Zydus Lifesciences Ltd (NSE: ZYDUSLIFE) Q4 FY23 earnings concall dated May. 18, 2023
Corporate Participants:
Ganesh Nayak — Executive Director
Sharvil Patel — Managing Director
Nitin Parekh — Chief Financial Officer
Analysts:
Saion Mukherjee — Nomura Securities — Analyst
Kunal Dhamesha — Macquarie Group — Analyst
Prakash Agarwal — Axis Capital — Analyst
Sameer Baisiwala — Morgan Stanley — Analyst
Kunal Randeria — Nuvama Group — Analyst
Cyndrella Carvalho — JM Financial — Analyst
Neha Manpuria — Bank of America — Analyst
Vishal Manchanda — Systematix Group — Analyst
Presentation:
Ganesh Nayak — Executive Director
Good evening, ladies and gentlemen. Welcome to our Post Results Teleconference for the Fourth Quarter and the Financial Year Ended March 31, 2023. On today’s call, we have with us Dr. Sharvil Patel, Managing Director; Mr. Nitin Parekh, Chief Financial Officer; Mr. Arvind Bothra, Senior Vice President, Investor Relations; and Mr. Alok Garg, Senior Vice President from the Managing Director’s office.
I’m sure you would have gone through the financials and other material, which we have filed with the stock exchanges. To begin with, let me give you an overview of the performance in the year gone by. As we progressed through the year, all businesses demonstrated strong momentum and delivered double-digit growth consistently. Consequently, we closed the year on an encouraging note with overall.
Revenue growth of 14%. Our EBITDA growth of 16% was faster than the revenue growth, thanks to margin improvement achieved during the year. Our formulations business in India built further on the growth momentum from the previous financial year and registered double-digit growth through the year-on-year COVID adjusted base. Our consumer wellness business grew in double-digits, despite softer consumer demand, due to increased inflationary pressure affecting discretionary spends.
Performance of our U.S. formulations business improved significantly during the year as the business grew sequentially every quarter on the back of volume expansion and meaningful new product launches throughout the year. As a part of our ongoing initiative, we continuously analyze our spend base and identify and implement various ideas across functions to unlock the efficiencies in our operations. Our innovation journey continues to make progress and achieve important milestones.
With that, let me take you through the financial numbers for the year gone by. During the year, we recorded consolidated revenues of INR172.4 billion, a growth of 14% year-on-year. EBITDA margins expanded during the year, despite high base and stood at 22.4% of the revenues, which is an improvement of 30 basis points over the previous year. EBITDA margin adjusted for one-time COVID-related inventory provision stood at 23.1%.
Consequently, the consolidated EBITDA for the year grew by 16% to INR38.6 billion. Net profit for the year adjusted for certain exceptional and non-recurring items, and the impact of discontinued operations stood at INR26.6 billion, up 16%. The balance sheet strengthened further as we had a net cash position of INR5.5 billion as on 31 March ’23 against the net cash of INR0.6 billion as on 31 March 2022.
With this, let me go to our performance for the quarter gone by. I’m happy to inform you that our quarterly revenues crossed the INR50 billion mark, driven by robust performance across segments. Coming to the quarterly financial numbers, we registered revenues of INR50.1 billion, up 32% year-on-year. Reported EBITDA for the quarter was INR12.6 billion, up 75% year-on-year and 31% quarter-on-quarter. EBITDA margin for the quarter stood at 25.1%, which is an improvement of 620 basis points on a year-on-year and 260 basis points on a quarter-on-quarter basis.
Net profit adjusted for certain exceptional and non-recurring items, and the impact of discontinued operations stood at INR9 billion, up 71% year-on-year. We expect all our businesses to sustain healthy growth on the back of our rich portfolio of products and focused execution efforts.
Now let me take you through the operating highlights for the fourth quarter of FY ’23 for our key business segments. Our India geography, which comprises our formulations and the consumer wellness business, accounted for 41% of the total revenues during the quarter and grew 11% year-on-year. The India geography consistently delivered double-digit growth in the current fiscal adjusted for COVID-related revenues in formulations business last year.
Our formulations business in the India geography posted revenues of INR12.9 billion, up 11% year-on-year. Excluding revenues from COVID-related products, growth during the quarter was 12% year-on-year. On a full year basis, too, the business delivered 12% growth, excluding the revenues from COVID-related products from the base. We continue to work towards strengthening our presence in our focused therapy areas.
Our first new chemical entity, the brand, Lipaglyn, continued to enhance the reach as it expanded the patient base by 37% during the year. On the super specialty front, we retained our leadership position in the nephrology segment, while in the oncology space, we were the fastest-growing company. Our consumer wellness business recorded revenues of INR7.1 billion, up 12% year-on-year. The business experienced gradual recovery in consumer sentiments during the quarter, though the urban demand still remained stronger than the rural demand.
However, the rural demand slowdown seems to have bottomed out, and we expect the recovery going forward. With appropriate price increases across the portfolio undertaken over the last few quarters, coupled with stabilizing inflation in key inputs, except milk, the business registered improvement in gross margins and was in line with the gross margin of Q4 FY ’22.
Now let me take you through the performance of our U.S. formulations business. The business accounted for 46% of the consolidated revenues during the quarter, with revenues of INR22.5 billion and registered a robust 17% growth sequentially. The business delivered sequential growth during each quarter of the current financial year.
Growth during the quarter was driven by new launches and volume expansion in existing products. We launched eight new products during the quarter. New launches for the quarter include topiramate extended release capsules, which was the first generic launch of the product in the U.S. market. During the quarter, we filed two additional ANDAs and received 28 new product approvals, including five tentative approvals.
Our emerging markets and Europe formulations business continued to deliver healthy growth with all the major markets contributing to the growth during the quarter. The business posted revenues of INR4.4 billion, up 34% year-on-year, excluding revenues from COVID-related products. During the quarter, our Moraiya formulations facility successfully completed the pre-approval inspection for transdermal patches by the USFDA.
