Good morning, ladies and gentlemen. Welcome to Biocon Limited Q1 FY 2022 earnings conference call. I am Chirag from the Biocon investor relations team, and I welcome you to the Biocon earnings call for Q1 FY 2022. All the attendees to this call shall be in listen-only mode, and there will be an opportunity to ask questions after the opening remark concludes. Should you need to raise questions, please select the Raise Hand option under the Reaction tab of your Zoom application. We will call out your name and then request you to unmute yourself, and to ask the question. While asking, our request would be to please begin with your name and your organization. Kindly note, we will not be monitoring questions on the chat box, but you can raise any technical concerns that you may be facing for our support team to help. This call is being recorded. To discuss the company's business performance and outlook, we have today with us the Biocon leadership team, comprising Dr. Kiran Mazumdar-Shaw, our Executive Chairperson, and the other senior management colleagues. I want to take this opportunity to remind everyone about Safe Harbor. Today's discussion may be forward-looking in nature based on the management's current beliefs and expectations. It must be viewed in concurrence with the risk that our business faces that could cause our future results, performance, or achievements to differ significantly from what is expressed or implied by such forward-looking statements. After the end of the call, if you need any further information or clarifications, please get in touch with me or Nikunj. I would like to turn the call over to Dr. Kiran Mazumdar-Shaw. Over to you, ma'am. Thank you, Nikunj. Let me welcome everyone to this earnings call, which is being held on this very new format. I would like to basically start this earnings call by saying that the impact of the second wave of the pandemic has turned out to be far more devastating than we thought. We have all, as in the pharmaceutical industry, faced mounting on-site infections coupled with lockdowns, which all have posed significant challenges to our operations across our facilities in Bangalore and Hyderabad, particularly at our API plants. As you know, we are a fermentation-based industry, and many of these supply chain challenges included things like oxygen shortage, et cetera. We have been impacted this quarter, but we have taken several measures to mitigate the impact of the spread within our organization. A massive vaccination drive was also undertaken for our employees, their families, and our neighboring communities, wherein more than 20,000 doses of vaccines were administered. We simultaneously ramped up the manufacturing of itolizumab, which has been at the forefront of our fight against COVID-19, I would like to share with you that more than 27,000 patients have benefited from itolizumab thus far. We have received several testimonials of appreciation from patients, family members, and healthcare professionals for the number of lives that itolizumab saved throughout this pandemic. With the vaccination drive picking up pace and newer vaccines on course to get to government approval in India, we are hopeful that the situation will turn for the better sooner than later. While there are signs of recovery, we cannot drop our guard. We must stay vigilant, ensure that we get vaccinated, and stay safe. I would like to also share with you an important management update. John Shaw, the Vice Chairman and Non-Executive Director of Biocon, will retire from the Board of Directors due to health reasons on 23rd July. That is today, at the conclusion of the Annual General Meeting. As a key member of the company's board and the management team since 1999, John Shaw has contributed majorly to the transformation of Biocon from a small enzymes company to a globally recognized biopharmaceutical company. Over the past 22 years, John Shaw has played an important role in building Biocon, ensuring the highest levels of corporate governance in the company, as well as contributing to the financial and strategic development of the Group. On behalf of Biocon's board of directors and management, we express our deep appreciation and gratitude to John Shaw for his stewardship and guidance. I would also like to share with you another organizational update. I'm pleased to welcome Dr. S. Vijaya Kumar as Head of Operations at Biocon to lead the manufacturing projects and EHS functions for the generics business and will be part of the executive leadership team. Vijaya Kumar is an industry veteran with more than 30 years of extensive experience across manufacturing and engineering in global diversified setups. Let me now turn to some business highlights, starting with our generics business. We launched labetalol tablets and esomeprazole capsules in the U.S., further expanding our generics portfolio. Within Biocon Biologics, we expanded our biosimilars global footprint with product launches in seven countries in Q1 this fiscal. We also received marketing authorization approval for biosimilar bevacizumab from TGA, Australia, and MHRA, U.K. The U.S. FDA has scheduled a pre-approval inspection of our Malaysia facility in Q3 of calendar year 2021, in support of the BLA for our biosimilar aspart. Syngene has signed a five-year agreement with IAVI, a U.S.-based non-profit scientific research organization, for manufacturing three anti-HIV monoclonal antibodies for use in phase I and II clinical trials. I will now turn to financial highlights for the quarter. Let me start by saying that we delivered a revenue of INR 1,808 crore in Q1 this fiscal, versus INR 1,712 crore last fiscal. A modest year-on-year growth of 6%. Our revenues were mainly driven by research services, which were up 41%, and biosimilars, which were up 10%. We reported a subdued performance in generics, which saw a degrowth of 22%. We largely sustained all our operational financial aspects of our business as we recorded a gross R&D spend of INR 136 crore for this quarter, versus INR 142 crore last fiscal, this corresponds to 12% of revenue ex Syngene. Of this, INR 120 crore is reported in the P&L, while the balance has been capitalized. We also recorded a Forex gain of INR 17 crore versus a loss of INR 4 crore last fiscal. Our core margins, that is EBITDA margins, net of licensing, Forex, and R&D, stood at 30% in this quarter, this is on account of subdued performance by generics that offset the gains of an improved performance in biosimilars and strong growth in research services. EBITDA for the quarter was INR 437 crore, largely flat year-on-year, the EBITDA margins stood at 24% against 25% reported in the same quarter last year. PBT for the quarter was at INR 166 crore, which is down, and this is at 9% compared to 15% of INR 249 crore in Q1 FY 2021, which is largely on account of higher depreciation and amortization and share of loss from our Boston-based associate start-up, Bicara. If you exclude the share of loss from Bicara, PBT stood at INR 224 crore. Novel Biologics is a capital-intensive business, and while it impacts our P&L, it is an integral part of our business and future growth. We will explore external venture funding to support clinical development for long-term value creation. This is a high-risk, high-reward business, and we believe that these novel programs are important to pursue. Our net profit for the quarter stood at INR 84 crore versus INR 149 crore last fiscal. If you exclude the share of loss of Bicara, our net profit was INR 142 crore for this quarter. This largely basically points to a very sustained financial performance despite all the challenges we have faced because of the pandemic. I will now take you through the performance of our business segments during the quarter. Let me start with our generics business. Our generics revenues witnessed a degrowth this quarter, as I mentioned earlier, largely due to COVID-related headwinds that resulted in operational and supply chain challenges that impacted largely our API manufacturing. With the number of COVID-19 cases starting to decline, we expect these to normalize