Ladies and gentlemen, good day and welcome to Q4 FY 2024 earnings conference call of Alkem Laboratories Limited, hosted by Motilal Oswal Financial Services. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Tushar Manudhane from Motilal Oswal Financial Services. Thank you, and over to you. Thanks. Good evening and a warm welcome for 4Q FY24 earnings call for Alkem Laboratories. From the management side, we have Dr. Vikas Gupta, CEO, and Mr. Nitin Agrawal, CFO. Over to you, sir, for the opening remarks. Thanks, Tushar. Good evening, everyone. Thank you for joining us for today's Alkem Laboratories Q4 and FY24 earnings call. To discuss the business performance and outlook going forward, we have with us on the call the senior management represented by Dr. Vikas Gupta, CEO, and Mr. Nitin Agrawal, CFO. Earlier during the day, we have released our financial results, press release, and the investor presentation, and the same has been posted on our website as well. I hope you all had the chance to have a look at it. Before we proceed with the call, we'd like to remind everyone that this call is being recorded and that call transcripts will be made available on our website as well. We'd also like to add that today's discussion may include certain forward-looking statements, and the same must be viewed in conjunction with the risks that our business faces. After the end of this call, if any of your queries remain unanswered, please feel free to get in touch with us. So with this, I would now like to hand over the call to Dr. Vikas Gupta to present the key highlights for the full year and the quarter and the strategy going forward. Thank you, and over to you, sir. Thank you, Purvi. Good evening, everyone, and I welcome you all to this earnings call for FY24 and quarter four. I'll start by presenting an overview of the operational and financial achievements for FY24 as well as for the fourth quarter. Post this, we should be happy to answer any questions that you may have for us. Our focus has been to improve the EBITDA margin during the year on the back of benefits through implementing various cost control initiatives as well as the favorable API prices that we had during the year. Continuing our trend of improved operational performance, Q4 builds on the momentum gained from previous quarters with significant gross margin enhancements backed by lower raw material costs as well as the lower intensity of price erosion in the U.S. We are happy to highlight that Alkem has registered a net profit before tax of more than INR 2,000 crore for the first time. Also, one of the first is that our international business has crossed the revenue of INR 4,000 crore in FY24. Coming to the highlights of FY24, during the year, we have generated approximately INR 1,400 crore in cash, which reinforces our balance sheet to establish a substantial net cash position of around INR 3,550 crore. We outperformed the IPM in antidiabetic therapy, which everybody has been looking forward to us to grow the chronic business, and that is really on track. Not only antidiabetic, in other markets like derma, GI, and even the VMN therapies, we have really outperformed the IPM, and our ranking has improved in therapies like antidiabetic, cardiac, as well as the respiratory. The company maintained its leading position in the anti-infective segment. However, we all know that the anti-infective market saw very sluggish growth in the financial year 2024, and that did impact us as well. The company continues to rank among the top five companies in the Indian pharmaceutical market. Our international business has delivered a very strong growth, with U.S. business reporting double-digit growth of more than 10% for the year. In the non-U.S. business, across geographies, we continue to achieve very healthy growth. Coming to quarter four FY2024, in quarter four, it has been a good quarter in terms of profitability improvement for the company. Our EBITDA margin improved by 150 basis points as compared to year-over-year Q4 of 2023. From 12.2%, we moved up to 13.7%. The net profit after tax for the quarter stood at INR 294 crore. PAT for Q4, it was impacted on account of derecognition of the deferred tax of INR 120 crore. Adjusted for the above item, PAT growth for Q4 FY24 would be roughly 54%. During the quarter, we have received two ANDA approvals. Our biosimilar business is performing impressively and witnessing significant traction in the domestic biosimilar market with a portfolio of 7 products now. We aim to sustain and carry forward this performance momentum in the current financial year. Thank you for your patience in listening, and the house is open for any questions that you may have for us. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to limit their questions to two at a time and to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Kunal Dhamesha from Macquarie. Please go ahead. Good evening, and thank you for the opportunity. Sir, would you like to provide any broad outlook for FY 2025 in terms of revenue growth and profitability? Hi, Kunal. So I've always maintained that our revenue growth will be in line with the market growth. We will be, say, we'll be at par with around 10% is what our revenue growth looks like for the coming financial year, and largely driven from even the domestic market. In international business, our U.S. business is going fine. The price erosion that we used to see over there, that has now stabilized at a low single digit. And that is what gives us hope that even our U.S. business will grow pretty fine. So that's on the revenue business, on the revenue. In terms of gross margins, we maintain we will be within the range of both the gross margin as well as EBITDA as to what we are currently. So I think that is what we will as a guidance, I would like to give you. Just a follow-up on the cost efficiency measures that we have taken, right? But when I see the, let's say, the improvement on a year-on-year basis from around 14% EBITDA margin to 17.7% in FY 2024, the majority of that is driven by the gross margin improvement and I think another 60 basis coming from the lower R&D expense. So the cost efficiency measures, will it kind of be positively impacting us going forward, or is it already baked into the improved gross margins? So it's an ongoing process. Some part of it, we have already baked in in our gross margins. But as we continuously keep our focus on improving costs, I'm sure this will add further. But on the overall API prices, currently, the