3 FY ’22 and INR658 crore in Q2 FY ’23. Radiopharmaceuticals business reported stable performance year-on-year. Sequentially, revenue variation is due to customer order rescheduling for some products in Q3 FY ’23. Radiopharmacies business reported higher revenue, resulting from rise in volumes of new products launched. Sequentially, the business witnessed lower sales due to shortage of radioisotopes for around three weeks during the quarter. Turnaround plan in Radiopharmacies business is on track to achieve breakeven in Q4 FY ’24.

Now, moving on to Allergy Immunotherapy, revenues were at INR147 crores versus INR124 crores in Q3 FY ’22 and INR150 crores in Q2 FY ’23. Revenue and EBITDA growth was supported by better prices versus Q3 last year.

In the CDMO Sterile Injectables business, revenues stood at INR272 crores versus INR265 crores in Q3 FY ’22 and IN299 crores in Q2 FY ’23. EBITA was at INR56 crore versus INR116 crores in Q3 FY ’22 and Rupees INR71 crore in Q2 FY ’23. Reported EBITDA margin was at 20.7% in Q3 FY ’23. CDMO business’ stable performance during the quarter was on account of higher sales of other products during Q3 FY ’23 amidst nil revenue from COVID deals. Reported EBITDA declined year-on-year due to substantially higher base of COVID-related business in Q3 FY ’22, business reported revenues of rupees INR89 crore and INR22 crore from deals related to the COVID products in Q3 FY ’22 and Q2 FY ’23 respectively, and nil sales in Q3 FY ’23. Quarter-on-quarter variation in margin in Q2 FY ’23 and Q3 FY ’23 is due to plant shutdown, which happens twice a year due to COVID deals in the comparable period.

Now moving onto Generics business, revenues were at INR223 crore versus INR171 crore in Q3 FY ’22 and INR161 crores in Q2 FY ’23. Reported EBITDA was at negative INR36 crores versus negative INR43 crores in Q3 FY ’22 and negative INR82 crores in Q2 FY ’23. Q3 FY ’23 performance improvement was on account of higher production at Roorkee plant and sales in non-US markets. This was partially offset by shutdown at our Salisbury plant to upgrade part of our HVAC systems. Businesses also benefited from onetime gain due to a legal award to settle a customer dispute.

We continue to undertake quality improvement initiatives and are engaging with [Technical Issues] for resolution of regulatory situation at our Roorkee plants. Company has undertaken a large-scale business transformation, focused on strategic reorganization of Generics business, business-wide cost optimization direct and indirect, reprioritizing geographic mix to accelerate growth in branded markets such as India and select international markets. During the previous earning calls, we mentioned that Company has identified annual savings of rupees INR100 crore in operating costs. The implementation of this cost optimization is on track and is expected to be completed by March 2023. Benefits of these cost optimization initiatives are going to reflect in our performance from Q1 FY ’24. We have further identified additional cost optimization opportunities of INR50 crore, implementation of which is expected to be completed in H1 FY ’24

Now, moving onto CRDMO business, revenues were at INR291 crores versus INR236 crores in Q3 FY ’22 and INR320 crores in Q2 FY ’23. EBITDA was at INR39 crores versus INR35 crore in Q3 FY ’22 and INR68 crores in Q2 FY ’23 with a margin of 13.4% versus 14.9% in Q3 FY ’22 and 21.3% in Q2 FY 23. Drug Discovery Services business witnessed stable year-on-year revenue amid slowdown in US and select approach by our clients. Demand growth likely to remain moderate in near from target clients for integrated drug discovery services and DMPK, currently witnessing key clients adopting selective approach in launching new projects. Sequentially, revenues were lower as Q2 FY ’23 had one-off revenues from fee-for-service FFS in drug discovery services. DMPK in-vitro facility a Greater Noida has received validation, which enables the site to provide comprehensive drug discovery service offerings.

And our API revenues were at INR168 crore versus INR116 crores in Q3 FY ’22. Revenues were higher due to increase in utilization and higher volumes as Q3 FY ’22 witnessed lower production due to plant upgradation. USFDA during its December ’22 audit of Nanjangud facility issued some observations. We are engaging with the USFDA to resolve the regulatory situation at this facility.

