Ladies and gentlemen, good day. Welcome to the Alembic Pharmaceuticals Limited to discuss the company's Q1 FY 2022 financial results. We have with us today from the management, Mr. Pranav Amin, Managing Director, Mr. Shaunak Amin, Managing Director, Mr. R.K. Baheti, Director Finance and CFO, Mr. Mitanshu Shah, Head Finance, Mr. Jesal Shah, Head Strategy, and Mr. Ajay Kumar Desai, Senior VP Finance. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star and Zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. R.K. Baheti, Director Finance and CFO from Alembic Pharmaceuticals Limited. Thank you. Over to you, sir. Thanks. Good evening, everyone. Thank you for joining the first quarter results conference call. I'm sure you have got the results by now. Let me briefly take you through the numbers for the quarter ending 30th June 2021. During the quarter, our total revenue was flat at INR 1,326 crores. EBITDA was 19% of sales. It stood at INR 254 crores. Pre-interest EBITDA is 31% of sales. Profit before tax de grew 46% to INR 199 crores, while after-tax profit de grew 45% to INR 165 crores. EPS for the quarter is INR 8.67 per share for the quarter. This is versus INR 15.99 in the corresponding quarter of the previous year. We are withdrawing our EPS guidance for the year 2021/2022 on account of softness in U.S. business due to increased competition, which has led to price erosion as well as delaying of the inspections of our facilities. Capex. CapEx for the quarter is INR 124 crores. Cumulative CapEx for ongoing projects under CWIP, including the pre-operative is INR 1,892 crores. Financial assistance to Aleor JV for the quarter is INR 55 crores. Borrowings. The gross borrowing at consolidated level is INR 500 crores, since these are long-term arrangements, and the company has INR 273 crores as cash on hand. The net borrowing is INR 227 crores. Net debt-equity is negligible at 0.04. I will now hand over the discussion to Pranav for his presentation on the international business. Thank you, Mr. Baheti. As we are all aware, the U.S. business has over the last five years had an exceptional growth. We had a massive, very impressive CAGR uptake. A lot of this growth was on the back of a sartan opportunity. We're very lucky that it lasted much longer than we had anticipated, as well as other market-based disruptions. The early part of last year also threw up additional opportunities due to COVID-related disruptions. Since it was a challenging quarter, this was a challenging quarter on account of intense competition in the market. Our long-term view of the U.S. business still remains bullish. We'll do minor strategy tweaks in the meantime because of the additional competition that we're seeing in the U.S. market. The ex-U.S. ROW business continues to do well and grew at 13% during the quarter. Just to refresh your memories, this is a business that had impressive growth last year because of the year before that when we had serialization. The API business also continues to do really well and grew at 6% during the quarter. This was pretty good considering that last year Q1 was a lot of growth in azithromycin and some of these other APIs, where there was a lot of disruptions from China due to COVID. Our R&D expense was INR 167 crores in the quarter, which is approximately 13% of sales. We received seven approvals, launched two products. We have cumulatively 146 ANDA approvals. This includes 18 tentative, and we plan to launch around five products in the second quarter. The international formulation business de grew by 27% to INR 566 crores for the quarter, and the U.S. generics de grew by 38% to INR 369 crores for the quarter. Ex-US generics grew 13% and API grew 6%. I will now hand over the business to Shaunak, the discussion to Shaunak for the India business. Yeah. Good afternoon, everyone. For the quarter, we saw a nice ramp-up in our India business despite challenges related to COVID. The overall business grew by 57%. Between the three key segments, the specialty grew by 29%, acute grew by 122%, veterinary continued to outperform, grew by 45% in Q1. There was some amount of COVID-related challenges in the market and for the non-acute portfolio, definitely there was some amount of pickup, which was due to the sharp uptick in cases. I think the net effect of both put together, I think we did pretty well keeping those things in mind. Our specialty business grew despite all the lockdowns, which affects the business from a long-term point of view. I think we managed to control the business and make it grow in this quarter. I say, I think at this point in time, our India business, we see enough pockets of growth across the portfolio, both the acute specialty as well as the generic side of it. We continue to perform the very comfortable business. There we still foresee some COVID-related disturbances to happen in the market, maybe this quarter. Hopefully, it should be much less, but I think we've come to terms with how to manage these ups and downs in the businesses, and as well as how to manage the business in the period of lockdowns. What is helping the business is the high clinicians we have, companies, doctors, health, is definitely giving a positive impact to the business despite the lockdowns. We are quite bullish on the business, and we continue to assess these opportunities for growth. We look to scale up parts of our business, but we are kind of mindful of the pandemic-related challenges at this present time. Keeping the two, we are committed to growing the business, and I think we see good opportunities to invest in this business and make it grow. Now I'd like to open the floor for Q&A. Thank you very much. We're now to begin the question and answer session. Anyone who wishes to ask a question, please 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 use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue is tended. The first question is from the line of Shriraj Gandhi from ICICI Securities. Please go ahead. Thanks for the opportunity. Firstly, on U.S. market, last quarter, we were expecting that $55 million-$60 million will be normalized rate. Now we are around $50 million. Is it purely because of higher competition? At the same time, is the impact of competition in theophylline as well open to this number? Shriraj, this is pretty much only due to additional competition in the U.S., nothing else. We were seeing this trend moving forward. theophylline happened. We haven't seen the full effect of theophylline because that happened towards the end of Q1, that will happen as well as going forward to Q2. I think, we were expecting a higher run rate, I still hope that we'll get to this $55 kind of run rate moving forward. We're doing some fine tweaks, yeah, bulk of it is due to pricing pressures in the market. Okay. The impact of theophylline can have additional impact in Q2, and the numbers can be more around this number or below. Yeah. What will happen is two things. One is, where on the volume side, we haven't seen too much change on the volume side. Maybe Q1, a little bit of an impact on volume. We're picking up new awards. We're getting more business. We're working on some cost rationalization in-house. I think hopefully with those things, we'll be able to pick up more business, moving forward in Q2, Q3 to counter for what we'll see additional competition in theophylline and some of the other ones. Okay, got it. Thanks for that. On the gross margin side, like this quarter, we are around 71%. Will you say that this is more of a normalized number now that should be there going forward? Yeah. We've been saying that when we had these margins of 78%, 79%, I was always making a cautious statement that, yes, they will come down. These were part of those high prices we could get during those disruptions. Don't know. India prices are static. India cost also remain more or less static. Some increase in API prices, but not significant. It depends on at what prices do we get to sell in U.S. That will determine the gross margin numbers. Okay, got it. Any update on the Karakhadi journey coming after we gave all the observations and any progress on that? I think, nothing since the last quarter when we spoke. Same, we've just been back and forth with the FDA. We're just waiting to hear from them. Let's see, hopefully next couple of months, what stand they take. Okay, got it. Thanks for that. I'll join back with you. Thank you. The next question is from the line of Damayanti Kerai. Please go ahead. Damayanti Kerai, may I request you to please unmute yourself? It's muted from your end, sir. You can take the next question and come back to Damayanti if he wants to use that. Yes, sir. We'll move to the next question, which is from the line of Prakash Agarwal from Axis Capital. Please go ahead. Okay. I think there's an issue from your side. Maybe people are not able to speak or. Let me just check, sir. Please give me a moment. Yes. Mr. Prakash Agarwal, please go ahead. Yeah. Am I audible? Yes, sir. Yeah, hi, good evening to all. My first question is on the INR 50 EPS guidance that we had given. Is there any thought there? Do we maintain it or how to think about it, given the first quarter has been little weak? Yeah. Maybe, Prakash, you might have missed the opening statement. Mr. R.K. Baheti said that we're temporarily withdrawing this guidance due to a lot of uncertainty that we're seeing and some softness in the U.S. market. Okay. Is there any revised guidance for the same? No, I think right now, due to the dynamic situation, we'd rather refrain from giving any guidance. Understood. On the gross margin, somebody asked, if I see my sales mix has gone favorable, right? India piece is higher versus last quarter Q4 numbers. U.S., in the last quarter only, we said that sartan opportunity is going or fading away. Despite that, we have seen another $15 million decline. A, what has really happened QoQ in the U.S. from Q4 to Q1, B, despite India business moving up our gross margin. Is that everything sitting in that $15 million, which we had a very high profitability, would that be correct? How should we think about it? Yeah, I think, the right way of looking at it is, as I'm saying, the volumes haven't moved as much for the U.S. market, so pretty much what we've seen is on account of pricing. Okay, these are now the realistic, or do we expect one more round on this, or this is on the base level portfolio, there is no special pricing on these products? As I mentioned, it is very difficult. It is too dynamic. That is why we are not giving any guidance. I don't know because it is not in our hand. It really depends how the competition is in the market. I would refrain from giving any guidance on that. Okay. No, because last quarter we heard you saying that you have visibility of 10-plus products, both in oral, derms, et cetera. We also expect in second half with the U.S. FDA inspection obviously happening second half onwards, maybe there is a injectable business coming back on stream. I'll tell you what. Basically, near term, we will see some challenges, I think. I don't know how much and to what extent, whether this is the new normal or what is going to happen. Long term, our view of the U.S. business is still intact. Long term, I believe we should be okay, and I'm still quite bullish on the U.S. market. That 10-plus launches remain? Yeah, that'll remain. I think more, probably closer to 15. Okay. Thank you, and all the best. Thank you. Thank you. The next question is from the line of Anmol Ganjoo from JM Financial. Please go ahead. Yeah, hi. Thanks for taking my question. A slight reiteration of what got asked by the earlier participant. If you look at the U.S., there are two key vectors. One is the product launches, on which we obviously seem