prices are pretty stable. So sometimes, if we are more cost-efficient on one side, there may be a scenario that we see an increase on some of the cost side of certain raw materials, which we can't predict. But anyhow, we are not seeing any such trend currently. So I'm assuming that at a business unit level, our EBITDA might even improve as we move along. But there are certain investments that we are going to make for the future growth. That is why I'm saying that our overall EBITDA at the corporate level, because of those investments, might still, I would maintain it where we are currently. Is it more R&D expense that we are expecting? See, there are certain initiatives that we are taking which are future growth potential initiatives. Say, for example, we are putting up this plant in the U.S. for Enzene CDMO business. So that will take up some part of our investments. That will become operational by the end of this financial year, most likely. And that's a business that we are very bullish about in times to come. So I think some of those kind of opportunities, we have our investments to make, which is a mix of R&D as well as some of the CapEx that we may have to do for future growth opportunities. Tushar, and one more with your permission. On the data, what would be the CapEx for FY25? It will be to the tune of INR 600 crore-INR 700 crore. Okay, perfect. I have more questions. I'll join, but thank you. Thank you. Sure. Thank you. Thank you. We'll take our next question from the line of Neha Manpuria from Bank of America. Please go ahead. Yeah, thanks for taking my question. So on the guidance that you just mentioned, when you say GM at current level, the gross margin at current level, I'm assuming you're talking about the full year number? Yes. I'm talking mostly about the full year number. While I understand the investment in future growth, the U.S. plant that you talked about, but that will only start hitting our P&L post-commissioning, right? So is there any other investment specifically that you're doing in R&D or MR expansion because of which we are keeping our EBITDA margin guidance as similar to what we have done in FY2024? So not on MR expansion side, any major investment. But on R&D, if you see this year, we have been at around 4.1%. But generally, we would like to keep it at 4.5%-5%. That's something that has been our trend on the R&D side. And that includes some of the clinical trials that we do for some of our biosimilar portfolio as well. So I'm forecasting the R&D spend somewhere within the range of 4.5%-5%. And I think put together some total of that, that's why I'm keeping the guidance at. Understood. Understood. And if I were to specifically look at the India performance, while I understand that seasonality didn't really benefit, was not really a tailwind this year, fourth quarter usually does not have any seasonality benefits. So it is surprising to see a decline year-on-year in the India business. Anything specific that you want to call out as to what's happening in India and anti-infective other than the seasonality? Is there anything specifically that is impacting any other segments or any other therapies in India for Alkem? Neha, my belief is that it's a one-off. If you will see even the IPM, IPM and the anti-infective market for Q4 has degrown. It will degrow at around 2%, 2.2%, which is a very unusual trend. And I guess the reason for that is the high base in Q4 of FY 2023, which saw a very good outbreak of flu. And I think it's a seasonality and a base correction that has happened in the market. And equally, we are impacted. And this is not new in the acute market. We see some of these peaks and troughs depending on certain events in the external environment. So I think fundamentally, we are going very strong as far as our domestic market is concerned. We are very bullish. This is one of our key core markets. If you will look at the other therapies that I mentioned, we have significantly outperformed in these markets as far as India business is concerned. So I'm sure in the and even in the coming year, we are very bullish on our growth in India. So I don't foresee any major challenge. See, there was also an improved, I would say, focus on the profitability, overall profitability from the organization's standpoint. And that's why Q4 is looking a little sluggish. But otherwise, we are very bullish as far as our India story is concerned. Last time, you'd mentioned some concerns on the pain segment, competitive pressures there. Has that improved? Have we been able to sort of allay those concerns related to competition? We are continuously at it. If you will see on the pain portfolio, we are registering internally quite significant growths. Strategically, whatever initiatives we had to take to counter those, we have already put in those strategic initiatives. Over a period of time, we will see the market also registering better performance in times to come. Got it. Thank you so much, sir. Thank you. We'll take our next question from the line of Rashmi Shetty from Dolat Capital. Please go ahead. Yeah, thanks for the opportunity. So again, on GM, generally, when I see the trend of the company, quarter four has always done higher gross margins. Sorry, Rashmmi. I'm sorry. Give me a moment, please. We'll check our connection. Meanwhile, we'll take the question from the line of Saion Mukherjee. Please go ahead. Yeah, hi. Hi, sir. Thanks for taking my question. So firstly, on your comment on the domestic market, I'm wondering, the growth, of course, seasonality is one factor. So when you think about growth next year at around 10%, given that you have a large NLEM portfolio where there is no price increase, are you banking on normalization of seasonal demand to get to this growth? To some extent, that. And I would say a strong volume growth because we have large feet on street. We have initiatives that we run quarter on quarter. So this year, we have had pressure on volumes, right, in a year where we do not have price as a lever for growth, which is around 30% of our portfolio is NLEM portfolio. But I think balanced 70% portfolio, we have levers of price as well as volume. On this 30% portfolio, it will be largely driven by volumes. So that is why I'm overall quite bullish on our India story. Of course, as the year progresses, we'll get to see even the market should show a better movement. But of course, if there is a sharp decline in the market, we may also get impacted, but which is a very unlikely scenario