Lupin Ltd (NSE: LUPIN) Q3 2025 Earnings Call dated Feb. 12, 2025
Corporate Participants:
Vinita D. Gupta — Chief Executive Officer
Ramesh Swaminathan — Executive Director and Chief Financial Officer
Unidentified Speaker
Analysts:
Kunal Dhamesha — Analyst
Tushar Manudhane — Analyst
Unidentified Participant
Surya Patra — Analyst
Neha Manpuria — Analyst
Vivek Agarwal — Analyst
Nitin Agarwal — Analyst
Presentation:
Vinita D. Gupta — Chief Executive Officer
And our Head of Investor Relations, Ravi. We look-forward to sharing with you our highlights for the quarter as well as outlook for the year ahead. We are very happy to report another quarter of strong performance across our key markets, both on a sequential and year-over-year basis. This has been backed by continued improvement in margins and profitability. I would like to highlight that our margins are the highest we have achieved in the last five years despite higher investments in R&D during the period.
We feel confident of maintaining our growth momentum going ahead with margins in the range of 22% to 23% in the current fiscal year. Our US business delivered strong quarter-over-quarter and year-over-year growth this quarter with revenues at again a five-year high. This has been led by volume growth in in-line products and contribution from new products like background that helped us offset the anticipated competition in products like Albuterol and Suprab. Our respiratory portfolio continues strong with higher market shares in most of the key products. We look-forward to strong close to the current fiscal year as well as continued momentum in the year ahead.
Apart from key products like, we have an exciting portfolio of injectable products like glucagon,, lyroglutide, which we anticipate bringing to-market next fiscal year that should help us deliver strong growth in the year. We continue to improve our profitability in the US led by better product mix and higher efficiencies in the base business. Are very optimistic of our long-term growth strategy in the US as it continues to evolve from — our business continues to evolve from a commoditized generic business to more complex portfolio of injectables, respiratory and biosimilars to ultimately a portfolio of strategic specialty assets. We believe that our pipeline will enable us to continue to drive the shift to complex products to over 50% of our portfolio over the next couple of years.
Coming to India, we reported growth of 11.9% year-over-year, led by growth in India formulations business and additional tenders in our global institutional business. Our India Formulations business recorded growth of 9.1% for the nine months this fiscal year against IPM growth of 8.2%. While key therapies like diabetes, cardiac, GI grew ahead of the market and we also increased our chronic share, muted growth in the respiratory category affected our overall performance during the quarter. We were very pleased to strengthen our diabetes portfolio with the acquisition of the human insulin range of products from Lilly and also three trademarks from Boringa for the Indian market.
We feel confident on continuing to deliver above-market growth in our India Formulations business, backed by our strong portfolio of innovative medicines and in-licensed products and extensive reach through the 10,000 people sales force. Switching to R&D, our R&D as a percentage of sales was at 7.7% during the quarter and 7.4% for the nine months. We successfully filed ranibizumab in EU during the quarter and are looking-forward to the US filing in the coming quarters. We have an exciting pipeline with more than 20 respiratory products and 40 injectable products in development and plan to file more than 30 ANDAS in the next two years, of which more than 50% will be complex products. As previously guided, we expect R&D to be around INR1,800 crores for fiscal year ’25, which will mean a significant increase in our R&D spend in-quarter four.
From a compliance perspective, we received the EIR for — from the US-FDA for our Pitampur Unit 1 manufacturing facility with VAI classification during the quarter. So-far this year, we have received EIRs for Orangabad and and have successfully completed inspections at Somerset and Nagpur injectable facility with zero observations. We would like to reiterate that we are committed to ensure that all our sites are fully compliant with the US-FDA and other regulatory agencies around the world.
Before I hand it over to Ramesh, I would like to say that we remain optimistic to grow our business in the years ahead. Our R&D capabilities and pipeline are gaining momentum, be it in our investments in various respiratory platforms like Elipta and-or the focus on complex platforms in injectables like iron colloids, peptides, Pfizer 5B2s and long-acting injectables and also our growing portfolio of biologics. We are also creating some unique differentiators like green propellant programs for our respiratory franchise. As I have mentioned earlier, we also continue to evolve our innovation pipeline to ramp-up our specialty business in the years ahead. We believe our approach on the pipeline front and our commercial strategy will drive long-term sustainable growth for the company and also build long-term value for our shareholders.
With this, I will hand it over to Ramesh for a deeper analysis of our performance. Thank you,.
Ramesh Swaminathan — Executive Director and Chief Financial Officer
Friends, welcome you all to our Q3 FY ’25 earnings call. This has been another quarter of consecutive double-digit growth across the top and profit lines. I’m particularly pleased to highlight our EBITDA margins at 24.3% during the quarter, which is the highest that we have achieved in the last five years. Now diving into the numbers, sales — sales for Q3 FY ’25 came in at INR5,619 crores as compared to INR5,080 crores in Q3 last year, a growth of 10.6% year-on-year. On a nine months basis, sales came in at INR16,630 crores versus INR14,761 crores last year, a growth of 12.7% year-on-year.
