Good day, and welcome to the Q2 FY23 earnings conference call of Gufic Biosciences Limited. As a reminder, all participant lines will be in listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Ms. Ami Shah, Company Secretary from Gufic Biosciences Limited. Thank you, and over to you. Thank you, Yashashree. Good evening and a warm welcome to Gufic Biosciences Limited earnings conference call for the Q2 of FY 2022-23. I have with me Mr. Pranav Choksi, Chief Executive Officer and Whole Time Director, Mr. Devkinandan Roongta, Chief Financial Officer, and Mr. Avik Das from Investor Relations team, to give the highlights of the business performance of the company and clarify all the queries of the investors during the call. We will begin the call with business highlights and overview by Mr. Avik, followed by financial overview by Mr. Roongta. After the opening remarks, the operator will open the bridge for Q&A session. Before we proceed with the call, please note that some of the statements made in today's discussion may be forward-looking and are based on management's current expectation, and this may be viewed in conjunction with risks and uncertainties involved in the business. The company assumes no responsibility to publish or update or amend, modify, revise any forward-looking statement based on any subsequent development, new information in future, or except as required by the applicable laws in force. This call is being recorded and the playback of the call shall be made available on our website shortly after the call. The transcript of this call will also be submitted to the stock exchanges and will also be made available on our website. I'll now hand over the call to Mr. Avik for his opening remarks. Thank you. Over to you, Mr. Avik. Thank you, Ami, and good afternoon to one and all, and thank you very much for joining on this call. I'll quickly begin the call and give you all a highlight of what happened in the past quarter. The past quarter, we have started gearing up to take our Indore facility live. In view of that, we have started investing in R&D for new molecules and drug delivery systems, which will eventually smoothen our entire process of going live at Indore. With respect to that, we've already started taking validation batches to create the data and build up closures for the pipeline products. This will definitely help us reduce our time to market significantly once our plant is up and running at Indore. This has been the broad theme for the last quarter for us. Now diving into our divisions. Critical Care division, we have an update over here where we've launched a sub-division within this, our flagship division by the name of Sparsh. This division will use the most advanced technology and smoothen the supply chain process for delivering 100 plus high quality injectable products primarily to untapped hospitals and nursing homes, which include not only the suburban, but also the rural market. As per our initial estimates, the addressable market size of this market is roughly INR 9,500 crores, and it is growing at a CAGR of 12%. We are also very pleased to inform you all, Gufic has received a DCGI approval for manufacturing and marketing Biocinin in dual chamber pack, which is our proprietary technology. As we all know, given the industry trends, the critical care segment, by and large, faced headwinds due to reduced hospitalizations and excess inventory in the trade channel. We've taken some strategic decisions to mitigate that. We'll touch upon that as the call progresses. We are also very glad to announce that we are planning to launch Ceftazidime-Avibactam soon. Gufic will be the only Indian company to launch this product other than the innovator with an in-house manufactured API. This is again in line with our strategy to go backwards for all our critical products and new products and have the API manufactured in-house. We are also launching the novel once a week anti-infective Dalbavancin for the first time in India in Q4 in FY 2023, and we are very much on track to achieve our target date for the launch. We have also received the DCGI approval to conduct Phase III clinical trials for Thymosin Alpha-1 injection for sepsis. Now coming to Ferticare division. This division has done phenomenally well for us this year, and it continues to register double-digit growth. Especially some of our flagship products like Puregraf, which is HMG, and Puretrig, which is hCG. We continue to have dominant market share in these products. We've received DCGI approval to conduct Phase III trials with Thymosin Alpha for endometriosis. As we had updated last quarter as well, we have launched Mycojestrone with our own API, and this is a vibrant market growing and it's gone above INR 800 crore now and growing at a healthy pace of 60% year-on-year. Our initiative to develop the recombinant alternative to de-risk geopolitically is also going on track, and within the next 18 months we should be able to launch the recombinant product as well. Another update over here is that we've increased our market penetration with enoxaparin in the infertility segment, and we've created a good brand within this molecule in this segment. We've also come up to second rank in the high-growth Cetrorelix market. Now coming to our other divisions. Some key updates over here is we've launched a cannabis extract-based topical solution for muscular and arthritic pain. We've also initiated development of a unique liposomal iron formulation in this division. Now coming to our international business, I'd like to highlight that we received two new product approvals from regulated markets, and we've also received one product approval from Health Canada. As informed earlier, we are gearing up for many more approvals to come, primarily for our Indore and our new approved plant at Navsari. In order to further our alliances with our partners globally, we very recently participated in CPHI, which was held in Frankfurt. In the coming quarters, we'll make announcements of the developments that happened there. With respect to Arisia, our center of excellence, targeting toxins and new age therapies, we're very happy to inform that we have developed 20+ combination therapies which are unique to Arisia only, and these will be used for skin and body transformation using FDA-approved technologies. Coming to our Aesthaderm division, here we partnered with the ICCG in the field of cosmetic vaginal tightening and rejuvenation, and we've organized training camps to use botulinum toxin for these indications. Now with this, I'll hand over the call to our CFO, Mr. Devkinandan Roonghta, to quickly take you all through the highlights of the numbers of the past quarter and H1. Thank you, Avik. Good afternoon, everybody. F irst thing I would like to inform you that the quarter results of Q2 of 2022 basically versus Q2 of 2021-22 is not comparable because last year's Q2 we are having a COVID-related sale. The total sale for last year's Q2 was INR 194 crores, out of which INR 47 crore was related to COVID-related sales. If I delete the COVID-related sales, the sales for last year was INR 137. Against this year's sale of Q2 is INR 175 crore, which is 19% higher than the last year's COVID sale. EBITDA of last year was INR 36 crores. This time in EBITDA is INR 33.4 crores. This quarter we have conducted lot of validation as per our Indore plant, and therefore the R&D expenses is slightly higher as compared to the previous quarters. EBITDA margin last year was around 18.6%; this year, 19%. Profit before tax was INR 13.4 crore; this year, INR 27.3 crores. Tax was 15.6%. This year, this quarter it was 15.5%. Profit after tax was last year INR 23.3 crores. This year it was INR 20.2 crores. Tax margin was last year 12%. This year it was 11.5%. Thank you. Should we begin the question and answer session? Yes. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Keshav from Raksan Investors. Please go ahead. Hi. Good afternoon. Sir, it's very fascinating to see so many things Gufic has been trying to do. We are a substance manufacturer in that we are expanding our capability to biologics, our expertise in NDDS and injectables. We have a branded portfolio, so we need to be reasonably agile on marketing spends as well as on manpower for that. On top of that, we are doing innovation as well. We have clinical trial management capabilities. Lastly, we have a portfolio that is predominantly injectables, and we are intending to get into regulated markets such as U.S., which puts an even more quality burden on us, and our quality control will then have to be top class. Is it not that we might be spreading ourselves too thin? Because all of this has a monetary bearing and all sorts of R&D spends after all come with an ROI. If you could help understand the overall vision as to what puts us in a position to succeed in such a wide array of endeavors, and why not have a limited but more focused approach instead of that? All right. Hi, Keshav. Pranav here. Thank you for the question. I think very well summarized our company in a nutshell, but I'll tell you the reason why we are a little bit going wide. I would say more than getting wide, it is a core competency of the company. It's still injectables and new delivery systems and innovation, which has been there in the past. What we feel, as, If you see in the last five years, I mean, this is what I have felt since the last decade actually, pharma is becoming more and more commoditized. T hat's why if we keep on sticking to the same thing day in and day out, there will always be a I would say economy of scale or there might always be an erosion or there always might be people who are ready to do it at a much cheaper rate. That's the thing which will always affect us. Today, what you have seen, U.S. was always an attractive market before. If you see the way erosion has happened not only in India, Europe or rest of the world, you also going to see that pretty soon. The reason we are beginning to look at a, I would say, biological line is because first of all the entry barrier for anyone to get into. What was the entry barrier of pharma maybe 10, 15, 20 years ago, so biologicals will be little bit more tougher and more complex to get into. At the same time, the core competency of the people working in this company, including me and my team, is also doing complex molecules and biologicals, where we feel that it's more of a capacity cost initially to be taken care of. I agree. I mean, we are still not doing NCE. Let me please clarify that the R&D work which we are doing is not, it is heavily intensive, yes, for sure. It's not I would say like a 50/50 or maybe like there's more than a 50% chance of failing it. Because this is doing something which has already been proven, but in a much more efficient way, in a much more, I would say, organized way. Plus we have a board of directors like Dr. Balram Singh, who have more than 33 years experience in handling this. It's something which we are doing as proof of concept. Sorry, I'm using all these fancy words. In a nutshell, if I tell you, we are doing mostly biological R&D work, which uses our core competency, but which is still a big entry barrier for others to get into. Because we foresee that the margins in the future, especially things coming to injectable as a core competency, will get affected more and more. We have to be in other things which not only offset that, but also give us more orders and more revenue down the line, which will help us invest further in line. Botulinum toxin might have taken four years for us to get in, but the margins which we achieve in botulinum toxin and the level of penetration which we go through can easily fund our foray into biologicals going forward. Right now what you see, like I think what Roonghta sir also said, apart from the validation costs which you see right now one time for Indore things. There are Whenever we go for any regulated markets, there is of course some pre-market validation which is done on an R&D level. There's a transfer, then the scale-up which is happening. Initially for the next 8-12 months, you will see a cost increasing of validation. Once the validations are done those are typically your assets which you can use for the next 5, 10, 15 years till that molecule has that relevance in the geography area. What we are investing right now in validation, the same thing we are doing in biologicals and, viruses and other things. We are doing something where we are creating data. We are creating relevance which can either be encashed any moment or if we can ride the entire wave of regulatory post-development, then we can get a much bigger share out of it. We sometimes definitely feel that we are maybe biting on things which are a little bit on the higher side. That has been always the DNA of Gufic from day one. Today, when we were, I think in 2008, 2009, when we were a maybe around INR 40-60 crore company also, we were doing complex molecules and working on R&D forms and working on NDDS, which was not even companies of our size were not doing. Today also a lot of big companies or even companies from abroad look to us for innovative products and look to us for new things which they can out-license for certain geographies also. I feel that the DNA is something which we don't like to change, which has been a success mantra. At the same time, of course, we have Roonghta sir, and we have the right team that we should not go overboard. Sometimes there's always going to be, I would say a pressure for us in terms of I would say, allocating the resources much. I would not say managing is an issue. It's mostly allocating the resources when, the timing is the most crucial. Be rest assured that we will not go so out of our way that there will be a big chance of failure. We feel for long-term sustenance, we have to be into something which is more unique and which gives us a better margins, which can sustain the next cycle of growth also. That is, this is what we all feel that we should continue to do so. Thank you for that answer, sir. Just one clarity. When you say that we have the capabilities to get into biologics. Yeah. Is lyophilization a critical factor? Because rest of it we are in-licensing, right? No. I'll explain how. If you see that the Botulinum toxin also came, the strain of the Botulinum toxin was in-licensed from U.S. But the entire development work in terms of lyophilization, in terms of formulation also was done in-house. When I see right now, once the strain comes, there's a master strain, we work on a reference strain. The first step of stabilizing the strain is lyophilization. But when we tomorrow we are working on a topical format. By the topical, I mean like a cream or a lotion or a gel. Then that also involves some sort of a unique formulation, I would say, core competency which we possess. For example, we are working on let's say tomorrow we are working on a topical form of a vaccine. Now the formulation development capability is in-house. The entire work on the genome. It is something which is a collaboration between Gufic and Prime Bio, by which we do most of the work in our R&D center here. Because of the background we have in biotechnology, it's not that we are in-licensing the technology. We are in-licensing the strain. Getting the right strain and the right genetic code is important for us. How do you then, I would say, express this in the right vehicle and then what do you call? Scale it up in a more efficient way. That is the strength of Gufic as a company. I would say strain is in-licensed. I'm saying the genetic strain is in-licensed. The remaining development is done in-house by the company. I understood, sir. Clearly. Secondly, can you help understand the nature of relationship with Selvax? Are