Ladies and gentlemen, welcome to quarter four FY 2022 earnings conference call of Aurobindo Pharma Limited. All participants' lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. In order to ask questions, please signal by using the Raise Hand icon on the bottom of your screen. I now hand the conference over to Ms. Deepti Thakur. Thank you and over to you. Thank you, Adithya. Good morning, and a warm welcome to our fourth quarter FY 2022 earnings call. I am Deepti Thakur from the Investor Relations team. We hope you have received the quarter for FY 2022 financials and the press release that we sent out yesterday. These are also available on our website. I would like to introduce my senior management team today on the call with us, represented by Mr. P.V. Ramprasad Reddy, Chairman, Aurobindo Pharma USA, Mr. K. Nityananda Reddy, Vice Chairman and Managing Director of Aurobindo Pharma Limited, Mr. Santhanam Subramanian, CFO, Mr. Yugandhar Puvvala, CEO of Eugia Pharma Specialities Limited, and Dr. Satakarni Makkapati, CEO of Aurobindo's Biosimilars, Vaccines and Peptide Businesses. We will begin the call with a summary highlight from the management, followed by an interactive Q&A session. Please note that some of the matters we will discuss today are forward-looking, including and without limitation, statements relating to the implementation of the strategy, actions and other affirmations on our future business development and commercial performance. While these forward-looking statements exemplify our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors may cause actual development and results vary materially from our expectations. Aurobindo Pharma undertakes no obligations to publicly revise any forward-looking statements to reflect future events or circumstances. With that, I would hand over the call to Mr. Santhanam Subramanian for the highlights. Over to you, sir. Thank you, Deepti. Good morning and welcome to all of you for joining this earnings call. This year has been very challenging due to various factors, namely COVID, steep crude price increases, global inflation and secondly geopolitical issues, et cetera. Despite these issues, we have delivered a good set of results in this fiscal year. We will now discuss the results for the fourth quarter of fiscal year FY 2022 declared by the company. We'll be discussing numbers throughout the call. For Q4, the company registered a revenue of INR 5,809 crores with a decrease of 3.2% quarter-on-quarter. The EBITDA before Forex and other income declined by 23.6% year-on-year and declined by 4% quarter-on-quarter to INR 974.74 crores. EBITDA margin for the quarter was 16.8%, and for the year, 22% for FY 2022 was at 18.7%. Our EBITDA margin before R&D is 24.2% for the quarter against 23.5% last quarter. Net profit decreased by 28.1% year-on-year and 4.7% quarter-on-quarter to INR 576 crore. In terms of the business breakdown, formulation business in Q4 FY 2022 witnessed a decline of 1.9% quarter-on-quarter to INR 4,896 crore and contributed around 84% of the total revenue. API business contributed around 16% and clocked a revenue of INR 913 crores for the quarter, registering a growth of 15% on a year-on-year basis, led by improved demand for some of our key products and decline of 9.6% quarter-on-quarter. For the quarter, the revenue from the U.S. formulation decreased by 4.5% year-on-year to INR 2,728 crores and 0.6% quarter-on-quarter. U.S. revenue during the quarter is, I mean, $363 million in absolute terms. We have received final approval for three ANDAs and launched four products in the quarter under review. We have filed 14 ANDAs, including three injectables during the quarter. The total number of filings end of March 2022 is 727. Revenue for Aurobindo Pharma USA, the company marketing oral products, has decreased by 5% year-on-year for the quarter. Revenue for AuroMedics, the injectable business, increased by 4% year-on-year to $70 million for the quarter. We have a total of 175 injectable ANDA filings as on March 31st, 2022, out of which 119 have received final approval and the balance 56 are under review or have tentative approval. The company on March 31st, 2022 has 727 ANDAs with the U.S. FDA on a cumulative basis, out of which 505 have final approval and 33 have tentative approvals, including 8 ANDAs which are tentatively approved under PEPFAR, and the balance 189 ANDAs are under review. For the quarter, European formulation revenues clocked INR 1,541 crores, a decline, decrease of 0.8% year-on-year growth. For the quarter, the growth market witnessed a growth of 28% year-on-year to INR 391 crores. For the quarter, ARV business registered a 51.5% growth quarter-on-quarter at INR 236 crores, a degrowth of 52% year-on-year on a high base of last year. R&D condition is at INR 431 crores during the quarter, which is 7.4% of the revenue. The average raw material cost increased by about 9% during the quarter and freight costs are more than 10% on year-on-quarter. The average raw material cost increased by 18% year as a whole and the freight cost by 42%. Net organic CapEx for the quarter is around $65 million. The average Forex rate is INR 75.09 in Q4 FY22 and 74.82 in Q3 FY22. The average finance cost is at 0.8%, mainly due to availing multiple currency loans. The business generated a free cash flow of $38 million during this quarter. The net working capital for the quarter has been reduced by about $98 million and $126 million for the year, mainly due to reduction in inventory. Inventory alone, we have reduced by $200 million for the year. As a result of the strong cash flow generated during the quarter, the net cash position, including investments at the end of March 2022, improved to $333 million. With this we'll be funding the PLI one project mostly out of internal accruals. Also, we reduced the gross debt significantly, $330 million from $499 million end December 2021. We have been reducing the gross debt quarter-on-quarter and we'll continue to do so. In a nutshell, despite the hostile global environment and peak raw material, we were able to maintain our margin and also generate a significant cash for future projects. This is all from our end, and we are happy to take your questions now. Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may raise the hand icon on the bottom of your screen. Once your name has been announced, you will be unmuted and you can ask the question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from Nimish Patel. Hi. Can you hear my voice? Yes. Yeah. Thank you for taking my question. Sir, my question is, what is your guidance for the future? Does it remain intact? I mean, you know, or, is there any change or what is basically your guidance for the future? Yeah, as a policy, we don't give any guidance, Nimish Patel. However, while the questions, detailed questions are being asked, we'll try to give the, I mean, direction as and when it is required. Okay, sir. Thank you. Next question is from Neha Manpuria. Yeah, thank you for taking my question. Sir, my first question is on the gross margins. We've seen quite a bit of improvement quarter- on- quarter, despite the fact that some of our lower margin businesses have, you know, have done well in this quarter and the oral solid business has, you know, sort of deteriorated. If you could give us some color on the gross margin trends, and, you know, is the full impact of the cost inflation that we are seeing factored into this quarter, you expect this to moderate going forward? Neha, last quarter itself we have answered this query. When we had 54.3% last year gross margin, it is mainly on account of the business mix skewed towards API in a significant manner by which around 1.25% is on account of the business mix basically on API. This quarter API business clocking around INR 900 crores, so it comes to the I mean, normal position by which around 1.25% got released. The balance around 1% is on account of the product mix as well as the geographic mix between the various continents. Right? That is the main reason. We have factored in all the costs that whatever we have been buying. I mean, we believe these are on the peak and probably it may continue for a couple of quarters, and this is the position as of date, and we are trying to see how to improve upon it. Anyway, internally as a process, we work on that continuously. Okay. Basically, from what I understand, you know, the mix has changed, you know, back to its normal level and, there has been some geographical mix, you know, which has helped margins. Absolutely, you're right. Sir, on the API front, you know, have you been able to pass on the, you know, cost increases that we've seen in the, you know, last few months to our customers? Or, you know, API margins have come down over the last year. In terms of the domestic industry, we are able to pass it on at least some significant portion of it. Total sale, 45% of the sale is the in-house formulation sale. Transfer to formulation. 55% is the outside. For whatever the 55% of the outside sale is, we are able to do at least 50%-70% of the price increases we pass it on. Still we bear some amount. The in-house one, everything we absorb it to the oral division. Got it, sir. Sir, on the second question on U.S., you know, there has been some commentary from our peers about, you know, portfolio rationalization. We have seen moderation in the oral solid business, even though injectable has improved. If you could, one, give us color on what we are seeing on the oral solid business in terms of price erosion. You know, has it, you know, sort of, has been flattish, has it deteriorated from last quarter? Injectables, how should we look at growth from injectables given, you know, we are now getting, you know, closer to the pre-COVID levels? The injectable part, my colleague, Yugandhar, can explain. I can tell about the oral business and other businesses in U.S. We saw the price erosion is continuing, and little bit, we felt there won't be much price erosion. To our surprise, the Q4 price erosion is. Average in the whole year it is 9%, and Q3 suppose around 9.5%, and Q4 it is 11.5%. Another 2% was increased in Q4. The overall impact, either price erosion or self-stock adjustment, together it is around 11.5%. Only price erosion is in Q4 is around 10%. Between Q3 to Q4, around 2.5% was further erosion. We are expect this one, this may not stop here, but in a matter it may be in slow phase, it may be next two quarters this situation will continue. That is what we are expecting. Okay. Neha, in terms of the injectables, as you can see, like, the price erosion continues. It is not that it is injectable businesses doesn't have a price erosion. It does have, but, like, we do have a good portfolio of launches, which is actually like will offset some some sort of a price decline. I do expect the growth momentum of injectable business to continue, mainly the specialty business as overall, both oncology, hormonal, and the general injectables all put together. We do expect a double-digit growth, going forward into the next year. And our- Yeah, madam. Sorry. Also in the oral business, overall our volume has increased around 