Ladies and gentlemen, welcome to Quarter One FY 2023 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 the questions after the presentation concludes. In order to ask a question, please signal by using the raise hand up option on the bottom of your screen. I now hand the conference over to Deepti Thakur. Thank you and over to you. Thank you, Aditya. Good morning and a warm welcome to our First Quarter FY 2023 Earning Call. I'm Deepti Thakur from our Investor Relations team. We hope you have received the quarter one FY 2022 financials and the press release that was 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. Nityanand Reddy, Vice Chairman and Managing Director of Aurobindo Pharma Limited. Mr. S. Subramanian, CFO. Mr. Sanjeev Dani, COO, Head Formulations, Aurobindo Pharma Limited. Mr. Yugandhar Puvvala, CEO of Eugia Pharma Specialities Limited, and Mr. Swami Iyer, CFO, Aurobindo Pharma USA. We will begin the call with summary highlights 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 limitations, statements relating to the implementation of strategic 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 important factors may cause actual developments and results might vary materially from expectations. Aurobindo Pharma undertakes no obligation to publicly revise any forward-looking statements to reflect any future or circumstances. With that, I will hand over the call to Mr. S. Subramanian for the highlights. Over to you, sir. Good morning, everyone. I hope that all of you and your families are safe. We are here to discuss the results of the first quarter of the fiscal year FY 2023 declared by the company. For Q1 FY 2023, the company registered a revenue of INR 6,235.9 crores, an increase of 9.4% year-on-year. The EBITDA before Forex and other income was INR 964.7 crores, declined by 1% quarter-on-quarter. EBITDA margins for the quarter of 15.5%. Net profit decreased by 9.6% quarter-on-quarter to INR 520.5 crores. In terms of the business breakdown, formulation business in Q1 FY 2023 witnessed a growth of 9% year-on-year to INR 5,329.4 crores and contributed around 85.5% of the total revenue. API business contributed around 14.5% of the total revenue and clocked a revenue of INR 906.5 crore for the quarter, registering a growth of 11.6% year-on-year, led by improved demand for some of our key products, and declined by 0.7% quarter-on-quarter. On a constant currency basis, U.S. revenue increased by 6.1% year-on-year and 6.2% quarter-on-quarter to $336 million. We have received final approval for 10 ANDAs and launched seven products in the quarter under review. We have filed 13 ANDAs, including four Injectables, during the quarter. Revenue for Aurobindo Pharma USA, the company making the oral products in the U.S., has increased by 5% year-on-year to $214 million. Revenue for AuroMedics, the injectable business, increased by 16% year-on-year to $71.7 million. The company as on June 30th 2022 has filed 741 ANDAs on a cumulative basis, of which 516 has final approval and 35 has tentative approval, including A-ANDAs which are tentatively approved under the PEPFAR and the balance 190 ANDAs are under review. For the quarter, the European formulation revenue dropped 1,548.1 crore, a decrease of 2.2% year-on-year, mainly due to the depreciation of euro currency and in absolute euro terms, the euro revenue was at EUR 189 million with an increase of 5% year-on-year. For the quarter, the growth market witnessed a growth of 30.8% to INR 430.6 crores, including the domestic formulation sale of INR 45.6 crores. The quarter performance was led by strong growth in Canada business. For the quarter, ARV business stood at INR 379.6 crores with a growth of 28.1% year-on-year. In U.S. terms, ARV revenue was at $49 million with a growth of 23% due to shifting of certain sales from the last quarter to this quarter amounting to $17 million. R&D expenditure is at INR 310 crores during the quarter, which is 5% of the revenue. Net organic CapEx during the quarter is $61 million. An average Forex rate of 76.9795 in the quarter ending June 2022, and 75.0917 in the quarter ending March 2022. Net cash from investments at the end of June 2022 was $337 million. The average finance cost is 1.8%, mainly due to earning multiple currencies. The business generated a free cash flow before CapEx and other items of $121 million during this quarter. Out of this cash flow, $53 million was spent towards the CapEx. Another $8 million was on PLI project and $34 million for dividend and $22 million for acquisition of business, and thereby increasing the net free cash flow by about $3 million. As a result of the above cash flow generated during the quarter, the net cash position, including the investments at the end of March 2022, improved to $337 million. Also, we reduced the gross debt significantly to $277 million from $330 million in March 2022. We have been reducing the gross debt quarter on quarter in the past quarters also. This is all from our end, and we are happy to take your questions now. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may use the Raise 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 Mr. Prakash Agarwal. Please unmute yourself, Mr. Prakash. Hello, am I audible? Yes. Yeah. Apologies. The first question is obviously you did fairly well in the U.S. Market, which is shown on Q-on-Q growth. Is it, you know, our preference volume versus getting into better pricing, given the gross margin decline or gross margin is largely due to the cost inflation or we have gone for volumes in the U.S. also to, you know, grow the business? Okay. I can take this, Subbu. Yeah. In the U.S., we have grown the volumes compared to the last year's similar quarter. We have taken on fair amount of business. We have grown in terms of volume, and the bottom line has various factors. One of the main reasons is the price erosion, and you know, there has been inflation also in terms of transportation. We believe that going forward, we can look for better numbers in terms of gross margins and for the U.S. When you say price erosion, what