We registered robust growth across most of our key geographies. India business has grown by 11.9% year-on-year. North-America has grown 12.3% year-on-year. EMEA grew 20.9% year-on-year, whilst API grew 4% year-on-year. The US business. During the quarter, the US business recorded sales of $235 million, a growth of 10.5% year-on-year and 6.8% quarter-on-quarter on a constant-currency basis.
On a nine months basis, US sales were $6082 million, a growth of 12.5% as compared to nine months of FY ’24. As Vinita mentioned, whilst we have benefited from volume growth in in-line products and new product introductions. This has been offset by low-single digit price declines in base products and anticipated new generic competition in products like and Supreb. Our respiratory portfolio continued the strong performance with high market-share in most key products like and Alpha. We also continue to execute on our strategy to improve our profitability in this segment with another quarter of strong profitability from this business.
On the long-term, we remain confident of consistent delivery of profitable growth through an increasing share of complex products in our portfolio. On a full-year basis, FY ’25 basis, we anticipate our US business to deliver double-digit growth ahead of our earlier guidance of high single-digit growth in this segment. India. Coming to India, the India business has grown by 11.9% year-on-year during the quarter and 16% year-on-year during the nine months period ending FY ’24 nine months period now. Within this, the prescription business has grown by 5.8% year-on-year during Q3 FY ’25.
On a nine months basis, the prescription business has grown at 9.1%, outperforming IPM by 1.1x. Chronic share during the quarter was higher at 65% with key segments like diabetes and cardiology playing ahead of the IPM growth. The share of in-licensed products is around 12%, similar to the 12% last year, which also positively impacts our profitability going ahead. Other businesses, revenue in ex-India — ex-North America formulations business, which includes EMEA, ROW and emerging markets has increased 7.5% year-on-year to INR1,277 crores and now constitute 23% of our sales.
On a nine-month basis, revenues have grown 12.6% year-on-year to INR3,685 crores during the period. EMEA, our EMEA region, which constitutes our EU region business and South Africa business registered strong growth of 20.9% year-on-year and 9.8% quarter-on-quarter during this quarter. This has been driven by healthy double-digit growth in EU markets like UK and Germany from products like luphobic and. Emerging markets. Our emerging markets includes APAC and LatAm regions and have registered sales of INR451 crores, a decline of 4.7% year-on-year.
On a nine months basis, revenues grew by 10.5% year-on-year to INR1,456 crores, whilst Latin-America, like Brazil and Mexico grew in local-currency terms, overall growth was impacted due to FX in this region. Coming into the — coming to the panel, other operating income — other operating income at INR149 crores has increased by INR32 crores as compared to Q3 FY ’24. And this increase is mainly due to higher PLI and export benefits during the quarter. Gross margins. Coming to the profitability, Q3 FY ’25, gross margins were 69.4%, up from 66% in Q3 last year.
On a nine-month basis, the gross margins at 69% versus 65.7% recorded in a similar period last year, an improvement of 334 points basis-points. This improvement is driven by multiple factors, which includes better product mix, tailwinds in the input cost, lower share of in-licensed products, increased volumes and also various cost-improvement and efficiencies, which we have undertaken over the last several quarters. Employee benefit expenses. Employee benefit expense at INR984 crores constitutes 10.7% year-on-year from INR889 crores in the previous year, translating to 17.5% of sales.
On a nine months basis, employee benefit expenses came in at INR2,963 crores, an increase of 14.2% year-on-year, translating to 17.8% as compared to 17.6% of sales in the corresponding period last year. This change is largely attributed to higher-cost attributable to regular annual increments and business growth during the period. Manufacturing and other expenses, Q3 FY ’25 came in at INR1,696 crores, increasing 8.7% year-on-year from INR1,667 crores in Q2 FY ’25 and INR1,560 crores in Q3 FY ’24, translating to 30.2% of sales vis-a-vis 30.7% last year.
On a nine months basis, employee expenses comes — employee expenses came in at INR4,936 crores, an increase of 7.7% year-on-year translating to 29.7% of sales as compared to 31% of sales in corresponding period last year. The expenses are higher mainly due to R&D costs and higher volumes in the normal-course of business. R&D, R&D is at INR434 crores, 7.7% of the sales as compared to INR448 crores, 8.2% of sales in Q2 FY ’25, which almost two-third of our R&D directed towards complex portfolio. On a nine months basis, R&D is INR1,232 crores or 7.4% of sales.
For the full-year, we expect R&D to be around INR1,70 crores to INR1,800 crores with a significant increase in R&D in Q4. EBITDA, excluding ForEx and other income, EBITDA was INR1,366 crores vis-a-vis INR1,022 crores last year, an increase of 33.7% year-on-year with margins of 24.3% versus 20.1% last year in the same-period. On a quarter-on-quarter basis, margins have expanded by 51 basis-points. This margin expansion is on the backdrop of higher gross margins and lower fixed costs during this period.
On a nine months basis, EBITDA was INR3,985 crores, up 42.1% year-on-year with the margin of 24% as compared to 19% the corresponding period last year. Putting all of this together, we believe that we should be able to deliver EBITDA margins in the region of 23% and 23.5% range in FY ’25.. As far as the ETR is concerned, it is 19.1% in the nine months FY ’25. For the full-year, we expect the ETR to be about 20% to 21%.