6%. We know that the price or the pricing pressure is continuing. There is no end for this in maybe another two quarters. We have a good number of products. Even though it is medium level products, we won't tell it is first to file or exclusive products or something. We have third party products subject to some plant approvals also. We hope, you know, in coming quarters after one or two quarters, things will stabilize in the volume and the price. Correct. Thank you so much, sir. Thank you. Anyone who wishes to ask a question may use the Raise Hand icon on the bottom of your screen. Next question is from Tarang Agarwal. Hello, good morning. Thank you for taking my questions. Four from my side. First, you know, between CWIP and intangibles under development, which translates to roughly about INR 4,000 crores, about 40% of company's net block, seems to be on track to be capitalized. Over what period should we see this getting capitalized, and how is management's revenue visibility on these assets? Out of the INR 3,000 crore which you are seeing, Tarang, at least INR 1,500 crore is pertaining to both injectable as well as the oral plant and derma plant in the U.S. Oral and derma likely to be commissioned by before FY 2023 end, and the injectable probably may spill over to next year. In terms of the other things, it is more of a brownfield. I mean, another big one is the ROQ. ROQ is the Vizag injectable facility, which the installation is more or less complete, and the exhibit batches will take place. Probably, Yugandhar will explain it a little bit more. Other things are more of brownfield expansion, small expansions, et cetera, which it will get capitalized over the course of time. Right. Yugandhar, do you want to talk about the ROE? Yeah, Tarang, you want to ask something else? Yeah. Would it be fair to presume that over the next 15-18 months, we should see a large proportion of that getting capitalized? Yeah. Okay. Tarang, in terms of the injectable plants, we have two new injectable plants, one in Vizag and one in U.S. We do expect the filing to start in FY 2023. In case if everything goes well, FY 2024 onwards, we will start generating some revenue from Vizag and New Jersey both. In worst case, it might spill over to FY 2025 first quarter. Okay. The second question to you, Mr. Puvvala. You know, what's the global generic injectable sales for FY 2022 and the split between North America and others? Second, do you still stick to your, you know, earlier guidance of about $650 million by FY 2024? And if so, can you give us a more calibrated pathway in terms of, you know, number of launches that could help us get there over the next two years from this business? Yeah. Tarang, let me again, I think I did correct last time as well, and I will continue to correct till the time your questions start changing from injectables to specialty. Yes, it is a specialty business, including oncology oral solids, hormonal oral solids, as well as the entire sterile business. That is what it is. On a pro forma level, we closed around $438 million in FY 2022. We expect the double-digit growth to continue into FY 2023 and 2024. We stick to our guidance of $650 million-$700 million by FY 2024 for the specialty business. Sure. In terms of number of launches that we could see, Yeah. In fact, in FY 2022 we had 11 launches, and in FY 2023 I expect 15-20 launches. From a filing and launches perspective, our target is 20 filings and 20 launches every year. Okay. That is what is going to be the trajectory. Got it. How should we see the CapEx intensity of Aurobindo as a whole going forward? I mean, reasonable amount of capacity is created, capital deployed. How should we see that going forward over the next two to three years? Karan, like I'll just take on in terms of the injectable portion of it. I think in injectables most of the CapEx has been spent. As I said, we have four commercial plants and two plants which are coming up, and where already the CapEx has been spent. Other than the normal general capacity enhancements within the plant, I don't expect significant investment in capacity for the specialty business. Subbu, would you like to take on the other side of the business, please? Yeah. As Aurobindo as a whole, including the special, I mean, injectable business, we expect around INR 125 million type of CapEx. See, already we have got a commitment of around INR 400 million, including the PLI project, which is the Pen-G project. We expect this to be spent over the period of two years, right? Other than the Pen-G product, I don't think we'll be beyond INR 100 million-INR 125 million. How will I like Mr. P.V. Ramprasad Reddy or Mr. K. Nityananda Reddy to- There is not much CapEx we are seeing in this. Around INR 250 million to INR 230 million-INR 240 million is the PLI. Balance is INR 120 million-INR 130 million is the other one or two API plants. In the oral formulation side, there is not much CapEx. Maybe in U.S. side, in the Puerto Rico we may require some CapEx. Otherwise, almost next two years, other than the already approved CapEx not yet spent, around INR 375 million or so, and it may be another INR 120 million in the CapEx side, not more than that. Got it. Thank you, guys. It includes the PLI also, around INR 250 million. Yes, the PLI. Got it. Thank you. Thank you. Next question is from Mr. Tushar. Yes, Tushar. Okay, we can't hear you, Tushar. We'll take you afterwards. Next question is from Kunal Randeria. Hi. Good morning. Sir, just on the U.S. price erosion, you did share some numbers. Sir, would it be possible for you to share some