to be holding what we had articulated earlier, 10-plus product launches. Yeah. Second is that, if you look at last quarter commentary with respect to certain pricing, we all know these things tend to undershoot once competition sets in. That obviously has happened. I don't think this is a real surprise. Why, therefore, a view that despite domestic formulations doing well and the suspension of guidance, what's the real directional surprise during the quarter? That's what I wanted to understand. Everything else obviously seems not very different from what we understood last quarter. Is there anything which has incrementally worsened with respect to landscape or- I'll just give a brief, then I'll let Mr. Baheti add whatever else. Why the withdrawal is, Anmol, because few things have happened. One is, as I said, from the last quarter also till now, we've seen incremental lot of erosion in prices in the U.S. market, number one. Number two, we're seeing that we're not seeing any guidance from the FDA in terms of when they're going to come, what they're going to do. The third is, as you all know, there's been the incremental competition in theophylline, timolol, some of these other products which are high pick products. There's lot of unknown uncertainties in the market. Hence we were not comfortable with the guidance. That's the reason why we've removed it. As I mentioned earlier, long term, we are still quite intact. I'm just going to veer off for a second before I get back to Mr. Baheti on the guidance. Yes, I sense that there will be a lot of questions on the U.S. business in today's call. Let me just give a flavor on what kind of things we are doing or what we are in the midst of doing. As you know, Alembic has actually captured a lot of high-priced opportunities due to disruptions in the market. The market has changed now. Everyone is back on suppliers, and there's not really any disruptions. We're doing a lot of cost cutting, cost reduction, supply chain, volume growth, picking up business, bidding for new businesses, and I think we will see the effects of that Q4 definitely, but Q3 definitely, but maybe Q2 also, as we're picking up some volumes, we're picking up some business. We're rationalizing some R&D spend. We're rationalizing our other expenses as well. That's what the strategy is moving forward, because those high-priced opportunities are not there. There's a lot of fluff in the system that we're trying to correct. No, I think you were calling. Yeah. Yeah. Anmol, anything else? Briefly, two more quick questions from my side. Now obviously this quarter, the competition has overshot expectations, and we seem to be stabilizing at around a $200 million annualized run rate on the base. Sartans at least would have worn off. Incrementally, I don't think that the portfolio is vulnerable to sartan pricing, at least. theophylline, again, if what has happened this quarter is anything to go by, the risk should be on margins, not as much on volume. I think, with a lot of these things happening, which were expected, as you highlighted, then $200 million plus the launch rate of new products, that is how we should be budgeting for the U.S. growth on a full year basis. Is that correct in terms of assessment? Anmol, if you extrapolate from this quarter, yeah, that could. Again, there's too many unknowns. That's why I don't want to give a guidance on the number. Okay. Second question is on the domestic formulations. Good show there, guys. Obviously that's been very impressive. If you look at the drivers, is this the new normal or you think that it will be a lot of work required to stabilize it to this number? Again, as one of the earlier participants highlighted, domestic growth at this rate should obviously be able to buffer the margin dilutive developments in the U.S. market, although it is still off a very high base. With domestic coming back, both from a cash flow perspective as well as a mix perspective, how should we be extrapolating it going forward in terms of guidance? Sure. I would request Shaunak Amin to respond to the business environment part, and then I'll take the financial numbers. Yeah. Anmol, you know that I think, honestly, the market is so dynamic. I think with the lockdowns play a large part in what could happen to the business. Like I said, ex-acute or rather ex-azithromycin, the portfolio performs fairly well, which gives me a level of confidence that a part of this is sustainable. There might be quarters where there is little bit up and down, but broadly, we feel the momentum is sustainable. Obviously, not that big part of the portfolio, ex-azithromycin, has performed exceptionally well. I'm fairly confident that we can maintain. Obviously, a lot of the growth is linked to market growth. A lot of the market growth at a very macro level is linked to GDP, is linked to this possible good monsoons we've seen. A lot of factors that play into it as long as the market does perform. I think we're fairly confident about performing the market on a sustainable basis. Is this number at 57% growth sustainable for every quarter? Like I said, a lot of this is determined, but it is out of my control, which is a market movement. As long as the market stays positive, there's no major slowdown in the market at an overall level. Like I said, we've been consistently saying I think we're fairly confident about performing the market in all of our key therapeutic segments as well as all our key products. Yeah. I think that's the outlook at this point. Yeah. Shaunak Amin, if I may just kind of scratch that a bit more. If you look at the growth that we've had, obviously the market has done well. There must really be, if the ex-azithromycin portfolio has done well, then there have to be market share gains elsewhere given the big lead we have this quarter over the rest of the market. Just trying to understand, are there any