Ladies and gentlemen, good day, and welcome to the third quarter FY 2024 earnings conference call of Glenmark Life Sciences Limited. 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Soumi Rao from Glenmark Life Sciences Limited. Thank you, and over to you, ma'am. Good morning, everyone. I welcome you all to the earnings call of Glenmark Life Sciences Limited for the quarter ending December 31, 2023. From Glenmark Life Sciences, today we have with us Dr. Yasir Rawjee, our MD and CEO, and Mr. Tushar Mistry, our CFO. Our board has approved the results for the quarter ending December 31, 2023. We've released the same to the stock exchanges and updated it on our website. Please note that the recording and transcript of this call will be available on the website of the company. Now, I'd like to draw your attention to the fact that some of the information shared as part of this call, especially the information with respect to our plans and strategies, may contain certain forward-looking statements that involve risks and uncertainties. These statements are based on the current expectations, forecasts, and assumptions that are subject to risks, which could cause actual results to differ materially from these statements, depending upon the economic conditions, government policies, and other incidental factors. Such statements should not be regarded by recipients as a substitute for their own judgment. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Our actual results may differ materially from those expressed in or implied by these forward-looking statements. With that, I invite Dr. Yasir Rawjee to say a few words. Thank you, and over to you, Dr. Rawjee. Thank you, Soumi. I wish you all a Happy New Year. I'm sorry, sir. Can you please start over? Because your line, I mean, your audio broke, sir. Oh, okay. Okay. Thank you. So, Soumi, thanks. Good morning. Welcome to our earnings call. Wish you all a Happy New Year. Is this okay now? Yes, sir, it's quite audible now. Okay. So thank you. So as we get into the new year, just a quick overview in terms of what's happening in the industry overall. So things have picked up. Certainly, you know, the US has improved. Inflation also seems to be cooling down, which is a big positive. With respect to geopolitical issues, of course, these conflicts are not helping the situation, but it's manageable, I would say. There's an improvement from China in terms of the supply situation, and things have definitely eased. The domestic economy is also doing well, so we see a robust demand overall. This business with the Red Sea may have some impact, mainly on freight, but it also results in longer supply chains, so it would have some kind of inventory impact. We may have to stock up a little more, but let's see how that pans out. As far as our performance goes, we've had decent performance. We've had just under 6% growth on the top line. This is driven by an external business of just under 10% growth, and then GPL has been flattish this quarter. From a regional perspective, we've had solid growth in India, US, Latin America, and ROW markets, whereas the Europe business has been flattish. Japan has reported a degrowth because of some inventory at the customers that they built up in the last few quarters on account of launches. So, as we guided in the previous quarters, CDMO has had a significant upturn in third quarter. We've signed a new contract for a supply of API. This is a multi-year agreement, and the minimum offtake commitment is about $5 million. We expect that this contract will commercialize sometime next year, and it could also lead to, you know, significant expansion with this customer. Also, with respect to other clients, we've got other irons in the fire with respect to CDMO, so, and those are also progressing very nicely. Now, before getting into the pipeline, it's important that we emphasize that, you know, even though we've had a single-digit growth, the bottom line growth has been much better because of our focus on niche products, cost management, and optimum utilization of our resources. So while top line has been a little soft, right, the bottom line continues very strongly. Now, in terms of product pipeline, we continue to file in various markets. So our DMF and CEP filings have crossed 500 as of December 31st, again, driven largely by cardiovascular and CNS therapies. During the quarter, we added four new products to the pipeline, with one high-potency API and three synthetic small molecules. So coming to high potency API, we now have 13 products with an addressable market of $24 billion, and three products have been validated and four products are in advanced stages. Now, before I conclude, I'd like to share an update on the Nirma acquisition. So we received an approval from the Competition Commission of India, and are waiting for some more approvals, for you know, completion of the open offer and so on. Now, once these steps are finalized and the deal is complete, we will proactively communicate to you, providing clear insights into our future strategy. Till then, I request your patience on this subject. As highlighted in the previous call, the core strategy of GLS will remain unchanged. Any new strategy developed will only be incremental to our core approach. In closing, I am optimistic of delivering stable growth in FY 2024, driven by a pretty solid order book in the external business, including CDMO business. However, we expect some slowdown in the GPL business, which might lead to slightly lower growth than initially projected for the year. With that, I'll hand it over to Tushar, our CFO. Tushar, over to you. Thank you, Dr. Yasir. Hello, and good morning, everyone. Welcome to our third quarter FY 2024 earnings call. I would like to briefly touch upon the key performance highlights for the quarter