Now, moving on to our Proprietary Novel Drugs business, we recently received Orphan Drug Designations (OTD) from USFDA for our lead program, JBI-802, an oral potent and selective dual inhibitor of two epigenetic targets of the CoREST complex: LSD1 and HDAC6 for SCLC and AML, and our second program JBI-778 of brain penetrant PRMTh inhibitor for glioblastoma. The Orphan Drug status allows a seven-year market exclusivity, specifically to the designated orphan use. The filing fee for the initial NDA is [Indecipherable] and FDA provides other development incentives, including the clinical protocol, design assistance and potentially accelerated review time.

We are excited to give you an update on the emerging clinical data from our first in-human trial for our dual inhibitor of LSD1 and HDAC6, JBI-802, especially amid the recent announcement of acquisition of Imago BioSciences by Merck for $1.3 billion. As indicated by Merck, the accretion is based on activity shown by Imago LSD1 inhibitor, bomedemstat, in its Phase II trial that shows a decrease in the excessive GFR level in the patients with [Indecipherable] disease essential thrombocythemia (ET). We’re now seen in the context of our first in-human studies dose-dependent reduction of platelet in humans, confirming that we have achieved pharmacology active LSD1 driven effects, which represent a human proof of principle for our molecule to be potentially improved alternative to LSD1 inhibitors developed in essential thrombocytopenia and related diseases. We believe the JBI-802 has a potential to be a better alternative to other LSD1 only inhibitors. And we look forward to generating additional human data in 2023 towards maximizing value of this program. We are also exploring strategic partnering opportunities to continue development and unlock value for our Phase I study, Phase I really PRMT5 and other R&D pipeline programs.

Now, I would like to highlight Company’s financial performance for the third quarter of financial year 2023. Revenues were at INR1,553 crores versus INR1,311 crores in Q3 FY ’22 and rupees INR1,600 crore in Q2 FY ’23. Reported EBITA was at INR155 crores versus INR200 crore in Q3 FY ’22 and INR232 crore In Q2 FY ’23. Depreciation and amortization expense during the quarter was at INR94 crores versus INR93 crore in Q3 FY ’22. Finance cost was at INR51 crores versus INR37 crores in Q3 FY ’22 and INR42 crore in Q2 FY ’23. Higher finance cost was in account of increasing global interest rate benchmarks. One-month SOFR has increased to 4.36% on December 31, 2022 from 3.05% on September 30, 2022. One-month SOFR stood at 0.3% as of March 31, 2022. Reported PAT was at negative INR16 crores as compared with INR51 crore in Q3 FY ’22 and INR5 crore in Q2 FY ’23.

Net-debt on constant-currency was at INR2,407 crores as on December 31, 2022 versus INR2,204 as on September 30, 2022. Capital expenditure, excluding R&D capitalization, was at INR218 crores for the quarter and INR498 crores in nine months ending December 31, 2022. Average blended interest rate for nine months FY ’23 was at 5.06% versus 4.56% in nine-month FY ’22. Detailed nine-month FY ’22 financials can be accessed through our results presentation, which is uploaded on our website.

With this, I would like to conclude our opening remarks. We will now be happy to address any questions that you may have.

Shyam S Bhartia — Chairman

That’s it. Thank you. We’re ready to take the questions. Please go ahead.

Questions and Answers:

Operator

[Operator Instructions] We take the first question from the line of Vinay Jain from Karma Capital Advisors. Please go ahead.

Vinay Jain — Karma Capital Advisors — Analyst

Yeah, hi. Thank you for the opportunity. I hope I’m audible. I just had a few questions pertaining to results. So starting with the Radiopharmacies business, again, like this quarter on a similar revenue, the losses have again gone back to INR45 odd crore level. Can you specify the reason for the same? Because the top line seems to be consistent with the last couple of quarters, but despite that, losses have increased again.

Pramod Yadav — CEO – Speciality and Sterile Injectables, Jubilant Pharma

Yeah, Vinay, this is Pramod here. Yes, as we mentioned, or as Mr. Bhartia also mentioned, there was a one-time event in the industry, where industry went through the shortage of technician generator. In our pharmacy, most of the [Indecipherable] that we dispense in that [Indecipherable] which are used in the technician, which is produced out of moly, and this moly comes from the nuclear reactors. There are about seven, eight nuclear reactors throughout the world, which are supplying moly for this medical purpose. Unfortunately, all of them were in maintenance. And one which was running had also gone — had a breakdown. And the entire industry then was depending only on one smaller reactor, which was running, and hence, there was shortage for three weeks. So, almost everyone got impacted because of that. So there was no supply on the moly and hence technician was not available. This happened in the month of November. So, that had an impact. So we had all the cost in the system, but not enough revenue to cover it for those three weeks.