in the coming quarter. Additionally, the comparable period in the previous fiscal benefited from customer stockpiling APIs on account of COVID-related uncertainties. The segment delivered quarterly revenues of INR 486 crore. The quarter's PBT stood at INR 29 crore versus INR 96 crore in the same period last year. PBT margins also were at 6% compared to 15% in Q1 last fiscal. Tacrolimus capsules were launched in the U.S. in Q3 FY 2020 and is witnessing a gradual ramp-up in demand. Our statin formulations portfolio in the U.S. comprising rosuvastatin, simvastatin, and atorvastatin, held on to its market share despite continued pricing pressure. During the quarter, we launched labetalol tablets and esomeprazole capsules in the U.S., in line with our aim to expand our formulations portfolio and establish a strong global presence. Labetalol is used to treat high blood pressure and helps to prevent cardiovascular complications such as heart attack and stroke. While esomeprazole, a proton pump inhibitor, is indicated for treatment of gastroesophageal reflux disease. IQVIA pegs the market value for labetalol hydrochloride and esomeprazole magnesium in the U.S. at INR 63 million and INR 230 million respectively. Travel restrictions in the wake of the pandemic continue to delay inspection of our facilities, and consequently, launches as well as expansion into some key markets were affected. However, we are in discussion with the U.S. FDA to see if we can apply the mutual recognition agreement announced in May 2021 between the U.S. FDA, EMA and MHRA. We have responded to the complete response letter issued by the U.S. FDA on COPAXONE. We remain on track to commission our greenfield API facility in Visakhapatnam in FY 2022. This will significantly expand our immunosuppressant manufacturing capacities, which will come on stream in FY 2023 post qualification and validation. We are confident that our strong foundation in fermentation technology, coupled with several initiatives undertaken during the past year, including digitalization, cost improvement and measures to boost operational efficiencies, will help us to significantly improve our business performance in the coming quarters. A note on novels. Equillium, our U.S. partner, had an end of phase I meeting with the U.S. FDA which confirmed the path to advance itolizumab into a single phase III pivotal study for acute GVHD to support their biologics license application or BLA. The study is expected to commence later this year. Biocon, who owns the European rights for itolizumab, would like to report an important milestone this quarter, wherein the Committee for Orphan Medicinal Products approved an orphan designation to itolizumab for the treatment of both acute and chronic GVHD. Meanwhile, itolizumab continues to be at the forefront of our fight against COVID-19 in India. We have ramped up our production capacity to meet the growing demand of the product. A second brand of itolizumab has been licensed to Sun Pharma for distribution. We have also completed patient dosing in the phase IV study of itolizumab to treat cytokine release syndrome in moderate to severe ARDS patients due to COVID-19. The study report is expected to be converted into a publication in the near future. Let me move on to biosimilars. Biocon Biologics has recorded revenues of INR 758 crore in Q1 FY 2022, a year-over-year growth of 10%. Also a sequential growth of 14%. Core EBITDA stood at INR 271 crore in Q1 FY 2022 versus INR 249 crore last fiscal. A year-over-year growth of 9% and 26% growth sequentially from INR 216 in Q4 FY 2021. Core EBITDA margins were at 36% in line with last fiscal. Profit before tax stood at INR 101 crore. We have seen a significant contribution from our COVID portfolio in India, predominantly itolizumab and remdesivir, in the strong growth delivered by our branded formulations India business. Thus far, more than 50,000 patients have benefited from these products. Our non-COVID products also have performed very well. Our biosimilars continues to maintain and garner market share in the U.S. FULPHILA, our biosimilar pegfilgrastim, maintained a steady market share of around 8.5%. OGIVRI, our biosimilar trastuzumab, increased to over 9% volume share in June 2021. Our biosimilar insulin glargine is estimated to be around 2.6%, about 20 basis points higher month-on-month. We anticipate continued pricing pressure in the U.S. and are taking steps to mitigate this through increased volumes and market share. In addition to this, we expect our growth to be fueled by regulatory approvals for our biosimilar bevacizumab and biosimilar aspart in the near term once onsite inspections happen. In Europe, our sales continue to improve on the back of new market entries and better market share in key countries. The EU launch of biosimilar bevacizumab by Viatris is expected in Germany, Austria and Poland in Q2 FY 2022. Moving on to regulatory topics. The U.S. FDA has scheduled a pre-approval inspection of our insulins manufacturing facility in Malaysia in Q3 calendar year 2021 in support of our biosimilar insulin aspart BLA. We believe the BLA is adequate in all scientific aspects, and it is only the pre-approval inspection of the Malaysia facility that is pending. However, with respect to our biosimilar bevacizumab BLA, we are yet to have visibility on the timing of the site inspection in India by the U.S. FDA. We have received approval for our biosimilar bevacizumab from TGA, Australia and MHRA, U.K. We expect the U.S. FDA's decision on interchangeability of our biosimilar glargine by the end of this month. If approved, it will be the first interchangeable insulin approved in the U.S. We continue to make good progress on our robust R&D pipeline. To summarize on our biologics business, we remain confident on the long-term opportunity for biosimilars to improve market penetration, geographical expansion and further growth from upcoming approvals. Coming to research services. During the quarter, Syngene reported revenues of INR 595 crore, up 41% over INR 422 crore in the comparable period last fiscal. PBT for the quarter was INR 95 crore with PBT margins at 16% in line with Q1 FY 2021. Syngene's performance was driven by growth across all divisions, discovery, development and manufacturing services and dedicated centers. Remdesivir was also a significant contributor to revenues this quarter. The company's Mangalore API facility has also successfully completed ISO 9001:2015 certification audit. As mentioned earlier, Syngene has signed a five-year agreement with IAVI for manufacturing three anti-HIV monoclonal antibodies for use in phase I and II clinical trials. Syngene will provide an integrated solution encompassing clone selection, analytical methods development, manufacturing process development scale-up, and cGMP manufacturing of drug substance, viral clearance studies, cGMP manufacturing of drug product and stability studies. You can see that Syngene now has end-to-end capabilities from clone to market in every possible way. To conclude, I would like to say that this has been a challenging quarter for all of us. However, we are confident we can overcome these challenges with all the encouraging developments and opportunities that lie ahead. Business sentiment is favorable for biosimilars, generics, and research services. Globally, we see a strong demand for biosimilar and generic drugs, given the growing emphasis on affordable drug pricing. These are challenging times, and I would like to end by saying let's be responsible. We all need to stay away from crowds. Let's double mask ourselves, maintain the proper COVID appropriate behavior, and most of all, I hope every one of you has vaccinated yourself like we have at Biocon Group. Thank you. I would now like to open the floor to Q&A. Thank you, ma'am. As we wait for the questions to queue, I would like to remind everyone that you can ask your question by selecting Raise Hand option under the Reaction tab of your Zoom application. We will call out your name and you can unmute your line to ask the question. Our first question is from