Ladies and gentlemen, good day and welcome to the Cipla Limited Quarter four FY 2022 earnings conference call. 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. Naveen Bansal from Cipla Limited. Thank you, and over to you, sir. Thank you, Faizan. Good evening and a very warm welcome to Cipla's Quarter four FY 2022 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, which would 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 Umang to take over, please. Thank you, Naveen. Good evening to all of you, and thank you for joining us on the call today. 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 the financial year 2022. I hope you've received the investor presentation that we have posted on our website. As you're aware, after a successful six-year stint, Kedar Upadhye has moved on from his role as the Global CFO. I sincerely thank him for his partnership in spearheading some of the most successful reimagination initiatives in finance and strategy during his tenure. I wish him very well for his future and his career ahead. I would also like to welcome Dinesh Jain, who's on our call and has been appointed as the interim global CFO by the board. Dinesh has had an illustrious career with Cipla of close to three decades across several domain groups finance. Thanks, Umang, for introduction. Over the last 24 months, we have made significant progress across all our strategic priorities while navigating the uncertain trajectory of the pandemic. Our company recorded the highest revenue and achieved several major milestones in our One India and U.S. business, pivoting the business on an accelerated growth and margin trajectory. In FY 2022, we continued the strong momentum across India, U.S., and other key markets while continuing investments in portfolio and several other growth-linked initiatives. Coming to the key highlights for the last quarter and full year FY 2022. Overall revenue for the quarter was INR 5,260 crore, recording a year-on-year growth of 14%. As you are aware, reverse seasonality kicks in during quarter four, which impacts the overall business mix for the quarter. Despite that, we've been able to drive strong double-digit revenue growth through focused execution and maintaining a high serviceability across our markets. The revenue growth for the full year was also 14%. Excluding the COVID portfolio, the core revenue growth was a robust 12% for the quarter and for the full year. For the quarter, our One India business across branded prescriptions, trade generics, and consumer health recorded a robust 21% growth over the last year and 15% adjusted for the COVID portfolio. We crossed the $1 billion milestone in our domestic branded prescription business, driven by the sustained growth across our acute and chronic portfolios. In line with our One India strategy, we are seeing strong execution across portfolio and distribution synergies, helping us drive strong growth across the three businesses, which are now tracking close to the INR 10,000 crore mark. The strong equity of our brands among the patients and physicians is reflected in the high growth rates for our flagship brands, which are now a household name. Our focused growth-linked investments, coupled with top-line leverage in our India consumer health business, has led to EBITDA breakeven in FY 2022 for that business, and we wish to grow sustainably from here in FY 2023. Our efforts are now focused on identifying more brands with high consumer potential across India and South Africa to build a strong global wellness franchise. I'm also pleased to see the transformation of the U.S. business led by sustained ramp-up in our respiratory franchise and the peptide injectables, which is improving the runway and offsetting price erosion being witnessed in parts of our portfolio. Our US core formulation sales stood at a multi-quarter high of $160 million, driven by strong traction in respiratory assets as well as the contribution from the peptide portfolio. We are gearing up for the upcoming complex launches expected in H2 FY 2023, which should drive both the top-line growth as well as the operating profitability of our business. While the uncertainties and challenges related to the pandemic seem more manageable now, geopolitical conflicts and associated supply chain challenges have kept procurement and freight costs at elevated levels. We are managing some of the external headwinds by passing on cost escalations where possible, continued cost optimization and mix management to insulate the core margins to the extent possible. Our operating margins for this quarter subsumed the impact of certain one-time charges to the extent of INR 200 crore, which I shall explain a little later. Business mix due to reverse seasonality, elevated procurement and freight costs as well as higher R&D investments driven by the initiation of the clinical trials of one respiratory asset, which is almost INR 45 crore higher than the last year. Adjusted for these one-time charges, the core operating margins remain healthy at 18%, delivering a growth of 20% over last year quarter four, with continued expansion in base business profitability. The INR 200 crore one-time charges pertain to two items. The first item is an item related to an inventory charge on account of largely the COVID portfolio lying with us, and that is approximately INR 160 crore in the gross margin line and about INR 20 crore in the one-time operating expense line. Both which we continue to carry marginal inventory which we believe can be liquidated in the coming quarters, and hence this quarter's charge covers us for any material unforeseen risks of inventory in the future. We also have a charge this quarter of about INR 20 crore, largely on account of the restructuring we have carried out in our South African business. Adjusting for these one-time charges, our core operating profitability was INR 960 crore and represented at over 18%, which is an expansion of 100 basis points versus last year's quarter four. Our reported gross margin after material costs stood at 59.2%. As alluded earlier, there is an approximate 300 basis points impact due to change in material cost line, largely