Vinay Jain — Karma Capital Advisors — Analyst

But revenue, again, sequentially isn’t far off. So INR410 crores is what we did during the previous quarter. And this quarter, it’s around INR400 crores. So it’s not that far off from what we did in the previous quarter.

Pramod Yadav — CEO – Speciality and Sterile Injectables, Jubilant Pharma

Yes, so what happened, as I mentioned, is that fixed costs have been there. But when you lose the revenue like this, entire contribution more than impacts EBITDA. And some of the [Indecipherable] which we could manage, that we had to purchase at a high price from that smaller reactor which was running.

Vinay Jain — Karma Capital Advisors — Analyst

But this is more from a Radiopharma issue, or it’s a Radiopharmacy issue?

Pramod Yadav — CEO – Speciality and Sterile Injectables, Jubilant Pharma

This was a issue of the Radiopharmacy. But please appreciate it, overall number of doses which are getting dispensed in the pharmacies have gone down. Then to that extent, ultimately, the consumption of the radiopharmaceutical products also goes down.

Vinay Jain — Karma Capital Advisors — Analyst

So my only reason for asking this is, since the time of acquisition, we would have incurred almost INR1,000 crores of EBITDA losses on this Radiopharmacies business. Last couple of quarters, we saw the losses coming down. But again, this quarter, there is this volatility and higher losses. So, one or the other reason — for one or the other reason, the losses keep coming back to those almost INR50 crore quarterly run rate. So, now also, we are talking about being breakeven by FY ’24-end. But this is something which we need to maybe have a look at in a realistic manner. Can we continue to sustain by incurring such high losses on this business?

Pramod Yadav — CEO – Speciality and Sterile Injectables, Jubilant Pharma

So the loss numbers you are indicating were there in the year FY ’21 when we also had a impact of the COVID. IN FY ’22, the losses have come down drastically. In FY ’23 also, the losses in our Q1 and Q2 were in the range of INR20 crores, not INR50 crores. And in Q3, if this event was not there, then the losses would have been much, much lower than what we’ve reported. And if we don’t see any sunch disturbance in Q4, you will see that Q4 losses are even much lower.

Vinay Jain — Karma Capital Advisors — Analyst

So you mentioned that this event happened in November. Has it normalized now in December and Jan-Feb?

Pramod Yadav — CEO – Speciality and Sterile Injectables, Jubilant Pharma

Yeah. Effective first week of December, the — all the supplies are back to normal.

Vinay Jain — Karma Capital Advisors — Analyst

So the losses should come down in fourth quarter, then, ideally.

Pramod Yadav — CEO – Speciality and Sterile Injectables, Jubilant Pharma

Yeah, absolutely. That’s what I was saying.

Vinay Jain — Karma Capital Advisors — Analyst

Okay. And on the Generics business, what was the onetime gain? Can you quantify that, please? Yeah, on account of settlement, the legal settlement.

Jaidev Rajpal — Managing Director and Chief Executive Officer, Jubilant Generics Limited

Yes, I think — this is Jaidev Rajpal. The gain was due to the settlement of the long pending customer dispute. However, we generally do not comment on individual customer-related contract due to the confidential nature of the settlement, as you can imagine.

Vinay Jain — Karma Capital Advisors — Analyst

I just wanted to know, from a core business perspective, [Technical Issues] the losses. So this INR36 crore loss includes the onetime gain. So excluding that, what would have been the loss trajectory is something which I wanted to understand from you guys.

Jaidev Rajpal — Managing Director and Chief Executive Officer, Jubilant Generics Limited

I understand the question. I think the — as you can imagine, there were some onetime events last year, which [Indecipherable] sales.

Vinay Jain — Karma Capital Advisors — Analyst

No, I’m comparing your business on a sequential basis. There is no point comparing it on a year-on-year basis.

Jaidev Rajpal — Managing Director and Chief Executive Officer, Jubilant Generics Limited

Yes. I think as I mentioned, it is not appropriate to give what was the exact loss due to the — exact award, the award — the legal award.