and nine months ended 31 December 2023, and then we'll open the floor for questions and answers. Our revenue from operations for the quarter stood at INR 573 crores, a growth of 5.9% year-on-year, a de-growth of 3.8% on sequential basis. This was driven by a steady 9.8% growth in external business, which was offset by a flattish GPL business. The gross profit for the quarter was at INR 331 crores, up 19.8% year-on-year. Gross margin for the quarter was at 67.7%, mainly on account of better product mix and lower input costs. EBITDA for the quarter was at INR 174 crore, up 14.6% year-on-year. EBITDA margin for the quarter was at 30.4%, driven by better gross margins. As mentioned in second quarter FY 2024 earnings call, employee costs remained elevated due to the bonus approval based on the past performance of the management. The employee costs will remain higher for fourth quarter as well and then shall return to normalcy. The PAT for the quarter stood at INR 119 crore, a growth of 13.1% year-on-year, with PAT margins coming at 20.7%. Let me quickly discuss nine months numbers as well. Revenue from operations for nine months, FY 2024, was at INR 1,737 crore, a growth of 13.4% year-on-year. Gross profit for nine months was at INR 983 crore, up 22% year-on-year. Gross margin for nine months expanded by 390 basis points to 56.3%. EBITDA was at INR 542 crore, up 17.3%, with margins at 31%. PAT for nine months was at INR 373 crore, up 16.3% year-on-year. Moving on to the segmental performance for third quarter FY 2024, generic API revenues grew by 6.4% year-on-year to INR 5,511 crore, driven by strong growth in external business. CDMO business recovered strongly, with revenue of INR 53 crore, a growth of 40.4% quarter-on-quarter and 27.2% year-on-year. I would also like to highlight that the new CDMO agreement, which Dr. Yasir alluded to in his opening remarks, improves our revenue visibility for the CDMO business in coming year. Looking at the therapeutic mix, CVS and CNS portfolio continues to lead the growth, with diabetes portfolio seeing good traction during the quarter. R&D expenditure for the quarter was at INR 18.4 crores, which was 3.2% of our sales. Touching upon the balance sheet and cash flow movements, starting with working capital. Working capital remained stable during 9 months at 170 days. CapEx for 9 months was at INR 93 crores, and we expect to close FY 2024 with a CapEx of around INR 150 crores-INR 160 crores. We continue to remain a net debt-free company. For 9 months, FY 2024, we generated free cash flow of INR 231 crores, with cash and cash equivalents of INR 236 crores on the books as of December 31, 2023. To conclude, as Dr. Yasir mentioned, our order book remains strong and... But fourth quarter is something that we are looking at, at how it will get to. And with that, I would like to conclude my remarks, and you can open the floor for Q&A. Thank you very much, sir. We will now begin the question-and-answer session. Anyone who wishes to ask questions may please press star and one on their touchtone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Tarang Agrawal from Old Bridge Asset Management. Please go ahead. Hello, morning, and thank you for your time. Am I audible? Yes, sir. There is a background disturbance from your line, sir. Okay, just give me a second, please. Yeah. Am I audible now? Yes. Yes, sir, you're audible. Okay, thank you. Congratulations on good set of numbers. I had three questions. One, if you could comment on the volume growth for the business for this quarter? The second question is, you know, on the employee cost, the run rate at which we are running at currently, would it be prudent to presume this to be the new base as we move to FY 2025, or some part of it is really one time. And in that sense, you know, the real base will be lower? That's second. Third, the sense that I got from your commentary for fourth quarter is that, you know, probably things are not gonna play out as per expectations. So if you could, you know, elaborate a bit on that. Thanks. So, Tarang, Tushar will take the employee cost piece, right? With respect to volume growth, volume growth has been pretty steady, okay, across, you know, markets, so no challenge there. With respect to fourth quarter, we have a pretty strong order book on the external side, and like I said, GPL may come a little softer. Mind you, fourth quarter last year was a very strong quarter, right? We fired on all cylinders in fourth quarter last year. So given that, right, there's that situation doesn't look like it will pan out again this fourth quarter. So yes, we do expect some softness, but we still have another two months to go, right? And the order book is shaping up very nicely. So I'll let Tushar take the employee cost, please. Yeah. So employee cost, if you see, it is around 12% of revenue. Historically, we were always around 8.5% to 9% kind of range. This is only a current scenario for this three quarters that I have, as I had mentioned in the last quarter as well, in second quarter. So, this higher employee cost will remain for second quarter, third quarter, and fourth quarter. It should return back to our normal levels at around 9% from first quarter onwards, is our expectation at this stage. Okay, thanks, Tushar. But just a follow-up, in terms of volumes typically have grown at anywhere between 15% to 20%. Would that be a similar range for this quarter as well? Yeah, it's a mix of price and volume, Tarang, okay? And then... Tarang, you can consider it around 4% as the price reduction that we have seen, generally between 3.5% to 4%. The balance will be all, all volume based. Okay, wonderful. Thanks. Thank you. The next question is from the line of Charul Agrawal from Bank of America. Please go ahead. Thank you for taking my question. My first