Natco Pharma Ltd (NSE: NATCOPHARM) Q2 2025 Earnings Call dated Nov. 13, 2024
Corporate Participants:
Rajesh Chebiyam — Executive Vice President, Crop Health Sciences
Rajeev Nannapaneni — Vice-Chairman and Chief Executive Officer
Analysts:
Rishikesh Patole — N/A
Ankit Minocha — Analyst
Nirali Shah — Analyst
Saumil Shah — Analyst
Unidentified Participant
Kunal Randeria — Analyst
Bino P. — Analyst
Hrishit Jhaveri — Analyst
Abdul Puranwala — Analyst
Nitin Agarwal — Analyst
Ankit Gupta — Analyst
Rajesh Jain — Analyst
Presentation:
Operator
Good morning, ladies and gentlemen. Welcome to the NATCO Pharma Q2 FY ’25 Earnings Conference Call hosted by Batlivala & Karani Securities India Private Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Rishkesh Patole from Batliwal Karani Securities India Private Limited. Thank you, and over to you, sir.
Rishikesh Patole — N/A
Thank you. Hello. Good morning. Good morning, everyone. On behalf of B&K Securities, I welcome you all to the Q2 FY ’25 earnings conference call of NATCO Pharma. Hope everyone is in good health and doing well.
On behalf of NATCO today, we have with us Mr. Rajeev Nannapaneni, Director and CEO; Mr. Rajesh Chebiyam, Executive Vice President, Crop Health Sciences.
I now hand over the call to Rajesh for the management’s opening remarks, post which we’ll open the session for Q&A. Over to you, sir. Thank you.
Rajesh Chebiyam — Executive Vice President, Crop Health Sciences
Thank you, Rishikesh. Good morning, and welcome everyone to NATCO’s conference call discussing our earnings results for the second quarter of FY ’25, which ended September 30, 2024.
As a disclaimer, during this call, we may be making certain forward-looking statements or statements about future events and anything said on this call, which reflects our outlook for the future must be reviewed in conjunction with the risks that the company faces. I’d like to say that the material of the call except for the participant questions, the property of NATCO cannot be recorded or re-broadcast before NATCO expressed written information.
I will begin with the results highlights and then followed by an interactive Q&A session. So, hope all of you have received the financials and the press release that was sent earlier. It’s also available on our website.
NATCO recorded consolidated total revenue of INR1434.9 crores for the second quarter of FY ’25 that ended on 30th September 2024 as against INR1,060.8 crores for the same period last year, reflecting a growth of 35.3%. The net profit for the period on a consolidated basis was INR676.5 crores as against INR369 crores same period last year, showing a robust growth of about 83%. The company has shown continued strong growth during the second quarter, primarily driven by export formulation business and a stable domestic pharma business.
The Board of Directors has declared a second interim dividend of 1.5 equity shares — per equity share for FY ’24-’25. The revenue split and details have also been communicated earlier. So we’ll pause here and take your questions. Thank you all.
Questions and Answers:
Operator
Thank you. Ladies and gentlemen, we will now begin with the question-and-answer session. [Operator Instructions] The first question is from the line of Ankit Minocha from Adezi Ventures Family Office. Please go ahead.
Ankit Minocha
Yeah, hi, good morning, Rajeev. Congratulations on a fantastic set of numbers. Just looking at Q3 for last year. So, I think Q3 for last year was sequentially a lot weaker versus Q2 of last year, but then much stronger Y-o-Y with over 50% top-line growth. So from what you’re seeing on-ground currently, should we expect a similar trend for Q3 this year in terms of strong Y-o-Y growth?
Rajeev Nannapaneni
I think compare — I mean I — the quarter is still running slightly it’s very tough to judge, but most of our quota is a little bit is left. So I think we’ll have some tail that’s left in this quarter for the December ending quarter. Again, I can’t give you a guidance on the number. But overall, I think we have said that will grow reasonably well and we should grow by 20% compared to last year. We will stick to the same guidance. That’s about it.
Ankit Minocha
Thank you.
Operator
Thank you. The next question is from the line of Nirali Shah from Ashika Stock Broking. Please go ahead.
Nirali Shah
Hi, Rajeev, congratulations on great numbers. My first question is on Revlimid. So how has the market share for Revlimid evolved in the second quarter compared to the first quarter? And as we had mentioned that we are expecting a ramp-up of almost capturing one-third of the market share by January. So are there any challenges that we are observing here or everything is going on?
Rajeev Nannapaneni
So far so good. I have nothing. I mean, things are reasonably well. I think we have done all right. So at least for this financial year, we don’t expect any challenges. Next year, we’ll see. I think that’s — so I think once we’ll have more clarity maybe around March or April of next year, how we’ll speak to our partner and try to get more guidance on how things are going to be. And so far so good.
Nirali Shah
Contribution from Revlimid in second quarter, is it higher than the first quarter or it’s in the same lines?
Rajeev Nannapaneni
I think generally we don’t give guidance like in the same range.
Nirali Shah
Okay. And as you mentioned to the earlier participant about the volume that we have exhausted, if you could give any percentage on how much of the volume has already been exhausted in the first half and how much is remaining?
Rajeev Nannapaneni
Generally, we don’t do that. We don’t give that much detail. I think most of it is done, some tail is left. I think that’s a position.
Nirali Shah
Okay. And my second question is what’s the progress on high-value product filings that will essentially be bridging the gap post-Revlimid? And also in the IP, we can see that Tabrecta has come in as a sole FTF alongside hydrolysis and [Indecipherable] in the shared FTF file line. So any color on the three — all of these three things.