Moving on to the balance sheet. Operating working capital was INR7,071 crores as of 31st December as against INR5,691 crores of 31st March ’24, which translates to 113 days of net working capital as compared to 105 days in the previous as of 31st of March ’24. Net-debt was INR103 crores as against INR477 crores as of 31st March ’24. Whilst we focus on increasing cash generation from our business, we’d also like to highlight that we continuously explore strategic allocation of our capital to ensure the long-term growth of the company.
Moving on to ESG, the last quarter we strengthened our ESG efforts in both environment and social areas through various initiatives and ensuring that our operating operations remained water positive year-after year. Our focus on reducing Scope 1 and Scope 2 emissions strengthened which include various renewable energy projects. We’d like to update on ASG ratings. Has received a leadership ASG score of A-minus by CDP for Climate and Water. The A-minus rating from CDP includes loop in performance in environmental transparency and management. The 2024 scores for Climate and water represent an improvement from last year’s B rating in climate and C rating and water.
Further, we have successfully launched an ESG supplier assessment to third-party encompassing our critical suppliers. We conduct our ongoing ASG webinars workshops to support key suppliers in enhancing their sustainability capacity. This program focused on providing rural healthcare services to marginal communities. With this, we open the floor for discussions.
Questions and Answers:
Operator
Thank you very much, sir, for the wonderful insights. We will now begin the question-and-answer session. Please raise your hands from the participant tab on the screen to ask questions. We will wait for 30 seconds for the queue to assemble. Thank you so much thanks for the patience. We’ll take the first question from Kunal Dhamesha from Macquarie.
Kunal Dhamesha
Hi, good evening. Can you hear me? Yes. Thanks. Yeah. Hi, thank you for the opportunity and congratulations on a good set of numbers. First one on the limited competition launches for us in US market over the next two, 3/4. We have discussed few names. I just wanted to understand that for those names like, Glucagon and probably Constar, we on-track? And am I missing some key product here, which we might be able to launch over the next couple of quarters?
Vinita D. Gupta
Yeah. So the major products are and glucagon, constant and potentially leglutide. So those will be the key products for next year.
Kunal Dhamesha
Sure. And can you suggest the probable timelines of the ton is I believe is quarter one FY ’26, but on glucagon and Quanta, is there any update in terms of approval?
Vinita D. Gupta
Yes, so we’re making progress on both applications with the agency and would expect that you know, hopefully approval sooner rather than later. But I think it will be safe to assume that tolvaptin would be the major contributor in the first-half of the fiscal year and the injectables should ramp-up in the second-half very nicely.
Kunal Dhamesha
And the recent inspection at Somerset, has that anything to do with our filing? Was it a PAI?
Vinita D. Gupta
Yeah, it was a PAI, but for a suspension product for it’s yeah, no, the Al product comes from Netherlands and is manufactured at a CMO and both were inspected by the FDA last year and are progressing well.
Kunal Dhamesha
Sure. Thank you for that update. And the second one on the India business, we have cited that the slow-growth is primarily due to issues in respiratory therapy. And I believe the respiratory therapy growth itself was quite low despite being — we are being in a winter season. So what are the factors that is leading to this lower-growth in your view?
Ramesh Swaminathan
Yeah. I mean the market seems to be that way. I mean sequentially the number is as an absolute number up actually for respiratory, but it just seems to — I mean, it’s been lagging for a while versus the rest of the market. Even for nine months, the market was only at 4%, the — we were at 3% for nine months and I mean, the quarter again has been disappointing. I do think it will bounce-back. I mean, we’ve had periods of high double-digit growth on respiratory. But for the last 12 16 months, it’s just been slow. I think the focus right now from a respiratory perspective in the market has been more on anti-infectives and the like, not so much MDI, DPI, inhalation kind of products. But we believe that it will bounce-back hopefully in the next couple of quarters.
Kunal Dhamesha
So sir, in your view, what would be the split of, I mean, the chronic side of respiratory product like inhalers versus acute like anti-infective and
Unidentified Speaker
Our focus is primarily on that. So our focus is in hello side. Yes, primarily MDI, DPI, a little bit of. That’s it.
Kunal Dhamesha
Sure, sir. I have more question. I’ll join back the queue. Thank you.
Operator
Mr Tushar. Thanks Kunal. We take the next question from Tushar from Motilal. Tushar are there hello.
Tushar Manudhane
Yeah, yeah, yeah, you are. Thanks for the opportunity, sir. Sir, particularly first on the R&D spend, both the guidance is that it is going to increase for 4th-quarter. So any specific projects which you would like to highlight, which is going to require a higher R&D spend compared to 40 basis which we will spend?
Vinita D. Gupta
You know your voice was very muffled, but if we got your question correctly, you’re asking about the reason for the R&D spend ramping-up. A good part of it is our complex generics portfolio. You know, it’s five nasal sprays actually that we expect to file in Q4 versus the rest of the year. I mean we have like — so majority of the spend is coming into quarter-four. Also injectables, there is a good amount of increase in the second-half of the fiscal year. So it’s primarily respiratory and injectables
Operator
Okay, are you there? Okay, we’ll take the next question from Bino from Elara.?