kind of price erosion we are talking about here? It is in line with the previously seen trends of 5%-7% or it is, as reported by some of the peers, it's double-digit or how are we facing it. What is the trend we are facing? I think, we are seeing some kind of tapering. We believe that the price erosion, for example, this quarter compared to the previous quarter is about, I would say, 2% +, throwing in the shelf stock adjustment also, it's closer to around 3%. Okay. What about injectables? I mean, that growth doesn't seem to pick up, so what's happening there? I think Yugandhar Puvvala can take this question. Prakash, I think, in terms of the growth, like we have grown by 16% in U.S. and the overall growth is, in the single digits at the global level. We expect whatever approvals what we receive during quarter one, and we expect some more approvals to flow through in this quarter. We are very confident of, hitting the double-digit growth for this year. Growth is not a concern at all. No, we have a big milestone, right? I mean, we have talked about almost doubling the business next two years. Where are we in that journey? We are still on track to hit the guidance what we have given for FY 2024, which is $650-$700 million. As I indicated last year, we closed at a pro forma level of around $440 million in FY 2022, and we expect to cross $1 billion this year in FY 2023, and we are on track for our guidance for FY 2024. Okay. You're saying it would be largely back-ended or how should we think about in terms of scale-up, I mean? No, it won't be back-ended. It will be a quarter-on-quarter growth and which you will continue to see the double-digit growth every quarter. Okay. Fair enough. One question for Subbu, sir, is on the gross margin. Clearly the price erosion is, I mean, I would say stable, 3% is stable in my view. What is the outlook on the gross margin from here on, given we have seen a substantial drop in this quarter? I think overall, if you really see, the gross contribution has come down by about 2.8%. Mm-hmm. Which is a combination of multiple factors, including the price erosion, which Swami has mentioned, and there was some raw material price increase also has happened. I mean, even though the price started becoming stable, but because of the weighted average, some of the costs which have not been charged off earlier has come this quarter, right? All put together around 2.8%, and we believe going forward must be in this range in the coming quarter, and probably there must be softening coming in the Q3. We are getting some indication, but not firmed up from everyone. If at all we can see, we can start seeing the improvements in the margin in Q3 onwards. That's what my feeling, right? I'm talking about the gross contribution and gross margin, not the EBITDA margin. Okay? Okay. Any color on EBITDA margin, sir? The EBITDA margin, even though this quarter it looks like low, we had one-off expenditure to the tune of, I mean, instead of one-off, I would like to use the word additional expenditure to the tune of around INR 60 crore. On account of the freight, because we have to reschedule our production process, et cetera, to meet certain regulatory compliance. Because of that, the production shifted to the later part of the quarter, which made us to airlift the material to achieve the commitment we have given to our customers. Hopefully This is not recurring. Going forward, this should not be there in the coming quarter. Okay. At least at a very reduced level, it should be. That's what our view. Okay. One or two quarters will be there, Subbu. This last quarter and this quarter also some extent is there. Yeah. It will taper down. Yeah. Okay. Last question from P. V. Ramprasad Reddy sir. Is there any update on the, you know, We had N. Govindarajan sir as a CEO. Is there any update on, you know, looking out for a professional CEO going forward? As on today, we are not looking, in that we are happy with the present system. We have. For all, as we told in the last call, biosimilars and vaccine and this vaccine peptides, so Dr. Satakarni Makkapati is the CEO, and Yugandhar Puvvala is taking care, and K. Nityanand Reddy is taking care of the overall and raw material business. I'm taking care of the formulation and reporting to K. Nityanand Reddy. That is what. I don't think we are looking, but it will take. We are going to appoint in next two-three years only. Okay, perfect, sir. Thank you and all the best. Thank you. Next question is from Neha Manpuria. Hello. Yes, Neha. Am I audible? Yes, a little bit feeble. You can talk a little bit louder. Yes, Neha. Hello. Yes, Neha, go ahead. It's going into mute, Aditya. Yeah, she's on mute. She has muted herself. Neha, please unmute yourself. Okay. She is okay. We'll take the next question. Next question is from Shyam Srinivasan. Hi. Good morning, everyone. Can you hear me? Yes. Okay. Thank you. I missed a little bit of the opening remarks. Just on U.S. revenues, I think we talked about lower price erosion, but QOQ and YOY we have grown. What's driven that? New products or new contracts and old products, if you can help us understand. Swami? Yeah, sure. Shyam, one is we have done additional volumes across some of our business. First and foremost, we had some supply chain constraints, so we could not bring in those kind of volumes. This quarter there's been an improvement in terms of volume, so the demand for those products was good, so we could increase the volume for those products. Apart from that, we also tried to get some of the business, base business additionally. We have been partly successful in that. Normally second and third quarter is, some seasonal products also will improve, basically like antibiotics and those things. This is also one of the reason is this demand will increase second and third quarter. Then other thing what Swami is telling. Got it. Swami and Ramprasad sir, the volumes came at much lower prices, is it? Because the gross margin comment you made on pricing pressure, is it U.S. only or we have seen it elsewhere as well? Swami. Shyam, as far