Sun Pharmaceutical Industries (NSE: SUNPHARMA) Q1 2026 Earnings Call dated Jul. 31, 2025
Corporate Participants:
Unidentified Speaker
Abhishek Sharma — Vice President and Head of Investor Relations and Strategic Projects
Jayashree Satagopan — Chief Financial Officer
Kirti Ganorkar — Chief Executive Officer
Richard Ascroft — Sun Pharmaceutical Industries
Dilip Shanghvi — Chairman and Managing Director
Aalok shanghvi — Managing director
Analysts:
Unidentified Participant
Kunal Dhamesha — Analyst
Neha Manpuria — Analyst
Damayanti Kerai — Analyst
Bino Pathiparampil — Analyst
Shashank Krishnakumar — Analyst
Surya Narayan Patra — Analyst
Yogesh Soni — Analyst
Vivek Agrawal — Analyst
Anubhav Agarwal — Analyst
Kunal Dhamesha — Analyst
Madhav Marda — Analyst
Aditya — Analyst
Vishal Manchanda — Analyst
Kunal Lakhan — Analyst
Tushar Manudhane — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Sun Pharma’s Q1FY26 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 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 Dr. Abhishek Sharma, Vice President and Head of Investor Relations and Strategic Projects. Thank you. And over to you sir.
Abhishek Sharma — Vice President and Head of Investor Relations and Strategic Projects
Thank you. Good evening and a warm welcome to our first quarter FY26 earnings call. I am Abhishek from the Sun Pharma Investor Relations team. We hope you have received the Q1 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. Keerthi Ganorkar, CEO India Business and MD designate Mr. Alok Shangri, Chief Operating Officer Ms. Jayashree Sadhagopan, CFO and Mr. Richard Ascrop, CEO North America. 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.
Before we begin the call, I wanted to bring to everyone’s attention that from this call we have renamed Global Specialty as Innovative Medicines Business. We will refer to the consolidated financials for the 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, Ms. Jayashree Sadagopan.
Jayashree Satagopan — Chief Financial Officer
Good evening. Welcome and thank you for joining us in this earnings call. After the announcement of the financial Results for the first quarter of FY26, our Q1 financials are already with you. Let me take you through the consolidated financial summary for the company. Sales for the first quarter of FY26 stood at Rs. 1,37,861 million, registering a growth of 10.1% over the last year. Gross margin was favorable aided by lower material cost due to better product mix and a higher share of sales from the innovative medicines. EBITDA for the quarter was Rupees 43,017 million, recording a growth of 19.2% over the previous year.
EBITDA margin percentage for the quarter was 31.1%. Profit before exceptional items and tax stood at Rupees 39,908 Million registering a year on year growth of 16.6% during the quarter. Exceptional items accounted for Rs. 8180 Million primarily towards impairment of SCD 044 and GX MDL settlement. Netting of the provisions in the books were part of the GX MDL settlement. The balance amount has been accounted during the quarter. Effective tax rate for the quarter was 24.3% vis a vis 16.1% in Q1FY25. Adjusted net profit for the quarter was rupees 29,961 million which is up by 5.7% from the corresponding period in the last year.
Reported net profit for the quarter was rupees 22,786 million after the exceptional items compared to rupees 28,356 million for Q1 of FY25. Forex gain during this quarter was rupees 2,290 million and this compares to a loss of 505 million during the same period last year. Other income during the quarter was rupees 4645 million lower than last year which included interest on income Income tax refund during the first quarter of FY25 our balance sheet continues to be strong with a net cash position of $3.1 billion at the consolidated level which is invested in Board approved securities and is earmarked for future investments.
Adjusted EPS for the quarter was at 12.50 per share. With this I would like to hand it over to Keesh who will share the performance of our India business.
Kirti Ganorkar — Chief Executive Officer
Thank you Jaishree. I shall take you through the performance of our India business. For Q1 the sales of formulation in India were Rupees 47,211 million recording a growth of 13.9% over Q1 last year. India formulation sales accounted for 13.2% of total consolidated sales for the quarter. Pan Pharma is ranked number one and holds 8.3% market share in over 2. 302 billion Indian pharmaceutical market as per AIO CD Pharma RAC Mad June 2025. Corresponding market share for the previous period was 8% for the quarter ending June 25th we grew higher than IPM and we have done well across all major represent therapy areas.
We are happy to note that MAD basis the sales growth has been led by volumes and new product launches versus the IPM growth which is predominantly price led as per SMSRC March June 2025 report we continue to the continue to be the number one brand company based on the prescription volume. Sun Pharma is also ranked number one by prescription with 13 different doctor categories for Q1FY26 the company launched five new products in India. I will now hand over call to Rick for the update on the US business.