Unidentified Participant
Hi, and good morning and good evening. Just following-up on that question on India. So this contribution from this tender business, which has helped us grow growth in that line. What’s the nature of that? Is it going to be steady next year as well or will it grow or will it drop-off next year?
Ramesh Swaminathan
Yeah. I mean the — it’s been fairly flat. It’s been a meaningful number. It will continue into the next year as well. But I mean, we always call-out the business with and without. The India region formulation business, which is the domestic sales business is 5.8% year-on-year or 9.1% for nine months. Understood. So this tender part of the business is likely to stay flat next year. Yes. I mean, it’s a good number and it will continue with that good number numbers.
Unidentified Participant
Understood. And second, on, what is — what are your thoughts, latest thoughts around the litigation? Are you planning to continue selling it at-risk? Any further thoughts since the last call?
Ramesh Swaminathan
Yeah. So no change in terms of litigation status. We continue to navigate through that process. In the meantime, the generic substitution has gone up, the overall available market has gone up and our share has ramped-up nicely as well. So no real change from a competitive scenario standpoint from the litigation and developments?
Unidentified Participant
Understood. And this is likely to the status quo is likely to continue for a few quarters. So what are your thoughts? Also, we will as we navigate through all of the outcomes of litigation, I mean, we expect in the first-quarter of next fiscal year to get a decision on 2 patent and continue to litigate the others.
Ramesh Swaminathan
So, yeah, well, definitely for this fiscal year, we don’t expect any change and then we’ll determine the next fiscal year based on outcome of litigation.
Unidentified Participant
Understood. One last question to Ramesh. We have been benefiting from this PLI related income. How long is it likely to continue? How many more quarters? The benefit is there for next three years. But I believe you are booking upfront also. So at the current level, how long will it continue? How many quarters?
Ramesh Swaminathan
So there will be decline for sure next year. In the normal-course, you’d be expected to look at about INR200 crores on an annual basis, but you have the benefit of actually taking up to a third more in a particular year alone, which have taken advantage of this year. But obviously, it could impact on the total quantum of money that you can claim over the next three years.
Unidentified Participant
Got it. Thank you. This iso for your question.
Operator
The next question is from Surya Patra from PhillipCapital. Surya?
Surya Patra
Hello. Yes. Thank you. Thanks for the opportunity. Sir, first of all, could you clarify what is the nature of this provision that has been created and have you shared about the specific nature of the disput also?
Vinita D. Gupta
Yeah. So it’s basically coming in from litigations. So we don’t talk about which litigation and the like. It’s a conservative provision and that’s what it is. Okay. There is nothing to anticipate or nothing to see any kind of risk to — relating to the background right now, right? No now
Surya Patra
Okay, sir. Second question is on the respiratory portfolio as a whole. If I remember right, then respiratory has become more than 30% of a revenue contributor putting all geographies put together. So — and the current-period is a kind of a respiratory pro respiratory season. So what kind of performance that you would have seen for the overall respiratory portfolio for the quarter.
Ramesh Swaminathan
So it’s been strong performance in the — yeah, you wanted to complete that? Yeah. So I mean, is there any — see, we have seen moderation, let’s say, in India, we have seen some kind of competition in US relating to to be specific. So given that, is there any risk that one should think or consider about this portfolio? The secular trends would kind of indicate that respiratory is going to be very important for us in America and in other parts of the globe and of course, India as well. There will be some quarter-on-quarter variations and the like and that doesn’t necessarily mean that the secular trend is going to be upended. But this is a kind of a seasonal — peak seasonal kind of period.
During that period, we are witnessing relatively underperformance. So that’s why the question was, you can’t pinpoint the reason why there is a decline in any part in our — in India and so on. So just take it as it comes that way. But in a general sense, our — our focus in this — on the segment will certainly continue. So it’s really strong contribution both in US, Europe, Canada, you know as well as growing in other parts of the world like Australia, you know and of course in India we have the respiratory market growth at a muted level that is contributing to the lower-growth. But overall, respiratory still continue — continues to be a major therapy area for the organization. It’s an area where we expect to bring all the material generic products to-market across the globe. And we expect to also innovate like we have done in India with the two triple novel combinations.
We continue to work on respiratory green propellants for US Europe as well as India, plus other products we have the opportunity to bring to-market brands like Zopenex in the US that have been fairly stable. And like while we have a low-growth in respiratory in India. And we’re seeing the flu season pick-up in the US again. We are seeing another peak. So the market shares on the respiratory portfolio fairly strong.
Surya Patra
Okay. The last question from my side is about the cost. It is great to see your cost optimization measures really contributing to the improved margin now. And also possibly that is flowing from — improved margin is flowing from the improvement, obviously what we have been seeing in the US business as a whole.