trends on how you are seeing price erosion in orals and injectables? What is that? Can you repeat? Sir, the price erosion trends, you know, how do they differ between oral solids and injectable products? No, I can tell about the oral, my colleague, Yugandhar will tell about the injectable. As we told, the last four quarters average is around 9%, and last quarter is 11%. But 11% include the shelf stock adjustment and price erosion together. Between the third quarter to last fourth quarter, around 2%-2.5% is the price erosion. So such way we expect, maybe, we expect in a lower terms in next few quarters. Vice versa, the shelf stock also will come along with the price erosion. Already the prices, a lot of depression, all, a lot much is reduced something. Now we are not expecting there is a big if at all, further increase, further price going down. I don't know how the market will react. Either some of us will drop some products or then some price increases may happen, where anything can happen afterwards. Mm. Yeah. It is in the similar trajectory. It is in the high single digits. Not much different. Yeah, we do have significant launches coming up. So that is what, like, will take care of the future growth. In terms of the price erosion, it continues to be in the similar lane, range like orals. It is one person here and there, but it is in the similar levels. Got it, sir. Just one more. You're starting to build up a nice cash pile now. Given the, you know, challenges in developed markets, does it make sense to, you know, keep acquiring there? Are you sort of, you know, you could say maybe, build a bigger cash pile for some domestic acquisition in future? For the present, we are not very much big acquisitions. We want to complete the existing projects. It is because project completion is not the end. That is the beginning. Again, operationally, it has to become breakeven and profitable. That will take another two to three years. We have to protect the cash to the pending existing approved pending projects, as well as the completion of the existing projects, as well as the projects completed, operationally break-even and profitable projects. There are almost six to seven projects at various stages. Like biosimilars, like vaccines and the China plant and where we are filing in a big way, we have a lot of hope, and Puerto Rico plant, like that. We are not going to start any more new plants. That is what we wish. In injectable, two plants, those things. Sure, sir. You know, we assume that there would be no, No. No big bank acquisition in future, either in U.S. or in India. Not at all. At least in next two to three years, that may not happen. Sure, sir. Perfect. Thank you very much. Thank you. Next question is from Surya Patra. Please unmute yourself. Okay, we'll take the next one from Kunal Dhamesha. Hi, good morning, and thanks for taking the question. The first one, again on the U.S. price erosion. Have we done any withdrawals from the market? If yes, how many? If no, what are some of the key metrics that we look at, you know, and how frequently do we look at our product portfolio, whether to do withdrawals or not? We are very closely monitoring. As on today, we don't have withdrawn any product. Based on the situation of the next one or two quarters, we'll keep you informed. If anything is there. We hope that situation may not come because nobody will sell the product under the loss. We have seen few examples, you know, less than the cost of production, less than the plant cost. Also, we are not able to cover in few products. In such scenario, drop may happen. As on today, such scenario is not there. Sure. Second question, when we now say that our injectable business is basically specialty business, so even the biosimilar part will be included in that specialty business? Is that the way to think about it? No. Biosimilars is an independent business. Biosimilars and vaccines is an independent business. Okay, sure. Thank you. Thank you. The next question is from Surya Patra. Yes, Mr. Surya, can you just unmute? Yeah. I think there is an issue with your mic. We'll take the next one. Next question is from Vishal Manchanda. Thanks for the opportunity. Can you talk about the capacity utilization for your oral solid manufacturing units at a consolidated level? Yeah. No, we don't. Still in U.S. plants, no production was started anyhow. U.S., we have in the Dayton, New Jersey, U-block, B-block is the oral plant that is going to start production in the end of this year. The dermatology and MDIs and patches is the plant which we are starting. We already started filing a few products, and some more products we are filing before the March 31st, 2022 and consequently. The biologics and the Puerto Rico one we are doing approximately in 2023, and we will start our products. Overall, in the capacity utilization in the majority, I can tell you oral plants. Oral plants, approximately 70% of the. In the Hyderabad, in the India side, 70% of the capacity we have achieved. Because I don't know the injectable, the Yugandhar can tell, my colleague. Otherwise, overall it is 68%-70%. Okay. in Indian formulation plants. Understood. The point is, like, unless we kind of reach to full capacity utilization, we won't be thinking about dropping products which are unprofitable at the, including overhead. Basically you would continue to manufacture as long as they cover the fixed costs, and that would keep the prices low basically. No. You see, the question of dropping, there is no connection between the capacity and dropping the products because still we have