Richard Ascroft — Sun Pharmaceutical Industries
Thank you Kirti. I’ll provide an update on the performance of our U.S. business. Our overall U.S. business grew by 1.4% to $473 million for the quarter. This growth is driven by our innovative medicines portfolio with all of our growth products contributing including Illumia, ceqa, Winlevy and Adonzo but offset by a decline in our generics business due to additional competition in certain products. The U.S. accounted for 29.3% of consolidated sales for the quarter in Q1. We launched four new generic products in the U.S. earlier this month Sun Pharma announced the launch of Lexelvi in the United States for the treatment of severe alopecia areata.
This launch marks a major milestone towards strengthening our innovative medicines portfolio. Luxabri represents a new and effective treatment option in the US for severe alopecia areata benefiting eligible patients, healthcare providers and the broader healthcare system. We also announced SunPharma has settled patent litigation with Insite result relating to Luxalvi which removed the overhang of litigation from the product launch. I will now hand over the call to Mr. Sunby.
Dilip Shanghvi — Chairman and Managing Director
Thank you Rick. I will provide an update on the performance highlights of our other businesses as well as give you an update on our RD initiatives. Our branded formulation revenues in emerging markets were 298 million, up by 5.1% over Q1 last year. The underlying growth in constant currency terms was 4%. Emerging markets accounted for 18.5% of total consolidated revenue for Q1. Amongst the larger markets in local currency terms, Romania, Russia, South Africa have done well. Formular session revenues in the rest of the world were 219 million, up 15.5% over last quarter. FY25 rest of the world markets account for approximately 13.6% of consolidated revenue in Q1 FY26 our global innovative medicine sales were up 16.5% to reach 311 million.
We continue to invest in building. A. R and D pipeline for both the global generics and the innovative medicine businesses. Consolidated investments towards R and D for Q1FY26 stand at Rs 9029 million or 6.5% of sales. This includes a charge of 1362 million on account of SCD044, which is reflected in exceptional items. Sanpharma discontinued clinical trials of SCD044 and has no further plans for development of SCD044. Excluding the charge, R and D expenses for the quarter stood at rupees 7667 million, or 5.6% of sales. Innovative R&D accounted for 41% of our total RD spend and stands at 11.8% of the global innovative medicine sales for the quarter after excluding exceptional charges.
Moving on to updates on global innovative medicines, Sun Pharma’s two phase 3 clinical studies evaluating Illumia in active psoriatic arthritis met their primary endpoint. These results support the potential regulatory submission of Illumia in the US and in other markets. During the quarter, our partner Phylogen decided to voluntarily withdraw the application for marketing authorization to the European medicine agencies for Needlegy. They plan to refile the application at an appropriate time when they have the requisite information. Sun Pharma has completed its acquisition of Checkpoint Therapeutics. The acquisition adds unlocks it to Sun Pharma’s innovative portfolio. Unlox it is the first and the only FDA approved PD L1 treatment for advanced cutaneous squamous cell carcinoma. We are planning to launch unlox it in the US in second half of FY26.
Abhishek Sharma — Vice President and Head of Investor Relations and Strategic Projects
That ends the readout. Operator if we can open the queue for Q and A.
Questions and Answers:
operator
Sure. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press Star and one on their Touchstone telephone. If you wish to remove yourself from the question queue, you may press STAR and two participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Kunal Dhamesha from Macquarie. Please go ahead.
Kunal Dhamesha
Hi, thank you for the opportunity and good evening. The first one on the Illumia successful trial on psa. Could you provide some timeline? I know it’s at a filing stage but how should we look at when the filing could happen and then when can we expect? What is the potential timeline here for the developed market like US Europe? And also if you could provide some data points in terms of the proportion of patients reaching ACR 2050 or 70 at week 24 that would be great.
Dilip Shanghvi
Yes. The plan is to present the data or publish the trial result in a reputed journal before we start publicly talking about the Data and I think the regulatory team is working with the CRO to ensure that as soon as we have all the requisite information information because we have currently only the top line data. But once we have the requisite information for filing the plan is to file, hopefully we should be able to file the product before the end of this calendar year. But that’s not something that I am 100% sure about. But that’s expand.
Kunal Dhamesha
Sure, thank you for that. And the second question is regarding. We had suggested that there would be incremental cost related to launch of Lexlv and unlocks it in FY26 which we had pegged at around $100 million. So have we seen that impact in this quarter and will it be more spread across the quarters or will it be high at the time of launch and then comes down from there on?
Dilip Shanghvi
So in addition to the actual cost out go, there will also be amortization of the cost of the acquisition and that will start only when the product is in market. So we will see unlocks it from, I mean sorry, like Selvi from this quarter. But I think our estimation is that the overall cost of 100 million we will be sustaining during the year. You don’t see that much in the first quarter, but it will start coming.
Kunal Dhamesha
So just a clarification. So this 100 million includes both the cash and amortization charge or it’s just spending and then amortization would be separately?
Dilip Shanghvi
No, I think it will be the direct cost 100 million. Amortization will be separate.