Unidentified Speaker
So there would be an element of Omera, which could be a positive surprise and all that. So given that going ahead, let’s say, in the next 12-month period, what kind of a margin performance that we should see for the US business? I may not require the number, but qualitatively, if you can talk something about the next year’s US profitability that you are anticipating. So there are some tailwinds in terms of ForEx, which you cannot be sure about, but the focus on cost is eternal insofar as we are concerned and we have seen some good results coming in. We have seen also tailwinds when it comes to input costs. But again, as I said, there are geopolitical tensions, et-cetera, that are actually moving parts. Can’t be certain. But I think if you talk about overall margins, I did indicate the fact that between 22.5% to 23.5% would be a good range to kind of aim for the next — the next fiscal as well.
Surya Patra
Okay. Sir, are you really worried about the kind of tariff things which has been talked about?
Unidentified Speaker
See, although it is like sometimes it has been indicated something like 2.5 on the pharma also or any — this US tariff thing is a kind of area of concern or uncertainty of this for this moment? Well, so we are monitoring it very carefully and the industry has made a strong pitch, both from AAM standpoint as well as IPA that tariffs will have a significant impact on the generic industry if it if was implemented in 70% of generic drugs for the US are imported at present, 50% of generics come from India. So there is clearly a significant role that India plays on the generic front. And we’ve made that case you know, with all the major stakeholders.
So we’ll find out with the current visit of the PM to the administration what transpires but we are hoping that pharmaceuticals and generic drugs in particular will be exempted and if it is otherwise, obviously, we’ll be looking at other ways and means of mitigating the impact with a combination of manufacturing in the US as well as wherever possible from a cost perspective and otherwise. But watching it very carefully, but hopeful that the case made by the industry is — has been heard and the implications understood that any tariff impact can really cause more product disruption and drug shortages which no one wants in the country sure man thank you.
Operator
We’ll take the next question from Anubhav Agarwal from. Anubhav.
Unidentified Participant
Hi. Yeah. One question is on. Vineita, which year can you launch it? Is it next one, two years or beyond that? Which product are you referring to?
Vinita D. Gupta
The Somerset would you have the PAI on ready carbon? I think it’s out for a good number of years. It’s not in the next two years.
Unidentified Participant
Okay. Thanks. Second is on the Canada semaglutide opportunity. Would you be in the first year of the opportunity or are you pursuing that?
Vinita D. Gupta
The team is working on it. We are hopeful that we’ll be in the first wave between 26 and 27.
Unidentified Participant
Okay. Thank you. Thank you.
Operator
We’ll take the next question from Bansi Desa from JPMorgan.
Unidentified Participant
Hello. Yeah, hi. Vinita, you mentioned about increasing our focus on the specialty business in the US. So if you could just elaborate on that, are we talking about evaluating more acquired acquiring brands like we did in case of or are we — or are we also going to evaluate probably late-stage assets? So what would be our strategy here? And have you earmarked any investments for this business?
Vinita D. Gupta
Yeah. So we do want to build specialty as the third major arm or leg for our global business with the US being a major focus. And assets like Zopenex is a sweet-spot for us. You know, know, products that fit our strategic aspirations building on the respiratory front. And ideally on-market assets, but we know it’s difficult to really get on-market assets. So we’re also looking at late-stage assets that are compelling from an investment perspective. And we — as you know that we are a debt-free company at this point, so have the ability to invest for the right programs, the right opportunities. And we haven’t earmarked, but are committed for the right assets to explore as well as close possible acquisitions.
Simultaneously, we are also building a pipeline on the respiratory front with the capabilities we have on the R&D side, the opportunities that we have on the green propellant front to take the meter dose inhalers and come up with more, you know, climate friendly and achieving both our sustainability goals and offering a differentiated product to the patients and the market. We continue to innovate on that front on the pipeline. So a combination of both pipeline as well as late-stage assets is what we’re looking at. And Mark, given the biotech funding has been weak out there in the US, is it fair to assume that there is good assets that are available in the market? Yeah. There’s a lot of opportunities right now that you know if one could acquire at least a few assets that are meaningful. So really good opportunity to acquire assets.
Unidentified Participant
Okay, noted. And my secondly on the tolvaptin opportunity, post exclusivity, how should we see the competition coming in? Would it be in a staggered manner? And would be a meaningful contributor in fiscal ’27 as well for us? Are we expect it to have a stronger tail because it’s a specialty product, name patient REMS products,
Vinita D. Gupta
It’s — the conversion we expect is going to be slower than what you would expect in a simple oral solid and the tail should be longer. So we would expect both second-half of the fiscal year as other competition comes in plus into fiscal year ’27, it should be a meaningful product. And therefore, just lastly, in terms of margin trajectory, two years out, when I just look at some of the moving parts, probably PLI would have been normalized. Would have been probably at a normalized levels. But then again, you have certain businesses in India, which are probably loss-making today and that could probably contribute positively. So how should we think about margins say in fiscal ’27, ’28, would be fair to assume it would be higher than where we are currently?
Yeah, given the kind of products that you’ve been bringing to the market, obviously, the top-line buoyancy would continue. There’s also the focus on cost and we have taken-up a number of initiatives, which would actually certainly keep that on a tight leash. And the third aspect of the entire program that you spoke about essentially adjacencies. Clearly, we are losing about a couple of percentage points because of essentially the losses that these adjacencies are kindly are kindly lapping up at this stage. But that said, over the next three years, we expect that to also turn positive. But we also have growth plans in terms of spinning it off at some point.