Recently, we received the EIR report from the USFDA for this inspection. Our formulations facility located in Ahmedabad SEZ known as SEZ-1 facility was also inspected by the USFDA, which was a pre-approval as well as GMP inspection. The inspection concluded with three observations. We submitted our response to the USFDA within the stipulated time line and are awaiting their response to the same.
This concludes the business review. I would now request Dr. Sharvil Patel to take you through the key drivers across businesses and initiatives in our innovation program. Thank you.
Sharvil Patel — Managing Director
Thank you, Dr. Nayak. Good evening, ladies and gentlemen. It is a pleasure to have you all with us today on the call. We are pleased with our performance during the quarter and the year gone by, both won by as both our large geographies, India and U.S., continue to deliver consistent results, driven by focused execution. Our initiatives in R&D have continued to progress favorably in order to meet patients’ demands across geographies.
These investments provide us assurance of sustainable revenue and cash flow stream in the future. On the regulatory front, our Moraiya formulations facility successfully completed product pre-approval inspection by the USFDA. This is the second successful inspection Moraiya during the year. We will continue to offer high quality, safe and effective health care solutions to patients around the world, thanks to our commitment to upholding high quality standards and continual improvement in the same.
Our strategic initiatives and interventions over the last six quarters have enabled our India formulations business to deliver consistent double-digit growth. We expect the trend to continue as we remain committed to deliver better than industry growth in the medium-term. The U.S. formulations business had a very successful year with the revenue momentum continued to improve every quarter, driven by new product launches and volume expansion.
We received 63 ANDA approvals during the year, which is one of the highest number of ANDA approvals received in a single financial year for the company. The complex products pipeline developed in-house over the years, coupled with the strategic BD&L efforts, should help us deliver sustainable revenue growth in the future. Our agile supply chain will help us capitalize on the one-time buy opportunities that emerge in the U.S. generics market.
On the innovation front, we are committed to improving patient lives as evidenced by the success of our first NCE Saroglitazar since its launch. We have also created one of the most extensive pipeline of biologicals serving multiple markets, including low and middle income countries. This has made the treatment affordable and accessible for patients and, in turn, has delivered strong volume growth consistently.
With this, let me talk about some of the material developments on the innovation effort. On the NCE front, our lead molecule, Saroglitazar magnesium, is currently undergoing a Phase IIb clinical trial in NASH indication and a Phase IIb/III clinical trial for PBC indication for the U.S. market. During the quarter, we received approval from the regulatory authorities of Turkey to conduct trials for NASH.
The molecule is also undergoing clinical trials in the U.S. for PCOS with NAFLD indications. During the quarter, the USFDA also granted an Orphan Drug Designation status to our molecules ZYIL-1 and NLRP-3 inhibitor. Earlier this year, the molecule achieved positive proof-of-concept in a Phase II clinical trial in patients with cryopyrin-associated periodic syndrome known as CAPS.
Coming to our vaccines effort. On the global development front, we submitted our dose — one of the dossiers of the vaccine to the WHO for the purpose of pre-qualification. This is a second submission to the WHO. Our rabies vaccine has already been received WHO pre-qualification. On the specialty front, our wholly-owned subsidiary Sentynl Therapeutics, continue to work with our licensing partner Cyprium Therapeutics to complete the NDA filing of CUTX-101 targeted at Menkes disease.
The company also continued to work towards adding both Menkes disease and MoCD A deficiency to key genetic lab panels in the U.S. We are also working towards ensuring early access to NULIBRY to patients of MoCD type A deficiency.
Thank you. Now we start the Q&A session. Over to the coordinator for the Q&A.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] First question is from Saion Mukherjee.
Saion Mukherjee — Nomura Securities — Analyst
Yes, hi. Am I audible?
Ganesh Nayak — Executive Director
Yes.
Saion Mukherjee — Nomura Securities — Analyst
Yes. Hi, Dr. Sharvil, first question is around the U.S. momentum. You’ve seen a good momentum here now. Can you throw light on some of your key assets on Revlimid and Topiramate capsule as a [Indecipherable]? And how should we think about $270 million-odd that you achieved in this quarter, how should we think about the quarterly run rate going forward?
Sharvil Patel — Managing Director
So yes, I think on the U.S. front, as I said, obviously, last year, we did continue to improve quarter-on-quarter. Going forward also, we still — we are seeing a strong quarter one as we move into the new year. And I think over the full financial year, we still expect growth on the current base.
Saion Mukherjee — Nomura Securities — Analyst
Okay. On Topiramate, particularly, how is the competition like in the market? And is the numbers going to come down significantly in Q1 versus what you recorded in Q4?
Sharvil Patel — Managing Director
Yes. So on Trokendi we believe competition will enter — will be there in Q1 versus Q4. Having said so, in spite of that, I think we will see a good growth in quarter one.
Saion Mukherjee — Nomura Securities — Analyst
Okay. And two questions. One on — the second question on your –I see a significant increase in our employee cost this quarter. if you can give some High color on that and your expectation on R&D spend for next year?
Sharvil Patel — Managing Director
So on employee costs, I mean, Nitin bhai, you’d like to take it up?
Nitin Parekh — Chief Financial Officer
So on a year-on-year basis, the increase in employee cost is because of impact of increments. And also if you consider evaluation that we have done. So this time, we had actual loss that we had to provide for. And in the last year same quarter, we had actual gain. That’s the other factor which is impacting the personnel cost.
Sharvil Patel — Managing Director
On the R&D, as we continue to say, we are likely to be around the 8% range. And if we see better positive outcomes on more projects, maybe 3.5%, but we are probably range bound around that 8% to sales going forward.
Saion Mukherjee — Nomura Securities — Analyst
Okay. And I mean, you mean to say incremental investments would be largely on your innovation programs or on the generic side?
Sharvil Patel — Managing Director
I think more so the incremental growth will come from the innovation programs.
Saion Mukherjee — Nomura Securities — Analyst
Okay. Thank you.
Sharvil Patel — Managing Director
Thank you.
Operator
Thank you. The next question is from Kunal Dhamesha.