Rajeev Nannapaneni
So I didn’t understand your question, so I’ll just paraphrase so that I got you correctly. So asking me what is the pipeline post-development? And the second question is you asked — you said something about another company, which product I didn’t — I couldn’t catch. Could you say that again, please?
Nirali Shah
Yeah. I’m saying post-Revlimid pipeline. So any update on the litigation portion or filing portion? So we do have a huge pipeline post-Revlimid. Any update on that? And I guess I can ask the second question. I mean, post-Revlimid, I think the big ones are — obviously the biggest one is Semaglutide. So there are two formulas of Semaglutide, one of which one formulation we have already is already there in the public domain and the second one is not settled yet. And the one that is settled, I think two strengths we have sole FTF and other strengths we have shared FTF. The one that is not settled, we have sold FTF and so that’s still under litigation. So that’s one big one. And then in addition to that, another big one is olaparib. So this one, again, we are awaiting approval, and the trial is set, I think the trial date is set-up in a year after from now, a year and a half from now. I don’t recollect the date, but so that’s about that. And then we have some smaller filings like carfilzomib 10-milligram, bosentan 32-milligram trial, so these are also expected in the next few years. So the big — and then maybe the — another large ones where we have 100% of economics is and. So those are very early-stage right now. So I think these are the major ones. Hopefully, in the next one and a half, two years, we expect to file another two, three very interesting products. So then we have good visibility for the next eight years to 10 years, at least we have six or seven very interesting times. Understood. Okay. And the third that I wanted to ask was that in the IT, we are seeing there is one addition to the sole FTF and there’s two addition to the shared FDF pipeline. [Indecipherable] is the one for sole FTF and hydrolysis and Jevtanaa in the shared FDF pipeline. So any color on this based on the timelines or general litigation, anything meaningful all right?
Rajeev Nannapaneni
I can’t comment.
Nirali Shah
Okay. Great. Thank you.
Rajeev Nannapaneni
Okay. Next follow-up.
Operator
Thank you. The next question is from the line of Saumil Shah from Paras Investments. Please go ahead.
Saumil Shah
Hi, Raju, sir. Congrats on a very good set of numbers. So last month we had given notification that Mylan and Novo have reached on a settlement for Ozempic drug. So could you please throw some light by when we can expect this product in India market and by when in US market, when do we expect to get FDA approval, any 22 timelines, or your views on the development?
Rajeev Nannapaneni
The launch date is confidential, so we can’t answer that question. And the review is ongoing with the US FDA. So at this time, I can’t share any timelines. The last question, India launch, I think the compound expires in ’26. So all goes well. We get the regulatory approval and I think if we don’t have any other challenges, I think we should able to launch post ’26.
Saumil Shah
Okay. So if no challenges, then by FY ’27, we can expect.
Rajeev Nannapaneni
I think so. I think ’26 earlier, I think is the patent expired on recollect the market, something like that. Assuming we get the regulatory and there are no other challenges, yes.
Saumil Shah
And sir, what is the market size currently for India market?
Rajeev Nannapaneni
Obviously, right now, the supply from the innovator has been limited. So there’s — so we don’t really know the true size of the market. Second, once the EMEA generics come, the pricing will also be competitive. So we’re actually creating a new market. So I think it will be interesting, but there will also be enough competition as well. So I would like to be guarded in saying anything, but it will be a good product. Definitely, it will be a good product. We hope to be in the first way. And so as you know, we have filed it in DCGI. So I think the review is ongoing. So I think I’m positive. Let’s see how things go.
Saumil Shah
So as of now, we are the only ones who have got the approval for India market.
Rajeev Nannapaneni
Nobody got approval, my friend. Everybody has filed in India, everybody is filed. I think quite a few people have filed, I think Reddy’s has filed, Sun has filed, we have filed. So I think these are — I mean, some companies are named, I’m not naming everyone, but I’m just telling top of my head I’m naming who filed. So we should assume that most of these guys will turn up on the first wave. So — but as you said, the market is interesting enough, so we have to see how things go.
Saumil Shah
Okay, okay. And sir, how do you see our December quarter?
Operator
Sorry to interrupt Mr. Samit Shah, may we request that you return to the question queue?
Saumil Shah
Just one — I mean, I just asked one question.
Operator
There are participants waiting for their turn.
Rajeev Nannapaneni
I got the question. I’ll answer it’s fine.
Saumil Shah
No, I was saying I will say one second, sir.
Rajeev Nannapaneni
I got your question.
Saumil Shah
December quarter. Yeah. No, but last December — last December there was some tender.
Rajeev Nannapaneni
Okay.
Saumil Shah
Let me complete. So last December, we had one-off revenue due to some tender in last quarter of — I mean, December quarter. So can we expect any sort of tenders in this quarter?
Rajeev Nannapaneni
I can’t answer that question directly. I think we — this quarter — December quarter will be weaker than Q2, that much I can tell you. And tail that is left. And I think that’s all I can answer at this time can answer. That’s the best I can answer. And I think the general guidance we have given that we’ll do 20% better than last year.
Saumil Shah
20% revenue growth, right?
Rajeev Nannapaneni
Profitability growth. So that is what we are at the beginning of the year, yeah.
Saumil Shah
PAT growth.
Rajeev Nannapaneni
Okay. Thank you.
Saumil Shah
Thank you.
Operator
Thank you. Ladies and gentlemen, in order to.
Rajeev Nannapaneni
Next caller.
Operator
Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference, we request you to limit your questions to two per participant only. The next question is from the line of Dash from Dalal & Broacha Stock Broking. Please go ahead.
Unidentified Participant
Yeah, hi, sir. Am I audible?
Rajeev Nannapaneni
Go ahead.