pertaining to demand uncertainties linked to the COVID, which I have explained in terms of the INR 160 crore charge we have taken. Total expenses, which include employee costs and other expenses, stood at INR 2,364 crore and increased by 12% on a sequential basis. Employee costs for the quarter stood at INR 892 crore and increased by 2.3% versus the last quarter. The other expenses, which include R&D, regulatory, quality, manufacturing and sales promotion, are at INR 1,471 crore and increased by 19.4% sequentially, given largely by the higher R&D spends as well as the one-time charges that we explained. Total R&D for the quarter is at 6.1% of INR 322 crore. The absolute trajectory remains intact with assets progressing in clinical trials and other portfolio developmental efforts ongoing. Reported EBITDA for the quarter was INR 763 crores or 14.5% of sales. If we adjust for the INR 200 crore charges that we have spoken about, which are one time, the EBITDA for the quarter then comes in at INR 960 crore with margins of 18%+. Tax charge for the quarter stood at INR 71 crore and the ETR was 15.9%. The lower ETR is attributed to the creation of a deferred tax asset for tax losses in our subsidiary, Cipla Pharma and Life Sciences, driven by the transfer and restructuring of certain businesses, which has been approved by the board in January of the previous board meeting. The full year ETR is at 26.7%. Profit after tax is at INR 362 crore or 6.9% of sales. Apart from the one-time charges above EBITDA, our tax for the quarter includes the impact of the following two items. Nearly INR 70 crore of impairment in certain assets, largely on account of our investment in Avenue Therapeutics. The depreciation on account of the Sri Lankan currency versus the US dollar, where we have booked a Forex loss of INR 42 crore on account of the outstanding receivables from our subsidiary. We are closely monitoring the situation and exploring options to secure the future business. The adjusted tax, excluding all of the one-off items in the PNL, is nearly 610 crore or 11% of sales. Our reported pretax return on invested capital continues to track at a healthy rate of over 21.5%. As of 31st March 2022, our long-term debt stands at ZAR 720 million in South Africa and $7 million in Uganda. We have working capital loans of $49 million and EUR 2 million. These act as natural hedges towards our receivables. Driven by the relentless focus on cash generation and the rigor and cost discipline, we continue to be a net cash positive company as of March 2022. We continue to be appropriately hedged for key global currencies as per the policies. Our elevated inventory levels reflect our commitment to ensure availability of medicines and de-risk any business interruptions due to the global supply chain disruption. I now come to detailed business updates by market. We will start with India. In India, our One India business grew by 27% for the year and 21% in the quarter. Core portfolio growth, excluding the COVID portfolio, was 25% for the year and 15% for the quarter. The branded prescription business delivered sustained momentum across therapies in all our core portfolios. As for IQVIA MAT March 2022, we continue to deliver market-leading growth on the overall portfolio and maintain healthy ranks and market share in key therapies. We have sustainably invested in our core and chronic and acute portfolios to build high quality, formidable branded franchise with power brands which have shown a healthy CAGR of 13% over the FY 2018- 2022 period on the chronic side of our portfolio. Over the last four years, driven by focused product selection, our share of core chronic to core branded prescription has expanded by nearly 750 basis points. 23% of our overall branded prescription portfolio is under NLEM, and here too we continue to demonstrate a healthy 6% growth over the last four years. The trade generics business continues to witness strong demand traction for the flagship brands with strong order flow across segments. Our consumer health business has crossed INR 500 crore in FY 2022, and some of our flagship brands which were transitioned have grown bigger and bolder. As we noted earlier, our India consumer health business has turned EBITDA breakeven in FY 2022, and we wish to grow that sustainably from here in FY 2023. Coming to the U.S. generics. The U.S. core formulation sales were at $160 million for the quarter, and full year revenue stood at $594 million. In FY 2022, we have taken significant strides in transforming our portfolio footprint, adding more complex products and strengthening our direct-to-market operations. Our respiratory franchise, including Albuterol and Arformoterol, is ramping up sustainably with 21% growth for the quarter and 28% for the full year. On the pipeline front, our Advair file is under active review, and we are hoping for a half U.S. cycle entry launch. As mentioned earlier, we have initiated clinical trials on the respiratory assets during the current quarter, and filings in the complex generics, including peptide injectables, shall continue in FY 2023. Coming to our SAGA business, which includes South Africa, Sub-Saharan Africa and CGA. The overall SAGA region grew by 8% on a year-on-year basis in dollar terms. The private business reported a robust 17% growth over the last year for the quarter in currency terms. The growth continues to be diversified across base business and new launches. We continue to maintain our third position with a market share of 7.5% in the overall market. In markets outside South Africa, the CGA business has witnessed strong order flow in one of our key products, while the Sub-Saharan business maintained scale over the last year based driven by continued order flow. Our international markets includes emerging markets in Europe, and the business navigated very strong geopolitical headwinds to maintain scale at $385 million for the full year and 4% growth for the quarter. Our DTM franchisees have delivered strong double-digit growth, which helps us offset the emerging market Forex volatility and the muted B2B demand in Europe for the quarter. The business continues to track high