we a development partner, would we be playing a CRO role in clinical trials? Or if you could help understand, Selvax, I think, is a different business model. Selvax, where the product is already being developed by them, it's not something where we have contributed in the development part of the concept, which is about this CDK2. We have collaborated with them, and we are working on certain CDK1 inhibitors of our own. Then for the technology which is used by them, which is a combination of anti-CD4 T-cell antibodies with CTLA-4. That technology which we are working on is very unique, which can also complement our development going forward only on the condition that it results within milestone which they have committed to us. Selvax is basically, I would like to say, a development for solid tumors. If that works with certain, I would say, milestones which we need to see in the next one year or two years, then we will be using that as a platform to combine with our CDK1 inhibitor to go for a much more superior option. Okay, understood, sir. Can I take one more question or should I come back in the queue? I don't know. I'll leave it to the moderator. Yes. Please go ahead, sir. Yeah, okay. Sir, I'm not very much aware of how clinical trials work over here, what the timelines are like. If you could elaborate and also brief a bit about where we fit in the Thymosin Alpha-1 trials that are happening for a couple of indications. Are we handling the clinical trial management bit of it? Or are we the innovator for the repurposed indications? If you see Thymosin Alpha-1, we are the innovator for the repurposing factor by keeping the peptide in a different form of a formulation. We did it for COVID initially. Now we have shifted in a separate way for sepsis management, because sepsis. If you see a severe patient or a moderate patient have the same, I would say, inflammatory parameters getting played up, plus something else which happens normally in sepsis. That's why we are doing for the repurposing component. To answer your question, we are actually the, I would say, company who got the molecule done, and then we outsource a third-party agency to run this. Let's say there is a CRO, basically, contract research organization which runs the. which gets the mandate from us, and then they coordinate with the private and public, I would say, institutions all around India, based on the permission of the honorable DCGI. They run the trials. We are just the company whose molecule is being tested, and eventually we wait for the results. What are the timelines like for? You're asking about sepsis or endometriosis? Because if you see, sepsis is something where the patient- Both. Yeah. Is there for around 10-14 days, and then there's a monitoring of another. Totally it comes around 28-45 days, depending on the patient's health. Endometriosis is for a longer time because we not only have to see at least three cycles of a woman has to be in post administration. That is around a whole month. Based on that, depending on the recruitment, depending on the patient size, the patient pool, it takes time. It can be anything between minimum of around 15 months to a maximum of 24 months, I guess. Depending on the patient size, the recruitment and the catchment area, and also the duration of treatment. Okay. If this indeed succeeds, so we cannot expect anything for the next 3-4 years. Is that correct? For sepsis, we already have started earlier because with the existing trials also. I hope sepsis should be ready by middle of next year. We should see the product being sold post, I think, October 2023. For endometriosis, certainly we will be able to see visibility of the commercialization of that indication in 2024 end or maybe early 2025. Okay. All right, sir. I have one more question, but I will come back in the queue. Thank you so much, sir. Okay. Thank you. We have our next question from the line of Rajat Sethi from iThought PMS. Please go ahead. Hi. Thanks for the opportunity. First of all, thanks to the management team for taking inputs that we gave last time and for the quick initial remarks in the beginning. Thank you so much for that. First question on the Sparsh sub-segment that we have recently launched under the critical care segment. This basically segment is different in the sense that it will be focusing on the untapped hospital segments, right? It means we're still selling the same products and pricing will be same, or how will that be? Actually Sparsh. Hi, Rajat. Sparsh is little bit different. What we realized in the last seven years in critical care, most of the business comes from Class A markets, that is from tertiary hospitals or maximum secondary hospitals. Our presence into small nursing homes or even I'm seeing, forget the Class B or Class C towns. I mean, now in India you see a lot of development happen. I cannot see anything Class B or Class C. You get my point. I'm saying a 20-city beyond Mumbai, beyond Bangalore, beyond Delhi, and those 8-10 metros what we have now, they are considered to be a tier two or tier three for us. Getting there, we were mostly. If we have, let's say, a team of 180 people in Criticare, we first went to. We had so many molecules coming in. We first went into specialty differentiation. First it was Criticare, then Microcare came. Then a separate taskforce came from Zarbot, and then separate task. Even in Criticare, we divided into Criticare Life, which was handling around a good set of molecules and Sparsh was handling separate MD combos. If you see, we have primarily around 64 molecules which was handled by this one ATD. Now, with newer coming in and with the existing scan and what we have, we have more than 103 molecules which we are working on, which we also want to take on the international markets also. Now, if I have to take on the international markets, again, keeping in mind this area also, subset A. I mean, we did a subset of A and B, where international market potential and domestic market potential. We came in the subset to know these 103 molecules which can work from these factories going forward, which will be having a good market and good growth in either of these geographies. We thought that why don't we take them in a different way, where we don't want to. We already have our pipeline and our, I would say, market set up for a specific division in the next 2-3 years, where I'm seeing we have the dual chamber bag, then we have ceftazidime-avibactam, then we have cefazolin, then few others. As these new molecules are being loaded up, older molecules are either getting neglected or maybe the erosion in margin is happening so much that the Criticare cannot sustain their PCPM in terms of keeping these I would say tail-end brands also. We created this Sparsh which will be a unique way by which we don't want to be dependent on the channel for our business. That is normally you have a C&F, then you have a stockist, then you have a retailer. Sometimes beyond stockist, you don't have control. We tell them to give it to the hospital. They will also buy some goods from us, and they can sell it anywhere in the open market also. Which might be maybe a small percentage, but still it's substantial when I consider 20% of INR 200 crore business. We thought that we'll cover the front, even if it's a little bit more of on the lines of international approach, where we directly have only 4-5, I would say it's from me, and then we have only 4-5 distributors all around India. We go for the last mile approach, where we not only, I would say, integrate or in a system in a IT setup, each and every pin code-wise hospitals or nursing homes or even doctor having his own setup of 5 ICU beds also, or maybe just a basic ward also. These, I would say unique, primary centers are being tracked on a pin code basis on all India basis, by which we track them by our system in terms of what is the