Vinay Jain — Karma Capital Advisors — Analyst

Okay. So in the coming quarter, now, hopefully with Salisbury also coming on stream in the fourth quarter, the absolute loss numbers reported this year — this quarter, so fourth quarter should be lower than this? Oy by when are we expecting to be in the black as far as the operating profit is concerned for the Generics business?

Jaidev Rajpal — Managing Director and Chief Executive Officer, Jubilant Generics Limited

So, I think the question is, by — what is our expectation on improvement in Generics profitability? That’s your question, I guess.

Vinay Jain — Karma Capital Advisors — Analyst

Yeah.

Jaidev Rajpal — Managing Director and Chief Executive Officer, Jubilant Generics Limited

Yeah. The expectation on Generics profitability is that from this nine months, which is close to approximately minus 34%, we should, in the next year, FY ’24, year, should be — we should significantly improve and should be close to negative mid-single-digits, is what we expect.

Vinay Jain — Karma Capital Advisors — Analyst

So, next year again, we are expecting — so this is despite the cost optimization activities, which we have talked about. Despite that, we would be incurring losses in the Generics business next year as well?

Shyam S Bhartia — Chairman

Yes, at a much, much lower this thing. As you can see, this year has been the significant losses this year, but those are going to be much lower next year.

Vinay Jain — Karma Capital Advisors — Analyst

And just on the regulatory part so — where are we? Son we were supposed to get an update from U.S. FDA on the Roorkee plant in November. So what is the update on that? And also if you could comment the same for our Nanjangud plant as well.

Jaidev Rajpal — Managing Director and Chief Executive Officer, Jubilant Generics Limited

Yes. So this is, again, Jaidev Rajpal. So let me just take — give you an update on the regulatory status of the Roorkee plant. As you recall that we had a — we had an audit last year in July 2021, which resulted in an import alert with a few products exemption. We had a follow-on audit in July 2022 for which we received the same status, which was the OAI before and continued OAI in October. We have disclosed to our press release. And at this moment, we have one product exemption that we continue to supply to US, right? Beyond that, and we have — as I said, we have completed all the CAPAs that we had committed to US FDA. Beyond US, we continue to supply to all other markets, which includes Japan, Europe, Germany, that is Nordic countries, South Africa and a host of other African countries as well. So other than US FDA, at this moment, we are continuing to supply to all other markets. In US, we continue to supply the product, which is under exemption, one product is under exemption.

Vinay Jain — Karma Capital Advisors — Analyst

No, I get that, but I just wanted to understand if the import alert, that remains as it is. So there is no change on that.

Jaidev Rajpal — Managing Director and Chief Executive Officer, Jubilant Generics Limited

No. As you mentioned, in October, we received continuation of the similar status, which was OAI with import alert.

Vinay Jain — Karma Capital Advisors — Analyst

Okay. And lastly, if you see, sir, API business, again, plant upgradation happened in the first quarter, and we were expecting revenues to see a bump up in the second half. But if I see for the last three quarters, there hasn’t been much improvement on the API business as such. The numbers have been hovering at around INR160 crores to INR170-odd crores. And again, because of that, margins also are taken a hit. So what is the outlook on the API business per se because clearly, things are not turning out the way we had earlier envisaged over here.

Giuliano Perfetti — CEO – CRDMO (Jubilant Biosys Limited and API and CDMO)

Yes. Thank you for the question, Giuliano Perfetti, speaking. So let me divide your question into two questions. One is on the FDA inspection in Nanjangud. And second is about the third quarter subsequential revenue versus quarter two. So on the first part, as we mentioned in the past, the site is currently in OAI status. So we are selling all over the countries. And you asked FDA completed its audit in Nanjangud facility in December 2022, [Indecipherable] and which was continuing 8 inspection and observations. So Jubilant’s timely reply to this observation within 15 days precisely on January 1, 2023. FDA has a knowledge up to now, the receipt of this [Indecipherable] response and Jubilant’s response described the actions being taken to address the inspection and supervision. So the Company will be using FDA regularly on its progress. But today we have not received any further communication from FDA regarding the inspection or our response. So this, of course, pending the qualification, we can just say that we can — we will keep the update on the outcome of this. For the moment, nothing is changing from the previous status.