Unidentified Participant
Yeah. Sir, congratulations on the great set of numbers. Sir, the first question is the semaglutide for the partner FDF. Now that we had settled with the innovator, what would be the rough time for the launch? I’m not pinning you on any numbers. So I mean, is it in the next one year to three years, three years to five years, or beyond five years? In a broader timeline, I’m not pinning any number.
Rajeev Nannapaneni
No, my friend. I can’t answer that question. It’s bound by confidentiality. I can’t answer that. Sorry.
Unidentified Participant
Okay. Okay. No issue, sir. And sir, the second question on the sizable launches that we highlighted in the last quarter. I’m talking about Olaparib. So if I heard it correctly, we have already filed and we are waiting for the approval?
Rajeev Nannapaneni
We have filed the product. Yes, that’s correct. And we have been waiting for review. And then in the last call, we also said that it was filed from our port side, and we moved to partner side. We moved it to Ozempic side now because of the warning that we have had. So that amendment also has been filed with the FDA. So, hopefully, all goes well. I think when we may get approval sometime. And then the outcome of the litigation, I think these are the two driving factors.
Saumil Shah
Okay. And sir, so on the — so because it’s the partner for that, what should be the economics for the same?
Rajeev Nannapaneni
For Olaparib, you’re saying?
Saumil Shah
Yes.
Rajeev Nannapaneni
Olaparib is 50-50 with telamib.
Saumil Shah
50=50. Okay, sir. Perfect. Thank you.
Rajeev Nannapaneni
Okay, thank you. Next caller.
Operator
Thank you. The next question is from the line of Kunal Randeria from Axis Capital. Please go ahead.
Kunal Randeria
Hi, good morning, Rajeev and Rajesh. Rajeev, first one on semaglutide. So, if can you share how many markets you would be targeting in 2026? Would it just be India? Would it also be Canada and some of the emerging markets?
And then secondly, how do you intend to distribute this product because you mean modest sales force spend in a lot of these markets?
Rajeev Nannapaneni
I think the biggest opportunity we see for this product right now is in India and US and Mylan has the rights for the regulated market. So they’ll open up and they actually open up. We are, I’m seeing some RWA opportunity, but not as much as like what other people are projecting. I think my — I’m more proud for our business model that we have had. I think we have, I think, US is probably the biggest one. And I think second will be India and then maybe regulated market. I think this is the strategy that we have.
Kunal Randeria
But India, you may need to add field force for this or you are to partner with someone here?
Rajeev Nannapaneni
Sorry, could you say that question again, please?
Kunal Randeria
In India, do you have the field force to market this or do you have to partner with someone?
Rajeev Nannapaneni
I think we do — I mean we have set it up. I think we have the setup, we have been covering cardio and oncologists for the last few years. Advantage is our own products. So we’re making it ourselves. So we control a lot of the manufacturing aspect how well we’ll do and all, I mean, the market is going to be large enough. So I think we should do well. I think there’s a reasonable opportunity in the front end and also there’s a reasonable opportunity in. So hopefully, I think as long as we’re in first wave and I think we get it right, I think we should be good.
Kunal Randeria
Got it. Now my second question is on financial. Now so Rajeev, just on your financials. Now if I were to look at some of your ex-international formulation revenue like India or API. So before we launch Revlimid, they have not really grown. While a lot of expenses, like staff costs, SG&A has gone up like before. So I do understand that you have been investing for future growth.
But if I were to, for a moment, exclude Revlimid profits from your numbers, would it be fair to assume that the ex-Revlimid business will not be making a lot of money for you on the bottom line?
Rajeev Nannapaneni
I, see, again, we are — I will answer this question. See, one is, as you rightly said, we’re using — so the expense are vested because spending much more on R&D. For example, this quarter, we spent just on R&D bio studies, and exit batches is been almost INR100 crores, INR125 crores.
The sort of — I mean, if Revlimid wasn’t there, then I don’t think we could have spent so much money on R&D, okay? So if you say we’ll be able to do the same amount of R&D if Revlimid was not there? Probably not. So I think you need to sort of balance the — what I call the expenses with respect to the income that we are generating. See, I think in terms of our future, I think we always say — I mean, we have a good pipeline. We’re going to have years of volatility. I’m not going to come and tell you if a particular product falls off, then obviously, there will be an impact on the earnings.
But we always look for the long-term portfolio and we look at R&D ideas which are — which we’ll be rewarding. But in the near term, they don’t reward. So you’re going to see volatility. I mean there’s no way I can’t avoid that situation. But we have to take a long-term view in our business. You will see ups and downs, I think that’s how you’re looking at it.
Kunal Randeria
No comment. I mean my only point was, since you have the Revlimid cushion, you are spending a lot more. So — but if I were to just for mathematic sales exclude renal profits, you would not be making too much money. That was my question, actually.
Rajeev Nannapaneni
I’ll have a caveat to that. If I don’t have — if you don’t have a big product, then you can’t spend on R&D also, so then the expenses also get reduced by that much. So it’s not a — I mean you can’t say that I’ll spend like a lot of money, but I don’t have a profit. You only spend if you make the money. Both are interlinked, right? So how does that work? That’s how it is.
Kunal Randeria
Got it. This is very helpful. Thanks a lot.
Rajeev Nannapaneni
Okay. Thank you.
Operator
Thank you. The next question is from the line of Bino P from Elara Capital. Please go ahead.
Bino P.
Hi, good morning, Rajeev. Just thinking ahead on.
Operator
Sir, your voice is already muffled.
Bino P.
Hello, is it better now?
Operator
Yes, sir, much better. Please proceed. Thank you.
Bino P.
Okay. Thanks. I was just thinking ahead on generic revenue mix. Our revenues are mostly coming in 1Q and 4Q. So when I look forward to next financial year, by far the exclusivity will be gone. So, practically, we will be — our revenues would be only in the first half for 1Q. So does that mean that FY ’26 over FY ’25, revenue would be slightly lower?