drivers of market share gains in this quarter which- Yes, there are market share gains. Like I said, I think one quarter is too small a period to start tracking market share gains. I don't want to get into a quarter market share gains because the market is As you know, IMS, even in this period, I think the IMS data collection was affected or gets affected when there are pandemics and lockdowns. Yes, there have been market share gains, but I don't want to Like I said, we need to see at least two quarters of market share gains for us to really come out and say that, "Yes, there's been large market share gains. Thank you. We have grown faster than the market. I think we've substantially outgrown the market in all the segments. For which I send you our presentation. Yeah. Thanks. That's very clear. Thank you. The next question is from the line of Shivan MS from JHP Securities Private Limited. Please go ahead. Good evening, sir. Three questions from my side. Broadly, sir, you said that the long term is pretty intact. From that perspective, considering that we've completed most of our CapEx and once it starts getting commercialized, where do we see the potential of that CapEx to kind of drive our U.S. business? What would be the top line that one can expect? Is it in the $500 million-$600 million range? Based on history and your experience, when does a particular plant reach its maximum capacity utilization once the approvals are with us? That's my first question. The second one is regarding our gross profit margin. Mr. Baheti did mention about the gross margin. Just reconfirming, that if I go back to my notes, he had said that a broad range of 70%-72% is what we normally would be confident of doing. Does that still hold? The last one was on the modified opinion that we've got in terms of accounting for the debentures. If you could just give a color in a layman's language that why have we not followed the accounting standard guidance and taken a differentiated stand. That's it from me. Pranav will respond to the first question, I will respond to the next two questions. Yeah, sure. Our long-term view, as I mentioned, still stays intact in terms of what we see the market where it's going. Yes, maybe two quarters a year over there, it may change due to the delay in FDA inspection and approvals. By and large, it stays as we haven't given a long-term guidance. I'd mentioned in the past that companies of similar size and what they went, we should look at about INR 400 odd million kind of sales revenue in moving forward by FY 2024, 2025. That still stays intact. In terms of, I think the other part was on the capacities and when do we expect integration. Yeah. Basically, as you know, the whole approval process does take some time. We have made filings from these facilities. Depending on when the FDA really comes for inspection and all of that, it will take some time before we get approvals from meaningful products. These assets have been built keeping long term in mind. There's a whole bunch of products that will keep getting filed over the next few years. As we file those products, more and more revenue can come through from the same facilities. From a long-term point of view, when you ask the question, when do we see peak sales? I think, it'll take about five, seven years before we see some peak sales coming from these plants. Based on the filings and the approval time and stuff like that. Okay. If I may just add, when we talk about peak sales, my question was, what could that be? Based on your experience on a similar asset in another company or what your internal assessment would have been when you would have expended this CapEx, what is the peak sales that this particular asset can give? The current block. Basically, generic business, we've been seeing that there is a lot of uncertainty. Having said that, overall, if you look across the sector, the general sales to fixed asset ratio, if you look at, it's in the ballpark of about 1.5- 2 times, and we should be aiming to achieve similar numbers over the long-term period. Okay. Again, these are very broad numbers, so please don't- Yes Make too many quantitative determinations from here. We're just giving kind of a direction. Sure. I get that. Coming back on that modified opinion. I think this is a policy which we have been forming consistently. This is in respect of Aleor. Aleor didn't make provision for interest, nor do Alembic Pharmaceuticals recognize the income, because as per the JV agreement, the interest will be payable by Aleor only when There are some conditions which have to be met. As of date, those conditions are still some time away, and that's how we may not meet. Actually, on a consolidated basis, it doesn't make much difference except that partners' share of loss will go up a bit. As far as cash flow is concerned and as the operations are concerned, it doesn't impact us because accounts get consolidated. On your margin question, yes. I've been saying this on margins are, again, as I said, a factor of how sales prices are, realizations are. They behave. It will depend on that. Okay. That's it from me. Thank you. Thank you. The next question is from the line of Abdul Kader Puranwala from Anand Rathi. Please go ahead. Yeah. Hi. Thank you for the opportunity. Just one question from my end. If I just look from a standalone to consolidated, the profit number looks quite lower. I understand this could be partially because of the U.S. business. But at a $50 million or a $55 million on a quarterly run rate, would the U.S. business still be profitable for us? Yeah, it is still profitable. Only two, as we have been mentioning, the ROC has come down, but otherwise, it's still profitable, obviously. All right. Thank you. That's all from me. Thank you. The next question from the line of Bharat Celly from Equirus Securities. Please go ahead. Yeah, hi. Thanks for the