question is with regards to the GPL business. Like the commentary has been that this quarter has been muted, and we expect the next quarter also to be slightly subdued. Is there any particular reason to this, and is it only a one or two quarter phenomenon, or could it extend for longer? So Charul, GPL has been a bit cyclical. We've seen that, and, and it's largely driven by the US and European business. Okay? And, while, you know, we did see a good uptick, you know, in their US business demand, you know, in the last couple of quarters, this quarter has dipped a little bit. However, if you look at the nine-month, GPL is still tracking at, you know, a little over 13% growth, GPL business. So it's not bad. I mean, you know, but, I mean, they are a pretty strong company across markets, right? So we don't see that this is going to be, you know, any kind of weakness going forward. Okay, thank you. So, that does not imply anything with regards to sales to GLS going down, right? This is just a temporary phenomena. No, no. That, yeah, that varies. Like I said, it's a bit cyclical. It moves up and down, but then, you know, we supply to them from, you know, largely the regulated markets. Okay. Thank you, sir. My second question is with regards to the gross margin expansion that you have seen. Would it be possible to break it down into drivers in terms of what proportion of it could be improvement in input costs? What proportion could be mixed? So if you, if you go from, let's say, a 52% to 57%, right, that delta has been driven partly by improved input prices. And, we also announced this new CDMO, you know, business, right, for which we made validation supplies. And, so it's a mix where CDMO played a bigger role in, you know, and that, CDMO, this CDMO business also has better margins. So these are the two main reasons, the input costs as well as, you know, the mix improvement. Got it. Even the QOQ, gross margin improvement would be these factors only, right? CDMO has been slightly higher. Yes. Got it. Yeah. Also, sir, you mentioned regarding the Red Sea disruption. So, what could be the possible implications of the Red Sea disruption? And, would it only be freight costs, or could that impact volumes as well? And how long do you see it at present? See, right now, out of three ships that used to come to Nhava Sheva port from China, okay, only one ship is coming to Nhava Sheva, two are going directly, okay? So they don't come, they don't basically reroute. These are ships coming from the Far East. Okay. So we, while freight is expected to go up, right, the other impact could be that we might have to stock up, you know, an extra 15 days of inventory. Okay, it hasn't reached that point, but, if we have to, we will, just to cover, you know, make sure that we, you know, we're stocked up well for, you know, supplies. It, it's not, it's not happened yet, Charul, but, right, we are watchful. Okay, it could happen. So this would not impact your supplies to your customers? Like you were saying that you might need to stock up for imports, but what about your exports to customers? That's air. For us, you know, to customers, it's largely air freight. Okay. Sea freight doesn't impact us. It's just the raw materials, that impact us on the sea. I mean, sea freight impacts us on raw materials. Got it. That is all. Thank you so much for taking my question. Sure. Thank you. A reminder to all the participants that you may press star and one to ask questions. The next question is from the line of Ahmed Madha from Unifi Capital. Please go ahead. Thank you for the opportunity. I just want to understand, the employee cost part little better. So there is roughly 40%-odd, you know, increase in the cost. So just, just what is the nature of that? Can you elaborate a little more on that? Ahmed, I had explained it in the second quarter call. These are certain bonus accruals based on the past performance, which have been given by the board, which are getting accrued over this three quarters, and that is what has taken this cost up. And as I also explained in my earlier comments, that the employee cost is coming around 12%. It should come back to around 9%, 8.5% to 9%, from first quarter onwards. Got it. And in the gross margin, is there any impact of PLI incentive this quarter? PLI again has an impact of about 1% to 1.5% on overall margins. Around 1.5% on overall margins. Okay. Just on the, Glenmark Pharma's business, so I think last year we did about, I think roughly INR 660-odd crores, INR 690-odd crores. This year, nine months have been good, but you are saying that, no, you see it weak, but overall, say, in the next two, three-year perspective, should we at least maintain this, INR 650 to 700 crore run rate? How should we look from the medium to long-term perspective about this business? See, I just answered Charul, right? That basically, GPL business is a little cyclical, but nothing alarming, okay? I mean, it's a very strong business that they have in the regulated markets, right? And, that continues and, you know, you know, we would continue to service that business. Okay. So we'll retain our wallet share with them, that is what I want to understand. Is this the correct understanding, that we retain the wallet share? Yeah, yeah, very much. Okay, fine. And just question on fourth quarter. So basically, should we sort of at least maintain the annual release similar to last year for GPL business? I can't comment on that, no. Okay. Last year, GPL was very high, at about INR 230 crores. We don't expect it to be that high in fourth quarter. Yeah, but just on the full year basis then as well. Full year basis, yeah, we will, we should be able to reach that level. Okay. Fair. Just on the last freight cost part, so I'm just trying to reconfirm that there won't be any sort of P&L impact, but just the amount of inventories which we might need to buy, correct? I think the doctor mentioned that the impact on inventory will be about 10 to 15 days, if at all we have to stock it up. We are currently at about 104 days of working capital, which may go up by another 10 days, but we will see how that pans out. Okay, sure. Thank you so much. Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Yes, hi. Sir, we are not able to hear you clearly. Is this better? Yeah. Is this better? Yes, sir. Sir, may I request you to kindly use your handset, please? Is this better? Yes, sir. Please continue. Okay. So firstly, on the asset terms, sir, for last two years, three years now, it is down to 2.9, which we used to have at 3.3. So any comment on that? So Tushar, actually, if you see the years prior to last two years, the spend on CapEx was very limited. Last two years, we have seen good amount of CapEx that we have done, almost INR 150 crores in FY 2021, in FY 2022, INR 160 crores in FY 2022. We are already near INR 100 crores in the current year. And as we have also mentioned that these new assets that come up, they don't immediately get into this 3 times, 3x kind of revenue generation. Initially, it will be lower. We had also mentioned in the past that, you know, we expect this asset terms to somewhere come down near between 2.5 to 3 gradually, because our CapEx plans are strong going forward, and that is what we are expecting. Understood, sir. Secondly, on this X, GPL business has been, you know, stable at about INR 390 crore average for last now six quarters. So any comment in terms of growth, on this segment of the business? No, growth has been good. I mean, we, we have been growing the external business, right? Very steadily, I mean, you know, low teens, you know. So, and that's driven by all our markets. I mean, the reason this is around 10% this quarter is because, like we explained, Japan has de-grown, and Europe is flat, but the US, Latam, India and ROW have been firing away because we have been introducing new products. And, US CDMO business is very strong. So I mean, the thing is that, overall, the fundamentals, for our external business, firstly, have got many levers, okay? Markets, products, and CDMO now coming in much better. So with all these levers, I mean, sometimes you don't fire on everything, right? Sure, sure. But we have been growing, right? I mean, there's no challenge there. And this, because it's exports on a constant currency terms, what would be the growth? The currency hasn't moved much in the last year, right? I mean, we are not getting any currency benefit in the current year we are now getting. Last year, there were certain currency benefits, but this year it is more like a constant currency. Both those are the constant currency. Understood, sir. And just lastly, this raw material, lower raw material benefit, any comment in terms of, you know, how long will we have this benefit continuing? It should continue because we have diversified our sources, okay? And that has resulted in the benefit, and that's something that we would continue, so we expect it to play out. Of course, like I said, certain geopolitical challenges, you know, could impact oil prices and so on, and that will hit solvents. And so I mean, look, there is a bit of, you know, challenge there, but overall, I think we on the buying raw material side, we should be okay. No great challenge there. So let's say if this Red Sea disruption, if I leave aside for the time being, for the sake of discussion, this impact, so then 56% to 57% gross margin is very much sustainable, right? See, again, I explained, right, to Charul, right, that basically the margin improvement, if you take from roughly 52, where we normally are, 52 to 53 to 57.7, excuse me, has been largely driven by some improvement on raw materials and then CDMO, the new CDMO business where we made validation supplies. So these things are contributing. Now, you know, so the, so we may not hit 57%, right, next quarter, but we won't. But it will be in the range. Okay. Okay. Thanks. Thanks a lot for this. Sure. Thank you. The next question is from the line of Harshal Patil from Mirae Asset Capital Markets. Please go ahead. Good morning, sir, and thank you for the opportunity. Sir, just have one question on the CDMO business. We've just recently signed a contract, and, as per your earlier comments, we've got the minimum offtake value as $5 million. So, sir, any specific timelines as to when would this come in? That's question one. And question two would be, sir, if you could speak a bit on the project pipeline for the CDMO business. Because I guess we were expecting some 2 or 3 projects which were there in the pipeline to be going on stream over the next one to two years. Yes, Harshal. So, basically, this project should come online next year. We just made a pretty large validation supply, right, for filing, and this would be filed in multiple markets. So, this, as soon as we start getting approvals in, you know, markets, we'll start supplying. So it should come on next year for sure. Right. As far as the pipeline goes, we have one more project which is very advanced. We hope to sign either in late fourth q uarter or then in first quarter. I mean, it's going very nicely. Okay. Then there's one that we have already initiated validation, and filings are on, but those are like 50, 53 or 57 markets that they are going to file in, and that we expect to also come next year. Okay? So that would be two more that would come. There are further discussions also on CDMO with other projects. So those discussions are going very nicely, and let's see how that pans out. But to, you know, answer your question, I mean, it's two more in the pipeline that we have very clear visibility on. The two ones which are there in the pipeline