Kunal Dhamesha — Macquarie Group — Analyst
Hi, thank you for the opportunity, and congratulations on a good set of numbers. Just digging a little bit more on the U.S. revenue, would you be able to kind of give the primary driver on a quarter-on-quarter jump of roughly $40 million in terms of whether it was majorly new product launches or whether it was kind of existing product and also the price erosion scenario in this quarter?
Sharvil Patel — Managing Director
So obviously, the larger jump is always because of new products. But we — as I said, the base business also did well. But the majority of the growth is driven by new products. And we have — not only we have received rich number of approvals, and we are also still expecting some good approvals during the year with limited competition. So we are seeing a good value creation on the new products in this coming financial year.
Kunal Dhamesha — Macquarie Group — Analyst
So would you say that the Revlimid was a major driver on a sequential jump?
Sharvil Patel — Managing Director
No, it was an important driver for sure, and Revlimid will continue in quarter one also.
Kunal Dhamesha — Macquarie Group — Analyst
Okay. And secondly, on the impairment charge that you have taken on Sentynl for that we had — we have already done with that Sentynl impairment. So was there nothing incremental which led us to take this impairment? And right now, let’s say, in the goodwill number on our balance sheet, is there anything left on that front?
Nitin Parekh — Chief Financial Officer
So goodwill impairment of Sentynl refers to the legacy business that we had acquired of Sentynl in 2017. So now we don’t have any products in the market. So gradually, we started continuing certain products. Now there are no more products of a legally business, and that is why we — while the assets which are two assets that we acquired, they have nothing to do with this. In fact, the valuation of the total business was much higher than the goodwill impairment. But once we, at a concept level, thought that legacy business we are not continuing, we have provided full amount of the goodwill of acquired business.
Kunal Dhamesha — Macquarie Group — Analyst
So right now, there is nothing left about Sentynl impairment.
Nitin Parekh — Chief Financial Officer
No, nothing left.
Kunal Dhamesha — Macquarie Group — Analyst
So right now, whatever I see on consol balance sheet has been more or less Heinz acquisition?
Nitin Parekh — Chief Financial Officer
Yes, there are some goodwill due to internal merger also and Biochem acquisition earlier, which is about INR500 crores. But large part of the goodwill is related to Heinz acquisition.
Kunal Dhamesha — Macquarie Group — Analyst
Okay. I have more questions, I’ll go back to the queue. Thank you.
Operator
The next question is from [Indecipherable]
Unidentified Participant — — Analyst
Hi. Good afternoon to all. Sharvil, Parekh, and [Indecipherable] for a great set of numbers. A couple of questions around the U.S. pipeline. Sharvil bhai, the last call. You had mentioned about one REMS product in the U.S. around mid this year. Are we on track? And would you be able to throw a bit more color on it?
Sharvil Patel — Managing Director
Yes. So we did have a large REMS payment in the last quarter three. And I think we are still planning for a quarter one — we have two products between quarter one and quarter two launch is still expected for both the products.
Unidentified Participant — — Analyst
Okay. And still, it’s not time to reveal the products, is it?
Sharvil Patel — Managing Director
It doesn’t make sense, because it’s defy the principles of competition, if we till we safe lines beforehand.
Unidentified Participant — — Analyst
Okay. Understood. In our Asacol HD competition always we kind of push out by at least six months. So is it the same this time as well? Do you have any visibility? Or do we don’t knock see anybody for next six months?
Sharvil Patel — Managing Director
Yes. So yes, our best estimate is similar to what you just said. But I think the good thing that we can see from the business is with the current new products and the new pro survey that we’re expecting to launch, we are more than offsetting Asacol any future losses.
Unidentified Participant — — Analyst
Got it. And on Saroglitazar, the PBC study, Phase III study, is that on going as per schedule or time lines are intact?
Sharvil Patel — Managing Director
Mostly on track, we may be one month delayed, but not anything major.
Unidentified Participant — — Analyst
I understood. Yes, thank you. I’ll jump back the queue.
Operator
Thank you. The next question is from Surya Patra.
Unidentified Participant — — Analyst
Thanks for the opportunity, and congrats for the great share of numbers, sir. Sir, the first question is on the U.S. business front. So is it possible to share, let’s say, excluding Revlimid, what would be the U.S. growth this year, FY ’23?
Sharvil Patel — Managing Director
No, I don’t think we can do ex-product because this is something — the U.S. business is a composite business of all our products. So I don’t think we are separating out new products. The way the U.S. business grows is you try and protect your base and grow on new products. So I sometimes find it very difficult to answer this question that every time people want to remove products and then the whole point of the U.S. business is launching new products.
So I think this way of continuing to ask these questions is not good in the light of what our U.S. business is. And the other point I said on its concern on Revlimid, Revlimid continues to drive value in the last quarter in the coming quarter and will continue to drive value over the next two years. So it’s not a one-off product, which people seem to think.
Unidentified Participant — — Analyst
Yes, of course. So — but now having seen a ramp-up in progression the Revlimid front, is there any sense about what volumes are that we might be getting, some sense, if not the specific number?
Sharvil Patel — Managing Director
Sorry, can you repeat that question?
Unidentified Participant — — Analyst
So having seen the ramp-up on the Revlimid prescription front for you and also in the business so far, so could you give some sense what is the kind of volumes here that you are expecting, let’s say, for — till, let’s say, progress until ’26 because until now, we have not been commenting anything on it?
Nitin Parekh — Chief Financial Officer
So directionally, volumes there are going to grow up, but we can’t obviously give specific numbers that being a settlement.
Unidentified Participant — — Analyst
Okay. Sure, sir. Sir, my second question is on the, let’s say, the kind of approval that what we have seen this year, that is a record number, of course, for U.S. But I wanted to have a sense that — see, there are many small value — small targeted value products that we have witnessed in the list. So these are like old filings, which were pending because of the Moraiya facility issue and now getting released? Or it is the finding of a [Technical Issues]
Sharvil Patel — Managing Director
It’s a mix of both. And for us…
Unidentified Participant — — Analyst
This is about this [Technical Issues]
Sharvil Patel — Managing Director
I think there’s a lot of background noise where you are talking from, so it is very difficult.
