Good evening, and welcome to Lupin Limited Q4 FY 2023 earnings conference call. Please note that all participants' line will be in listen-only mode, and there will be an opportunity for you to ask questions after the opening remarks. Please note that this conference is being recorded. I now hand the conference over to the management. Thank you, over to you. Hi, everyone, this is Vinita here. Very pleased to welcome you to our Q4 earnings call. I have with me our MD, Nilesh, as well as our Chief Financial Officer, Ramesh. We are very pleased to close the fiscal year with continued improvement in operating margins. Our team has had a sharp focus, as you know, on getting our India business back to double-digit growth and quarter after quarter improvement in U.S. margins as well. This focus, along with growth in other areas like API, EMEA and APAC, enabled us to deliver margin improvement as planned. We are committed to sustaining this positive momentum into the new fiscal year and driving strong growth across all our regions. In particular in India, based on our recent sales force expansion and the U.S. aided by material new product launches. Our India business, as you would have noted, recorded an 11% plus growth per IQVIA ex the diabetes portfolio. Growth was 15% plus in line with the market growth. In Q4, we made a significant investment to expand our sales force in India and enhance our reach. We are very pleased that overall we delivered margin improvement for the organization despite this material investment. In the U.S, we improved our margins for a third quarter in a row through portfolio optimization, maximizing the high-value products, and continued cost optimization efforts. We were able to improve our margins despite increase in R&D spend quarter-over-quarter. When you look at it, for the year, the R&D spend for the U.S stood at $100 million, with an increasing proportion of complex generics, in particular inhalation and injectables. Apart from India getting to double-digit growth and U.S. business improvement, our API business recovered in the quarter with demand growth in our core products. Our EMEA business grew, driven by South Africa quarter-over-quarter and Fostair, Luforbec in Europe, year-over-year. In APAC, our Philippines subsidiary performed very well. Switching to R&D, we continue to drive the shift to complex generics with a focus on respiratory and injectable products. We filed 19 products in the U.S. and 10 ex-U.S. Of the U.S. filings, we had four injectables, three nasal sprays, and we made progress on Respimat and Ellipta products on both platforms. Apart from generics, on the R&D front, we optimized the new chemical entity R&D spend in Q3 to focus on two of our oncology pipeline programs, significantly reducing the discovery spend. Switching to compliance. You know, on compliance front, as you know, we have made progress, in part, you know, with positive outcomes on the Ankleshwar, Nagpur injectables, and Somerset sites. We've also made substantial progress on our remediation efforts in Tarapore, Mandideep, and Pithampur Unit-2. We are committed to ensure that we get all our sites to a consistent and sustainable level of compliance. I'm sure we'll see more progress on this front in fiscal year 24. On the M&A front, our recent acquisitions have performed well with Anglo-French, Southern Cross Pharma, Xopenex, Brovana in the U.S. and Paloma in Brazil, all delivering per plan. Our recent acquisition of Medisol in France enables us to accelerate our injectables franchise in Europe. We are very pleased to be able to close that. We have come a long way in fiscal year 2023, and are excited about the prospects in fiscal year 2024 as we launch products like tiotropium, darunavir, and others in the US and drive consistent double-digit growth in our India business. We remain focused on driving operating margin improvement as we grow our business. With this, I will hand it over to Ramesh for a deeper analysis of our performance. Thank you, Vinita. Friends, welcome to a refreshing set of numbers. We are hopeful that it sets the stage for better numbers year on. Sales for Q4 FY 2023 are at INR 4,330 crores as compared to INR 4,264 crores in Q3 FY 2023, with a growth of 2% quarter-on-quarter. On a year-on-year basis, the company registered a 12% growth over Q4 FY 2022 sales. In the U.S., during the quarter, the U.S. business registered a small degrowth of 1.3% in local terms, local currency terms, on a sequential basis. The sales have got down, come down from INR 177 million to INR 174 million in Q4. During the quarter, Albuterol sales came down marginally due to a seasonality factor. India region. India branded formulations business declined by 3.1% in Q4 FY 2023 versus Q3 FY 2023. On a year-on-year basis, the sales grew by 8.9% FY 2023. Year-on-year, the growth was 3.3%. Overall market growth during Q4 2023 was 14.9%, whilst Lupin grew by 11.3%. Lupin witnessed highest growth in Q4 as compared to the earlier quarters. Q1 was 1%, Q2 was 6.2%, and Q3 was 7.5%. Adjusted for diabetes, we are close to market growth rate, which is 14.9% versus 15.2%. Loss of exclusivity and genericization of the anti-diabetes business has impacted our growth rate as patented portfolio is a large chunk of our diabetes portfolio. We do well apart from the top three years of Lupin in gynecology and GI. API business. API business sales grew by 14.6% on a quarter-on-quarter basis as core cephalosporins API sales continued the path to recovery from higher sales in cefaclor and 7-ACCA. On year-on-year basis, growth was 46.4%. EMEA. Sales for EMEA region grew by 19.3%. Year-on-year was 11.4%. South Africa. Quarter-on-quarter growth of 35.3% in local currency terms, led by higher sales in various products. U.K. The degrowth was 6%, but the higher sales over the last quarter is primarily driven by Fostair. Germany. Quarter-on-quarter degrowth of 12% was an outcome of Q3 being higher for German, for the market due to competition and competition stockout reasons. Growth markets. Sales of growth markets grew by 4.7% quarter-on-quarter. Philippines. Traditionally, Q4 is a strong quarter for Philippines. Nearly all divisions performed well in comparison to last year. The growth was 14%. Australia. Quarter-on-quarter and year-on-year growth was led by higher sales in our new acquisition, Southern Cross. Q3 was lower due to shipments getting deferred to Q4. Grin. Quarter-on-quarter degrowth was 23.6%, led by stock out of certain products due to plant shutdown. Brazil. Quarter-on-quarter growth of 9.4% was led by acquired products from Paloma. Gross margins. This is an important term here. Q4 FY 2024 gross margins is 59.7% as compared to Q3 FY 2023 gross margins of 59.8%. The sales mix, especially India regions, played a part in the slight lowering of the gross margins. Friends, at the beginning of this year, we spoke about optimization initiatives on various fronts. I'm glad to state that we did achieve good progress on some elements of the program, as in the case of sales returns, air freight and so on, both elements of which get folded into this line. Secular inflation of over 5% in input prices has, however, eroded into the gains, marring visible progress here. We continue to work on write-offs and other initiatives, including launch of meaningful products that would make a difference to the gross margins and hence to the bottom line. Employee benefits, you