at this point in time. I'm banking on a strong volume growth that we will be driving as far as our business is concerned. How has been the performance of trade generics for you in this fiscal year? And an associated question is, when you talk about volume growth, you see many companies launching their trade generics division and getting aggressive there. And you have additional competition from generics, private label, etc. So aren't you worried about these headwinds which can impact volume growth over the medium term? Saion, I have a different take on this. I think we have a unique proposition as a company where we are the largest trade generic player in the country. Our trade generic business continues to grow along with our RX business. We have the know-how of managing these two businesses the way they need to be managed. Any headwind on the trade because of new entrants, of course, the market is competitive. I think that's the nature of our market, and we have dealt with it in the past as well. We are not seeing any, I would say, issues in terms of growth in our trade generic business, so to say. In fact, we are even improving on our margins as far as the trade generic business is concerned with every passing year. So with the kind of scale that we have in this business, in fact, we are very bullish about both the trade generic as well as the branded generic business. In the trade generic business, we are even going ahead with a lot of products that we are going to launch new on the trade generic side, which should further propel the growth of our trade generic business with improved margins in the medium term. Right, sir. You talked about margin and cost measures earlier. I'm wondering, I understand that international and U.S. business, the margins can go up with volumes. What about the domestic business? Whatever margin levels you have, how do you see India business margins in general over the medium term? So India business margins, with the increase in volume and with the reduction in the API prices of certain key products, we see a positive trend on the India side as well. So during the previous years, especially during COVID times, we had seen a very significant upsurge in the pricing of some of the commodity APIs, which has stabilized now. And I think unless there is a black swan event which drives these kind of prices further up, I think these raw material prices, I expect them to be stable. I expect them to be at this level. Of course, there are certain elements which will play out in the market over a period of time, and that will decide on some of our key products like Pen G where everybody is expecting the price to come down. So far, we haven't seen it getting played. If that plays out the way everybody is anticipating, then I'm sure our margin profile would even get better. It's more around raw material and the impact is limited from other expenses like SG&A, etc.? Yeah, not so much to do. We have a scale business, so those are pretty much standard SG&A expenses that we have. But I think it's the raw material which will impact if any gross margin improvement further has to happen. I think that is how it will be. Okay, sir. So I have one more question, but I'll join back. Yeah, and one more point that can impact the margin is the mix. As our chronic business is improving, as the portfolio, which is a higher margin portfolio, as its contribution increases over a period of time, then that also will contribute positively to our overall improvement in the margin. Right. Yes, thanks. Thank you. We'll take our next question from the line of Rashmi Shetty from Dolat Capital. Please go ahead. Yeah, thanks for the opportunity. Am I audible now? Yes. Okay. Sorry if I'm asking this question, and you might have answered this because I lost the connection in between. So just on the gross margin side, just need a clarity that every fourth quarter, we have normally seen higher gross margins compared to your first three quarters. While I understand that you have given the explanation that stable price erosion and lower input cost has benefited to that extent, I just want to understand that for your cost control initiatives, any restructuring or anything which you are seeing to improve on the supply side, on the inventory side, sourcing materials at a cost-effective way, anything that is also leading to this improvement? Yeah, Rashmi, I wouldn't attribute this improvement to any one single step. All of this that you mentioned is also what we do on a day-to-day basis. So it's a continuous improvement process. It's not a one-time improvement initiative that we take and leave it at that. So I guess all of this, what you have referred to, including the supply chain efficiencies, including the raw material procurement, etc., we do it on a day-to-day basis. And wherever there are opportunities to improve the margins further, we do that. So I think it's a mix and some total of all of these initiatives that has led to this kind of improvement, which to my mind should be sustainable. Of course, because of mix issues, it might be a slight variation here or there. But I guess on an analyzed basis, more or less, it should pretty much stabilize at it. Okay. And on your U.S. business, the sales have come down significantly on a quarter-on-quarter basis. In the first three quarters, we managed to do $80 million plus, but this quarter, we were below that, around $74 million-$75 million. So just want to know, this was purely seasonality, or there are any other issues with it? So I would say it's on two accounts. One is some of seasonality. And second, even some of the supply issues that we had in U.S. business, which was, I would say, one-off, that impacted us for one or two months, which has largely led to quarter-on-quarter if you compare it like that. But if you will see even the previous years, the trend, more or less, because of seasonality, has been like that even in U.S. business. But yeah, I mean, we are seeing the way I will put it, U.S. business, the kind of price erosions that we were seeing in the previous years, that has come down. We every day read reports in newspapers that U.S. is going through a drug shortage for many products. For that to happen, the products need to be available over there. I think it's translating even in our numbers where we are seeing the prices getting more or less bottomed out for many products. I think that is a general larger trend. We are very bullish now that because of our volume growth that we are