Unidentified Participant — — Analyst
Yes, sorry. I was asking about the number of approvals what we have witnessed in this quarter — or this year also full year. So whether — these — means so we planned and are filed for these products having very low target value in U.S. or what is [Technical Issues]
Sharvil Patel — Managing Director
So U.S. — I think let me explain the strategy on U.S. U.S. is a — U.S., we are servicing key clients, key customers, a representation of having a large product portfolio is very important for the U.S. generics business, and that is always what we have believed in. And we strongly believe that a completion — a completeness of portfolio is critical. So from our point of view, we believe whether they are small or large, all products are important for us from servicing the customer.
So we will be launching small value products also depending on the market situation because there is a need to service the patients and customers. And of course, we are also — we also look and file the difficult to do products, which have far larger opportunity. But from a strategy point of view, U.S., we will be launching all types of products because one important aspect of what we do is to create access for these products. So we cannot — we have a plan to do that.
Unidentified Participant — — Analyst
Okay. Sir, my next question is on the domestic business front. So now it is quite clear that at least during last one year period, we have witnessed our core business delivering much faster than the industry growth or the complex portfolio. So sure, progressively going ahead, how should we think? And overall portfolio, how would — should that be growing or performing versus the industry? And whether we are seeing improvement in the profitability in the domestic business? And also, if you can share the specialty portfolio’s contribution in terms of percentage or in terms of mix in the domestic formulation business for FY ’23?
Sharvil Patel — Managing Director
So yes, we are putting efforts behind our India formulations business to continue to drive a market growth or at least better than market growth. I think so far in the last year, we have achieved some — most of the time better than market growth. And in the medium-term, we also want to aspire for building better than market growth, which will mean gaining market share. It will be driven across the mass and chronic therapies. I don’t think there’s — the plan is to only drive one specific type of therapy, but we are present both in the mass segment as well as in the chronic specialty segment. So all in all, I think on the composite side, that will deliver better at least market growth and our aspiration is to drive better than market growth.
Unidentified Participant — — Analyst
And the improvement in the profitability from the domestic base business, any sense on that, sir?
Sharvil Patel — Managing Director
It’s a good profitable business on a medium-term to long-term, it will drive better profitability, but we will continue to look at opportunities to continue to invest in this business also. But yes, it will be — our effort is to drive profitability also.
Unidentified Participant — — Analyst
Okay. Just last one small clarification, sir. This WHO warning against Artificial sweeteners so how should that have an impact on our, let’s say, key brand under the [Indecipherable] business?
Sharvil Patel — Managing Director
Very early to give an answer to that. This study is not a new study. But I think it doesn’t say that not to use the sugar subside, it has come out with I think we are studying. But I don’t see an immediate impact, but we will keep — we’ll have our plans to counter that effort also.
Unidentified Participant — — Analyst
Sure, sir. Yes, thank you. Wish you all the best.
Operator
Thank you. The next question is from Prakash Agarwal.
Prakash Agarwal — Axis Capital — Analyst
Hi, good evening. Am I audible?
Sharvil Patel — Managing Director
Yes.
Prakash Agarwal — Axis Capital — Analyst
Yes, congratulations on good set of numbers. Couple of questions. One is I’m trying to understand your comment on new launches and volumes for U.S. growth. You’ve mentioned it’s led by new launches and volume. So when you say new volume or one-time buying opportunity, these are like short-term three months kind of opportunity, these are six month kind of commitments or your — kind of commitments and what is the typical size when you talk about this?
Sharvil Patel — Managing Director
So one-time buys by the very nature are not long-term. So they are, obviously, for that month, not even for the quarter, generally. But we continue to see those opportunities in that market. It varies product to product. So it’s not the same product all the time. So I don’t think these are like contracted or assured businesses, but those opportunities do exist in the market. As I said, on the overall guidance that I said, I said what we’re trying to do is maintain and protect our base and find new products to grow from that. So that’s been the effort, and that’s what sort of helped us in the last many quarters and will also deliver better results in the coming quarters.
Prakash Agarwal — Axis Capital — Analyst
Yes. But these are sizable in terms of like $10 million, $20 million kind of opportunity? Or these are small ones?
Sharvil Patel — Managing Director
They’re sizable.
Prakash Agarwal — Axis Capital — Analyst
Okay. Fair enough. And when you say new launches, you mentioned you had 63 approvals, which is record. But how much was converted into new launches? And how much of those 63 are yet to be launched?
Sharvil Patel — Managing Director
We are — we launched 32 and we are planning to launch 35 this year.
Prakash Agarwal — Axis Capital — Analyst
Okay. And in terms of — you mentioned that fiscal ’24 is also looking good, despite a good base, which we have achieved in fiscal ’23. So — you mentioned Revlimid and apart from these new launches and Trokendi still be a good product. And there are two REMS you mentioned, right? So one is expected this quarter and the other one is next quarter. Is that the right understanding in terms of stacking the grow drivers?
Sharvil Patel — Managing Director
The Trokendi has already faced competition versus quarter four, obviously, will come down. But then we have launched the other Topiramate, which will add value. And then we have, going forward, some critical launches in the next three months. So we believe if we are successful in two out of the three also, it will release good value.
Prakash Agarwal — Axis Capital — Analyst
So on the U.S., we can still see high single-digit growth, despite a very strong performance in fiscal ’23?
Sharvil Patel — Managing Director
Yes.
Prakash Agarwal — Axis Capital — Analyst
Okay. And there, you’re factoring in Asacol or not really factoring Asacol?
Nitin Parekh — Chief Financial Officer
So even after factoring Asacol, we still will have a single-digit growth.
Prakash Agarwal — Axis Capital — Analyst
Okay. Lovely. And secondly, on guidance performance. So last year, similar time to guidance on R&D about 8%, we did around 7%. This year, we’re also guiding about 8%. So anything to read out there? And what is the margin like we could see better margin going forward? Or this with 8% R&D 22 [Phonetic] is a good margin to model this thing?
Sharvil Patel — Managing Director
So we are seeing maybe a — in spite of building for an 100 basis point increase in R&D, we are still building for at least another 100 basis point increase versus last year. So that we are still seeing. So we are seeing good improvement in margin going forward. So we — that’s the current best estimate that we can give.