as the gross margin is concerned, there's definitely a lag for improvement, you know, after these prices go into effect. There's inflation in terms of transportation, and we have taken on additional volumes, and some of the additional volume products may have, product mix-wise, the margins have been low. Like Mr. Reddy mentioned, we are looking forward to higher volumes, and the mix could be better. We believe that, the lag in the price changes that we have seen, that's where that might somewhat, you know, be nullified a bit going forward, in the second and third quarters. Got it. Very helpful. Second is on Europe and also on biosimilars. Europe as a business, we've seen it. You accounted it for FX reasons. Clearly even here we have seen like lackluster growth for quite a few quarters, right? While the U.S. engine is probably slower, I think Europe has remained, and these two are like, you know, almost 2/3 of your business. Just want to understand, you know, what's happening in the Europe front. The linking point is on any update on the biosimilars in terms of either approval or queries from EMA, anything like that. Thank you. Yes. To answer on Europe? Yeah. Yeah, Shyam, just to put it in a perspective, the Europe business is pretty stable and growing. This quarter we have the 6% growth. The previous quarter was 7% growth. The markets are about 0%-3% growth, you know. We are expecting 5%-8% growth year-on-year, and that has been always the guidance. I mean, of course, we are not looking at double-digit unless we have made in the past acquisition, then only it has grown. Secondly, the future growth drivers are of course the new products. We have several new products which are waiting for approval, something close to 43. And we have another 118 oral products under development. We are looking at the oncology products, injectable and oral, which are another close to 50. Injectable, the new plant, which is expected to start filing early next year, that we are looking at about 50, close to 50 products. Biosimilar, which are two, which are already filed for now almost nine months. All put together, this market, addressable market is $34 billion. Even considering, you know, the net price, et cetera, and then 5%-10% market share, we are looking at about 300 million-plus in the next couple of years. I guess that the new products, once they are there, the specialty-driven, we will be able to grow faster. Okay. As far as the biosimilars, as we told in the last call, two products we filed in U.K. and Europe, and that is the Day 180 days will happen in the next one week. There we will have a lot of clarity where we stand. We have filed in U.K. third product. For third product that is not the global clinical. Yes, as we told, as of today, we have four global clinical going on. Those out of that one we are going to file in the first quarter of the 2023-24. The same year in the last quarter we are filing second product in the U.S. U.S. we'll file two products, and next year we will file five, total five products in Europe. One data point for Sanjeev. Just where are we on margins in Europe at this point of time? Still about double-digit%? Yeah, margins are. EBITDA is in double digits. Early double digits, yes. Thank you. You're welcome. Thank you. Next question is from Neha Manpuria. Yeah, hi. Am I audible now? Yes. Perfect. Yes, Neha, go ahead. Hello? She's mute. Yeah. Yeah, go ahead. Go ahead, madam. We can hear you. Oh, she's muted. Neha, can you unmute yourself? Okay, we'll take her again. Yeah, let's move to the next person. Yeah. Next question is from Praveen Kale. Hello. Good morning. Can you hear me? Yes. Yeah. Yes, sir. I would like to ask a question on behalf of, you know, the retail investors, right? In terms of our investment in the stock, we haven't seen much appreciation. What does the result mean for retail investors, like us? Because we had a lot of hope on also the Eugia Pharma investment, so that did not come through. You know, the prices in the stock hasn't been, you know, reflecting the progress that you've been making. As a retail investor, you know, what should I be expecting in the days ahead? Yeah, Mr. Praveen, while we may not like to comment on the movement of the share price or where it is, in terms of the performance, we have given a very clear roadmap where we are heading to on various things. If you have seen our annual report also, we have said what are all our growth pillars, which is what going to deliver it in the coming years. I'm sure for your benefit, I'll repeat. One is the biosimilars, second is Eugia, which Yugandhar Puvvala are just explained. We are going with Pen G project. We are getting into the China project. So many projects and as on date there are six plants are under commissioning, right? Once this has been successfully commissioned, this will also add to the top line and the bottom line, etc. It's from our side, what the company and the management has to do in terms of working out a strategy to improve the top line and bottom line, we have been doing that. Well, I really appreciate, you know, your efforts in this regard. I do hope that, I mean, as a retail investor who has a lot of, you know, hopes in the progress of the company, you guys do really well in the days ahead. Thank you. Thank you. Thank you. Next question is from Anubhav Agarwal. Hi, guys. Subbu sir, a couple of clarities first. You mentioned about $17 million number. Is that the shift which has happened in the U.S. segment or the ARV segment? It is with the ARV segment, Anubhav, because we follow the Ind AS 115 revenue recognition. If the material has not been loaded into the vessel, we'll not return the sales. Last quarter we could not do, which has happened in the month of April. That's the reason why it got added here. Similarly, this quarter also, some around $5 million got deferred to the next quarter. This is a continuous phenomenon. Since the number is a significant one, we thought better to inform the market. On an average base, the ARV business we have been looking at, which has been explained to you