SUN PHARMACEUTICAL INDUS (NSE: SUNPHARMA) Q4 2025 Earnings Call dated May. 22, 2025
Corporate Participants:
Abhishek Sharma — Vice President and Head of Investor Relations and Strategic Projects
C. S. Muralidharan — Chief Financial Officer
Kirti Ganorkar — Chief Executive Officer, India Business
Abhay Gandhi — Chief Executive Officer, North America
Dilip Shanghvi — Chairman and Managing Director
Analysts:
Kunal Dhamesha — Analyst
Damayanti Kerai — Analyst
Neha Manpuria — Analyst
Anubhav Agarwal — Analyst
Shashank Krishnakumar — Analyst
Vivek Agrawal — Analyst
Bino Pathiparampil — Analyst
Girish Bakhru — Analyst
Tushar Manudhane — Analyst
Saion Mukherjee — Analyst
Kunal Lakhan — Analyst
Dhawal Khut — Analyst
Vishal Manchanda — Analyst
Madhav Marda — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Sun Pharma’s Q4 FY’25 Financial Results Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Dr. Abhishek Sharma, Vice President and Head of Investor Relations and Strategic Projects. Thank you, and over to you, Dr. Sharma.
Abhishek Sharma — Vice President and Head of Investor Relations and Strategic Projects
Thank you. Good evening and a warm welcome to our 4th Quarter FY’25 Earnings Call. I am Abhishek from the Sun Pharma Investor Relations team. We hope you have received the Q4 financials and the press release that was sent out earlier in the day. These are also available on our website.
We have with us Mr. Dilip Shanghvi, Chairman and Managing Director; Mr. C. S. Muralidharan, CFO; Mr. Abhay Gandhi, CEO, North America; and Mr. Kirti Ganorkar, CEO, India Business. Today, the team will provide an update on the financial performance and business highlights for the quarter, pipeline updates and respond to any questions that you may have. We will refer to the consolidated financials for management comments. The call recording and call transcript will also be put up on our website shortly.
The discussion today might include certain forward-looking statements and these must be viewed in conjunction with the risk that our business faces.
You are requested to ask two questions in the initial round. I also request all of you to kindly send in your questions that may remain unanswered today.
I will now hand over the call to our CFO Mr. C. S. Muralidharan.
C. S. Muralidharan — Chief Financial Officer
Welcome, and thank you for joining us for this earnings call after the announcement of financial results for the fourth quarter FY ’25. Our full year and Q4 financials are already with you. The full year FY ’25 sales were at INR520,412 million, a growth of 9% over last year. Material cost stands at 20.7% of sales, lower than last year on account of better product mix, including higher share of sales from specialty business. Staff cost stands at 19.2% of sales, flat year-on-year. Other expenses are at 32.2% of sales, flat versus FY ’24.
Forex gain for the year was INR1,855 million compared to a gain of INR361 million last year. EBITDA for the year was INR152,717 million, a growth of 17.3% with a resulting EBITDA margin of 29%. Adjusted net profit for the year was INR119,844 million, up 19%. Reported net profit for the year was INR109,290 million compared to INR95,764 million for FY ’24. Let us now discuss the Q4 FY ’25 performance. Q4 FY ’25 sales were at INR128,156 million, a growth of 8.5% over Q4 FY ’24. Material costs for the quarter were 20.6% of sales. Staff costs came in at 19.4% of sales.
Other expenses were lower year-on-year as a percentage of sales and higher on Q-on-Q due to higher sales and distribution expenses across geographies. Forex gain for the quarter was INR2,912 million compared to a loss of INR564 million in Q4 FY ’24. EBITDA, including other operating revenues was at INR37,161 million, higher by 22.4% over Q4 last year. EBITDA margin for the quarter was 28.7% compared to 25.3% in Q4 FY ’24 and 29.3% in Q3 FY ’25. We had a few exceptional items in Q4 FY ’25 amounting to INR3,617 million. A major portion comes from an impairment of our investment in Lyndra Therapeutics, INR2,597 million.
Adjusted net profit, excluding the exceptional items for Q4 FY ’25 was INR28,890 million, representing a growth of 4.8% over Q4 FY ’24. Reported net profit for Q4 FY ’25 stands at INR21,499 million. The effective tax rate for Q4 FY ’25 was 19.8% compared to 5.1% in Q4 FY ’24. Tax rate for the full year is 16.6% versus 12.4% in FY ’24. Going forward, we expect the tax rate to continue to go up on a full year basis, mainly on account of exhaustion of tax losses. Reported EPS for the quarter was INR9 per share.
As of 31st March 2025, net cash was $3.1 billion at the consolidated level. The Board has proposed a final dividend of INR5.50 per share for the year FY ’25. This is in addition to the interim dividend of INR10.50 per share, taking the total dividend for FY ’25 to INR16 per share compared to INR13.50 per share for FY ’24.
Over to Kirti Ganorkar, who will share the performance of our India business.
Kirti Ganorkar — Chief Executive Officer, India Business
Yeah. Thank you, Murali. I shall take you through the performance of our India business. Our India formulation sales for the full year FY ’25 were INR1,69,230 million, recording 13.7% growth over previous year. For Q4, the sales of formulation in India were INR42,130 million, recording a growth of 13.6% over Q4 last year. India formulation sales accounted for 32.9% of total consolidated sales for the quarter. Sun Pharma is ranked number one and holds 8.3% market share in over INR2,259 billion Indian pharmaceutical market as per AIOCD AWACS MAT March ’25 report.
Corresponding market share for the previous period was 8%. For the quarter ending March ’25, we grew higher than IBM, and we have done well across all major represented therapy areas, primarily led by volume growth and new product introductions. As per SMSRC MAT November, February ’25 report, we continue to be number one brand company based on the prescription volumes. Sun Pharma is also ranked number one by prescription with 13 different doctor categories. For quarter FY ’25, the company launched 10 new products in India. There are new products planned for future launch in diabetes and weight management space. During this month, Sun Pharma launched a corporate branding campaign. This is for the first time that we have launched a corporate branding initiative at this scale. The campaign underscores Sun Pharma’s roles in the lives of patients, caregivers, doctors, pharmacists and communities, reaffirming its leadership in India.