purchase on a monthly basis. Then we know, and it's the distributors' work is only to buy from us and make it reach there. How much to sell, what to sell and what we sell is all determined by us end to end, by which we can control the margin much better. O therwise there's always a scope of more erosion because of the channel getting more greedy in the entire process. Plus, there's less chance of substitution also. When distributor is handling high-end products and new age products, the old products can be easily substituted because of XYZ reason. It's not related to quality or pricing. It's something which we want to get into. That is where this Sparsh was come up in a way which is mostly electronically guided. We have a team in HQ who will be running this along with, of course, our team in the field. Here we can talk about higher PCPMs, where we know our target of the. Every person has to handle minimum 300 centers, with a PCPM target is around INR 12-15 lakhs in one and a half years. Where it's more of availability of the entire 103 SKU basket in a much more efficient way, using a very lean and mean channel in the middle. It just goes from a single distribution point and directly to hospital. That is how this birth of Sparsh has come, and we are trying to monitor electronically on a monthly, daily basis. Every transaction, every purchase can be tracked on a, I would say, minute-by-minute basis and see that can we come up with a business profitability model also. Then also a lot of new molecules which we want to launch, we can get more access directly to the trade because of this. Understood. Thank you so much for this detailed answer, and this whole concept here. Now moving on to the two launches that we have done, one in the anti-infective side, Dalbavancin, Vancomycin, and then the other one, Ceftazidime plus avibactam. Just wanted to understand how much time did it take us to come up with these two products in terms of R&D and effort that have gone into coming up with these products? How much money have we spent in the R&D here? How big is the market and what kind of growth rate for these two particular products here? And at what price differential are we going to sell this product vis-a-vis our competition? We are the first ones, I think, in terms of generic here, right? Yeah. I think, firstly, just to clarify, we'll be launching ceftazidime-avibactam in the month of November. We have built up the inventory for the last 6-8 months to keep all the APIs and all the formulation side because the patent expires in January 2027. We are coming with a unique protection so offshore, by which we can launch it 3 months before anyone else can launch. That's why Avik was mentioning ceftazidime-avibactam's innovator is Pfizer in India. We write the brand name as Zavicefta. They are the only one who are selling it in India right now. Like you rightly said, we are the first generic for that molecule in India, and we are going to launch it on our own and then maybe offer it to a few of our I would say associates also in terms of CMO also. Just to answer your question, yes, the work on this molecule started around 2 years ago. We knew that it's going off patent in 2023. We first worked on the API. API to sustain this on a longer version, it's always better to work on the API because, keeping in mind the antibiotic market, high erosion is inevitable, and especially for listed molecules, it may be of course high revenue, but if you're not good enough, strong enough with the backward integration of avibactam, then it would not make sense for us. Avibactam and Ceftazidime is just one combination. We are working going to work on multiple combinations of avibactam down the line. That's why we worked on the API on our own. That's what took us two years. Of course, first we started development of API. We worked on a different start to differentiate us as an innovator to start with, by which we can get a 2-3 months head start to launch it before the other competition. Thirdly, we also came up with the pricing, which is much more unique. I cannot share the strategy with you, how much we're going to launch it and all that because it's going to be launched next month and I don't want to make it public right now. Next month, I think in the month of November end, we are going to launch it and December it's going to be in the market. Of course, maybe in the next call I'll give you more insights and I'll give you the feedback also of the launch by then. Coming to Dalbavancin is a product which is not available in the Indian market. It's a very unique two injection on the first day and then followed by maybe if required third injection on the fifth day or, seventh, depending on the patient. This is only molecule available internationally. No other innovator has also not brought this molecule into India because they feel that. Right now it's being sold internationally at around $1,500. We want to launch this molecule in India as a fraction, where with this molecule it's not going to give us, I would say, volume. It is going to give us a good value and it's also going to give us good reputation because in the entire basket what we have almost all antibiotics, antifungals in our basket. We feel down the line when the resistance is going to come up for other gram-positive options like Teicoplanin, Vancomycin, Linezolid. This can be very unique, I would say, proposition advantage for certain patients where these other molecules are not responding. Getting that at a fraction cost for the Indian market always makes it much more clearer in terms of affordability. More importantly, this molecule is going to be a big success for us for the international market because we see in India more than gram-positive, gram-negative is more of significance. Dalbavancin for us next year is a very important product for Indore because we see markets in U.S. and Europe and other countries taking this product in a much more gung-ho manner. Dalbavancin, I would say, is more of a international product in the short term and coming to India on the long term, even though we launch it next year together. I think you'll see the actual numbers and values coming up maybe in the sequential quarters once you get maybe six months and Vancomycin and Linezolid is taken care of. Ceftazidime-avibactam also will be a star product for short term, where you'll see better volume growth and, I would say, revenue growth also because ceftazidime and I would say being broad-spectrum for gram-positive, gram-negative and cephalosporins normally also for Indian market is always preferred for many reasons. Did I answer that properly or I hope I did not miss any point? Yeah. Just one or two things that I mean, the follow-ups here. How big is the market for avibactam, which we are going to launch in India? Avibactam market, I think IMS numbers are not in my mind. If you know ceftazidime as a whole is around a big way. This molecule, if priced properly, can almost take a big share of the entire ceftazidime market. Again, I may be wrong. I don't want to give any wrong market. I know that ceftazidime market is more than INR 1,000-INR 1,200 crore range. Sometimes avibactam might not be more than around INR 80-INR 90 crore. Again, I don't know. I might be around. I'll just give the exact numbers in the next five minutes, ±. Just to give you a feedback, the reason that ceftazidime-avibactam in India has not grown is still you have the cheaper ceftazidime substitute. Our foray will be to make this pro-molecule more affordable. Doctors need this molecule much more, and we foresee that this market of ceftazidime-avibactam will at least go to at least a multiple of INR 100 crore in the next 2-3 years itself. This is our projection for the market. I'll just come back to you with the current market size of ceftazidime-avibactam. Only one player is there, and that's Pfizer. It is