Shilpa Medicare Ltd (NSE: SHILPAMED) Q3 2025 Earnings Call dated Feb. 11, 2025
Corporate Participants:
Keshav Bhutada — Executive Director
Alpesh Dalal — Chief Financial Officer
Analysts:
Runjhun Jain — Analyst
Unidentified Participant
Nikhil Upadhyay — Analyst
Krisha Kansara — Analyst
Rupesh Tatiya — Analyst
Neha Kharodia — Analyst
Sahil Bambade — Analyst
Vishal Manchanda — Analyst
Tushar Bohra — Analyst
Presentation:
Operator
And please wait while you are joined to the conference. The conference is now being recorded ladies and gentlemen, please stay connected. The conference call will begin in next few minutes. Thank you Ladies good day, ladies and gentlemen, good day, and welcome to the Shilpa Medicare Limited Q3 FY ’25 Earnings Conference Call. 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. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded.I now hand the conference over to Mr Runjun Jain from EY. Thank you, and over to you.
Runjhun Jain — Analyst
Thank you,. Good morning and a warm welcome to everyone. To take you through the results and-answer your questions today, we have the management team from the company, represented by Mr Kesha, Executive Director of Pharma Life Sciences Limited; Mr Alpesh, Chief Financial Officer; and Mr Monish Shah, Head, Strategy and Investor Relations.
Please note that the financial results and the presentation have been uploaded on the company’s website and on the exchanges. Please note that this conference call is being recorded and the transcript along with audio of the same will be made available on the website of the company as well as the exchanges.
I would like to remind you that today’s discussion might include forward-looking statements based on the current expectations and assumptions. These statements are subject to risks and uncertainties that could cause actual results to differ materially. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date.
The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. I would like now to request Mr to provide you with a brief update in the quarter. Over to you, Kishan.
Keshav Bhutada — Executive Director
Yeah, hello. Runjan, am I audible?
Runjhun Jain — Analyst
Yes, sir.
Keshav Bhutada — Executive Director
Yeah. Thank you, Runjan. Good morning, everyone. Thank you for joining us today to discuss on our Q3 and nine months FY ’25 results. It was a very exciting quarter for the company with multiple opportunities shaping us well for supporting us in growing for years and quarters to come. Come. I’ll start briefing about the various business segments in which Shilpa is currently invested, mainly into API, formulations, biologics and CDMO.
So I’ll start briefing with API business segment. In API, let me start with the oncology segment where the — for the current year in the oncology segment, our main focus was on building products where — which are more complex and where there are not many manufacturers or either it’s an import substitute.
So many of our existing production blocks where we were manufacturing some old products, we have replaced that with new products and validated them so that for the upcoming financial year, we will have a good growth opportunity in the oncology segment. So let me start with Molecule one, which is a NCE molecule, which we are supplying to one of the US big pharma clients where they have already received breakthrough designation therapy for one of the cancer treatment.
For them, for the current year, all the supplies for the clinical trials has been completed and there is already a forecast which is given by them for next financial year. And the current clinical trial Phase-3 is going as planned by our partner. That is the update what we have from our partner.
Now I’ll start updating on molecule number two, which is again NCE molecule, which we are supplying to one of the US big pharmas, which is currently under Phase-3, where we have some order — pending order for supplying for Phase-3, which we are planning to complete in Q4 FY ’25.
Apart from that,, which was an important oncology pipeline, which we had added in and validated in the current financial year for that the CEP and DMS is already filed in Q3 FY ’25. And for next year, we are hopeful that we will start having commercial revenues from it. Apart from that every drawn where we have developed this molecule with in-house API and also we have developed a differentiated formulation.
For API, the process validation batches are already completed and DMF will be ready in Q4 FY ’25. Two new molecules in oncology, mainly and palbociclib, already the planned validations are ongoing and we are expecting to complete in Q4 FY ’25. With this, we will have total of four new oncology product launches planned for next financial year, where we will have a growth which applies to our internal formulation and also we will be supplying to external formulation players.
Now let me start briefing about non-oncology segment. In non-oncology, mainly on transamic acid where we had already invested on capacity expansion. In the current quarter, the capacity expansion was completed and commercial production has started. And we will start seeing the delta of revenue increase in this product from next financial year.
On second molecule, UDCL, which is again a molecule in India, very few companies are manufacturing where company has already received CEP in previous quarters and we have already started seeding samples to various customers in export market and we are hoping positive that we will have a likely good traction in export market with multiple commercial orders in UDCF for exports.
Third molecule, which is non-UDCA, where company has developed their own API and formulation, which is NCA in India where — which is developed for non-alcoholic fatty liver disease. The molecule is expected to have approval in Q4 or Q1 FY ’25, for which the API supplies will start from Q4 for our internal formulation where we will be the only supplier for our formulation.
With this next year, we will have a increase in revenue mainly from DCA and our additional capacity — additional orders from our sodioxycholic acid in export market and also transamic acid where already the capacity expansion is completed. So with this, we are positive that in the next financial year, both our oncology and non-oncology segments are likely to perform well. Now I’ll start briefing about new segments, mainly CDMO, polymer and peptide, where we have had very good traction in current quarter also.
So let me start with you. In CDMO, lanthanum deoxy carbonate, which we are developed and where we are manufacturing both truck substance and truck product for our US partner, the launch order execution is already started and the API supplies for that is expected to complete in Q4 or Q1 FY ’25.
And with this, the product commercial API sales will start coming in from Q4 FY ’25. The second molecule where we are the only supplier for our US partner where we are manufacturing both API and formulation, the molecule is being studied for multiple indications and our partner has already received fast-track designation and the molecule is being studied for more than five indications, where we are the only API and formulation supplier.
In the current quarter, we have finished the API supplies for our partners for their Phase-2 clinical studies and the formulation supplies are expected to complete in Q4 FY ’25. And our partner already the Phase 1/2 studies are ongoing. The next update is on polymer, where I’m happy to share in the current quarter, we have received a $4 million worth of single purchase order for one of our partners, where we are the only supplier for them from India for the specialty non-pharma application, which is a very complex specialty polymer.