Rajeev Nannapaneni
I don’t know, my friend. I have no idea because you also know that our market share will go to one-third of the whole market. So we — so I think that — so that is one factor. What the price erosion still is going to be is something that I can’t judge. I don’t have an answer to your question. I can only say, I think this year, we should fill next year also we should do well. How well we’ll do is I don’t know. But overall, I would say that we will do well. ’27, ’28 is going to be a challenge because let us assume that the price erosion is more — again, we don’t know how the future holds.
But obviously, we have to build other pipeline. Hopefully, the other products will start coming in other markets that we have invested in should open up. So — and we have the cash on books. So we will be able to do an acquisition, we can be some accretive one. So I think that’s how we have to look at it.
Bino P.
Understood. So suppose we assume that there is no significant change in price erosion. Of course, you get some volume share increase that you get. Would that first half be big enough to comment for the INR2 lakhs of limit assuming everything is still the same?
Rajeev Nannapaneni
As I said, I don’t have an answer to that question. So it’s very tough to predict what the price erosion will be in the future, right? So how — see, you’re asking me questions, which are very hypothetical, which I’m only time will tell. We will see how things will go.
Bino P.
Understood. Okay. Thank you.
Rajeev Nannapaneni
Okay. Thank you. Thank you. Next question.
Operator
The next question is from the line of Hrishit Jhaveri from Pi Square Investments. Please go ahead.
Hrishit Jhaveri
Hi, sir. Congratulations for the good set of number. I had two questions. First, can you give an highlight of the new investment into the e-Genesis, the biotech company? What’s our plan here?
Rajeev Nannapaneni
And I think as our investors know, I think we do a lot of destructive ideas which can reward very large amount. If the ideas work, there’s a large amount of reward. I think this has always been the focus of the company. We never think in terms of near-term. I think we always think about long-term and I think all our ideas are five years, seven years, eight years away. But I think when they come, they come big. So I think among those ideas that this is one of the very interesting ideas that I saw. I think as you see this, they have genetically modified a pig and looking at doing organ transplant primarily for kidney and liver. And so they see a huge upside if this technology works. As you know, there’s a lot of shortage of organs for kidney and liver and if they are able to demonstrate that it can be safely done, I think the upside is tremendous.
So I think we like investing in disruptive ideas and interesting ideas and the investment is part of that philosophy. So if it works, the investment is worth multifold of what we invested. If it doesn’t work, then it is what it is. So I think the idea is always to go for those really large payoffs. And I think the idea in the balance sheet is that we have 10 ideas like this at work for the next 10 years. I think your next 10 years have sorted. So I think a few minutes is, I think the other person has asked me, what are your next big ideas?
So I mean, right now we have Revlimid, in-between we’ll have Olaparib, then we have semaglutide. Maybe in the next few years, we might have Ibrutinib and then we have Capmatinib, which are large ideas and then we throw in a couple of new R&D ideas like each of this investment. And so then you have a box of 10 ideas, 15 ideas. So even if you’re able to pull off six ideas or seven ideas in the next eight years to 10 years, I think you have done a great job. But again, what I say has high amount of risk. At the same time, the payoffs are very large.
Two, there’s a lot of volatility because you’re going to have a year, then none of these ideas are coming through, then you’re going to have some dip of earnings but you got to live with it. But if you take a long-term view on these ideas, I think the work we have consistently delivered over the last few years. And as you are aware, we have delivered, for example, capex or TAM you in the past and which have added very interesting sort of earnings. So I think you just have to go — we can only discuss what we’re doing and I think as I said, there’s always an element of all quality. Okay.
Hrishit Jhaveri
Understood, sir. And the second question, do we plan any major M&A and coming here in the next year, we have a lot of cash on our books.
Rajeev Nannapaneni
Absolute level. We can. I’m just looking for the right idea. I think we are very comfortable right now just spending money on R&D and these sort of start-up ideas. I mean — so again, in addition to that, we also invested in a carti company invested in Delhi as well. So, I mean, these are the flavors of things that we’re doing. Yeah. Coming back to what you said, we are always looking. I mean, we have enough cash on books and so I think we are accruing more cash. So as of end of September, I think we have about INR2,600 crores of cash and so — and let’s see how things go. So I think it will only increase at year-end and let’s see how things go back. I think we’ll see you.
Hrishit Jhaveri
Okay, sir. Thank you and all the best.
Operator
Thank you. The next question is from the line of Abdul Puranwala from ICICI Securities. Please go ahead.
Abdul Puranwala
Hi, sir. Thank you for the opportunity. Sir, just wanted to understand the performance of your subsidiaries for this particular quarter. I’m referring to your Brazil and Canadian specifically.
Rajeev Nannapaneni
All the subs together have done INR120 crores of top-line.
Abdul Puranwala
Okay. And how would be this against last year, same quarter?
Rajeev Nannapaneni
Let me just check. I don’t have that number. I don’t have it on-hand, I don’t have. I don’t have it on hand, my friend. That’s all I can say.
Abdul Puranwala
Sure.
Rajeev Nannapaneni
Okay.
Abdul Puranwala
Second one.
Rajeev Nannapaneni
Next question, please.
Operator
Thank you. The next question is from the line of Shah from Paras Investments. Please go ahead.
Saumil Shah
Hi, sir. Thanks for allowing me a follow-up. Sir, would you not like to revise our guidance? We are guiding for 20% PAT growth. And on TTM basis, we are already at 40% PAT growth. So does this mean that second half of this year is going to be a degrowth compared to the second half of previous year?