Prakash Agarwal, from Axis Capital. Yeah. Hi. Am I audible? Yes. Yeah. Hi. Thanks. Good morning to all. My first question. I'm trying to understand this July-end, that date better. As per our understanding, what are the things pending, if at all, and what is our expectation of getting interchangeability and how does it impact our assumptions for the market share ramp-up, which we in the past have talked about that from calendar 2022 only we will see some, since the buying is already happened or is the last commentary. If you could give more color there, that would be very helpful. I will turn this to Shreehas to respond. Thanks, Prakash. As Kiran said, we are looking for that interchangeability status. Our goal date is towards the end of this month, and we've reason to remain optimistic that our insulin glargine would be the first interchangeable biosimilar insulin analog that the FDA would approve. Now, having said that, we've talked about this in the past as well, that after the interchangeability status, we would still have to go through the full contracting cycle and secure the contracts. That piece will have to be completed in terms of securing the contracting piece. It certainly does provide us the opportunity to then validate the decisions that payers have made in supporting the cost for biosimilars, rebuilding it into the formularies. More importantly, also provide assurance to the patients, prescribers, and more importantly, when it can be made available at pharmacy counters in a substitutable manner. Clearly there is a support to that overall strategy that we at least outlined where it has stated in the Investor Day that it is an opportunity now to relaunch SEMGLEE as an interchangeable insulin glargine, the first of its kind. We will certainly be looking at that uptake in the coming calendar year. The contracting cycle that you spoke about, what is the contracting cycle currently? Is it ongoing and would it help if we get the interchangeability, say, on the goal date? Or it would actually help in the next contracting cycle? The Viatris commercial team is right now in discussions with various payer channels at this point as we talk, and the interchangeability status towards the end of this month is in a way timely because it will aid in these decisions as payers make them over the course of the next month or two. Okay, got it. Secondly, on the inspections that you have talked about both in Malaysia plant for aspart, everything done is what I understand, but it would require a physical inspection or it would be an online inspection? I don't know what's the status in Malaysia, but have they started, has the FDA started visiting other countries and Malaysia? I am not sure. If you could throw some light there. In bevacizumab, is there a chance of online inspection? That's all from my side. Yeah, thanks, Prakash. I think you have two, three questions in that, let me respond. I think on the insulin aspart inspection for our facility in Malaysia, as Kiran said, the agency FDA has confirmed that they will visit us end of this quarter for a physical inspection on location. That's something we were working with the agency closely for and that's something the agency has consented to. We will be looking to host the agency towards the end of this quarter and the aspart inspection should be then the only step to move us forward into the approval process. On the bevacizumab part, our goal date, as you know, was end of last calendar year and we've been working with the agency to enable that inspection. The FDA did publish a resiliency roadmap where they are looking at international inspections in an expedited manner. We have been in engagement with them. We haven't received so far a firm date on when they can visit us in Bangalore. At this stage, the understanding we have is there is no technical outstanding questions for the bevacizumab application. We've submitted a complete package and we look forward to the pre-approval inspection, which is a mandatory requirement for a biosimilar approval in the U.S. That's the update, Prakash, on bevacizumab and aspart inspections. Okay, sir. Thank you very much. I have couple, but I'll join back the queue. Thank you so much. Thank you, Prakash. The next question is from Damayanti Kerai from HSBC. Yeah, hi. Good morning. I hope I'm audible. Yes. Okay. My first question is, can you explain what kind of P&L impact we should continue to see from Bicara? Maybe some more clarity like what is spent from our side and then what kind of impact we'll be seeing on the P&L, say in next few quarters. Maybe Siddharth, you would like to answer this question. Sure. Damayanti, I think last quarter we had said that Bicara, which was earlier a subsidiary would move to an associate because Bicara is looking at raising funds directly in the U.S. to fund its clinical programs and the pipeline that is under preclinical stage. The investment value that we have for Bicara end of June is roughly $15 million. We expect till this $15 million of expenses are there in Bicara, it will continue to go through the P&L, but through the share of loss of associate, which we expect within the next one to two quarters. Okay. Thank you for that. My second question is, can you provide current state of biosimilar sales between regulated market and rest of the world market? If you can talk a little bit more on what will be the key expectations for the rest of the market biosimilar sales and what will be key drivers or key market which you are looking at that part of the business? Let me request my colleague, Susheel Umesh to talk about the biosimilars business in the rest of the world markets. Mute. Susheel, you're mute. Sorry. Thank you, Damayanti, for your question. In the rest of the world, we are looking at the biosimilar space very positively. We have a plan to quickly launch our new products and also increase our products in many more countries than where we are today. We do this with our partners and distributors. We plan to have a very robust growth in excess of 25% over the years. Okay. That's helpful. What is your current split between this regulated and rest of the world market sales for biosimilars? Shreehas, do you want to take it? Please respond. I think you were already unmuted. Damayanti, hi. For the quarter, emerging market is actually above 60%, but if you look on a full year basis, you'd see developed markets 40%-45% and emerging markets around the 55% mark. Oh, okay. Just to clarify, 55% around rest of the world market and 45% for the regulated market. On a full year basis. For the current quarter, emerging markets is above 50%. Okay. Thank you. I'll get back in the queue. Thank you for the opportunity. Thank you, Damayanti. The next question is from Neha Manpuria from JP Morgan. Thank you for taking my question. First, on the biosimilar business. In ma'am's opening comment, she mentioned there's a COVID portfolio contribution in the quarter. Is there a way to quantify that, just to understand how the base business will look going forward? Just understand what's the COVID contribution in this quarter, please. Well, this was specifically linked to the second wave. Actually, it is just sort of a blip in our BFI sales. We don't expect it to continue at these levels. It has contributed significantly to our branded formulation business in India, but we don't expect it to continue and contribute at these levels going forward. That's as far as what I think. The branded formulations have certainly jumped over 50% because of this contribution, but I don't think we can rely on this particular business beyond a few quarters. Understood. Ma'am, in terms of, again, for the biosimilars business, if I were to look at quarter-on-quarter, we have a FX gain. R&D does not seem to have moved too much, from what I can see for the biosimilars business. The costs seem to have increased. Is it a reflection of gross margins being different or lower because of this COVID portfolio contribution? Because ROW sales are higher. What's driving the margin improvement should have been higher given the FX gain and flattish R&D