Prakash Agarwal — Axis Capital — Analyst
So 23% [Phonetic]
Sharvil Patel — Managing Director
See, it has to — many things have to work out, and maybe we are being conservative. But hopefully, that’s what we will try and achieve even assuming some things go wrong.
Nitin Parekh — Chief Financial Officer
So assuming there is no competition, Prakash on Asacol HD, in spite of higher R&D by 50 basis points to 100 basis points, we expect margins to go up by 50 basis points to 100 basis points.
Prakash Agarwal — Axis Capital — Analyst
Okay. That is great. Okay. Thank you. And lastly, on India, so we’ve seen good growth, double-digit growth coming in. April was soft month. I mean do you read an aberration? Or do you think too early to call? Or what is the double — do you think industry and your sale will be double-digit growth this year?
Sharvil Patel — Managing Director
So it’s difficult to — I think that will be difficult to say. I mean, whether we are in — it’s obviously not going to — it will be — we hope it’s double-digit, but it could be anywhere between 9% to 12%. It’s very difficult to predict where the growth of the industry will be because we have seen volume growth being a challenge on the overall industry.
The other is also we continue to have price challenges with NLEM and other things. If you look at even our growth in the last quarter, it would have been at least 2 percentage points more had we not had the NLEM impact so — which we hope to nullify going forward by doing the right product mix and other areas. But those challenges will remain. So I think it’s difficult to predict. But having said so, I think — our focus on our critical brands, the new launches and more importantly, our differentiated portfolio driving strong momentum in the market, I think in the medium-term will allow us to outperform the market.
Prakash Agarwal — Axis Capital — Analyst
Okay. And last one here is the MR number, if you can share as on March field force?
Sharvil Patel — Managing Director
Field force…
Nitin Parekh — Chief Financial Officer
7,000 plus.
Prakash Agarwal — Axis Capital — Analyst
So this includes the managers or this is just a field force?
Nitin Parekh — Chief Financial Officer
Only field force.
Prakash Agarwal — Axis Capital — Analyst
Okay, and the full team, sir?
Nitin Parekh — Chief Financial Officer
One minute.
Sharvil Patel — Managing Director
Managers…
Nitin Parekh — Chief Financial Officer
Sorry, this includes managers.
Prakash Agarwal — Axis Capital — Analyst
Okay. Thank you, sir. All the best.
Operator
Thank you. [Operator Instructions] The next question is from Sameer Baisiwala.
Sameer Baisiwala — Morgan Stanley — Analyst
Hi, thank you very much, and good evening, sir. A quick question on Vascepa. Your thoughts about when do you plan to launch? Are there any raw material availability issues and the market dynamics?
Sharvil Patel — Managing Director
So Vascepa was a welcome approval for us. We had predicted a little much later approval, but we got it in the first cycle. So we’re preparing for the launch. I don’t — We can’t give the exact date, but we are working aggressively to launch the product. On the supply side, I am confident we’ll be able to get enough material, which is the most limit — which is a limiting factor in the market. And we are — we believe we will have enough hopeful enough material to launch to get good share.
Sameer Baisiwala — Morgan Stanley — Analyst
Great. And the second question is on the U.S. launches. So can you talk about the transdermals?
Sharvil Patel — Managing Director
Sure. So transdermals, as I said, after successfully clearing our Moraiya facility, we have been in preparation for launching the products. We are planning for three launches, and those will be staggered from the July quarter onwards. So in this financial year, we at least hope to do three launches from Moraiya.
Sameer Baisiwala — Morgan Stanley — Analyst
Okay. Great. So Sharvil bhai, if I have to summarize the U.S. calendar, you’ve got two REMS, three transdermals, Vascepa. And I guess all of them should be fairly meaningful, substantive. Anything else that we are missing out?
Sharvil Patel — Managing Director
We do have at least another five programs, which have high value. So if we are successful in three also, it should significantly be good.
Sameer Baisiwala — Morgan Stanley — Analyst
Okay. So Sharvil, this is quite a handful and you still expect just a single-digit sort of a growth for U.S. that’s surprising, know?
Sharvil Patel — Managing Director
We have to also plan for the negative side, which is competition to products, right? So — and the base is also quite decent, so a small erosion also is a meaningful erosion.
Sameer Baisiwala — Morgan Stanley — Analyst
Okay, great. All the very best for you for fiscal ’24. Thank you so much.
Operator
Thank you. The next question is from Kunal Randeria.
Kunal Randeria — Nuvama Group — Analyst
Hi, good afternoon. Sharvil bhai, if I understand correctly, you will maintain a generics R&D spend at around the current level of INR1,300 crores, and the incremental spend will be on NCEs, right?
Sharvil Patel — Managing Director
No, INR1,300 crores…
Nitin Parekh — Chief Financial Officer
So we have told the total in FY ’24 will be 8% to 8.5%. And normally, the additional amounts would be more or less for innovation portfolio only and not the generic portfolio.
Kunal Randeria — Nuvama Group — Analyst
Sorry, I was not asking just for ’24, but it’s a slightly longer-term kind of question in the next two to three years because you will have a lot of NCE spends coming up.
Sharvil Patel — Managing Director
So there will be very little or no growth on the generic side because we have a better base which is comfortable. So the most, as I said, the future delta of growth that comes on research with the growth in revenue is all going to be towards the IT — I mean, the NCE and NBE portfolios.
Kunal Randeria — Nuvama Group — Analyst
Yes. Sure. And just one more. On the U.S. side, how — what’s the kind of price erosion that you are expecting? How are the competitors behaving? Because we have seen some shortages going up. We have seen some ANDA withdrawals by competitors. So just to get your thoughts on how the market is evolving for FY ’24.
Sharvil Patel — Managing Director
We always build for a single-digit — I mean, before we should see very strong double-digit erosions, but we are building for a single-digit price erosion because that’s what we expect to happen in FY ’24 in the best estimate. Obviously, in the last quarter, we haven’t had any major erosion. But knowing the portfolio and knowing competition, we — on a conservative side, we should assume mid single-digit price erosion.