And once the supplies are finished, which we are likely to finish in first-quarter of FY ’25. We expect a orders from them. The next update is on peptides where the GLP-1 portfolio in which we are seriously focusing. Leraglutide is the first molecule in which our drug master file is ready now and our formulation registration batches are planned in Q1 FY ’25 — FY ’26.
And once the formulation batches are done with six-month stability, the molecule will be filed globally in Europe, US and all the rest of the world markets. The second update is on, where our API form — API development is already completed and our API process validation patches are planned in Q1 FY ’26.
The next update is on regulatory where in the current quarter we had a audit from Mexican authority and the audit was successfully completed for multiple products. So with mix of Oncology, non-oncology and CDMO polymer peptide, we are positive on outlook for FY ’26 for our API business. Now I’ll start briefing on formulation business. In formulation, totally, we have now three NDA approvals with us currently, in which the first molecule for which already the NDA approval is received. The molecule is already launched in US with our US partner and the molecule is having good traction quarter-on-quarter and we are hopeful of doing well for the next financial year also with being only generic player to have an RTU room temperature stable product. The second molecule,, for which the India approval is already received and we had applied for various courts which are required for selling this molecule for insurance reimbursement and premium pricing. The courts are received recently and our partner is planning to launch this product in April — April 2025. Now the third molecule, which is imartinib oral liquid, which is again an NCE molecule where we are the only approval — only company to have this oral liquid oncology product approval in US for imartinib. The molecule is already launched by our partner in Q4, and we look-forward to have a positive outlook for this also in next financial year. Apart from that, now let me start briefing about Europe business where Nilotini, which was our first generic launch in Europe with non-infringing strategy. We were the only player to launch with number-one partner in Europe in generic space and the molecule is expected to really do well in quarters to come. And with being only generic player in the market and with non-infringing API, company is well-positioned to do well in quarters to come. Apart from that, the second molecule, which is axitinib where the formulation approval is already received. And this is again a molecule with non-infringing API strategy. And upon patent expiry, we are planning to do day-one launch, which is planned in Q1 FY ’26. Third project, which is SML annuity 007, which is a molecule which we have non-UDCA, which we have developed for non-alcoholic fatt liver disease. Our filing in India is already completed and we are hopeful of getting approval in Q4 FY ’25/Q1 FY ’26. With this, we will be the only company to launch this MCE molecule in non-alcoholic fatty liver disease and there is a serious interest from multiple partners and we are in under final negotiation with multiple partners for launching this product in next financial year. The next molecule, which is, which we have already filed this product in Europe with — which is a very complex transgermal patch product and we are not expecting many generics in this product and expecting to launch this product in next financial year. We will be one of the very few generics to have this product and already we have partnered with the very strong player in Europe who is very strong in Parkinson’s disease for which this molecule is being treated. Two new transgeneral patch products which are being — which are already signed with our European partners. For the two molecules, the currently our product development is already completed and our pilot clinical studies are starting in Q4 FY ’25. With this — and we also have multiple other four to five new differentiated products for which already we have given a brief on investor presentation and we are really hopeful that each of these molecule will progress very well in-quarter to come. And upon launch, it will give us a sustainable growth in quarters to come. We have very strong order book in formulations with not only Europe market and US also from rest of the world market where the multiple registrations which were done in previous years, we have approvals and we have multiple launches in multiple markets. On regulatory front, our USFDA remediation, I’m happy to share that we have successfully completed all the remediation action and we have submitted to USFDA for requesting for audit. Now next, I’ll start updating on biologics front. In biologics, our second molecule, which is aflibercept, which is again a very complex ophthalmic product. The molecule is already the registration batches are coming — the clinical trial batch is completed and our Phase-3 clinical study is already initiated and we are expecting to complete this study and file this product in India and rest of the world market in next financial year. And it will be one of again very few generic molecules with very limited competition in India and ROW markets. Two new molecules which we have added in our pipeline in current financial year, the molecules are progressing very well. Nivolumab and pembrolizumab is being major blockbuster molecules being top-10 biologics in world, but both the molecules, our preclinical trials are initiated in Q4 and we are hopeful to start human clinical studies in next financial year. And there were three new biologics, three new blockbuster biologics, which we have added already in our pipeline and we are planning to start preclinical studies for this product — these products in next financial year. In total, company will have almost six biologics products with each molecule being having a market size of more than $1 billion. Now mainly, I’ll start updating on the CDMO business for biologics. We have in the current quarter, we have had very good traction on multiple RFPs and there is a serious interest from multiple CDMO partners to partner with us for our CDMO business in biologics. As on-date, company has more than five CDMO projects which are in various stages of development, some molecules being where we have already submitted the material for preclinical studies and even Phase-1 studies. And as mentioned in previous quarter, every quarter we have a target of signing at least one new CDMO project, which will surely give us as and when the program will ramp-up, we will have a likely increase in the revenues. Now I’ll start updating on albumine, which is recombinant human albumine, which is a new biological entity being the first synthetic albumine being studied for the therapeutic use. Our molecule Phase-1 study data was reviewed well by Indian SEC Authority and we have successfully received permission to start the Phase-3 clinical study for which the material generation is currently in-progress and we are planning to start the Phase-3 human study in for India and rest of the world markets in Q1 FY ’26. Apart from that, for the global market, for Europe market already our Phase-3 clinical study protocol is submitted to EMA and we are expecting response from European authority in Q4 FY ’26 — FY ’25. And same once this response is received from the European Authority, we will be submitting the same clinical study protocol for US and we will be taking the alignment with USFDA also in Q1/Q2 FY ’26. And with that, we will be planning to start a global Phase-3 study for US and Europe market in next financial year. Now, lastly, I’ll update on the UNICICU project where the company has already partnered with Therapeutics for drug substance and drug product supply. For the molecule, the launch order for 5 million tablets is under execution for which API manufacturing is ongoing and we are planning to finish formulation supplies of initial 5 million tablets in Q1/Q2 FY ’26. Once these supplies are done, there will be a repetitive orders from our customers. At last, I’m — we are very positive on the company’s outlook for FY ’26 with multiple assets being getting very close to monetization and we are very positive of having growth. I will now hand over to Alpesh Talal, who will provide a detailed financial overview.