spend. Two things. One is, you must understand that always quarter one obviously reflects the increments that we give our employees, and that's the big impact on costs in the first quarter, which gets normalized for the rest of the year. Secondly, I think you must also understand that even though we have a contribution from the COVID products, the margins are at a lower level compared to our other biosimilars business. Thirdly, I don't think you should read into the fact that ROW margins are low. I think ROW is a very good business in many markets on very rich margins. Of course, averages over the entire business. Overall, I think the margin impact has really happened because of the quarterly impact of salary increments, as well as some of the low-margin sales that we have basically this quarter because of our COVID portfolio. Understood. Just to clarify, Neha. The FX gain, there's no FX gain in biosimilars. Okay. With the core EBITDA margin at 36%, which is a 26% sequential growth. I mean, in growth terms is 26% sequential growth, and in margin terms, it's a 36% margin consistent with last year. I was looking at the absolute sales increase year-on-year is pretty significant, right? To that extent, the margin is flat, despite R&D pretty much being in the INR 60 crore number. That's why I was asking. Ma'am's answer sort of gives color on that. Revenue grew 10%. EBITDA grew 10%. Core EBITDA growth, just about 10%, 9%. They are all consistent, yeah. Understood. Siddharth, just on the generics business. Given the supply chain and operational challenges, if that were not there, what was the impact because of that? I'm just trying to understand the normalized performance of the generics business. The impact on supplies because of the second wave was roughly INR 75 crore. Okay. We would have been very close to our fourth quarter. Understood. Kiran alluded to, we have also seen continued pricing pressure in the U.S. for our generic drug and also for our API customers. Unfortunately, we do not have any new approval because the current works which are under review with FDA, until the inspections are complete, we are not expecting any new launches. The two products which we launched were more in-licensing products. These products were approved by our partners, which we in-licensed and launched recently. We do expect some growth to come in. The main point is that when we get additional approvals, the continued pricing pressure will continue to impact our generic formulations sales. The API business, which was impacted in Q1, we said that we have seen normalcy now. Number of cases in Bangalore have gone down. All our employees are vaccinated, and the operations are now running on normal course. Understood. Thank you so much. Thank you, Neha. The next question is from Surya Patra of Phillip Capital. Surya, you may unmute your line, please. Yeah. Good morning, everybody, and thanks for this opportunity. My first question would be on pegfilgrastim. A couple of days back, we have seen a notification from U.S. FDA to Amgen about the claims what they used to make about the product Onpro. FDA has indicated that all the claims of a superior clinical benefit over the prefilled syringes, that is baseless. I think with those claim, Onpro was having initially about 60% market share of the total prefilled pegfilgrastim opportunity, and now they're still having over 50%. With this notification, how should we look at as a kind of potential opportunity for Biocon? Shreehas, would you like to take this? Yes. Thanks, Kiran. Thanks, Surya, for the question. I think if you look at our previous commentary on the topic, we've always said that the Onpro device does offer an element of convenience, but we're focused on making meaningful clinical difference through the prefilled syringes. That's been our focus, and this kind of, in a way, validates some of the positions we've taken in the past and over the last one year, where we saw the effects of the pandemic resulting in the Onpro device holding on to a market share of around 58%. Over the last year now, we're starting to see that come off, and we're seeing that deplete to about 52% this year or this quarter we just closed in June. In a way, it does create an opportunity for FULPHILA, and we do see that in terms of how market shares in the last quarter have started to slowly ramp up with a 50 basis points increase in the monthly market share that we've seen in our product. We view this as an opportunity to really make a difference in the market space. Okay. Just I want to extend this question a bit more. The 340B program, what you had tied up with also for prefilled pegfilgrastim and the kind of significant ramp-up in the capacity for pegfilgrastim, what you have already achieved prior to the COVID, and possibly the benefit of which all this would not have flown into you. Given that with the recovery in the business that end with a favorable notification from the FDA, all that considering, should one consider this as a kind of meaningful opportunity in the near term? What timeframe that you can see that, okay, there will be some meaningful progress in terms of penetration as well as contribution to the earnings? Just to elaborate on that, Surya. I think the way to pose is these are certainly developments which bode well for an increase in market share going forward. If you really look at it, the factors that will influence these things would be the competitor contracting strategies, the regulatory or the reimbursement strategies that exist in the marketplace. We certainly see this as a positive development and an opportunity for us. We have the capacity, the product, the approvals, and with increased customer focus or commercial attention to this, which we have just as actually said in the previous calls as well, with a stronger value proposition that we can bring to stakeholders, we really see this as an opportunity in the coming fiscal to really realize a lot of this market share. Thank you, sir. About the interchangeability approval, aren't we expecting the interchangeability approval for both the insulins, both insulin aspart as well as insulin glargine? The aspart, as you know, we talked about insulin glargine a little while ago, where we are expecting it towards the end of July, we'll expect a decision on our application for interchangeability. The insulin aspart has been filed as an interchangeable insulin analog under the 351(k) pathway. When approved, we would be looking at that approved as well as an interchangeable insulin analog. Okay. Just last one question from my side, sir. On the Bicara, if you can just help me understand, means what could be the early earning trigger for Bicara? We know that the first or the lead molecule is at the very early stage, in phase I, phase II, like that. There is a upfronting of the spend also that we know that. Hence, if you can just give some sense on that side. Bicara has both the first program in the clinic at early stage of phase I development, and it also has a portfolio of molecules which are preclinical. I think from that point of view, it is a growing startup. As Siddharth mentioned, we have basically funded it, and they are at the stage of looking for external funding. I think that is where we need to support them because the program is very exciting and some of the early signals are also very encouraging. I think we would like to support them until they raise external finance. I think, let me just add, we expect some critical readouts on the first program, which is in clinic, by end of this calendar year. Okay. The losses from the share of losses, whether that is restricted to, let's say, current year and early part of next year or something, or it is a kind of a continued thing till the time that we see some progression in terms of earnings? Surya, I think what I mentioned to an earlier question, that we have roughly $15 million left in our balance sheet out of the $40 million which we had funded. That $15 million, till it gets replaced, will flow through the P&L. Unless we fund anything incremental over the next few quarters, till