Jayashree Satagopan
The amortization factored in our guideline guidance which we had given.
Dilip Shanghvi
But we don’t give profit guidance we don’t give.
Jayashree Satagopan
But overall we told.
Kunal Dhamesha
Okay, yeah, okay, sure. Thank you. I have more question as joined by the team.
Dilip Shanghvi
Yes, thank you.
operator
Thank you. Next question is from Neha Manpuria from Bank of America. Please go ahead.
Neha Manpuria
Yeah, thanks for taking my question. My first question is on lexelvi. Now that we have launched the product, you know, how should we look at, you know, what would be the key milestones in terms of traction of the product? Because if you look at the other two competing products, we’ve seen very different trends in IQVI in terms of the prescription trend. If you can just help us in terms of when you think this gets to a point where we are comfortable with formulary coverage. How much time would that take roughly?
Richard Ascroft
Yeah, so we just launched Lixelvi a couple weeks ago. We’re very encouraged by the early results. We’ve seen good receptivity with healthcare professionals and patients with our messaging. We already have patients that are going through our hub which is our support program and we already have our initial commercial prescriptions. We’re in ongoing discussions with payers which have been very positive and as I said, we’re encouraged by what we’ve seen with the first two weeks in the market.
Neha Manpuria
In your view, when do you think this starts converting into revenue contribution? Once you see that formulary coverage, which it takes usually in your chance, nine months, could it be a year out or you know, you could start seeing contribution much faster than that From a revenue ramp up perspective.
Richard Ascroft
We planned we will see some impact yet this year, this fiscal year.
Neha Manpuria
Understood. My second question is on the row market that seems to have seen a very strong growth in the quarter. Is there anything, any milestone income, anything in that number? You know, what drove that strong growth in the other market?
Richard Ascroft
Could you repeat the question?
Dilip Shanghvi
I think she’s asking about the rest of the world market. So I think the overall there is no specific event that I can point to but there may be some one time sales which may also be responsible. But the overall guidance that we have given includes the performance of the emerging market and the rest of the world market.
Neha Manpuria
Understood. I’m sorry. If I could squeeze in one more question on the MSN based on your discussion. What is the sense of the likelihood of Illumina getting included in the demonstration project and therefore negotiations on that? Any color on that?
Dilip Shanghvi
Yeah, maybe Rick, you can respond because I am away from market that way.
Richard Ascroft
Yes, I would say we have no further information on the MFN executive order. We have not had any dialogue with the government. We have not been contacted with respect to any products in our portfolio.
Neha Manpuria
Understood. Mr. Hosa, thank you so much.
operator
Thank you. Next question is from Damian Tikerai from hsbc. Please go ahead.
Damayanti Kerai
Hi, good evening and thank you for the opportunity. My question is in the US market. So while we are still waiting for the details, official details to come on the tariff part, but from your side, do you have any thought about improving your manufacturing footprint in the US.
Richard Ascroft
Maybe I can start. We actually have a significant footprint in the United States already and at this time we have no plans to move further manufacturing to the US if you.
Damayanti Kerai
Can indicate broadly what percentage of sales come from your US plant at this point of time, that will be helpful.
Abhishek Sharma
That we don’t disclose the main thing.
Damayanti Kerai
Okay, but you think the current capacity is good enough for you in case you need to onshore manufacturing and you have no immediate plan to add on there?
Dilip Shanghvi
Yeah, I think that would be the right assumption.
Damayanti Kerai
Okay. And my second question is on limit opportunity. So does 1Q number reflect meaningful contribution from that product? And if you can also comment on the pricing for that product.
Richard Ascroft
Generics, go ahead. I apologize.
Dilip Shanghvi
No, no, please. I wanted you to respond.
Richard Ascroft
I would say our generics business faces up and down quarterly due to lenolidomide. If we remove that impact, the US generic business is down quarter over quarter and year over year. We do see continued pricing pressure for Lin alumni.
Damayanti Kerai
Okay. But does 1Q has significant contribution from that product?
Dilip Shanghvi
Yeah.
Abhishek Sharma
Yeah. So the Mayanti Q1 Leonardo mite sales were moderately higher versus Q4.
Damayanti Kerai
Okay.
Abhishek Sharma
Moderately.
Damayanti Kerai
Moderately higher. Okay, thank you. That’s helpful. I get back into Q4.
operator
Thank you. Before we take the next question, a reminder to participants that you may press Star and one to join the question queue. The next question is from Bino Patiramdal from Elara Capital. Please go ahead.
Bino Pathiparampil
Hi, good evening and good morning. Couple of questions. One Dilip Bhai, were you happy about the top line results from the Illumina Psoriatic Arthritis study or could it have been better? I’m asking this because we have seen the ACR 20 numbers which have come fine. But in ACR 50 and 70 maybe didn’t show much improvement.