know, line. Q4 FY 2023 is INR 770 crores. We service INR 764 crores in Q3 FY 2022, and INR 703 crores in FY 2022, Q4 FY 2022. Quarter-on-quarter increase is mainly due to field force expansion in the India region. Higher bonus accruals, ESOPs in U.S, et c. On an ongoing basis, we expect employee costs to be around 19%. Despite the lower growth on the top line, the year-on-year increase has been only 3%, reflecting the initiatives on the workforce reduction that we carried on at various functions. This also captures a negative impact of FX translation resulting from a depreciating rupee. Manufacturing other expenses. Q4 FY 2023 is INR 1,006 crores. We service INR 1,333 crores in Q3 FY 2023 and INR 1,321 crores in Q4 FY 2022. The quarter-on-quarter savings is as a result of reduction in business settlements and other expenses of a one-time nature. Year-on-year savings is on account of a reclassification done in travel in Q4 last year from employee benefits. Friends, whilst there are savings as a result of optimization measures, the translation impact of outside India expenses, as well as an increase in sales promotion spends in India, along with minor investments in adjacent businesses, offsets the gains made. EBITDA front. Operating EBITDA excluding Forex and other income is at 13.9% for the current quarter, reflecting an improvement of 170 basis points in comparison to the previous quarter. The improvement in EBITDA is primarily driven by optimization endeavors, lower other expenses and PLI benefits. With launch of newer products and sharper focus on cost, we expect material continued optimization of EBITDA across quarters over the next year. R&D. R&D is 7% of sales at INR 305 crores in the current quarter as compared to INR 289 crores, that's 6.8% of sales, in Q4 FY 2022, and 8.9% in Q4 FY 2022. We continue to pivot to more, 289 was actually Q3 FY 2022. We continue to pivot to more complex products and platforms while continue to focus on costs and outcomes. Year to date, ETR was 36.9% for the quarter. The ETR for the current quarter is only 5.9%. The lower ETR in the current quarter was mainly due to higher profit in the US apart from normalization of accounting for the effective tax rate. Other operating income. Quarter-on-quarter, there is an increase in other operating income on account of inclusion of PLI benefits, somewhat reduced by, you know, other settlement income, other milestones and the like. Forex gains is at about INR 26 crores in Q4. Again, in Q3 FY 2023 was INR 16.6 crores. With that, I would like to open the field for discussions. Thank you very much, sir. We will now begin the question and answer session. Please, raise your hands from the participant tab on the screen to ask questions. The first, question is from, Damayanti Kerai. Go ahead, ma'am. Yeah, hi. I hope I'm audible. Yes. Okay, thanks. Thanks for the opportunity. My first question is, can you update us on the status of your tiotropium filing? Because you had earlier given two TADs, right? One in April and one in June. If you can talk about it. Yeah. We've been in active dialogue with the agency back and forth on information requests over the last two months on tiotropium. The TAD date right now is on paper, July and August, instead of April and August. We hope that we will actually get approval sooner. You know, we've had communication on a monthly basis with the agency on the application. Just last week, they cleared a drug master file for the product, which is a very positive sign. We hope that we should be able to get approval in the next month or two on the outer side by July, August. Ma'am, why two TAD date? Is it similar like plant and without plant inspection? Yeah. That's the two TAD dates. You know, the extension of the TAD dates is based on the information request that the agency is making. When we respond to the information request, they have an automatic 90-day from the response that they, you know, give us as a, as a TAD date. We've been trying to work with the agency to figure out how we can avoid that. Some of them are just clarifications that they're asking of us. Okay. My second question is on R&D. Now you are down to, say, INR 3 billion a quarter. But at the same time, you are progressing in some of the complex generic products. You talked about Ellipta, Respimat, et c.. My first question is, how should we look at R&D expense from here on? If you can split R&D into your complex generic spend and NCE spend, that will be helpful. Ramesh, you wanna take that, the R&D spend? Maybe I might like to answer the first part. We are pivoting to more, Yeah. Overall, you know, strategically, we've been pivoting to more of the complex generic platforms and continue to do so. Even when you look at our generic R&D spend, at this point, the percentage oral solids versus complex platforms, inhalation and injectables has changed in favor of inhalation and injectables. We continue to drive that shift towards complex platforms. I mean, the NCE spend that you asked about is very small. In the scheme of things, it's less than 5% at this point, right? 10% really, it's actually coming down to about less than 5%, in fact, in the course of this current fiscal. We are pivoting more towards into complex generics. The salience of, you know, the oral solids is actually coming down. That used to be well above 45%. It's coming to much lower figures. The spends for injectables and inhalations is certainly going up in the course of this fiscal, and certainly would be the way forward as well. Just a clarification. OST, you said earlier it used to be 45% of the generic spend. It is coming down and, more is going for the inhalation. Inhalations and injectables, for sure. Okay. like your fourth quarter number include cost for the MR addition in India. Does it reflect fully or like more to come in coming quarters? Yeah. A huge chunk of it is actually captured in Q4. As opposed to annualization impact of that, because these were recruited in the fourth quarter. The annualization impact will certainly be captured along the full, you know, the entire year next year. This fiscal, the current fiscal that is. Okay, thank you. I'll get back into queue. Thank you very much. The next question is from Kunal Dhamesha. Hey. Hi, this is Kunal from Macquarie. First question again on Spiriva. Would you be able to share the nature of the information requests that we are getting from FDA? Secondly, on the same generic Spiriva, would we have clarity as to whether we will require plant inspection or not by now? If yes, hypothetically, let's say if we require, what is our preparedness? Have we done any mock inspection? Have we proactively employed consultants, et c.? I'll take the second question first, that we have always been inspection-ready in unit three for FDA in case they come to inspect the site for Spiriva. At the same time, you know, we don't know for certain, but we believe that at this point we are pretty far along with the agency. You know, the information request that we're getting, you know, beyond the last CRL that we responded to was really clarification on the testing method, sample size and the like, the rationale for it. You know, what is giving us comfort is the fact that they started clearing parts of the application. We've already informed that the PDPK was cleared a while ago, and the fact that the DMF has been cleared last week, and we continue to, you know, get minor queries at