Bicara gets this readout and does the external funding. It is expected to be temporary. Definitely, we do not expect it to go beyond this fiscal year. Sure. Thank you, sir. Wish you all the best. Thank you, Surya. The next question is from Shyam Srinivasan from Goldman Sachs. Hi, good morning. Thank you for taking my question. Just the first one on the COVID impact, going back to the earlier participant as well. I remember Branded Formulations India was some INR 100 crore, like the way we used to report earlier. Maybe I'm wrong. If that has grown 50%, INR 758 crore- 150 is INR 600 crore. I'm making these numbers up but looks like then the base biologics or the biosimilar business has declined QoQ. Would that be a fair way to think of things? Susheel, you want to take this question? Yes. The base biosimilar business is kind of flat versus last year, if you strip out the COVID portfolio. Keep in mind that last year there was a spillover from Q4 into Q1, which boosted the Q1 FY 2021 numbers. If you strip that out, then you will still see a growth in the biosimilars business, excluding the COVID portfolio. Yeah, Susheel, from a market share perspective, QoQ things have improved. I'm just trying to understand where the struggle is for the business. You talked about, I think EM being higher and higher contribution and DM being lower, versus how you envisage it to be for the full year. What are some of the translations? I remember in fiscal 2021 call, we had actually said that the profit shares from Viatris has not flown through. What can ease now, which will kind of help us accelerate this biosimilar business? You see, we're double counting there. It's a COVID portfolio that's got the emerging markets shared above 60%. Just to clarify. The second point, of course, yes, as we start to increase the market shares in insulin glargine, you'll see the profit share from insulin glargine play out, and you're aware that we have two more approvals lined up for this year. The potential increase in market shares on our existing portfolio, that's peg and trastuzumab, should also play out and improve profit share in the coming quarters. Got it. Very helpful. Second question is on the Generics business. Siddharth, I think we have seen kind of subdued performance, you talked about the INR 75 crore. This now spans across multiple lines, right? The INR 100 crore, I remember Q4 FY 2020, we couldn't ship things in the biosimilar line. INR 75 crore now on the generic line. From an operational and an ability to supply perspective, is the Group looking at what are some of these issues? Could these have been avoided? Can we do something in the path forward where these issues don't recur? Just looking at peers, we have not seen this kind of QoQ large volatility in numbers. Most of them have had it trended upwards. I'm just curious from our own group perspective, where are the potential misses and how can we correct it in the path forward? Very good question, Shyam. I think we do have a BCP and disaster recovery plans. If you look at the second wave in Bangalore, we all know there were significantly higher number of cases compared to first wave. Out of 3,500 employees in Generics, in the second wave, we had almost 500 employees who were positive within a span of two months. That impacted a lot of the work schedule, the quality releases got impacted. Now that has been addressed by vaccinating all our employees. 100% of our employees in Hyderabad, Vizag, Bangalore are vaccinated. That's number one. Number two, again, Kiran had alluded in our opening comments, that if you look at Biocon API business is primarily a fermentation-based business. For fermentation, these are large-scale fermenters. One of the most important ingredient for fermentation to run is oxygen. When there was overall high number of cases in the country, the allocation of oxygen was being done by central government, where lot of the oxygen, even for the industrial use, was diverted for medical use. We were out of oxygen and hence not able to charge any new batches. Unfortunately, we treat this more as a force majeure where there is no mitigation plan. We were working with various state and central governments to see how soon we can get the required quantities that we needed, which did happen, as I mentioned, after 15 years. There was also certain other disruptions, but I think we do have overall a good plan in place. An extreme situation like this wave 2, I'm not sure if at a very short notice we are able to address all the issues that come up. In fact, Q1, we didn't have any of these issues in the Generics business. We had a very strong quarter one last year, including H1, because number of cases in the company were still low. We were continuing to manufacture. We had supply chain issues, which we addressed very efficiently. Hope that these issues, at least on the employee front, do not happen if there is a wave 3 in the future. Got it. Last question to the team is on R&D spend. How should we look at it for FY 2022 and FY 2023? Is the current run rate now, or you see a step-up happen in terms of R&D? I think maybe I'll just give a view on the Group level. We continue to maintain our earlier guidance of between 12%-14% of gross R&D ex Syngene revenues. Got it. Thank you so much, sir. Thanks. All the best. Thank you, Shyam. The next question is from Harith Ahamed from Spark Capital. Hi. Good morning. I hope I'm audible. Yes. On the Generics business, my apologies if this question was addressed previously. On the generics business, after the disruptions we saw in the first quarter, how is the business shaping up now, and how should we think of the second quarter and the upcoming quarters? Harith, I'll split this answer into three parts. The operational impact that we had in quarter one is normalizing. We do expect, again, our API production to ramp up to what it was in the previous quarters. We do not have any new plant or new capacities which get qualified this quarter, so there is no growth in our API business. The generic formulations business in the U.S. is undergoing pressure. While we are launching new products, we are ramping up our tacrolimus drug, which we had launched last year. We won some new contracts, and we've started supplies against those contracts. At the same time, we have lost certain business on our statins. On an overall basis in Q2, I do not expect significant growth, because the biggest growth is going to come from the two or three products which we have filed and are under review with the FDA. We have a target action date, which was in calendar quarter one of 2021, which FDA moved to calendar quarter three and four of 2021. Assuming FDA accepts our request of conducting a virtual audit or the U.K. MHRA audit, which was successfully conducted in quarter one, even if we receive the approval, we expect the launch to happen in the third quarter this year. I expect overall business to remain flattish, and flattish compared to, let's say, quarter four of last year. Definitely, we should be much better compared to this quarter's performance in the next quarter. Okay, got it. On Bicara, how far are we in terms of fundraising plans at that entity, and who owns the 13% minority stake there? The funding should be complete, or funding is actually dependent on the readouts. I mentioned that the readouts from the phase I clinical trial readouts are expected by end of this calendar year, basis which the funding timing would be decided. The remaining 13% of the company is with the employees and ESOP pool. All right. Thank you very much. Thank you, Harith. The next question is from Nithya Balasubramanian from Bernstein. Nithya, please unmute your line. Yeah, hi. I had just the one question on biosimilars in the U.S. We know that CMS offers a pass-through status for the reimbursement rate that's given to 340B hospitals, and that's valid only for three years. If you look at your FULPHILA, you're possibly reaching that deadline in June, and that's likely to happen for some of your other biosimilars at a later point of time. Given that the delta between reimbursement is ASP + 6% ASP - 22%, do you expect this to impact your margin profile meaningfully? [crosstalk]. Let me take that question. Nithya, yes, we are seeing that CMS deadline come up shortly. We have developed, or Viatris has developed strategies to counter that pricing change, which will come up shortly. We believe the recent discussion that we just had on the call also in terms of Onpro does provide us the opportunity to expand the market. There is going to be increased competition in that space, also with more players than we started off with when these debates were fixed and we will certainly have to have the right mix of whether it's just the pricing part or whether it's the reimbursement strategies that we talked about or the overall mix that we will be coming up with. Certainly, Viatris is aware of this and we are looking at providing a stronger value proposition overall to the various stakeholders. If I may just follow up, can you throw some color on whether if you look at your revenue split between hospitals, clinics, and 340B, is it possible to provide some color on what's your exposure to 340B? I think we'll have to do that often. I'm just- Susheel you have that available with you. Do you have that split with you right now? No, we don't have the exact split, but we have a lower share of the 340B segment, so our exposure is slightly lower there compared to some of the competitors, but we can't give you specifics on the numbers. Got it. Thank you so much. Thank you, Nithya. The next question is from Sameer Baisiwala from Morgan Stanley. Hi, good morning, everyone. The first question is on the pricing pressure that you're seeing in the U.S. for biosimilars, trastuzumab and pegfilgrastim. Can you just help us what's driving this? You've been talking about this for the last six months at least. Pricing pressure in terms of the U.S., I can see the important piece is the biggest question around U.S. was whether the U.S. market will be accepting more biosimilars. I think that was the biggest question that we were faced with as we began the fiscal and maybe towards the end of last fiscal. I think that's been reasonably answered, that is we've seen good adoption of biosimilars, and as competition increases, the natural fallout is that there is going to be some pressure on pricing. We've not seen pricing go down the generic route, so this is in line with the expectation when we see different major players enter this space. We basically expect this to kind of stabilize. We've also seen more gradual decrease in prices overall. The ASPs have been more in line with what you would expect in a market where you have four or five major players across the portfolio. We're not really seeing anything out of line that we had set out in the beginning. Sure, that's fine. I'm just trying to understand what's the dynamics behind it in the sense that if there is no new entrant over the last, whatever, six-month period, then what forces the price correction? Is one of the incumbent getting more aggressive or is the payer demanding it? What's the catalyst behind the price cuts? Pricing is one. Sorry. [crosstalk]. Sorry, can I respond? Yeah. Pricing is certainly one factor which plays a role in deciding this. I think as I was saying before, beyond pricing, there are other factors that play a role as well in terms of how entrenched players have focused on therapy areas, in terms of what the competitor contracting strategies have been, in terms of what the overall payer dynamics are. In addition to just the pricing, even the reimbursement strategies that have been put together play a role in terms of how market shares get allocated. They are not equally weighted between the various determinants on how these decisions are being taken. Pricing is certainly one factor, but not the sole determinant of market share allocations between the various players. You will see that change over time across the various players. Certainly those who have been in the space in that particular therapy area could create barriers given their long-standing relations with the payers. I think that's an area that Viatris has also said in the past, that there is an area for improvement that they've identified. That's what they will be investing in with greater focus of their commercial team. They've stated that publicly as well. My next question is on the market share for these two products, pegfilgrastim and trastuzumab in the U.S. I see we have been at, whatever, 6%-8% for some time. We do get some 50 basis points up here and there. What's really going to drive this to 15%-20% rightful market share? What's holding back? Just to add to that, over time you will see more players coming in and this opportunity will then go away as the biosimilar utilization moves up to 65%, 70%, 75%. We need to act urgently. It's been a long time. Your thoughts on this? Yeah. Let me address these questions one by one. Let's talk about pegfilgrastim to begin with. I think the pegfilgrastim space, we've got a steady market share of around 8.5%- 9%. That's where it has been trending, and as we discussed earlier on the call, we did see Onpro, which kind of moved up in its market share over the last one year given the pandemic situation and the convenience factor that we saw patients looking at. Certainly it held on to market more than what was expected. It has taken a longer time for all incumbents to move into that share. We're seeing that come off as we get into this year, and we've seen over the last one year that Onpro market share dropped from 58% to 52%, certainly creates an opportunity for FULPHILA to move into that space. In terms of trastuzumab, I think there again, the COVID pandemic has played a role where there's been a reduction in terms of the overall diagnosis, where the screenings itself came down over the course of the last year. We've held on to that market share steadily over the course of the last 18 months. We've ramped up towards the double-digit figures. We're just under 10 at this point, and we're looking to increase that market share. There was, of course, a disruption that was caused with the market moving from the 150 mg to 420 mg. Certainly there is some attribution that given the higher dose formulation, there is lower losses, hence lower requirements. The franchise itself, there is some, I would say rationalization in terms of volumes. We believe that that remains strong, and as we get into the coming year with the pandemic firmly behind us, particularly in the U.S., we are starting to see more footfalls in the hospitals and more screenings, and we will see that we continue to hold that 150 mg pole position that we've held. In terms of talking to you about what is it that has driven this overall franchise, in addition to pegfilgrastim and trastuzumab, we're looking forward to getting bevacizumab join this overall oncology franchise, which we believe will be also another sizable opportunity because bevacizumab itself has grown year on year 5% in terms of market share solely in the U.S. Apart from 26% globally. We believe that there is a long-term play for us in the oncology space with a more complete offering in terms of pegfilgrastim, trastuzumab, and then bevacizumab to join it shortly. Okay. With your permission, I just have one or two more. That is, when did FDA confirm that it would come for the Malaysian inspection in 3Q? I ask this question because I think Malaysia right now going through a very bad third wave. I think just two, three days back, it's hitting almost its highest ever COVID positive cases. Is there any reason to think that FDA can actually delay this? Second question is any thoughts on the new biosimilars entering phase III trials? Okay. Let me answer the first one straight up. We've been in constant dialogue with the inspectors who are visiting us on-site, and we have good clarity. You're absolutely right, the third wave of Malaysia, despite the lockdown, has been more aggressive. Not the third wave, but essentially the current wave. They are seeing an all-time high in terms of cases reported. There are clear relaxations that the government has provided in terms of visitors from different parts of the world and those who are coming for visits for 15 days and less. I think the way we've worked with the agency is they are confident of making the trip to inspect us and be with us on-site. At this point, what we have to share with you is those plans are still on track, and they expect to visit us towards the end of this quarter. That's on the Malaysia as part pre-approval inspection at our location. In terms of products getting into the clinic, we've said in the past that our products are progressing very well in terms of the CMC aspects of it. We are currently in the stage where we are progressing them towards the clinic, and we will be updating you shortly once they get past that stage and are ready to discuss that with you. Thank you very much. Thanks. Thank you, Sameer. The next question is from Charulata Gaidhani from Dalal & Broacha. Charulata, please unmute your line to ask your question. Yeah. My question pertains to the interchangeability for glargine. After receiving interchangeability, what type of market share would you expect over the first year, full year of operations? Charulata, I wouldn't be able to comment on specific market shares, but as we've discussed all through the call, we certainly believe this to be a development in the right direction for us to have more constructive discussions with the payers. We wouldn't be able to give you specific guidance on what those market shares would. While you are talking to the payers with limited number of competition in glargine, would it be reasonable to expect a 10% market share in FY 2023, or it could be higher? As I said, Charulata, we would not want to comment on specific market share percentages. Suffice to say that we are looking at building on what we've done so far in the past. Okay. Okay. Yeah. Thank you. Thank you, Charulata. The next question is from Sheersh Jain from Apex Capital. Yeah, hi. Thanks for the opportunity. I want to understand the cost competitiveness and cost advantages of Biocon in the biosimilars arena. Do we have certain cost advantages in manufacturing biosimilars which other players won't have because we are manufacturing in India and Malaysia? Do these cost advantages will help us stand in this pricing war that is happening currently in U.S.? Sheersh, I think, if you just look at how our focus has conventionally been in the biosimilar space, price is certainly an important, or I would say, cost is an important element or important lever to be successful in the market. The first piece is the scientific aspect, and to be able to develop a molecule as complex as a biosimilar. The ability to get the facilities approved in terms of which markets you want to bring these products to. The third aspect then would be the ability to price it competitively and to win market share. I think what Biocon has been able to successfully demonstrate is we have the scientific credibility to bring these highly complex biologicals to the market, and not just to emerging markets which certain players may be operating in, but to all parts of the world. Our products today are approved by all ICH countries. That's the scientific hurdle. The next piece is the manufacturing scale and the compliance with regulatory standards, and that's the other hurdle that we've been able to move on and surpass. We've always been, even in our small molecule space, very focused on emerging markets. We've always been extremely competitive in that space. That's been our DNA. We continue to be focused on cost at all times. We come from that focus and legacy, so we don't see cost being a barrier to us within market share. I want to leave you with the thought that that's not the only factor determining success, as I've just kind of outlined. Okay. Yeah, that helps. My other question is, what is the core growth strategy that the senior management is looking? Where is the bottom line growth going to come from in the next two or three years? What arenas are you most hopeful about? On the biosimilars space, let me respond. I think one of the things that we've got is we've laid the platform very effectively for an insulins franchise, which is all set to grow in terms of us towards the end of the month, looking forward to the first interchangeable insulin ever to have been approved by the FDA. We're clearly looking forward to that decision. We are hopeful, and we're looking forward to that. We're looking at the insulins franchise making a difference. Certainly, we are also looking at a more complete oncology portfolio, with atezolizumab joining the bevacizumab and trastuzumab franchise. We're also looking at making a difference with patients and patient lives through our COVID portfolio, where we repurpose products from our pipeline, like itolizumab, which is really making a difference in saving patient lives in this time of crisis. We are looking at growing our footprint in emerging markets, where we've really had great success in different parts of the world, as Susheel talked about, with the portfolio that we've got. Most importantly, we are looking to bring the next wave of biosimilars to the fore as we continue to maintain our lead in terms of bringing several first biosimilars to the U.S. and to several other geographies. I would say there are several things that we have to look forward to, and we're really looking forward to that with a lot of optimism. I would just like to add to that by saying that across the Group, we see some very strong growth drivers. I think you've just heard from Siddharth that we have a large number of ANDAs in our pipeline. We are having a lot of capacity expansions that will go on stream. API business, as you know, is also a very profitable business for Biocon. If you saw the recent rankings of API producers in India, Biocon is right up there in the top 10. In fact, it's in the top 5. I think from that point of view, we are very committed to this business as well. Of course, research services has a lot of growth opportunities, which you also heard. I think overall, the Biocon group is in a very strong position to deliver on all fronts, whether it's biosimilars, which is now going to focus on market expansion across developed and emerging markets with its existing portfolio. It's looking at a portfolio expansion. It's looking at a strong focus on insulins. I think, in terms of our generics business, both in terms of APIs and formulations, we see a huge opportunity for growth in the coming years, and so also in the research services. I think overall, we are in a good place and we are going to be really focusing on operational excellence as well as market share in terms of all our products. Yeah. One last question from my side. Siddharth, what kind of CapEx do we foresee for fiscal 2022? I think we had said that overall CapEx spends were $100 million a year for next three years. We have had some delays in the beginning, in the first quarter. Overall, from a cash spend perspective, I expect around INR 500 crore to be the outlay in FY 2022, but it'll pick up in FY 2023. This is ex Syngene, right? I'm only talking about generics business. Maybe Susheel can give numbers for the biosimilars business. Another $ 100 million account, biologics. $ 100 million per year. Okay. Thank you. Thank you, Sheersh. The next question is from Masira Vasanwala from FSSA. Masira, please unmute your line. Yeah. Sorry about that. Hi, am I audible? Yes. Perfect. Thanks for taking my question. I think first, just wanted to understand, with Mr. Shaw leaving the board, are you thinking of adding somebody else to the board? What kind of profile are you looking for? Yes, we will look at adding someone to the board, and we will look at someone who comes from a digital technology background, is what our view is. Got it. Thanks. Just a second question was, I think, six months to a year ago, the target for the biosimilars business was about $1 billion in revenue. Understandably, some of that has been delayed with the CA [audio distortion]. Does that target still stand for you guys? The target is there, obviously, but it won't happen by FY 2022. I think we are looking at recalibrating that target date. Obviously the billion-dollar target is very much on the anvil for biosimilars. We hope that we will deliver it sooner than later. Got it. All right. That's all from me. Thank you. Thanks, Masira. The next question is from Mitesh Shah from ICICI Securities. Mitesh, please unmute your line. Sure. Can you hear me? Yes, we can. Yeah. Thanks for taking my question. I just have one hypothetical question. Post interchangeability, if a product is substitutable, can we see the similar kind of generic acceptance, like for the bios aspart in the insulin portfolio? I think Shreehas had mentioned that we have submitted our BLA for insulin aspart as an interchangeable insulin. I think going forward, all our insulin submissions will be made as interchangeable insulins. Specifically insulin glargine was filed under a very different regulatory route, and that's why we had to now request for an interchangeable label under a very different set of circumstances. Going forward, I think we will look at all insulins being submitted under the interchangeability. Yeah, madam, I got it. My question is mainly because post the interchangeability of the insulin glargine, can we expect the similar response like generic is having the interchangeability currently in the market, or the pure generic is accepted as a standard portfolio? Oh, you mean for biosimilars in general? Right. Post interchangeability. I thought you were talking about insulins. Right now the guidance given is for insulins because it's a simpler molecule from an identical compatibility point of view. When it comes to monoclonal antibodies, I think it'll take some time before the agency will take such decisions, is our belief. Okay. The loss of our sales this quarter because of the COVID-related disruption, can we see some of the recovery on the coming quarters? We certainly expect that to happen, because we expect normalcy to return this quarter, unless we see a very unexpected third wave. Other than that, I think since we have vaccinated all our employees, we believe that we are in a safe place to continue with our operations. We hope that things will resume over the coming quarters. Certainly, we expect things to improve. Let me put it that way. Got it. Thanks a lot. That's it from my end. Thank you, Mitesh. The next question is from Tarang Agarwal from Old Bridge Capital. Hello, team. Good morning. Couple of questions from my side. Just general questions. One, in a manufacturing/marketing partnerships that you have entered with your partners, such as yours and Viatris for your oncology platform or the diabetes platform in North America, if you could give us some sense on what proportion of value of the product is captured by the manufacturer and what is captured by the marketer. Without getting into specifics, just wanted to get a broad brush of incentives between the two collaborators. That's number one. The second question is, given the size of the biosimilars opportunity, wave 1, wave 2, wave 3, and maybe the wave 4, and the portfolio that you have, whether it's approved, under development. Would it therefore not make sense for you to maybe, in the medium to long term, actually be marketing these products on your own so as to be able to capture the entire value chain? Would that be the right way to look at it, or would partnerships be the right way to look at this in the long term, obviously not in the short term? Well, if you look at the way we have developed the biosimilars business, it is exactly along these lines. I think you will know that our partnership with Viatris was extremely valuable as we initiated our biosimilars development, because I think it was important to share the risk, the cost, and the opportunity, which I think both partners have benefited from and realized the value of entering into such a partnership. Where Biocon brought in a lot of R&D and manufacturing capabilities, and Viatris is obviously focusing on the commercial aspects of our partnership. Going forward, as you know, in terms of wave 2 and wave 3 programs, we have a partnership with Sandoz. We have also plans to have our own programs. We will have a combination of partnerships and programs going forward, depending on what the commercial models are going to look like. I don't think we want to completely focus on one or the other. I think it's important to have a very balanced view of what works in a partnership and could work better on your own. I think that's the way Biocon has gone about it. Going forward, we certainly want to have our own programs being marketed by us. Sure. On my first question, a broad brush in terms of value capture at the manufacturing level and at the marketing level? Let me put it this way. On the collaboration as a whole, we have a very equitable collaboration. I think that's as much as I can say. I cannot really break it down into the share. I would just say that it's a very equitable partnership. Okay. Thank you. Thanks, Tarang. We have another question from Sameer Baisiwala from Morgan Stanley. Sameer, please go ahead. Thank you for the follow-up. Just a couple of questions. One is on the mutual recognition group with MHRA U.K. for bevacizumab. What's the likelihood that FDA accepts this, and I guess are there any case precedents where FDA has done so? Sameer, I just want to correct you. The MHRA mutual recognition route has been actually pursued by the generics division. As far as the biosimilars or Biocon Biologics is concerned, they have looked at all avenues of trying to get our facility in Bangalore inspected, whether it's virtual, whether it's through mutual recognition, but we are yet to get a positive feedback from the agency. We at least appreciated that they gave us a positive feedback from Malaysia. India is still not something that we have visibility on. Okay, got it. Very clear. If I may also add, in general, there has been not a precedent on this. I think this guideline came out in May. After that, I know that companies have reached out to FDA to get the advantage of this new guideline. FDA has reached out to us and requested for information, which we have submitted, and we await that decision. At least I have not heard again in the Indian generic context if any other Indian company has received an approval using this mutual recognition with MHRA. Okay, great. Just on the interchangeability, I'm not so sure, maybe not a very right question, but would this be against the innovator brand, which is LANTUS, or also against the other brand, which is BASAGLAR? This is, Sameer, against the innovator brand always. This interchangeability is to LANTUS. Oh, I see. Got it. Thank you so much. Thank you, Sameer. The next question is from Vipul Shah. Hi, ma'am. Any update on oral insulin program and what is the progress on our biosimilar joint venture with Sandoz? Any update, ma'am? In terms of oral insulin, we are still in the process of completing the type 1 diabetes trial. Once that is known, we will take a view on the next path ahead for this program. As far as Sandoz is concerned, yes, the programs are under development, but they are still at early stage. Lastly, ma'am, what type of annual loss guidance we can expect for Bicara? Bicara is a startup. I would say that you will only get some readouts by the end of this year in terms of their first program that is in the clinic. Based on that, then the company plans to then raise venture funding. It also has some very exciting follow-on programs, which are preclinical. I think I'm sure you're aware, these kind of very innovative startups do need to basically focus on one or few programs that will then establish their capability and their platform technologies. Okay, ma'am. Thank you and all the best. Thank you. Thank you. That was the last question. We thank you all again for joining us today. If you have any additional questions, please feel free to reach out to our investor relations team. We look forward to see you again next quarter. Have a good day and stay safe. Thank you. Thank you. Thank you.