Rajeev Nannapaneni
No, I think I’m being conservative. I think we should do better as the guidance I gave early part of the year. I think we have done much better than we thought. I think I’ll have more clarity on how the earnings are going to be. I think maybe our — when our December numbers are there. So I don’t want to comment right now. I think once we have more clarity on issues will come. So I think we’ll give you some time on that.
Saumil Shah
Okay.
Rajeev Nannapaneni
But you’re right. I think we are going to probably do better than what we have guided. So we have a new finding. I’ll tell you. I don’t — how much better I tell you in the next quarter.
Saumil Shah
Next quarter. Okay. So you are doing a good job. Sir, we have a new filing in this quarter, Tabrecta. So can you please throw some light? You have indicated in your filing that we are eligible for 180 days of sole marketing at the time of launch. So what do you mean by that and by when we can expect this launch, any approximate base work?
Rajeev Nannapaneni
Again, litigation outcome is going to drive it. I think product is about 110 million, 120 million. I don’t collect the exact sale and the sole FTF and this is going to be marketed by our entity in the US. So we get to keep 100% economics. So that’s what makes it very interesting. And when will the market open up and all, it all depends on the litigation clarity. I think it’s too early-stage at this. I’ll come back on that.
Saumil Shah
Okay. That’s it from my side. Thank you and all the best for future quarters.
Rajeev Nannapaneni
Okay. Thank you. Yeah, thanks.
Operator
Thank you.
Rajeev Nannapaneni
Next follow-up.
Operator
The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead.
Nitin Agarwal
Hi, thanks. Rajeev, on — in the past, you’ve talked about looking to scale up your emerging market business. So two things, I mean, what are your thoughts on maybe some of the portfolio products that you have for the US right now filings? I mean in which of these do you see an opportunity for some of these and all of these products in these other non-US markets? And what other strategies do you have in mind for growing this part of the business?
Rajeev Nannapaneni
Actually, that’s the idea, Nitin. I think whatever you do and develop in the US market, we’re extending to other markets. So, for example, we had Olaparib, and we are extending that to Brazil and Canada, for example, and other ROW markets. So I think that’s how the strategy works because whatever R&D money is spent, you extend it to as many countries as possible. So I think we’re doing filings of these very good products that we have in multiple markets. The strategy is that you should file at least seven to eight good countries and then somewhere you will get a jackpot somewhere. I think our core areas that we’re focusing on in addition to India, US, Canada, and Brazil, I think we’re doing a lot of work in the Middle East now, especially Saudi. We have a partner in oncology and then we have our own subs now in the Philippines and Indonesia. So we are looking to extend it there as well. So I think this is where we see a lot of potential and we also done some filings in China as well. So these are other markets that we’re focusing. But again, these all partnered out. So I think there is a lot of potential, absolutely.
Nitin Agarwal
And do you have any — any numbers in mind for how large you see this business probably becoming this non-US business over a period of time, maybe three years to five years?
Rajeev Nannapaneni
I don’t have a number in mind at this time, but I think we are organically trying to build these businesses. But I think also, I think we’re looking at an acquisition in these markets. And this time we are looking at at least a couple of acquisitions in the RW business. So it will be in combination with filing and an acquisition, we believe that these businesses should grow.
Nitin Agarwal
Okay. Lastly, on the core production, any color you will throw on that?
Rajeev Nannapaneni
I think it’s been a little disappointing, I think here the sale — we have done well overall. I think because last year was the first full year of operations with our core portfolio, we saw a little bit of returns and also we had to adjust for the returns. That’s the reason why we had — the sale was a little on the lower side. But I think we have launched two products, three new products — two products which are unique. So I think we expect that the business should do well. We’re hoping that this business will breakeven starting from ’26 March and ’27 March is our target of profitability.
See, a lot of these businesses that we’re building, you will have cash loss to the near-term, but I think eventually with time, as we’re just speaking about a few minutes ago, I think once these businesses start to make money, then the base business becomes stronger. And so I think what we’re doing is using this opportunity of the — that we have to build these businesses to scratch and settle them and then also spend money on R&D so that we can improve our pipeline for the future.
Nitin Agarwal
Okay. Thank you so much. Best of luck. Thank you.
Rajeev Nannapaneni
Thank you,. Next caller, please.
Operator
Thank you. The next question is from the line of Abhishek from Capital. Please go ahead.
Unidentified Participant
Hello.
Rajeev Nannapaneni
Yeah, go ahead, Abhishek.
Unidentified Participant
Yeah. So first of all, congratulations on the great quarter. I just want to ask one question about the operating margins. So I am seeing that the operating margins has increased to 60% in last two quarters. So do you think these margins are sustainable in the future?
Rajeev Nannapaneni
Answer is it — I answered that question a few minutes ago, but I’ll just repeat the answer. I think it all depends on our portfolio and the pricing. If the pricing is good and we have a good product, it will work. And I think we’ve said that this year should be fine, ’26 also should be fine. But what the future holds, we don’t know and it all depends on how the market formation is and what the erosion is. So you could see a dip, but it’s the nature of the beast.
Unidentified Participant
Okay. Then what average margin we can expect in this year and the next year?
Rajeev Nannapaneni
No, it will maintain the same margin that we have, I think for this year and next year.
Unidentified Participant
60%, right?
Rajeev Nannapaneni
Yeah. Whatever we have right now we’ll maintain. But I think what future holds, again, it all depends on what products we have at that time, what is the nature of the portfolio, what’s the nature of the price erosion and all that stuff. So to answer your question, for now, I say yes, I think things will do well. But again, what the future holds is all is contingent on the pipeline and on the price erosion.
Unidentified Participant
Okay. Thank you.
Rajeev Nannapaneni
Okay. Thank you.