this point gives us the comfort that we are pretty close. Sure. Vinita, we are still sticking to a September timeline or second half timeline for launch, second half of FY 2024? We're hoping first half. Okay. Last time I think we said September launch, for September 2023 launch. I think August was the outside chat date. We hope that we'll be able to get approval before that, and we're getting launch ready. Sure. Secondly, I think, you know, Ramesh, one for you. Whatever cost, savings that we have done that is getting offset by some of the line items which have seen increase, like sales and marketing, et cetera. Still, would it be possible for you to quantify, in terms of, you know, our target of INR 550 crore cost savings, which we said at the start of FY 2023, where we would be right now and what's the runway left for us for FY 2024? Yes. We have been able to achieve well over INR 300, INR 350, INR 325 to INR 350 crores across, at least, three of the four levers that we have progressed along. There is of course, some more steam left in, insofar as, the inventory write-offs is concerned. We believe on the idle time as well, which will, it is not a switch on, switch off kind of a thing, so it has to be over a period of time. We will exercise those levers and potentially see gains over the next several quarters. Sure. I think last year we had a failure to supply penalty roughly around $26 million-$27 million. Yeah. Would you be able to share the number for this year? Well, I don't want to actually make that explicit, but it has come down dramatically. It's in fact, in a high single digit numbers right now. Sure. Lastly, on the, you know, profitability expectation for next year, would you be able to share any form of guidance or range? We believe that the momentum would be sustained. You know, going forward, we would like to see that, you know, Q2, Q3, Q4 would see success of improvements. For sure after the launch of Spiriva and the other products that he's speaking about, darunavir and, you know, and others in America. And of course, there is expansion of Fostair in Europe and the like. With the cachet of products that we're launching across various markets, and that's actually, you would see the top line lifting up, you know, to a double-digit growth rates, for the entire year. And of course, with the tight leash on costs, you would expect the EBITDA margins also to go up. We do think that, you know, towards the end of this current fiscal, you would find a substantial increase closer to in fact, where we think we should be, upward of 18%. 18% or exit run rate? Yeah. Yeah. Exit run rate. Yes. Exit run rate, that's what I meant. For the full year, you could talk about at least, you know, upward of 15%. Sure. Perfect. Thank you and all the best. Next question, please. Krishnendu? Yeah. Hi. Thank you very much, Kunal. Next, we'll take from Krishnendu Saha. Yeah. Can you hear me? Yeah, Krishnendu. Hi. Thanks for being with us. Just want to get a hang of for the U.S. numbers for the quarter. It's flat. Just trying to understand, we had one extra month of Zinplex and Brovana. We had, I think so we had AG also in the middle of December. We had a launch. Is this $175 million sustainable? What were the misses and what were the plus additions to it which get to this $175 million? I'm trying to understand that part. Yeah. The difference was 177 versus 175, $2 million. There's a good amount of seasonality that you see in Q3. especially with flu products as well as Albuterol. I see. Albuterol, while the share remained the same, the volume came down a little bit. Okay. In Q4, you know. Okay. Otherwise, Suprax was very strong, you know, and offset some of that actually. I see. As well as, we had, you know, our in-line products were fairly stable. I would say overall. I see. Suprax, we still have two-player market, right? That's right. It's the authorized generic and ourselves- So- so far. Most financial days we see this. How long do you think that this can continue any case? I'm not an expert. I'm just trying to understand your view on this. Yeah, it's hard to predict. You know, far we don't see any, you know, any new entrant, imminent, you know. One thing on the last approval which you launched at the beginning of the quarter, Velezy. The two-player market, have you launched it? Is it, could it be meaningful? Which one are you talking about? I, there's a few- Tenofovir. I don't recall having launched it in the U.S. We haven't. Oh, okay. No. My mistake. I thought we, very first month we launched that. Nonetheless, thank you. Thanks for your time. Thank you, very much, Krishnendu. The next question is from Neha Manpuria. Thank you so much. Vinita, on Spiriva, you don't see a scenario of FDA giving us a possible CRL, you know, when the tag date comes, right, based on the queries that we're getting or is that still a risk? That would be highly surprising, you know. Okay. Okay. I mean, it's hard to predict the agency at any point in time, but just based on where we are, we feel like we are, you know, close to the finish line, yeah. Okay. Got it. And second, Ramesh, given Spiriva launch, et cetera, is still tough to predict and there's also the market share that we end up ramping up to. If there is any delay in Spiriva, then how should we look at the margins from the 13% that we are doing? Could there be leaks to the margin or all of that margin guidance that we've given is dependent on the new launches? I don't emphasize the situation where Spiriva is going to be in doubt, but in the unfortunate event it does happen to be something like that, you know, the base is set with the current levels, and we expect in fact, better numbers to come in from our India business and we have products across others also. I would certainly say that there will be margin improvement, of course, you know, the needle really moves sharply when Spiriva is really launched. I would just add to that, you know, other than Spiriva, which of course will be the largest opportunity as we see it right now. I mean, we also have darunavir in June. We have, you know, cyanocobalamin that we hope to launch out of Somerset in August. We have diazepam gel that we hope to launch in July. We have varenicline that we hope to launch. We have a tag date of October for that product. We have bromfenac, the ophthalmic product, where we exclusive first to file, that is at the tail end, March. You know, while we have Spiriva as a major new product opportunity, we also have few others that will help us grow the business. Needless to say, I mean, you know, the margin guidance that we just spoke about, there will be some impact of if hypothetically Spiriva was not would not come through. Again, we would. You know, we've looked hard, we've worked hard on cost optimization. We'll continue to do that to, you know, make sure that we continue to drive our margins forward. Understood. Vinita, one other question on the U.S business. I think you mentioned in, you know, the television interview about price erosion being, if I heard correctly, low single digit, mid single digit. You know, just wanted to understand, are you seeing, you know, let's say things improve on the pricing erosion front? Or let's say at least customers not coming back to you with repeated requests for, you know, price revision on the baseline products, given what's happening with the plans for competitors? Yeah, we are starting to see that. You