Alpesh Dalal — Chief Financial Officer
Thanks, Keshav, and good morning, everyone. Let me briefly take you through the financial performance for the 3rd-quarter and nine months ended on December 24. Our total revenues for the quarter were INR320 crores, recording a growth of 11% year-on-year and 12% for the nine months period ended.
The total revenues were — were as I mentioned, grew at 12% and total revenues were INR971 crores. The growth was largely driven by improved performance in our formulations and biologics business and that was partially offset by the muted performance in our API business, right. Given the improved business mix, the gross margin for our — for the quarter improved to 72%, you know, which was higher by 5% year-on-year and 7% quarter-on-quarter. And then the resulted EBITDA was at about INR82 crores as compared to INR68 crores in Q3 of FY ’24, showing a growth of 20% year-on-year. And EBITDA for FY ’24 for nine months FY ’25 were at INR256 crores, which I’m happy to report that it was higher than the entire EBITDA reported during the previous financial year. So we have done significant improvement on the operating side over there. And EBITDA margins for the quarter and nine months were at about 26% and we believe that going-forward with further improvement in operating leverage and better asset utilization of newer initiatives that we had taken and also the improvement in the business mix that we have been witnessing, we could witness further improvement over there in the margins. I’m also happy to share that on back of you know, repayment of a substantial part of our NCD and other loans post our QIP issue, the interest burden has started coming down with the interest cost declining 55% year-on-year during this quarter. Going-forward as well, we are working on measures to reduce this interest further. Now on the profitability side, profit-after-tax for the quarter stood at INR732 crores versus INR5 crore last year, whereas for nine months ended during this — during nine months ended December ’24, the PAT was INR64 crores, which again was almost double of the entire PAT of FY ’24. On the segmental performance, our API business clocked a revenue of INR182 crores during the quarter that was down 10% year-on-year, largely on account of lumpiness in purchase pattern from our key customers. Formulation revenues for the quarter were at INR118 crores, which grew by 64% year-on-year and the growth was mainly driven by our EU business where we launched a limited competition product as Shaw had explained, Nelotinib. Similarly, the Bio similars business recorded a revenue of INR18 crores, which was a growth of 43% year-on-year. Now a quick update on a couple of balance sheet items. Our net-debt was INR532 crores as at 31st December 2024 and our capex for the nine months period ending December ’24 was INR173 crores. And this was mainly on account of our alumin facility, which is coming up. And with that brief update, I would now like to open the Q&A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press R&1 on the touchdown telephone. If you wish to remove yourself from the question queue, you may press. Participants are requested to use handsets while asking a question.
Ladies and gentlemen, we will wait for a moment while the question queue assembles thank you. We will take our first question from the line of Kiran B from Tabletree Capital. Please go-ahead.
Unidentified Participant
Thank you so much for the opportunity, sir. A fantastic update of all the molecules. Thanks so much. Sir, I have a broader question than any specific question. For FY ’26, we are — I mean, I’m just through the update that you just gave. Are there any particular molecules that can give us a delta of INR100 crore, INR150 crore INR200 crores in FY ’26 because apart from scaling, all the other molecules are relatively smaller is my understanding, but I’m happy to be corrected.
So the answer that I’m trying to look for is, is, are there any molecules which can give us a delta over FY ’25 about 100, 150, 100, 150, 200 or more apart from scaling because OLC gold date is 28 June, then J-Code and it will take time to scale. That’s probably FY ’27. So that’s roughly what I’m trying to understand.
Keshav Bhutada
Yeah. Thank you. Hi,. Thank you for your query. See, I will not be able to tell where it will be INR100 crore, INR150 crore or INR200 crore delta. But what I can tell you is the molecules what we have mentioned, right, mainly the NCA opportunities and our launch, axitinib launch, rotigotin launch, I think the delta in the revenue is surely possible.
How much it will be — we have to see because as you can also understand, these are mainly NC molecules, right, like it’s being a 55 B2 product, more complex product. So I feel that giving a number for us currently is difficult. But I can tell you with mix of each of this opportunity, there is really a good opportunity for the company.
Unidentified Participant
Got it, got it. Then sir, the other question that I have is, I mean we launch maybe Q4 FY ’24, but let’s say Q1 FY ’25. So we have taken about a year for scaling to really start scaling. Is that going to be a similar case for all the other molecules results? So for example, we’ve launched — we’re going to launch in Q1 FY ’26. Is it going to take one more year because even, we had, we had everything?
Is it how the market dynamic usually works that it takes offer all the five or five B2 products because of the payer and insurance and everything else? Does it take a year to scale? I mean, just like is taking, will and the other launches in the US take similar amount of time.
Keshav Bhutada
No, Kiran, because I’ll try to help you understand. See, when we — with our partner also, it was the first 5, 5, we do injectable launch for our partner. So there were some courts which we had to apply for this product in exit, which we applied post-approval. But what we have done is in case, we have done differently.
So once we had approval, we immediately applied for courts. So the time it takes for this, to get-in the market, right, that takes more time. So in case of Votizomib, that is already available now for us, which we have just recently received. And with that only our partner is planning to launch in April.
So I’m very sure that for Botizomi, the case will be better and we should have a revenue ramp-up being — we will be the only RTU player with subcutaneous use, right, which is a big indication in Botizomi, it will be a better opportunity for us for sure.
Unidentified Participant
Got it, sir. And my final question on the OLC, sir, carbonate. So we said 5 million — I mean, this is a call when we had the OLC where Vishnu sir was talking about it. So OLC, 5 million tablets by June 2025, 10 million by December 2022 — additional 10 million by December 2025. So I’m just trying to understand the dynamics sir here.