Operator
Thank you. The next question is from the line of Rohit from PMS. Please go ahead.
Unidentified Participant
Yeah, good morning. Am I audible?
Rajeev Nannapaneni
Yeah. Please go ahead.
Unidentified Participant
Yeah. Good morning, sir. So sir, just — I mean you mentioned to a previous participant in terms of your — the way you think about the business taking sort of these sort of moonshots and some of them will pay out. So I’m just in that context, I wanted to get your sense on some of the NCs that we have and anything — any update on the 2694 NRC that we have also if you can share, I think it was in Phase-2 trial. So if you can answer these two questions. I mean, first, the broader context, I mean, do you see the NC portfolio as like a part of that overall like the moonshot that you’re talking about and do you consider that or it’s just too early to say? And specifically on this NCI, sir, yeah.
Rajeev Nannapaneni
Yes, certainly. I mean, this is another moonshot. It’s just like our investment. I think ILRC-2694, there is a clinical trial going on. We’re doing a trial in the US at this time. It is for a particular late-stage head-and-neck cancer indication. It’s an early stage. That’s why we’re not talking much about it. I think we’ll give an update as things go along. It comes back to the same point that I made a few minutes ago. I think our generic filings are moonshot is a little harsh word, I would believe. I think we have some — there is some method to the madness. It is not completely moonshot, you know. So but as I said, I mean, you have three ideas — two ideas, three ideas in drug discovery, and then you have four ideas, five ideas, six ideas with your paraphors, and then you have two, three ideas in oligos between all these 10 ideas.
You will get — I mean, you got me wrong about every product, every time, right? You want to get something right. And I think the idea here is that you build about these 10 businesses to 15 businesses, sorry, 10 products to 15 products, and then and you’ll get — even if you get seven or eight right over a period of decade, I think you’ve done a great job. If you look at our profitability, I mean, I can be a little immordest and tell you that our margins or our profitability is definitely the top-10 pharma companies in India. But — but again, what you need to live with as an investor is probably the volatility. I think we — the challenge that we face in our business is that we are not consistent. I mean, we’ll have three good years, four good years and we’ll have two years of dip. And again, then we’ll have three good years again. So — but I think that’s the nature of the risk that we take. I think hopefully, we built enough of the pipeline with the R&D that we have that we’re able to deliver more good consistency. I mean, that’s what we are trying to do.
In my personal view, again, this is a very — this is a minority view, but this is my personal view that a mid to commodity generic business is not going to make money. And the model that we are doing as Indian pharma where you have — everybody filing everything and covering every geography to expect earnings growth on that portfolio is extremely difficult. And I believe that unless you pursue what we are pursuing, and obviously can do it at different degrees of what do you call depth on how you allocate your capital. I don’t think you’ll ever have earnings growth. And I think you can — I’ll again challenge you the other way. I think if you look at most Indian pharma in today, we remove the jackpots, those two, three jackpots, or whatever, the earnings growth is minimal. There’s no earnings growth. In fact, there’s growth. And that’s the nature of the industry because the industry is very competitive. Two, nobody has debt. So, everybody is very aggressive and everybody makes cash flows. So the market is — I mean, there’s very little margin left, so, and this is the structure of the business and I believe that this is the only way the future growth will happen. Did I answer your question into that one?
Unidentified Participant
Yeah. No, no, it does. I mean, I mean I hear what you said. And I mean, of course, you know it much better than any of us here. So I respect your view. I think, sir, just the point on our volatility, I think, I mean others may also fall, but I think given their portfolio and given their breadth to the portfolio, I think the fall is still kind of arrested and I think that’s where we are a bit sort of sound wanting at this stage of our evolution. So I mean that’s so that is probably what we all are sort of asking in different ways. So yeah, that’s it.
Rajeev Nannapaneni
So again, I don’t want to avoid the elephant in the room. I mean it is what it is. I mean you can’t come and say, what, I should have this much base business and all, you can’t create a business that you don’t have. You know what I mean? It takes time and it has its own journey, right? So — and from the size of the firm that we have grown, we have grown to the size that we have because of the disruptions that we have done. And so it is what it is. I mean, hopefully, I think over a period of time with the cash that we have and with the R&D spend that we’ll have been able to bring that little more stability. But — but again, comes back to the original point, you will not have growth unless you do disruptive products. That again, I’ll reemphasize again. And if you remove the big products, the niche products, there is no growth in the business. I think that’s the nature of the industry today.
Unidentified Participant
Sure. Maybe can I sneak in one more question? I don’t know if you can one more question.
Rajeev Nannapaneni
Yeah, please conclude, yeah.
Unidentified Participant
I mean just on this point on your base profitability, I mean, would you want to sort of share what is that profitability today? I know you mentioned that like we are investing a lot, but I’m sure you are also looking at like I mean instead of this investment that we are doing in R&D, if we are to look at or however you want to put it, what’s your base profitability today? I mean you want to sort of share anything on that? And how do you see it?
Rajeev Nannapaneni
I can’t answer that question because you’re asking me what my earnings are going to be two years, three years down the line. I have no idea. I mean it all depends on what products you have. I think that whole base profitability concept you need to remove. I think that it’s a wrong notion that people have. You are as good as what product you have in what product you have that year is what’s going to drive your earnings and every year, you need to come with something new. There’s nothing like — it’s not a cement or a steel business that you’ll have certain output that you’ll get and there’s no — this business is constant innovation. You need to have new products because whatever you have right now, we’ll just vanish.
If you just look at your own balance sheet, I mean, I can challenge you on any balance sheet. If you look at your own core portfolio, whatever you have on your base gets — goes away, 30%, 40% of it goes away in five years. So this, if you ask me, it’s a very — if you ask me, I don’t think the correct question. I think you need to judge a person on the pipeline, not on the base. Base means nothing base erodes continuously, especially in the export business. It’s brutal, it just erodes away. We just had to keep coming up with new ones. Okay, next color. Yeah, right.