margins and robust governance and receivables during the year. Our operations in some of the emerging market geographies are facing currency headwinds, the impact of which is also baked in our Q4 numbers. We are closely monitoring the situation and exploring options to mitigate any risks that may arise. Turning now to our outlook. We have established a strong threshold for revenue and operating profitability in FY 2022, with core margins trending in the 21%-22% range. Geopolitical crisis, which is contributing to the current inflationary environment, has driven up procurement and trade expenses over the last year, cost base. We are monitoring these trends closely and working on plans to mitigate these in the coming quarters. As we mitigate these challenges over the next two to four months, we expect the business trajectory to improve given upcoming complex launches expected in the second half of this fiscal. Our near-term priorities include focus on monitoring and monetization of our respiratory filings and launches across geographies to accelerate our global lung leadership journey. Active advancement on innovative consumer-centric products to accelerate the augmentation of our global consumer wellness franchise across India and South Africa. Continued execution on our branded market portfolio, including peptides, brand building and improvement in our end product activity. Sustainability. Sustainable scale-up of our U.S. core formulation sales on the back of high serviceability of respiratory and peptide franchise. Continued focus on cost management, especially amid the inflationary environment we are, which is impacting our procurement costs and others. Accelerate the digital adoption across businesses and functions through focused agenda under the new digital health company, Cipla Digital Health. Focus on regulatory compliance across our manufacturing facilities and implement globally benchmarked ESG practices. 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 attached phone 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. A reminder to the participants, anyone who wishes to ask a question may press star and one at this time. The first question is from the line of Prakash Agarwal from Axis Capital. Please go ahead. Yeah. Hi. Thanks for the opportunity. Good evening to all. My first question is on outlook on the India business. While we are seeing robust growth, with COVID, without COVID, just, you know, some outlook would help given that, we are on a good base. I'm sorry. I had a problem following the question. Could you repeat it again, please? Maybe the line was bad. Just wanted some outlook on the India business. How is it looking? I mean, given the strong growth we have seen with and without COVID. I understand, you know, there would be COVID-related therapeutics which have also helped growth. How do we see, you know, growth outlook for India business in particular? We are quite clear. We are like, we would like to see very high growth, better than market for the non-COVID portfolio. I think our business momentum is very strong across all the three businesses. I think it will be for us big brands becoming bigger. We remain bullish on India. Of course, we have COVID in our mix, in the previous year, but if it is non-COVID, I think we will be showing growth much higher than market. Okay, fair enough. Also wanted to understand the current goodwill is about INR 3,000 crore. I understand Tramadol is largely written off. Now currently it largely pertains to InvaGen acquisition or there is more, you know, sub-parts to it? It has InvaGen, yeah. I think it has in the South Africa part also. We had done an acquisition of Medpro in 2013. So goodwill is also pertaining to the South Africa business in addition to InvaGen. Okay. Tramadol is largely done? Yeah, Tramadol is already done. Yeah. Okay, perfect. Lastly, on the U.S., just wanted some color on Albuterol. I mean, is it seeing flattish performance or you continue to gain market share and dollar value is increasing for us? The market share, we don't answer specifically on each individual product, but what I can tell you is that market share has expanded versus the last quarter. I think based on recent data that I saw, we are almost at 22% share. Okay, perfect. I have no questions. I'll join later. Thank you. Thank you. Thank you. The next question is from the line of Anubhav Aggarwal from Credit Suisse. Please go ahead. Thank you. Umang, one question on the other expenses actually. You talked about the adjustment, but even after doing that, roughly about INR 40 crore adjustment that you talked about, other expenses seems to be higher by INR 100 crore in this quarter versus the run rate that you are doing. Any particular reason that you want to call out for? Because you're not calling that as an extra, so is that the new base now? No, I don't think it's the new base. Anubhav, I think what we are looking at, we've only taken the INR 200 crore for the calculation of the 18% margin, which is the inventory write-offs. We haven't even taken the R&D or anything else into that computation. It's just the inventory charges and the exit charges that we added back. I think the expenses are higher because in quarter four, particularly our India business, had more expenses than usual. I think this was on account of, you know, quarter four for us is a respiratory quarter. The fact that we're not able to spend it in quarter three on account of, you know, COVID-related. It's not the new base. It's not the new base. Having said that, yes, expenses are higher by INR 30-40 crore, even from a normalized basis for us on sales promotion. Just to ask the other way, and maybe I missed out in your comments earlier. What's the expectation for the margin for next year? I mean, what kind of range? I heard you talking about 21%-22%, or you think even without Advair you can do 22%+ margin for next year? No. Let me put it this way. I think at margin range for the current what we are guiding towards is upwards of 21%. From the last call we were somewhere closer to the 21.5%-22%. You know, considering the procurement cost, et cetera, this time the high inflation and