OLC gold date is 28 June. Hopefully we get it — get approval within 28 June. And then the J-code application and all those things are going to happen, right? So this 15 million targets that we are pushing in the market, we can’t really push in the market. Is that a fair understanding and therefore, the real growth in OLC will happen only in FY ’27?
Keshav Bhutada
No, no, Kiran. I’ll tell you, see, one is the launch, but this being NCE molecule, right? Our partner is not planning a direct launch. There is a different strategy which they are — they are adopting, which I’ll not be able to disclose. But what I can tell you is for OLC, the — for next year already 10 million tablets order is confirmed for us. And for that already the supplies are planned.
Unidentified Participant
Got it, sir. Got it. Got it, got it. Sure, sir. Thank you so much. I’ll get back-in the queue.
Keshav Bhutada
Yeah. Thank you.
Operator
Thank you. We’ll take our next question from the line of Nikhil Upadhya from Simple. Please go-ahead.
Nikhil Upadhyay
Hello. I hope I’m audible.
Operator
Yes, please go-ahead.
Nikhil Upadhyay
Yeah, good morning and thanks for a detailed input on each of the assets. It’s really helpful. I just have one question — two questions in fact. One is, as these products now get launched into the market, so would we see — would that the license fee income which we received this year would drop-off and it would more move towards a formulation sales, how should we understand the dynamics between the license fees and the actual formulation sales? So would there be a drop-off?
Keshav Bhutada
Yes. Yeah, thanks, Nikhil. See, Nikhil, there are two things which you should understand. One is the existing products, once the approval comes, that will move to the sales revenue, you are very right. But company every year we add at least four to five new complex pipelines, which we have already been doing for last four, five years, right?
So there is already a pipeline. If you go through our investor presentation, there are already five differentiated products, which are already in Phase-2, some are in Phase-3, some are in preclinical or some are close to filing and approval. So those molecules also we Will out-license, right? So there will be a licensing income, which will start coming in from this new molecules, which are already under execution. So the dynamics will be the existing molecules once the approval comes, will move to the sales revenue and the new molecules for which already we have been investing from last three, four years, right, their licensing income will start coming in.
Nikhil Upadhyay
Okay. Thanks for the explanation. Secondly, on the API side, so just at a broader level, some of the companies did mention that the pricing pressure in the API has again come back. And if we look at our onco sales and the non-onco sales, it has year-on-year or over the last 3/4, if we look at, we have seen some kind of a drop-off. Is it more pricing-driven or is it just a difference in terms of when the — when the molecules will start getting the supplies? And is it a timing difference or is it actually a pricing pressure also you are witnessing?
Keshav Bhutada
Yeah, very good question, Nikhil. So I think for us, because as you understand that API, mainly we are manufacturing more of a complex APIs and not amito generics, right? So we have not had so much of pricing pressure, but the major decline what we have experienced in our oncology business this year against last year was because of our major customers who has received some regulatory issues in last financial year, right?
So there they have done worked on remediation and after that slowly quarter-on-quarter their revenues have started kicking up. But what we have done is for this year, right, we have taken this as an opportunity and all the new molecules which were in our pipeline, which we couldn’t execute for validation, DMF filing and for future growth, that execution we have done in current financial year where for some time we will have a revenue decline.
But because again, these are complex APIs and not many players have it and we will supply to our own formulation and also to the external customers like classic example being, right, where we have a non-infringing API because of which we have a differentiated launch in formulation, licensing, etc. So we are mainly focusing on building such pipeline in our existing production blocks, which will improve the efficiency of the block as well as it will give us increase in revenue.
Nikhil Upadhyay
Okay. Okay. So to some extent, we are prepared for the future and we’ve used this opportunity to put our capacities and be ready on the back-end. So whenever demand come, we are ready with the supply-chain.
Keshav Bhutada
Yeah, we already have some visibility that there will be a demand for some products where we have selected and worked on these products, right? So that is the pipeline on which we are mainly focusing.
Nikhil Upadhyay
Okay. And last question on the Europe, we’ve seen this jump from current run-rate of — on the formulations I’m talking from that INR12 crore INR16 crores to INR35 crores. And if I understand our commentary of previous quarters, it’s only one-product which we have launched this quarter and the rest two would be launched in Q4 and Q1. Is that understanding correct?
Keshav Bhutada
Yeah, Nikhil,, which we have already launched, that revenues will — we’ll start seeing in every quarters to come. Apart from that,, which is the second molecule will be launched in Q1 FY ’26 and then there are series of launches in upcoming quarters. So yes, you are right that our existing will continue to have revenues, which is already launched and then there is a pipeline of upcoming launches.
Nikhil Upadhyay
And this nelulotinib opportunity, how long do you see can remain a limited competition kind of opportunity? Because earlier in last call, you had mentioned there are only few we would be the first generic player, but when do you see competition can come in or any — any sense if you can give there?
Keshav Bhutada
Nikhil, currently it is difficult for us to give any thought there, but we feel at least for a couple of quarters, we’ll not have any competition.
Nikhil Upadhyay
Sure. Thanks. I’ll come back-in the queue.
Keshav Bhutada
Yeah. Thank you.
Operator
Thank you. Ladies and gentlemen, in order to ensure that management is able to answer queries from all participants, kindly restrict your questions to two at a time. You may join back the queue for follow-up questions. We’ll take the next question from the line of Krisha Kansara from Molecule Ventures. Please go-ahead
Krisha Kansara
Hello.
Operator
Yes, Krisha. Please go-ahead.
Krisha Kansara
So thank you for giving me this opportunity. So sir, my first question is on our API division. So in the last con-call, you had indicated that the European API segment is now set for a good growth in the coming quarters. And in the last six months or so, we have received close to four or five API approvals for Europe market, including, UDCA and many other approvals. So how do you see Europe as a market shaping up for us?
If you could give us the context as to how much of our API sales in, let’s say, in this quarter or nine months were contributed by Europe market? And what is your view on European API segment in the upcoming quarters? This is my first question. Thank you.
Keshav Bhutada
Thank you. Yeah. Thanks, Risha. See, in API, when we are selling to our formulation, right, for many of the partners, they don’t take molecule by telling that we are taking only for Europe. It will be for a global market because we make single quality for all the grades, okay?