know, I think I said mid to high single digit, Neha. Okay I n the interview, but because that's a normalized level that we saw in previous years. You know, we've Given the supply chain challenges that companies have had, you know, our customers have become again, very, very focused on reliability of supply and are again, you know, engaging in more longer term, you know, relationships, contracts or at least commitments, which gives us comfort that they are, you know, prioritizing reliability of supply, over, you know, price. I mean, of course, they always like to get the best price, but they've struggled a lot this past year, with the flu season products. The flu season products in particular, we are finding that they are engaging with us in a more strategic dialogue on how do we really ensure that we meet the market demand, you know. How do we partner to meet the market demand? The partnering dialogue is gaining momentum over the transactional, you know, model of business with our channel partners. Understood. Okay. Thank you so much. Thank you so much, Neha. Next question is from Prakash Agarwal. Yeah. Hi, good evening. Am I audible? Yes, Prakash. Yes. Yeah, thanks. Just on the India business, we talked about, you know, we expect double-digit growth. When we see April data, I mean the, the month is pretty flat, volumes are down 5%. First question is, you know, what is the strategy that we are following? I did hear you have added some MRs. If you could explain how much you have added with therapies and what is the strategy, despite a very soft start for the industry? Sure. We've added close to 1,000 representatives, and we've done five new divisions out of that. There's a sixth division that will come up in this first quarter as well. We're seeing growth across the board coming back. We're seeing growth on respiratory. We're seeing growth in, you know, cardiac. We're seeing, you know, some normalization of growth in diabetes even. The intent would be for that to continue. You know, good growth in areas like gynecology, for example. You know, I think the mood is extremely upbeat. Our own internal numbers on April look, you know, higher than whatever estimates we originally had. Yeah, I do think things are moving in the right direction. I don't think, you know, I think there's two of these of the divisions that we've added that have started giving us some returns. The others have, you know, we've just set them up in, you know, January, February, March. That will really come in the quarters to come. Okay. What's the final count as on the March for after 1,000 MRs getting added? Yeah. About 7,000 and about 9,300, you know, all inclusive for the sales team. 7,000 is the MR with the managers and supervisors, or? No, I believe it's 7,000 and 9,300, right? The number. Yeah. 7,000 MRs and 9,300 including the total sales team. Understood. Fair enough. Secondly, on the, you know, the facilities issues that we are having across, the US FDA issue, just wanted to have a flavor in terms of what is the remediation expenses we are incurring currently across and, you know, which ones would be, you know, the first one that could get, you know, out of the FDA scanner and, by when? I mean, if you could just, very ballpark, what is the thought currently? Sure. We can talk about the remediation. I think the, you know, when they'll get cleared is a little bit of crystal ball gazing. I think the spend is definitely higher at this point of time. You know, for example, there's a considerable amount of spend being done on nitrosamines and the like. Part of it would be for the industry as well, but certainly for us, basis some of the observations we had in Tarapore. We've made great progress. You know, I think we're close to remediation of that site. We're close to remediation on Mandideep as well. Pithampur, we're hoping with the next update we close out all the observations that we had. The next step obviously would be to engage with FDA and get feedback. You know, I think there is definitely additional spend at this point on the compliance front, which we would hope to see normalize in the second half. That would be to the extent of what? Couple of million dollars or it's a larger number to look at? No, it is larger than that. Yeah. We spend fairly large amounts on consultants itself. Okay, about $10 million, something like that? I mean, some ballpark number. 2x. Okay. This is annual, right? That's right. Yeah. Okay. Meaning there was a certain number in the base also. All of this is not incremental, but there is definitely room to optimize, yeah. Yeah. Okay. At best it would be what, six-12 months while we see like, you know, you know, a clean slate, or it could be long drawn as well? Yeah. A large part we expect to complete in the first half, definitely there would be optimization that we would expect to get in thereafter. You know, some of it will flow into the next half as well. Got it. Just last one here on, you know, looking at past notes, we had talked about Fareva for injectable tie-up. Just wondering if there's any update. We had two tie-ups, if I'm not wrong, two injectables. That's right. Is that plan still on or where are we on that? Yeah. They filed doxycycline. I think we have a TAD date pretty soon. It is, you know, a product that we intend to launch in the next 12 months. The other one? AmBisome is still in development. Okay. It is limited to two products or are we planning more? The Fareva partnership was the two products. Are we doing more such types or? Yeah. Yeah, on the injectable front, we have a pretty active effort ongoing to partner as well as acquire injectable products that can accelerate our build of the injectable franchise. You would have seen the approval that we had with some of the Caplan points... Yes. as well. Yeah. We have, I think five or six Caplan point products that we intend to launch in the next 12 months. Okay. Okay. Perfect. Great. Thank you. All the best. Thank you. Thank you very much, sir. We'll take the next question from Mr. Bino Pathiparampil. Thank you. Hi. Good afternoon. We have a couple of questions. one pegfilgrastim, what's the update? I thought that was also expected this fiscal. Yeah. We're just waiting to hear back from the agency on pegfilgrastim. You know, we have, after the inspection of the Pune site, we responded to all of the queries that the agency had and, you know, believe that we should be getting that approval if they have no objection. We're just waiting to get that approval to really determine next steps with the product. Understood. Could you please repeat the product you said, the ophthalmic product you said could get launched in March? Bromfenac? Prolensa? Prolensa. Oh. The list of products that you mentioned for launch this fiscal, do any of them depend on clearance of these FDA issues at the facilities or are they all de-risked? Actually, Bromfenac does. Only Prolensa. Yeah. Yeah, Prolensa is Pithampur Unit-2. Okay. Yeah. Which we hope to clear. Okay, great. Finally, Ramesh, this year we had a very high tax rate. Going forward for next couple of years, what do you expect the reported tax rate to be? As you can imagine, the tax rate, you know, has been high only because factory had loss-making subsidiaries across. Since then, actually Brazil has turned around. America is expected to, you know, of course, do well next year. I expect the rates to come back to normalize to around 30% next