imported into India and there's a patent protection. Till now the market is quite limited. Sure. How much money would we have spent on the R&D of these two products? Sorry. Can I request you to come back in the queue? Sure. Thank you. We have our next question from the line of Rohan Rabindra Agarwal from Loop Advisory Ventures LLP. Please go ahead. Mr. Agarwal, can you please unmute your line? Hi. Can you hear me? Yes. Hi. I had a couple of questions. My first question is, I'm not sure if you've discussed this already, about the commissioning of the Indore plant. Can you just give us a few more color on when it will start impacting our P&L? It is already started impacting our P&L in terms of salary which are being paid right now to people there. The revenue impact on the P&L should come by around Q1 2023. We have started the construction in December 2021. We have finished the construction. I think when I mean finish, the main building and the R&D building has been done by October 2022. The machines are under process of getting installed. We feel the installation should get mostly completed by around February. There'll be around two and a half. There'll be a parallel installation and validation happening. We feel the entire validation and entire, I would say, commissioning should be completed by March or April 2023. Then we should see the revenue coming in by June. May or June 2023 for us. Sure. Another question I had was I heard you mention about dual chamber bags. Can you just tell us more about it and what sort of market size are we targeting with regards to that? Dual chamber bag is basically a drug delivery system by which I don't need to explain the product as such. You just want me to talk about the market access, is that right? Sure. I believe it's a mechanism by which the transmission mechanism for the medicine. Basically, it's a drug delivery system. I would say it just makes the entire thing very administration as well as patient compliant in terms of, more than the patient, it's more compliant for the nursing staff and the hospital staff as they save almost at least 2-5 minutes, depending on their efficiency on every administration of every injection. So it's a single bag where the IV bag and the powder is in the same bag, and you can just press it and it mixes. There's a good video on our website. If you have time, please go through it. That is a very self-explanatory video which shows about the dual chamber bag. Answering your next question, we were supposed to launch dual chamber bag in this quarter. That is I mean, maybe around September itself. By November where we already had everything in place. The government came up with the NLEM, in terms of putting meropenem also in this list. Our target was meropenem and then doripenem and then imipenem. Of course, we got a piperacillin license also. We have just decided to launch the product maybe in December or January to get more clarity from the government that even though we know for a fact that the pricing will not have that much impact on the margins or in our strategic launch. Now since we become scheduled, we just have to go to them and now we have to get an NOC from them that since we are, your normal vials are under price control about NLEM, we are going to come up with a dual chamber type approach. Why don't you give an exemption and allow us to put the MRP which we desire. That process is there. The market addressable thing is meropenem as a market is close to, we are going to start with INR 10 million and we're going to go with other antibiotic control like tobramycin cefotaxime and even sort of peptide for other antibiotic like vancomycin on an export basis, not in India. India it won't work. Even ceftazidime and imipenem which we are trying to launch right now will be eventually launched in a dual chamber bag once we get the necessary permission. This approach can be applied to all these molecules which are, I would say a little bit expensive than the routine ones. As well as it's something which you have the right administration, I think, volume of 50 ml or 100 ml to guide them. We hope that we can get this into multiple products. Starting off you want to start with meropenem, piperacillin and ceftazidime, which should be around INR 1,800-INR 1,000 crore market size. Got it. Cool. My last question is just regarding the Center of Excellence that you started. Just wanted to know how it will help fulfill our business objectives. Okay. I think that's why I'll repeat this, Roy. I think it's just the reason we went for it is also something which we thought about was when we see the toxin market. You have a toxin, then you have fillers, and you have these different, I would say, machinery available, which are mostly non-invasive, which mostly help for body and face contouring. Actually, the toxin market is close to $7 to 8 billion. US is around $5 to 5.5 billion, I believe. I'm talking about numbers which are in the public domain. Somebody mentioned $4 to 5 billion in 2017-18. Now it's come to almost $5 billion. I thought Indian market, which is still very small, I think not even a fraction of what we have. If you see the U.S. market around 0.4 billion people, India market 1.4 billion people. Still the market is very fractional. What we thought the reason we decided on this, and this was already decided and why we wanted to get into Center of Excellence. A lot of doctors want to use it. They aspire to use a toxin or filler or these things, but they don't know how to use this in a combination. The same thing, a lot of people. We have amazing doctors in India, but they are very few. A lot of few doctors have the power and have the expertise by which they can use this in a much more efficient way. You don't want any patient for your job to go bad also. There's a particular way and particular SOP by which you can use the toxin or the filler and also using some machines like Ulthera or using certain machines like radiofrequency, ultrasound or something, you can actually mold a face or a body depending on what you desire if you do it in the right way. That is something which we thought is something maybe Gufic as a thing because we have a doctor working with us who was earlier working in Malaysia, and he was working in Mars, and we have a big team who has worked in specific therapies, and that's what Avik mentioned. We are almost 20+, and we are in the process of getting around close to 35 different, I would say, techniques by which you can use toxin, use these machines and use maybe in some cases fillers. Not in all cases fillers, but use even in some cases. Not only use a toxin, some cases fillers and these machines. You can uniquely go for a body and face contouring which you desire. This can also involve in terms of I would say getting rid of some excess fat or getting rid of dimples, getting rid of and getting some depressions or some bits and in some, I would say, other parts taken care of. This is something you have to be trained, and that is the Center of Excellence has been created with that clear vision that we want to actually train the doctors. We want to handhold them. We want to actually use these. We have invested a good amount of money on this technology. We want people to come see it for themselves, see how it can be done. Also handhold them. Even our team will go back to them and make them train them for around maybe five days, seven days. If once they know, they are pretty good, then we associate them also with a particular. We have tied up with not only Indian, I would say, good training from AIIMS. We have tied up with a doctor from Germany. We've tied up with a doctor from U.S. Now we're getting someone from Australia to work specifically on some tied up our trainings also we want to do and the hands of these doctors getting used to. We get a lot of inquiries from the dermatologists and these other doctors