good amount of capacity. Another 20% we can. We may not fill up at least in next one, two years, this in the capacity side. Because afterwards, we are getting our Puerto Rico plant coming into the hand. So we don't think, you know, once we lost the. The margins are come down, then only we will take that extreme step. We are not expecting that. We are not expecting that. Anyhow, we will continue wherever there is a positive contribution. As long as the positive contribution is there, we will continue. If we are losing, then definitely we will do. We will keep you informed every quarter. As on today, that situation we have not come across. Maybe few strengths and few SKUs maybe. If it is the same way around 11% next year also, the 10%-11% was the price erosion, then definitely will happen. Price drop. Product drop. On R&D, FY 2023, would this be around 7%? We are at 7.5% ballpark of sales this quarter. Would we be at the same levels for FY 2023? I think FY 2023 going forward, no, because this quarter is a very peak quarter in, I mean, throughout Aurobindo's tenure. I think going forward, we may not be having this much a percentage. It will be anywhere between, we expect around 6% type is what we are expecting. Okay. Any color on the ARV business? Will that some bounce back to the FY21 levels? No. What, Reddy? No, at this stage here, we expect the business to be maintained at the same level. We will strive towards the improvement. We'll maintain the same level as whatever the last quarter is there, here and there, we'll maintain the same level. On the Pen-G facility that you are putting up, would your customers need to kind of switch the supplier in their DMF files to procure from you or they can directly start procuring without any changes in their file? In the antibiotics, the DMF, the regulatory quantity very minuscule, not much. Maybe CEP, Europe or something they may change. Initially, we are not going to file the DMF, U.S. DMF from that plant. What I mean, so you won't be looking at the U.S. markets. No. That is very small. Okay. It's 5% or 3% of the capacity of the plant is U.S. market. Okay. The customers who might be procuring from China, they can directly switch to your product without any lag, basically? Would this require some regulatory process for someone to change their source? Very, very minimal regulatory changes. We are not expecting any big change. There may not be a requirement. Okay. Got it. Thank you. That's all from my side. Thank you. Thank you. Next question is from Nishid Shah. Hello. Can you hear me? Yes. Yeah. Congratulations on a very good set of number when I compare with some of the peers, especially who are operating in the U.S. market. First of all, congratulations, Mr. Reddy and his team. Thank you, sir. for a splendid set of numbers. My first question is, which I have been asking for almost last two years, what is the status on the depot injections? Are we now at the stage of filing or, what is the status there? Nishid, we are at least one year away from filing. We will be doing the exhibits sometime in FY 2023 for all the depot products. Depending on bio-studies and other stuff, it will be an FY 2024 filing in the best case. I want to know the reasons for the delay, because this, actually, I go back to the two-year transcript also. It was supposed to be done in one year's time. What has led to the delay, and why we are every time talking about one year later? Nishid, if it would have been so simple, everyone would have filed it. No, no. Obviously it is complex. Sir. Nishid, let me just finish. It is complex. When we take batches, we do see some issues, and we redo the batches. It is a journey of continuous improvement in depot products. It's not a simple straightforward development and execution. We might have felt that like, yes, we have, cracked it and we are ready to take the batches, and we have taken batches. When we see find some issues, we do redo the batches. Like now we feel more than 90% confident that whatever we'll be taking in FY 2023 will give us good set of results, and that is when we will start the bio-studies for these products. This is what is our best guesstimate at this point of time, Nishid. Again, I might have a different answer 6 months down the line or at 12 months down the line. Okay. These are complex products. Yugandhar, the issue. The why I'm again raising this issue is that some of the large peers in India have failed to do this product. That is why it is important to elaborate and explain. If you are able to do it, then it is a very big milestone. That is why I am again asking that, are we now closer, and how confident we are on doing this? See, I think we are closer than before, and we are more than 80% confident at this point of time. In these complex injectables, unless you fully succeed, the success cannot be announced. The reason is they are complex. Okay. Appreciate this. Now the second question is to Mr. Reddy on the we have heard it in the press, and we have seen several reports that we are trying to restructure the injectable business and bring in partners in this business. What is the status on that? If you can elaborate to the extent you can elaborate on this subject. At this point, my colleague, Mr. Subbu Subramanian will inform because he had a better grasp of this. You can, Subbu, can you explain? Yeah. Nishid bhai, this we at the Board have met and then evaluated options and then appointed advisors who have been guiding them through the restructuring process. If and when we reach a requisite stage that deserves to be announced, we will