So for me, it will be difficult to give you exact percentage how much of our API is going to Europe because many of the partners are using our API for US, Europe, ROW and many multiple markets, okay. But Europe business and rest of the world market is again a very big opportunity. And since we have a pipeline like UDCA, which I mentioned, transamic acid or some complex molecules in peptides like desmopressine, optreotide, which we have, leraglutide for which now our DMF is ready.
So what will happen is in quarters or years to come, right, these all will start giving us the delta of revenue. So I’ll not be able to give you an exact percentage how much it will be, but we are positive that these all new molecules what we have in pipeline will start adding revenues.
And since you can understand that for many of the formulations, right, we have our internal API itself, so for which are already a formulation launch for us in Europe. For that also, I’ll be making API, which will again be a revenue for us for Europe market.
Krisha Kansara
Right. So sir, for us going-forward, Europe will be a key market is what we can assume, right?
Keshav Bhutada
Not only Europe, it will be a mix of like see, when we are doing for CDMO for multiple partners, right, for they are mainly targeting US market also. So I will say it’s a mix of US, Europe and rest of the world market.
Krisha Kansara
Right, right. And sir, in our biosimilar segment, so we reported close to INR18 crores of top-line in this quarter. Now correct me if I’m wrong, but our entire biosimilar revenue as of now is coming from Adali Mumam and CDMO projects that we have. And previous quarter, we did INR31 crores in sales in this segment.
So it has come down from 31 to 18. So is it fair to assume that this is because of the CDMO project lumpiness nature or are we seeing some kind of a slowdown in the segment?
Keshav Bhutada
Yeah,, I think we are not seeing any lumpiness in our biologics business. It’s mainly because of seasonality of our customers, especially in CDMO. Like in last quarter, we had given one big supply to one of our Korean partner for their Phase-1 and preclinical supply, which actually gave us a big growth.
But apart from that, you are right that our current major revenues are coming from CDMO and adalimumab sales. But going-forward, you will start seeing more of the revenues from multiple licensing opportunities in multiple markets.
Krisha Kansara
Right, right. Okay. So will you be able to give a breakup of, let’s say, how much was from Adalimuma then from CDMO?
Alpesh Dalal
So you know, at this center, we wouldn’t be providing those details at this stage. But as Kesha was mentioning, is having consistent sales currently. So we are not seeing you know any challenges over there. It’s just that as you’re rightly pointing out that in CDMO, practically — typically what happens is that depends and depending on the growth or the development that has happened in that particular contract, the fees start coming in or they take certain developmental quantities and all. So to that extent, yes, there will be lumpiness. You are right in your assessment.
Krisha Kansara
You’re right, right. Okay. And sir, just one last question if I can pitch in. So sir, in this quarter, if we observe, our gross profit margin has improved significantly. If we compare on sequential basis, it is up from 65% to 72% . But the same has not been translated into EBITDA because of an increase in other expense. So I wanted to understand the — as in what drove our other expenses, was there any one-time expense that we took in this quarter? Were there some remediation expenses that we took in this quarter or what was the composition?
Alpesh Dalal
Yeah. So there are a couple of items over there. I think one of the things is that, you know because of the developmental cycle that we have, some of our R&D spends during the quarter have been on a higher side as compared to what it has been in the past. Also, you know, due to the euro exchange rate going against the exporters, the — there has been an exchange loss as well.
These two have been the main contributors for you know the other expenses going up during this quarter. But I think going-forward, it should come back into the normal region.
Krisha Kansara
Okay. So what was — what was the remediation expense in this quarter?
Alpesh Dalal
Remediation expense was not maybe as roughly about INR2-odd crores, not much.
Krisha Kansara
Okay. Okay. Okay. I have couple of questions. I’ll join back-in the queue. Thank you.
Alpesh Dalal
Thank you.
Operator
Thank you. We’ll take our next question from the line of Rupesh Thatia from Intel Sense Capital. Please go-ahead.
Rupesh Tatiya
Hello, sir, am I audible?
Operator
Yes,
Alpesh Dalal
Yes, you are.
Rupesh Tatiya
Okay, thank you. Thank you for the opportunity. My first question, sir is, I mean there are so many segments, CDMO, non-CDMO, biologics, FDF. So I think it would be much better if you — at least I am very new to the business and it’s very complicated. So can you maybe just give some sort of a two, three-year revenue and EBITDA guidance.
Alpesh Dalal
Sorry, we as a policy do not provide any guidance. So we may not be able to provide that. You know you’ll have to pardon us for that.
Rupesh Tatiya
Okay. Okay. So first, maybe coming to specifics, first question now is on the biologics. So we have these five, six assets in biologics and then also I think recombinant albumine some commercialization I think is expected towards the end of FY ’26. So can we expect, let’s say, biologics can become, let’s say, a INR300 crores business for us in FY ’27?
Or I mean, is that like a reasonable estimate? Can business have that kind of trajectory or you think it will be longer, it will take longer?
Alpesh Dalal
So first, as I mentioned, we don’t — as a policy, we don’t provide any guidance, right? I think what we can tell you is that the way our business is building up with development happening for our pipeline products as well as the CDMO contract pipeline that is building up for us.
I think we see a very good traction happening in our biologics business and we should be able to generate sizable revenues going-forward. Anything that you would like to add-on,?
Keshav Bhutada
No, I think we are fine. Thank you.
Rupesh Tatiya
Okay. Okay. And sir, in — I mean, what is — what is our total CDMO revenue? Because I am confused. In API segment, you say some CDMO revenue of INR25 crores in 3Q and INR62 crore for nine months and then there is this licensing services revenue in formulation. So maybe can you help me with — in nine months, what is our total CDMO revenue, all development plus commercialization combined?
Alpesh Dalal
So again, see, this CDMO revenue that we have got in our API business is north of INR60 crores during the nine months period.
Rupesh Tatiya
Okay. And then there is no CDMO revenue booked in FDA?