So clearly, upward movement of — on the EBITDA front is certainly to be expected.
Unidentified Participant
Great. Thank you.
Operator
The next question is from Neha Manpuria from Bank of America hello Neha okay we’ll take the next question are you there?
Neha Manpuria
Yes you already filed and if you can take us through 2026 and 2027 you know-how should we think about the launches? And you prepared this in terms of formulation and API and how much will be the dependence on partners for this product? So if you can just draw the landscape broadly for this product over the next two years, please.
Vinita D. Gupta
Maybe I can talk about India and then can add. I think on India, I mean on the injectable, I mean there’s going to be many players. Obviously, we’ll have it in that first wave as well. I think the more interesting part to solve for in India is the oral product and we’re hoping to have that at the time of loss of exclusivity as well. We think that will be the more important product to deliver on and that will come from an internal development. And then for other markets, we’re obviously looking across. I mean, Canada, we talked about earlier, but, do you want to add for other?
Yeah. I mean, for the oral solid, which is an opportunity also in multiple markets, obviously, we have an internal development. And for the injectable semaglutide, we have partnerships in-place. For a few markets, we have existing partnerships, others in the books, but we would expect ’27 calendar year to be in at least a handful of the open markets for and in terms of capacity, anything you can share your ability to service the markets, have you invested in that from a formulation perspective? No. So the oral solid, definitely, you know we have internal capacity as well as injectable, although we have a partner — we have partnered with companies. We have the ability to develop with our Nagpur facility. But right now, we are counting on partners for the injectable.
Neha Manpuria
Okay, understood. And next one was on green. You mentioned, Vita, about that opportunity. So how should we think about it? When do we get more clarity on this and how meaningful this opportunity you see at this point?
Vinita D. Gupta
Yeah. So we expect the meter dose inhaler market will move materially over the next maybe start in five years, but definitely over the 10 years into the green propellant products certainly with the moves that the major pharma companies have made like GSK, AstraZeneca as well as KAC from a European standpoint. We hope to be at the forefront on, you know as a material player on the respiratory front and with our brand as well as other MDIs to bring a better propellant products to the market. So we have multiple products in development right now, not in you know, at the stage where we are filing in the next year, but certainly year next fiscal year ’27, we should start to see product filings.
Neha Manpuria
Understood. And just if I can ask one more question. This is regarding biosimilars. We sense that it’s investment slowed down in the in the recent past. Any fresh thoughts there? Are you planning to step-up investments in biosimilar, any view you have on that space and participation?
Vinita D. Gupta
Yeah. Actually, it’s a promising trend on the biosimilars front in the US in particular in the last 12 months, both from a regulatory perspective with the FDA easing the requirements on interchangeability, you don’t need to do additional studies for interchangeability anymore. And with the trend on private labels from the large PBMs like with Caremark and Humira, what they did with the Sandoz — the label that converted majority of the market from Humira to the biosimilar, that is a promising trend on the market front. You know, in the past, as we looked at it, both from a development perspective, we saw the biosimilars had — were fairly onerous capital-intensive and then from a go-to-market standpoint, you needed commercial infrastructure and both seem to start easing up at this point.
So it’s a really positive trend. I mean, we have a good number of products for the near-term. So we continue to invest in those. As I mentioned, ranbizumab was filed in EU this past quarter will be filed in the US. So we have that we still see as an opportunity. And as we get the product approved. We have ranibizumab, aflibercept and then in 29 that comes into the market in the US where we should be one of three in the market. And then we have other products like setalizumab and respiratory products as well that we are pursuing.
So actually, you know, it looks like the biosimilar market is starting to open up. And as it does, we’ll continue to look at opportunities where — so as it opens up and on the one-side, the challenges come down, but the competition goes up. So our focus is very much going to be in limited competition products where we’re going to be in the first wave where we can be one of two, one of three. That is the kind of focus that we will have from a portfolio standpoint. So it will be a fairly selective number of products that we will pursue.
Neha Manpuria
Understood. Thank you. Thank you very much.
Operator
Before we move on, can we request everyone to limit your questions to maximum two so that we can accommodate more callers? You can always get back-in the queue for more questions. Thank you. The next question is from Shyam Srinivasan,
Unidentified Participant
Good evening. Yeah, thank you for taking my question. Just the first. Hello. I think you went. Yeah, okay. We’ll take the next question from his back. I think we can hear him. Yeah. Yeah. Hello, Shyam. Go-ahead, Shyam. Okay. Maybe move to the next one before we — on the European market, the kind of growth that we have seen about 20%, if you could kind of articulate what’s driven that growth?
Vinita D. Gupta
I think you called out two products, but just want to understand the sustainability of the growth in the European market for the for the path ahead. Yes. So respiratory portfolio has been a big contributor in the European growth, in particular in UK as well as Germany, where we’ve continued to grow our market-share with and now with the Nalcrom addition in Germany, in particular, that’s helped us grow Germany with the combination of as well as. So respiratory portfolio has been a big contributor for the European growth and we expect to continue revenues at the current level. So wherever we can, we will grow share.