would definitely have better revenue potential than the ones we already are supplying to, if I have to just get some qualitative inputs on that. Typically, they are ranging between $5 million and $10 million. Typically. Okay. Right? I mean, our projects are not that big. Right. But they are decent size, right? And, you know. Right. So, right. So, that helps. Thank you. Thank you for the input, sir. All the best. Thank you. The next question is from the line of Ashwini Agarwal from Demeter Advisors LLP. Please go ahead. Good morning, Dr. Yasir. Good morning, Tushar. Congratulations on a very strong margin performance over the quarter. Just continuing from the last participant on CDMO, I mean, if you were to, you know, think about it over the next three to five years, do you think that this piece of the business could be 30% to 35% of revenues? Or do you think generics and CDMO would grow at pretty much the same pace in the medium term? Okay, Ashwini. Thank you, Ashwini. The thing is that, see, we have a pretty strong generic pipeline, and the market spread, right, of the products has only been improving over time. That would continue. So since generics is also going to grow reasonably well, right, and it's a pretty big chunk to begin with, in the next three to five years, right, at the rate at which we are doing things, we expect CDMO to quadruple. Okay, so around from INR 150 crore, we are likely to get to INR 600 crore. But even INR 600 crore would not, you know, get to 30% to 35%, simply because, you know, the other piece is also growing well. So if we get to INR 600 crore, it would still be around 15%, okay, of our overall, right? 15% or even less. So let's see, I mean, it—whatever visibility we have now, right, and, the strike rate at which we are going on CDMO, we should, we should definitely, improve the percentage from the 7% to 8% that we are at now, but very unlikely we will go to 30%, unless, look, unless something really earth-shattering happens, okay? Which cannot be ruled out, but, I'm just going from whatever we are, you know, driving as of now with the current level of investment. Okay. Thank you. And one more follow-up on the CDMO contract that you've just signed for $5 million, which has an expected revenue line of $5 million at a minimum in fiscal 2025. Just if you could share some color on, are you the sole supplier? Is this a technology transfer where the innovator transferred what they knew to you, or you helped develop them? How sticky is this relationship? Would you continue to be the sole supplier in the foreseeable future, if you could provide some color around that? Okay. So while we didn't do a t ech transfer, and that's why the regulatory timeline goes to next year, right? We did do a fair amount of customization for the, you know, to get the business. Okay. The thing is obviously, you know, in our kind of CDMO play, what is important is we match the current supplier of the innovator, okay? Which in many cases is the innovator itself. Okay, and they are going to stop their own manufacturing and move to us because they get a very large cost advantage. So I don't see any reason why they would continue their old supply. You know, so yeah, we would be the sole supplier once the regulatory approvals are in place. And the other CDMO pipeline that you have is of similar nature, where you develop on the cost, you bring down the cost, and, you know, that advantage therefore allows you to foster a longer-term relationship with the customers. Yes. Of the two that I said, one is a heavily customized API... Mm-hmm. That is already in filings, right, in the filing stage. The other, we are in the process of, you know, doing some further sort of tweaking to, you know, get, get it, you know, to where the customer is now in terms of their current source. Okay. And the last question from my side: in the past, you often said that, you know, raw material benefits, whenever they accrue, need to be passed on, but this time around, you know, some of it has flowed through to gross margins. Is this temporary, or do you think this is sustainable, the margin gain that you had on the raw material side? Actually, we, this raw material, we have to see, right? Depends on the pressure of the business, right? But if we are under pressure, we'll have to pass on. So we won't do it as a default, right? But, yeah, I mean, if we have to gain a bigger market share or help our customers sustain their market share at the front end, you know, we may pass it on, right? But since this improvement has been pretty broad-based, you know, across many products, right, we're not going to pass on everything. Okay. No, that gives me an answer. Thank you so much, and all the best. Thank you. Thank you. The next question is from the line of Harsh from Bandhan AMC. Please go ahead. Yeah, thank you. Good morning. Am I audible? Yes, sir, you're audible, but be a little bit louder so that we can hear you. Yeah. Sure. Just in terms of the incremental capacity for Ankleshwar and Dahej, it's 200,000 liters and 50,000 liters, is what is given in the press release. So, Yasir, do you... Speak a little louder, Harsh. Can you speak a little louder, please? Yeah. Is it better? Yeah, much better now. Thank you. Yeah. So just in terms of this incremental capacity for fourth quarter, the 200,000 liters and the 50,000 liters for Ankleshwar and Dahej, do we feel that a majority of the cost according to the commercialization is already in place? Or do you feel that incrementally you would see a lot more cost going forward once this gets commercialized, both the capacities? You are talking about CapEx or you're talking about operational costs? OpEx. OpEx part. OpEx. I mean, OpEx is not likely to increase greatly. I mean, you know, when we go with the incremental capacity, we are going for