So, coming on the second question, you are right. We were mentioning that quarter previous year, we were expecting to regrow in revenue. By the way, we grew in revenue versus previous year significantly, which was more than 45%. But as sequentially, we were basically aligned to the previous quarter. There are two reasons for that, which have been briefly called out before by my colleague, Arun. The first reason was plant is going through a complete plant upgradation. And currently, in the plant, we do have — in the site, we do have six plants, four of them have been updated. The last updating, which was supposed to be completed in quarter two was prolonged even in quarter three, and this created some lower volume because of the shutdown. This delay was due to the situation linked to the instruments and late coming versus the expected one. In addition, there was also some lower volume in specific products, which we are selling in the US, and particularly Losartan [Phonetic].

Vinay Jain — Karma Capital Advisors — Analyst

But our understanding was that the plant upgradation was done and completed in the first quarter itself. So — maybe there is some lack of communication also which is happening from the management side because if you see your presentation in the first quarter, you have mentioned that the plant upgradation is completed and you should see a revenue bump up happening in the second half of the fiscal year. And also it’s pointless to compare it on a year-on-year basis because last year, in which there was maintenance shutdown, which was there and which impacted our revenues. So just one last thing, again, like the company, the way things have been going, again, we seem to have bounced back sharply from the COVID. But one of the — for one or the other reasons, the numbers have been disappointing. And maybe we might have to take some hard calls if necessary when it comes to the Radiopharmacy business as well. If things are not planning the way we had at some point in time, we might have to maybe have a relook on that decision. Yes, that’s all from my side.

Operator

[Operator Instructions] our next question is from the line of Rahul Veera from Abakkus Asset Manager.

Rahul Veera — Abakkus Asset Manager — Analyst

Just wanted to understand on Drug Discovery side, usually, like whenever our molecules have been moving the R&D expenditure usually would move very sharply up. Are we expecting any kind of sharp up move in our R&D expenditure going forward?

Pramod Yadav — CEO – Speciality and Sterile Injectables, Jubilant Pharma

Can you repeat the question? What do you mean for sharp on R&D expenses?

Rahul Veera — Abakkus Asset Manager — Analyst

Our new chemical integrate on that business segment.

Pramod Yadav — CEO – Speciality and Sterile Injectables, Jubilant Pharma

[Technical Issues] this question. I think this is for Proprietary Novel Drugs.

Syed Kazmi — President and Chief Executive Officer, Jubilant Therapeutics Inc.

Okay. Yes. I’ll take that question. This is Syed Kazmi. So our spend really depends on how programs move forward based on the emerging data and the collaboration opportunities. So depending on how the clinical data transforms…

Shyam S Bhartia — Chairman

Syed, you have to mute the video.

Syed Kazmi — President and Chief Executive Officer, Jubilant Therapeutics Inc.

I’m on mute, but anyway I will try again.

Shyam S Bhartia — Chairman

No the mute — this is better. Go ahead. Go ahead.

Syed Kazmi — President and Chief Executive Officer, Jubilant Therapeutics Inc.

Okay. So all I was saying that the spend really depends on the emerging clinical data. So once we have collected some human data in the ongoing study, then we will be able to determine how fast we have to expand those studies. And then we can manage and report our expenses accordingly.

Rahul Veera — Abakkus Asset Manager — Analyst

Sir, and one more question from my end. In terms of the commentary that you’ve provided specifically for our high-margin business, that is the Drug Discovery Sciences. You mentioned that the growth may moderate. Any particular view on that, sir?

Pramod Yadav — CEO – Speciality and Sterile Injectables, Jubilant Pharma

This is for Giuliano, this question on the contract research discovery yes.

Rahul Veera — Abakkus Asset Manager — Analyst

No sir — yes, Drug Discovery Services. Usually we do 30%, 33% EBITDA, but this time, it has come at 29% margins plus we mentioned that the business may moderate. I wanted to understand some insights on that will be helpful.

Giuliano Perfetti — CEO – CRDMO (Jubilant Biosys Limited and API and CDMO)

Yes. I think what is happening on the market is that overall, the market has remained healthy in terms of demand. Until — I mean, despite the fact that in this quarter, there are signs that we called out also in the previous call of a more selective approach of our customers to run programs in Drug Discovery. This is resulting in slight, I would say, lower growth than in the past, which in this case, is almost keeping the same level of volume. And we do think that this probably will stay also for the short term, for the next quarter. But there are our view and there are views that the market will restart grow into — at the same level that we had previously even from the second half or end of this year, this fiscal year.