year. It could be a little lower than that also. Got it. Thank you very much. Thank you so much, sir. The next question is from Surya Patra. Yeah. Thanks for the opportunities. First question on the general overall cost. See, in fact, thanks for improved performance in the quarter, but, still generally the margins are below par versus the industry trend. We know the kind of challenges what we have been facing, but, Having seen the kind of cost containment measures and all that, so we have started seeing some kind of sign of improvement. Could you give some sense that, okay, which are the key cost element that we are targeting currently, and where that we can see some improvement? Because that will give some kind of a confidence about it, because we have been under the, sub 15% kind of margin since long, and one of our big revenue driving market that has been under loss. Could you give some key cost line items that you are targeting to really control? Also, what is the update on that halving of the discovery research as a division, what we have been talking about to improvise our overall margins. Let's say over next two to three-year kind of horizon, what is the kind of margin progression that we can see? For that, what cost item, line items or cost items that we are really considering in this? I'll start with the easiest. Starting with NCE, we have actually, you know, ramped down the, you know, the overall infrastructure associated with that. INR 150 crores spend is actually coming down to much lower numbers. That's the first. Essentially, we'd save close to about INR 70-80 crores on that. On the cost lines, yes, we do realize, you know, whilst there has been considerable savings and progress along with these initiatives, and I spoke about INR 350, INR 325 crore-INR 350 crore kind of savings, we still believe that there is a good INR 250 crore that is possible across lines like inventory write-offs, which still remain high because of products that we are dropping, impurities, nitrosamines and the like is impacting those as well. That would of course come down. It's not as if it's going to be a situation of continuing for long. We've taken active measures in terms of, you know, looking at inventory control. Evidence of that is really seen in the working capital optimization measures that were, you know, which is actually bearing fruit even in this quarter, particular quarter. There is a base below which it is impossible to go below, you know, when it comes to in fact, cost threshold, so to speak. There is a minimum infrastructure that we need to maintain in terms of staff and across various functions. For sure, we do believe that there is still some scope when it comes to, for example, facilities on the infrastructure, for example, on the R&D, oral solid dosages front and so on. If we're gonna keep it lower, then potentially there is scope for optimization. If the volumes are what they are, then potentially there is scope for footprint reduction across manufacturing lines and the like. It is going to be a continuous process, but it's not as though it is going to be, you know, something which can be achieved within a period of two quarters or three quarters. It is going to be over an elongated run, possibly over the 18 to 24 months period. The only thing that we can actually, you know, assure you is that the focus is going to be constant. It is going to be, you know, it's going to be razor sharp in that sense. We'll show you results over time. Ramesh, if I can just add. I think first of all at the gross margin line, I think you guys did a bunch of efforts around that. We did a bunch of efforts around that. Yes. A very large portion of that got wiped out by inflationary costs as we discussed. Same way on the SD&A front, there's a significant increase. The majority of that increase is towards India and the related adjacencies that we have. In fact, we've optimized expenses on a bunch elsewhere. You know, there is an optimization plan in the U.S that is actually what's helping getting the numbers to a better level at this point of time. There's also an investment plan in markets like India that is resulting in increase in some of these lines as well. It's not gonna look linear from that perspective. It's gonna be different strokes in different markets. You know, U.S clearly moving down the optimization path. Clearly the focus on new product launches as well. In markets like India, we're obviously investing. Like we said, we added the sales force. There's a cost attached to it. That's just started, so there's gonna be additional selling promotion spend that will come around that as well. That obviously is with a clear visibility of return that we will give, literally within 12 months. You know, starting within 12 months from the time that we get the sales force on the ground. I think the margin will obviously improve, but, you know, there are these forces moving things up and down a little bit. True. Actually, I mentioned a lot of that, when the, you know, at the start of the session itself in terms of my opening remarks. Yeah, sure. My second question is on the, let's say, all your effort towards the injectable ramping of your injectable base. The acquisition of the Medisol, this one recently that we have done. See, this is a very small company, although it is not very influential one to the overall size and this thing. See whether it is having any capability apart from the products, that is one. Secondly, on the injectable front for our existing key market, what is the kind of a core strategy that, or when are we expecting to see kind of a meaningful contribution from the injectable portfolio as a whole? That is my second question. Yeah. Your two-part question on the injectables. The first, Medisol just gives us access to France. You know, France is a market where we've had very little exposure. Right now in Europe, we're really in Germany, U.K., you know, directly, and then, you know, France with the Muscula. This small, you know, toe hold or so to say, just gives us entry into the hospitals in France. It allows us to really take our injectable pipeline that we have put in place for the U.S. as well as other developed markets, and bring it into France to the hospital segment in France is actually pretty attractive for the portfolio that we have, you know, invested in. It gives us an access point. It doesn't give us material infrastructure or a sales force or, you know, it really gives us access to the market and it's a very, you know, accretive deal. It's a small asset, but accretive. Yeah. Yes. Our focus has been on all our acquisitions to really buy accretive assets that don't dilute our earnings. On the, you know, contribution from injectables, I'd say that fiscal year 25 onwards, I mean, we have been building a pipeline. We have a good number of products filed even in fiscal year 23. We filed liraglutide, we filed glucagon, we filed, you know, the Caplan products were filed. We'll see six or so injectable products coming to market in fiscal year 23. They'll be 24 rather. They'll be the smaller products. The larger products, whether it's glucagon or, you know, RISPERDAL CONSTA, we expect in fiscal year 25. That will be a, our, hopefully a big ramp up year for injectables. We are trying to figure out ways and means that we can accelerate that with products that we can partner, products that we can acquire. The U.S. generic team is actively