Dilip Shanghvi
So I think when you look at the numbers you also need to look at the dosing. What we have in no induction dosing as well as only two injections. So I think it’s very good result considering the dose and the overall safety profile. The doctors with whom we’ve discussed understand the product because it’s a class that they are familiar with. So we are comfortable with these numbers.
Bino Pathiparampil
Understood? Yeah. And just a question. The one off settlement that you have done there was this $200 million settlement of Taro. From your footnotes I understand that we have recognized already about 62 million in this quarter in Q1. So should they assume that the balance would be recognized in Q2, Q3, etc. As exceptional? It.
Jayashree Satagopan
Let me take this question. Out of the 200 million we were carrying a provision for part of it in our books from prior years. So netting of that the balance has been fully accounted in this quarter and therefore we would not see any further exceptional item on this account in the forthcoming quarter.
Bino Pathiparampil
Thank you. I’ll turn back to Q.
operator
Thank you. Next question is from Sushang Krishna Kumar from MK Global. Please go ahead.
Shashank Krishnakumar
Hi. Thanks for taking my question. My first question was on the domestic business. I think this quarter we’ve seen a 14% growth on a relatively higher 1Q base and last few quarters. Also if I look at our growth rates, it’s not a significant divergence but a marginal divergence versus what secondary sales growth trends would indicate. So just wanted to understand if the OTC portfolio is now becoming a major part of our domestic piece and probably there are a few sales channels which are not getting captured. Is it what is driving this marginal growth divergence versus what we’ve achieved secondary sales strength?
Kirti Ganorkar
The majority of the growth is coming from prescription business. It’s not from a consumer business.
Shashank Krishnakumar
Oops. Got it. So my second question was again last quarter we had indicated that we are looking to launch a few new products in the diabetes and weight loss management space in the domestic market going forward. Just wanted to understand how this will sort of reshape the incoming treatment regimens particularly for diabetes. Because while the incremental opportunity size probably is being talked about. Just wanted to understand how the current standard of care treatments could get disrupted when some of these new launches come in starting next year.
Kirti Ganorkar
You’re talking specifically of GLP1s or
Dilip Shanghvi
GLP1 effect on existing products. So I think if you look at that way globally there is a lot of experience about the impact of GLP1 on sale of existing product, both DPP4 as well as SGLT2. So we haven’t seen any significant degrowth in those. As a matter of fact post generics I think there is a increase only so, so I, I, I think if that is repeated in India there should be no problem.
Shashank Krishnakumar
Yeah, got it. Thank you. That’s it. That’s it for thank you.
operator
The next question is from Surya Narayan Patra from Philip Capital. Please go ahead.
Surya Narayan Patra
Yeah, thanks for this opportunity. Sir, taking the GLP point further, could you give some sense about your participation in the first wave of commercialization of GLP product in Canada and Brazil?
Dilip Shanghvi
Yeah, I think maybe anok you want to respond but I don’t know whether we share this information.
Kirti Ganorkar
I think Canada, Brazil we are not shared the information but what I can share is about in India we will be in a first wave of launch. Yeah. So we are all working in that direction so that we come first to the market.
Surya Narayan Patra
Yeah. Thank you. This is useful. My second question was about the cash deployment that you are having in the annual report that you have mentioned. So you are in the recent past much of the investment, what we have done it is towards the specialty portfolio and this time that you are also indicating about your interest beyond that. So could you give some clarity about that? What Are which are the areas that you’ll be interested in ending and all that?
Dilip Shanghvi
No, I think we’ve indicated that we’ll continue to look for opportunities to strengthen our product portfolio in three therapy area that we are interested in. Ophthalmology, dermatology and on. Okay.
Surya Narayan Patra
Okay. And irrespective of the market.
Dilip Shanghvi
What is that?
Surya Narayan Patra
Irrespective of the market? Not necessary. US or India.
Abhishek Sharma
Yeah, I mean generally these assets is easier to do a global deal.
Surya Narayan Patra
Okay. Sir, I was just looking at the China development also. We know that we have Illumina illumetary there partner but we have now created our own subsidiary also if you can add some color to that kind of a development and interest.
Abhishek Sharma
No, I think it’s an option that we are creating without any specific plan at this point.
Surya Narayan Patra
Okay. Okay. Yeah, thank you. I have a couple more. I’ll join in the queue.
operator
Thank you. Next question is from Vishal Manchanda from Systematics. Please go ahead.
Vishal Manchanda
Yeah, thanks for the opportunity and good evening everyone. With respect to generic rev limit, we are almost halfway through into CY25 and there are just to go before the exclusivity expires. So is it fair to assume that you would have sold 50% of your allocated volume quota for the year?
Richard Ascroft
We don’t give, we don’t provide.
Abhishek Sharma
Yeah, Rick, continue.
Richard Ascroft
I was going to say we don’t provide product specific guidance.
Vishal Manchanda
Okay. So like do we expect our US formulation run rate to improve from here in the coming quarters?