In terms of profitability, this market from the way we discussed in the past, it was expected to generate an EBITDA around 30%. If you compare to previous quarter last — to same quarter last year, EBITDA was a little bit on the peak for this incidence of FFS business, which was affected positively the previous year quarter.

In terms of the way we see the future, what we are doing now is we are continuing our program of expanding our capability. And I’d like to mention we commissioned within the quarter the DMPK capability within the greater Noida site. So we have now completed the first phase of this Chemistry and DMPK Excellence Center. And we are still developing our talent pools of scientists in order to be ready to catch the growth once the market will return to the level that we do expect. And based on the fundamentals of this market, there are no other reasons for not going back at that level.

Rahul Veera — Abakkus Asset Manager — Analyst

Sure. Sir, we have — do you have any contracts or any queries for this facility now? Like do you already have clients on board for the new facility?

Giuliano Perfetti — CEO – CRDMO (Jubilant Biosys Limited and API and CDMO)

No, the new facility is fully operating, what we commissioned in September 2021, and we run at a high level of capacity utilization. But we call out that we will further expand the facility in order to be ready to catch additional demand that we do expect starting from end of FY ’24.

Operator

Our next question is from the line of Raghav Vedanarayanan [Phonetic] from JM Financial.

Raghav Vedanarayanan — JM Financial — Analyst

So I have two questions. The first is, where do we see the long-term margins at and what will be driving these margins? And the second question is with respect to the CRDMO business, how do we see this growing in the future?

Arvind Chokhany — Group Chief Financial Officer and Whole-time Director

Yes. This is Arvind here. So with regard to the sustainable margins, we have very strong pillars of growth in Radiopharma, Pharmaceutical, Allergy, CDMO, Generics and also Drug Discovery Services. And there are the pillars which will drive the sustainable growth in the medium term. But in the short run, we have to overcome some challenges, which both Jaidev as well as Giuliano have articulated. So the three challenges we have to overcome is breaking given the generics, which we are targeting for next year, improving the API performance through remediations as well as breaking even the pharmacies. So the management team is working on a very strong KPI for all of these 3 things, and we can assure you that all these businesses are being closely monitored through various project programs that we have. I hope that answers your question, Raghav.

Raghav Vedanarayanan — JM Financial — Analyst

The second question is regarding the CRDMO business, how do we see this growing?

Giuliano Perfetti — CEO – CRDMO (Jubilant Biosys Limited and API and CDMO)

Yes. I think we need to distinguish for Drug Discovery side — for Drug Discovery business we see double-digit growth happening — starting from end of this year, and we see that the outlook in midterm is quite robust in terms of demand for new projects and the way the company is positioned, particularly in United States where we have a large presence in terms of customers biopharmaceutical and meet large customers. So we think that this growth is definitely would be on that level. On API, I can’t provide at this stage, any guidance for the next year because of the pending outcome from the inspection. What I can tell is that we have a strong plan, which is focusing the cost containment within API to reduce structurally the cost. We do have in place a quality transformation program happening at the site. And the third pillar is we are acting — we are focusing of our portfolio of products in order to target the progress which are more profitable, a little more potential for growth. [Technical Issues]

Operator

We have the line for Mr. Giuliano connected. Over to you, sir.

Giuliano Perfetti — CEO – CRDMO (Jubilant Biosys Limited and API and CDMO)

So I don’t know if I finished my third pillar was on the portfolio rationalization, and with this pillar which is both the basis point further growth of API and thus the entire CRDMO.

Operator

[Operator Instructions] We will take our next question from the line of Mitesh Shah from Nirmal Bang Securities.

Mitesh Shah — Nirmal Bang — Analyst

I have a couple of questions regarding these margins. Is the supply constraint has also impacted the margin of your Radiopharma business as well?

Pramod Yadav — CEO – Speciality and Sterile Injectables, Jubilant Pharma

So Mitesh, this — the technetium generator issue was related to the Radiopharmacies, which is the part of the Radiopharma business in the totality of margins what impact? So new pharmaceutical, is that your question?