working on it to figure out how we can accelerate the injectable build. Okay. Just a last question, if I may. On the domestic formulation business, say how should we see? Because, say, having seen, this segment really contributing meaningfully to everybody's growth who were present during the difficult time of the last two year. Hence everybody is now kind of trying to enhance, expand, or whatever in the domestic business. It is nothing but just enhancing the competition. While the growth of the industry or growth of the base is kind of known and the trend is kind of getting followed only. Is it because of the incremental competition and everybody trying to have their share in that? Whether the profitability is likely to be compromised going ahead? I couldn't help but smile when you were saying the message. I think there's a massive opportunity in India. There is a massive need in India as well. For example, the sixth division that we're gonna launch is an extra urban division where we will go to doctors in geographies that we don't even cover at this point of time. I, yeah, I don't think it is, you know, competition with each other. Definitely when you launch products, obviously you compete against other companies. I don't think it's that. I don't think it's gonna have a reflection on pricing. There is an opportunity here, you know, in the bigger scheme of things, I think if the GDP, the amount of spend on, you know, healthcare out of GDP, the, you know, the, you know, affordability, the ability for people to pay, the people to get diagnosed and tested, that is the bigger story in India. I think anybody who's really focused on India is, you know, driven towards that story. Certainly we are. I don't see this as a limiting opportunity going forward. I I actually see this hopefully as something that should accelerate in the next few years. Sure, sir. Wish you all the best. Thank you. Thank you, very much, Mr. Patra. May I request, Sameer, Mr. Sameer Baisiwala to go ahead with his question. Yeah. Thank you so much. Good evening, everyone. Vinita, just quickly, how many complex injectables and inhalers have been filed, and what's the approval visibility over the next couple of years? On the injectable front, we have a few. glucagon that I mentioned. I think four or five products. The liraglutides, glucagon, ganirelix. Of course the four-dose product, doxycycline. On the inhalation front, you know, it's been the products you know so far, in terms of Spiriva and DULERA. you know, we've been like this year we've filed three nasal sprays as well. you know, while smaller opportunities, but still meaningfully add to the respiratory portfolio. I'd say that you know, Ellipta filing, as well as Respimat should really happen in the next fiscal year. I mean, we are making good progress on these products, but, you know, in terms of the development cycle based on where we are, they will really be fiscal year 25 filing. Okay, excellent. Just talking about Albuterol, what's the outlook for the current year fiscal 24, both in terms of pricing and, is there a room for market share gains over here? You know, if there are any market disruptions, we certainly will be ready to take share. I mean, so far the market has been fairly stable and, you know, you know, we've got this 20% plus share and we hope to be able to sustain it at the at price, current pricing, or as close as possible. I mean, I think if there are any disruptions, certainly we'll have the opportunity to gain share. It's, you know, it's turned out to be a really nice product for us. You said, you expect the pricing to be stable, for the foreseeable future? Yes, we think so. Okay, great. Just one final on India. For the full year fiscal 2023, I see you have grown at 1% or so, whereas the price increases I would imagine have been more like 7%-8%. Does that mean there's been a quite big volume erosion in India? That's one? Second, what's the pricing outlook for fiscal 2024 for India? I think the bigger story we impacted on diabetes, and definitely we de-grown there, right? And from a value perspective. That certainly happened. As far as the pricing outlook, obviously, you know, the WPI was 12.2 for the likes, for the scheduled products. For the most part, we would have taken that increase. We typically don't take it on anti-infectives, for example. Obviously we optimize other products and take an annual increase as well. There have been input material increases as well last year, I think we definitely wanted to take more of the increase. Typically, I think in the non-scheduled portion, 5-6% is the price increase that you end up sticking to. I think the pricing, you know, I. Last year, if you take out diabetes, it's a growth story. With diabetes it's actually a de-growth. From that perspective, obviously, there's, you know, significant room to move. That diabetes part is starting to stabilize. Diabetes is about 20% of what we do in India, there is direct impact on the overall India number when we do it. You know, we're starting to see all of that, you know, starting to even out. Respiratory was slow to start with, now that's growing nicely. Cardiac is starting to get to the double-digit number as well. We basically see everything. Diabetes will not, but I think other than diabetes, everything else will be at double digits. Let's just to conclude on this. After 7%, 8% price increase last year, 5%, 6% this year, I mean, 14% put together, I mean, you think markets, doctors are quite okay to absorb this kind of pricing? I can't remember when last we had such high price inflation in the drug industry, therefore I'm asking. Yeah. Yeah. As far as these controlled products, as you know, there was an additional NLEM list. Net-net, there's actually a negative impact on that portfolio from what happened in November, December. On that, you know, that list of products which was there, obviously there is impact. I'm not sure where you're getting the 7%, 8% from. That certainly was not our price increase last year either. But, you know, that That's the number you get if you see industry-wide volume versus value growth for the industry as a whole and most companies, and that's where it's coming. Yeah. No, I think that would also be the portfolios as they're shaping. If there's gonna be more oncology, then the value will go up and everything. Yeah, I can't comment on that. You can comment on that better. From our perspective, you know, I think, you know, obviously we look at products very closely from affordability as well. Certainly with our peer set as well, we would not be priced at the lowest product. We would certainly not be priced as the most expensive product as well. And there have been significant cost increases which have happened over the last couple of years, right? If you look at the base products, look at anti-infectives, look at vitamins, look at some of the starting materials out of China, massive inflationary costs. The same thing that we're explaining on the gross margin line. You know, you can't directly pass them on in India. I think you only get an opportunity once a year to go and address that. You would address it where it's possible to do. Where you feel that it's not, you know, you don't. Okay, great. Thank you so much. Thank you so much, sir. The next question is from Mr. Madhav Marda, please. Thank you. Hi. Just have a few questions. Just wanted to understand on the R&D side, we are at about 