Ladies and gentlemen, good day and welcome to the Cipla Q4 FY 2021 earnings conference 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 touch-tone phone. I would now like to 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 their four Q FY 2021 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 the opening remarks. Over to you, Naveen. Thank you, Gaurav. Good evening, and a very warm welcome to last quarter four and full year FY 2021 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 information, 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 fourth quarter earnings call for financial year 2021. I hope you have received the investor presentation that we have posted on our website. Cipla continues to be at the forefront in the global fight against the pandemic. I would like to express my sincere gratitude to healthcare and other frontline workers, doctors, nurses, compounders, as well as our employees who have been working tirelessly to serve the patients across the country and globe. In this testing time, the pharma industry, with the strong support from the central and state governments, have been working to ensure continuous supply of life-saving medicines. While the uncertainties and challenges related to the pandemic are evolving, we stay committed to serving demand across our markets, monitoring critical filings, continued portfolio expansion, along with the resilience in our manufacturing, supply chain, and distribution. Our business and cost remediation initiatives, supply consistency, and rigor on the operational excellence have helped us drive a healthy performance for the quarter and the full year. Our profitability improvement journey has sustained across all the quarters during the year, and you may have noticed that in the quarter four also, it saw 240 basis point year-on-year expansion in the EBITDA margins. This is despite the fact that quarter four is a seasonally weak quarter and COVID cases continued to decline sequentially for most part of the quarter. We have also moved our historical baseline of 16%-19% of EBITDA to over 22% this year, I believe this is quite structural, sustained, and will improve from here on. Our free cash flow generation and operating efficiency helped us become a late cash company, we improved our pre-tax return on invested capital metric by over 750 basis points. We are noticing strong tailwind across our India portfolio, which is likely to play out in quarter one and onwards. These include the surging demand for COVID drugs, including antiviral, Expected pickup in the antibody cocktail, among others, once we launch. We are also noticing strong demand triggers for our core respiratory products, including budesonide, which is now a part of the ICMR protocol. This is quite a distinct trend as compared to what we saw in fiscal 2021 and should help drive core portfolio growth in FY 2022. For the quarter, overall income from operations stands at INR 4,606 crores and recorded a year-over-year growth of 5%, driven by focused execution that I referred earlier. Full year EBITDA growth is 12%. For the quarter, our One India business, which includes prescription, trade generics, and consumer health portfolios, performed in line with our expectations. Our U.S. generic co-promotion sales are at $138 million. Gross margin after material costs stood at about 60%. There is an approximately 200 basis point impact due to charge on the material costs that pertains to some of the inventories of products which we built during the COVID period but couldn't liquidate. It also includes certain overhead charge-offs and a one-time sales force adjustment for Zelenko. Total expenses, which include employee costs and other expenses, stood at INR 1,988 crore, increased by 2% on a sequential basis. Employee costs for the quarter stood at INR 815 crore. It declined by 4% over the sequential quarter. Other expenses, which include R&D, regulatory, quality, manufacturing, and sales promotion, are at INR 1,143 crore, which increased by 7% sequentially. Total R&D investment is about INR 277 crore. As a percentage of revenue, the spends will moderate in line with the expected surge in revenue. Absolute trajectory of the spends and the filings, it remains intact, with assets progressing in the trials and other portfolio development efforts continuing. Reported EBITDA was at INR 796 crore or 17.3% of sales. Tax charge for the quarter is INR 128 crore. The ETR is lower at 24% or so. The full year ETR was 27%. Profit after tax is at INR 413 crore or 9% of sales. As of 31st March 2021, our long-term debt stands at $138 million towards the InvaGen acquisition and ZAR 720 million for operational requirements at Medpro in South Africa. We also have working capital loans of a $49 million and ZAR 75 million, which acts as natural hedges towards our receivables. Driven by relentless focus on the cash generation and rigor on cost discipline during the quarter and the year, we continue to be a net cash positive company as of March end. Outstanding derivatives as the hedge for receivables as of March 21st are $179 million and ZAR 634 million. Apart from additional loans in Australian dollar and global GBP. We have also hedged a certain portion of our forecasted export revenues and outstanding cash flow hedges as of 31st March are $252 million and ZAR 654 million. To close, we saw strong execution across our key priorities in FY 2021, and that included continued growth across our markets, structural expansion in our EBITDA trajectory by over 350 basis points to over 22%, and expansion in our pre-tax return on invested capital by more than 750 basis points. I would now like to request Umang Vohra to present the business and operational performance. Thank you. Thank