getting in U.S. business, our U.S. business should also continue to grow significantly. How many launches we have done this year, and how many are we planning for next year? So this year has been just two to three launches, and similar is our expectation in the coming year. So in Q2, we will see our bigge r trend. So that is what we'll look at. But we are looking at in FY25, overall, we are looking at around six to seven launches, I would say. Sorry, I said two to three. Six to seven launches. And one of those next year, we launch. So looking at around 7%-8% growth contributed by the new product launches in the U.S. market. That is something that we are looking at. Okay. And one last question on Enzene Biosciences. We had given earlier sales guidance of achieving INR 2 billion and achieving the break-even level. Have we achieved that, or any outlook if we can give for next year? So we are pretty optimistic about that business. Today, I think whatever guidance we have given, we are more or less running in line with that. But I guess it is FY25 and beyond, actually, because we are making some more investments in that business to make sure that we grow the top line. So at that individual business level, I guess we don't look at profitability like that. But I think we can give you more on this. Nitin, would you like to add? So the numbers. So the investment we have made in Enzene in the last 10 years was mostly for India in the plant and in the R&D, which we did for India market and for Europe market. So that business has achieved break-even in last year. Now, in the current year, we will invest for U.S market. We are building a plant in the U.S. We will also invest in R&D and for other related stuff like CDMO for the U.S. market. So there will be some expense which we will incur, and the revenue will start generating maybe from quarter one of next year for the U.S. market. In this year, we may incur some expenses related to R&D and training of employees for the U.S. market when the plant is ready in the U.S. in the second half of the current year. So for the U.S. market, definitely, we will report a loss under Enzene. But the India market and the Europe market under the Indian operations will do well, where we have already almost break-even in FY 2024 itself. Got it, sir. Thank you so much. Thank you. We'll take our next question from the line of Damayanti Kerai from HSBC Securities and Capital Markets. Please go ahead. Hi. Good afternoon, and thank you for the opportunity. My first question is again on India business. So Dr. Gupta, you mentioned you're very positive on outlook for volumes in FY25 after a muted slowdown in FY24 last fiscal. So theoretically, just if you assume volumes still remain muted, then what are your expectations on contribution coming from the price hike and new launches? So very broadly, and other two drivers, what are your expectations? See, I will maintain my guidance of an overall growth. Of course, there are levers of price, volume, and new launches. So I think largely, our growth is mainly volume-led growth, which is going to be there. So we have 3% growth that comes out of price that we take. There are one or 2% growth that we attribute to the new launches that we do during the year. And balance, we should have the volume-led growth. So I think that has been the general break-up, and that is what I expect in the current year to go ahead. Sure. My next question is again on India segment. Improving contribution from chronic segment will be a key driver for your profitability, I guess. Can you update us on what is the contribution coming from chronic portfolio, and then what is the productivity in terms of sales team on chronic and acute team? So I think every quarter, I get this question, and I will once again reiterate. See, like I mentioned in my earlier commentary, antidiabetic markets, we have grown substantially well. If you are asking the productivity, then for FY24, we have an overall group-level productivity at around INR 4.5 lakhs. From chronic, it's around INR 3.5 lakhs already that we have bought. So that's on the productivity side. But if you look at the percentage contribution, today, we have around 17%-18% business that comes out of chronic, and I expect it to cross 20% in the near term to mid term. Okay. Lastly, you mentioned you are broadly done in terms of hiring MR, medical representative, etc. Any addition planned for this year, or it will be no meaning? See, I mean, India is our core market, home market, right? Not the kind of expansion that we have done in previous years. We do not have any such plan for this year. Of course, if there are minor additions here or there, that we continue to do, but nothing like we have done in the recent past, right, in the previous years. Okay. Sorry, can you mention what is the headcount on MR size? Today, put together, we have around 12,000, which is the number that we have overall on our field force overall. Okay. Thank you. Thank you, Dr. Gupta. Thank you. We'll take our next question from the line of Kunal Dhamesha from Macquarie. Please go ahead. Hi. Thank you for the opportunity again. So on this U.S. capacity that we are putting, can you share what is the capacity size and approximate Capex that we are doing? And this is on biologic side, right? Yeah, yeah. This is a CDMO facility for the biosimilar that we are putting. I would differentiate from right now giving the capacity size, etc. But on an overall CapEx side, I think we have given a guidance that we will be within for the overall CapEx for the company will be to the tune of INR 600 crore-INR 700 crore, and that covers the CapEx that we will have to put in for this facility as well. Okay. What would be our maintenance CapEx? See, this includes around INR 80 crores-INR 100 crores of maintenance CapEx, which we incur every year, Kunal. So only if you are looking at the facility, it should be to the tune of around 400 to. No, no. This is maintenance CapEx is for the existing. No, no, no. I'm saying this question was on U.S. facility breakup. I mean, what is it that we need for? For U.S. facility, the new facility, we will have a CapEx around INR 400 crores. For the maintenance CapEx of existing plant, it will be in the range of INR 80-INR 100 crores. Sure, sure. And second question on the trade generic business, what was the contribution of trade generic business this time around? So we are, I think, between the range of around 20%. 