in the past quarter also, will be around the $35 million. At least, we have been, I mean, targeting to achieve not less than $35 million quarter on quarter like that. Helpful. Second question is just a clarity on the other expenses, actually. Even adjusted for the INR 60 crore number that you talked about, other expenses has gone up significantly quarter-on-quarter. Even if I adjust for INR 60 crore, there's a INR 100 crore jump. I understand this quarter has, let's say, integration of the India acquisition that you have done that would have added some, but still a higher number. You Anubhav. See, what is happening is when you're looking into the numbers in rupee terms, we need to translate all Europe, U.S., everything into rupees, which has also added significantly. That is also one of the reasons, right? As we said in the last two, three, four quarters, you're comparing exactly Q1 FY 2022 versus Q1 FY 2023. I would say because so much of freight costs et cetera has increased in the Q2 or Q3 of last year, so it is not really comparable. If I give a demonstration of some numbers, the freight cost which was there in Q1 has gone up nearly double in this quarter. Even though I mentioned about INR 60 crore, which is additional only pertaining to this quarter. Overall, freight costs, solvent. I mean, all the expenses for everything has gone up substantially in the last one year, which we have been explaining in every quarter. Sir, I was not comparing year-on-year, actually. If you look at March quarter versus June quarter, our total other expenses is almost up, increased by INR 170 crore. Let's exclude the INR 60 crore number that you talked about. Now, freight costs, I am not sure how much they have increased, March quarter versus June quarter. If I'm right, Q4 other expenditure was INR 1,457 crore, versus INR 1,504 crore, which is an increase of around INR 50 crore. The INR 50 crore increase is, I can clearly say, up to INR 60 crore on account of the freight, plus we have the India integration, et cetera. I really do not know which number you are comparing. No, sir. 1,457 or the 1,504. I am comparing the same numbers, but in these numbers, your R&D has reduced significantly, right, as well, so. No, R&D is not only the expenditure, no. It involves the payroll employees, which is the biggest cost. We are nearly so much of payroll cost and other things. Plus, it is a question of translation also. Sorry for harping on this, but won't bulk of R&D be captured in other expense rather than the personnel cost? Yeah, everything it will go into, no, it spread over all the elements of cost. Like, in payroll it will be there, in other expenses it will be there, everywhere, no? Okay, let me simplify. Is this a new base? Just so INR 60 crore is the adjustment we make for this. Is it a base that we work with until and unless the freight cost comes down? Yeah, I think around 1,000. I mean, this is what, when we said 1,504, right, at least it has an incremental cost of around clearly INR 50 crore-INR 60 crore pertaining to this quarter alone, right? Probably the 1,450 is what we need to look at it, subject to the translation effect on account of the forex and other things. R&D, we should think about somewhere between INR 350 crore-INR 400 crore range a quarter? I think that is what, typically, if you really see, you know, as Chairman explained while talking about the biosimilar, we are getting into the four biosimilars into the clinical trials in the, in this year. Probably the impact of it, you can start seeing it from Q3 and Q4, right? You can see the biosimilar costs going up, right? By the time we hope, as explained, you know, the freight cost are little bit softening, probably that impact may come down. We are also trying to ensure we are, moving the material more onto the sea route rather than the air freight. We are also trying to do all the possible things by which the cost is controlled. Just last question. $22 million that you talked about in acquisition, what does that pertain to? It is the Veritaz which we have explained. That is same. Same. That is same. Same. Around INR 131 crore plus GLS INR 9 crores. Yes. Okay. Clear. Okay, thank you. Thank you. Next question is from Surya Patra. Yes. Thank you for this opportunity. Sir, the first question on the U.S. business. Pardon me if I'm repeating this. I joined relatively lately. Sir, there is a kind of positive surprise in terms of the U.S. generic growth, what we have seen in this quarter, despite our earlier guidance that possibly a 13%-14% kind of price erosion that we've been seeing for our base business. Simultaneously, obviously there is a kind of impact on the gross margin also that we are witnessing. Is it fair to link these two thing and think that the growth will be possibly in the U.S. market is coming at the cost of margin because of volume push? Surya, thank you. First and foremost, I would like to clarify. Last time Mr. Reddy had mentioned- Yes. that we have to watch one or two quarters as far as the erosion is concerned. He hinted that probably it may not happen the way it has happened. Mm-hmm. That is kind of a factual statement. It turns out to be factually correct. You know, we are not experiencing that kind of erosion that we did last quarter. That's number one. Number two, with regard to the margins. The margins, there are various reasons for it. One is of course the increase in certain costs. I had mentioned earlier that there would be a time lag for some of the realizations or some of the savings that would happen. For example, just to tell you, the gasoline prices have gone up, so the transportation costs had shot up. Now we are seeing in this quarter the prices coming down. Naturally, that's going to translate into lower cost for us. I don't want to get into those kind of details, but primarily what we are saying is Q1 we did have certain increases in cost and, these were not matched, in terms of realization. Sure. We are taking a lot of volume and, there could be, you know, quarter to quarter. Mm-hmm. There could be some product mix issues. Earlier