who, "I want to use a filler. I want to use a toxin. There's something I want to add in my arsenal which I can give to my patient and things. But who will train me? Who will hold my hand?" That is the thing we have come up with the Center of Excellence, which of course eventually it will help us to sell our toxin, our fillers, and our entire, I would say, cosmetic range. Got it. Thanks and good luck for the quarter. Thank you. Thank you. Ladies and gentlemen, in order to ensure the management is able to answer queries from all participants, kindly restrict your questions to two at a time. We have our next question from the line of Bhavya Sonavala from Prime Asset Source Private Limited. Please go ahead. Hi, sir. Thank you for the opportunity. I just have two questions. Just with regard to the dual chamber bags, just wanted to understand how different is the international market, what we are charging in the domestic market would be in terms of dual chamber bags in terms of usage. If you can throw some light on that. Sorry, Bhavya. You mean to say the market size or Not the market size, but how well accepted is it and how is it in use for a while? I just wanted to understand how the market is expressed in terms of. Okay. Yeah. What is the response of the guy internationally and why do I feel confident we can go or we can do very easily? That's the question, right? Yes. That's it. Basically there are two companies who are focusing on this. One is, of course, ZILES and the second one is I believe Baxter. If you see the price difference between the vial and their bag is almost 3-5 times. Internationally, the costing is the big thing, what I feel for them because, and also it's a good registration process which happens in each and every country which might be of an issue. Again, I will not comment on how they're doing and what they are doing, but I think the pricing difference between a vial and a bag, if it crosses a particular percentage doesn't make any relevance for them to do that. At least our anti-infectives mostly under this bag being used, their price is always a big factor. What we have done right now, we tried to get launch right now almost close to the current MRP level. So maximum around is 15-20% above that for the 10 ml market for it. For piperacillin-tazobactam, we are asking for a little bit more higher pricing because product is anyway NPPA controlled. So we feel since the current pricing for us is not as high, I mean, I'm talking one time, two times or three times, we're talking about only percentage over the current thing. With economies of scale, we have a clear-cut roadmap. In the next two years we will start manufacturing this bag also in-house because once we reach that critical mass. At that time we have already done our homework and we have done our research that eventually in the next two years we foresee that the bags and the vials should be at the same size once we reach that critical mass. I mean the same price, sorry, what I mean. Again, I don't know if internationally. There's no relevance of the international for us to get into this market in India. We saw a good solution and we saw that the current pricing supports our strategy. In the next two years, if critical mass is achieved, we are almost seeing that whether we can replace the vial overall aspect also. Okay. Thank you, sir. Thank you so much. Yeah. Thank you. We have our next question from the line of Saurabh Beria from Axon Owl Investment Management. Please go ahead. Thank you. My question was: Over the last four years, our contingent liability as a percentage of net worth has been very high. It mainly comprises of letter of credit and bank guarantee. Can you elaborate more on those of which types, like the nature and the purpose of these activities? Sure. I think, Saurabh, I will request Roonghta sir to just question that. Just to understand, most of our raw materials, something which we use in a unique way is imported. That's how a lot of our RM which is coming, which as per se we are trying to get back to the recombinant form. That's why we maybe in the next two years will be a little bit, I would say, de-risk from us. If I understand it correctly, a lot of material comes from Korea, from Italy, and of course from China, and mostly open LCs and then buyers credit. I think it's just this thing. I don't know if I have any confidence that I'm, at least I've answered the question right or not. Yeah, This was only the question. Can you elaborate the exact nature of these transactions? Sorry. Devkinandan, do you want to say something? Yeah. Typically, we import our raw material from China, Europe and other countries against the LC. Sometimes the LC period, buyers give a credit period of 30 days or 70 days or 180 days. Accordingly, if he has given a credit period of 90 days, for remaining 90 days, we sometimes take a buyer's credit because it's cheaper. We are also having an export. Because of export, it's also hedged. We do not require to pay hedging costs. Our borrowing costs will be almost close to compared to because around 7%-8%. That is the nature we are purchasing a buyer's credit from the bank. Okay. Thank you. My next question was, our R&D expense as a percentage of sales has been quite low when compared to the other pharma companies. Is this because of the nature of the business or any other reason? Basically, there are two types of R&D expenses. One is we call as a validation batch. The validation batch is basically consumption of raw material and packing material. That basically goes under the head of raw material consumption. Then there is a second type of expenses which we are giving to doctors for conducting a trial, that is going on other expenses. On which we have to see this R&D expenses as we incur a third party is we are showing under the R&D expense. Therefore, our overall R&D expenses is around 50% of the turnover, whereas the direct payment of R&D expenses is hardly around INR 4-INR 5 crore. Okay. Thank you. Can I proceed with another question if the moderator allows? No, sir. I request you to come back in the queue. Okay. Thank you. Thank you. Thank you. We have our next question from the line of Nishit Shah from Karmayachya Wealth Management Private Limited. Please go ahead. Hi, Pranav sir. Congrats on the DCGI approvals and entering so many niche segments in the sector. My question is regarding Botox. I saw in your presentation that the market size for Botox is between INR 150 crore and INR 200 crore, which is very minuscule. I want to understand from you, where do you see this market size and demand reach in the next five years, especially in the cosmetic. At the cost of. And what is the cost of, and since the cost of treatment is lower in India in comparison to all the other countries, do you see this as an export opportunity for Gufic? Thanks. Yeah. Very frankly, I think along with cosmetic, neurological conditions and medicine use also will be equally important for, Botulinum toxin. Stunox and Zarbot are our brand names. Stunox has been actually launched for cosmetic and Zarbot has been launched for, medicine use. Yes, the current market is small, and that's what I feel that at least, we hope, that we can contribute in also. Not only. Minimum our target is in the next, 3-5 years, growth will take time, to gain momentum. Like you see even countries like Thailand, forget U.S. and Europe and other things, but countries like Thailand and Vietnam and even our like neighbors who surrounding in the Southeast Asian market and even South America or even in Middle East, the penetration has been good. Just to give you an indication, we were in the seminar some time ago. A market like Iran has a consumption of around 800,000 vials. A market like Russia has a consumption of around 1,000,000 vials. A market like Thailand, again, the numbers are what I have been told, of course, these are all data