Alpesh Dalal
No, no.
Rupesh Tatiya
Okay. And then so what is this licensing services component? Maybe can you just explain that a little bit? And I think earlier participants also asked how will this move-in, let’s say, FY ’26, FY ’27, can this component decline?
Alpesh Dalal
That question.
Keshav Bhutada
Yeah, Rupesh, since you are new to the business, I’ll give you some understanding. See, Shilpa Medicare as a company, we are mainly into B2B, okay, in all the markets, except India for few of the molecules. So what happens is for all our pipeline molecules, okay, we partner with some of our partners like we have relations in Europe, US and multiple markets.
So for each of these molecule, we partner with some company to sell the molecule. So when we partner with them, right, there will be upfront licensing fee and then there will be various milestones on approval, on launch, post-launch sales achievement milestones. So these are all revenues which are called as licensing income. Is it clear?
Rupesh Tatiya
Yeah. Yeah. So it is not, but okay, it is kind of like out-licensing for our sales. However products we have developed in generics.
Alpesh Dalal
Yes. See, the fundamental difference in-licensing and CDMO would be that in-licensing the IP belongs to us, we own the IP. We have developed it on our own account and then we have after developing that IP, we have given the license for the IP to somebody else. In CDMO, we do the development for our partners.
Rupesh Tatiya
Okay, okay. And then sir, maybe another question is this OLC that we are developing for in — I mean, how can you give some sense of the market opportunity? How large product can this be? I mean, however you want to explain it by number of patients or therapy or application, but how can — how large can this product be?
Keshav Bhutada
So yeah. I think, Rupesh, just to tell in simple words, this molecule going-forward, it’s — for our end-customer, it’s more than at least $1 billion opportunity.
Rupesh Tatiya
Okay. And we are single-source supplier, sir, for API and formulation?
Keshav Bhutada
Yes.
Rupesh Tatiya
Okay. Okay. Thank you. Thank you for answering my questions.
Keshav Bhutada
Thank you.
Operator
Thank you. We’ll take our next question from the line of Neha Karodia from. Please go-ahead.
Neha Kharodia
Yeah, hi. Good morning, everyone, and thanks for the opportunity. Sir, my first question was regarding the API business. So in case of oncology business, we were expecting the supplies to — in touch to improve in the coming quarters as per our commentary in the quarter two. So just wanted to understand reason behind the decline in the current quarter for the same and why there was lumpiness in the client business?
Keshav Bhutada
Yeah, Neha, see the entire business against the last year in Q3 once they had the remediation issues. From there, it has significantly improved in current financial year, okay. So — but it is still ramping-up. So as per our end-customers, they are hoping to do better for next financial year with respect to our API supplies also.
So that is what is the understanding we have with our — with. So still it’s ramping-up, it is not fully ramped currently. That is why you will see this, it’s slowly increasing. And since in the last financial year, these were very big revenues, right, from Intas. So you will always see that de-growth.
But what we are also doing is the blocks where we were manufacturing for, right, those blocks we are currently — we have changed our production plan and we are manufacturing some more high-value complex, good gross margin products for which currently we will have some pain for some quarters. But for next financial year, they will again contribute to the commercial revenues.
Neha Kharodia
Okay. But even sequentially, we have seen a decline in the oncology business. So like the supplies have further reduced to or was it led by some other reason?
Keshav Bhutada
Yes, sequentially, it has decreased mainly because of and also for some of our products where we have orders, but we have taken production of because that’s an important launch for our formulation. So because of that, you will see a decline in the current quarter because those blocks now we are manufacturing mainly in for our formulation.
Neha Kharodia
Okay. So the situation for oncology business, if my understanding is correct, is likely to improve from Q1 and probably in Q4 as well, we can see some pressure on the oncology business.
Keshav Bhutada
Yeah. I think from Q1, surely there will be improvement.
Neha Kharodia
Understood. And also on the non-oncology business, so with the acid expansion and we expect the commercial supplies from Q4. So how should one look at the non-oncology business because there also we have seen sequential as well as year-on-year decline.
Keshav Bhutada
So yeah, in non-oncology, what we have done is for some of our molecules, which we were manufacturing from many years like ambroxol,. There we have reduced our production because with — in those production blocks, we have taken now high-value products like UDCA, which will slowly go into export markets and then not UDC, which is for a formulation for NAFLD. So going-forward in FY ’26, the old molecules which were not giving a significant revenue jump, those Molecules we have replaced with some good, better molecules with better margins. So you will see a good increase in the non-oncology business also in Q1 from Q1, starting from Q1.
Neha Kharodia
Understood. And also regarding the tax-rate, so as of last quarter, it was at 51% and we had guided that it is likely to come down to 35%. So just wanted to understand the reasons for improvement in the current quarter and how should one look at the tax-rate going-forward? Will the 24% of level of the current quarter be sustainable or how to look at that.
Alpesh Dalal
Yeah. So Neha, you know the current quarter numbers that have come up, there are certain mat credits and all that have come in, which does not — may not necessarily continue. But as we had guided that we were taking certain measures to arrest the tax leakage happening on account of intercompany loans and all.
So a large chunk of that we have done and that has helped us from an overall perspective. And as I had guided last-time also that overall, we are likely to remain in the region of 35%. For FY ’26. Yeah, we should reach nearer to that. We are currently at about 39% 40% for the nine months. So we might be slightly couple of percentage points higher during this year, but next year or not, we should reach 35% tax-rate.
Neha Kharodia
Understood. Thank you.
Operator
Thank you. We’ll take our next question from the line of Sahil Bham from Sirius Advisors. Please go-ahead. Sahil.
Sahil Bambade
Hello.
Operator
Yes. Sail, can you use your handset mode, please?
Sahil Bambade
Yes. So am I audible now?
Operator
Yes, please go-ahead.
Sahil Bambade
My question is that
Operator
Sal, your voice is muffled.
Sahil Bambade
Hello, hello. Is it better now?
Operator
A little better. Please go-ahead.