certainly do that. See, the evaluation process in today's context is a very volatile environment, and they are taking into consideration all the material aspects and also taking cognizance of the current environment. It is under process, Nishid bhai, and the business is not looking. I mean, the business irrespective of the restructuring or not, the business is committed to achieve that. That's what Yugandhar has just a few minutes back explained actually. Okay? Thank you very much. Thanks a lot. Thanks all so much. Thank you, Nishid. Next question is from Nitin Agarwal. Hello. Sir, my question is on the margins. Your margins have come off a fair bit in this quarter. How should we look at a margin improvement from these levels as we go through the next couple of years? I mean, what are the levers for margin improvement for us? Can we go back to the earlier levels we were in FY 2021? Cannot tell at least the next two quarters where we are, and we want at least another two quarters to answer your question because margins are still in some areas it is falling, some areas it is stable, and very few areas it is increasing. We are waiting to see where, how the things will change in next one or two quarters. We can tell a better answer after two quarters, after a quarter or two. Sir, on that point, you know, in the past, you were expecting that the inventory liquidation process will get over by Q3. Obviously this has not happened, and price erosion will sort of reverse. Here's two things. One is inventory liquidation still going on? If it has stopped, then what else is driving the price drops then? As far as the oral products, we are hearing from the distributors and all that. Their inventory also come to the normal level and also the U.S. companies where their inventory also came normal level because it is already 1 year, one and a half years. Either it will become normal level or it is expired and destroyed. Where the issue is there, the huge stocks of API and intermediates in some products, so those things has to be become normal in some areas, because otherwise that will impact in the, especially those products, the basic API intermediates. Other than that, majority of the stock issue is a past. That is what I feel. We are hearing the same thing from in the wholesalers also. Okay, sir. Sir, lastly on, can you probably just help us understand what is happening in the vaccine business, and what's the outlook for the vaccine business, especially the pneumococcal vaccine? How should we look at that? Satakarni. Nitin, in terms of our vaccine business and the bacterial vaccine that you have spoken about, we have concluded a phase 3+0 trial in India. We are in the process of analyzing the clinical samples. We will be able to provide more commentary on this program once we complete the clinical analysis and initiate the regulatory process in India. In all likelihood, the regulatory process in India will be initiated in Q3, Q4 of this year. In terms of the other vaccines, they're at early stage of development, with one viral vaccine potentially moving forward to a proof of concept stage, preclinical and then moving to a possible phase I in the Q4 of this fiscal year. Okay. Thank you. Thank you. Next question is from Kaushik Poddar. Yeah. You had announced your foray into the domestic formulation. I mean, what is the status of that and what are the future plans for the next three years, three to five years? No, the domestic one we have now only we are completing the transaction. The integration is, we just in last one or two days only the. What, Subbu? The transaction has come. Yeah. The transaction is in the closure, and we have been integrating all the people, et cetera. Yeah, integrating this last week only we have closure and the integrating. First let us stabilize the existing and study the whole thing, then we can take some decision what to do the next thing. Okay. Thank you. Thank you. Next question is from Tushar Manudhane. Am I audible now? Yes. Yeah. Yeah, thanks for the opportunity. Just from the inventory part, there has been significant reduction in the inventory over the past six months. Considering that the raw material prices have been on the rise at the same time. How do you look at it for next couple of quarters on the raw material side in particular? Tushar, I mean, we explained we have been focusing on the inventory if you recall it in the August call itself, we have significantly reduced in the last two years. Given the nature of the prices going up and the availability of stocks, right, et cetera, et cetera, we may not be reducing anything significant going forward. Apart from that, the value of the materials itself has gone up. Whatever we are maintaining is equivalent to at least 1.1 x or 1.2 x of what we have been holding it previously. We may not be doing anything significant reduction going forward. Okay, sir. That helps. Thank you. Next question is from Tarang Agarwal. I just wanted to get a sense on Dr. Satakarni on the biosimilars business. If there is an update, if you could give us an update there. Second, on the bacterial vaccine, you said that the regulatory process submission should start from Q3, Q4. If it were to happen, how should we then anticipate the eventual launch of the vaccine in terms of timelines? It's a good question. I'll start with answering the part one of your question related to the biosimilars. In the Q4 of the last fiscal, our second oncology biosimilar has been filed with the EMA, which is as per expectation. We are having three more biosimilars, out of which two of them are