you, Kedar. Can you confirm, Kedar, if you can hear me well? Yes, Umang Vohra. Sounds good. Okay, very good. Thank you. Firstly, I would like to wish all of you and your families to continue to stay safe and well. At Cipla, we continue to support the nation in its fight against the pandemic with our portfolio of COVID products. We salute the grit and sacrifice of our healthcare heroes as well as our employees who have been tirelessly working to ensure continuity of service to our patients. Our topmost priority is in supporting the government's efforts on increasing availability of the COVID and other life-saving products through strategic inventory build-up and ensuring continuity of operations at our plants. We have enhanced safety protocols across our network to ensure safe operating environment for our colleagues, including a 24/7 ambulance, consultations, and quarantine facilities. Our teams have been working relentlessly to ensure supply continuity, with remdesivir monthly supplies now approaching almost five times what we had done during the previous peak of the pandemic. We have also expanded our COVID portfolio with novel formulations in partnership with MSD for molnupiravir, Roche for the antibody cocktail, and Eli Lilly for baricitinib. We are proud to bring these products to the country and are working on the logistics to ensure availability in the coming weeks and months. Let me come to the strategic updates and the operational performance. I am pleased to see the sustained expansion in our EBITDA margins through this year, including in quarter four, now trending at over 22%. I believe this trajectory will improve and grow henceforth. In India, our One India strategy continues to see seamless execution, with One India business growing 15% for the year and 4% for the quarter. This is, I think, the seventh or eighth time that we are beating market growth. Seventh or eighth quarter we're beating market growth. The prescription business grew 14% for the full year. As per IQVIA MAT March 21st, we continued to deliver market-leading growth in our respiratory, where we grew 4% versus a market decline of eight u rology, where we grew 7% versus a market of 4%. Derma at 8% versus a market at 6%. Cipla consistently ranked number two with a market share of 8.1% in chronic therapies and grew by 12% versus market growth of 8% for MAT March 21st. We are observing a strong demand across the COVID portfolio, which will reflect in our Q1 numbers. We expect these products which are used for the COVID effort to also see strong traction in the coming months. Apart from the COVID portfolio, we are also noticing strong volume trends across our acute and respiratory portfolio, including budesonide. Our teams are working to ensure serviceability across these categories. Our trade generics business continued to do well with a full-year growth of 18%, adjusted for transfers to the consumer business. We are seeing demand tailwinds emerging in this part of the business as well. Our consumer health business has now scaled up to over INR 360 crores in revenue, led by growth in the organic anchor brands, as well as the continued traction in the transferred consumer brands. In line with the One India strategy, Cipladine brand was transferred to CHL from the trade generics business during the quarter. This makes the total number of brands transferred in the last year to three and six till date. Our participation in the industry digital initiatives through the investment in ABCD Technologies and subsequently by ABCD and PharmEasy will also add to the digital channel transformation in India. In the U.S. generics and lung leadership space, the U.S. generic core formulation sales for the quarter were $138 million, and factors the one-time shelf stock adjustment for albuterol based on the competitor entry. Full-year revenue stands at $551. Reflecting on FY 2021, I am pleased to see the unlocking of our SP portfolio with launch and ramp-up of albuterol, which is ranked number one with a TRx market share of 87% of the preventer market, 16.5% of the generic market, and 13.2% of the overall market as per IQVIA week ending 23rd April 2021. Our focus continues on our complex launch engine, along with driving growth in the institutional channel. I'm pleased to report that for the full year, the overall profitability of the U.S. generics business is very close to company-level profitability. Our Advair file is under active review with the FDA. We are working on responding to the queries and will continue to share updates. In line with the strategy for the U.S. markets, the non-respiratory portfolio during the year also includes two filed partner peptide injectables, one of which is an NDA application. Coming to our South Africa and Global Access business, which includes South Africa, sub-Saharan Africa, and our particular Global Access. Our South African private business recorded a strong 13% growth over last year for the quarter in local currency. We continue to maintain a third position with a market share of 7% in the OTC segment as well as in the overall market as per IQVIA MAT March 21st. In markets outside South Africa, the sub-Saharan business grew by 10% in dollar terms, and the decline in the CGA business performance was in line with expectations as higher orders were serviced in the last quarter. In emerging markets, happy to see the business scaling up to $250 million, growing almost 21% during the year and 4% for the quarter, driven by healthy demand across all regions. During the quarter, we also expanded our partnership with Alvotech biosimilar in the strategic market of Australia across immunology, osteoporosis, oncology, and ophthalmology. The European business grew 17% on a full year basis and 7% for