opportunity. Sir, just wanted to understand on the gross margin side, given that during this quarter you had some benefit because of domestic business being higher, five plus years to like complete impact has not been there. Do you see that the gross margin can further correct from the current levels of 70$, 65%? Or do you see some risk? Very difficult to predict. What we are doing, what is in our hand? What we are doing, we are looking at more efficiency in procurement. See, last couple of years, our focus has been on making the goods available. Okay. The pricing was secondary because that's how the U.S. was operating. Now we are looking at all-round efficiency improvement. We think we have reached to a number which is sustainable. Right. Sir, from the perspective of other expenses, we have seen a sharp increase sequentially, despite being a case where the overall promotional activities have been subdued. What is the key reason for that? The other expenses, I think a large portion of other expenses are not related to the generics business. The large portion of other expenses relates to domestic market. Last year, domestic market expenses were very muted because of a very strict lockdown throughout. This year, markets have opened up, so we have spent more on promo, we have spent more on field travels and all the field related activities. It's, again, it's closer to the normal reality. Is it a number we can look out that this number will continue? Will it be more like a base for us? In domestic market, the expenses are never uniform in all quarters. There'll be some quarters where there'll be high expenses on promo, and then there'll be some quarters where those investments will be strict. It depends on marketing strategy, but I think broadly 20%, 30% growth here or there, these numbers should stay. Sure, sir. Sir, last one, on the U.S. business side. We are saying that maybe are going to be around $50 million a quarter. Sorry, $50 million a quarter. Does it mean that by that fiscal end, we will be returning back to the guidance of $55 million, which we have guided for the adjacent quarter for the U.S. market? No. Actually, I've not guided. I've not given a guidance on the $55 million sales. I think I just mentioned in the last call that what we were seeing typically was $65 million-$70 million. That is coming down because we were seeing a trend of a lower, more price erosion. That's all. That's where that number came already. Right. Pranav, in your assessment, can we go back to around $55 million annual by the fiscal end or as an aggregate number? Yeah, I responded this to the earlier question as well. If you want to extrapolate from this quarter, you can add a $15 million or It's very tough to say, and that's one of the reasons we have withdrawn the guidance is I'm seeing a lot of It's a very dynamic market. I'm seeing more competition. I'm seeing what's happening. I really don't know. I think I'll have to wait for a couple of quarters to see where it settles down in order to give a formal opinion of where I feel the market will be. Sure. That's helpful. Best of luck for future quarter. Thank you. Great. Great. Thank you. The next question is from the line of Norman from Falcon Investments. Please go ahead. Hi. My question is around the U.S. business model itself. Looking at your history, it seems you've generally made profits when there's some sort of a structural issue or first aid filing or something of that sort. In a normal way, the U.S. market doesn't allow you to make much profits at all, simply. The fact that this competition has come up is no surprise. It's going to keep happening. Right? Because that's the way the FDA wants it. It wants all these suppliers to kill themselves literally and get the medicines at the lowest cost. What makes this business model good in your view? Yeah. First of all, I think the U.S. market for us, I don't know about the others in the market, but for us, it has always remained profitable and still is profitable. I think since inception, it's always been profitable. I don't see any issue there per se. In terms of the FDA, I really can't comment on that, what they want. What makes this market seem attractive and why are we still attracted to it, or why do we keep making investments in it is because a few reasons. One, the addressable market size is very good. There are opportunities to make money in the U.S. market, they continuously close that up. If you look at us over the last five years, we've grown at a CAGR of over 25%, every quarter has been profitable on that. I think it's a good market. Addressable market size is big. Compared to the other international markets, I think it's a better market because it's easy to do your own front end in the market. That's what we feel about the U.S. market. I agree you have made profits, but if you look behind the profits, there's been a reason behind it, right? The sartan was completely because of supply constraint, right? It was not run-of-the-mill business. It's not business as usual. It's like a commodity, right? When there's supply constraints. I think what you have to understand is that is how the U.S. market is. There are continuing disruptions. Even if you take the disruptions out, it's still a profitable business. You look at us, you look at some of our peers in the industry, there is still a lot of profit to be made. Well, could you explain more of your conviction, why you think that way? Because it hasn't happened that way. Because the price erosion immediately sets in. No, why I'm saying is it has happened that way. We see our history, Alembic, our U.S. business, it's always been profitable for us, and I still think it's a great market. There are a lot of opportunities to make money if you do the business right, you get the right prices, and I think the industry's seen that. We've seen across the board with generic pharmaceutical