oncology biosimilars at different stages of our phase III large licensure clinical trials. One of the oncology biosimilars, we should be completing 600+ metastatic cancer patient recruitment probably in a month or two, which positions us to evaluate the efficacy and safety of this product potentially by Q4, which then leads to a series of filings in regulated and semi-regulated countries in Q4 2023 or starting Q1 of the next fiscal year. What is also important to note in terms of our biosimilars, for some of you following the business closely, is that as you know that we are stronger in our pipeline with oncology and immunology biosimilars. An interesting update for all of you would be right now our focus has been on oncology, but we have advanced one of our very important immunology assets into phase I clinical trial in Australia and New Zealand in the Q4 of the last fiscal year with the potential of it moving into a global phase III immunology trial by Q3, Q4 of this year. Which means that we will be probably in the top three to take this product by 2024, 2025 with a $4 billion potential market opportunity when it opens up in Europe and U.S. We remain on track with the development of other biosimilars in our pipeline, and I am quite excited with the sort of development we are seeing and the progress we are seeing in the biosimilars space. Does that answer your first question? Yes, sir. Just to follow up on that, as you said, three more biosims oncology in different stages of phase III, one of which, you should probably get some evaluation done by Q3, Q4. What about the balance two in terms of how should we see, you actually filing for these these products in terms of timelines? That's out of the three biosimilars which are in global phase III clinical trials, two of them are oncology assets. The first oncology assets I have given you guidance on when we are expecting the data review to happen and the filing procedure to begin with. The second oncology biosimilar is also in a global phase III trial right now. We expect the filing to be towards Q4 of the next fiscal year, which essentially means that we expect the large trial to take some time to conclude. But having said that, we are discussing with certain regulatory agencies on the basis of our clinical data accumulated so far. We wanted to approach and push the regulatory barriers and file it with a bridged clinical pathway. When that happens, we will provide you guidance on what's happening on that product. Expect it to be filed towards the late 2023 or early 2024, because the nature of these clinical trials are very extensive, and take longer duration. With respect to our third biosimilar, which is in phase III global trial, we have just begun recruiting subjects and dosing them in the last quarter, in the Q4 of the last fiscal. It's a shorter clinical trial. We expect the clinical trial to conclude in 2023-2024, with an expectation of filing either in Q4 2023-2024, or if things go well, maybe the filing procedures might start as early as Q3. Again, as you know, the business of biosimilars. We had COVID headwinds over the last one and half to two years. A major COVID headwind is on the clinical recruitment rate and the site preparedness, so that caused delay, not just to us, but across the clinical trials of biologics and biosimilars players. Got it. This answers my first question. Can you take me through the second question one more time? In case of your bacterial vaccine. Yeah. You suggested that the regulatory filing should probably start by Q3, Q4 of FY 2023, depending on the analysis of phase III. If that were to happen, typically, how much time would this process take, and how should we see that product actually coming to market if all goes well? We are currently in the final leg of analyzing our phase III licensure trial samples with the bacterial vaccine. We look forward to reporting the pivotal clinical data in Q3 of this fiscal leading to necessary submission requirements to the Indian authorities either Q3 or Q4 of this fiscal year. Now, what this means is, there's a queuing procedure with the regulatory agencies, and if the queuing procedure is three months leading to a review from the regulatory authority in India, then it would take another three months to have a final approval on this product. If the queuing procedure is, say, four weeks or six weeks, then the review procedure is again 90-120 days. We are looking at a window of anywhere four to six or four to seven months before the final approval happens. In 2023, Q1, I expect if everything goes well, Q1 would be a potential launch into the Indian market, if all the procedures go well at the best possible speed that we expect it to. Got it. Thank you. Thank you. Next question is from Shyam Srinivasan. Yeah. Hi, good morning, and thank you for taking my question. Just wanted some update on the Europe business. We have seen it come off sequentially. You know, what's the kind of outlook here? How are you looking at the different markets, even from a price erosion or a tender perspective? If you could share something on the Europe business, please. Europe business is very stable. In one or two countries where we bought the Apotex licenses, we took a decision to write off those products. That actually made some provision. It became a little more provision than normal. That is what it was. Some extent it went in some one or two Eastern European country. This is the one or two Eastern European country. They're not doing well from the beginning when we bought the Apotex. These are all Apotex licenses. Finally