We are getting into new markets in Europe as well. Right now, we are in 13 countries with, but have the potential of launching in countries like Spain and others. So continue to make inroads there. Understood. Thank you. And just a second question going back to the question on tariffs. If you see there’s increasing a risk that 10% import tariffs come on critical imports in the US and the critical imports do include pharmaceuticals at this point of time.
Unidentified Participant
So I’m just going to ask a hypothetical question in case it gets announced as early as next February — 18 February seems to be the date. What are the mitigation efforts in terms of do we have pricing power to increase that onto our customers or you think we are going to have to absorb it at the start and then negotiate because mowing manufacturing and other stuff while we have capacity probably takes time. So I just want to understand the push and pulls around — I know it’s a hypothetical question, but seems given what is happening on-trade, a more likely one than not. So just want to see from a management preparedness, in case such tariffs occur, what is the thought process?
Vinita D. Gupta
So we are looking at multiple different avenues there, you know to look at the impact and how you mitigate it. But as an industry, we have all aligned on the fact that the industry has gone through a lot of pressures and cannot take on critical medicines, high-volume, low-priced medicines cannot bear additional costs. So with 70% of the products imported into the country on the genetic front, 50% of contribution of overall generics from India, I mean one would expect prices would go up in case uncritical medicines in case you know, there are tariffs implemented.
So again, I mean, it’s hypothetical, but as an industry we have, you know, everyone recognizes the impact that tariffs can have on the cost of goods and understands that it either leads to a, you know, cost increase for the market or you know, are you going to see disruptions in the market? Yeah. The response to the Indian government also. They actually reduced tariff on certain rates on certain categories of goods and so on from America. So we don’t know their response for this particular category also as yet.
Unidentified Participant
Thank you. Thank you very much.
Operator
Thank you. Yeah.. We’ll take the next question from Vivek Agarwal from Citi. Hello, Vivek.
Vivek Agarwal
Okay. I guess we’ll move on to — yeah, we can hear you. Hi, hi, sir. So the question is related to. Given that this is going to be an address launch and you have highlighted that there’s going to be product and conversion is expected to be slower. So what kind of the market-share you are expecting during exclusively? Is this going to be, let’s say, around 15% 20% or maybe higher like 30% 40% so any color if you can provide that would be super helpful.
Vinita D. Gupta
Yeah, we hope that it gets to the 30% 40% level based on the partnerships we have established with the key channel partners on the product. And yeah, we expect it to be hopefully in the 30% to 40% level. Thanks. And a related question. Pause to one or two exclusivity, right, how many players you are expecting in this particular product, maybe two, three or maybe expect in two, three additional players.
Vivek Agarwal
Thanks. That’s from my side.
Vinita D. Gupta
Thanks, Vivek.
Operator
We’ll take the next question from Nitin Agarwal from DAM Capital.
Nitin Agarwal
Hi, thanks for taking my question. There has been a lot of general concern in the sector with respect to sector facing certain sort of US sales erosion post post Revlimid sales going away. While we don’t have the Revlimid challenges, we do have our set of large ticket products in ’26 like, maybe Mira as you mentioned continuing in ’26. So I mean, as you see the business looking through a couple of years out in FY ’27, do you see a risk of these also growing or not — de-growing or not growing over ’26 base that you will end-up creating?
Vinita D. Gupta
Yeah. So we have a strong pipeline that we are pursuing. Some of these products that you know where we expecting maybe competition to come in just gone by how long it has taken for us to get approval on products like say, right, that took us five years to get FDA approval, one believes that it’s going to take longer for competition also to get approved. So we do feel with the pipeline that we have in-place, that we should be able to continue to drive growth in the US market despite pressures on products where you lose exclusivity. So I mean, so I just ready, this is going to be double-digit growth in ’26. Sorry, same thing to be a position to double-digit growth all over ’27 and ’26? Net enough, it depends on so many things really, essentially. So we have a rich pipeline, but as you say, there are moving parts because of various things. But over the next five years, we are focusing on what we think would be the complex portfolio and that would help in-kind of securing growth over the next four years, five years. Yeah, we expect fiscal year ’26, the US should be at $1 billion-plus and then look at how we can sustain the growth from there. I think it dropped out, ma’am.
Nitin Agarwal
Okay. Thank you. Thank you.
Operator
We’ll take the next question from Neha Manpuria.
Neha Manpuria
Yeah. Hi, sorry about the last-time. Quick question. First on the capital allocation. If I were to ask for a rank order in terms of where we would pursue M&A. Would it be India, specialty, biosimilars? How should I think about priorities for capital allocation for Lupin?
Vinita D. Gupta
So as you correctly point out, the highest priority would obviously be India. There would of course be opportunities in generics up to a limit in other parts, including America. And of course, we have a larger chunk reserve for specialty itself. And would you like to earmark a number as to what we would like to spend in, let’s say, India or the US generic in case of acquisitions. I think Ramesh meant to say India specialty and then generics wherever we needed and in that order.
Neha Manpuria
Okay. Okay. Sorry about that. With specialty and India being the major focus.
Vinita D. Gupta
Yeah. Yeah.
Neha Manpuria
Okay, got it. And we don’t have like a year marked number as to this is what we would like to invest in, let’s say, India Specialty.