commodity, we are in the 21%-22% range. This is with or without Advair? Let's say if Advair doesn't happen for whatever reason this year, you can still do 21%+ or lower? Yeah. Yes, I think we can still do that. Also Advair for us is penciled in only in half. Just last question on Advair. What are the kind of queries you're getting on this from the FDA? I mean, not particular query, but is it more on the device side, more on your trial data side, et cetera? Because so far you have given us very high confidence that very high chance of getting this asset in second half, but just trying to get some more confidence that what are queries you're getting from the FDA on this. I think you know, Anubhav, here the queries that we have received from the FDA are more around the CMC. I don't think we've received anything on trial. Obviously they have to come and visit the facility because it's our first DPI product. I think maybe the file is pending on account of that as well. When was the last time you received any query on Advair? About four months back, six months back. Oh, that's been a long time. Okay. Okay, thanks. I'll join later. Thank you. Yeah. Thank you. The next question is from the line of Neha Manpuria from Bank of America. Please go ahead. Sorry to interrupt you. Ms. Manpuria, your audio is breaking, ma'am. Please check. Oh, is it clear now? Yes. Okay. Sorry about that. Umang, you mentioned in your opening remarks that, you know, U.S. also saw contribution from the peptide asset. Last call you had mentioned, you know, sort of a sustained increase in market share over time. Post the launch that you've seen, you know, over the last two months, has there been any change, you know, or would you change your market share expectation and the timeline for ramp up on the product? No, Neha, we are not changing any of our expectations from the product. I think our plans largely remain on track. Okay. It would still be a gradual increase in market share? Yes. Okay. What could be the fair market share for a product like this, in your view? I think we have an internal estimate. I'm a little hesitant to give it out right now because the product is fairly competitive. Matters of this product are also kind of, you know, subjugated in some way or the other. I don't think I'd like to give a commentary on market share, et cetera, but I'd just like you to know that it is well on track to what we have as our internal goal. Understood. Umang, on the R&D expense, now that we have one respiratory asset in trial, how should we look at the expense for next year? Would it be in the 6% range that we have reported in the quarter or slightly higher as you know, the expenses probably goes up? I think we have also booked in this quarter some amount of clinical trial expenditure on account of the respiratory trial. I think between 6%-7% would be where we would end up mostly in R&D. Understood. Last question, if I may. On Abraxane, you know, what is the timeline there? You know, any view on that? That will also depend on Goa inspection. Have we heard from the FDA on that happening anytime? No. We have not. We don't have a specific date as yet on the inspection. You know, you're aware that inspections have started in the country, and quite significantly. Hopefully we will, you know, we are also hoping to be audited soon. Abraxane would therefore could be a second half launch in that case. Yes. We're hoping it is. Okay. Thank you. Thank you. The next question is from the line of Saion Mukherjee from Nomura Securities. Please go ahead. Yeah. Hi, good evening. Umang, just, you know, one question on India. Can you share what's been the growth in trade generics in this fiscal year, FY 2022 over FY 2021? And any dynamics there, is it acute, chronic? What kind of products are driving the growth in trade generics? I don't know if you're giving segment specific, but I'll put it this way, our highest growth probably was in our consumer business, followed by our branded prescription business, in the last year. I think trade generics is also significantly comfortably in double digits. That's how I would put it. It's higher than market. The portfolio there I think is more acute, more pain category rather than chronic. We are building the chronic franchise. Okay. Umang, when you mention like COVID and non-COVID, I mean, the growth rates that you mentioned, so you consider only the products which are exclusively used for COVID, or you also include the impact of, you know, the products which got, you know, sold higher during COVID? Largely, for us it is largely the COVID. The antibiotics which sold largely is within our base. Okay. You expect on this non-COVID base to grow next year. Is that what you? That's correct. We expect to grow on the non-COVID base. Okay. Just one last question, if I can. You know, you talked about in your opening remarks about various pressure, inflationary pressures. Is it possible for you to quantify like, you know, what level of raw material or freight cost we are currently seeing versus, let's say, you know, a couple of years back in a normal situation? Is it possible for you to sort of quantify the impact? I don't know if I can do over four years, Saion, but maybe a good reference point would be from, let's say, last year, right? What could be the overall impact broadly that one could see of this in the category? My guess is about 50 basis points, could be the freight and the procurement cost impact. You know, to some extent, you would try and offset this through levers available to a company through pricing, et cetera. So overall, I would say about 50-70 basis points broadly. Dinesh, is that roughly. Yeah, Umang. Yeah, you might be correct. Yeah. You would say this is probably most prominent in this quarter or even in the third quarter. Sequentially, have things materially changed? Yeah, I think they did because, you know, the Ukraine crisis changed, which was already a slightly worsening situation. I think the Ukraine crisis has added to it. Materiality of crude price swings, et cetera, happened more in quarter four than they did before it. Okay, thank you. I'll join back with you. Thanks. Thank you. The next