we took the decision to write off this, the stocks and all these things. We hope the business' stability in the existing level of 10%-11% is not an issue, but we are working very hard. There are many products we are going to file, and we are hoping the reaching the 15% is our. A lot of people, we are all working very hard to improve from 10%-11% to 14%-15% EBITDA. How many of our products have been moved to the Vizag plant, if I recollect? You know, do we think fiscal 2023, it's possible to reach this mid-teens EBITDA margin? Yeah. Simply changing that, we can change it up to some extent only. We have to change another 20, 30 products. Still the around 38% of the products will continue to be in Europe. That we don't. There is no point in changing those products because of the volume and all these things. The newer products where we filed around 65 products, we expect some. Because each product there are two to four countries. So those things it comes. The Vizag plant also. Now Vizag plant we are doing around 325 million tablets or the capsules per month. When we will reach next year to another INR 100 million, then we are confident this, our EBITDA has to increase in Europe. Got it. Helpful. Second question is a little bit more philosophical. Aurobindo is always known to be a manufacturing powerhouse. If I were to step back and look at your manufacturing footprint now, it's quite well diversified. I'm unable to get a specific message. For example, when we closed down a recent plant in the U.S., the New Jersey area, you're talking about the Puerto Rico plant. If there is some unified vision in terms of, you know, will we continue to divest certain non-performing plants versus open new, and are we optimum there? I know you gave some sense about the utilization levels, but just from an overall perspective, are we done in terms of how our footprint should look, or is there more divestments? No. Stoppages. No, because we already covered India plants around 70%, and because there are so many products where we bought some ANDAs and some of the five products. All these things come as a safe side we kept. Recently we bought the Puerto Rico. Otherwise the New Jersey plant where we closed down, that we have not closed it because of the leakage in the roof, where it is a 50-year-old plant. In the recent typhoon that was 1 year back. These leakages are there in one or two places continuously. We are not able to control. We are removing the floor on. We are reflooring the thing. That is the reason we stopped this one, because that will take around 8-9 months. In the same area we have a B block that will be ready in December. There we will do around 21 products of the CDMO products that we are going to manufacture one after other, Sudin. Other than that, we don't have any intention to expand in the oral side, at least next three years. Got it. Last question. I know you didn't share any guidance at the start, but are we certain if there is some way we could think about the revenue growth going forward? We have had a flattish kind of a year this year, but when is there likely to be a step change in growth? When can we likely see double-digit growth? Okay. for Aurobindo’s In next two. It take, you know. We can see the other divisions or other plants or something, it will take another two to four quarters. Sir, given that your earlier comments on price erosion being high, the next two quarters are where the visibility is lowest, and then- Yeah. I have not told price erosion is high. Maybe there is a possibility. I cannot tell that there is no price erosion. We felt that in this fourth quarter there is not much price erosion, but the actual thing happened the other way around. It happened. Let us wait and see. We are taking a chance. We are taking a reasonable margin next to one to three quarters. It will go how it will change. Got it, sir. All the best. Thank you, sir. Thank you. We will take the last question from Vikas Sharda. Vikas, please unmute yourself. Yeah. Hi. Thanks for the opportunity. I have one question on the specialty business that for the full year, how does the margin profile looks like? Like suppose if the full year margins are 18.5% for the company, how would you split it, say, between specialty and non-specialty? I think it's at a pro forma level. In terms of the gross margins, we continue to be in the 65%-70%, and in terms of EBITDA, it'll be around 35%-40%. It is still at a pro forma level, not as a specific set of numbers. That is what is going to be the range. Understand. Just a follow-up to Mr. Subbu then, I mean, when you look at the overall ROE of the companies in the mid-teens, and then, I mean, the non-specialty business, what kind of returns does it make, and how would you look at that kind of that business in terms of return profiles? Vikas, just now Satakarni has explained. We have a great future from the biosimilar business which is expected to deliver well. Even if the specialty business is, I mean, without the specialty business also, the biosimilar will step in and improve the overall ROE. Understood. Thank you. Thank you, sir. Thank you. I would now like to hand the conference over to Ms. Deepti Thakur for closing comments. Thank you all for joining us on the call today. If you have any of your questions unanswered, please feel free to keep in touch with investor relations team. The transcript of this call will be uploaded on our website, www.aurobindo.com, in due course. Thank you, and have a great day. Thank you. On behalf of Aurobindo Pharma Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.