Unidentified Participant
Thanks.
Operator
Thank you. The next question is from the line of Ankit Gupta from Bamboo Capital. Please go ahead.
Ankit Gupta
Yeah. Thanks for the opportunity and congratulations for the good set of numbers. So my question was on the sema Ozempic and [Indecipherable]. So are we done with all the litigations on the Ozempic side for both — in all device as well as API?
Rajeev Nannapaneni
I think one product we are done with all the indications, other product we are not. I think have done, one we are not.
Ankit Gupta
So there will be spending for the weight-loss indication. There would be a…
Rajeev Nannapaneni
…on weight loss. I think one product is settled and one product is not settled.
Ankit Gupta
Okay. So I think most likely diabetes would be settled is what I can assume that.
Rajeev Nannapaneni
I think diabetes will settle, I think weight loss is also.
Ankit Gupta
Sure. And any timelines for that?
Rajeev Nannapaneni
Yeah. No, my friend we can’t answer that question.
Ankit Gupta
Sure, sir. Thank you. Thank you and wish all the best, sir. Okay, sir. I appreciate it.
Rajeev Nannapaneni
Thank you. Next caller, please.
Operator
Thank you. The next question is from the line of Bhagwat from Prosperity Wealth Management Private Limited. Please go ahead.
Unidentified Participant
Thank you. Thank you for the opportunity. Congrats for the very good quarter results. Sir, you mentioned about the EBITDA margin to the previous participant. In fact, my question was on the revenue. So if possible, could you please guide us the revenue growth, say, for the mid-term next two years to three years?
Rajeev Nannapaneni
Next two…
Unidentified Participant
Next two years to three years in the mid-term?
Rajeev Nannapaneni
I can’t think so far, my friend. There’s so many moving parts. We can’t make judgments. I’ll tell you for next quarter, I can tell you for this year and maybe in the — in the end of the year of — when the year starts for the following year, I think we’ll tell you about the following year. So there’s so many moving parts and it’s very hard to judge. I will not give guidance on that. Sorry.
Unidentified Participant
Okay, sir. I understand. Thank you, sir.
Operator
Thank you.
Rajeev Nannapaneni
Okay. Next question. Next caller, please.
Operator
The next question is from the line of Manan Rastogi [Phonetic] from Alpha Wealth. Please go ahead.
Unidentified Participant
Thank you for the opportunity. My question is what we are doing on our growing our domestic business because it has been on a baseline for a couple of quarters now.
Rajeev Nannapaneni
So I think it’s been stable. Unfortunately, we’ve not grown. I think we have a good pipeline coming up in the next 12 months. We have a lot of three big launches and obviously, semaglutide is one of the biggest launch we have in it. So I think my expectation is that semaglutide should really jumpstart this business and it’s probably the biggest launch we have. But we also have some smaller launches. So if you take a two-year to three-year perspective, I think the business should do well. We expect the business to compound at 15%, 20%. I know the numbers look flat right now, but I think we take a patient, I think in two years, three years, again, it comes back to what I was saying, it’s all about your pipeline. You will only get growth if you have a good product. If you don’t have a product launch, there’s no growth in this business and it’s true in domestic also and it’s true for export market. So that’s how it works.
With our pipeline, you have nothing and you need to have pipeline where you’re backward integrated doing your own manufacturing, only then you have margin. Otherwise, there’s no margins. So I think the key here is that you need good pipeline, which allows you to sustain growth, and which I believe we have just that you just have to wait until it actually comes. So that’s a patient you have to.
Unidentified Participant
Right, got it. Just one more question. Are you facing any issues from Canada subsidiary with India, Canada, like or…
Unidentified Participant
…because of the diplomatic.
Unidentified Participant
Yeah, diplomatic issues, yeah.
Unidentified Participant
No, I’m not interested.
Operator
Thank you. The next question is from the.
Rajeev Nannapaneni
Next caller, please.
Operator
Yes, sir. The next question is from the line of Rajesh Jain from RK Capital. Please go ahead.
Rajesh Jain
Yes, sir, I have two questions. So the first question is like what could be the impact of the Biopharma Act on NATCO Pharma’s business in your assessment?
Rajeev Nannapaneni
As of no, because the biopharma portfolio is not there. We don’t have biopharma portfolio in our — in our — on our products. So I don’t see much impact. But again, it’s more now Trump has come. So we have to see how — what policies he will adopt and what disruption that will cause in the generic business, we don’t know. So we have to be cautious about what’s going to happen. But as of now, specific to that act, no. But what the future holds, I don’t know. We’ll see how things play out.
Rajesh Jain
Okay. The second question is like how is your agro business doing? And what is the outlook for FY ’26, specifically on the agro side?
Rajeev Nannapaneni
I think we believe — right now it’s doing okay. We’re still losing money. I think we lose, I think about — if you take off all the one-time write-offs and all, I think we’re losing about INR40 crores to INR50 crores a year. I think the objective first is that by ’26 March, we want to breakeven. I think that is the internal objective that we’ve given to the Group. So we expect that it should breakeven. I think that’s — to answer your question, yes, I think ’26 March is our target that we should breakeven in that business.
Rajesh Jain
Okay. Thank you.
Rajeev Nannapaneni
Okay. All right. Thank you. Next caller, please.
Operator
Thank you. The next question is from the line of Ankit Minocha from Adezi Ventures Family Office. Please go ahead.