20% is the total contribution of trade generic business to our domestic business. So has it come down substantially? Because I think last year, we were somewhere around 23%, 22, 23%. No, no. In fact, it has remained stable, and it is also growing. It is growing at a similar pace of what our general overall RX business goes. Because I think last time, around this, we were at 23%, and it has been growing slightly faster, and hence, the contribution is increasing. In terms of percentage, maybe in a year where our branded business has not grown that well, it ranges within that range. So one or 2% here or there, it remains. But this year, we are giving you this year numbers that we are within the range of 20%-25%. So going forward also, it will remain in the range of 20%-22% only. Okay, okay. And in terms of margin, you earlier alluded that the margin in this business is improving. So maybe qualitatively, if you can say what is the gap between the branded versus a trade generic business in India and how that gap has moved over the last three, four years? See, generally, we have not given any segment-specific margins. What I can say is we are improving with every passing year. Of course, everybody knows that these two businesses operate at different margins. I would say at an overall EBITDA level, we are improving in that business every year. With the increase in scale, we generally get that leverage. I think we are leveraging that. Operating leverage has started coming in that way. Is it fair to say that trade generics business would be higher than our corporate average margin? It will be within that range, 1% or 2% here or there. So it's within that range. Perfect. It's a last question from me on anti-infective side, right, which is our strong hold. But when I see even there, we have underperformed the market. So what could be the reason here? Was it more inventory channel? Channel inventory was there, and hence, this year, we had seen lower-than-market growth, or would we have lost market share on that strong hold? How should we think about it? So it's a mix. Some part of it is also on account of some of the inventory and channel normalization, which generally happens whenever the market sees a sluggish growth. And also, it's about the regional dependence. There are certain geographies where we are more dominant than the others, and if the market is impacted more in those geographies as compared to the others, then we get impacted a little more. So that is perhaps one of the reasons as to why our growth is looking sluggish as compared to the overall market. It's more of a weighted average issue on that front. Would you say that now channel inventory for us would be normalized than the channel launch? Yeah, yeah. That That is the answer. So it's the nature of this business. When you will see the demand going up, the channels automatically keep getting to normalized levels. And one more, in terms of, let's say, this Penicillin G consumption, since we are really big in anti-infective, would you be able to provide what is our tonnage consumption of Penicillin G or 6-APA? And do we buy Penicillin G or 6-APA and convert it to the APIs, or we just buy directly the APIs that we kind of sell in India like Amoxicillin, etc.? So we buy directly. That is what we do. I think on the other details, we will have to connect offline as to what is the tonnage, etc. You can post your query, and we will respond to that. Sure, sir. Sure. Thank you and all the best. And I can tell you, we are one of the largest consumers of Penicillin G, and if Penicillin G prices ease out, we will be more happy than anyone else. That is something that I can just let you know. Great, great. Thank you and all the best, sir. Thank you. Thank you. We have our next question from the line of Bharat S., an individual investor. Please go ahead. Mr. Bharat, can you unmute your line, please? Since there is no response, we'll move on to the next question from the line of Rahil Dasani from Mittal Analytics. Please go ahead. Yeah. Am I audible? Yes. Yes, Rahil. First of all, thank you for the opportunity. Just a few quick questions on Adalimumab. Are we selling it under Enzyme's own brand, or have we licensed it to someone? And secondly, where are we selling this product exactly? Sorry? Adalimumab? Yes. We are selling it through Enzene. We have our own brand? Sorry? Yeah, yeah. We have our own brand. Where are we selling this product exactly? Yeah, it's India one. Your question is with regards to Adalimumab Enzene India sales, right? We are selling it in India. Okay. So we can see another Indian MNC, Sun Pharma, has become a licensee of Adalimumab, which is the same concentration of our product. So how do we plan on competing in terms of pricing? Our pricing is pretty stable as far as this market is concerned. This is not a new market, right? This market, we have been there since long. And there are that's a day-to-day thing that we do. So I think we are very competitive in terms of those are generics. So it's a generic market, and we are very competitive in terms of pricing. So that's not an issue. Do you have anything specific in mind other than a product-level price issue, or it's not good to get it? So I just wanted to understand, Adalimumab is a big product. It's supposed to be a big product for Sun Pharma. So considering that, I wanted to understand more on the pricing, and are we seeing increased competition from them? No, so there is competition, but we have other products also which are much bigger than Adalimumab. As far as this market is concerned, we are pretty competitive in terms of pricing. I don't think it's a price war anymore, or it's because of price that we are losing out to competition. We are competitive like we are in most of the segments as far as our price is concerned. Got it. Secondly, if I'm not wrong, we launched this product in 2022? I will not have the exact date, Andy, but yeah, somewhere around that time. You want the exact date? We can do. No, I just wanted to understand what sort of volume growth have we seen from that period of time for this product? No, I refrain from giving product-level details on what we sell a large number of SKUs, or you'll have to pose this specific query separately. Okay. That's not an issue. Thank you. Thank you for having me. Thank you. We'll take our next question from the line of Madhav Marda from Fidelity. Please go ahead. Yeah, just one question from my side. It was just on the. We cannot hear you, Mr. Marda. Hello? Can you hear me now? Yeah. Your voice is quite stable. Can