I do remember in one of the investors' call we mentioned that you should not take quarter-to-quarter. Overall, I think we will do better. Sure, sir. Regarding this India business, sir, for it, sir, obviously, initially we had indicated about the branded formulations in the market, but our expectation was really low, like INR 1,000 crore kind of base in two- to three-year time. That will not influence at all our overall business model. We are currently doing small acquisitions to build up. What is the ultimate plan here? Can you really be more influential positively to our overall business? If you can throw some light here, how should we think? Yeah. Subbu, I'll answer that. Surya, I do agree on a INR 25,000 crore company, INR 1,000 crore will not contribute so much. That is how we want to make a start because launching organically we will not reach anywhere around even that number, so- Yes In the timeframe that we are discussing. We have to make an acquisition, but I guess we have to keep on looking opportunities and look at the strategic fit and also not at a very high valuation, which is the current level. I guess that we will be spending our money or investing money wisely. Sir, on the European operations, although we have been targeting that kind of a more integrated manufacturing activities in India should ultimately be driving the overall profitability to the company levels. I think the major trigger on that front is the launch of injectables. Mm-hmm. When should really we consider this injectable ramp up happening or launches happening in Europe and that should be bringing at least the profitability beyond 15% level because it has stuck at that level of 11%-12% levels since some time. Not only injectable, we also talked about biosimilars. Mm-hmm. That also will give higher profitability margin. I remember CEO of you know Yugandhar talking, Yugandhar who is also on the call, talking about filing the products early next year. I guess it takes about a year to get the products approval. You can look at FY 2024 onwards, this impact coming. Meanwhile some of the capacities are being expanded, so even existing approval we will be able to meet the demand. Okay. Just last one bit, sir, on the PLI side. With the significant change in the pricing scenario for the Penicillin G and all that, do you think that this proposition has changed meaningfully from the time of that we accepting the contract and now the situation becoming even more significantly better for our operation? What is the stage of that PLI project? Surya Patra, the status of the PLI project is the project has already started and we expect to install the entire thing by about maybe Q2 and then do the pilot batches, et cetera. Hopefully we'll be completing by Q4 2024. I mean, Q4 2024. We are expected to commission the project as of first of April 2024. That is what we are seeing. Well, our endeavor is to complete it earlier, but this is the target which we have been working on. All right. That is one thing. In terms of the prices, I think we are 18 months away from the commissioning date, and we'll not like to make any statement depending upon the current price, et cetera. Let us face it as and when it comes nearer the date. Yes, there is a positive, but whether this is a sustainable pricing, et cetera, we do not know at this stage. No, Subbu, it is not only pricing, the input costs also, the Penicillin G has increased, the like cost increased, power increased, all these things. The increase in the price also because of the costs also are increases, don't you think? Yes. And- All the input raw material and the service. Meanwhile, we are going to complete the plant before December 2023, and we are going to start before March 2024. Sure, sir. Yeah. Thank you, sir. Wish you all the best. Thank you. Next question is from Nitin Agarwal. Yes, sir. Thanks for taking my question. Sir, my question is on your in China business. Can you just give us more update on where we are on the China business in terms of this, you know, the meaningful commercialization revenues coming in from there? On the China business, as we told, the plant was completed. We have taken around 11 exhibit batches, and the filings will start from October onwards because six months stability we have to put. Because the revenues will start, you know, nowadays any formulation plant, after you complete the plant, it is taking four years or five years to become, you know, the commercial production. Because commercial production means you have to take the products, file the products, approval has to come, then the meaningful approval, some five-six approvals come, then only commercial will start. This will take time. You know, in 2024, we expect our commercials will start in China. Sir, on your inhaler business filings, which were there in the U.S., can you give some more color on how many products have you filed and when we submit from when we are looking at approvals for this segment? No, we have filed only one product as on today. That is a year before, a year and a half before, and we are working for another three projects. It is maybe if everything is all right, in 2023, second half, we can file at least one product. Okay. Sir, secondly, on the oral business in the U.S., there has been during the quarter a lot of talk about certain companies talking about withdrawing from certain products. Are you seeing any changes in the dynamics in the business as pricing beginning to improve in certain products? Is there anything improving, any signs of improvement in the oral business in general? No, there is no improvement. As we told in the first quarter also, the sizable 2.5%, the price erosion, 1% of the shelf stock adjustment, it is more or less similar to the similar or little more than the last year. You know, same last year, including shelf stock adjustment, it is 10%-11%. This year, in the first quarter itself is 2.5%, around 2.5%, and 1% the shelf stock. Shelf stock is only quarter, only one time. It is not a regular thing. One quarter time. We hope, let us see the further quarters