Kunal Randeria — Nuvama Group — Analyst
Right. And this price mid single-digit erosion is pretty much similar for all product forms like oral solids or injectables or transdermals?
Sharvil Patel — Managing Director
No. If you are a different alone in the market, the erosions are significantly larger. So when I’m saying that I’m talking for the whole portfolio. Otherwise, the erosions could be significant depending on how much — how exclusive you are in the market.
Kunal Randeria — Nuvama Group — Analyst
Sure. Thank you, and all the best.
Operator
Thank you. The next question is from Cyndrella.
Cyndrella Carvalho — JM Financial — Analyst
Yes, thanks for the opportunity. My question is on transdermal. You said that we’ll be launching most probably three products in the coming year. Can you highlight the competition scenario that you expect in this? And you have already highlighted that this will be meaningful launches for us. What kind of duration do we expect them to be a two year long opportunity? How should we see it?
Sharvil Patel — Managing Director
So it’s difficult to predict how — what will be the competition because that is difficult to know. But there aren’t many transdermal development going on. So we at least believe that many of them have at least — I would say, at least a two year opportunity, but it could be longer, but two years, definitely.
Cyndrella Carvalho — JM Financial — Analyst
Even for the REMS — two REMS product that we spoke about, even for them also the similar scenario we can expect?
Sharvil Patel — Managing Director
No. That is — I can’t predict for the REMS. REMS are not transdermals. So those are two different technologies. So REMS, I don’t — I would say when we launch, we will still have limited competition, but it will be difficult to say there will be no competition in the medium-term to long-term.
Cyndrella Carvalho — JM Financial — Analyst
Right. And when we look at pricing scenario in U.S., like not just for our portfolio, but overall industry, how do you see the U.S. pricing today? And if you can segregate it on — based on products like orals and injectables. Can you help us understand some color to date, how does it look?
Sharvil Patel — Managing Director
It’s a very competitive market with a very consolidated buying. So the — there’s no fundamental shift that has happened in the structure of how the U.S. business is. So price erosion will continue to be there. Once the — as I said, the only way to explain it is when the portfolio is mature, the erosion there is not severe. But obviously, for portfolios where there is limited competition — with competition, you would see more price erosion. So as I said, our — we estimate generally about single-digit price erosion. It could be low single-digit to high single-digit, but that’s the range that we are operating in.
Cyndrella Carvalho — JM Financial — Analyst
And on the NCE side, what kind of investment do you expect over coming two to three years because as you were just now talking about the entire investment will be on the IP side or the NCEs side. So what is the plan over two to three years? And what all geographies, like apart from U.S., any other reg markets, what kind of — what is your thought process on that if you can share?
Sharvil Patel — Managing Director
So the NCE developments are global development. So they cater for U.S. and Europe and all the development countries. As I said, we are — when we’re talking about the investment — the overall investment, we are talking about 8% to 8.5% of spend, which will include generics and NCEs, which would largely be for the clinical programs. So as the programs reach the clinical phase, the investment goes up. So Saroglitazar is our largest current investment that is going on.
And then in the future, we have ZYIL-1 and — which is entering Phase II and Phase III in the future. A few more, but these are all orphan assets. So the investments are over a period of three to four years, and they are — I mean, from our estimate in the current 8% to 8.5%, we can manage our R&D expenses with these two or three programs.
Cyndrella Carvalho — JM Financial — Analyst
Yes. On the R&D side, I think you’ve been clear. On any other kind of investment do you think like on ground, teams, preparations, all those, you will need to invest? Are you planning to do it now or maybe later when we are closer to the phases, that’s where you will decide?
Sharvil Patel — Managing Director
Generally, the investment starts one year before the launch and a major — large investment six months before. So if we have — our current assumption is that we will commercialize in calendar year ’26. So calendar year ’25, we’ll see major investments.
Cyndrella Carvalho — JM Financial — Analyst
Okay. Thank you so much, and all the very best.
Sharvil Patel — Managing Director
Thank you.
Operator
Thank you. The next question is from Harith Ahamed. Yes, Harith go ahead. I think there is some issue. The next question is from Neha Manpuria.
Neha Manpuria — Bank of America — Analyst
Yes, thanks for taking my questions. Sir, you mentioned a high single-digit growth for the U.S. Just wanted to clarify, this growth would be on the base that we reported in the quarter, I’m assuming. Is that fair to assume?
Sharvil Patel — Managing Director
Over FY ’23. We are talking of growth in FY ’24 over FY ’23.
Neha Manpuria — Bank of America — Analyst
In that case, even if I were to take the higher-end range, we’re assuming that our quarterly run rate would probably come off from what we have seen in this quarter.
Sharvil Patel — Managing Director
I said not for the next quarter immediately. But going forward, we have to also assume competition. So…
Neha Manpuria — Bank of America — Analyst
But — okay. But given that we have a fair bit of launch, the transdermal launches, Vascepa, etc., are we being too conservative on this number?
Sharvil Patel — Managing Director
You have to understand if the base price erosion is also there, and we have to assume for that also.
Neha Manpuria — Bank of America — Analyst
Okay. Understood. My second question is on the injectable business. Could you give us some color in terms of how big it is, what we are targeting, how many launches do we have planned for that? And what’s the pipeline there?
Sharvil Patel — Managing Director
So I don’t have the breakup like that. But I think for us, when we talk about the U.S. generics business, we talk about whether it’s oral solid, topical, transdermal or injectable. So I think it’s a composite way of doing business. Having said so, the business, there are a good amount of complex filings that have happened on injectables, and we would — we hope to see at least one or two important launches this year. But many of the launches will be post ’25, ’26, where we will see highly complex products coming to market. So it’s still a medium-term opportunity, not a short-term. But currently, it’s at a good base and there are shortages and other issues in the market. So — we are — the growth and momentum is very good, but it will become sizable probably post ’25.
Neha Manpuria — Bank of America — Analyst
Understood. Thank you, sir.
Operator
Thank you. The next question is from Tarang Agarwal.