industry as well. If you're making all these investments and you don't know what the pricing is going to be, you don't know how many competitors are going to enter. Isn't that a big risk? No, I don't think so. I think that's just the way the industry is. You have to find the opportunities. You have to ensure the variables that you take care of, be it the supply chain, be it your sourcing, be it your marketing content. That's it. There's no business with 100% certainty. If there was, let me know and I'll get involved with it. Okay. Thank you, Pranav. Thank you. Next question is from the line of Abhishek Jain from Arihant Capital. Please go ahead. Just two questions. First question, how India business is doing out right now, post-COVID, things are opening up right now. If you can throw some color on this thing, especially on the acute therapy portfolio, how the things are shaping up. Ex-azithromycin, I think if you can throw some light, see what is the growth number for India business. If you can throw some light on this thing, sir. Third question, what is the CapEx guidance? Are you maintaining your INR 1,000 crore CapEx guidance for next two years? For India business? Yeah. Just to get clarity, asking for Q2 guidance number. No, I'm not asking. How the things are shaping up. I don't need numbers and all those things. Just how the trends are there right now in last one month. If you can throw some light. You want Q2 numbers basically? Market is still opening up, so I think we are in a state of seeing the markets just open up gently. I think it's bit premature to make any large statements. I don't want to get into giving absolute numbers for Q2 when we are in the middle of the quarter. As you're aware, the cases have come down. I think with cases coming down and I think some amount of markets opening up, I think there's some amount of normalcy coming back into the market. I think that's our blessing at this point. To your other part of the question, yeah, ex-azithromycin I think also the entire other non-azithromycin portfolio as well as company portfolio has been sitting even in the first quarter. Abhishek? Yeah. Thank you, sir. Yeah. Okay. Thanks. Please tell your next question. There is no response from the line of Nitin Agarwal. We'll move to the next question. It's on the line of Rahul Saneesh from Axis. Please go ahead. Hello. Yeah. Please go ahead. Hello. Yeah. Just one question. You sound very cautious from the U.S. business, and we all know that the competition typically leads to price erosion. Apart from that, in molecules which have not seen incremental competition, has that been also affected by the price erosion, or the pricing has remained stable on those and just the ones who have incremental competition, there we have seen price erosion? Generally, there has been competition across product profile. The most intense competition, of course, has been patent where the prices have come down, but we have seen that in other products also. Which have not seen any incremental competition in this quarter? Nothing which I can point that there is no incremental competition. In activity, we've taken price increases also, where it was possible. In general, yes, it is sartans which are in fact uncovered quarter. Okay. Sure. I think maybe cautiousness that you have shown seems to be like in the case of some structural change. Even the products which are not seeing competition might also be facing price competition, that's price erosion. That's why I asked. I think the competition is across the board, across everywhere in the U.S. No, that is there. Within the portfolio also, there will be some products which would not have seen incremental competition and their pricing has remained stable. There also because sometimes when the wholesaler consolidation happens without incremental competition also price erosion happens. Yeah. In some products there was no erosion, in some there was. Okay. Sure. Thank you. Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Sir, with this Ardent sale, just to understand, top three products will be contributing how much for you guys now? I don't think we give product-wise. I don't have that breakdown. I don't think we give product-wise. As I just said- It keeps changing every quarter it's changing every quarter. It's tough to say. Typically, industry is, I think with the way the industry is, top 20% or is something about like 80% of sales. That's what the industry figures are. We don't give because it's too dynamic. Okay. Currently standing with INR 160 crore for the quarter. Yeah. How much to look for FY 2022 full year? We've not given the guidance, but I'm assuming it'll get close to INR 650 crore-INR 700 crore kind of level. Annually. Okay, sir. Thank you. Yeah. Thanks. Thank you. The next question is from the line of Vishal Manchanda from Nirmal Bang Institutional Equities. Please go ahead. Thanks for the opportunity. My question pertains to the API business. Wanted to understand whether the current run rate can sustain for rest of the year. As I mentioned in last few quarters, the API business had a phenomenal growth last year, and a lot of the growth last year was due to the COVID-related disruptions. Having said that, this quarter they've done well. I expect them to be close to this 5%, 7%, up to 10% growth is where we look at for this year for the API business. Okay. The second is, in the U.S., we have also seen volume share loss in case of penicillins. Is it on account of some manufacturing disruption, or is it on account of competition? As I understand, there was significant market share loss in that product category. I think it would be probably just pricing pressure or we may have backed off, but there's nothing related to manufacturing. Okay. Can you give a sense on the ANDA approvals that you expect this year, some sense on per ANDA revenue number? Is that possible