Richard Ascroft
Again, we don’t provide that level of guidance.
Vishal Manchanda
Okay. And just one more. So like I could see in your annual report that there is a sharp jump in the. With respect to India, there’s a sharp jump in the neuropsychiatry therapy revenues on a yoy basis. A very sharp jump. So is this almost a thousand crores? In fact on a y o y.
Abhishek Sharma
Basis that’s not correct. Yeah. I think CNS growth is also in line with India growth. Yeah. If I remember correctly it is 11 to 12% range.
Vishal Manchanda
Okay.
Abhishek Sharma
Yes.
Vishal Manchanda
And just one final one on the tax rate. If you could give a number what should be the tax rate this year?
Jayashree Satagopan
For the full year we can consider around 25%.
Vishal Manchanda
Got it. And it should be there going forward. Around 25%.
Jayashree Satagopan
Yeah.
Vishal Manchanda
Thank you.
operator
Thank you. The next question is from Vivek Agarwal from Citigroup. Please go ahead. Hi.
Vivek Agrawal
Thanks for the opportunity. My question, the first question is related to or Donjo. So although it’s a relatively smaller product in your global innovative medicine pipeline, but the product Was there in the market for quite some time and in the last couple of years there is a sharp pickup and the product has got a decent market share against the competition, every wage. Right. So what has changed? I just want to understand. Thank you.
Richard Ascroft
Yeah, at least in the US I can comment. We continue to see nice growth of Adamso. It’s really a recognition from clinicians of what the product can bring and also strong execution from our sales and marketing teams.
Vivek Agrawal
But the product was there in the market right from around 2017, 18. Right. Or 1819. Right. So is it in the last couple of years is there any better coverage or it is better salesforce behind the product. So have you changed anything? Right. So that has resulted in a sharp pickup.
Richard Ascroft
You know, I definitely think there’s been improvement in execution with our sales team. I think also it’s taken some time to convince loyalists to give the product a try and once they give it a try, they stick with it.
Vivek Agrawal
Understood. And a related question with Unlockside, Is it fair to assume that the channel as well, the prescribers are more or less same for Odomjo as well as Anloxite?
Richard Ascroft
There is overlap. It’s not 100% overlap, but there is overlap between the customers which will be something we take advantage of from a sales and marketing perspective.
Vivek Agrawal
I understood. So just one more question on Lexelv, right? If you look at the comparing molecules, lead, Filo, Olumiadrite, they have a restrictive coverage like prior authorization, limited quantity. So even for Lexelvi, are you expecting similar kind of coverage or will that be enough for the pickup in this product?
Richard Ascroft
I think with all three products we’ll continue to see prior authorizations. Based on our ongoing negotiations, we do expect to have good coverage for Lexalvi versus the competition.
Vivek Agrawal
You are expecting a better coverage for Lexelvi against the competition?
Richard Ascroft
I think we’re saying we expect at least parity coverage versus the competition.
Vivek Agrawal
Okay, and just what is going to help you in let’s say priority coverage over the competition?
Richard Ascroft
I think really the profile of the molecule. We know from message testing that both clinicians and patients really prefer what Luxelvi has to offer. Particularly from a speed perspective and from the discussions with payers. They’ve been encouraged by the data we’ve shown them as well.
Vivek Agrawal
Understood. Thanks Rick. This is from my side.
Richard Ascroft
Thank you.
Kunal Dhamesha
Thank you. Next question is from Kunal Damesha from Macquarie. Please go ahead.
Kunal Dhamesha
Hi, thank you for the opportunity. Again, just a logistic question. So the small one time kind of revenue that we are suggesting in row is it part of innovative medicine business or is it part of the non innovative medicine business?
Abhishek Sharma
It’s a mix of both Kunal but innovative business. We have given the detail what is the growth and the only about Only for ro but it is still included in the separate number that we’ve given for innovative business. Global innovative. Global innovative.
Kunal Dhamesha
So just to clarify the 311 million does it include any milestone payment this quarter?
Abhishek Sharma
No.
Kunal Dhamesha
Sure, sure. So that’s great. One question for Rick Abuno. Since now we have seen some bit of stellar or biosimilar launches in the US market and Europe also sterile biosimilars have been there. So are you seeing any on the ground impact? Maybe new to RX patients given? Obviously biosimilar would be at a much lower cost compared to the medicines like Illumia or.
Richard Ascroft
Not really. We have not seen any or any major biosimilar first policies amongst payers. We also see more growth in the IL23 class. So there already has been movement away from Stelara in multiple therapy areas.
Kunal Dhamesha
Right. So you don’t expect also in the future that that could be the case because just for the new to RX patient, not for the existing patient but.
Richard Ascroft
Hard to predict the future. But we don’t at this time based on our current discussions with payers and what we’re seeing in the market.
Kunal Dhamesha
And the last one on the unlocks it launch I think we have suggested obviously it will be launched but now you know is it imminent? We should expect the launch to be in this quarter or what are we kind of waiting is it preparations that we are doing?
Richard Ascroft
I can take this still up unless you want to.
Abhishek Sharma
No, no, please go ahead.
Richard Ascroft
Check point had submitted long term data for locks it. We’re currently waiting on that data to be approved and added to the label in the US and once that occurs we will launch and of course we are also planning for that launch and we’re dealing with that currently.
Kunal Dhamesha
And then this long term data, does it provide us with a clear differentiation versus the competing product and is it in public domain?
Richard Ascroft
We believe it is very competitive and it is in the public domain.
Kunal Dhamesha
Thank you and all the best.
Richard Ascroft
Thank you.
operator
Thank you. Before we take the next question a reminder to participants that you may press Star and one to join the question queue. The next question is from Kunal Lakhan from clsa. Please go ahead.
Kunal Lakhan
Yeah, hi, thanks for taking the question. Can you give some color on the hallowed observations and any timeline on when the final resolution there?
Aalok shanghvi
So we are engaging with the FDA on finding a Resolution for Halo. We’ve responded to the 483 and we. Are waiting to hear back from the agency.
Kunal Lakhan
Okay. But any, any timeline you have in mind over which you would expect a fully full resolution on this plant.
Kirti Ganorkar
I mean it would be speculative. We will need to wait for the agency to rest.
Aalok shanghvi
Sure, sure. My second question was actually more of a clarification of the tariff announcement. Firstly like are pharma companies being exempted or you’d be paying tariffs starting August 1st or you know any tariff would be pending. You know the outcome of 232 investigation. Any color on that?
Dilip Shanghvi
I mean that is the understanding is that it’s post 232 investigation report the government will decide on the next step. Till that time I think pharma continued to be exempted from basic tariff from.
Kunal Lakhan
Just a follow up on that. From what, from my understanding of what’s happening with the EU deal is that you know they’ll be paying 15 tariff but it has a ceiling of that irrespective of what the outcome of 232 investigation would be.
Dilip Shanghvi
I think my understanding is that EU deal also exempts pharma product. The pharma product don’t carry 15%, sir.
Kunal Lakhan
Sure, sure. All right, thank you so much.
operator
Thank you. Next question is from B. From Elara Capital. Please go ahead.
Bino Pathiparampil
Hi, thanks for the follow up. Actually two follow up questions. While answering an earlier question you mentioned that India is run by the prescription transition. Now if I look at the growth that’s been pretty strong off late for several quarter.
Abhishek Sharma
Yeah, your voice is cracking. So if.
Bino Pathiparampil
Hello. You feel better now?
Jayashree Satagopan
Yeah.
Bino Pathiparampil
Hello.
Abhishek Sharma
Yeah, this is better.
Dilip Shanghvi
Yes, much better. Please go ahead.
Bino Pathiparampil
Okay, thank you. So you. You refer to an earlier question that the infl growth is by the prescription business. It is very healthy now. Much higher than the market growth rate. Is there anything that is driving this. Like emulations, products etc. Which is in there or is it something which is sustainable once this comes into the base with the market plus growth rate or is this sustainable?
Kirti Ganorkar
Yeah, I think what I can is I cannot pinpoint to only one thing which is driving the growth. But what I can say it is a concentrated effort on brand building through scientific promotion. Then building deeper connect with the prescriber using science led promotion, then improving the prescriber coverage. Then we. You also know we have done a field force expansion in the past and declutter our portfolio and building selective presence in tier 2 tier 3 towns. So all of that if we put together I think this, this is Helping us to grow better than the market.
Bino Pathiparampil
Okay, got it. Same question on tax rate to an early Christian who answered for 25%. Earlier you had said that your tax rate will gradually move up. Last year we had about 16, 17%. Are you saying that this year it’s going to sharply jump to 25%?
Jayashree Satagopan
So the tax rates have been moving up quarter on quarter during last year and currently it is around 23 and we expect for the full year to be around 25%.
Bino Pathiparampil
Got it. Thank you.
operator
Thank you. Next question is from Tushar Manudane. From Motila Loswal. Please go ahead. Tushar, we can barely hear you. If you could use the handset and speak a little louder please.
Tushar Manudhane
Is this better?
Abhishek Sharma
Yes, much better. Please go ahead.
Tushar Manudhane
Right. Sorry for this, maybe I missed, but just if there’s a revisit on the R and D cost as a percentage of sales for FY26.
Dilip Shanghvi
No, I think we’re staying with the guidance.
Tushar Manudhane
Because this quarter, adjusting for the charge, it’s 5.5. So effectively it implies that the RND expense is going to be much higher in the coming quarter. Quarters.
Dilip Shanghvi
Yeah, but clinical start, I mean we have three quarters to catch up. Please.
Tushar Manudhane
And so subsequently, further building on, it’s adding the promotional marketing expenses of 100 million. So if I have to think about the EBITDA margin. So directionally would this have sort of an impact on the EBITDA margin? We, we have done on 1Q FY26. Not, I mean, I mean asking in terms of quantifying the number, but just as a direction.
Dilip Shanghvi
No, I, I think the key difference between how you look at and how we look at is that we look at what is in the best interest of the business long term. Now how that affects short term ebitda, I think we actually don’t even calculate, so I’m not able to respond. But our view is that both unlocks it as well as Lexel, we have significant opportunity to strengthen our presence in the innovative product business and also strengthen our relationship with the customers. So we will do whatever is required to become successful. And once we are successful, it pays for everything that we invest in.
The same way I think trials also will have to be invested on because then we create future revenue stream.
Tushar Manudhane
Sir, the reference as far as RND spend is concerned, if it has to be so high, then at least if it is possible to share the name of the product in the subsequent list of the R and D product in the pipeline, that would be helpful given that the existing table which has Been highlighted in the press release. Most of them are up for regulatory filing.
Dilip Shanghvi
GL34 phase two will start. So so that also will add to the cost because those are larger studies.
Tushar Manudhane
And so just one more on the as far as the facilities being compliant for US market like if you could just share in terms of which all facilities have now let’s say under issue while the business continues but incremental generic approvals might be stalled and which facilities are sort of compliant to get the approval.
Aalok shanghvi
Would you respond? Yeah, sure. So we currently have three facilities that are under warning order from the US fdi, Mohali, Gadra and Haloal. We have other facilities in Basket, om Hungary, Haifa, Brampton which continue to supply to the US and do not have and we have one more facility in Balerica in the US which is in near Boston. So all of these facilities continue to supply and are in a compliance status. With the US FDA.
Tushar Manudhane
Got you. And reasonable to assume that the ANDAs awaiting US FD approval would be you know good number of anders from those sites as well.
Aalok shanghvi
So the decision to file the product from the facility would be a function of the compliance status of the facility and the technology available at the facility.
Tushar Manudhane
Right? No, I was referring to the 119 ANDAs which await USFD approval.
Abhishek Sharma
Those, those that breakup we don’t give. Tushar.
Tushar Manudhane
That’S it from us. Thank you.
Abhishek Sharma
Thank you.
operator
Thank you. Next question is from Neha Manuria from Bank of America. Please go ahead.
Neha Manpuria
Yeah, my question has been answered. Thank you so much.
operator
Thank you. We take the next question. Next question is for Surya Naray and Patra from Capital. Please go ahead.
Surya Narayan Patra
Yeah, so just one clarification about after settling this antitrust litigation, is it fair to believe that there is no more litigation relating to the antitrust that is there?
Abhishek Sharma
We are given details. We have given details.
Jayashree Satagopan
So it is, it is there. And we have given the details in the annual report.
Surya Narayan Patra
Okay. Sorry for that. Second is about the Illumia for the new indication psoriatic at that you mentioned that. Okay, this the filing is likely sometime this year. But what are the likely mean? How far the far the drug is from the commercialization in the US and what could be the targeted markets that can be addressed by this flood?
Dilip Shanghvi
I mean typically there is a approval timeline for a new indication. Hopefully we should achieve whenever that timeline is met post the filing. I think I don’t know specific target for psoriatic arthritis. But broadly what I understand is that around 30% of the psoriasis patient also suffer from psoriatic arthritis. So that market then becomes available to us.
Surya Narayan Patra
Okay. And about the kind of of formulary additions of this molecule since there is a kind of already one molecule of there in the market. So whether the timeline required for putting this new drug in the various formulas would be kind of less critical and will be taking less timelines and all that or how should one think about it.
Abhishek Sharma
Rick? Maybe.
Richard Ascroft
Happy to. Is this question specifically related to Illumia?
Surya Narayan Patra
Yeah. For the new indication psoriatic arthritis.
Richard Ascroft
We would expect to have similar access to what we have today for psoriasis. It would likely fall under the same contractual arrangements.
Surya Narayan Patra
Sure. Yeah. Thank you.
Richard Ascroft
Thank you.
operator
Thank you. Next question is from Yogesh Soni from Incred. Please go ahead.
Yogesh Soni
Thanks for the opportunity sir. One bookkeeping question. I wanted to understand the amount for which we have settled inside litigation one time amount that we have given and whether that would be formed part of existing items in second quarter.
Jayashree Satagopan
We don’t give indications on this.
Abhishek Sharma
The terms are confident.
Yogesh Soni
Okay, so what another question that I have is wanted to understand the unlocks it launch timeline whether it would be towards the start of second half or later part of the year.
Richard Ascroft
We expect to launch in the second half of the fiscal year.
Yogesh Soni
Okay, got it. Thank you.
Richard Ascroft
Thank you.
operator
Thank you. The next question is from Vivek Agarwal from Citigroup.
Vivek Agrawal
Yeah, thanks for the opportunity. Again. Just one clarification. I thought for the US generic business you indicated that it is down yoy as well as correct quarter on quarter in this in this quarter. Is that right?
Richard Ascroft
That is correct.
Vivek Agrawal
Okay, thanks. And just a related question. Previously you commented that clearance of Halal facility is going to be very important for pickup in the US generic business. So now halal clearance doesn’t look like in the site at least this particular year. So how it how we should look at the gentrik business this particular year or the year after that? Are you expecting growth in the business from launches from the other facilities or is it going to decline? Yoy. Thank you.
Richard Ascroft
Yeah, I don’t think we provide that forward looking guidance. But as alok mentioned, we obviously have other sites in which we’re able to supply the US market and we have an existing portfolio that we can look to grow to offset any headwinds we face for new products.
Vivek Agrawal
Thanks. That’s for my time. Thank you.
operator
Next question is from Anubhav Agarwal from UBS Securities. Please go ahead.
Anubhav Agarwal
Thank you. Just one clarity on the tax rate. So this 25% number, does it include the deferred tax component, how much is deferred? Just trying to understand is the cash taxes for the company also 25%.
Jayashree Satagopan
So we have to look at it all inclusive on a yearly basis which will be at 25%. The cash out go may be lower because of some NAT credits that are still available with us.
Anubhav Agarwal
Yeah. So I’m just trying to understand is that difference dramatically? I mean just like taking a case, right. The effective tax rate could be 25, but the actual cash outflow may be 20%. So is that the case?
Jayashree Satagopan
Yeah, there will be a difference, but we don’t share the exact details.
Anubhav Agarwal
Thank you.
operator
Thank you. Next question is from Kunal Dimesha from Macquarie. Please go ahead.
Kunal Dhamesha
Hi. Just one clarification from Rick. So on the question related to the formulary access for Illumia for PSA indication, did you mean that from day one of launch we’ll have similar access to what we have currently for Illumia or whatever that date may be? Whatever Illumia would have coverage. Is that the correct understanding?
Richard Ascroft
That is the correct understanding.
Kunal Dhamesha
So then is it also fair to kind of, you know, assume that the ramp up could be much faster here?
Richard Ascroft
Well, we should have far fewer free goods than we typically would have with a new launch.
Kunal Dhamesha
Yes, sure. And then while there is a second question, but there is a Overall number of 30% of psoriasis patient having psoriatic arthritis, is there any age related increase or decrease in incidence that we have seen in the data in terms of prevalence data that maybe aged individuals do have a higher 50% prevalence? Maybe.
Richard Ascroft
You know, that’s something we’ll have to follow up on. I’m not aware if there is an age related change that happens with psoriatic arthritis. Certainly as patients have psoriasis longer, they’re more likely to have psoriatic arthritis. But I’m not sure if there’s a major difference between an older population and a younger population. We’ll have to follow up.
Abhishek Sharma
No, Rick, you’re right. There is no age tradition between the onset of psoriatic arthritis and psoriasis.
Kunal Dhamesha
Sure, sure. Thank you. Thank you.
operator
Thank you. Next question is from Madhav from Fidelity. Please go ahead.
Madhav Marda
Yeah, just wanted to check. We plan to file for the PSA indication by end of this calendar year typically. What’s the approval timeline? Is it about 12 months? Is that the right way to think about it?
Richard Ascroft
Yes.
Madhav Marda
Thank you.
Richard Ascroft
Yeah, 10 to 12 months.
operator
Thank you. The next question is from Aditya from Digital Beast Securities. Please go ahead.
Aditya
Thank you for taking my question and good evening.
Abhishek Sharma
Good Morning. Morning. To all of you. This quarter we have done a guide EBIT of 31, 31.1%. What is our guidance for the full year?
Jayashree Satagopan
We normally do not give a margin guidance.
Abhishek Sharma
No margin. We don’t give. Yeah.
Aditya
Okay, so if I can ask, is what led to a margin of 31.1%? Is it the lower low cost of raw materials or there has been some. Other cost saving measures which you have. Taken that has led to a margin of 31.1%?
Jayashree Satagopan
Yeah, there has been a mix of factors as I was mentioning earlier. There is an improvement in the raw material cost. It is also the product mix which has been quite helpful. We’ve seen a higher specialty sales and also the branded formulation business.
Aditya
Okay, thank you very much.
operator
Thank you very much. We’ll take that as the last question. I would now like to hand the conference over to Dr. Abhishek Sharma for closing comments.
Abhishek Sharma
Thanks everyone for joining us at this late hour. If you have any questions which have remained unanswered today, you can reach out to the investor relations team. Wish you all a very good evening. Thank you. And over from us. Thank you very much on behalf of Sun Pharma. That concludes the conference.
operator
Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.