the quarter, driven by strong in-market performance in GBPM and market share expansion in our flagship respiratory portfolio. Turning now to our outlook. We have established a new threshold for our operating profitability in FY 2021, with margins trending over 22% now. Our focus and efforts will be to continue to sustain this in the coming period. On the business side, we see commercial tailwinds across our business, which we believe are significantly higher than some of the risks in certain parts. We continue to stay energized with these opportunities and are working to ensure we'll be able to service patient demand across our markets. Our long-term priorities remain intact, including leveraging the emerging opportunities across our markets and maintaining market-leading growth in branded and unbranded generic franchises of India, South Africa, and also augmenting a consumer-led franchise in both these markets. Ramping up the COVID portfolio supply to increase availability and maximize patient reach. Continued high vigil on cost and cash management amid the uncertain trajectory of the pandemic. Expanding young leadership globally by maximizing the value opportunity in the U.S. complex generics space. Focus on regulatory compliance across manufacturing locations and embracing best-in-class globally benchmarked ESG practices. Accelerating our digital transformation to capitalize opportunities and growth opportunities across markets. Also building a sustainable talent pipeline for the company's future plans over the next three to five years. 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. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Saion Mukherjee from Nomura. Please go ahead. Yeah. Hi, good evening, and compliments to Team Cipla for efforts during the pandemic. Thank you very much for that. My first question is around the India business. Kedar, if you can break it up, please, for FY 2021, between the key COVID-related product, how much they contributed, trade generics, the normal prescription business, and the consumer business, that would be helpful. The second question on India is, you mentioned about five times increase in remdesivir supplies from last year peak. What's the outlook on supplies for antibody cocktail and tocilizumab for this year, and how does that compare to last year's peak? Yeah. Saion, I'll take your first question with respect to the split. See, the total COVID medicine sales for the full year at a company level is around 4% or so. It's still less than 5% on a full year basis. In quarter three, it's less than 3% or so. I think you should work with some of those numbers. The split of prescription generics and CHL, we don't want to go into too much details, generics continues to be less than 20% of the overall One India revenue that we have declared. The total One India is around INR 7,700 crores, the trade generic is less than 20% of that. It gets a little tricky because as you know, we have launched an active program to transition consumer brands to the CHL business. I think the best would be to look at the whole thing in totality going forward, because the base would be different, Saion. You can roughly work with those numbers. Overall COVID medicines for the full year is between 4%-5% at company level, split largely into India but. Some into EMEA and South Africa and other geographies as well. The split of trade generic is less than 20% of total volume. Okay. Yeah, on the supplies of antibody cocktail and tocilizumab. Actually, the cocktail deal has been signed, as you know, we have announced it. We feel quite good about it. I think the reports are pretty strong. It's a great weapon in the fight against COVID. All these details, Saion, would be more comfortable to announce once the actual launch happens. The launch, by the way, is not far away from today. I think with respect to capacity, number of orders, pricing, all that we'll be comfortable to share once the launch happens. Okay. My second question would be on the U.S. market. You had ramped up albuterol. How should we think about FY 2022 now, both with respect to albuterol and new launches, if you can provide some color or growth prospects for FY 2022, please? Okay. Sure. Umang, may I request you to take this question? Yeah. I think, Saion, where we are in terms of albuterol, we still see some expansion in the market going forward. I think we adjusted quarter four in response to a competitive entry into that segment. I think in terms of launches, we have a reasonable launch here in this year. I think some of those will start coming out starting with quarter one. I think the big year for launches, obviously, for us will be the next year. We will have a reasonable year of launches in this year, which will allow us to sustain and grow the trajectory in the U.S. as well. We aren't providing sector guidance, Saion. There will be growth in the U.S., and there will be a reasonable number of launches. Okay. Thank you. I'll join back the queue. Thank you. The next question is from the line of Prakash from Axis. Please go ahead. Thanks for the opportunity. As a question on the gross margin, I missed your comments. You spoke about shelf stock adjustment in albuterol with the new player coming in. Was that correct listening, or do you want to repeat that for the benefit of the audience? Prakash, there are two, three reasons. This keeps happening based upon the quarter for the stocking of inventories. Some of the products that we had built during this period, we should go to liquidate. The charge-off for inventory overhead, that happens when the stock goes down. You would have noticed a significant drop in this quarter in the inventory holdings, and that was with respect to the plant shutdown. The