Now, I will hand over the call to Abhay.
Abhay Gandhi — Chief Executive Officer, North America
Thank you, Kirti. I will update on the performance highlights of our US business. Our overall US business grew by 3.6% to $1,921 million for the full year FY ’25. The growth is driven by specialty with all our growth products contributing like Ilumya, Cequa, Winlevi and Odomzo, but offset by a decline in generics for the full year. In Q4, our overall sales in the US were $464 million, lower by 2.5% over Q4 of last year, with growth in specialty offset by a decline in generics. The generic business declined due to additional competition in certain products. The US accounted for over 31.4% of consolidated sales for the quarter. In Q4, we launched two generic products in the US.
I will now hand over the call to Mr. Shanghvi.
Dilip Shanghvi — Chairman and Managing Director
Thank you, Abhay. I will now provide an update on the performance highlights of our other businesses as well as give you an update on our R&D initiatives. Our branded formulation revenues in emerging markets where 1,114 million for the full year, up 7% year-on-year for Q4 sales and emerging markets was $261 million, up 6.3% over Q4 last year. The underlying growth in constant currency terms was 11.5% year-on-year for Q4. Emerging markets accounted for 17.6% of total consolidated revenue for Q4 amongst the larger markets in local currency terms, Romania, Russia and Brazil have done well.
Formulation revenues in rest of the world were $847 million, up 4.5% over last year. For Q4, rest of the world sales were $200 million, up 2% over Q4 last year. Rest of the world markets account for approximately 13.5% of consolidated revenue. In FY ’25, our Global Specialty sales were up 17.1% to reach $1,216 billion — $1,216 million. In Q4 financial year ’25, our global specialty sales were up 8.6% to reach INR295 million. Global Ilumya sales for the year were up 17% to $681 million. This figure does not include end market sales of our partners.
We continue to invest in building an R&D pipeline for both the global generics and the specialty businesses. Consolidated investments towards R&D for Q4 FY ’25 stands at INR8,116 million or 6.4% of sales. The specialty R&D accounted for 36% of our total R&D spend for the quarter. Moving on an update on global specialty. There are a few changes in our clinical pipeline. We are now seeking a partner for future development and commercialization of MM-II in certain geographies. This change is due to the strategic reassessment of our pipeline. We continued to believe in the potential of the product.
The other change is that we are now planning a trial of GL0034 in type 2 diabetes as its first indication. Sun Pharma has agreed to acquire Checkpoint Therapeutics, a company specializing in immunotherapy and targeted oncology. We are awaiting approval of that transaction and subsequent closing. Checkpoint has recently received approval from US. FDA for Unloxcyt for metastatic or locally advanced cutaneous squamous cell carcinoma, and we look forward to leveraging our presence to accelerate patients’ access to Unloxcyt.
And lastly, on the guidance of FY ’26, we expect mid- to high single-digit consolidated top line growth for FY ’26. For the current year, we are looking to invest approximately $100 million additionally on commercialization of new specialty product. This investment will enable us to significantly strengthen our specialty business for the future. We now expect our FY ’26 R&D spend to be 6% to 8% of sales for the next year.
Abhishek Sharma — Vice President and Head of Investor Relations and Strategic Projects
Operator, that’s the end of our readout. We can go to Q&A, please.
Questions and Answers:
Operator
Thank you very much. We’ll now begin with the question-and-answer session. [Operator Instructions] First question is from the line of Kunal Dhamesha from Macquarie Group. Please go ahead.
Kunal Dhamesha
Hi. Good evening. Thank you for the opportunity. First question on the Global Specialty sales growth for the quarter. This is after many quarters, we have seen a single-digit top line growth in this business. And I think the quarter 4 base from last year was also a little lower because of the issues at United Healthcare, but — so is there any one-off why we are seeing this kind of lower growth in this quarter because sometimes branded companies do see some rebate adjustment, etc., which could lead to this kind of growth. So any color there would be helpful.
Dilip Shanghvi
So Abhay, you will respond?
Abhay Gandhi
Sure. So I can only speak for the US, Kunal, but Jan and Feb typically are lighter months in the US because of change in the way the insurance resets happen. But otherwise, when I look at the prescription trend and the inventory trends that are there in the market, and I’m comfortable that our key brands will continue to grow. And clearly, no one-offs.
Kunal Dhamesha
Okay. But any particular product [Technical Issues].
Operator
Kunal, sorry to interrupt you, we are losing your audio. Can you please come in a better reception area, please?
Kunal Dhamesha
Yeah. Can you hear me now?
Abhay Gandhi
Yes, can hear you.
Kunal Dhamesha
Sorry for that. Yes, so any particular product that you want to call out or is it a broad-based you said it’s more like a seasonality, Jan, Feb, which would have played out.
Abhay Gandhi
Not really a seasonality, Kunal. It’s more to do with the insurance resets. No particular product that I can call out.
Kunal Dhamesha
Okay. Okay. Sure. And second one on the $100 million additional spend that we are expecting this year to spend. The whole idea of getting more dermatology product was to kind of reduce — gain more synergies of our front-end infra, which is already in the place, right? So, yes — so I’m just a little bit confused as to why do we need such a big amount even if we launch two products in dermatology and derma-onco, which is something that we have already been doing for quite some time.
Abhay Gandhi
So there are no specific projects…
Abhishek Sharma
No, I think it’s a question of looking at how other companies, even very large companies have a significant launch cost for a new product. So once you study, I think this actually is a conservative number.
Kunal Dhamesha
Okay. And sir, this is launch cost. So in the future, it should basically moderate, right? That’s the way we should look at it?
Abhishek Sharma
Which is what I said is that we don’t actually look at this as a cost. We look at this as an investment, and we expect this to further help us strengthen our specialty business.
Kunal Dhamesha
Great, sir. Thank you. I have more questions. I’ll join back the queue. Thank you.
Operator
Thank you. Next question is from the line of Damyanti Kerai from HSBC. Please go ahead.
Damayanti Kerai
Hi, thank you for the opportunity. My question is on Leqselvi. So now like what are the plans for launch of this product in the US. If you can give us some time line there?
Abhay Gandhi
So I think in the quarter two, we will be launching this product in the US.
Damayanti Kerai
Second quarter of this fiscal?
Abhay Gandhi
Yeah.
Damayanti Kerai
Okay. Okay. And my second question is on your generic business in the US, where you mentioned there was some price pressure, etc. So two things. Has it wasn’t compared to recent quarter in the base portfolio? And also, if you can comment in the fourth quarter, was Revlimid a significant contributor?
Abhay Gandhi
So I’ll start with your latter question. I mean our Revlimid sales in the Q4 was similar to Q3, and that was not very significant. On pricing, I think we have consistently said that it’s a product-specific thing and nothing which I can speak to on a generalized basis. So product specific and we continue to see pressure on pricing.
Damayanti Kerai
Okay. Okay. And it’s product to product and nothing we should read as part of the change in industry, which might have happened on the pricing side?
Abhay Gandhi
No, there is not much which has changed as far as overall industry dynamics is concerned. Basically, it remains the same as what we have seen in the past.
Damayanti Kerai
Okay. Thank you again. Thank you.
Abhay Gandhi
Thank you.
Operator
Thank you. Next question is from the line of Neha Manpuria from Bank of America. Please go ahead.
Neha Manpuria
Yeah, thanks for taking my question. Abhay, first question on the Checkpoint asset. What should we think about from a time line perspective for the launch of the product? Will we first — obviously, the deal needs to be completed. So will that be a launch probably in the later part of the year?
Abhay Gandhi
So I think we have to wait for the launch to — I mean, for the acquisition to go through all the clearances. And before that, it won’t be fair to give an answer on when we will launch. So I think we’ll have to wait for the processes to get over before I’m able to answer that question. Maybe on the next call, I will be able to.
Neha Manpuria
Fair enough. That’s clear. My second question is on the India business. We saw a fantastic growth this year given what the industry has been doing. Kirti, sir, when we think about next year, do we need to invest more in MR, should the growth momentum that we have seen this year continue? Any color that we can provide on how we are thinking about the India business and the investments there?
Kirti Ganorkar
No, no, what — I have been telling for the last couple of calls we want to grow higher than the market, and that’s the effort we are continuously putting quarter after quarter. So this year, our growth is at least 3%, 4% higher than the market, and the growth is coming from volume and new product. So I strongly believe we have a good base and then the momentum should continue, but we can’t predict what this growth will be in coming years. It’s very difficult.
Neha Manpuria
And any MR expansion plans, sir, for the growth?
Kirti Ganorkar
No, it’s like a strategic lever what we said whenever we had done expansion, it has helped us to grow. But depending on the opportunity which may come, we will decide on the expansions.
Neha Manpuria
Got it. Thank you so much.
Operator
Thank you. Next question is from the line of Anubhav Agarwal from UBS Group. Please go ahead.
Anubhav Agarwal
Yeah. Hi, guys. One, just trying to understand this $100 million additional spend. So it will be multiple areas that you’ll be spending in. But just checking, is there a dominant part that you guys will be spending on? Just — so what I’m trying to ask is, you guys not been doing TV ads right now. Would you start doing TV ads for the new one or how much of this, let’s say, roughly is going in expanding the infrastructure on the ground — let’s say, more sales force versus more promotion? So what will be a rough split of sales force expense versus the promotion expense out of this $100 million?
Abhay Gandhi
These products that we are talking about are niche areas, Anubhav. so they do not lend themselves to TV advertising clearly. So the promotion will be more with the HCPs as well as the patient advocacy groups. Later on, as we evolve, we will keep evaluating what works best for the product.
Anubhav Agarwal
And Abhay, the spend will be largely more tilted towards the promotion rather than adding more people on the ground?
Abhay Gandhi
It will be a combination. There will be certain expenses related to optimizing the field force, looking at the target audience that we need to cover and also looking at competitive dynamics and how the competitors are structured. Large part will, of course, be the variable promo spend.
Anubhav Agarwal
Understood. And just last clarity on this and then I’ll move to the second question. This is largely for the new products, right? For the existing business, that’s…
Abhay Gandhi
Sorry, sorry, I missed you. Can you repeat?
Anubhav Agarwal
Yeah. The question is this $100 million spend is largely for the new products that you’ll be launching — the two products that you’ll be launching. The existing specialty business is on business as usual?
Abhay Gandhi
That’s correct. This is only for the new launches.
Anubhav Agarwal
Okay. That’s helpful. Second question is for Dilip. I’m just trying to understand one thing that current manufacturing for the branded product is — Sun doesn’t manufacture directly, most of them and gets them contract manufactured. So let’s say, the tariffs, no one knows what numbers will come out or tariffs. But just trying to understand that how much — just as a process, how much time does it take if you need to shift manufacturing from outside US to US from one contract manufacturer to the other contract manufacturer? So the question one is on time.
Secondly, what’s the harm in Sun Pharma already starting the process now, given what US wants to do it, etc. So in terms of doing it later versus doing it now as a backup mechanism, just your thoughts on that.
Dilip Shanghvi
No, I think it’s a good suggestion. You have to keep one thing in perspective that Ilumya is a biological and transferring a biological product and giving the kind of quantities that we require is not something that is easy to identify a CDMO who can do that in the US. So we are looking at — because it’s not a question of where we do fill finish. We will have to manufacture the full product in the US, starting with the active substance.
Anubhav Agarwal
Sorry, one part of the question was that if you were to do it, how much time does it take if you want to transfer the full product?
Dilip Shanghvi
No, I think both cost and time. I think my view is that it will take at least two and a half, three years before the new source is approved by the agency, and it’ll cost a lot of money.
Anubhav Agarwal
Okay. Thank you very much. Thank you.
Operator
Thank you. Next question is from the line of Shashank Krishnakumar from Emkay Global. Please go ahead.
Shashank Krishnakumar
Hi, thanks for taking my question. So my first question was on Ilumya. I think our partner in Europe has commercialized a 200 mg version there. Just wanted to understand the thought process and if we have plans to also sort of commercialize it in the US market.
Dilip Shanghvi
So, Abhay, you want to respond?
Abhay Gandhi
I think on the Europe part, you can. In US, we are evaluating for the filing and then subsequently launching the product, but it will take some time.
Shashank Krishnakumar
Got it. Sir, and secondly, on MM-II, I think we’ve passed Phase II and I think we also have a fast track designation here. Just wanted to understand why we are looking to sort of enter into a partnership to commercialize this? Is it largely because it doesn’t fall within a broader onco-derma framework or why this change in the commercialization strategy?
Dilip Shanghvi
No, I think you’ve said this right — that it doesn’t kind of fit immediately into — I mean, focus in the US because I think we’re further strengthening our presence in the dermatology. We continue to look at opportunities in ophthalmology, so…
Shashank Krishnakumar
Got it, sir. Thank you. That’s it from my side.
Operator
Thank you. Next question is from the line of Vivek Agrawal from Citigroup. Please go ahead.
Vivek Agrawal
Yeah, hi, thanks for the opportunity. Sir, question is related to Leqselvi. The launch seems to have been delayed by, I think…
Operator
Vivek, sorry to interrupt you. Your audio is not clear.
Vivek Agrawal
Yeah. Sorry, the question is related to Leqselvi. The launch seems to have been delayed by three, four quarters because of the litigations, etc. So does anything change from this delay, let’s say, your expectations from the product competitive dynamics or are your expectations on the product more or less same, let’s say, you would have launched the product last year? Thank you.
Abhay Gandhi
We still believe we have a competitive product. However, since the launch is delayed by, as you said, three quarters, I think the time to our expected peak will move a little, but I think the attempt of the team will be to try and make up for that lost time by increasing the focus on the product and the investment on the product to try and mitigate it to the extent that we can.
Vivek Agrawal
Thanks. The second question is related to the recent acquisition, UNLOXCYT. So if I was looking at some of the competitive products, right, UNLOXCYT has a bit longer infusion, it is around 60 minutes, so I don’t have other indications, etc., while — if you look at some of the other competing products like Libtayo well-entrenched with the market, longer clinical history, wider indication. So just was trying to understand why the prescribers would shift to the new therapy UNLOXCYT, if you can help us understand.
Abhay Gandhi
I mean, two ways of looking at the whole thing, while you right that your competitors will have multiple indications, and we will end up with only one indication. But that also means that we will be able to give our attention and time to one single indication and try and be the best we can in the arena that we compete in. So it helps us focus also better. So you can look at it either way. We look at it, of course, clearly, but it helps us focus better. Also don’t forget in the same indication or rather with the same customer group, we have two other products that we go to. So we have familiarity with the customer groups. Some, of course, will be new to us. But we understand the space, and that also helps.
Vivek Agrawal
Understood. Sir, just a related question here. Is it — although you didn’t launch the product yet, but is it pricing going to be one of the key differentiator because this is what I think the Checkpoint also indicated earlier that the product can be priced much lower compared to some of the other products that are in the market and can help a better market share.
Abhay Gandhi
How do you expect me to answer the pricing question when I haven’t even decided the time of launch exactly and the transaction itself is not yet completed.
Vivek Agrawal
Understood, sir. Thank you. Yeah. That’s from my side.
Operator
Thank you. Next question is from the line of Bino from Elara Capital. Please go ahead.
Bino Pathiparampil
Hi. Good evening. First question on Leqselvi. The patent litigation, as I understand, is ongoing. So to that extent, if we launch in coming second quarter, it would be sort of at risk of any damages, if at all, we lose the patent litigation. Am I right in thinking so?
Dilip Shanghvi
Yeah, that’s true.
Bino Pathiparampil
Okay. And second, this $100 million additional spend that you would do, how should we look at it? You will have a normal selling SG&A expense on which you will have a normal increase, which happens every year. On top of that, there will be an additional $100 million. Is that the way we can model it?
Dilip Shanghvi
That’s correct. That’s correct. I think we don’t — want only at the normal expenses. We want to understand that there are significant launch-related costs for these products, and it needs to be factored. We don’t want to negatively surprise investors afterwards.
Bino Pathiparampil
Sure. And finally, there is a tax rate, which has gone up significantly compared to last few years at 19% this year consolidated level. Is that the new range we should look at for tax or is there some reason why it is high this year?
C. S. Muralidharan
Yeah. So we have indicated in earlier communications also that the tax rates continue to inch or go up, mainly due to this year, we have also said that utilization of the past losses we exhausted. That’s one of the primary reasons for the increase in tax rate.
Bino Pathiparampil
Okay. So practically, this is roughly the range that we should expect going forward. Okay. Thank you very much.
C. S. Muralidharan
Bino, just one second.
Bino Pathiparampil
Yeah.
C. S. Muralidharan
So what I said is that it will inch up, I said, compared to the last year, if you see our full year was 16.6% and this year it is 19.8%. That’s because of the of tax losses. It could inch up from the current level.
Bino Pathiparampil
Got it. Thank you very much. Thank you.
Operator
Thank you. Next question is from the line of Girish from OrbiMed. Please go ahead.
Girish Bakhru
Yeah, hi. Thanks for taking my question. Abhay, just going back to Checkpoint actually. I know the transaction is yet to close, but what’s the key difference between the competition, particularly Libtayo for this asset?
Dilip Shanghvi
I think broadly, our understanding is that in the class, it has possibly been the safest side effect profile.
Girish Bakhru
Okay. So Dilip, if I just actually ask a generic question here, given this is PD-L1, others are PD-1. So is there a difference for clinicians materially? I don’t know if it has been observed in a clinical setting or in other cancers. Does that give a material edge to your asset?
Dilip Shanghvi
We believe it does.
Girish Bakhru
Okay. Okay. That’s helpful. Second question was on the psoriasis market. I mean, I know Ilumya is going strong. But FY ’27-’28, given there will be full steam Humira, full steam Stelara biosimilar, what’s your thought on, let’s say, three years down the line for this asset?
Abhay Gandhi
It’s an evolving situation. So we keep evaluating. And yes, I mean, my expression, which you can’t see is similar to Dilip bhai, but whatever modeling we have done so far, I mean, there will be an impact, but we think it will be a small impact and the product can continue to be a growth driver in the existing therapy as well as with the new indication that we will get.
Girish Bakhru
And would biosimilars, let’s say, impact differently in the medical channel and versus commercial, do you think?
Abhay Gandhi
So it’s a narrower competitive field. So to that extent, it helps. Now how much is something that we need to continuously evaluate because there is only so much that you can estimate with a great degree of certainty.
Girish Bakhru
Right. Abhay, do you have any number like how much biosimilar penetration should there be, let’s say, three years down the line from both these products?
Abhay Gandhi
I mean, I can’t have a number which I can share with you.
Girish Bakhru
Fair. Thank you so much.
Operator
Thank you. Next question is from the line of Tushar Manudhane from Motilal Oswal. Please go ahead.
Tushar Manudhane
Yeah, thanks for the opportunity, sir. Sir, just with respect to, firstly, on the R&D spend guidance of 6% to 8%. So does this factor the R&D spend, additional or higher R&D spend on the existing projects or are we building new projects for the R&D spend? That’s my first question.
Dilip Shanghvi
Everything. It does not include transactions that we have not done. If there is a transaction that we do in future during the year, then that can change the guidance. But this includes whatever that we have in the pipeline.
Tushar Manudhane
Got it. And sir, secondly, with the growth in, let’s say, branded markets of India — emerging markets and the specialty and at the same time, spending on the specialty product. So how to think about the EBITDA growth compared to revenue growth for FY ’26?
Dilip Shanghvi
I mean, generally, we don’t give margin guidance. That is why because we felt that analysts would not have clarity about increased cost of launching the product, we give a specific number, which helps them model, but we don’t give margin guidance.
Tushar Manudhane
Okay, sir. Thank you.
Dilip Shanghvi
Thank you.
Operator
Thank you. Next question is from the line of Anubhav Agarwal from UBS Group. Please go ahead.
Anubhav Agarwal
Yes. Thank you. Just trying to understand the impact of new MFN loss on Sun Pharma here. So please help me understand if this is an important metric to look at. So if — on the Medicare side, if they — would they look at price difference between Ilumya in the US and ILUMETRI in Europe and then try to compare the two and ask you guys to, let’s say, match those prices, one? That’s the first part of the question.
Second, is there a material difference between the price of ILUMETRI and Ilumya?
Dilip Shanghvi
No, I think we have to wait for greater clarity on finally how this — because as I read it, it is kind of currently at a voluntary level. So we have no idea as to how it plays out. So we have to wait for greater clarity before we respond. To the question of the price difference between the US and Europe, I think all the branded products will have significant difference in the prices between US, as well as Europe. I mean this is not only our product, all the products. Only thing we have to keep in perspective is that — and for any reason, I don’t understand, but stock prices of big pharma companies have not changed.
Anubhav Agarwal
Just one technical clarity on this. Like Sun is selling Ilumya in the US, but Sun technically is not selling in Europe, so does it…
Dilip Shanghvi
Sir, there are many, many issues that we can go into. So till the time we have clarity on finally how the law — so this is just what you call guidance document without specific how it will be implemented and on what condition, what provision. Because if you see the IRA when they wanted to implement, they gave a significant amount of time and very great level of clarity as to how and what — what is negotiation and how it will be done. So that level of clarity doesn’t exist here.
Anubhav Agarwal
Okay. Thank you, Dilip. My second question is on R&D. So I’m talking not on the specialty, but on the generic R&D here, on the non-specialty side. The absolute amount for Sun Pharma is similar in last four years, somewhere about $230 million. Based on the focus of the company on the specialty side, what — how would you think about this absolute amount that the company is spending on the generic side? Would this absolute amount remain flattish, go down from here because the focus on generic is reducing as well the opportunities in the market are reducing?
Dilip Shanghvi
I mean, generally, I have said that there would be increase in the specialty R&D. However, since we spend money as a percentage of our turnover, I’m not expecting the absolute money spent on R&D for generics to go down.
Anubhav Agarwal
Okay. Can I ask one more question and just join the queue.
Dilip Shanghvi
Yeah, okay.
Anubhav Agarwal
One question is about cash. So the company is carrying $3 billion cash with them and almost generating more than $1 billion free cash flow. So all the acquisitions that you made so far in the last few years, they’ve been — they were less than the free cash flow companies were generating and you’ll not be using the cash pile. So just trying to understand here what is eventual use? Would someday you will end up doing a very large acquisition, so you will use the cash? Otherwise, your free cash flow is so large that you’re not acquiring to that extent?
Dilip Shanghvi
No, I think we’ve always consistently maintained and we continue to look at acquisitions, which will help us create value because any business that we acquire, we should be able to run it significantly better than the current owners or we should have significant potential synergies. Otherwise, it would not justify the acquisition premium.
Anubhav Agarwal
So would you look out for a large acquisition at some point of time, not the time line, but if you get an opportunity like that, even if it’s a large platform, you would be able to…
Dilip Shanghvi
I mean, we will — with our Ranbaxy experience, we will also look at our ability to manage because anything that we do, we should then be able to manage and manage it well. But size is not something which would kind of put us off. We are open to do it. But more important, it has to be strategic and multiple other what I would call checklist it needs to go through.
Anubhav Agarwal
Yeah. Thank you very much for your response.
Operator
Thank you. [Operator Instructions] Next question is from the line of Kunal Dhamesha from Macquarie Group. Please go ahead.
Kunal Dhamesha
Hi, thanks for the opportunity again. A couple of questions on UNLOXCYT. Abhay, would you say that Ilumya’s current prominent sales channel in the US could also be the primary channel for UNLOXCYT?
Abhay Gandhi
Sorry, I’m not clear on the questions. Ilumya and UNLOXCYT are in two different spaces.
Kunal Dhamesha
Right, but the prior channel — let’s say there are prior channels like Medicare Part B, Commercial Medicaid, right? So would you say that Ilumya’s prominence channel would also be the UNLOXCYT’s primary channel for sale given the [Speech Overlap]
Abhay Gandhi
This is some overlap. I would not want to characterize it as a same channel at all because it will be a combination. There is a buy-and-bill component if that is where you are going, but that will not be the only one aspect.
Kunal Dhamesha
Sure. Sure. And secondly, since we have LEVULAN in the portfolio, which is for actinic keratosis, which is a precursor condition for the squamous cell carcinoma, do you think does that also help us synergistically identify patients from what is versus maybe competition?
Abhay Gandhi
Which is what I said when I answered the prior question by and other of your peers that understanding the space and knowing the customers and the condition will help us definitely. And that is why we are looking at more products in that space to strengthen our franchise as a whole.
Kunal Dhamesha
Thank you and all the best.
Abhay Gandhi
Thank you, Kunal.
Operator
Thank you. Next question is from the line of Saion Mukherjee from Nomura. Please go ahead.
Saion Mukherjee
Yeah, hi. Good evening, sir. Sir, one question I have on the specialty pipeline. This is regarding SCD-044 for atopic dermatitis and psoriasis. So are we expecting the top line data, which is mentioned as first half of this calendar year, that means in the next one month or so?
Dilip Shanghvi
Sorry, which product?
Saion Mukherjee
SCD-044.
Dilip Shanghvi
Yes, that’s right.
Saion Mukherjee
Okay. And my second question would be on R&D spend. Assuming this data is good and you want to start the Phase 3, when do you expect Phase 3 trials for this product to start? And have you sort of factored that sort of expense for Phase 3 in the R&D guidance for fiscal ’26 or do you think that comes up in fiscal ’27?
Dilip Shanghvi
You’re talking now — continue to talk of SCD-044?
Saion Mukherjee
Yes, that’s right, sir. I mean assuming — I mean, once we get the data…
Dilip Shanghvi
I think as a process, what we’ve done is we’ve — what you call it, evaluated all potential studies that we will — either we have ongoing or which we will start during the year and how much we can spend during the year as a part of the guidance.
Saion Mukherjee
Right, sir. Sir, just — I mean, are these Phase 3 studies very expensive? I mean, can you give some color or it’s like — if you can give some idea about the quantum of spend if you have to do Phase 3 studies for these assets?
Dilip Shanghvi
No, these are — I mean, general line answer would be these are long studies and expensive studies. Specific number till we have the negotiation — because we have to power the study. For that, we have to understand the Phase 2 data with a view to understand how to power. So all of that will help us in designing the study and that, but till we have that clarity, we will not. We would have taken some indicative number for all potential studies which are likely to be started, but some of them will be — and that is the reason why we have this 6% to 8% guidance.
Saion Mukherjee
Got it, sir. Okay, sir. Thank you.
Operator
And do you have any follow-up questions?
Saion Mukherjee
I’m done.
Operator
Thank you. Next question is from the line of Vivek Agrawal from Citigroup. Please go ahead.
Vivek Agrawal
Hi, thank you for the opportunity. Now if you look at the current US administration is talking and also focusing a lot on reducing the role of middlemen, CBN, etc. So how you see this move? Do you see improvement in access of some of the products like Ilumya, CEQUA, etc., where still I think there’s a lot of scope as far as the improvement in commercial segment. Thank you.
Abhay Gandhi
I think the answer will be similar to what Mr. Shanghvi answered when it comes to MFN. There are no specifics at this moment. So on the ground, no changes.
Vivek Agrawal
Understood, sir. Thank you. That’s from my side. Thank you.
Operator
Thank you. Next question is from the line of Kunal Lakhan from CLSA. Please go ahead.
Kunal Lakhan
Yeah, hi, thanks. Good evening. Just on the MFN again, like I know you said there’s no clarity there on how it will be implemented. But just in the event that it does get implemented, what proportion of the US business would be impacted by this? Will it be like the entire US specialty portfolio or some part of this?
Dilip Shanghvi
I mean, there is no clarity on whether it will apply to Medicare, Medicaid or it will apply to commercial. So when there is no clarity, how can we give any idea?
Kunal Lakhan
Okay.
Dilip Shanghvi
I mean, there is a statement if you see, which says that patient can get access. I don’t know how a patient will get access. Till there is a method by which a patient can claim reimbursement from the insurance company because doctors have a way by which they can claim the reimbursement for products in the formulary. So how will this process work? There has to be some clarity.
Kunal Lakhan
Understood, sir. On the investment of $100 million for launch of new products, what would this number would have been in FY ’25?
Dilip Shanghvi
So this we are guiding for extra cost.
Kunal Lakhan
I get it. But is there a similar number in FY ’25 that was embedded, which you are not separately indicated?
Dilip Shanghvi
No, we didn’t launch any important product last year.
Kunal Lakhan
Sure. Sure. Understood. Understood. Also, any color on — or any expectation that you have on the tariff side, where those discussions are heading?
Dilip Shanghvi
We have no idea. I think so we have to wait for clarity to emerge.
Kunal Lakhan
All right. Thank you so much.
Dilip Shanghvi
Thank you.
Operator
Thank you. Next follow-up question is from the line of Damayanti Kerai from HSBC. Please go ahead.
Damayanti Kerai
Hi, thank you for the opportunity again. My question is for Ilumya for psoriatic arthritis indication. So in your release, it’s mentioned top line data expected in second half of this calendar year. So I just want to check, earlier you mentioned that there were some delays in patient recruitment, etc. So all those have been covered and you are now on track to release data?
Dilip Shanghvi
Yeah, that’s the disclosure, correct.
Damayanti Kerai
Okay. And…
Dilip Shanghvi
If you see, it took a long, long time. So from a typical Phase 3 study, we should have done this much earlier.
Damayanti Kerai
Okay. And this data, will that be sufficient for you to file to the US FDA for this indication?
Dilip Shanghvi
Yeah, that’s the idea.
Damayanti Kerai
Okay. Okay. That’s helpful. My second question is on emerging markets. So again, the business is above $1 billion. So can you comment on its profitability? Like how does it look compared to the corporate average?
Dilip Shanghvi
I mean, what is the question?
Damayanti Kerai
I just want to understand the profitability profile of your emerging market business in comparison to the corporate margin levels? Like how does it look better, lower or broadly on par?
Dilip Shanghvi
No, I think it’s a very profitable business.
Damayanti Kerai
Okay. And you have like a few big markets which you read out in your comment earlier. So those are the focus markets for you or do you have plan to look into some newer market as well?
Dilip Shanghvi
No, those are the — we have one or two additional focus market. But otherwise, these are the major markets.
Damayanti Kerai
Okay. Thank you. That’s helpful. Thank you.
Dilip Shanghvi
Thank you.
Operator
Thank you. Next question is from the line of Kunal Dhamesha from Macquarie Group. Please go ahead.
Kunal Dhamesha
Hi, thank you for the opportunity again. Just one on the Nidlegy, our foray with the checkpoint, is there any change in thinking about this product for the US market because it kind of fills the gap on the melanoma skin cancer?
Dilip Shanghvi
No, I think we are evaluating its attractiveness for the US because they are doing two separate studies, one for Europe and one for US, so it’s different time lines.
Kunal Dhamesha
Okay. And one follow-up question on the Ilumya pricing where you suggested that any branded product, the pricing in US would be higher than the other developed markets. But let’s say, average out-of-pocket cost for Ilumya in US would be meaningfully lower than the other developed market prices for Ilumya or out-of-pocket cost would be higher than the other developed market prices for Ilumya?
Dilip Shanghvi
Your question is whether out of pocket in US is higher than the market price of the other countries or what is the question?
Kunal Dhamesha
Yes. Yes, yes. That is the question.
Dilip Shanghvi
How can that be? US case, there will be no sale in case if people have to pay that kind of money in the US Abhay, I think you can clarify, but that’s my understanding.
Abhay Gandhi
I mean, it cannot be — I mean, except an uninsured patient, that kind of money, nobody pays out of pocket. Otherwise — and for a particular product, that is the scenario, then the doctors and patients will shift to something else.
Kunal Dhamesha
Then practically, MFN in its current form is only for uninsured patient is what we can conclude, right?
Dilip Shanghvi
Yeah. No, we can’t conclude anything. I think that’s the reason. So I think let’s not try to read more than what we know. I think there will be greater clarity as time progresses.
Kunal Dhamesha
Sure, sure. Thank you, sir. Thank you.
Dilip Shanghvi
Sure. Thank you. Thank you. Next follow-up question is from the line of Tushar Manudhane from Motilal Oswal. Please go ahead.
Tushar Manudhane
Thanks for the opportunity again. Sir, just with respect to this — the charge of $37 million with respect to national prescription opioid litigation. So is that what the overall amount to be paid or is there something more to be coming in the coming quarters?
C. S. Muralidharan
So this is the substantial amount that has all been provided on the books.
Tushar Manudhane
Okay. And also, if you could just clarify this $11 million, while small amount, but still that has gone for this integration and restructuring of operations in US. This is — if you could just elaborate a bit on this?
C. S. Muralidharan
Is $11 million, you’re talking about the exceptional item? So that is regarding our own concept integration-related expenses.
Tushar Manudhane
Okay, okay. Thank you, sir. That makes sense. Thank you.
Operator
Thank you. Next question is from the line of Dhawal from Jefferies India. Please go ahead.
Dhawal Khut
Hi, sir. Thank you for taking my question. So just wanted to check on UNLOXCYT. Does KEYTRUDA patent expiry in coming years — will that significantly impact the market dynamics once that event occurs? That’s the first question.
Second, on the guidance for the past several years, we have done high single to low double digit. And for this year, it’s lower than what we have done. India, clearly, we have sort of — we are doing well, and we are looking to outperform the market. So it kind of indicates that there is a slowdown in the global specialty or the ROW and EM markets. So will that be the correct interpretation?
Dilip Shanghvi
No, I think the correct interpretation is high level of global uncertainty because today, if you look at currency fluctuations of rates in different geographies, it’s very difficult to predict. If you see — and we disclose part of it in constant currency growth, which sometimes is significantly different from actual growth that financially we are able to grow.
Operator
Do you have any follow-up questions?
Dilip Shanghvi
I think overall we are operating from a view that businesses are well positioned to continue to grow.
I think Abhay, would you answer about Keytruda and Unloxcyt, what was the impact?
Abhay Gandhi
Yes, sure. I mean, what I would say is that, our indication is only one of the indications for KEYTRUDA. And in acquiring product and building up our business case, the patent expiry of the competition have been factored in, and we still feel that the product can become a meaningful contributor to our specialty business in the US.
Dhawal Khut
Thank you.
Abhay Gandhi
Thank you.
Operator
Thank you. Next question is from the line of Saion Mukherjee from Nomura. Please go ahead.
Saion Mukherjee
Yeah, thanks for the follow-up. Is there any update on Mohali and Halol site as far as FDA issues are concerned? And have the supplies from Mohali completely normal at this point?