Sahil Bambade
Hello. So please feel that main PDMO more formulation. So can you hang these segments based on their such a and future revenue potential? And additionally, how are these investments are — how investments are being allocated among them?
Alpesh Dalal
Sorry, we, we couldn’t understand get the question at all.
Operator
Your voice was not clear at all. Can you just repeat your question, please?
Sahil Bambade
Hello. Is it now?
Operator
It is for some time, but then it is cracking. Can you just check your network and join back the queue, please.
Sahil Bambade
Okay, okay, sir.
Operator
Thank you. We’ll take our next question from the line of Deepak Sharma, an Individual Investor. Please go-ahead.
Unidentified Participant
Thanks for the opportunity. And my one of the question is how the Trump policy will impact the export revenue of the company. If yes, then how much there will be impact on which segment?
Keshav Bhutada
Yeah, very good question, Deepak. I think on the Trump recent announcement on tariff, whatever they have given, right? Still I think multiple things they have not clarified how much will be the tax-rate and for which therapy of drugs, etc. But what I can tell you is, since you have — if you have gone through our numbers also majorly our formulation still the US revenues are not significant. And the molecules which we are manufacturing are more of a lifesaving trucks.
So there I don’t see that being because oncology being very-high gross margin business, right? So this should not have significant impact, but we should observe in quarters to come.
Unidentified Participant
Okay. And my another question is, will you sustain the EBITDA margin of 26% to 27% in the coming quarters?
Alpesh Dalal
Yeah, that should be sustainable as I was mentioning in my commentary as well that we do believe that there are opportunities to improve it further, but certainly, 25% 77% is.
Unidentified Participant
Okay. Okay. Thank you.
Alpesh Dalal
Thanks,
Operator
Thank you. We’ll take our next question from the line of Vishal from Systematix. Please go-ahead.
Vishal Manchanda
Hi, good morning and thanks for the opportunity. One clarification on and exitinib. So since you have launched this ahead of others on the market through a non-infringing route, so basically, have you been able to kind of circumvent the patents around this and launch it earlier? Is that the case here?
Keshav Bhutada
Yes, we sure.
Vishal Manchanda
Okay. So this window, how long this window will last for you?
Keshav Bhutada
Okay. That depends on how the litigation goes for other partners for which we don’t have clear information, Vishal. But as I mentioned, at least for a couple of quarters, be the only generic what we feel.
Vishal Manchanda
And post that, do you still expect this to be limited competition or you would expect kind of markets getting flooded with a number of generics.
Keshav Bhutada
No, this is very complex product, Vishal. So I will not say that there will be like, 10 20 generics like that, but how many will come, how the market will shape up, I think we have to observe.
Vishal Manchanda
Okay. Okay. And are you also kind of trying to build-on this opportunity for the US markets through the non-infringing route?
Keshav Bhutada
No, Vishal. US has a different strategy for which our strategy what we have worked out for US is not okay. So there is no opportunity for this molecule for US for us.
Vishal Manchanda
Okay, okay. And with respect to the rotigutin transermal patch, you would be a generic — substitutable generic, right?
Alpesh Dalal
Correct. You’re right.
Vishal Manchanda
Okay. So it would be easier to garner market-share.
Keshav Bhutada
Yes, Vishal, you are right..
Vishal Manchanda
And just on this licensing income, if you can kind of talk about the events that trigger licensing income for you and also some guidance on a broad range like where the licensing or if you can set-up floor for the licensing income that you would expect probably a basically a low-level — a basic level of licensing income that you can generate every year with whatever assets you have currently?
Alpesh Dalal
So I think as far as the various milestones related to licensing income is concerned, Keshav already explained that, that you know, A, each contract is different and depending on you know, your various milestones that you reach within the contract, which could be either submission of a dosier or completion of certain studies or filing of the dosier receipt of marketing authorization approval launch of products, there could be several such milestones for which licensing revenues can be generated or triggered.
And so — but it differs from contract to contract. As far as you know, setting any expectations or floor for the licensing fee and all. I think what we have been mentioning is, see, we are a B2B company. So this is part of our regular business that we would develop products and we would, you know, generate licensing income out of it, how much is the quantum and all will be dependent on each opportunity that comes up, the kind of product which is there, the kind of market potential that the product has. So it is very difficult to quantify or provide any guidance on that.
Vishal Manchanda
Okay. Okay. So just if you could — if you could share whether there was a lumpy one-time — lumpy licensing contributions from a single-product this year and so if you could share that, maybe 50%
Alpesh Dalal
Opportunities that we have worked on, right? And we can’t disclose, you know specifics about any special — any contract because of the confidentiality confidential nature of the agreements that we have.
Vishal Manchanda
Maybe only kind of if whether it was — whether there was a single-product contributing to a large part of the licensing income.
Alpesh Dalal
As I mentioned,
Vishal Manchanda
Not the name of the product, but
Alpesh Dalal
We have number of such opportunities, which we have worked on. So —
Keshav Bhutada
So Vishal, just to clarify, for the current year, we did not have a licensing fee-only for one-product or two, three products. It was a mix of more than I can tell you at least 15 20 products in different customers, in different territory with multiple products, multiple strengths. So it is very difficult to quantify exactly that. But I can tell you it’s from a multiple pipeline products.
Vishal Manchanda
Okay. Okay. And just one final one on the — on the biosimilar aflibercept opportunity. Do we have the block manufacturing aflibercept in the fixed — capitalized or it is once it is commercialized, you will capitalize the asset then?
Alpesh Dalal
Yeah. The capitalization will happen once the — everything is completed and the product is ready and all that . So capitalization has not yet happened fully over there.
Vishal Manchanda
Got it. And just one, any other ready
Operator
Queue please as we have other participants waiting for sure.
Vishal Manchanda
Sure. Okay. Thank you.
Operator
Thank you. We’ll take our next question from the line of Tushar Bora from Emkay Ventures. Please go-ahead.