bigger batches, okay, at the product level. So in that sense, on a per kilo basis, the OpEx actually improves. But since the volume, volumes are going up significantly, right, that OpEx will scale up according to the volumes, but then, you know, with the improved batch sizes, the per kilo level, it'll actually come down. So it'll be a sort of midway, you know. It won't go up linearly with the CapEx with the increased capacity. Does that help answer your question? Yeah. Okay. Lastly, in terms of Japan, you have already highlighted the inventory situation. Anything in particular for Europe market, is there a lot more price erosion than you anticipated, and which is why we are refraining from selling into European market, or is there something else that is happening? Europe, see, unlike other markets that have done well, our new product introduction into Europe has been a little slow, okay? This is largely because of regulatory slowdown, okay. So we are not getting approvals. Our customers are not getting approvals fast enough in Europe. And so while we have a bunch of new products to introduce, right, we've not been able to do that in Europe as well as we've been able to do it in India, Latin, and the US, you know. So that challenge is there. So hopefully once approvals come through, newer approvals come through, Europe should also pick up well. Okay, so the primary reason is- I mean, to answer your... To confirm, yeah, price erosion in Europe is a little higher, right? So that challenge is there. Okay, so the regulatory situation is temporary as such, but otherwise, we expect that that should also pick up going forward. Yeah. Once we get our new products approved in Europe, right, we should see Europe also picking up pretty well. It shouldn't be a problem. Okay. Thank you. Thank you. Sure. Thank you. The next question is from the line of V.P. Rajesh from Banyan Capital. Please go ahead. Hi, thanks for the opportunity. Most of my questions have been answered, but just one clarification. Dr. Rawjee, when you spoke about the CDMO business growing 4x, what was the timeframe you were thinking that the growth will come about? three to four years. Okay, three to four years. Thank you. That's all. Thank you. The next question is from the line of Ajit from Unifi Capital. Please go ahead. Yeah. Hi, Dr. Rawjee. You know, congratulations, and thanks for the opportunity. Dr. Rawjee, I want to take you back to probably the, you know, initial few conversations you'd had post-IPO, where, you know, you were very, articulate in explaining us that how you had migrated customers in the US, to, to, you know, to address the pricing pressure challenges by moving and introducing second generation molecules, and phasing out the first generation molecules, thereby, you know, addressing the price erosion. You had given the example of statins at that point of time, I remember. So Dr. Rawjee, in this journey, where have we reached? And it also in reference to the point of Europe, because, you know, you mentioned a bit about pricing pressure. So is it that those European customers, we are still in that journey? And could you speak a little bit more about this? Yeah, it's a very good question. See, the thing is, this whole business of second, third gen processes, right, is something that we have to continue to do. Because on the generic side, right, most markets have, you know, our customers face a lot of pricing pressure at the front end. So that is something that we continue to do, and, you know, with the regulatory filings happening in a timely manner, that is something that has panned out. Because, see, if you look at our price erosion, right, overall in the business, it's about 5% to 6%. Okay. So in order to continue to deliver on margins the way we've been, this is something that we have been doing, and the customers have been very supportive, right? And we continue to keep our customers competitive. That's the, that's the name of the game, really. And then, of course, you come back with, you know, you sort of add the launch products to that, and, the launch products obviously give you better margins, right? But then the same thing applies even to the new launches, where, you know, we've got to be ready with the next gen process to be able to, you know, keep the customers, in the game, you know, if, if they've already sort of entered at a good, you know, with a good market share. So it's, it's an ongoing process, I mean, to, to continue to drive the, the margins and to keep our customers competitive. Got it. And Dr. Hari, how many such, you know, competitors use or follow this approach? Because we've not heard a lot of companies call out this kind of process of trying to upgrade molecules and help customers. And you know, you had extensively spoken about all those filings where you helped them a lot. So which is the... Who is your key competitor you face, who's also following this kind of an approach and, and, and where there is competitive pressures or challenges? So see, we have about 100 commercial APIs now as we speak, right? Okay. And, there's no single competitor that we have in all 100 of these APIs, but in any given API, we would have, you know, one or two competitors, right, in India or China, that would we'd have to, we'd have to take them seriously. Okay. The good news for us is that because we are in the regulated market space, right, the whole regulatory approval process is a pretty, you know, involved process, where we've got to convince the regulators that the next gen process is as good as the earlier process, right? And that takes some doing. So not only from a chemistry perspective, but also from, you know, an overall, you know, specifications, methods, right, controls on genotoxic impurities. You know, all this plays a big role, and so that really thins out the competition for us. Because the regulators have become much more stringent with respect to, you know, genotoxic impurities. You must have heard about nitrosamines if you have been following this space. But many of our competitors, you know, fall out because they are not able to successfully address, you know, this whole business of nitrosamines. And we have been, you know, lucky or clever or whatever you want to say, but we've been sort of addressing this upfront rather than, you know, it hits our customer and then the regulator comes back with a big query. So I mean, net-net, you know, the second, third gen process involves a lot of work, you know, not only on the chemistry side, but on the regulatory side as well. That's why, you know, we've been able to successfully migrate our customers to the next gen processes with not much competition. I mean, the competition is there. Like I said, we take them seriously and, you know, so I mean, that's the way things are working here at GLS. Thank you, Doctor. That was very helpful. Doctor, one last thing. Since the time you've been listed, the CDMO business has been in broadly a band, and you know, you spoke about, you know, the breakout towards the INR 600 crore over the next 4 years. I just wanted to understand that, is it that these 2 years were seeding stages, which, you know, where we were trying to establish our, you know, excellence of, of products with customers, and that's why you believe the scale-up, or are there any other significant growth triggers or drivers? So Ajit, you're spot on, okay? I mean, CDMO does have a long gestation period. And we've got a long pipeline, right? More than 10 to 12 projects that are in discussions. But by the time they bear fruit, right, I've mentioned about 2 that are coming online pretty quickly, right? But there's others that are also going to follow, right? So we expect that, you know, we'll have a good number of projects in the next two to three years, and that's why we are very confident that, you know, we'll get to INR 600 crore very comfortably. Thanks, Dr. Rawjee, and all the best. Thank you. Thank you. You may press star one to ask questions. The next question is from the line of Naman Kumar Bhansali from Perpetuity Ventures LLP. Please go ahead. Good morning, sir. Just one question on the US FDA inspections that they are going to trigger. So what are your facility due for the US FDA inspection, and then newer ones which are coming in? Yeah. So all three facilities that are US FDA inspected are due for inspection going by the three-year cycle. Okay. We expect them anytime at any of our facilities, and so, you know, you know, it should happen anytime. I mean, we are frankly hopeful that it happens soon so that, you know, we kind of, you know, over the hump there, right? But all three, yeah. I mean, they are due. Got it. Thank you. Sure. Thank you. The next question is from the line of Tushar Bohra from MK Ventures. Please go ahead. Yeah. Thanks for the opportunity and, congratulations to the management for a steady set of numbers. Just, first thing, quickly on the CDMO strategy. You know, historically, and you said, as you just explained also on the call, you've been focused more on life cycle management products, right? Is there any thought, though, to also pursue, you know, pure CDMO opportunities, working closely with innovators in new molecules? Any efforts or, you know, steps in that direction? So, Tushar, you know what? I mean, I had explained this again at the time of the IPO, and we had very, very long discussions on CDMO. But basically, firstly, the gestation on the kind of projects that you're talking about is very long, okay? Because if you get into phase one and stuff, right, I mean, clinical trials for most drugs, new drugs, take anywhere from, like, you know, two to three years. And then there is the approval, you know, by FDA, which takes yeah, because there's a lot of clinical data that they need, right? So it could be, like, a 12 to 15 months. Plus, what happens is that new products have a huge amount of attrition, okay? I mean, you know, products that are in phase one, I mean, the chances of them becoming commercial are, like, 1 in 30 or 40 molecules, right? So, I mean, you know, if you don't hit one of those, right, after doing all that work, you still don't have a commercial project. Okay? So this challenge, you know, has been there for this kind of work. Whereas on the life cycle side and the specialty side, right, the, it's a much faster, you know, comparatively, the gestation is much sooner. I mean, you know, in about a year and a half to 2 years, you can have a project going, okay? Versus the, you know, these early-stage projects, you know, it takes much longer, the attrition is much higher, basically. So we've stayed away. I mean, the other thing for us, right, is both our R&D infrastructure and our manufacturing platform are common, so we don't have to make any special investment for, you know, these kind of projects. I did mention to, I think it was Ashwini, right, that we do do a lot of tweaking, okay, in terms of, customizing the API for the, innovator. And, here is where, again, it's our R&D, you know, work. I mean, our R&D, current R&D setup is good enough, to do. You know, so, I mean, we don't make very significant investments also, with this approach. So here, sir, in this, specifically, are we developing products and then reaching out to innovators, or, or are we looking at the, you know, areas where we want to target, reach out to these companies first and then take up projects on demand? How do we, you know, target new CDMO initiatives? Yeah. So we have a whole, I mean, we have 140 APIs in our pipeline. And a good portion of them are still, you know, the innovator still has... You know, even after