7% of sales in Q4 and about INR 300 crore on absolute basis. I'm not sure if you gave some guidance in terms of, where we could be as a% of sales or an absolute basis, if we should be like annualize our Q4 number or can this go up? No. Essentially, you know, so there would be actually a pivoting to more complex, but the magnitude will be around the same vicinity, anywhere between INR 1,300 crores-INR 1,400 crores max. INR 1,300 crores-INR 1,400 crores R&D. Okay. Okay. Got it. Yeah. The second question was on the India business. By when does the diabetes portfolio genericization impact come through in the base? Is it Q1 FY 2024 when it's fully in the base and then sort of we can start growing at a faster pace? No, no, it goes into I think it goes into 2025 as well, I think as the, as some products go, right? I think there is definitely. You know, if you look at what's happened, is. There's two things here, right? Products that we would have in-licensed where, you know, competition comes in or we reduce pricing in line with competition or other products which are getting genericized. Both of these things are the two elements eating away at diabetes, right? You would have seen in the DPP-4s, one by one, each of them has been going off patent. In the SGLT2s, same way, that's been happening as well. That keeps impacting the market over time because, you know, certainly certain prescription behavior keeps switching when, you know, a higher priced product remains, but a lower priced in the same category is available as well. I think that will go on till 2025. From a India region perspective, while that's a top-line story, it's not a bottom-line story because in the in-licensed portfolio, obviously you make a lower margin profile versus products that you would make yourself. You know, I think we obviously enjoyed the wave of the increase in the entire diabetes sales over the years as these new products were brought to market by us. You know, on the flip side, we are seeing this as well. I think it's part of life. It's gonna pan out in the next two years. Um- you know, till then, the growth I think on diabetes will remain possibly, in my opinion, possibly high single digit, not get into the double digit category. Correct. Just one clarification, you mentioned about INR 250 crore cost impact from the nitrosamines. Could you just clarify what that was? Like, that's a saving which can come through- Say 250 or anything like that. We said about $20 million, about $150, $160. Well, we said $20 million on consultant spend. We did not say- Well, total. Total, everything put together. Total the, you know, Facility limitations. Okay. Yeah. Okay. Thanks, sir. Thank you. Thank you so much, sir. Can I request Mr. Chirag Dagli to go ahead with his question, please? Thank you. Yes, sir. Thank you for the opportunity. We spent INR 1,500 crores CapEx, organic CapEx in FY 2023. Can we have some details on what this CapEx is on? acquisitions. No, no. essentially a chunk of that, you know, the CapEx is far lower, in fact less than half of what you're mentioning. a huge chunk of it is actually for M&A. You know, it is spread across in fact what we bought in India, what we bought in Australia, and what we bought in America. there's a separate line item, Ramesh, which says, payment for acquisition of business, that's INR 291 crores, that's separate. But- Another one on capital expenditure. Aptiv was there. for property plant. Vishant, pick up. What you're seeing there on the acquisition, that's only for one piece which is on Aptiv. All the other acquisition, whether it was with the Sunovion for Xopenex Brovana or the Paloma acquisition in Brazil, those are all getting accounted in the line which is where you see the capital expenditure. Both this acquisition, specifically the Sunovion one, was a significant one from an acquisition perspective which we did this. This line item says property plant equipment. You know. We need to clarify it. It's intangibles actually, you know, what we bought, the brands and so on. Yeah. It's actually coming as part of that. I think like we said, the CapEx is basically of the order of INR 600-700 crores, that's global. About half of that would be really going towards maintenance kind of spend, and the other part would be for newer capabilities. Yeah. Understood. Both lines together is INR 1,700 odd crores is what you see overall. We hope to maintain this, kind of run rate, INR 600- INR 700 crores organic CapEx. The CapEx would be, you know, around the vicinity between INR 600- INR 700 crores. Potentially M&A is really going to be based on the proposition that presents itself, no? Understood. Understood. This, you know, this M&A, we keep doing these small, you know, bolt-on deals. Deals. Bolt-on deals. My question is really Is there an internal hurdle, IRR payback period, return on capital? How are you thinking about, how do you evaluate yourself? Of course, we do have that. You know, it really varies. As, for example, if you take the Medisol thing, it is actually very strategic. You know, of course, the payback period is, you know, it's very reasonable from our perspective. It really is dependent on the proposition and what does it do to our overall portfolio. You know, on the respiratory space, for example, we found an opportunity with Brovana and Xopenex, you know. Essentially Paloma, for example, helps in actually stabilizing the overall portfolio in Brazil. It is actually a bit of strategy and of course the kind of returns associated with it. Ramesh- For all of time, our focus has been on, you know, quick payback and high IRR. And being- Lower EBITDA multiples. EBITDA accretive as well, as much as possible in the very first year. We've spent about INR 1,000 crores on these acquisitions, right? INR 1,700 crores of overall CapEx. Yes, that is correct. Everything put together. My question is this INR 1,000 crores, if you can just give us a sense of, how are you thinking about payback periods, IRRs, or whichever way you're, you know, slicing. This seems like a fairly large amount. I would have been surprised if you'd have told me, you know, 12 months back that you would spend about INR 1,000 crores, you know, with a single-digit ROIC, you would spend about INR 1,000 crores on M&A. I'd be surprised. You know, that's the question, that how have you evaluated- Our threshold limits are, you know, as I said, you know, it is, you know, it is pretty, you know, pretty high. I would say anything north of 19%-20% on IRR basis, which includes in fact the terminal value of that. Even without that, it would be well above 16%. From our perspective, it actually adds value, economic value to, you know, to us. Our cost of funds is about 11.3% or and thereabout. To that extent, all of these propositions as well as they are well above those limits, it makes sense to us. Understood. Just the last question is on the tax rate. At what point do we become a normalized, you know, tax rate company? In the recent past, we have been inhibited by in fact the, you know, losses in various subsidiaries, and that included Brazil and America. Of course, we still have our entity, R&D entity at Nanomi in Netherlands. You know, that would potentially be because it's more R&D spends, but we do expect the other, you know, business subsidiaries to start making money for us, as was the case in America until very recently. Effective tax rates would actually normalize around the 