you please make it louder? Yeah, yeah. I just had one question, which was if you could just remind us on the tax rate reset when that kicks in and what could be the effective tax rate maybe for FY27. Thank you. So see, for next two years, we see our tax rate in the range of 13%-15%. For FY27, the second tax benefit will be over. So our tax rate will definitely increase, and it will be in the range of, say, 25% from there onwards. Understood. Thank you. Thank you. We'll take our next question from the line of Saion Mukherjee from Nomura. Please go ahead. Yes, sir. Thanks. On the Enzene or biosimilar program, can you share how many programs you've identified for development, and how should we think about clinical development spend on these over the next, say, three to five years? Currently, we have around seven products that we have already launched. We are already working on another five is what I would say, and this is for the domestic market. For the global market, we have close to around four assets that we are working on for the global market. Any timeline you can share from now? When can we expect the full development and filing in the regulated markets? It's an ongoing process, and product-level, the details are, there are different timelines for different products. So Saion, what I would say is you can get back to us, and we can respond to it separately because it needs product-level details. All the products are at different stages, so the timelines would differ for each one of them. In this year's time, there will not be any launch in biosimilar. Maybe next year, there will be a few launches. Right. The whole idea about setting up a plant in the U.S., so is it primarily so I'm wondering why you have decided to put a plant in the U.S. and not in India? What are the specific rationales there? Yeah. So it's to meet up on the CDMO business that we have in the U.S. market. So there were companies like WuXi Biologics who have really catered to this market, and they're multi-billion-dollar business as far as this business was concerned. Now, with the U.S. facing pressures because of geopolitical reasons, so some of these companies are not doing the kind of business that they were doing, which threw up an opportunity for players like us to consider entry into the CDMO business as far as the U.S. market is concerned. So clearly, we see an opportunity over there, and there have been players in the market who have been doing that in the past. So that is why we are putting up that facility over there. We have this unique proposition where part of the process we can do in India, and we can really offer a cost arbitrage in terms of grabbing business as far as that market is concerned. That's why we have decided to put up that facility over there. Okay, sir. Just one last on the U.S. launches. Would you have any comment on generic Suprep launch? And then the Baddi site, which recently got 10 observations, how are you thinking, and how critical from a new launch perspective is that site? So in Baddi, I already gave the. I think we had a few observations to which we have responded to the U.S. FDA. And we are pretty sure that none of these observations were very significant or were such that there were no data integrity issues, etc., that we got as an observation. So as part of our U.S. FDA audits, we all know as a part of pharma ecosystem. So as part of regular exercise, that audit was done, and we have responded to all the queries that were raised by U.S. FDA. We're pretty hopeful that we should be able to address all the issues that were raised over there. Generic Suprep, we have just launched, so it's picking up now. So at this stage, I do not have any this thing because it's a recent launch that we have just done in the U.S. market. To add, Saion, for our FY25 new launches in the U.S., none of it was planned from Baddi. All the new ventures are planned from the one for FY25. Oh, thank you. Thank you. We'll take our next question from the line of Aachan Maheshwari from Equity Securities. Please go ahead. Ms. Aachan, can you please unmute your line? Since there is no response, we'll move on to the next question from the line of Kunal Dhamesha from Macquarie. Please go ahead. Hi, sir. Thank you for the opportunity again. Since we are sitting on a decent pile of cash, what is your capital deployment priorities? Would you be looking for inorganic activity to boost our growth, or would it be returning to shareholders? As I did on the earlier calls as well, we are building a war chest for acquisitions. I would say we are very hungry. We are looking for the right opportunity in the market, but of course, at the right price. So we are very open to acquiring any asset which will be synergistic to us, of strategic value to us, and comes at the right price. So that's how we plan to deploy cash. But of course, dividend payout, we have always been within the particular range, and we are continuing to be within that range as far as our dividend payout is concerned. In terms of acquisition, any preference for size, large size, small size, more like brand acquisition versus the organization acquisition? And when you say right price, what is what are the valuation metrics that you look at? No, I would say anything that can add value to our overall business and can be value accretive. I wouldn't put a size and scale and a valuation to it that we then depend on asset to asset. But we value, and we evaluate various opportunities that come our way. And I think we cannot be way off from the market if we have to acquire something. So I think whatever are the market valuations, we have to be in line with that. But of course, the way we look at it is, will it be value accretive for us? Will it add value to our overall business? And if the answer is yes, then definitely, we'll be very keen to acquire something. Anything like chronic, acute? Yes, of course. Chronic will be our first priority because that's a business that we are building at scale. But since we have presence across therapies, we will not be averse to any therapy, so to say, to consider as far as acquisition is concerned. Let's say today, what would be a biggest obstacle for you to do an M&A? Would it be the availability of asset or the availability of asset at right price? What would be the bigger concern for you? It's a mix of both, but more number two. Great, sir. Thank you. Thank you. We have our next question from the line of Shrikant from Nuvama. Please go ahead. Hello, Dr. Vikas Gupta. Thanks