Dilip Shanghvi
So I think we’ve disclosed that — we’ve requested FDA to audit, they have to decide. I think most likely, this may be a surprise audit. So we don’t know when they are likely to audit. Mohali as well as Dadra, I think we have not yet requested them because some of the ongoing remediation, they have to be completed, our view so that we can then request for an audit. So when we will do that, we will disclose.
Saion Mukherjee
Got it, sir. And my second question on the specialty product, Fibromun, for soft tissue sarcoma and glioblastoma. Can you give some time line as to what we should sort of look forward to over the course of the next year or next two years? What are the key milestones and time line around that?
Dilip Shanghvi
So at this point, I don’t want to give something — this, but I understand that there is an interest in trying to get a greater clarity. So we will try and see what we can share.
Saion Mukherjee
Got it. Okay. Thank you.
Dilip Shanghvi
Thank you.
Operator
Thank you. Next question is from the line of Vishal from Systematix Group. Please go ahead.
Vishal Manchanda
Good evening and thanks for the opportunity. On MM-II, I wanted to understand whether this is a device or a drug? And what would be the Phase 3 time line? Like how long that can take for it to be commercialized?
Dilip Shanghvi
No, it is treated as a drug in many geographies. In Europe, it is treated as a device. So — and the typical time line would depend on what kind of studies the regulator will ask and whether there would be a requirement at least to cover a large number of subjects. So it’s all a function of finalizing the protocol with the agency to decide on the time required for completing the study.
Vishal Manchanda
So since — like assuming like if this is — as you said, it’s a device for European regulators, does that mean the size of the trial can be lower or the duration of the trial can be lower or that doesn’t matter?
Dilip Shanghvi
No, size of the trial would be lower in case if it’s treated as a device. But I think our interest would be to register it as a — I mean, my understanding is that the product attractiveness comes on if it’s approved as a drug in some of the geographies.
Vishal Manchanda
Okay. And just one final one on semaglutide, would we look to commercialize that in our focus emerging markets?
Dilip Shanghvi
Yeah, I think that’s the plan.
Vishal Manchanda
Okay. Thank you. That’s all from me. Thank you.
Dilip Shanghvi
Thank you.
Operator
Thank you. Next question is from the line of Vivek Agrawal from Citigroup. Please go ahead.
Vivek Agrawal
Hi, thanks. Most of the questions have been answered. So just on generic business, in FY ’25, we have seen a decline. So how to see the generic business panning out in ’26? Do you still expect to grow this business in ’26? Thank you.
Abhay Gandhi
I think when we are able to get our plants in compliance, that will help in gradually improving the profile of the generic business.
Dilip Shanghvi
Yeah, but otherwise, our overall guidance is factoring all the potential for all our businesses.
Vivek Agrawal
Understood, sir. And on Revlimid, right, the product was not there in this — not significant in this quarter or previous quarter. So do you expect this drug to reflect in some of these products or is it more or less done for you?
Dilip Shanghvi
No, I think what — it is included like what I said in our overall guidance.
Vivek Agrawal
Okay, sir. Thank you. That’s from my side. Thank you.
Dilip Shanghvi
Thank you.
Operator
Thank you. Next question is from the line of Madhav from Fidelity International. Please go ahead.
Madhav Marda
Hi. First question is on the sales growth guidance. I think you’ll said the mid-single digit to high single digit growth, we’re being a bit conservative because of global uncertainty. And it seems like it was linked more to the forex volatility potentially that may or — may happen. Is that what you are referring to? So — or is it some other uncertainty that we are referring to here?
Dilip Shanghvi
No, I think so many open issues. You see — if you see tariff, if you see fluctuations in global currency rate fluctuations. So all of that, I think it’s better to be realistic about our ability to manage and our getting impacted by things which are not in our control. So our effort is not to kind of get into a situation where we give justification of what we can’t achieve.
Madhav Marda
Got it. Like, you yourself mentioned that on the tariff MFN, there’s actually lack of clarity. So I don’t think anybody knows how it finally comes in. So this seems like we’re being just conservative rather than knowing any actual impact, right? Is that how we should think about it?
Dilip Shanghvi
No, I think what you should think is that it is wise at this point of time not to take a stretch objective.
Madhav Marda
Okay. Got it. And sir, the second question was just on the $100 million spend for the new specialty launch in FY ’26. Given it seems like it’s more of a launch expense, is this something which is a recurring expense or this is the kind of spend we usually have when we launch the product and then it sort of reduces or this is going to be more of a recurring expense in the future years as the product scales up?
Dilip Shanghvi
Abhay, can you respond or…
Abhay Gandhi
So I think you have to look at it in two ways. The year also will be a partial year for launch of the two products. So some are very initial upfront expenses and some will be recurring. Now I haven’t done the budgeting for next year, so I don’t know how it will shape up. But any launch will have an upfront and then a certain recurring also. Like for example, if you take a field force, if I have X number of people, that’s then a recurring expense, but for the year, it will be only reflected partially. So it’s a combination.
How the next year would shape up, I think we will give probably a new number when we reach that stage if there is a requirement. But I think specifically, this $100 million, we are calling out so that it can go into your factoring and your modeling because it is not something that we have seen in the past.
Madhav Marda
So sir, the expense is related not to the sales force, but I think you mentioned the HCP and patient advocacy group-related spend, so…
Abhay Gandhi
What I said was, it is the combination of all of that.
Madhav Marda
Yeah. Okay. Okay, understood. Thank you.
Abhay Gandhi
Thank you.
Operator
Thank you. As there are no further questions, I will now hand the conference over to Dr. Abhishek Sharma for closing comments.
Abhishek Sharma
Before we conclude the call, we would like to share an organizational update. Ms. Jayashree Satagopan has joined Sun Pharma and will assume her role as Global Chief Financial Officer effective from 1st of July. Concurrently, Mr. C.S. Muralidharan will be superannuating from this role. On this occasion, we extend our sincere appreciation to Mr. Muralidharan for his unwavering commitment and distinguished leadership throughout his tenure with Sun Pharma. Thank you, and have a good day.
Operator
[Operator Closing Remarks]