question is from the line of Bino Pathiparampil from InCred Capital. Please go ahead. Hi. Thanks. Hi, Umang. Could we get an update on generic Revlimid? Are you still looking at launching in the second half, and would you be in the next wave of launches? Bino, yeah. I think we should be in the, I mean, look, the first wave has already formed, and there could be exclusivity linked to some strengths with another player. Yes, among the people who will launch in half two, we are hoping to be in that wave. Yeah. For the strengths for which already the exclusivity is getting over, you will be. That is it. Okay. Got it. That is it. Just one follow-up on Advair. I believe Teva got an approval recently of late. Have they launched and how has the market changed, if they have launched after that? I think the intelligence we have picked up is that there has been a very limited launch by Teva, but we are aware that they have shipped in the market, in limited quantities. I don't see. We haven't seen any material change to pricing in the market anyways. Okay. Got it. Thank you very much. Thank you. The next question is from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead. Thank you very much, and good evening, everyone. Umang, did you say that the impact because of higher cost of procurement and freight is just 50-70 basis points in Q4? Broadly on a full year basis, yes, Sameer, and I think on a quarter four, yeah, it could be in the same range. Okay. Just looks a fair bit lower because considering what other companies are saying, and I'm saying across the sector like including chemicals and other sectors, is a few hundred basis points I would have thought, you know, the way the inflation is raging. Well, no. One minute, Sameer. I'm only talking about procurement and freight. I'm not talking about overall inflation. You know, overall inflation and people costs on some of the promotional materials, all that is over and above this and extra. No, no. Not including those. Just raw mat, freight, and maybe you can include power. If you were to do that, you know, I thought the impact is much higher, but it's fine if it's not so for you. Actually, this doesn't include power, and I think the impact we will see maybe going forward also because a part of it will be in the inventory. Okay, that's fine. Umang, the other question is on the price increases. In which market have you been able to pass on the, you know, the input cost inflation, and roughly to what magnitude? Actually, to some extent prices are adjusted in the emerging side of the world to the extent we can. You know, in India, I think companies have got the permission to price higher. For the other markets it's not been possible. Okay. When you say that, emerging markets, what's the magnitude? Is it like a mid-single digit kind of price increases that you have managed last six months? No, actually, you lose more there, Sameer. Because what happens is you try and index pricing based on where the currencies are. Then what happens is that even though you price, you know, pass on a little bit of the cost, the currencies take it away. You know, while you are price adjusting, you're losing more on the currency and its translation back to you. You can price up, but your net currency translations bring you back down. Okay. Net-net, are you neutral or what? No, you try and be neutral in the emerging side of the world, but it's you don't get the benefit that you're asking of price increases to margin in those markets. Yeah. No, that's fine. Yeah. That's exactly what I was looking for. Yeah. Thanks. Just on the U.S. side, you know, I was just wondering how important is Advair launch going to be in the sense that you'd be a fourth player, if I'm not wrong, maybe more. I think 50% volumes have already gone generic, so your right to win, and do you think this can be a triple-digit sort of an opportunity on a twelve-month basis? I don't know if I would give specific guidance, Sameer, on whether it's triple digit or high double digit or anything close to that. All I would say is that, you know, 50% of the market is still branded. That's a pretty sizable opportunity to go after for all generic players, not just us. I think over a period of time, that branded share would reduce, in my view, with more people entering the frame. Umang, would you not think that, you know, that generics have been around for couple of years, if not a bit more, and this part has been very sticky with the brand, and brand has matched a lot of rebates? It just makes your job that much tougher and being a fourth or fifth entrant, including also a generic, you know, winning market share could be very tough in this market. Kunal, I don't disagree with that. I think winning market share is always going to be tough in markets like this, which exhibit a little bit of stickiness. I also think that there is. You know, if you were to look at where generics were maybe one and a half or two years back, they were at a much lower level. So the delta that has happened with generic launches increasing over the last, you know, 24 months is also significant in this category. So I think that is one shift. The second thing is that, you know, we have overachieved what we thought we could do with Albuterol, which was again a market category where we were launching as probably the third or fourth variant of Albuterol in this market. You know, while the overall category had three sub-brands, we were not clearly the first to market share, but we've, you know, consistently tried to gain share there. I think those share conversions happen. It's a matter of time, and we're quite bullish about it. Okay, great. Umang, with your permission, if I can ask one last one, that's on lanreotide. You know, based on you've been in the market for the last two or three months, where do you see is this, you know, more challenging part? Is it contracting with clinics, GPOs? Is it, you know, supplies? Is it getting the reimbursement like, you know. If you can just share your thoughts and experience on lanreotide, please. Yeah, I think because this is a B2 product, what happens is that it has to, in some way, get the approval, the