Vinita D. Gupta
No, it’s based on the opportunity and what we see in terms of synergies as well as growth potential. But having said that, we would be comfortable with the bite-size acquisition, $200 million to $20 million should be easy enough for us. In each of these areas. Well, several of them, several of them. Yeah.
Neha Manpuria
Okay. Yeah, got it. Okay. Second, I think in the past, we’ve talked about CDMO opportunity that we are probably exploring for growth beyond ’27. Any update there? Have we looked at capex? What’s the thought process on that?
Unidentified Speaker
Yeah. So we’ve spun out manufacturing solutions and there’s a whole team that’s been put together for this as well. So I mean, efforts are on in all earnest now. They’re actually putting their strategy together, which they’ll have in-placed so we’d hope to give some more flavor on this next quarter. Okay. And have we earmarked the capex for this village? No, it will come along with the strategy.
Neha Manpuria
Okay. Got it. Thank you so much.
Operator
We’ll take the next question from Harsh. Yeah. Harsh, are you there?
Unidentified Participant
Yeah. Thank you very much. Yes. Yeah. Thank you. Just very quickly, for market-share for FY ’25, our target was somewhere around 35% 40% till December, as per the presentation, it’s around 30% 31%. So what are the plans for market-share at this stage, including commercial versus Medicare and Medicaid channel. That’s the first one.
Ramesh Swaminathan
Yeah, so the team has done a really good job in activating multiple areas from a conversion standpoint. And we’re just starting to see early days, but we’re starting to see some impact already in January where the TRx share is become high-30s, has gone to 38% level and NRX is 40% plus. So the multiple efforts on — from a co-pay standpoint to ease the burden on the patient to access into Medicare and Medicaid through contracting plus other avenues have — are starting to show results. So we are hopeful that we sustain this level into the rest of the quarter and into the next fiscal year to get the overall market-share to hopefully 40% plus.
Unidentified Participant
So just one clarification on this incremental market-share that is panning out. Earlier mentioned that at commercial level, you were already at 30% plus.
Vinita D. Gupta
So this incremental market-share is sort of coming from the non-commercial side of the business? That’s right. And again, sorry to harp on this, but this is sort of related to the out-of-pocket capping that the innovator had undertaken, let’s say, few months back.
Unidentified Participant
Does that sort of relate to that in any extent?
Vinita D. Gupta
Now maybe we can take this question offline, but it’s you know, needless to say, the efforts that the team has put in to drive conversion to our generic have are starting to show. We’ll have to still continue to monitor the trend to see if it is sustainable, but it’s looking good so-far in January. End of February.
Unidentified Participant
Thank you. Very lastly on this $250 million run-rate for the quarter for FY ’26, basically a $1 billion number. What is the assumption for Mira, if I may ask for this number? Have you assumed that additional competition comes in the second-half of the year?
Ramesh Swaminathan
On background, we’ve assumed that Albutorol faces competition or impact of competition that has already started and additional. And we’ve assumed that helps tremendously in the first-half and injectables plus in the second-half. No, thank you so much. I think we’re at the art.
Operator
Maybe we take last two questions. Yeah, we are to the last one, sir. We’ll take one last question from Tushar Manulani so sir, can you hear us? Am I audible now?
Tushar Manudhane
Yeah. Sorry for the. Just continuing on R&D spend when you highlighted INR1,800 crores for INR1,750 to INR1,800.5 would you over for FY ’26 as well on an absolute basis, how much in this point-of-view? I would say as an absolute, there would be an increase, but as a percentage of sales, it will perhaps be around the same levels. But given the focus that we have on more complex stuff and the like, this is inevitable. So INR1,800 crores to INR1,900 crores safe to assume that has been spent.
Ramesh Swaminathan
Yeah. Slight increase over that if necessary. And just if you could share specifically for Canada senoblutide on like market in terms of units, how big it could be? Only rough line? You can take the rough line, please. Oh sir wait. That’s it from us. Thank you. Thank you, Tushar.
Operator
Thank you very much. I now hand the conference over to the management for the closing remarks.
Vinita D. Gupta
Thank you. Hopefully, we have been able to answer all your questions. We’ll be happy to take any that we have not been able to get to offline. You know, there were a lot of questions on what is likely to happen in the US from a tariffs perspective. And you know, as I mentioned, we hope that the industry efforts do pay-off and in terms of to ensure sustainability of the US generic industry in the interest of patients as well as other stakeholders. From a standpoint, we are very pleased with how the company has performed this fiscal year and really excited with the potential in the near-term with a major growth drivers looking very clear from a approvability standpoint as well as market launch standpoint and improving market conditions in new areas — new areas for like biosimilars.
So we look-forward to continue to execute in our strategic plan to drive growth across our key major markets and evolve our business from generics into more branded and specialty on-top of complex generics in the year ahead and certainly in the next couple of years. So thank you again for your support and attention. We look-forward to catching-up with you at the end of this fiscal year in May, hopefully in-person. Thank you again. Yeah.
Operator
Thank you very much to the entire management team. On behalf of Lupin Limited, that concludes this conference. Thank you for joining us and you may now exit the webinar. Thank you.