because I cannot estimate whether it is going to substantially reduce the price reduction or something. Sir, are you seeing opportunities for shortages and all beginning to improve again or the situation is you know, very few shortage positions, products are, you know, I think there have been the reduction, the shortages have reduced quite a bit over the last few quarters. Yeah. Is there any change on that or that's also a similar view? All right. Swami? No. We have not seen any opportunities because of that. At least I would say we have not seen any major opportunities, as of now. Sir, last one. We have a very large capital work in progress on our books right now. Can you give us some sense on which are the large blocks of CWIP and when will they get commercialized? We have, Nitin, we have three plants in U.S. under installation and commissioning. Apart from that, in India also we have the injectable Vizag plant, then the biosimilar plant, then China plant, right? The vaccine plant. You know, in India, around three or four plants. In the US, around our Dayton plant and Puerto Rico and as well as the Raleigh plant. All these things under various stages of the thing. These things has to come to commercial end. All these almost seven plants, this is the working. Progress. This is what you are telling. Mm-hmm. Sir, by when do you see commercialization of all these seven plants coming through? It starts with five in a year and ends with the next three-four years. Okay. Thank you, and best luck. Thank you. Thank you. Next question is from Bino Pathiparampil. Sorry, Hello? Yeah. Yeah. Yes. Hi. First a quick question. You know, I believe earlier you have said that generic Revlimid in the U.S. would be a FY 2024 launch for you. Does that hold true even now? Would that be a significant opportunity for you? Binoy. Yes, it has an FY 2024 launch. As the settlement discussions with the innovator are confidential, I cannot comment on the financials or percentages, but yes, we are launching in FY 2024. Okay, great. Next, a general question. You know, when I look at your overall business portfolio, a large part of that is U.S. and Europe. In both these markets, slow growing markets, you already have a reasonable market share. The kind of growth we can see is around 5%-6%, not significantly more than that. You mentioned that sometime a little while ago as well. Of course you add all these new things you are trying to do, biosimilars, China, et cetera, maybe it adds a percentage point or so. Is that 6% or 7% the kind of growth we should look forward to over the next two, three, four years or am I missing something? No, that's what we can expect. That's what we're also expecting. Unless there is no other any surprises don't happen in the global side. The present costs are more or less stable. We hope next, after a quarter or so, the prices slightly may come down also. That is what we are also expecting because one after the other, six, seven plants should go into the commercial and profitable. That will take some time. All these things will come, then definitely this growth or little more growth may expected after one or two years. My question was more like, you know, do you have anything in mind to take this growth from 6%-7% to, say, 11%-12%? Is there any such plan in mind? Binoy, like I think I can just try and explain in terms of each maybe business unit has a different growth trajectory. Let's assume in a specialty business, whatever you're mentioning, that double-digit growth is possible. In terms of OSD, it will be different. In terms of biosimilar, it will be different. Like, you need to just look at in the different segments and opportunities, and the growth trajectories will be different for different businesses. Okay, understood. Thank you very much. Thank you. Next question is from Tushar Manudhane. Yes, Tushar, please unmute. Am I audible? Yes. Just on, just extending previous participant's question, while these products under, you know, different niche categories are under development, and we already have a huge base of existing products under approval or pending approval already filed. How do we see the filing pace of ANDAs over, let's say, next two years? Tushar- Yes. Continue, Santham. Shall I just give some data? Tushar, we have been filing around 10, 12 products. Even this quarter also, we filed 13 products, if I'm right. If you recall in the past this one, in the past also we have been filing around 50 products plus, year on year, or maybe around the COVID time it has come down. We don't see a reason why it has to come down dramatically, and we will endeavor to make it continue the same filing. Sure, sir. Secondly, on the operational cost, like in the recent months, we've been hearing that there is softening. If you could just put some numbers, let's say, is it down 5%, 10%, or even that is too much to ask? 5%, 10% on what? In terms of this, inflation link, raw material cost, or in terms of this logistics cost. We have been hearing that there is some reduction that has happened. Yeah. Any ballpark number you'd like to put? Yeah, we expect, the reduction will start happening, but whether it'll have a full impact in this quarter is not sure. There is, as chairman said, the prices are stable, and it started coming down, and probably we will be able to see the full impact of it in the next quarter. Certainly some impact will come in this quarter. Sure. That helps. Thanks. Thanks a lot. Thank you. Next question is from Charul Agarwal. Hi. Thank you for taking my question. Am I audible? Yep. Yep. Yes. Thanks. This is Charul from Bank of America. I wanted to understand that you have $300 million in your cash. Given the current stock position, do you have any plans of stock buyback? Madam, this is a matter which cannot be talked. There is no proposal as on date on the table. As and when this proposal is talked about it'll be dealt by the board, and any decision taken, we'll immediately inform the stock exchanges. As on date, there is no proposal as of now. Okay, understood. My second question is regarding the value