Ankit Minocha
Yeah, hi. So the — if you were talking to a previous participant about maintenance of the margin in FY ’26 as well. Are you assuming any pricing erosion in Revlimib in when you say that or it depends on the pricing erosion if you’re able to maintain that?
Rajeev Nannapaneni
We — I don’t know what the answer to that question is because what I’ve said is that we have nearly one-third share and we’ll see how the erosion is. Overall, we are expecting that we should do all right. But again, I will have more clarity on this once we speak, we’ll have clarity next year. I think once we are — post-March earnings, I think we’ll have clarity on how the following year is going to be. But yeah, we’ll see how things go. Yes. It’s very hard to judge the market. It’s all linked with the market erosion and also, which is not in our control and hard to judge.
Ankit Minocha
Sure, sure. Thank you so much for that. And secondly, just a general understanding about the industry, the generics industry in the US, I mean, last year was good in terms of the pricing environment, but are we seeing any acceleration of pricing erosion in the US markets now starting to come in this year or do you feel the pricing environment is still pretty reasonable?
Rajeev Nannapaneni
I think overall, the business, I think you have a good portfolio and breadth of portfolio, I think you do reasonably well. I think that’s one. The second thing is you need to have a good pipeline which are first wave generics, which gives you a good amount of profitability. I think these are two ways that you actually make money in this business. But I think your new pipeline is what drives the profitability. Without that, I don’t think you have that — the push in the earnings. But these two things are required. I think that’s how it works.
Ankit Minocha
Great. Thank you, and we wish you the best. Thank you.
Operator
Thank you. The next question is from the line of Josh from Dalal Stock Broking. Please go ahead.
Unidentified Participant
Thank you for the follow-up, sir. So just a broader question. By FY ’26, we will have about $400 million, $500 million of cash potential — potentially. So what is the potential size of acquisition we are looking at, I mean any broad color?
Rajeev Nannapaneni
Good question. I don’t know. We’re looking at different levels of transactions. I mean, the size is bigger, then we can use the cash and we use a combination of maybe a debt and then maybe some equity to — it all depends. I mean, we are looking at — I mean, we look at one transaction, which is about $300 million. We will get one transaction, which is about $5 million, 6 million. So I mean you get different types of transactions, but what you consummate in the end is all it all depends on you know we’re able to on the price and the diligence course well. So we’re open to any size of transaction. But I think if you want a range, this is that range. But again, I — we have not closed anything. So it’s very difficult to say that in our way that we have — that this is going to happen. So we don’t have — it’s very hard to judge, but looking at different kinds of transaction because this is something that — because of the cash that we have allows us more flexibility to do something large, so.
Unidentified Participant
That is clear. Okay. And anything on the table that is now?
Rajeev Nannapaneni
Sorry, say that again.
Unidentified Participant
Anything on the table right now?
Rajeev Nannapaneni
Any…
Unidentified Participant
Anything on the table right now?
Rajeev Nannapaneni
We are looking at different transactions. We are not closing anything at this time.
Unidentified Participant
Okay. Thank you, sir. Thank you so much.
Rajeev Nannapaneni
Thank you.
Operator
Thank you.
Rajeev Nannapaneni
Yeah. Next question.
Operator
The next question is from the line of Rahul Chaudhary, an Individual Investor. Please go ahead.
Unidentified Participant
Hello, sir. Am I audible?
Rajeev Nannapaneni
Yes, sir.
Unidentified Participant
Hello. Yes, sir, just picking up on the last caller, sir, when you said 300 million, you mean 300 million USD range?
Rajeev Nannapaneni
Yes.
Unidentified Participant
Oh, that’s good. Great. Sir, I was just comparing how we did the Revlimid deal. Is it fair to assume that the Ozempic and WIGO deal in US is losing exclusivity in 2031 as of now, the information in public domain?
Rajeev Nannapaneni
There are multiple patents, I think there’s some patterns in ’31, there are some in ’33, and some in ’30. I don’t recollect the dates, yeah, but over a period of time. I think we have a launch.
Unidentified Participant
Okay. So we can’t — we can’t do dedicated guess and say like in four years how we did Revlimid. They should also start growing. All right. Okay. Got it.
Rajeev Nannapaneni
We can’t answer. Thank you.
Unidentified Participant
Okay.
Rajeev Nannapaneni
I’ll take one last question.
Operator
Thank you. If we take the next question from the line of Ankit Gupta from Bamboo Capital. Please go ahead.
Ankit Gupta
Yeah. Thanks for the opportunity again. Sir, my question was again on the — on the Ozempic side. So like I think because of the device involvement, if there is any difference in the device with respect to innovators, we might have to carry on human factor study. So do you see any risk in that because it’s a mix product and a lot of supply constraints are there, and then they are big products? So I just wanted to ask, is there any human factors, any risk in human factor studies if there is?
Rajeev Nannapaneni
I can’t discuss about the regulatory review questions and all that.
Ankit Gupta
But as of now, you’re confident of launching?
Rajeev Nannapaneni
I can say that we’ll do what it takes to get it up to. I think our partner Mylan is handling the regulatory aspect on this and whatever it takes to get this up.
Ankit Gupta
Okay. And you remain confident.
Rajeev Nannapaneni
We address the right partner, and they have bought a lot of complex endings approved. And I think we are in good hands, and I think we will get it done. Yeah. Thank you, guys. Thank you, everybody. Can we conclude, please? Thank you.
Operator
Sure. Thank you, sir. Would you like to add any closing remarks?
Rajeev Nannapaneni
No, nothing. Thanks. Thank you. Thanks for your interest and thanks for the call.
Rajesh Chebiyam
Yeah. Thank you all. Again, the transcripts once it’s available will be uploaded to the website. Thank you all and have a good day.
Operator
[Operator Closing Remarks]