for you to estimate? No, it's very tough to give that, and I wouldn't be comfortable with that kind of a guidance because it's too dynamic. Who's going to launch, how many people launch, what the competitive intensity will be. It's tough to predict. If it's not that, maybe what value of the market, what market opportunity do these ANDAs represent in terms of the brand sales or the overall market, including generic? We can take this offline. I'll just ask the IR team to get in touch with you. I don't have that figure with me right now. Okay. Thanks. That's all from me. Yeah. Thanks. Thank you. The next question is from the line of Ranjit Singh from Cengage Securities. Please go ahead. Yeah, thanks for taking my question. My question pertain to India business. We see some low base last year in Q1. Now we have seen a very good growth here, but I see that probably run rate has come up better than now pre-COVID levels. My question is whether that kind of growth, I mean, that kind of run rate, it's sustainable going forward? Internally, what should I take growth, especially in acute segment. What kind of growth you see from here onward? Like I said, I think operationally we feel we're definitely pre-COVID levels. We think we need to be at that. As long as the market doesn't shut down. I mean, if we go into one more six-month lockdown, then I think I can't tell you what's going to happen with the basic business because lockdowns impact the business. Keeping in mind that things don't go haywire and markets stay stable, I think the basic issues with a good monsoon and GDP growth and rural income, things like that stay in line. I think as long as the market behaves correctly, I think we're fairly confident of showing strong growth in all our businesses going forward. This growth should be in excess of represented market growth, both for acute as well as specialty, as well as vet. Okay, fine. Secondly, on API side, whether we have seen price erosion in sartan API also? There's the erosion in sartans has been across the board. It's not a big API component for us. It's tough to say, I think. The more so the pricing that we saw is on the formulation side in the U.S., not as much on the API side. API was a supply availability, which caused the formulation prices to go up. Also we're not large players in sartan API as well. Okay. What's the status of oncology injectable facility? Have we started filing from this facility? Yeah, we've started filing from this facility. We're doing batches and we'll be filing. Then we'll await FDA inspection for the India facility. So for- Sir, can we take your question again? Can you kindly just follow up? Yeah, just a related question that in oncology injectable, just I wanted to understand if we are waiting for U.S. FDA inspection or U.S. FDA clearance. Meanwhile, are we selling anything to non-U.S. market from these new facilities? No Okay. Thanks. Thank you. The next question is from the line of Ravi Kumar, an individual investor. Please go ahead. No, I think I have my questions were answered. Thank you. Thank you. The next question is from the line of Nimish Mehta from Research Delta Advisors. Please go ahead. Yeah, thanks for the opportunity. Just one more understanding on the domestic business. The overall market, if I understand, has grown by about 50% in the month of April and May, and it came down to almost 14%, that is 14% in the month of June. Are we as a company also seeing a similar proportionate decline in June or is it still much better than the market? Nimish, whatever you are quoting from IMS, we are also covered, you can have our numbers also out there. Because you are comparing annual numbers with our provisional numbers. Whatever source you are quoting, our numbers are also available. Okay. I don't have that granular. If you can tell me. You are very smart. Okay. I think we are, as strongly said, we have been outperforming market. The trail continues. I just add to that, I think, what you are saying, IMS reflection in April, May versus June, definitely there was a IMS slowdown, which we also saw. Like I said, we outperform the market. I think the slowdown is more to do with lockdowns. I think peak of lockdowns always slows the business down. I think they're seeing that when lockdowns happen, I think three, four, five weeks into the lockdown, everything starts to slow down because basic movement slows down of people moving in and out. I think practices slow down, footfall slow down. We see the lag of the lockdowns coming in. That is it. I think going forward, like I said, I think markets have opened up largely now, we're seeing a more normalization level of movement. I think the monsoons have been good also this year, so that gives a boost to our cotton, gold and agri business. Okay. The other thing I wanted to know, have we capitalized any expenses with regards R&D or Aleor and operational expenses of facilities not commercialized? If yes, how much is that? Thank you. Yeah, we have capitalized R&D of Aleor. When we put the products and once we get the approval and we put to use, then we amortize those expenses. You can get the numbers in the March 2021 financial, it is around INR 200 odd crores. I'm talking about this quarter. What would that number be? That plus the operational expenses that we capitalized. What would that number be for this quarter? For Alembic Pharmaceuticals, it is around INR 70 odd crores, which is the pre-OpEx, and Aleor would be a small portion of around INR 10 odd crores. Okay. Thank you very much. Thanks. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. Hi, thanks for the invitation. Sharma, on the U.S., you've been spending almost INR 600 crores on R&D for the last three years now. When do you see some of these higher R&D spends sort of culminating into maybe relevant, meaningful launches or whatever, which can move the needle from an R&D contribution perspective? Sorry. Your question is, the R&D expenditures that we have been incurring, where do we see meaningful launches from these? Is that the question? By what time frame do we see this time frame ongoing, and we see monetization of the same company? Sorry, you're asking for amortization of R&D expenditure or monetization? In terms of results of the R&D spend that you've done for the last three, four years, over what time period do we see the results really showing up by way of launches from the spend? Sure. Yeah. Actually, as you know, the approval time frame after we file is close to about two to three years. As and when these products keep on getting approvals, we will be able to commercialize. As we commercialize, we will see revenue coming in and therefore the result in gross profit. I think this is a continuous kind of an effort. We keep spending money. As and when the approvals come through, we will keep on monetizing. The amounts that we have spent in the next, say, three, four years, you will see monetization of it for the next five to seven years in the minimum. Right. Have there been just, given the way the market dynamics have really changed over the last two, three years, have there been a significant number of projects where the dynamics for your own estimates have changed meaningfully versus what you thought of when you were probably investing in those projects? Or they are very few and simple like that? Yeah. Obviously dynamics keep on changing, and we keep on monitoring the market dynamics almost on a monthly basis. We look at where the products are, how much investments have been made, how much yet to be made, what is the complexity of the product, and how many new players are emerging. It's so many factors we keep on looking on a real-time basis. Wherever we feel that the competition has changed in a dramatic way when we are in early stages of development, we take a call and cull those products. Basically, we actually monitor this on a very active basis and maintain the discipline of ensuring that the products which are in the grid are expected to generate the required rate of return. Last thing that, your experience around your assessment over the last three or four years, opportunities like these where you can make price higher than average revenue per product, have those opportunities become difficult to come by, or are there still enough more opportunities like these around? Yeah. Traditionally, the generic business, and you can also see the number of filings the industry is making. That data is available in public domain. You can see a number of ANDA have been filed over the last maybe seven, eight years. That's very clear situation, not just for us, but for the entire industry, that you have a number of products getting filed. Having said that. I think it's better we take this call offline. Yes, sir. I think we're talking of basic nuts and bolts of our business, which I think is. I understand. Okay. Sure. Nitin, Jesal, Deepanshu will be in touch with you offline. Sure. Okay, one last question because we are just running out of time. Thank you. This will be the last question, which is from the line of Vineet Gala from Monarch Networth. Please go ahead. Hello, sir. Thanks for taking my question. On the derma part of the business that is on your JV, we've seen decent number of approvals. Can you throw some light in terms of the profitability and pricing part? Also, given the investments being made in this asset, when do you expect it to start contributing meaningfully? Sir, you are right that we have got lot of approvals, but unfortunately, it's not great commercial opportunity at this moment because of intense competition. We have started supplying, we have launched the product. We are talking to customers for getting better market share. We are also looking at optimizing the capacity utilization. All those efforts we are doing, but I think for the size of operations we have, it will take a while to really make that venture profitable. Fair enough. Is there any kind of payback period in our mind because significant investments are done in this asset? The payback period we had in our mind when we invested has really got extended. Again, when you are in pharma, particularly in generic pharma, you have to be a little patient and wait for the right opportunity. You've got two opportunities in a year, and you can have the entire calculation back on track. We are very patient at this moment. Fair enough, sir. Sir, last question from our side. Qualitatively, most of the approvals that we've been getting are relatively smaller opportunities and seem to be very well contested, like the recent approvals I'm talking about. Given the R&D spend- Sorry, what? Yeah, given the R&D spend we've seen, these are relatively less attractive kind of approvals and OFEs. Can you please articulate your thought process? You are talking of derma or other approvals? OFEs. Okay. Yeah. Actually, we have a portfolio of products. Some of these products, like I said, that we keep on looking at competition and some of these products competition may have increased by the time we got approval. You're seeing that. It's going to be a mix of products. We've had opportunities in the past, and we continue to believe that we will have opportunities in the future. Okay. Fair enough, sir. Okay. Yeah. Thank you. Thanks, Vineet. I think we are completely run out of time, and I would take this opportunity to thank all of you to have been actively associated with us, participated in our calls, asking relevant questions, keeping us on our toes. We look forward to continuing the interaction with you. Anyone who still has some questions can always get back to us offline. Deepanshu and I are always available. Me, Pranav Amin also on request. I will close my comments with a big thank you to all of you. Thanks. Good evening.