unlocking in injectable business. Now that strategic investments have seemed to be delayed, are there any other plans for the value unlocking that you're looking for? This matter has been discussed both by the COID and the board of directors, and they will look into that any option in the best interest of the shareholders at the appropriate time in the future, ma'am. As of date, we don't see in the next, I mean, I don't see in the next six months anything will happen like that. If at all anything happen, board will decide in the best interest of the shareholders. Okay, understood. My last question is on the depot injectable. Do we have any update on the same? Yes, Charul, it is the same thing what I said last quarter. Our three depot products are under execution, and we will keep the investors updated every quarter in terms of the progress. It is on track as I mentioned last quarter. Thank you. That was all. Thank you. Next question is from Damyanti Kerai. Hi. Good morning. Am I audible? Yes. Okay. Thank you for the opportunity. Sir, my first question is on Vizag injectable plant. Did you mention a majority of supply pickup will happen after 2024, FY 2024? Yeah. Damayanti, like, it is like this. Vizag injectable plant will start the validations and filings in Q4. Q4 we will be doing validations, and then Q1, Q2 of FY 2024 is where we'll be filing. In all probability, by FY 2024, quarter four, we should start commercializing the plant. It depends on inspections and other matters, as you said. We'll start with emerging markets and Europe, and then subsequently also commercialize the plant for U.S. That's the plan. This is an additional plant and which we want to use it as both de-risking and capacity enhancement for a number of molecules where we have additional demand. For this target of INR 650 million-INR 700 million sales for generic injectable, there is less dependence on Vizag plant and you believe the existing capacities would be able to meet the stated goal? You're absolutely right. In existing plants, where all you have expanded capacity? See, we have existing four commercial plants. One oncology and hormonal plant, one venom plant. Everywhere we have added additional lines. Wherever we have excess demand, we have added additional lines. In three plants we have expanded the capacity. The fourth plant also we are planning to expand the capacity. That is a continuous process, Damayanti. Okay. All these expansions are good enough to meet the target which you have set for yourself? Absolutely. In fact, whatever we feel is with these 4 plants can take care of demand up to FY 2026. Up to 2026. Okay. My second question is on any update on the unit seven and unit five which had undergone FDA inspection in previous month. I think both the unit seven we have already informed the stock exchange that we have been classified as VAI. The unit five also we have informed the stock exchange at least a month back that it has been cleared. I mean, we have given a proper disclosure to the stock exchange. Okay. My last question is on vaccines. How should we look at this opportunity moving up in next two-three years and what are the key near to medium term goals for you here? Yeah. It is as we told in previous calls and we told the one product we may launch if the clinical trials go through in next one or two months. It will. We hope the outcome will come. Once it is there, we will launch in India. Then we are also working on another two vaccine projects. This will take another one and a half years. That is the way. It's going slow, but it is going very steady, I mean. Mostly two years from now we should be seeing good. Yeah. Stuff happening here. In two years we can see profits in this company. That is what I am hoping. Okay. Thank you. I'll get back in the queue. Thanks, ma'am. Thank you. Next question is from Prakash Agarwal. Thanks for the follow-up. Hello? Yeah. Prakash. Yeah. Just, two things. One is, during Q3 call we had talked about, you know, acquisition of 40 NDAs. 32 I guess were in the market. Is it a function of that that is playing out in this Q1, where the sales have improved? No. No. It is work going on, the CBE-30s, PAS and out of that 40, and there is nothing has come into the operation, nothing come to the commercial. We are hoping, it will come from September, October onwards, one product by other product will come. Because it is either it is CBE-30 or it is a PAS, it won't take much time. Because only thing is we have to take the product and take the batches here and keep the stability and file it. Maybe 30, this will take some time. That is the reason most probably can take in early next year the commercial, the output, the result will come from this 40 products. Okay. What is the- Thirty-one- Sorry, go ahead. 31 is the oral and three are injectables or six are the. Derma. derma products. Correct our understanding. These are not currently commercialized- No. Products which are having. Not in our portfolio. running studies. Okay. This gets transferred to your portfolio through your filing, and then you start monetizing this. Yes. From early January, we already transferred to Aurobindo name from the business search name, and we're already working on the filings. We already filed around seven products. The commercial benefit will start from early January. Early January. Perfect. What is the expected sales run rate from these, how would it start? Would it be like a step function, and what would be the expected sales from this portfolio? I will come back, Prakash. I'm not sure how many products I filed. I have to look into that. I will come back on that. Okay, perfect. Lastly on the, you know, clarification on the first question that I'd asked. I think what I understood was this gross margin would be still softer in the upcoming quarter. From 3Q, you would start seeing some improvement with the function of improving freight and raw material. Is that correct understanding? That way, as long as the if the R&D expenditure is not going up, otherwise the profit has to start a little bit improvement should