overhead charge-off, that's a one-time thing which hit in this quarter. There is a third shelf stock adjustment for albuterol as well. All these three contributed. The total quantum is approx 200 basis points, Prakash. Because YoY and both QoQ, you have improved on the U.S. with higher profitability business. I would have assumed that the gross margin would have improved. Correct. If you adjust, I think there's two, three reasons, there is an improvement in the margins. You mentioned one more generic entry in albuterol, is that correct? This is Perrigo, right? No. That's just replacement from one distributor to other, right? Yeah. That's the thing. Is it fair to understand that they have seen some correction in the market in terms of prices and hence you have to take the readjustment? Is that understanding? Yeah, that was expected. Everything is additional player. While the adjustment was not very disruptive, given the fact that we enjoy a very high share within the Proventil market. The magnitude is not very high, by the way. After every player, I think minimal pricing adjustment is expected. Okay, perfect. Second one on your market share today and where we expect to reach by end of this year for your product? Yeah. Within generics, the TRx share is about 16.5%. If you take the total market, which is brand plus AG plus GA, it's about 13.2%. Within the generic Proventil, obviously, as you know, we own the whole franchise, so that's about 87%. Therefore, Umang explained there is a headroom for us to grow on the shares during the next year. Okay, perfect. Great. Thank you. All the best. Thank you. The next question is from the line of Nithya Balasubramanian from Bernstein. Please go ahead. Thank you. My first question is on U.S. specialty. Avenue Therapeutics, we understand, did not get an approval for IV tramadol before April 30th. If you can explain to us what does it mean? Is Cipla still likely to go ahead with the transaction? Will you be renegotiating? Any color on that would be helpful. Nithya, the approval is awaited. I think the transaction, the obligation, Cipla is still invested in Avenue, and Cipla has an option to close the transaction deal on tramadol up to a certain point in the future, which I believe is six months from now. I think a lot of what happens will depend on what we hear from the FDA going forward. I would think that the obligation for Cipla to close, we believe, has expired on 30th of April. I think the right to close still exists for a time, about six months or seven months later. Obviously, that depends more on what we hear from the FDA. Do you have the option to renegotiate if the label changes are not as expected? No, I don't believe. There's nothing in the agreement that allows either party to renegotiate. I think as long as the agreement is not mandating any of the parties to renegotiate, I don't think there is an absolute necessity to renegotiate. Got it. My second question is on India sales and marketing spend. I think in one of the earlier calls, Kedar, you had mentioned that you would be expecting INR 400 crore-INR 500 crore savings, and you can update us on which of that, what part of it you potentially see being sustained into FY 2022 as well. If you can throw some color on has they normalized already? Is Q4 a normal quarter in terms of your spend, and how do you see that shaping up in FY 2022? Nithya, this is an evolving matter for us. For FY21, I think we exceeded what we thought the saving target we could have vis-à-vis our operating plan. We are pretty energized. We also stated in the last call that we are pretty energized and excited with respect to the levers that we have been able to unleash during this period through multiple ways. One is obviously, virtual mode of engaging with channel partners, customers, and healthcare practitioners. Secondly, introduction of digital ways to run our own business. Thirdly, relooking at what is actually discretionary business and discretionary spend, and what is the cost of doing business. I think our discovery of how efficient our model can be for our domestic business has unleashed a lot of potential. Our attempt is to preserve it in the next year. The expectation is not at all to plow back all the cost that we saved in FY 2021. That's the comment that I made, that vis-à-vis our historical projection of EBITDA, which was 16%-19% or so, we have been able to go to 22%, and beyond 20% actually, 20.5% or something. The idea is to retain that, to keep it sustained. The structural levers have been unlocked. A large part of this improvement, especially on the cost side and sales and distribution side, has got to do with the India business, the way it works and engages. Can I assume Q4 was a fairly normal quarter for you in terms of what you would've normally spent on the ground with doctor sales marketing initiatives? Yeah, I mean, to a great extent. As you know, the team starts getting ready in the quarter four to deliver in quarter one to some extent. While that's true, the activity is lower as well. I think more or less, you could model that way. Obviously the sales base of next year is higher, the investment and the activities which are required will be different as well. I would just caveat your statement with respect to this change in the sales base. Understood. If I might just squeeze in one more on Advair. Umang, you had mentioned that you're working on a query. Can you tell us a bit more about have they asked you to generate additional data? Is this a major CRL, minor CRL? What could be the review cycle? Just to give us a bit more sense of when we might see this product in the market. Yeah. I don't think we have to generate any further pharmacodynamic clinical data. I think the clinical data from what we’ve submitted doesn’t have too many questions. Generally, data, the FDA always asks for additional information, but for us it is all the information related to the non-clinical portion of the product. We are in the process of replying, and I think we should be replying shortly to it. That would start their inspection review of the product as well. This is usually a six to eight-month review timeframe once you have submitted a response? Well, I would hope so. I think on this product, Nithya, we had already said that from the time we filed, which was May of the year before this, we said that the earliest that we can expect anything is going to be a period over two years. Right. I think from the time we file, you can make the calculation that two and a half year period is pretty normal for a product like this. Thank you so much. Thanks, Umang. Thanks, Kedar. Thank you. Thank you. The next question is from the line of Neeraj Khetan from DG Capital. Please go ahead. Yeah. For the quarter, year-on-year growth has been 4% for India. Can you tell us the ex-COVID growth for the quarter? See, there are a lot of moving parts, Khetan. I explained to you the contribution of COVID business on a full year basis. Maybe you should model based on that. Okay. The businesses continue to be strong, and you would have seen the market data for April as well. I think you should model based on what we just said. Okay. Thank you. Thank you. The next question is from the line of Surya Patra from PhillipCapital. Please go ahead. Mr. Surya Patra, your line is unmuted. Please go ahead with your question. As there's no response from the current participant, we take the next question from the line of Neha Manpuria from JP Morgan. Please go ahead. Yeah, thank you for taking my question. Just to ask for clarification on the EBITDA margin trajectory that you talked about. Several times you have said that the margins would improve from the 22%. You've also mentioned that the approach would be to sustain at this level, given that the India cost will normalize to some extent next year. What are the additional drivers for the margin versus FY 2021 level? Yeah. Kumar, your take. Sorry, Kumar, are you answering this? Yeah. Neha, I think whatever investment you have to make for the India market, I think we do hope. Am I audible? Yes. You are. Okay. Neha, to answer your question, the investments for India business will be highly productive. We are not worried about that. Even if there is an escalation which happens, as I said, we will link it to the activity and we'll link it to the sales base of FY 2022. Any incremental marginal plowback to that we have to do from the savings that we did in FY 2021, we are not worried about that. I think there are several levers available. Pricing is one, mix is another, and the portfolio, the launch momentum is third. I think between these three across businesses, I think we have a plan, Neha, which suggests us that the sustainable trajectory of the EBITDA is the range in which we are reporting now. Okay. Just to understand, what you're trying to say is that while it might fluctuate this is the 22 into whatever percent is the range you would like to take over the medium term? That's true. Okay. On the gross margins historically, it will be 63%-65% sort of gross margin number. Even if I were to adjust the 200 basis points, we are in that lower end of that number. To get to the high point, does it need a lot of the U.S. launches to come through and therefore it's more FY 2023, FY 2024? Is that the outlook on gross margin? I guess so. Another reason is a large part of our trade generics business to some extent our prescription business. I think the items are bought out. Those licensing operations we have, the P2P operations that we have, is where we buy the product. I think certainly gross margin is what we should track, but EBITDA is more representative when you have the business which we don't have organic source of the material, but we buy from outside because the material cost subsumes the overheads of our vendors. I think EBITDA is little more representative. I think mix of a particular quarter and typically quarter four, Neha, you have seen trend over the years that once you have change in mix then the gross margin gets subdued to some extent. It's more a mix issue in a particular quarter rather than any weakness per se. Okay, understood. Thank you. Thank you. The next question is from the line of Nimish Mehta from Research Delta Advisors. Please go ahead. Yeah, thank you for the opportunity. First, can you offer some clarification regarding the shelf stock adjustment that you have taken on albuterol? Are these lost sales or you think you'll be able to recover it? No, I think the shelf stock adjustment is typically given, Nimish, when you match the price. Let's say after every entry of additional player, there is a price adjustment that happens when you match. For the quantities which are being held by the customer, you offer this discount. It's not very material, by the way. If you normalize for this, I think we are in line with the sequential revenue for the U.S. generics business. This is a regular happening within the U.S. generics market, Nimish. Correct. You mentioned that there has been a 200 basis point impact and I guess that could be on margin, which is why it becomes a bit more. No, I think 200 basis point impact on the margin is primarily because of certain inventory write-offs and the overhead charge-off that I referred to. The shelf stock adjustment is not a major reason. As I said, I think there's a headroom from the market share standpoint. I think for albuterol there's a strong headroom that we have in FY 2022. Okay. Other question is regarding again the U.S. generics pipeline. A couple of products that we see are important for pipeline that can be launched. We can give some color. One is lanthanum carbonate. Second is the paclitaxel protein bound. Which one is the second one? I'm sorry, I missed. P aclitaxe l. Is it nab-paclitaxel, Nimish? Yes. Okay. I think we don't offer product specifics, but one of these is probably slated for launch in the next few months, and the other one will probably launch sometime in the later half of next year. Later half of next year. Okay. Both of them are important for us, right? I mean, if there are certain customers, right? Yes. I mean, as launches, if you're asking me whether these could be meaningful launches, I think one is obviously much bigger than the other. I think you could say these are meaningful launches, sir. Okay. Thank you. Thank you. The next question is from the line of Saurav Bhutra from IIFL. Hello. Mr. Saurav Bhutra from IIFL, you may please go ahead. As there's no response from the current participant, we take the next question from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead. Thank you very much, and good evening, everyone. Umang Vohra, you mentioned that fiscal 2023 for U.S. will be a big year for new launches. Can you expand on that? Sameer, I think we're hoping that between Advair, between a product which is settled, between a product that the earlier person on the call asked for, and possibly a peptide, I think there's quite a few products that are lined up for FY 2023 for launch in the U.S., which are, I would say, meaningfully big. Now, obviously, they're complex in nature, and they depend on the timeline. I think we see FY 2023 as a very significant year for the U.S. generics business. Thanks for this, Umang. Other than these three, is there something else on your mind? Yeah, there are a few others as well coming in FY 2023. Okay, great. Secondly, it's on peptide products. I probably missed your comment. Did you say you have partnered for five products, and your presentation says of which you have filed for two, including one NDA. Is that correct? Yeah. A lot of the peptides we are doing, we have partners. It's a fairly complicated API science, as well as most of these have issues with devices and things like that. We have partners. Of that, I think we file two, and this filing will increase as we go forward. Okay. What do you think would be the approval cycle here? Is it three years plus going forward? Some have IP, Sameer, so obviously we'll have to follow that. Generally, for those which IP is not there, I would expect the same. 24 months would be a reasonable expectation. Okay, great. One more, if I can, on EBITDA margin. I'm a little confused because I think in Q1, Q2, Q3, I think all the three quarters you were doing more like 23%, 24%. I know 22% looks good on a full year, but in Q4, suddenly it's come down to 17%, and can I ask you to explain for 200 basis points? What about the rest? Why such a sharp step, and how should we think about it going forward? Yeah. Sameer, I think in quarter four, historically, the trend is that we have sequentially typically go down from quarter two and quarter three, because typically quarter two and three are respiratory seasons for us in India. That changes in quarter four. It is basically the mix of domestic in the overall company, which is probably the only reason which causes this change. That fundamentally and structurally, business by business, nothing changes. It's more the mix at the company level rather than anything else. Okay. Umang, just your thoughts on vaccines. I know you're doing so much on the COVID, on the therapeutic side, and thanks for that. It's a wonderful job. On vaccine side, Cipla's not done much. Are there any big entry barriers to this business, even in terms of manufacturing, et cetera? How are you thinking about it? I think let me put it this way. I think people have made a business out of vaccines, and some of those companies are as big as Cipla and they have large manufacturing footprints like Cipla does. It's been years in the making. I think for somebody like us to overnight compete with any of them is very difficult. There's probably not prudence for us to do that. Having said that, I think what is the easier part of vaccine is more the fill finish. The drug substance part of it is scientifically different than what we know. I don't think we have any immediate plans of developing our own vaccine. I don't think we're going to do that. As I mentioned earlier, we are always open to partnerships that we can have if people are interested to partner with us. Okay, great. Thank you so much. Thank you. The next question is from the line of Charulata Gaidhani from Dalal & Broacha. Please go ahead. Yeah. Hi. I have two questions. One pertains to the increasing cost of raw materials that have been in the news for quite some time. How well is Cipla protected against this, and do you see increase in realizations happening relating to COVID products? Charulata, we have been vexed with this procurement cost escalation, in fact from the last year. Fortunately it is happening in select products. It's not that the whole portfolio is going up and getting escalated in terms of costs. I think selected products where either there is an issue with respect to closure of a particular plant or something else happening in China. That's what we have experienced. On the whole, while we have seen an escalation, we have been able to handle it well from an EBITDA standpoint. That's how. Our big priority actually is to secure the quantity of materials that we need. We have been able to manage both the quantity and the cost of procurement. With regards to your second question, actually, the COVID products cannot have a price increase. As you know all of us, all the seven manufacturers of remdesivir took a price decrease in line with the affordability and access goals in India. That's the reality, and we are happy to work with the Indian government on those angles. Okay. Another question relating to South Africa. This quarter, we had seen a slightly lower growth in South Africa compared to the other quarters. Do we think that there's a new base? No, it's not a new base. I think we grew by 10% in ZAR in this quarter, which is significant. I think our outperformance in South Africa across each quarter for the full year and for the last more than three to four years is phenomenal. Within that, you can see from our presentation, the private market actually has grown in 13%. I think when generally the South African overall pharma market is either declining or growing in low single digits, I think this performance is incredible, and that goes to our leadership on the ground there. I wouldn't say that quarter four growth is muted or anything like that. I think the outperformance vis-à-vis the overall market continues. Yeah. Okay. All the best. Thank you. The next question is from the line of Krishnendu Saha from Quantum Mutual Fund. Please go ahead. Yeah, thanks for the question. Most of them have been answered, but just on the two fronts which Umang alluded to, on 2023 launch and launch of both. Are they partner drugs or they are just your solo on that? Sorry, is your question on the FY 2023 peptide products or is it? No, the launches which are lying back. Yeah. Most of it is run. Okay. Just under margin front. This quarter we are having a percentage increase, I think. We're going to ramp up the R&D expenditure going ahead because we have a couple of filings to be done with partners. How do you see, do you still maintain that EBITDA margin of 32% in spite of that going up to 6%, 7%? Yeah. We would do that, Krishnendu, because I think at the increasing revenue scale, anywhere 6%-7%, I think is enough considering the pipeline that we have and the programs that we are running. Right. I think that should prevent us from growing our EBITDA. I think there is good headroom to improve EBITDA percent, and we are committed to that. Okay. The full year is coming around roughly 4.8% for the full year for this year. Next year it'll probably inch up on that push. Anyway, thanks a lot. Yeah, bye. Thank you. The next question is from the line of Surya Patra from PhillipCapital. Please go ahead. Yeah, thanks for the opportunity. Kedar, just one more thing. If you can tell, what is the kind of digital initiatives that we have taken that is known? What is the kind of saving that one can anticipate on the cost front? Let's say, if you consider FY 2020 as a base year, from that to FY 2022, what is a sustainable saving that one can anticipate on this front because of the digital initiatives? Yeah. Surya, I think these initiatives span over each area of operation throughout the company. I think starting from sales and distribution and commercial within India and across the globe, going to manufacturing and quality, supply chain, all the other corporate functions as well. I think each function and business unit we have been able to identify a very specific set of levers, Surya, which means that I think we digitize our operations, we convert the activity to a virtual mode, and we identify efficiency to unlock the time and the cost to run each activity. Either you eliminate the activity if it is not value-adding, or you digitize or make it virtual. I think we are encouraged with this work that we have been doing throughout the company. I won't be able to tell you the quantum. It gets subjective at times because sometimes you eliminate non-value-adding activities, sometimes you stop discretionary activities, and sometimes you run the activities but in a different mode. All throughout, I think we are energized. That much I can tell you. We don't want to have them as a flash in the pan for FY 2021. As I said, our attempt will be to preserve this going forward. I can tell you, it's one of the most active workstreams in the company. Okay. Anyway, you have not quantified, but that's fine. Now the second question is on the kind of COVID portfolio and itself kind of a contribution, profitable contribution going ahead. How sustainable is the opportunity it looks like? Although there are talks and things are moving every day or it's not very clear about many aspects about COVID, how sustainable the opportunity could be on the so-called contribution from this portfolio is considered, and is it relatively more better profitable segment compared to the current blended margin of the company? See, I just said that the total COVID sales in FY 2021 are around 4% or so at a company level, primarily to India, but into other geographies as well. From our vantage point, the way we are looking at the second wave, how lockdowns are evolving in each state, tough to say how much contribution will sustain, but we see this a longer-term business, and as a responsible pharmaceutical company, we are deeply committed to it. The reason we are doing these deals with Roche on the COVID antibody cocktail and the baricitinib and products like that, I think it comes from this vision of our caring for life. It's not going to go away in months or so, if that was your question. It will be tough for us to tell you precisely. As I said, at a company level, in revenues and profits, not that this is a huge contributor, but whatever it is, it will sustain to a great extent. In the near term and over time, obviously, it will taper down as the cases go down, and all of us want that to happen. Okay, just last one small question. Sir, if you can just share your thought on the Cipla BioTec, what you have created for U.S. What is your thought process about that? I can take that, Surya. Yeah, sure. We announced in the last quarter, this is a scheme of demerger. The intention of that is to have a sharper allocation of assets. I think all the assets in India which service the U.S. business will get housed in this subsidiary. It is not yet fully done because it needs to pass through several regulatory approvals. I think it's being taken with all the regulators, and whenever it gets completed, we will speak to you. As you would recollect, last time we had spoken, there are two streams to this demerger. One is the U.S. business, and secondly, the consumer brands. Right. which are currently housed in the CHL. I think both these are being taken to various regulators for their approval. As of now, there is no specific corporate action subsequent to that which we have on the table. This is just an appropriate reorganization of the assets at a corporate level. Okay. Yes, sure. Thank you. Thank you. The next question is from the line of Nithya Balasubramanian from Bernstein. Please go ahead. A quick one on if you can throw a bit more visibility into the respiratory generic pipeline, the one partner asset and the two you mentioned are in clinical trial stage. The partner asset, Nithya, I think that the partner is now in the process where it's, as we mentioned last time, that they are in dialogue with the FDA and submitting the data that's required. That's on the partner respiratory asset. On the rest of the pipeline, we are likely to be in clinicals in two products in this year. I think beyond that, the rest of the work for India, emerging markets, and Europe continues. Just a quick follow-up. The partner has said you have visibility on when you might be able to launch the product and are the clinical trials already underway and when do you expect to complete those and submit to FDA? I think the clinical trials are done and I think the partner is probably in the process, if it is not already, of responding with their file to the FDA. Clinical timeline, my guess is from here might take maybe another 12-18 months for the partner if the product is approved. I'm sorry, it's a little confusing. The partner is conducting clinical trials on the partner product and it's going to be another 12-18 months before we wrap it up, right? No, no. The partner has completed, and the partner is now in the process of filing this with the FDA. Post-filing with the FDA, it will probably take at least 12-18 months from an FDA. From an review cycle. Understood. On the two products which is Cipla's own, where you're running clinical trials, what is your best visibility on when you're likely to file? Nithya, we won't share that detail. You could expect filings next year, towards mid of next year is my guess, mid to end of. Thank you, sir. Thank you so much. Thank you. The next question is from the line of Arpit Kapoor from IDFC Mutual Fund. Please go ahead. Yeah, thanks for taking my question. This is regarding the U.S. business. If I look at the numbers, we did close to $135 million in first quarter and we are exiting the financial year this quarter at $138 million and we saw gradual ramp-up of albuterol in all the four quarters and the numbers for the second and the third quarter were also in the range of $141 million. Has the base business eroded so much that we don't see any delta of albuterol sales in the overall U.S. sales number or am I missing anything else? No, I don't think there's erosion in the base business more than what we signaled. The U.S. business responds to launches. The price erosion is there as a regular feature in the U.S. business. As your launch trajectory starts to increase, your launches offset a significant portion of price erosion and allow you to grow. In our case, I think as the launches start coming in, you will see the traction in the U.S. business. We were at about 115 - 20 trajectory before we launched Andicurb. We're now at our current trajectory post Andicurb. I think that's how it is in the U.S. We will see trajectory ramping up as the launches come. No, yeah, I understand. I guess even albuterol market shares have ramped up over the last four quarters. Yet our U.S. sales have been pretty sticky around $141 million mark. You would have had couple of other launches as well. Has the base business eroded so much that we don't see any impact of. Not by a significant amount, which is nothing more than what we look at as a normal erosion. Is that your question? No. In a quarter where we may have not had any significant launch, we may see a $2, $3 million impact on overall numbers. That doesn't mean that there is erosion. It just means that launches have not come in to supplement the business. I don't think we're seeing any major erosion in the U.S. Okay. Because probably I'm still not able to understand why, at even a sequential basis our business every quarter should have improved whereas we've just remained flat for almost all the four quarters. Okay. The current base of $138 should be the base that we should take and most of the pricing adjustment that albuterol at least for the new generic we have taken in and that should be the base going forward for the next year. Correct. Okay, sure. Thanks. I'll sit back. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for their closing comments. Over to you. Thank you everyone for joining us on the call today. In case you have any follow-on questions you can reach out to the investor relations team at Cipla. Thank you so much. Have a good night and stay safe. Thank you. Thank you. On behalf of Kotak Securities Limited, we conclude today's conference. Thank you all for joining. You may now disconnect your lines.