for the opportunity. Just two questions. How do you see the anti-infective season in FY25 considering the monsoon prospects? Of course, I mean, I'll be bullish, but this is a forecaster's job. I can't forecast how rains or season will play out. But yeah, what I know is trends in the previous year. And balance, let's see. It's not very far. We'll get to see in a few months. Within your 10% guidance for the domestic growth, what sort of growth would you have baked in for the anti-infective considering it is very large therapy and we had a very poor season last year? I would peg it at somewhere within the range of 7%-8%. Understood. On the domestic biosimilar, what will be the current contribution of this business, and how is it growing if you can talk about last two to three-year performance and how the margins have been performing there? The business has really grown well. Today, it stands at around 5% of our overall domestic business. The margins are decent enough as far as this business is concerned. The competition is also less as compared to certain other segments as far as the biosimilar businesses there. We continue to get strong and strong with every passing quarter as far as this business is concerned. About the again, biosimilars only, how big do you think that the biosimilar market is in India in terms of value? There is no organized report over there. So whatever estimates I would give would be my view versus anyone else's view. So I would refrain from giving a number over here. But yeah, there is, I mean, IQVIA gives its own number, but in these kind of markets, you can't rely only on IQVIA numbers. What we are seeing is that whatever certain products that we are getting into, there is enough headroom for us to grow and build brands as far as on the biosimilar market is concerned. So that's how I'll put it. On biosimilar, do you need to put different MRs, or you can market these to existing sales force? So it depends on the product to product. For some products, we need a specific task force to cover those specialties, but there are many products where our regular field force helps us take that to the market. Understood. Thank you so much. Thank you. We have our next question from the line of Harsh Bhatia from Bandhan AMC. Please go ahead. Yeah, thank you. Am I audible? Yes, please. Yes. Yeah, thank you. Just two quick questions. I joined the call a bit late, so maybe repetitive. But the Enzene plant, once it gets commercialized in the fourth quarter, how would you say that on an analyzed basis, the Enzene segment as a whole would still continue to be break-even once the fourth quarter costs come into picture, or would you say that that would not be the case? I think Nitin already had answered this question. It will still take a while because when it was only India, they had break-even. We saw the break-even happen only ex-India. But now, we'll need investments that need to be made for this plant. And once we start clocking in revenue, which may be Q4-ish to Q1-ish of somewhere around that time, that is the time we will be able to give you some outlook on when do we break-even for the U.S. investment that we have made on the overall Indian. Sure. And the margins. Depending on a strong top-line growth as far as this business is concerned, which is what we are pretty bullish about. Sure. And the margin guidance, so I understand the Enzene part of the chronic share and the trade generic margin potential as such. What is your internal assumption, very qualitatively, directionally, again, for your most important, let's say, raw materials as such like NAC, PENG? What is your internal assumption to that extent? And so yeah, the internal part of it. Like PENG, I've already answered. It's very hypothetical because everybody is expecting it to play out the way it has to play out because one large Indian player has already started producing. We should see. Our assumption is that we should see the costs easing out over a period of time. Right now, we haven't seen any significant change on that front. I think once that happens, then obviously, our numbers will start showing it up. Sure. And lastly, just bookkeeping, in this quarter, is there anything incremental on the other OPEX side? I understand that you haven't called out anything in particular as such. So there is no one-off in the other OPEX line item? So only one-off was service-level penalties which we have incurred. So in our U.S. business, we faced some supply chain issues, and because of that, we have incurred some amounts of service-level penalties. So that was the only one-off. Okay. That would be in the range of $1 million-$2 million at max or maybe more? For the entire year, it was around INR 120 crore. Okay. Okay. All right. All right, sir. Thank you. Thank you so much. Thank you. We have our next question from the line of Aanchal Maheshwari from Equirus Securities. Please go ahead, Yeah, hi. Hi, this is Celly Bharat. So sir, just wanted to understand, again, on the supply chain penalties which we have faced, so what were those during fourth quarter, if you can call out that number? That was INR 30 crore for fourth quarter. Okay. And how do you see these supply chain issues going forward, and especially on the U.S. business? How do you see U.S. business on a normal basis, whether it will be again back to $80 million, or how should we look at it? So you mean in terms of supply? Yeah. You mentioned that there were some supply issues for the first two months. So we had certain backorders, and because of which, we are facing these service-level penalties. But as we have ramped up our supply chain to bring down the backorders, we see that situation getting eased with every passing quarter. So on an overall basis, I guess we should be pretty much in control of this, and we should be able to bring this number down in the current financial year. Right. And sir, again, on Enzene business, so what sort of operational expenses are we seeing for the new plant? What kind of? Sorry? Operations. Operational expenses. So this year is largely CapEx that we will be doing and some operational expense that will happen. Yeah. This year, it will be around, say, INR 30-40 crores of operational expenses which we will incur both for, say, R&D and the hiring of employees and also for their training and all. But most probably, from quarter four onwards, we will also start seeing the revenue. Revenue. So on an annualized basis, we are expecting almost like INR 100 crore-INR 120 crore sort