Mitesh Shah — Nirmal Bang — Analyst

Yes, strategically because it came down from 32% to 10% this quarter. The pharma business is scaled down to 65.51 [Phonetic] also.

Pramod Yadav — CEO – Speciality and Sterile Injectables, Jubilant Pharma

There in the Q2, we had the higher sales of our higher-margin product and if you recall in the Q2, we had indicated that this is a one-time bump where the customer has brought extra quantities. And we indicated that in Q3, it will be getting corrected. So that correction took place because the sales of that high-margin product was, as per the expectation in Q3, not as per that higher base of the Q2. That had an impact. And then we have this impact in the Radiopharmacies because of the shortage of the generators.

Mitesh Shah — Nirmal Bang — Analyst

Got it. And the — again, on the Generics front, what is the bifurcation between the US and the other markets in Generics business.

Pramod Yadav — CEO – Speciality and Sterile Injectables, Jubilant Pharma

Sorry, can you repeat your question?

Mitesh Shah — Nirmal Bang — Analyst

What is the bifurcation — geographical bifurcation between the US and the other geographies for Generic market, specifically Generic business.

Jaidev Rajpal — Managing Director and Chief Executive Officer, Jubilant Generics Limited

Right. So we segment our business in key geographies in North America, RoW and India. And if you look at from the presentation that has been uploaded on our website, on a nine-month basis, this is approximately INR383 crores out of INR563 crores sales North America, INR150 crores is RoW and INR29 crores is India that should give you a rough estimate of the bifurcation of the geography-wise.

Mitesh Shah — Nirmal Bang — Analyst

And in a sequential jump in the Generics business, can we assume mainly both on the margin and the revenue trend was mainly because of this one-time case? Or should I exclude them, we also have an improvement in the margins and the growth as well.

Jaidev Rajpal — Managing Director and Chief Executive Officer, Jubilant Generics Limited

So onetime settlement did contribute significantly to the margin gains in the quarter three FY ’23. And therefore, it is likely that in the next quarter, this may or may not be sustained. Having said that, the revenue gain, the revenue growth in Generics was not limited only to one-time gain. As we’ve mentioned, this is also due to resumption of production at our Roorkee facility, as you would recall, was undergoing implementation of CAPA as an outcome of US FDA. So in this two months of this quarter, we resumed full production at Roorkee facility, which was — which continued to supply, as I mentioned before, markets such as Japan, Germany, Nordic countries, UK, South Africa and one product to US.

Operator

Our next question is from the line of Sumangal Pugalia from RaRe Enterprises.

Sumangal Pugalia — RaRe Enterprises — Analyst

My first question is on the Radiopharmacy. Since our EBITDA margin losses has widened quarter-on-quarter. So how confident are you on of your breakeven guidance for Q4 next year?

Pramod Yadav — CEO – Speciality and Sterile Injectables, Jubilant Pharma

This question, Vinay, had also raised earlier, and I couldn’t comment on that when we made the last statement that the management needs to take a hard look. As we have been saying from last few quarters, we are extremely confident that our turnaround plan on which we are working into our pharmacy business is absolutely on track. If no such untoward event happens, which happened in the month of November, then in FY ’24 — by end of FY ’24, we are very hopeful that we should be breaking even in this business. We are growing revenue — if you have seen, we are growing revenue with the organic growth from existing products. We are growing revenue by taking new products in our basket. We are increasing our market share. We are bringing the operational efficiencies and that we see quarter-on-quarter the impact of that on to the bottom line. So as I speak, we remain hopeful.

Sumangal Pugalia — RaRe Enterprises — Analyst

Okay. On the generic side, I just wanted to get a flavor of the cost that we are looking — the cost savings that we identified INR100 crores this year and then another INR50 crores by first half next year, these are significant amounts. So are these excesses in the system or can you just give a kind of insight into what are these costs — nature of these costs?

Arun Sharma — Chief Financial Officer

We got the first part about the INR150 crores, the second part, we could not understand your question. What about that you want to know.

Sumangal Pugalia — RaRe Enterprises — Analyst

No, I just want to understand the nature of these costs that we are cutting down.

Arun Sharma — Chief Financial Officer

You’re saying what is the source of the cost savings? Where are these cost savings coming from?

Sumangal Pugalia — RaRe Enterprises — Analyst

Yes, correct.