from the IMS, whatever is there, is more than around it's also around 800,000-1,000,000 vials with that population as such. More than. Again, I feel it's not the question of affordability. I think affordability is always there. This is a question of accessibility and more options available. One is awareness, of course. People should be aware that why don't you do it? I think awareness is building up quite faster than what we feel. Only that if I know about it, where do I get it done from? Who can do this procedure? I mean, who can help me to do this procedure in a very confidential manner or in a clandestine manner or a secret manner? Because still I don't want to go out and talk about it, that I have got this done. That's the normal human psychology what I feel. I may be wrong. That is where we feel that if we can get more and more people trained to have this treatment available in their regional or in neighborhood, I would say trusted medical space, then we will have reached the penetration. If I give you the numbers of 800,000 or 1,000,000 vials the market has the potential to become even INR 2,000 crore or INR 3,000 crore for India, from the current market of INR 150 crore. Somebody has to do the hard work of starting that initiative, and that will be tough, but we will go from there. Definitely. Thank you for that answer. My second question was on, like the last candidate asked about, avibactam. I wanted to understand that what is the R&D cost and the market size for avibactam? Market size, again, like I told you, after the call, I didn't get time to see the IQVIA IMS data as of now, but I'll ask my team member if they can do that. It should be around maybe between INR 60-80 crores. But again, I'll reserve my comment till I actually give the number. But it has a bigger potential, very frankly, because the cheaper version is available as such. I just feel that Avibactam, coming to your first question, I don't know. I mean, I cannot give you a specific number as of now. Maybe anytime we can conduct a query. Once again, I'll specifically try to give you the numbers. Every molecule has such overlapping cost of manpower in terms of materials, in terms of. Maybe R&D consumption is something I can tell you much easily, but how much work has happened, how much trial has been done, clinical data has been done, because there's also a certain sort of a, not only in vitro, but now we are also doing some in vivo study also that our product is matching the innovator's one. There are so many different factors which come into play. On average, you see any molecule which has to be launched, especially injectables, from a commodity perspective to around INR 6 crore to maybe a specialty like Adalimumab around INR 13 crore. This is a normal range which happens for any R&D development for any molecule. This of course includes the clinical cost and the clinical data also if required. This is a normal average cost which goes behind each and every molecule which we work on. Okay. Thank you so much for your detailed explanation. Wish you all the very best for the next few quarters. Thank you. Thank you. Ladies and gentlemen, in order to ensure management is able to answer queries from all participants, kindly restrict your question to one. We have our next question from the line of Aman Vij from Astute Investment Management. Please go ahead. Yeah. Good evening, sir. My questions are on Criticare segment. First, on the Criticare segment. You had talked about we have an aspiration to reach the top 3 players in the next 3-4 years. Could you talk about what is the sales of the third player currently in this segment? Basket size what they have, you're saying, right? Mr. Choksi, I'm sorry to interrupt. You're not audible. Can you repeat, please? Sorry. Aman, if I understood your question right, you're asking me the actual crores of value what- Yes. The third player is paying? Yes. Yes. I think what I've said is well, all the numbers I will. If you want these, I personally give you specific numbers. But yes, but your estimate. It's okay. Even rough estimate. I feel I'll just tell you that I am around maybe INR 20 crore away from them. I'll just give you that indication. I think with the HMG what we have, 9 and FBD we have, and coming with the entry of bio and also with the entry of recombinant molecules coming in, I think we can achieve that very easily. Reasons are because we have the backward integration, I mean, the backward advantage of manufacturing, which is something which make it a bit faster. I think there is a gap what I feel right now. Of course, there's a bigger gap with the top two, but usually we feel that in the next 24-36 months it should help us to complete that in a much more efficient way. One clarification on this and then specific question. You had talked about our current market share of the offset market is around 3%, and you had talked about taking it to 10%. Yeah. That means that we are talking about utilization becoming like 4-5x. Are you expecting this kind of growth in the next 2-3 years for us? If yes, then, sir, in terms of molecule launch, because one of the big molecule we have launched is dydrogesterone. But there you are talking about we are only targeting very less sales compared to the whole market. It will require like INR 50 crore plus kind of product. Yeah. If you can talk about your thinking, how will we reach this 4-5x sales of fertility segment in the next 3-4 years? Yeah. Aman, dydrogesterone is of course one of the products. I would not say the main product. Actually, in fertility segment, which you talk about, we normally talk about these modulating hormones, and we normally talk about down-regulation or up-regulation of these different body cycles. More than that, there would be more options in FBD, HMG, FSH, the recombinant follitropin, recombinant molecules of, again, FSH and HCG coming in, which will become a game changer for us. Dydrogesterone, like I said, we are early player in the market, and that's why we are little bit, I would say, prudent on that estimate, because dydrogesterone, I think, two, three companies have done a wonderful job. We are actually little bit late in that, and that's why we are being little bit conservative, because we don't know how much is there. More importantly to answer that thing, why we think 3%-10% is because of the hormones, the peptides and the recombinant molecules coming in at the scale which we are getting into manufacturing and the factory limitation once the recombinant molecules come, that will be seen. The market as such, it has already consolidated much more in the fertility segment. There's a lot of players who are actually just buying and from a manufacturer and then trying to sell it in the market and take the share. We see a lot of consolidation of these buyers of these fertility intermediary companies happening in the next two, three years. That is where we feel that there will always be a scope of much how would you say, better penetration going forward. I would say recombinant molecules, expansion of efficiencies of our hormones and peptides, plus launch of certain, peptides for endometriosis, along with a combination of orals, plus, I would say some, unique molecules we are working on reoccurrence, implantation failure and also on again, endometriosis, which already we have spoken in the past. These are the things which will help us to take that market share much more. Thank you. We have a next question from the line of Keshav from Raksan Investors. Please go ahead. Hi. Sir, in your presentation, there's a mention of us building capabilities for peptides and cyclopeptides. Earlier you had also argued about Vancomycin. Are we currently sourcing the drug substance and we are just formulating? Is that the correct understanding? Vancomycin is not the peptide I was referring to. Vancomycin is normally. In fact, even