of expenses from this plant. Going forward? From next year? Yeah. Sorry, I said 26. We'll be building in almost like INR 100 crore sort of? Yeah, it will be, say, INR 120 crore- INR130 crore. Right. And what sort of response we are getting from the clients, whether we have got any commitment, some initial interest from the clients from the orders perspective or from the CDMO perspective? So we have already started building our order book in U.S. I can't share the numbers like how much order we have already booked, but we already have customers who are ready to work with us. So once the plant is ready, I think we'll start serving them. Sir, just trying to understand, whether it will require incremental R&D spend from our side as well to conduct this business, or will we? No, we will not be investing much in R&D. I think the clients will invest. Right. So it will be more of a manufacturing, the contract manufacturing services which we'll be providing. Right. And sir, just last one from my end. So we were earlier asking that we'll be seeing almost like 100-120 this margin improvement every year. So has that changed? Because for this year, as far as you have mentioned that there will be only INR 30 crore spent which will be coming through from the Enzene plant. But you are stating that the overall EBITDA margin is expected to remain flattish. So has that changed? So how do we overperform over the guidance which we have given? We have given a guidance of 17%, and we achieved 17.7% in the current year itself. So definitely, there will be, say, a few points of improvement, but it will not be a very significant improvement over what we have achieved in FY2024. Maybe, say, 20, 30 basis points we can expect, but it will not be a very significant improvement because, as Vikas spoke about, that because of, say, NLEM also, there's no price growth on a significant part of our portfolio. So we'll try to push our, say, domestic sales through volume. So definitely, the margin will be more or less in line with what we have achieved. Right. Last one, sir, in fourth quarter, was that trade generics business very different from what we would have done for the full fiscal? No, the contribution of trade generics was, say, on the similar line of our total domestic use. In the fourth quarter, right? And when we are guiding for 10% growth in the domestic business, what sort of growth we are expecting for IPM? IPM, IPM. IPM should be in the range of eight to 10-ish. I think somewhere around that. Are we expecting any outperformance as compared to IPM, or we are expecting to be largely in line with market? Looking at in line or a +1% compared to IPM, somewhere within that range. Sure, sir. On a fully average. Thank you. Fine. On a fully average. Sure, sir. And we would have already seen some sort of ramp-up already happening for this quarter, right, first quarter? Yeah, yeah. I can't give any numbers at this time of the quarter. Sure. No worries, sir. Thanks a lot. Thanks a lot. Thank you. We'll take a last question from the line of Yash Tanna from iThought PMS. Please go ahead. Hi, sir. Thank you for the opportunity. Sir, I was just wondering about the medical devices business. I mean, there were a couple of news articles relating to iPhone launching a couple of medical devices, and I think you also mentioned probably in one of the media interviews. So is this line of business we would probably look to make an acquisition in? Is that a possibility? Or if you can just elaborate about this line of business. Sorry? This line of business, can you make up? The medical devices. There have been a couple of media articles relating to iPhone launching a couple of medical devices. Yeah. So see, it's a line of business that we are setting up now. So it will be a mix of both organic, as well as we are very open to even if there is any inorganic opportunity that comes on that front. So it's an important line. It's going to be an important line of business for us. We've just started, and we've just floated that only. So we'll give you further details on it as and when we've got significant details on the same. Sure, sir. This will mainly be for the domestic market, or are we targeting to another market? It will be primarily for the domestic market. Okay. Got it. And if you could also shed some light, I think, Alkem launched the Ophthalmic division. So how is that progressing, and what's the vision out there? Sorry? On chronic? The Ophthalmic. Ophthalmic. Ophthalmic. Like I said, even in the last quarter, Ophthalmic is a very recent launch that we have had. So it's a business which is growing with every passing month. But it's right now at a very small stage. It's a very potential market. Market size is very big. The number of players are lesser as compared to certain other therapies. So we are bullish about this market, but we've just entered into that market. It's early days, and we have some of the new launches that we have planned in this therapy as well. So I think that is where we will see how the business progresses over the coming quarters. Sure, sir. And if you could provide a vision if iPhone wants to come in with Ophthalmic or with Ophthalmic, whatever, probably a five-year vision. You're not clearly audible. Voice is not very clear. I'm audible now? Can you use your handset? It is sounding muffled. Sorry. I'm using my handset only. Am I audible now? Yes. Yeah. No, sir. It was just relating to the vision of Alkem division, whether in a five year vision, if it'll reach a top 5 category or something. So we said top 10, I guess. But yeah, we are pretty bullish. Any business that we launch, that's with a vision to enter the top players in that segment. We are not a company where we have operated in that market, and we do not have a meaningful presence. So we have that credential that whatever segment we have entered, we have made it really meaningful, and we are in the top players in that segment. Same will be the case with this business as well. Right, sir. That's great. Good luck for the future. Thank you. Thank you. We'll take that as the last question for today. I would now like to hand the conference over to management for closing comments. Over to you. Yeah. Thank you, everyone, for taking your time out today and making this a meaningful discussion. If you have any queries which remain unanswered, please feel free to connect with us. Thank you once again. Thank you. On behalf of Motilal Oswal Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your line.