genericization, the innovator still has 20% to 30% global market share. Okay? And so the approach is that, you know, we sort of work with the innovator on those products and give them a nice cost advantage, right, and move the project along. All right, sir. Just a clarification. You mentioned specialty as well, along with the pharma. Are we actually targeting any specialty in chemicals or, you know, areas beyond pharma in our CDMO initiatives? Is there something on the top? So, Tushar, in our current pipeline of three commercial products, right, or now I should say four, right, two are of the same specialty. Okay. Got it, sir. Thank you so much. The one last thing on the overall size of the business. You mentioned CDMO, over the next four years will go INR 150 to maybe INR 600. Overall business will maybe slightly more than double. But since your CDMO business is at much higher margin, the overall gross margin profile should move up or at least remain the same. You know, CDMO should compensate for maybe loss of margin on the generic side. So it's good to assume that we should be at or above the current margin profile as the CDMO penetration improves? Yeah, that over the long term, we can expect that for sure. Got it. Thank you so much, sir. I'll join back again. Thank you. The next question is from the line of Tarang Agrawal from Old Bridge Asset Management. Please go ahead. Thank you for giving me time again. So mine is a more generic question. I just wanted to, you know, get some insights from you on how the API landscape is today versus where it was, say, a year, year and a half back, both from an industry standpoint and from GLS's standpoint, as you see it today. See, the demand environment is growing at 6%. I mean, API stands at about $220 billion overall market. Okay? And that is a pretty nicely growing market. For GLS, because our concentration is on the chronic areas, again, you know, we are very much in sync with how this is growing. So there's a lot of stuff happening now. Anti-cancer was one area where we were not there, but we are rapidly catching up on anti-cancer, right? But apart from that, CVS, CNS, diabetes and pain are good areas. They are all chronic, right? So we continue to drive our portfolio in that direction. And, just, from a nuts and bolts perspective, how do you see the pricing environment in context of where it was, say, a year, year and a half back? Clearly, your intermediate or raw material prices have come off meaningfully, but how do you see the pricing environment for your end products overall? Has it become more aggressive or, you know, you're seeing some element of stability? No, Tarang, it will always be aggressive. I mean, you know, it's a tough business, but it's a good business. I mean, that's the way I look at it. I mean, we've always, at GLS, we've always recognized that. I mean, look, pricing environment will always be there, customers will always put pressure on pricing, and we have to respond to that, okay? We can't run away from that. So as far as we are well-positioned from a technology perspective and a cost management perspective, we are good, right? I mean, the world is not going to be kind to us, okay? Let me put it that way, right? We've got to be smart at it and continue. Perfect. Thank you. Thank you so much, sir. All the best. Sure. Thank you. The next question is from the line of Charul Agrawal from Bank of America. Please go ahead. Thank you for the follow-up. So I wanted to understand more about your complex API products. Firstly, on the Dahej Oncology block that had been commissioned a couple of quarters back. So what is the kind of traction that we are seeing for the oncology supplies? And next, on the complex API filings, could you help us understand more on the timeline perspective, like when can we see them see some of those getting commercialized? Okay. So as far as the pipeline for both, oncology as well as the complex, right, we continue to fill the pipeline. Okay. With respect to, onco, right, we've already validated 3 products, right? And 4 are, like, actively being, you know, we'll be taking them into validation pretty soon. And the customer interest is also pretty good. So that's going well. On the, iron complexes, 1 has been in regulatory review, okay? With the customer's file is in regulatory review, and, that has also triggered a review of our file. Okay. And, we should file soon, okay, on 1 more, on 1 product soon, and another 2 are, for, you know, we're following up with another 2 in development. So it's going well. Complex is going well. Okay. And some other, you know, not only iron complexes, but we have other complex molecules, right, on the antifungal side also that have had very good traction more recently. Okay. And, that is also picking up well. So I mean, overall, I would say that, this is an area that, you know, both these areas are something that we are aggressively pushing, and, we've got good, good, you know, updates from customers as well. I've got it. So on the Dahej Oncology block, currently, the capacity is being used for filing validations, or is there any commercial supply at all from that block? No. See, onco, the volumes are very small, right? So, in order to, you know, sort of optimize the cost on the manufacturing side, we do, we do make a little more on the validation so that, you know, we can supply even small commercial quantities as it comes up. So, right now, we are not in full-fledged commercial manufacturing, but then that onco block is not a very big burden also from the cost perspective. Got it. Thank you, sir. That answers my question. Okay. Thank you. Ladies and gentlemen, due to paucity of time, that was the last question. Thank you, members of the management. On behalf of Glenmark Life Sciences Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.