Arun Sharma — Chief Financial Officer

So let me answer your question in two parts. The first question is, as we mentioned in our last investor call, we had identified INR100 crores of savings which — the saving implementation program is on track and is expected to complete by March ’23. Therefore, we should see these cost savings in our next year’s performance. As you’ve also mentioned, you identified a further INR50 crores cost savings [Indecipherable] implementation program will begin next year, which is first quarter one, which is April to January — June quarter of FY ’24. It is expected to finish by September ’23, which is — ’24 second quarter FY ’24. The nature of savings is coming, it is broad-based. It’s coming from three major sources. Source number one is we have had direct cost production that we have managing our number of people on our role. So direct cost savings. Second is that we have serial cost saves. We are identifying wherever feasible, alternate vendors for our material. So that’s the second source. And the third source is that we have taken we have modified our operating model in product development that we are increasing the usage of external R&D only from internal R&D. So this is a three-way savings that is helping us. So it includes both, as I mentioned, a direct cost savings, the fuel savings and three, change in the operating model.

Sumangal Pugalia — RaRe Enterprises — Analyst

And my final question is on the Novel Drug, how close are we to this capital raise or a commercial licensing or agreement? Or how — what is the stage? How should we look at that business?

Syed Kazmi — President and Chief Executive Officer, Jubilant Therapeutics Inc.

So this is Syed. To answer your first question on the capital raise, as you well know, the biotech market in the US is still in the process of recovery. And in the current environment, investors are looking for more mature data, if you will, especially from clinic. So we have started our clinical program. We are in the process of collecting clinical data. And at the same time, we are also having discussions over the investors in terms of to what extent the landscape has evolved with regard to requirement of clinical proof of concept data before they come on board with the funding. So we hope that by end of this year, we will have enough critical mass of clinical data to enable external funding at a favorable term. And that’s what we are shooting for. But in the meantime, we will continue to have those discussions and assess the market interest. And because of the recent transactions that have happened, especially the one that we mentioned in prepared remarks about Merck acquiring a company called Imago for $1.35 billion. In this space we are working on, I think that transaction has created a lot of interest for our programs.

Our program is behind the Imago program because that’s what has been going on for seven, eight years, but we are certainly optimistic that with the market improving on one hand and the Imago transaction on the other, we are getting traction now with regard to some of these meaningful discussions. So we’ll — we have already collected some human data, but are looking to generate more robust clinical data later this year and doing — hopefully get back to fundraising at an appropriate valuation. With regard to partnering, I think with large pharma and biotechs, we will continue to pursue those discussions similar to what we have done with our two prior partnership programs, including a licensing that was done to Lengo Therapeutics. And we have mentioned about the blueprint acquisition of Lengo for which we did receive some portion of the upfront that we have plowed back into the business. We are looking to partner the assets at the right inflection point and not just we’re partnering, which will be typically after IND filing or early clinical proof of concept essentially to maximize our deal value.

Sumangal Pugalia — RaRe Enterprises — Analyst

Sure. Are you guys willing to share any kind of sort of estimate on what it can be the potential monetization in a broad range or so?

Syed Kazmi — President and Chief Executive Officer, Jubilant Therapeutics Inc.

It all depends, right? It’s all contingent upon the program, the data, the strategic fit. So there is a huge — big range. So it’s very hard for me to give you a meaningful response so that — it all depends on the program and the data that’s emerging, like I said before. As we have mentioned, for a very early stage program like Lengo, we have received about $6 million in FY ’22, which, as I mentioned, has been plowed back in the business. And then as part of our confidential licensing agreement and M&A deal plans over the next five years we’ll be entitled to additional milestones as well as royalties. So again, every deal is different. And it all depends on the data package that we are able to generate. We are feeling pretty confident about the differentiation of our programs as they are moving through various preclinical and in one case, clinical stages. So we are very excited about building some of these new novel medicines to meet the unmet medical need, and we certainly hope that there will be traction on the partnering front once we have a critical mass of data available.

Operator

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for closing comments. Over to you, sir.

Vineet Mayer — Investor Relations and Corporate Finance

Thank you. Thank you for joining the third quarter earnings call for Jubilant Pharmova and look forward to see you all in the next quarter. And until then, please send in your queries to the Investor Relations team. Thank you very much, and good evening to all of you.

Operator

[Operator Closing Remarks]