Tushar Bohra
Yeah, thank you for the opportunity. Sir, couple of questions quickly. Just to carry-over from the previous participant on licensing, is it just fair to assume that given you’ve highlighted so many new products that we are working on and a lot of opportunities are closer to commercialization or in advanced stages, that licensing income should continue to be a major driver of both revenue and profitability for us going-forward over the next maybe couple of years looking — not looking beyond that, but at least in the foreseeable future, do you think that it will continue to be a major driver?
Keshav Bhutada
Yes, Pushar, it’s right. I will not say it will be only major driver, but it will be one of the major drivers.
Tushar Bohra
Got it. So we should — we should continue to model for licensing as one of the important revenue drivers for the fourth in the full solution. We are a B2B company, which I have kept mentioning quarter-on-quarter.
Keshav Bhutada
Yes, this will be an income which will continue for us every quarter. It can be sometimes very-high, sometimes it can be down against previous quarter, but it will be there every quarter.
Tushar Bohra
Second, on CDMO, so when the contract with came up, I think it caught a lot of people were surprise who were not aware that is in advanced stages of development in any CDMO project. Maybe you would like to highlight the overall strategy behind building our CDMO business across API as well as Biologic and if there are any other products that may be similarly placed, which could come up over the next couple of years in terms of commercialization possibilities.
Keshav Bhutada
Yes, Tushar, as I already mentioned in the commentary also right. So there are a lot of molecules already in pipeline and the main focus why companies focusing on CDMO because these are surely a good gross margin business. And also once if you have a good customer where you are supplying API and if you get even formulation, right, you will be one of the only suppliers for them or at least there will be second source or third source opportunity. So it will be a sizable opportunity as and when there are milestones which our partner will achieve.
Tushar Bohra
So maybe, sir, if you can qualitatively highlight what kind of efforts the company is doing to build-up the revenues of the business development of CDMO specifically.
Keshav Bhutada
So yeah, like company already has multiple very good talent pool in various markets, starting from US, Europe and some high-quality rest of the world markets. And since one good thing with us, many people ask us that we are into so many segments, but that is the main strength what Shelpa has because we are into API, we are into formulations, we do peptides, we do polymers, we do biologics, we do fermentation, right? So when we go to any customer, we have multiple offerings.
And if we even enter with them in any of this one vertical, that’s a hit for us. So that is the kind of advantage which company has?
Tushar Bohra
Second, if you can highlight on albumin besides the therapeutic rate, if any efforts have been taken to develop it for excipients and cell culture, etc?
Keshav Bhutada
Yeah, Tushar, as I already mentioned in previous quarter on excipient grade, we are focusing on developing some clients, some customers there where we want to start seeding them samples. So there is a business development team which already we have appointed and they have joined. So slowly there is an effort now getting started for selling this excipient grade, which we are doing for the first time. So we have to observe how it will evolve now in the upcoming financial year.
Tushar Bohra
Finally, sir, if you can — and maybe it’s been answered in the call earlier, don’t remember though. If you can highlight more on the ADC side, what are we doing exactly? An antibody continue.
Keshav Bhutada
I couldn’t hear it clearly.
Tushar Bohra
If you can highlight, sir, what are we doing on antibody you get building that business, sir?.
Keshav Bhutada
Yeah, because we manufacture biologics, we have small-molecule capabilities also, right? So we have in the pipeline what we have taken in our biologics, we have now taken some ADC molecules also. And globally, we will see in next five to 10 years, there will be like how today in top-five molecule approvals, there will be at least two to three biologics, right?
So same way ADCs will get into picture in at least years to come for sure, this being more targeted than even biologics. So we are well-positioned because we have biologics, we have small molecules where we can manufacture payloads, linkers, etc., right. So together we have very good manufacturing and development capability of ADCs now.
Tushar Bohra
Thank you very much. I’ll join back-in queue.
Keshav Bhutada
Yeah. Thank you.
Operator
Thank you. We have a next question from the line of Bhawani Shankar Somani, an Individual Investor. Please go-ahead.
Unidentified Participant
Hello, am I audible?
Operator
Yes, please go-ahead.
Unidentified Participant
Good evening and good afternoon, sir. Thank you for taking my question. Sir, my question is like we have like big lineup, big product being lined-up or launch in next financial year. So like I wanted to know from the management perspective, which are the top three products which according to you will be the biggest revenue generator next financial for Medicare.
Keshav Bhutada
Yeah, the top three molecules will be surely, axitinib and our CDMO products what we are doing broadly.
Unidentified Participant
Okay. And sir, like I have a question with slightly different from the business perspective. Like there are a few promoter, I think they have been with the company for like six, seven years, but now they are trying themsel to be classified to public categories. Any specific reason for it? Or I
Alpesh Dalal
Think some of the promoters of family people who are not involved in the business, right, they just not been actively doing anything. They have not been participating in anything. So — and obviously as promoter group, there are additional responsibilities cast on you. So you know, it was just more of a compliance-related requirement that was coming up, which they wanted to avoid, nothing more than that.
Unidentified Participant
Okay, sir. And sir, like one more question, like if I mentioned in biologics segment about one new project being signed-up in food sector. So I just wanted to know more about like what’s the product and like what the project basically
Keshav Bhutada
Yeah,, it’s one of the project which is developed by fermentation. A molecule I will not be able to disclose, but it’s a CDMO project where already the client has regular commercial requirements and now we will be the one more source for them where the development activity he has initiated with us.
Unidentified Participant
So will that be launched in India or like in and other foreign countries?
Keshav Bhutada
It’s mainly for export market,
Unidentified Participant
Mainly for export market. Okay, sir. Thank you. That answers my question.
Keshav Bhutada
Yeah. Thank you.
Operator
Thank you. Ladies and gentlemen, due to time constraints, we’ll take that as the last question for today. I now hand over the call to management team for closing comments. Over to you, sir.
Alpesh Dalal
Thank you. Thank you very much. Thanks everybody for your continued interest in Shulpa. We hope we were able to answer the most of your queries. If you have any follow-on questions or queries, you can reach-out to our IR team and we’ll get back to you. Thanks a lot.
Operator
Thank you, members of the management team. On behalf of Shilpa Medicare Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines