Ladies and gentlemen, good day, and welcome to the Cipla Q3 FY 2021 earnings call hosted by Kotak Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Kumar Gaurav from Kotak Securities Limited. Thank you, and over to you, sir. Good evening, everyone. On behalf of Kotak, I thank the Cipla management team for giving us the opportunity to host this earnings call. From Cipla, we have with us Mr. Umang Vohra, MD and Global CEO, Mr. Kedar Upadhye, Global CFO, and Mr. Naveen Bansal from the Investor Relations team. I now hand over the call to the management team for their opening remarks. Over to you, sir. A very warm welcome to Cipla's Q3 earnings call. I'm Naveen from the Investor Relations team at Cipla. Let me draw your attention to the fact that on this call, our discussion will include certain forward-looking statements, which are predictions, projections, or other estimates about future events. These estimates reflect management's current expectation of the future performance of the company. Please note that these estimates involve several risks and uncertainties, including the impact of COVID-19, that could cause our actual results to differ materially from what is expressed or implied. Cipla does not undertake any obligation to publicly update any forward-looking statement, whether as a result of new confirmations, future events, or otherwise. With that, I would like to request Kedar to take over, please. Thank you, Naveen. Good evening to all of you. I hope that all of you and your families are safe and well. We appreciate you joining us today for our third quarter earnings call for financial year 2021. I hope you have received the investor presentation that we have posted on our website. In the calendar year 2020 till now, while the uncertainties and challenges continue to evolve, we achieved several milestones across multiple strategic areas, such as servicing demand across global markets, continued portfolio expansion, along with resilience in our manufacturing and supply chain infrastructure. This continued during the December quarter as well with a strong and robust performance. We are pleased to report EBITDA margin of 24.8% for the quarter, which is the highest ever reported EBITDA for the company in the recent history. While on-ground field activity has largely resumed, we have been able to maintain a tight control on the cost base on account of our balanced mix of digital initiatives and face-to-face engagements. Optimization of our FY 2021 operating expenses continues to track far higher than the potential of INR 400 crore- INR 500 crore against our operating plan that we had referred to in our earlier quarterly interactions. Our free cash generation continues to be robust, enabling us to prepay our debt obligations. We repaid $137.5 million of InvaGen acquisition loan during this quarter, which was due several months later. We have also repaid working capital loans of INR 300 crore in India during this quarter. Our return on invested capital has seen expansion by about 900 basis points over the last nine months, driven by our focus on growth, margin expansion, coupled with cost discipline. While part of this expansion is attributable to some levers which may not always sustain fully in the coming year, this puts us on an accelerated journey towards achieving a sustainable range of 17%-20% over the long term, which is our aspiration. We are constantly simplifying our manufacturing network to unblock capacities and improve operational efficiency. In line with the same objective, we have divested our manufacturing facility located in Satara, India, with an agreement to ensure there is no disruption in supply. Furthering our commitment to carbon neutrality, which is one of our 2025 sustainability goals, we are pleased to share that we are the first pharmaceutical company in Maharashtra to commission a large open-access solar power plant of 30 MW capacity in partnership under a group captive scheme. This project is also a testament to our relentless commitment to use cleaner and renewable sources of energy and contributing towards a greener environment. Coming to the financial performance for the quarter. The EBITDA for the quarter includes the benefit of COVID product sales, tender supplies in our Global Access business, lenalidomide settlement, and cost optimization. Some of these may not sustain in the coming quarters. In line with sharp reduction in COVID-19 cases in India, which was anticipated, the contribution of COVID products in the overall mix is normalizing on a quarter-to-quarter basis. The recovery trend in core therapies has helped offset the impact on revenues and profitability. Overall income from operations for the quarter is INR 5,169 crores, which recorded a year-on-year growth of 18%, driven by focused execution and demand-led growth across our businesses. All the three businesses under our One-India, which is prescription, trade generics, and consumer health, have performed quite well for the quarter, with overall the strategy progressing well. The U.S. generics business continues to exhibit strong momentum supported by new launches, including albuterol. In other businesses such as SAGA, EM&AU, and API, the performance also was robust. Gross margin stood at 61% on a reported basis. There's a marginal decline of 93 basis points on a year-over-year, while on a quarter-over-quarter, it's flat. The year-over-year decline is attributed to sharp reduction in EM&AU's income and contribution of COVID-19 products having lower than company average gross margin in the overall mix. Total expenses, which include employee cost and other expenses, are at INR 1,944 crores, increased by margin by 2% on a sequential basis. Employee costs for the quarter are at INR 844 crores, increased by 2.9%, largely by increments. The other expenses, which include R&D, regulatory, quality, manufacturing, and sales promotion, are at INR 1,100 crores, increased marginally, and continue to be benefited by cost control and digital engagements. The R&D expenditures include depreciation worth INR 221 crores or 4.3% of the revenues. While the percentage to sales appears low, part of that is on account of healthy revenue growth accompanied by last year's ad spend in the base. We do not foresee much delay in our priority projects and expect the spends to increase as respiratory assets progress in the clinical trials. Overall reported EBITDA for the quarter was INR 1,281 crores or 24.8% of sales. Tax charge is at INR 269 crores, and the effective tax rate has been reduced to 26.3%. We are looking at a full-year ETR of 27.5%. Profit after tax stood at INR 748 crores or 14.5% of sales. As of 31st December 2020, our long-term debt stands at $138 million towards the U.S. acquisition and ZAR 720 million for the Mirren acquisition and other operational requirements at South Africa. We repaid working capital loan of INR 200 crores in India, as I mentioned. We also have loans of $41 million and ZAR 285 million, which act as natural hedges towards our receivables. Driven by relentless focus on cash generation, we continue to be a net cash positive company as on December-end. Outstanding derivatives as a hedge for receivables as of 31st December are $172 million and ZAR 705 million. We do also have hedged a certain portion of our forecasted export revenues, and the outstanding cash flow hedges are at $192 million and ZAR 403 million. Today, the board also announced approval for a scheme of arrangement that needs to be filed with multiple regulatory authorities including stock exchanges, SEBI, NCLT, and others. This simplifies our group structure with subsidiarization of our India-based U.S. undertaking to drive further growth and transfer of consumer business undertaking to Cipla Health Limited in line with our One India strategy. I would now like to invite Umang to present the business and operational performance. Thank you, Kedar. Before moving to business and operational updates, I would like to thank our employees for the resolve amidst the challenging and uncertain phases of the pandemic. We've delivered on our ethos of caring for life. I found inspiration in their acts of courage and commitment. I would like to start by sharing Cipla's continued commitment to offer a comprehensive portfolio of products for battling the pandemic. We have served more than four lakh severe COVID-19 patients with our portfolio depth of CIPREMI, ACTEMRA, and CIPLENZA. We've also supplied remdesivir to other emerging market countries, including South Africa. We have now enhanced our COVID-19 diagnostic franchise with Covi-G rapid antibody detection under partnership for emerging markets in Europe. We've also launched a rapid antigen detection test under partnership for the India market. While nearly a large portion of our workforce has resumed activity, we continue to leverage teleconsultations, virtual conferences, and remote detailing for physicians. We are implementing a hybrid return-to-office approach for all our associates and have offered the choice to work from anywhere between home and office with the most stringent protocols that ensures a safe workplace. With that, let me come to the strategic updates and operational performance for the quarter. Over the last five years, we have taken concrete initiatives to drive focused execution of our strategy, capital allocation, portfolio development, talent, and governance. The pandemic significantly accelerated several business and cost reimagination programs, translating into quarters of strong performance. I'm pleased to see this continued effort on cost management and productivity during the quarter, helping us drive revenue growth and EBITDA higher than expectations. In India, our One-India strategy continues to see seamless execution. We continue the momentum in our prescription business and have reported market-leading growth for the sixth consecutive quarter now, with prescription business grew at 25% on a year-on-year basis, led by contributions from the COVID portfolio, healthy traction in respiratory and chronic therapies, recovery in the hospital and acute businesses with the opening up of several OPDs. As per IQVIA October-December 2020 quarter, we continued to deliver market-leading growth in respiratory, where we were 14% versus the -4% in the market. Urology 8% versus the 7%, and derma 15% versus 8%. Cipla ranks number two with a market share of 8.1% in chronic therapies and grew by 6% in the chronic therapies. We are pleased to inform that Breathefree, Cipla's flagship respiratory initiative, was viewed by already nine crore people across India, reflecting the power of digital reach. The trade generics business grew by 7%, adjusted for brands transition to consumer health businesses. The business witnessed healthy seasonal demand across regions. Our consumer health business has now scaled up to INR 250 crores plus revenue in nine months, led by growth in organic as well as continued traction in our consumer brands, post-transfer from the trade generics business. Coming to the U.S. generics, the U.S. generics business grew by 6% to U.S. dollar $141 million in the quarter, supported by continued traction in the new launches, as well as growth in the institutional channel supporting the business. On a nine-month FY 2021 basis, the U.S. business continues to deliver robust profitability. We have consistently managed the supply of albuterol HFA in the U.S., and I'm pleased to inform you that we are ranked number one in the Proventil market with 84.6% share. The overall albuterol market as for the latest data, we are trending closer to 14% market share. This unlocking has enabled our U.S. respiratory franchise to cross $100 million in the nine months of fiscal year 2021. Our respiratory asset, generic Advair, is under active review and we are constantly engaging with the agency. We will have two complex assets in the respiratory space that we will move into clinical trials shortly. On the complex generics side, the settlement of generic REVLIMID improves the earnings visibility and enhances our U.S. product portfolio towards complex products in addition to our respiratory franchise. Coming to South Africa and emerging markets. While sales in South Africa private business were in line with last year for the quarter, our nine-month growth remains strong at 11% year-on-year in local currency terms. Cipla continues to maintain its third position with a market share of 7% and is growing faster than the market. In the OTC space, we grew at 6% where the market grew by 3%. We ranked third overall in the OTC market. Overall, the SAGA region grew by 6% in U.S. dollar terms, supported by solid performances in the Sub-Saharan and our tender access CGA business with 15% and 60% growth on a year-on-year basis. During this quarter, we also entered a strategic partnership with Alvogen of four oncology products, which will enhance our oncology presence over the long term. The emerging markets business grew by 46% on a year-on-year basis in U.S. dollar terms, driven by continued demand across all regions. We are pleased to share that Cipla is the largest Indian exporter to emerging markets as per the Intellimax for the period April to November. The European operations grew 28%, driven by consistent in-market performance and market share gains in some of our key direct-to-market businesses. Our flagship respiratory products continue to demand double-digit market share. Our API business grew by 18% on a year-on-year basis with seamless execution of order book and customer relationships. On the regulatory front, we are actively engaged with the agency and working towards the resolution of observations for our Goa plant. Turning now to our outlook. We are encouraged by the agility and responsiveness demonstrated by the business units across the Cipla geographies as one of our FY 2021 strategic priorities. We have firmly embraced our sustainability goals and will continue to update you on the progress of the journey. Our priorities for the next couple of quarters include maintaining market-beating growth in large branded and unbranded generic franchises of India, South Africa, and the consumer wellness franchise. Expanding our lung leadership footprint globally and maximizing value opportunity in the U.S. complex generics. Prioritizing key U.S. launches with focused execution. Scaling up businesses across branded and generic direct-to-market businesses of Europe and emerging markets through execution, organic and partner launches. Accelerating our digital transformation to capitalize opportunities across markets. Focusing on regulatory compliance across manufacturing locations and embracing best-in-class globally benchmarked ESG practices, and sustained expansion in ROIC over the long term. I know this has been a long day for most of you, and I would like to thank you for your attention and will request the moderator to open the session for Q&A. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants to ask a question, you may press star and one now. The first question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Thanks for the opportunity. Just on the U.S. that Advair is under review, I would like to understand the product launches in terms of on the complex generics side other than, or rather in addition to the market share gain for the albuterol over the next 12- 15 months. Kedar, you can answer that. Tushar, I think there are both these levers possible. One is albuterol and all other products, which are yet to see their full potential, so that's clearly a lever. Some of the other products, what we would do is, we would talk about them as the things comes to fruition. We would want to avoid guiding ahead in terms of specific products. I think the launch calendar is quite busy. Overall Cipla system, both in terms of commercial and the manufacturing and R&D, is all geared up to optimize. In our view, I think, the next 12- 18 months, I think could see one of the largest number of launches from our portfolio. You may not share the name of the products per se, but when we say complex, could this be in the range of $15 million-$20 million per product kind of the launches? Yeah. It could vary, it could be even higher than that. I think the complexity of a product is not always shaped by the value per se. Yes, I think if there is a barrier for entry, either by virtue of our filing position or litigation or anything else, I think you should expect that the revenue per product could be in the range that you said or in fact higher than that. Got it. Just secondly, in terms of capacity utilization for albuterol currently? Capacity is not an issue for albuterol. I think supplies and capacity is not an issue either on the device stocks or the inhaler manufacturing capacity. That is not an issue now. Even on the procurement side in terms of devices per se. No, we are well protected. I think our contracts and our arrangements are sufficient enough in terms of supply ability. That's not an issue. That's it. Thanks a lot for this. Thank you, Tushar. Thank you. The next question is from the line of Kunal from Emkay Global. Please go ahead. Thank you for taking my question and congratulations on the good set of numbers. The first question pertains to the savings in other expense. I think last quarter we guided for around INR 450 crore-INR 500 crore savings in this year, but I think we are tracking slightly on the higher side. If there is an update on that guidance. Secondly, I think last quarter you also suggested that you'll be providing a number in terms of that is sustainable going forward in the next year. If you could provide an update on that. Yeah. Kunal, we have crossed that annual guidance. I think like what we mentioned, we continue to be energized with a mix of offline and online model. I think the field will need to have face-to-face engagements. In fact, as we are speaking, a large part of our field, especially in India, is in the market actively trying to interact with the customers and healthcare practitioners. We also have very active digital engagement which is going on. Either that and overall cost optimization focus has allowed us to exceed the target that we had mentioned. In my view that promise and potential continues in quarter four and in fact next year. At the same level. I would hesitate to give you any number at this stage, but as I said, I think multiple levers for our reimagination projects have allowed us to benefit from that opportunity. The exact quantum of saving, either in quarter four or next year, could be based upon certain discretionary activities that we may want to undertake. Suffice to say that our attempt is to preserve a lot of these savings which has been pocketed this year. Okay. Thank you for that. The next question is on the two inhalation assets that you suggested that will be moving to clinics. Can you provide some color on what would be the spend on those assets? Would it be in line with what we have seen with Advair, or it would be moderately lower or relatively, if you can explain in terms of spend on each of these assets. It will be much lower. The spend compared to what we spent on Advair is much lower. These are trials which are not as extensive as the Advair trial. Okay. Thank you. Thank you. The next question is from the line of Neha Manpuria from JP Morgan. Please go ahead. Thank you for taking my question. Umang, in the last call, I think you had mentioned that the COVID contribution was roughly about INR 400 crores-INR 450 crores in first half. Has that number materially gone down? If you could give some color on what was the contribution in the third quarter, that's my first question. Neha, I think the ballpark number range is marginally lower than Q2, but it's broadly the same. I think we are seeing it go down further as the cases come down. It's lower than 5%, much lower than 5% this quarter, but it's probably going to be much lower going forward. Understood. In terms of the U.S. business, given that albuterol has ramped up, is there a reason why sale was flat quarter-on-quarter? Is it because we've reached our fair share and therefore we're just refilling rather than seeing incremental sales on albuterol? Was there any other reason for the flattish quarter-on-quarter sales in the U.S.? We've seen increased albuterol sales in line with the market share. I think the U.S. had a product recall accounting entry that was done For one of the products that probably led to the overall recognition being at $141 million. Is all the cost associated with that recall in the quarter, or could we see some spillover? It's all in the quarter. Understood. Thank you so much. Thank you. The next question is from the line of Vishal Manchanda from Nirmal Bang Institutional Equities. Please go ahead. Mr. Vishal Manchanda, your line is unmuted. Please go ahead with your question. Mr. Manchanda, I would request you to unmute yourself if muted from the handset. There's no response from the line of the current participant. The next question is from the line of Nithya Balasubramanian from Bernstein. Please go ahead. Thank you. Congratulations, Umang and Kedar, on another quarter. I just want a bit more clarity on the respiratory pipeline, specifically generic Advair you filed in April, May last year, which means if it's a 10-month review cycle, you should have been hearing back from the FDA, your TAD date now. Have an update from the FDA, is there a TAD date? Where are we on Advair? The second question is actually on the partnered asset. In different forums, we have heard that the partnered asset is filed, or it's still in clinical trial. If you can just throw a bit of clarity on what exactly is the status there. Nithya, the Advair TAD date is late quarter four, early quarter one, around that time period. I don't think there's ever going to be a first-pass approval of any asset of this kind. Realistically, like we guided in May, when we filed in May, we are looking for a two-year cycle on Advair. Right. We are looking forward to receiving correspondence from the FDA through a formal letter now. We've obviously had many questions that they've raised already on the program, but we are waiting for the formal letter to come, and I think that will happen sometime in quarter four, quarter one. Late quarter four, early quarter one. Which we will answer, and then obviously the FDA would review it for its merit again. The partnered asset is an asset that was already filed by the partner, and the partner was thereafter asked some further queries, including some queries around their clinical study. I think the partner is also responding to that. The partner conducted the clinical trial. It was developed by Cipla, though the partner actually was the lead on the clinical trial? That is correct. Yes. Is there a TAD date on that? Sorry, not a TAD date. I said a response date. When are you likely to respond back, and any visibility on that? Because it's a partnered asset, Nithya, we can't provide too much color. I think the response should be going shortly, if it has not already gone. Understood. The other two assets, which are likely to enter the phase III clinical trials now, does it then mean that the R&D spend this quarter seemed a little low than what you would normally expect, given that the pipeline is maturing? Is this likely to inch up materially compared to where we are today now that we have two more assets in phase III? I don't know if I would call it materially. Yes, I think the R&D spend will increase. Advair was not the right comparator, I think this will be fairly meaningfully less than Advair. I think you're right, it will inch up as the trials begin. Any guidance on what it's likely to look like in FY 2022, the R&D number? I'm not sure that we would be higher than the range of 6% or 6.5%. I don't see us being higher than that. We've been giving this guidance for a while, so I don't think we'll be higher than that in any case. All right. Thank you so much, Umang. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. Hi. Thanks for taking the question. Umang, on albuterol, the market is now getting settled with yourself, two, a few there, and Perrigo looking to come back. Now, on a sustainable basis with this competitive landscape, do you see the pricing sort of settling down below $5, $6 per unit? Or this is where, eventually, on a long-term, this market settles at a broader market level? I can't comment on that. I can probably just say that we believe that it's difficult to see who enters and how they enter or re-enter. That is very difficult to do that. I just know one thing, that from a cost perspective, we believe we have the lowest cost in the market, therefore, we will defend our share responsibly and sustainably. Oh, thanks. Have you seen in the recent weeks or months any change in the pricing sort of dynamics in the market? No, not in the recent quarter. Okay, thanks. Secondly, in the past you've guided to a typical complex launch per quarter sort of a run rate for our U.S. launches. When you look through the next year and a half, two years, how should we look at that dynamic now? Yeah, I think starting quarter one, we should be probably seeing the complex launches starting again. Quarter one of next financial year, I think that's when they would start. Okay. Thanks and best of luck. Thank you. Thank you. The next question is from the line of Girish Bakhru from Bank of America. Please go ahead. Hi. Thanks for taking my question. Great set of results. Umang, just on this INR 100 billion franchise, which you said respiratory for nine months. Just correct me if I'm wrong, you're including albuterol and budesonide or anything else also? Yeah, I think those should be included. Kedar, do you have any? Yeah, I think it would include all, but Kedar, just confirm. Yeah, it could include all, but yeah, predominant share would be by these. Predominant. Okay, when you look at let's say run rate, 25% of the business now respiratory, U.S. business margins, would have it come close to the company margins now? Yeah. Any color? Yeah. The fully loaded EBITDA of U.S. is now equal to, slightly lesser, but in the same zone as the company level margins now. Great. That's helpful. Like you shared, TAD on Advair, possible to give update on where is ABRAXANE? I don't think we're commenting on, Girish, on each specific asset, but could you specify what you would like to know? Do you have a TAD and given that there are settlements in this product, do you still see that for you potentially this could be a fiscal 2023 launch? I can't comment on launch timing because I think that is confidential. We see this as an attractive product, limited by technology. I think while settlements are there, it's also a pretty challenging product to manufacture. Right. Just lastly, again, I'm not sure how much you can speak here on REVLIMID. If you could throw some more color on if there is any color you can give on how big this product could be from March 2022. I think, Kedar, you want to take that? Yeah. No. Girish, I think firstly, we are sort of limited by our agreement with Celgene on how much to talk, but I think this is going to be quite material. This is, as you know, outside the biosimilars, this is the largest product on the chemistry side. Whatever is the percentage share that we are allowed to seek, this is going to be quite sizable. Right. You would believe others would also likely settle in this product, right? We don't know. Tough to say yes or no, how many more, but difficult to forecast, Girish. All right. Thanks. That's my question. Thank you. The next question is from the line of Ashish Thavkar from Motilal Oswal Asset Management. Please go ahead. Yeah, thanks for the opportunity. On this REVLIMID, obviously, I have two questions on this. Whether we are backward integrated is first, and second one is, what are the advantages given the fact that we now get to share the innovators REMS program? Probably this is the most complex REMS program, Ashish. If that was our own program, setting it up, et cetera, would've been highly complicated, time-consuming, costly. I think the ability to share the innovators REMS program allows us several advantages. That's why I think this, in our view, this is quite unique settlement. That was, I think the answer to your second question. The answer to the first question is yes. Okay, great. Again, on this One-India strategy, we have always mentioned that we are looking to extract synergies between the consumer health, the trade generics, and prescription business. If you could help us understand what kind of synergies would accrue at the EBITDA level, or at least in terms of how much percentage point more can we extract? The synergies are in several forms. Firstly, under distribution there could be some benefit. The most important is what we are trying to do now in terms of consumerizing some of the stronger brands in the trade generics itself, which have actually a very high customer recall. The potential to add value through consumerization is quite enormous through the Cipla Health, the consumer health business. I would say in terms of stickiness to revenues, in terms of pricing, in terms of margin expansion, and in terms of establishing a strong consumer brand, that's the value accretion. Some of that could be in P&L, some of that could be in the valuation in terms of the long-term value of a consumer brand. I wouldn't put any percentage at this point of time, but this is Out of the recently articulated goals, if you have noticed in one of the conferences recently, I think this is one of our biggest objectives. To take the global consumer business in India and South Africa from the current, let's say, around 5%-7% of revenues to beyond 12% of revenues. I would believe that in cash flows, EBITDA, and valuation, I think this could be a great lever, plus an opportunity to get into the consumer healthcare meaningfully. Yeah. This is helpful. Just one more question on this, albuterol. Almost 50% of the market is controlled by the AGs. Now we and Lupin being the major players in the market, is there more headroom for us to take more market share? No, I think it's more dependent on the shares, et cetera, and how the market reacts. Obviously, every company will want to increase its own share, whether it's us or it is some of the other competitors. I think, and the market offers that opportunity. Okay. This is very helpful. Thank you so much. Thank you. The next question is from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead. Yeah, thanks. Good evening, everyone. Great quarter. First question on albuterol. A few months in the market, do you think there's fair bit of porosity between the three different brands, or more if we could do largest brands? Do you think generic is a bit tied up with the respective brands? I think it's a mix of both, Sameer. I think by and large, I think it's a mix of two. There is a tie to the respective, but also there is some amount of porosity we've seen in the market. You being a generic provider, does it limit your ability to increase market share beyond a certain point, therefore? Yeah, you could say that. When we started in the market, the Proventil share was some amount, and today we see that the amount is higher clearly today. We think that there is the potential to increase, and I think we are happy with the marginal increase happening. As I mentioned in the last call, we want to make a sustainable product here, and a product that is backed with good quality in manufacturing. Even if it's going to creep up from here slowly, we are fine with that. I do think there is room to grow, if that was your question. Exactly. Thanks, Umang, for that. Just on REVLIMID, Umang, it confuses me or rather surprises me a bit, that here is one of the largest product. Four players have settled, there are six more in the queue. From the look of it, at least half of them, if not more, will settle. Everyone gets a 5, 10% piece, volume share piece. How does it qualify from a regulatory standpoint, from FTC standpoint? That's question number one. Second, if there are indeed four goes to seven, eight settlers, what happens to pricing? Is pricing protected over there or would market dynamics in play? Just your thoughts on this. I can't comment on the pricing piece, unfortunately, Sameer, because we really don't know. We've never had a situation like this. It's a pretty benchmark sort of a scenario that's playing out in REVLIMID. I can't comment on what happens in the market finally. Obviously the fact that there are multiple players, but no multiple player has enough to take large shares of the market for a few years, I think, lends us to believe that the market may behave responsibly and more sustainably. I think that's the thought we have. We could be completely wrong on this, because we've never seen something like this. As regards to your first query, I can't comment, but I think most of these get clearance from various council and NK. Okay, great. Yeah. Thanks. One final, if I may. A great move over last, what, four to six quarters from sub 20% EBITDA margins to now almost mid 25. Would you want to consolidate around these levels for some time, or is this a base camp to move up higher? Your thoughts on this, please. No, I'm not sure. Sameer, I think there are two sets of discussions we're having within the organization also. It's a great question. I don't want our EBITDA margins to compromise our growth. We're in no tearing hurry to push this higher. In fact, we think because of some normalcy returning, because of the stickiness of maybe some of the digital initiatives we planned have probably not stick. I think it won't be uncommon to see the EBITDA probably seep down lower a bit, right? I'm not sure we are in a hurry to push this EBITDA higher. We actually want to push our top line higher while maintaining this responsible EBITDA that we think we should have. Okay, great, Umang. This is very helpful. Thank you. That's all from my side. Thank you. Thank you. The next question is from the line of Vishal Manchanda from Nirmal Bang Institutional Equities. Please go ahead. Thanks for the opportunity. Could you share how many respiratory inhaler filings would you have with the U.S. FDA? Vishal, we'll come back to you. Okay. Second, on your QR filing, there's a litigation there. Any sense on how long the litigation can take? Typically, we avoid commenting on under litigation products, Vishal. Whenever there is a milestone reached there, I think we will communicate appropriately. Okay. Just one, do you have any exclusive FTF launches lined up in FY 2022? Can't comment at this stage, Vishal. Okay. Thank you. Yeah. Thank you. Thank you. The next question is from the line of Sayantan Maji from Credit Suisse. Please go ahead. Hi, this is Anubhav here. Umang, actually a couple of clarity from the medium-term guidance given. One is on the U.S.A. addition of $300 million-$500 million over the next three to four years. Just query here was that you include REVLIMID sales here, and if you do, because it's a separate product and you will have a good amount of guidance about it, where do you include it, in the lower band or the higher band? Sorry, I had problems hearing you. Could you please repeat it? Sorry, I'll be louder. Question was on the guidance that you've given on the U.S. sales. Yes. Are you able to hear me now? Yes, I can. Yes, please go ahead. When you mentioned that your U.S. sales will increase by $300 million-$500 million over the next three to four years, my question was, do you include REVLIMID revenue there? If you do, because you have a fair amount of certainty on the market share, which has been promised or settled there, do you include it in the lower end of the guidance there or the upper end? I think REVLIMID is included, for sure. I think the beauty of the range is also one that takes into account product delays and launches, because we have quite a few complex products in the pipeline. I think, as long as we come in the range, I think we would have done quite well. I don't think I'd be disappointed if it's not $500, but it's $350 or $400. We'll try and get the max we can, but that's the range that we have provided. Sure. That's helpful. Secondly, one more clarity on the other guidance that is given, which is ROIC of 17%-20% over medium term. That roughly amounts to the same kind of margins that we're making right now. I know current margins are elevated to an extent of some costs are not normalized. Over the next three-five years, when we're talking about REVLIMID included, Advair coming in, et cetera, we're largely talking about the same margins at that time as well. Kedar, you want to take that? No, I was just saying the capital base, Anubhav, might be a bit higher. While a large-scale acquisition is not factored in this, there could be low to medium scale acquisitions. You are right, I think we have an opportunity to do more than what we have said. For the time being, since the sustainable ROIC till last year was tracking at 12-13, we felt it appropriate as a first step to target 17, 20. Yes, there is an opportunity to do more on that goal. Sure. Having said that, Anubhav, I think one of the things which I would like to just mention. I think the potential unlock here is the ability to execute on that, both from a supply and manufacturing and do that sustainably. I think, while we could do better, I also want to just caution that it's not like any other regular product which can pick up share immediately in the market or for that matter, be easy to deliver. These are difficult products to do. That's the reason that we also want to be cautious about what we're giving out. Thank you. That's very helpful. If you allow, I have one more question, and I can join back the queue. Please go ahead, Anubhav. Please go ahead. Okay. Just one question on albuterol. I was just reading the market. The brands have a market share right now combined together 18%. Would it be fair to think like as long as the brand market share past experience suggests that brands typically retain market share once multiple generics enter about somewhere between high single digits, thereabout. That is easy kill for the generic to take more market share, but after that, taking market share from other generic or Authorized Generic will be difficult, and that would be normalization of market share? Yeah, I think right now the market is mixed, you're right. With the brand holding share, the AGs holding share, and then the two generic players and one generic player who possibly will reenter at some point in the future. Yeah, I think there is scope for the generic share of the market to go up, definitely. I think there is scope between for that to happen. I'm not sure that I can guide to a number, but I think we clearly see potential for this market for generic players to grow. Okay. Thank you. Thank you. The next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead. Yeah, thanks for the opportunity. Pardon the background noise. First one on your scheme of arrangement into Cipla BioTec, you are using the term for U.S. subsidiary. How should we read that? The other one is consumer business, and more so, what's the rationale of doing it, turning into a wholly owned subsidiary? Yeah. Prakash, as we said, the announcement is just an initial approval by the board for us to file the scheme with multiple authorities. I think there's a long time between the procedures that we will need to navigate. We have to approach shareholders also. That's the first one, and I think, like what we said, this allows us to simplify our structure, and this allows us to align the resources in the Indian facilities with the needs of the market. I think the trade generics to CHL consumer undertaking transfer is, we have referred to it. This sort of cements what we have been doing. The subsidization of the assets in India, which are focused on the U.S. business, that also, I think, in terms of bringing efficiency, bringing a structure which is more efficient, that enables us to operate with a lot of focus. That's the rationale and objective. In future, this also opens up multiple strategic options, but nothing is on table now, at this stage. The strategic option, you mean funding or expansion through funding? Possible, yes. Basically growth options, because I think we are quite excited with the launch momentum in the next 12-18 months and 24 months. While that goes on, I think this is just an enabling structure that we are creating. As I said, at this stage, there is nothing on the cards. The term "BioTec" use is. This is a company within the group. It's 100% wholly owned subsidiary within the group. We should not read into turning into a biotech investment. No, not at all. This is just a vehicle, which is our 100% wholly owned subsidiary, and we have been advised that that's the appropriate entity to use. Okay, got it. Fair enough. Secondly, on the U.S. business, I'm sorry I joined the call a little late, multiple calls today. U.S. QOQ is still flattish, and your presentation says that market share has picked up in albuterol. Has the base business eroded significantly? How should we read into it? Not really, Prakash. We answered that question. I think we are in the zone in which we wanted to. The increase in market share appropriately reflects in the sales of albuterol that we book in the financials. I think there's a recall of about INR 2 million-INR 3 million that we had to take, and if you adjust for that, I think there is appropriate quarter-on-quarter growth. Okay, base wouldn't have eroded significantly. Is that normal? Not really. Okay, perfect. I'm sure you answered this also. India ex-COVID, India is phenomenal growth, right? There's a base business, there's COVID-related sales. If you eliminate or X off COVID-related sales would be Have you answered that already? I'm sorry about that. I think it's about 6%-7%. The growth in non-COVID portion is about 6%-7%, and we are happy to see that many therapies outside COVID have seen growth coming back now. Okay, perfect. Very quick ones, EM phenomenal growth again. Understand it's been for a couple of quarters. How do we see this forward and what is leading to this growth? No, I think the sequential run rate, Prakash, should continue. I think good thing for us is this is quite broad-based between Middle East, LatAm, Asia, Pacific, Australia, some of the countries like Sri Lanka, Nepal, et cetera, and many of our B2B arrangements. I think this is pretty broad-based, and it should continue sequentially. We'll be able to better forecast the YOY growth next year around May, but I think the sequential run rate should continue. What I'm trying to understand is could it be related to the COVID-related sales also because these countries would highly depend on India, larger players like you? Not really. I think our basket for emerging markets at this stage does not include too many COVID medicines. This is the base portfolio that you're selling? Correct. Wow. Last one, with your permission. On the R&D side, you've done the big filings. How do you see the R&D going ahead for the year 2022, 2023? No, we do have priority projects. As you know, we have brought a lot of focus now in the portfolio under development, and that is going ahead well. In terms of the% to revenue R&D spend, I think that could hover. I think current quarter is low, and we have always said that it could marginally inch up. With keeping the margins at similar levels with growth being the priority is what you meant? That's true. Perfect. That helps. Thank you, and all the best. Thank you, Prakash. Thank you. The next question is from the line of Charulata Gaidhani from the Dalal & Broacha. Please go ahead. Charulata Gaidhani, your line is unmuted. Please go ahead with your question. Hello. Yeah, I have two questions. One about albuterol. What is the current market share, and where do you expect to reach in a year or two? Yeah, Charulata, within the overall albuterol market, comprising all brands and all AGs and all generics, I think we are beyond 12 or so. We do expect a gradual ramp-up from here onwards. Okay. Why is the ramp-up gradual in albuterol? It's in line with the prescription pattern. It could be higher as well. I think we are happy with where we are. You have seen a sharp increase in the last few months. There is always an opportunity. Okay. Second, how do you plan to increase in Consumer Health? Consumer Health currently is around INR 300 crores. Where do you see it going over the next two years? Yeah. See, globally, we have that in India, the consumer health business is in India and South Africa, and I think there are several growth levers which excite us as we look forward for the next five years journey. That's what we said that, potentially, the opportunity is to do more than 12% of our global revenues in the next three-five years. That's based on, Charulata, multiple levers, like what we have done this quarter in terms of transferring certain channel brands from the trade generics business, organic growth in several therapies where we are present currently, and possibly inorganic growth. Okay. Right. Thank you very much, and congrats for the good results. Thank you. Thank you. The next question is from the line of Sameer Shah from ValueQuest. Please go ahead. Hello. Yeah, sir, I just wanted to check on what would be the extraordinaries during this quarter. I mean, this REVLIMID settlement amount, et cetera, whatever is non-sustainable. If we remove that, then what would be the margin? No, it would still be quite decent, Sameer. The reason for that is both. I think robust performance across geographies with very good product mix and cost control. Right. REVLIMID settlement amount would be high, right? That's about INR 50 crores. That's booked in other income line. Even if you ignore that, Sameer, I think we have still done well. All right. Thank you. Thank you. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. On the emerging markets, in the past, you've talked about using biosimilars as a key sort of- Nitin, we can't hear you. Hello. Sir, I request you to come closer to the phone and speak, sir. Over the last few quarters, how has the experience been in terms of pickup and biosimilars across these markets, and is there any rethink on how you're looking at that space as an opportunity? No, we could only hear about biosimilars and emerging markets, Nitin. What's the exact question, please? Something on the biosimilar bit in the emerging markets. We've talked about how has the experience been in terms of our scale-up in this space using the out-licensing strategy that you've been using for growing biosimilars business in the emerging markets for us? Nitin, we have signed multiple high-value in-licensing arrangements at quite decent margins, in line with our thresholds for the margin. I think many of these are lined up for monetization from the year after next. Some of them next year, largely the year after next. All going well till now in terms of the milestones towards launch, in terms of filing approval, interactions with regulatory authorities, market study, customer feedback, all going well. Kedar, when you guys looking at the markets, how competitive do you see these products opportunities are gonna be? Is this gonna be a limited competition opportunity across markets, or it's gonna be a reasonably competitive market where your distribution presence is gonna make all the difference from different players? No, we think that they will be fairly limited. We don't expect multiple entry. We do think they'll be fairly limited, and overall decent pricing. As you rightly said, I think our ground presence allows us to target good market share. I think per country or per product, the value may not be as high, but as we cumulate it towards the entire emerging market, including South Africa, in our view, this is going to be quite sizable business from this year and the year after next. That's helpful. Second, lastly, Kedar, on the API business, what's been our thought process in terms of the PLI scheme? Do we see that as an opportunity? Have we applied for certain products on the scheme? It is an opportunity, Nitin. I think we are sort of working with the government and the regulators to ensure that the product lines in which we are present are included in the scheme. In the current schemes which have been announced and awards have been made, as you would notice, we are not present. We do hope that in future, we can participate and join the scheme. Thanks for that. Best of luck. Thank you. The next question is from the line of Ritesh Rathod from Nippon India. Please go ahead. Yeah. Hi, everyone. Can you help us understand your outlook for next quarter across businesses, Q4? Why I'm asking this, because of the seasonality. At the same time, India may not see that kind of COVID. At the same time, in U.S., you may see full quarter reflection of the albuterol higher market share. Yeah. Some of those will play out, Ritesh. Region by region, I think a variety of factors do play out. India especially, I think you're right. I think there is a reverse seasonality. That's part of our operating plan. I think a little bit of a reverse seasonality playing in India business. We refer to the COVID medicines being linked to a trajectory where the cases are low now, significantly low. That will play out. To some extent, I think a part of our Global Access revenues, by virtue of higher import clearances by our customers, are a bit higher this quarter. I think those are the factors which will play out. All this is known and all this is part of our operating plan. In case of U.S., would the quarter end market share, that would get fully reflected in next quarter's numbers? We do hope so. Yes, we hope that, most likely that will happen. Correct. On net-net basis, it will be flattish kind of or positive bias? No, I would tend to think that there is a positive bias. Yeah. Thank you. That's from my side. Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to the management for closing comments. Thank you, Mallika. Thank you everyone for staying with us on this call today. In case you have any follow-on questions, you can always reach out to us. Thank you so much. Have a good evening ahead. Thank you. On behalf of Kotak Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.