happen. Okay. When you say R&D, do you what is the rate that you're looking at for this year and next year, given that we have lot of complex products under development and that we'd also see filing. How do you see that ramping up, or what is the guidance on that also? Based on the program which has been explained, Prakash. Quarter we had done five, and on an average we have been meeting around 6% to second half last year. We'll continue to do that, probably on an overall basis, anywhere could be 5.75%-6.5%, could be the thing based on the programs, how the programs are going fast. Would it not be fair to think that this will go up, given that you have significance of complex products From the biosimilars and from the Raleigh plant in the MDI projects. These two other plants more or less every quarter going very structured way. It may not be additional and these two areas, some additional expenditure as Subbu told, it may little bit increase some other percent and 1.5% may increase the additional R&D if this clinical expenditure comes into the account. We need to see, Prakash Agarwal, adding to what Chairman says, we need to see the timing, whether it can spill over between Q4 and Q1 of next year like that, we need to see that. Okay. Okay. Thank you. Next question is from Pulkit Singhal. Hello. Thank you for the opportunity. I'm very much confident on pharma business. Could you please elaborate about the vaccine, like, how many products are there in R&D now? As you said that two-three products will be roll out in couple of years, maybe, two-three years. Okay. What is our future prospect on other R&Ds, means other products? We are working on multiple things, Pulkit. Right? We are working on nasal, we are working on derma, as Chairman explained on the inhalers also we are working, transdermal we are working, et cetera. If you really see, in the case of nasal, we have already got two products approved and we have filed one product and development is around nine products. Derma we're working more than 30 products, and we have already filed some products. Sir, you are talking about derma. I have talked about vaccines. Is it the time for vaccine? Yeah, I'm talking about vaccines. As on vaccine, as Chairman explained, we have already done the PCV vaccine, which is the outcome of the results will be known in two, three months, maybe we'll come to know of it, and that is what we are working as on date. Mm-hmm. Another two projects we are working, that is with the collaborator. Is PCV? Yeah. Tell me. Okay. PCV. You said that it will be launched in India. Is there any other competitors are also there for these products? Yeah. There must be another one or two people, definitely. And- Including Serum and those things. And- We are going to take up after that to WHO. That will take another one year. Okay. Thank you. What could be the market size if it is launched maybe in two years? Let me check with the concerned person and come back, but I'll get back to you in the next one. Mm-hmm. Thank you. Next question is from Vishal Manchanda. Thanks for the opportunity. Would you have a number as to what would be Aurobindo's market share in the oral solid dosage category in the U.S.? By prescription volumes. By prescription volume, Vishal, we are number one in the U.S., and that is just by Aurobindo itself. You know, we also have some private labels that would be additional. We had done in the last one year Through May, based on the IMS, we have done about 4.4 billion tablets approximately. So this is with this, we are the number one. On an annual basis, we are close around 20 billion. Okay. 20 billion is in terms of number of tablets, you said? That's correct. This is only from Aurobindo's side. Plus, as you know, we also have some partners. What is the percentage he's asking, Swami? Ours is around 77.1%, or how much is it? If I recall, it is 8.3%, Swami. Somewhere around that, then. We will come back. Okay. As in the oral solid dosage category, 8 point. Yeah, that's what. We'll come back to you, Vishal. Okay. Sir, the second question is on Folotyn. There is a settlement ongoing in November 2022. If assuming generics enter post that, would that materially impact our EBITDA, or it'll not be a material event for us? Some extent it will impact from end of this year. Do we have launches that could set this off or this would obviously be large for- No, the two derma products, the clinicals already in the middle way. There is a gap. This gap will come in 2023. From 2024 onwards, calendar year approximately, this will cover up. That is what we are expecting. Okay. Just one fundamental question. On oral solids, I think even Aurobindo would be doing mid to high single digit ROC, and probably be, I think Aurobindo would be the lowest cost player in this space. How long do you think this situation can persist? Based on your assessment of capacities that would be available in this. No, we are not the lowest cost of production. Whatever the Indian people are producing, same cost only we are also. Right. Plus we have good number of ANDAs, so we are producing even more. But this will, we hope, continue. Some more additional products are expected to join in this. Out of that, at least some will get clicked. This will continue for, we hope, next seven to ten years. Maybe more. No, what I mean is the ROCs could be in low single digits. Can this go further down or what? How do you think the industry will shape up? Because this is an unsustainable number. This further going down is a very difficult, you know, but still we cannot judge. We don't know exactly what is going to happen. Right. Yeah, but if you ask me, it should not go as per theory. It is already gone down like anything then. Thank you. That was the last question. I would now like to hand the conference over to Miss Deepti Thakur for the closing comments. Thank you all for joining us on the call today. If any of your questions are not answered, please keep in touch with the investor relations team. The transcript of this at 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. Thanks.