Unidentified Participant — — Analyst
Hi, good evening, and thank you for the opportunity. A couple of questions, just to follow-up from the previous participant. Currently, how big would your injectable business be? And what would it be in the previous year? That’s one. And the second, I mean, you’re generating sizable cash now. And historically, you’ve not shied away from leveraging the business as well. So is there a possibility of you probably looking at growing our business inorganically? If so, where could we see this getting deployed?
Sharvil Patel — Managing Director
So I think, today, we are not giving the dosage-wise breakup. I think that is not something that in our guidance we are giving. So we continue to talk about the U.S. generics business separately, and that’s the best guidance we can give. Having said so, I have explained that on the injectables front, the meaningful revenue in terms of the overall business will be post ’25, but the momentum and growth is very good.
With respect to the future investments, as I said, we have two important markets, India and U.S., which we look at. U.S. from the specialty point of view, where we want to build our presence. So that’s one area which we look to find opportunities to invest in. In India, we are continuing to look for brand acquisitions, if available. So that’s one area that we will look at. And we have been seeing very strong progress on our developing markets business, including Europe. So we will — and it’s growing very well and it’s becoming an important part of our business. So we hope on, I would say, opportunistic basis to see if we can find some opportunities to leverage our portfolio there.
Unidentified Participant — — Analyst
All right. Thank you.
Operator
Thank you. The next question is from Nitin Agarwal.
Sharvil Patel — Managing Director
Yes.
Unidentified Participant — — Analyst
Sharvil sir, on the developing markets, you just mentioned — so from a growth driver perspective, what would be the driver of this — what is the strategy for growth rather in this non-U.S. markets for us? I mean it’s largely going to be driven the biosimilars? Or are there other elements of growth also that you’re focusing on?
Sharvil Patel — Managing Director
No, it’s a — biosimilars will add over a period of time to the business. But today, the business is strongly driven by branded business — branded generics business with the areas focusing on cardiometabolic and CNS space. And as I said, we have a focused market strategy where we have deep penetration in certain markets in which we have identified and the others we do through distribution. But a majority of focus is to deepen our presence in the markets where we are very strong. And those markets, in spite of fluctuations in currency and other things, I have continued to deliver good growth. So — and now are becoming good profitability also. So We will continue to drive those. And as to do with mostly new product launches, but mostly in the — I would say, in the CNS and cardiometabolic space.
Unidentified Participant — — Analyst
Secondly, on the U.S. market, this new business opportunity that you sort of referred to, have you seen increased incidence of these opportunities coming through in the last few months? And how do you see this sort of — is this a consequence of what specialty closures and all which have been happening because of FDA — recent FDA inspections? And do you see momentum in this part of the business increasing as we go along?
Sharvil Patel — Managing Director
So the earlier question was related to where I would invest in the future? And that was more to do with the specialty business, which is not with the current businesses which are sort of generic. So generics business, I think on our own we do above is a very rich pipeline. We are filling up the gaps or finding opportunities through BD&L opportunities and really been — have been able to our license very difficult and good products from the generic point of view and complex generics point of view. Beyond that, our effort will be to look at the specialty business and invest behind that and not in the current generics business.
Unidentified Participant — — Analyst
And lastly, Sharvil bhai, I think we mentioned earlier on the call that Revlimid, the assumption is the volumes will keep increasing. So philosophically, is it fair to assume — how should we look at Revlimid as a business or the revenue should be — the ’23 numbers that are there are like the peak numbers or numbers should actually increase through the next couple of years before they come off?
Sharvil Patel — Managing Director
Our current best estimate is — with the volumes increasing, the numbers will go up at least for the next two years.
Unidentified Participant — — Analyst
On a consecutive basis…
Sharvil Patel — Managing Director
On a?
Unidentified Participant — — Analyst
I mean on successive basis. I mean ’24 would be higher than ’23 and ’25 probably should be higher than ’24?
Sharvil Patel — Managing Director
Yes. And as I said, we do still expect quarter one sales of Revlimid also.
Unidentified Participant — — Analyst
Thank you very much.
Operator
Thank you. The next question is from Harith.
Sharvil Patel — Managing Director
Can you please get the next participant?
Operator
Yes.
Sharvil Patel — Managing Director
Hello?
Nitin Parekh — Chief Financial Officer
What happened?
Operator
Just a second.
Nitin Parekh — Chief Financial Officer
Are there no more questions?
Operator
No, there are. Just a second. Yes, Harith is here.
Sharvil Patel — Managing Director
Yes. I don’t think we are hearing anybody.
Operator
Yes, exactly. The next question is from Vishal.
Vishal Manchanda — Systematix Group — Analyst
Hi, good evening. Thanks for the opportunity.
Sharvil Patel — Managing Director
Vishal, can you hear us? Hello?
Vishal Manchanda — Systematix Group — Analyst
Am I audible now?
Operator
Yes, Vishal. You can speak.
Vishal Manchanda — Systematix Group — Analyst
Okay. So on the two REMS assets that we are expecting to launch, are you going to launch them as an authorized generic or under our own ANDA?
Sharvil Patel — Managing Director
Own ANDA.
Vishal Manchanda — Systematix Group — Analyst
And would you be able to share the indication of the two?
Sharvil Patel — Managing Director
No, we won’t be able to do that. Once we launch, we will update everybody.
Vishal Manchanda — Systematix Group — Analyst
Right. And the second one on the Menkes disease asset, any time lines for approval?
Sharvil Patel — Managing Director
They’re in the rolling ANDA stage, so it’s difficult still to give a time line. I would be able to give better understanding maybe in two quarters, but not before that.
Vishal Manchanda — Systematix Group — Analyst
Okay. On the vaccine front, do you expect to file any more vaccines for WHO pre-qualification this financial year?
Sharvil Patel — Managing Director
We have two vaccines, the TCV and the MR. So those two will be going for WHO pre-qualification.
Vishal Manchanda — Systematix Group — Analyst
And the one that you filed this quarter was [Technical Issues]
Sharvil Patel — Managing Director
Was TCV.