28%-30% mark from next year onwards. Though if you recognize India itself, it's much lower than that. FY 2025, you're saying 28%-30%. In FY 2024. The current year, we are bringing it down to about 28%-30%. Understood. a normalized rate should be 25, Ramesh. It could be, but that. You could expect that out of India because, you know, it is possible, you know, if I would move to regime two in low net regime. Of course, we still have our tax breaks in India, so that's why we are still sticking on to that. If you talk about other parts of the globe, incremental, you know, tax rates are in the vicinity of 30%, you know, in most parts really. It is really a function of those. In America, for example, you still also have federal, apart from federal taxes you have state taxes as well to reckon with. Even if you. I know. There is an NOL, so potentially you won't be actually making any. Yeah. Paying any payments out, you know, tax payments out. Federal tax. There's still some federal tax out there. State tax. Understood. State tax out there. Okay. Thank you so much. I know we are at the hour, but maybe last two questions. Thank you so much, sir. next is, Ms. Cyndrella Carvalho, please. Next question. Thanks for the opportunity. If I can understand, if we are looking at the coming quarter in U.S, it will be seasonally weak quarter, right? If I follow our general trend. Do you see our quarterly run rate of $175 million sustaining, or should we assume it more towards the seasonality that we always consider? Plus, with the U.S base, can you help us understand how Suprep is expected to pan out for the coming entire fiscal FY 2024 along with Albuterol? Do you think these both products will continue at the same level for us today, or you see that they will see some competition, though you highlighted earlier that, you know, you do not see meaningful entry in Suprep yet. Any further thoughts will be helpful. That's first question. We definitely will see seasonality impact in the first quarter for the U.S. business. All the anti-infectives, cephalosporins, azithromycin, oseltamivir, all of that portfolio will be down. There will be an impact on revenues. We have some upsides also. We have the darunavir launch, and we'll see when we can launch Spiriva, June or July, based on FDA approval. We have some launches as well to offset it. You know, for us, you know, once we launch Spiriva, that's where revenues pick up in a major way in the U.S. Otherwise the seasonality will have an impact in the first quarter. On Suprep and Albuterol? Yeah. Albuterol is already a multi-competitor market, you know, and we believe that it's, you know, stable from the standpoint of competitive and, you know, from a share perspective for the competitors. You know, we don't see any near-term entrant in Albuterol in the next 12 months. On Suprep, it's hard to tell. You know, we don't believe that there is any imminent approval right now based on what we understand of the supply chain. It's hard to tell how long it will remain exclusive. It, you know, we think the next 3 to 6 months, it should. It could be beyond that as well. Okay. Okay. If I have to understand the overall scenario, ex these new launches, like, if we keep Suprep aside, do you see the price erosion at the mid to high single digit run rate only, or do you think it is higher than that? We think that it's gotten to that high single digit run rate, but for the new products like Suprep. Excluding new products, right? Yeah, yeah. Right. If I may understand, Ramesh, how should we look at the hedging rates for us? Can you give us some idea around the coming quarters? You know, you know, there's this philosophy that we should not hedge fully. The currents are current... You know, the current, at least trends kind of indicate we're gonna stagnate around the 82 mark. Given the volatility around the economic front, you know, it's good to be actually open at least for a huge chunk of our portfolio. That's what we have actually done. We have booked some things for the future, and those are well into, you know, very acceptable rates at this juncture. A fairly large chunk of our overall exposure is still unhedged. If I may ask one more question on the API side. What is keeping this kind of growth in the API? Do you think there is some seasonality to this, or you think this is sustainable? What were the key drivers for the API segment to outperform? Can you please highlight and help us understand? A little more granularity will be helpful. Okay. Chintala, we'll have to wrap up after this. We're already five minutes over time. As far as the API business is concerned, we were basically doing very low in the first three quarters. There's really been a successive build over the quarters on the API business. Every quarter the business grew. You know, in Q4 obviously we've seen a lot more normalization in products like 7-ACA and cefaclor. That's really what's driving it. We expect it to continue. We don't expect this growth to continue, but we would expect it to kind of continue more or less at this kind of levels. Thank you so much. Last question, please. Can I request, Mr. Kunal Randeria. Kunal, are you there? Hello? No, sir. I think we can wrap up. It's okay. We can wrap up there. Yeah. Am I audible? Yes. You are. Thanks for allowing me to squeeze my question in. Vinita, just a couple around Spiriva now. Is my understanding correct, the Spiriva volumes have been shrinking and even within that Respimat share has been rising, so which means HandiHaler has been maybe going down in double digits in the last five- years? That's right. Just, you know, what is your expectation once the HandiHaler generic comes in the market? Do you expect some shift back from Respimat to HandiHaler? We haven't assumed that, but hopefully that happens. You know, from a pricing perspective that the retail, you know, retailers have the incentive to shift some. Right. Right. What would be the market size today at the manufacturer level? It's, I think our gross level's still, INR billion plus at the gross sales level. Okay. The net level may be INR 500 odd. Would that be a correct understanding? I would think so. You know, from a pricing perspective, it's really the gross level that is important. Sure. Sure. Okay, perfect. Thank you, and all the best. Okay. Thank you. Do we have another question or, can we wrap up? I think that, pretty much concludes our Q&A session. Okay. I'll now hand the conference over to the management for closing comments, please. Okay, great. Well, thank you everyone. Hopefully, we've been able to, you know, respond to all of your questions. If not, I'm sure, you'll be following up with Ramesh. As we mentioned at the outset, we are very pleased with the progress we have made, through the year, through fiscal year 2023, closing the year, on a positive note, in terms of EBITDA margin improvement. We continue to be very focused on driving, you know, profitability as well as growing our business, into fiscal year 2024 with our new product launches as well as, you know, the basic business, India business, as well as other parts of our business. Look forward to a successful fiscal year 2024, and we'll look forward to speaking with you again in the next quarter. Thank you. Thank you. Thank you so much to the management team and the panelist. On behalf of Lupin Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines and exit the webinar. Thank you so much.