reimbursement listing, et cetera. I don't think it's a challenge. I think it's more. It has a different timeline than a generic product. You know, a generic product enters pretty much at the same classifications, et cetera, as a branded product. Whereas this one has slight differences and tweaks to it. You know, it takes time for price listing, for reimbursement listing, et cetera, and that's the time period we are in right now. Okay, great. Thank you so much. Thank you. Thank you. The next question is from the line of Anubhav Aggarwal from Credit Suisse. Please go ahead. Yeah. This is continuation on lanreotide, actually. Last time you mentioned that you need to reach out to a lot of clinics in order to address this market. Just trying to understand in last 3 months you've been in the market, let's say, what percentage of clinics that you want to address. Just trying to understand what's your progress over there. Let's like 10% of your clinics that you want to address, you reached out already, 20% you reached out already. Something that we can track, just to get a sense of how this opportunity is panning out for you guys. Anubhav, I won't be able to give you specific. We have a list internally of who are the big DESI prescribers, et cetera, which clinics are the ones where this happens. That data is available. You would attempt your outreach to those clinics. Beyond that, I'm not sure we'll give the level of detail that you're seeking on this question. All I would say is that we are on track with what we had as our own targets. Just to get a sense, let's say, a good launch, would you say that by end of this year, if you think that double-digit market share is possible for you guys, or you think that's a high target? Double-digit means, I mean. 10% market share. I think it's possible. Okay. Second is, what about the European opportunity for lanreotide? Have you already filed for Europe? Are you waiting in the queue or are you yet to file? No, I don't think we would. I think we were only authorized as a partner in this side of the world, only U.S. Okay. Sure. Thank you. Thank you. The next question is from the line of Nithya Balasubramanian from Bernstein. Please go ahead. Thank you. Umang, just one on EBITDA, and this is a follow-up on the guidance you had given earlier. This year, you ended at around 21%. Next year as well, you're guiding to the same 21%-22% range in spite of, hopefully generic Advair, generic Abraxane and generic Revlimid coming through. Yes. Nithya, I think what we are guiding to is also a fair amount of, you know, cost increases that are gonna likely to happen. Both via as designed from our side on account of higher R&D, as well as, on account of the procurement and freight that we spoke about. I think cumulatively, if you look at it like to like between the two years, I think that cost delta would almost be close to 200-250 basis points. We're trying to offset that through the business. Understood. Second one on lanreotide. Who is the key influencer here? Is it the doctor or the clinic or is it the GPO? I think it's the clinics where the administration happens. I would think the clinics would be the influencers. Within the clinics, you know, you have doctors, you have clinics which are associated with chains and clinics which are associated with, GPO franchise. I would imagine it's the nodal point is the clinic, and then doctors. Uh, well. Right. Understood, sir. I'm just going back to a question you answered for me in the last earnings call, which is that you might not require any additional commercial infrastructure. I'm just thinking your GPOs are obviously a very concentrated bunch, but your clinics are. Yes. Should be fairly fragmented. In spite of that, you do not see any infrastructure, commercial infrastructure requirement? I don't know if we would. You know, I think, look, for a health systems team, it is quite common to have five, seven, 10 people as reps in the market. I think Cipla has that, so I'm not sure that we require significant commercial infrastructure to market this product. Understood. Thank you so much. Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Yeah, thanks for the opportunity. Just on Advair, as you responded in the call about. It's been three to four months that there has been no queries pending on this product. Have I heard that right? No, I don't think. Look, I think this is the usual process. You receive questions from the FDA and then you answer them, then the FDA takes time to review it. We got a last set of questions about four months back, which is in line with how we've seen most products. You've responded to all of them as of now? Yes, that is correct. Would the inspection be subject to resolution of the old queries and then subsequently you will get the inspection timeline or that can happen parallel? I'm sorry, I could not hear you. I lost you because there's a lot of noise. Could you repeat, please? The inspection timeline can be parallel or that will be only after the resolution of all the U.S. FDA queries on this product? It's supposed to be parallel because the FDA gives a certain date that they expect to complete the inspections also by. You know, considering the fact that there is a lot of inspection the FDA has to do, maybe we can, you know, maybe I'm assuming that they've, you know, that these inspections have now resumed, so we should be hoping to be inspected anytime soon. Got you. Because at least, given that this still remains a limited competition product, so from that angle at least that is a compelling reason to, you know, come to inspect the facility. Yes. Secondly, even the Revlimid. Sorry. No, we don't have any specific timeline for inspection, if that was your question. Which means no specific intimation of when the audit would happen. Let me put it that way. Got it. Similarly, even Revlimid, like, any timeline for inspection of Revlimid as well? I'm not sure that for Revlimid we would need an inspection, because it's not a new category of the product. I understand. Understood. Just lastly on gross margins, while you were adjusting for the COVID related inventory, there is a sequential improvement in gross margin, despite having cost pressures or raw material cost pressures. Any specific factor you would like to highlight here? Dinesh? Yeah, I don't think so. I think it will be in line, everything compared, but I don't think it is to be higher. Okay. All right. Thank you. The next question is from the line of Nikhil from SiMPL. Please go ahead. Hello. Am I audible? Yes, sir. Yeah. Yeah. Hi. Good evening and thanks for the opportunity. Umang, my question is a little bit longer. If you look at our presentation, in U.S. we say, incremental opportunity to add $300 million-$500 million by FY 2025. Now, some of the pipeline products which we understand is like one of the respiratory on which the clinical trial started, there was another, partnered clinic, respiratory product. But other than VO, and we have Revlimid and Advair, but other than the existing pipeline, do you think, we need to probably add more, through some organic inorganic acquisition so as to get to this number? Or the existing pipeline based on what is happening at the back end is good enough to give us this, $300 million-$500 million? The reason is also because if I look at our balance sheet, the cash generation remains strong and with Advair, Abraxane, Revlimid, it's only going to step up only. How should we understand the cash generation and achievement of this additional $300 million-$500 million incremental revenue opportunity in U.S.? Hello. Yeah, Dinesh, I think he had addressed this to you. Sir, can you, like, was it regarding, like, M&A? I'll repeat my question. Yeah, go ahead, please. Please repeat. Yeah, I'll repeat my question. My question is that, in our presentation, we say by FY 2025, in U.S. there is incremental opportunity to add $300 million-$500 million. Now, if I divide it in two parts, one is based on the existing pipeline of products which are under in R&D or in clinical trial, do you think they are sufficient enough to help us grab this $300 million-$500 million opportunity? Or would you say that probably we would need some acquisitions also in terms of some tie-ups or some acquisitions so as to fill this gap? The reason is that we are generating good enough cash, and we already have good enough cash on the balance sheet. How should we understand the usage of cash in terms of meeting these objectives by FY 2025? Let me clarify. The INR 300 million-INR 500 million is largely from work that has already happened through our P&L. It does not include any acquisitions, et cetera. It is our, largely our organic pipeline that we are doing. I think that's, that is one. M&A as a focus will continue to be what we have for India. India and some of the other, you know, strong markets for us will continue to have M&A focus. That cash is, you know, it can be borrowed or it may come out of internal accrual. The amount of cash which we have and we are generating, how should we understand the division between, like, what should be the payout, what should be kept for acquisition? Because we are already sitting on INR 4,000 crore of cash, and it's only going to add up more. Where are we missing in terms of the business requirements for which probably we are keeping so much cash? No, no, actually, it's the other way around. I'm happy that we are in this situation because two years back we were a net debt company. Yeah. With our strong cash flow generation, today we have reached a point where we have INR 4,000 crore of cash and now if we are able to, we have a balance sheet which we can lend to buy some assets in India. That is our overall objective. The first would be to support our CapEx program and to buy some assets in India where we can acquire. The second item there would be that, you know, if we are able to do that, then that cash will generate future returns. Because our internal return in the company is significantly higher than the return of putting this in the bank account. Okay, fine. Fine. Thanks. Thank you. The next question is from the line of Sonal Gupta from L&T Mutual Fund. Please go ahead. Yeah, hi. Good evening and thanks for taking my question. The first question I had was, could you sort of quantify what was the total contribution of COVID to the India revenues of, I mean, like absolute contribution as a percentage? Dinesh or, Naveen, can you quantify that? Thanks, Umang. Sonal, at this point in time, as we've alluded in earlier earnings call, we're not quantifying the exact number. What we have done is we've given the full year growth numbers with COVID and without COVID, so maybe we would request you to refer to that number, please. No, the thing is that both numbers have in the base also COVID revenue, right? That is right, Sonal. You know, the challenge is that, you know, as maybe Saim was also asking earlier in the conversation. What we've done is we've specifically looked at only the COVID products, but, you know, the ancillary has also been kept in the base. Those factors do play out in our overall number and therefore it becomes difficult to then, you know, split our numbers with COVID, without COVID, from a pure play standpoint. We request you to just refer to the adjusted numbers which have been provided. I mean, like ballpark, would it be in the 5%-10% range? Yes. You can. It would be in that range, yeah. Okay, cool. Just the other question. Umang, in your opening comments you mentioned something about Sri Lanka, some INR 45 crore. Is there any provision that you've taken for that? Or just trying to clarify on that. Yes. That's an accounting provision which relates to the currency's loss in value. What happens is that our subsidiary owes us money, which will now be at a lower currency, so which is why we have taken a charge on that. That is again reflected in other expenses, right? Yeah. It is a charge reflected in the Forex line. Yeah. Yeah. Dinesh, it's other expense. No, no. It goes to reduce the other income. For the overall, we have got an exchange gain, we have exchange gain, for the full year. Therefore this negative also is sitting in the other income line. It reduced other income by 45%. Yes. Got it. No, I was just because the, like previously Anubhav had also asked this question around other expenses being a significant step up on a sequential basis. You said around INR 30- INR 40 crore is coming from India, higher spending, but just trying to understand. What else is boosting this so much? R&D is one, definitely, right? R&D is higher on a sequential quarter basis because the trials have started. Also the One India expenditure is higher on our trajectory. Those are the two big reasons. Got it. Sure. Thanks. I stripped out the R&D, but still it looks very high. Yeah, but thanks a lot for taking the questions. Thank you. Thank you. The next question is from the line of Saion Mukherjee from Nomura Securities. Please go ahead. Yeah, thanks for you taking my question. So on the M&A front, you know, what kind of opportunities you're seeing in India particularly, given the valuations that we have seen? I mean, are you looking at small bolt-on acquisition? Are you sort of even open to do some large acquisition? How should we think about the opportunity and what Cipla wants to do on the M&A front in India? No, I think, Saion, it will obviously depend. I think creating an opportunity in India now for an acquisition is now difficult. I think what we realized is it's only assets that people have made up their mind that they want to sell. Those are the type of assets that are in play. For us, I don't think there is a limit. Anything that could be, you know, INR 200 crore in sales is also attractive to us as a portfolio. Anything that could be, you know, INR 500 crore in sales is also attractive to us as a portfolio. It has to fulfill a strategic need. I think we have to see over a period of 10 years, considering the way India is growing, you know, that we would be able to create significant presence with that asset over a seven to 10-year period. I think that is what we are looking at. Okay. As a related question, Umang, you know, you were selling, you know, Azmarda in India and, you know, it has now been acquired by JB Chemicals. I mean, what are your thoughts? Because you had already built that brand. Why to sort of let that go before the patent expiry? Well, ideally we would not like to let it go. The innovator has other plans, right? You know, if you're not the highest bidder then, you know, then somebody else should take it. I think that's what is. In this case, I think both us and another competitor also had a similar issue. It's a function of how much, you know, what you think the true value is, and we could not, at that point in time, justify a value higher. Okay. Just one last question, if I can, on your India pipeline of 69 pending approvals. How many would you sort of consider as complex in this, which has like, you know, revenue potential of INR 30 million+? Naveen, are we giving that level of clarity? Could talk to that? Yeah. Directionally we can come back to you, but at this point in time we're not sharing that information. But we can come back to you. We can, we can take this offline. Just one, Naveen, one question, the depreciation seems to be a little higher this quarter. Is there any one-time that you have put in depreciation? Yeah, there is a small one-time charges is there. Some write-offs are there. A small amount. Yeah. Okay. Thank you. Thank you. Ladies and gentlemen, we will take the last question from the line of Surya Patra from PhillipCapital. Please go ahead. Yeah, thanks for taking my question, sir. Just one question on the One India initiative. How sustainable is this initiative as a growth driver for- Sorry to interrupt you, Mr. Patra. The audio is not clear from your line. Please check. Yeah. Hello. Is it fine, sir? Yes, sir. Hello. Yes, sir. Yes, Mr. Patra, please go ahead. Yes. Hello. Yes, we can hear you, Mr. Patra. Please go ahead. Hello. Yeah. Hi, Surya. We can hear you. Please go ahead, Surya. Hello. Hi, Surya. We can hear you. Please go ahead. Maybe, Faizal, what we can do is in interest of time, we can move to the next. If there is any last question in the queue, let's go ahead. We'll take the last question from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead. Thanks so much. I think it was meant for me. Umang, just did you say that you'll be filing one peptide injectable in fiscal 2023? Yes. We will. We should be, yes. Okay, that's great. Also for the respiratory filings, can you just quickly summarize how many are in clinicals and how many have been filed? Filed and not on market. Yes I'm assuming your question is for the U.S.. That's right. Filed and not in market are two. Okay. To be filed in clinic is one. Hopefully there'll be another in clinic later this year. Perfect. Okay, great. One final one from my side. You mentioned about the India business. You mentioned four-year CAGR for chronic 13% and acute 5%. Is it possible for you to just broadly tell us what's the volume component and what's the price increase component? Do you think this is what we should expect going forward as well? Yeah, I think we can break that down, Sameer, and send it to you. All I would say is in chronic, I would think a large portion would also be volume because this is a segment that, you know, Cipla was never historically strong in at all, whether it's cardio or it's diabetes, and we've built this over the last four years. We have always been strong in respiratory and some acute therapies, but never so much in chronic. A lot of the work has happened in dermatology, in cardiovascular and diabetes, and we can send you that data. Yeah. Sameer, just incrementally, the numbers that you see on that slide are basically coming in from the IQVIA data. Maybe while we can also stay in touch, you can also refer to that to split the growth into volume, price, and NI. Okay, great. Thank you so much. Thank you so much. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Naveen Bansal for closing comments. Thank you, Faizal. Thank you so much everyone for joining us on our earnings call today. In case you have any follow-on questions, please feel free to reach out to us. We wish you a very good evening ahead. Please take care. Thank you. Ladies and gentlemen, on behalf of Cipla Limited, that concludes this conference call. Thank you for joining us. You may now disconnect your lines.