Vishal Manchanda — Systematix Group — Analyst
Okay. And the two that you’re going to file are for…
Sharvil Patel — Managing Director
So one we already have, which is the rabies, then the TCV — typhoid conjugate and measles rubella. And then we are also doing pre-qualification for some other products. But slowly, we will add more products, but these are the current plans.
Vishal Manchanda — Systematix Group — Analyst
Would you have a number as to how large the WHO market is for TCV?
Sharvil Patel — Managing Director
I can share it offline, but it’s a very, very large market, but we can share it to you offline.
Vishal Manchanda — Systematix Group — Analyst
Got it. And just on the Africa and Europe business, which grew sharply this quarter, can we expect that kind of a run rate to continue for the rest of the year?
Sharvil Patel — Managing Director
Yes, it will have a strong double-digit growth.
Vishal Manchanda — Systematix Group — Analyst
And any color on what drove the strong growth this quarter?
Sharvil Patel — Managing Director
It’s a branded business. So it’s a quarter-on-quarter good performance.
Nitin Parekh — Chief Financial Officer
Across the board.
Sharvil Patel — Managing Director
Across the board.
Vishal Manchanda — Systematix Group — Analyst
Okay. And it was across geographies, not any specific…
Sharvil Patel — Managing Director
Correct.
Vishal Manchanda — Systematix Group — Analyst
Okay. Thank you.
Operator
Vishal. The next question is from [Indecipherable]
Unidentified Participant — — Analyst
Sorry. Hi, am I audible?
Sharvil Patel — Managing Director
Yes.
Unidentified Participant — — Analyst
Hi, thanks for taking the question. My question is on oncology. So across both India and U.S. formulations, what would be your share of oncology, and how is that growth going?
Sharvil Patel — Managing Director
So in India, we are now a leading oncology player. We — our aspiration is to be in the top three and one to achieve the number one rank, if possible. So that’s what we are aspiring for with the kind of access of medicines we are creating, which are largely driven by biologics and also some small molecules. So that’s our aspiration.
So we have obviously — we are amongst the top five or maybe third, but we hope to be in the top few with adding more products to the basket. With related to beyond India and U.S., U.S., obviously, it’s not a branded business, it’s the generics side. So we do have two — the three oncology sites, two injectables and one oral. And we are using those sites to build for the U.S. oncology business, where we do have some day one launches planned. I would see it — if we just look at the oncology business, the — and U.S. generics point of view, it’s maybe three years out when we will see significant revenue uptake.
Unidentified Participant — — Analyst
Okay. Got it. In terms of capacity, either in India or U.S., we’re seeing a lot of people obviously putting up oncology plans for the last one or two years. So just overall from a demand/supply situation how we are seeing the growth in that segment? What is your view do you think that there has been increased capacity that we built in which is built for the industry, and the next two, three years, that could create some kind of oversupply, you think there is just enough demand growth?
Sharvil Patel — Managing Director
I do — to some extent, I do feel there is overcapacity, but these need to be regulated — I mean, plans that are approved in the regulated markets. So I’m sure there is a little bit of excess demand because the volumes are not very high in oncology. So I think it’s — it will depend on a lot on the product mix and what type of products a company has, which will drive value, not the volume.
Unidentified Participant — — Analyst
Okay. Got it. Thank you so much.
Operator
Thank you. The next question is from Puneet, and this is the second last question.
Unidentified Participant — — Analyst
Yes, hi. Thanks for taking my question. So I have one question on specialty innovation initiatives. So in Saroglitazar PBC indication, there are two molecules that are ahead in terms of time lines and both are PPAR agonist. So by the time we launch, we’ll be fourth player the entire PBC market. And considering the rare nature of the market, how are you expecting the numbers to flow through?
Sharvil Patel — Managing Director
Yes. So on the PBC asset, we — our current business model assumes that we will be fourth or third. So I don’t — they’re not — I think there’ll be one PPAR and two others, but we assume we’ll be — the worst case will be the fourth. There is a good case, we can be the third. And our business case is appropriate for that. I mean our investments are still very much appropriate for that scenario. The market is — as you said, it’s an orphan indication, but it is a sizable market, which is growing.
Unidentified Participant — — Analyst
Understood. And my second question was on the Phase II trial we completed for ZYIL-1. So by when, can we expect Phase IIb/III to comments?
Sharvil Patel — Managing Director
We are just finalizing that strategy. So if everything goes well, we will start in a quarter or maximum five to six months.
Unidentified Participant — — Analyst
Thank you, sir. That answers my question. Thank you.
Operator
Thank you. The last question is from [Indecipherable]
Unidentified Participant — — Analyst
Hi, just a quick one relating to what the previous participant asked on the products in the pipeline, the NCEs, especially products like the NLRP-3 inhibitor, are these partnered products? Or is site is doing it independently?
Sharvil Patel — Managing Director
We are doing it independently.
Unidentified Participant — — Analyst
So none of — including Saroglitazar, nothing is partnered?
Sharvil Patel — Managing Director
Yes. Right now, all our development phase programs are done by Zydus individually.
Unidentified Participant — — Analyst
Okay. That’s great. Just a short follow-up. So once we are like you mentioned that you will be — expenses will increase as we are closer to the launch date. Will that also include expenses such as setting up a dedicated field force once we have come closer to approvals?
Sharvil Patel — Managing Director
Yes. I think in that earlier question, when I — When they spoke about I was speaking about the field force and the commercial operations team, that will be needed to be set up if we are seeing good data on Saro.
Unidentified Participant — — Analyst
Understood. Got it. And is this the same approach is going to be used in the European market as well, or there, are we going to [Indecipherable]
Sharvil Patel — Managing Director
There’s a higher probability we will out-license in Europe.
Unidentified Participant — — Analyst
Perfect. Thanks a lot. All the best.
Sharvil Patel — Managing Director
Thank you.
Operator
Thank you. As there are no further questions, I now hand the conference over to management for the closing comments.
Ganesh Nayak — Executive Director
Thank you very much, and have a good evening, and look forward to interacting with you again in the month of August for the quarter one FY ’24 results. Good night.
Operator
[Operator Closing Remarks]