though it's a peptide derivative, but it's more of a fermentation thing. That is something which we are outsourcing only because it's published in markets and there are only players who have better efficiency in terms of fermentation than us. It's not our strength. The peptides I was referring to is mostly these biological peptides which are going to be used for infertility. Also, they're going to be used for sepsis management. Also, they're going to be used for female I would say sexual drive also, which are going to replace certain oral things also. These are mostly peptides which we are working, which are different from that. For which only trials are going on in terms of endometriosis, and it will be something for sepsis. Down the line, we also plan to work on a peptide for some other indication I cannot disclose right now. That's what I recall. Then we are looking at new drug delivery systems. We are trying to get these peptides in the form of implants for sepsis depots, which have an international market. Once in a month or once in three months or once in six months options available. You can just take a simple, I would say, depot intramuscular or I would say subdermal implants which are much more long-term. Thank you. This is the last question from the line of Narendra from White Oak Capital. Please go ahead. Thanks for the opportunity, sir. My question is on ceftazidime-avibactam. As I understand, this is basically used as a alternative to your existing antibiotics. That is carbapenem in drug-resistant organisms. Does it mean once the ceftazidime-avibactam is more easily available, our existing carbapenem sales will be impacted to some extent? Very good question. I think, sir, you already have a background knowledge about the, I would say the, again, I'm saying pharmacologic properties. I feel more than they get affected, there are a lot of conditions where people are using a cocktail of products going forward. Instead of that cocktail this will be more of a drug of choice in certain cases where you don't want to go and try and error and you don't want to go trial and error. Yeah, Penems, I would say Penems is a market so huge that I don't think much impact will come. If the affordability of ceftazidime-avibactam becomes lower, which will take some time, and we are all trying to work on that, definitely you will see some change happening in the penem market. Right now because of the pricing difference between both, I still think there is enough space for both and they will survive. Okay, sir. The next question is on Thymosin Alpha-1 in sepsis. As I understood, there is already reasonable data over last 10 years to suggest that this may not make much impact in sepsis study or sepsis treatment as such. Are we doing something different here? Why you are going ahead with the Phase 3 trials when there is already some evidence? If you see that, on the contrary, we went to almost 200 publications where we've seen that Thymosin Alpha-1 is used in a much more, I would say, efficient manner. Because during the time we always had the issue of it working and not working, depending on the timing and issues. I'm not getting into the debate right now. If you talk about Thymosin Alpha-1, we have seen the results in COVID. 200 plus publications of sepsis has shown that when used in the right time initially, it can really help to I would say suppress the inflammatory parameters, which we have seen in COVID also, like cytokine storm and certain CD4, CD8 or even, I would say specific, of course, inflammatory parameters what we see, you know. We feel that it still has a role to play because if you see, our Immunocin Alpha was the only product which was approved in moderate to severe patients having the COVID thing. That is mostly inflammatory parameters where we see in a normal case, maybe three people were dying out of four. In case of Thymosin Alpha-1, only one person is dying out of four. We, I mean, that's a big one. Right now we feel still one patient died, but we have survived, we survived on the contrary. That way we feel we are still quite bullish on the data, what we did independent because of the before also, via some doctors who had tried it in the past. They are quite gung-ho, and we still feel. I think what if you need, we can try to send you some publications which we have, and maybe I would like to understand from you what publications you have also to actually go through this data and, maybe you can teach us something which we are not aware about. I'll be more than happy to see what you are looking into. I would like to go through it later. Let's see. Sir, other question is, which was mentioned in Q2 presentation. Actually channel checks do suggest that Q2 impact was less subsequently for hospital segments in particular. Sorry, your question unclear. Could you specify that point again? I could not hear your last question, last sentence. Narendra, please use the handset. Can you hear me now, sir? Yeah, better. Please go ahead. Sir, in the presentation it was mentioned that Q2 sales were impacted because of low hospital occupancy. Yes. The channel checks do suggest that Q2 impact was not the highest for clinical admissions and occupancy. Can you throw some more light on it, sir? Your question is that in Q2 we have mentioned that the critical care sales in the Q2 were impacted because of less hospitalization and channel, what you call, Inventory. Channel, stocks, inventory levels, right? That's what we have written. Yes, sir. You feel that hospitalization has gone up in Q2? That's what you feel? Or that's what you have read? That's what I feel, sir. what we feel, I think, Narendra, very clearly there are two issues. In lot of cases, what I feel and what we have worked is the thing, what was pre-COVID conditions in terms of planned surgery and other hospitalizations had still to come and even if it has come in ten years, I don't deny. There's a lot of inventory in the channel which is blocked. A lot of people post-COVID also had maintained very high inventory. Not only in Asia, including us, hoping that and I would say, being prepared for if something comes back again. That high inventory has led to a lot of, I would say, inventory in the channel. That is also one way which is affecting us. That's my opinion. Because right now, so many companies had this anti-infective antifungal. It was only COVID, but even mucormycosis also led to a lot of increase in antifungal inventory also. Then we spoke to doctors and all that. They say, "Yeah, we have it, but in the hospital stock, in the district level stock and all that, we have so much stock that even if hospitalization is happening, firstly we are trying to use that inventory first and then we'll go for the new one." That's what we got the feedback. That's what we felt that our Criticare could have done much better. Even though Roonghta said that from one, if I remove the COVID sales last year and I do a normal Criticare, we have still seen not that much growth which we have seen in the other divisions part of it. That's why we feel that our Criticare should have done much more, but we feel it was affected because of these two factors. Thank you. I would now like to hand the conference over to Miss Ami Shah for closing comments. Over to you. Thank you. Thank you everybody for joining this call. I hope all your questions and queries are satisfactorily answered by us. In case if there are any further questions which have remained unanswered, you can reach out to us or Mr. Devkinandan Roonghta from HDA, our investor relations partner. The contact details are already provided on the last slide of the presentation uploaded on the website of the company and on the website of the host company. Thank you once again. Hope to reconnect in the next investor call. Thank you. On behalf of Gufic Biosciences Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.