Ladies and gentlemen, good day, and welcome to the Dr. Reddy's Q1 FY24 earnings call. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing Star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Richa Periwal from Investor Relations team. Thank you, and over to you, ma'am. Thank you, Darwin. Thank you. A very good morning and good evening to all of you, and thank you for joining us today for the Dr. Reddy's earnings conference call for the quarter ended June 30th, 2023. Earlier during the day, we have released our results and the same is also posted on our website. This call is being recorded, and the playback and transcript shall be made available on our website too. All the discussions and analysis of this call will be based on the IFRS consolidated financial statements. The discussion today contains certain non-GAAP financial measures. For a reconciliation of GAAP to non-GAAP measures, please refer to our press release. To discuss the business performance and outlook, we have our CEO, Mr. Erez Israeli, and our CFO, Mr. Parag Agarwal, along with the investor relations team. Please note that today's call is a copyrighted material of Dr. Reddy's and cannot be rebroadcasted or attributed in press or media outlets without the company's expressed written consent. Before I proceed with the call, I'd like to remind everyone that the safe harbor contained in today's press release also pertains to this conference call. I hand over the call to Mr. Parag Agarwal. Over to you, Parag. Thank you, Richa. Greetings to everyone, and a warm welcome to our Q1 FY 2024 earnings call. We had a strong start to the year with robust sales and record profitability. I'll start today with an overview of our financials for the quarter. For this section, all the amounts are translated into U.S. dollars at a convenient translation rate of INR 82.06, which is the rate as of June 30, 2023. Consolidated revenues for the quarter stood at INR 6,738 crore, that is $861 million, and grew by 29% on a year-over-year basis and by 7% on a sequential-quarter basis. Adjusting for brand divestment income on a rebased comparator, the online growth was higher at 35% on YoY basis and 12% sequentially. The growth was driven by the generics business, mainly in U.S., emerging markets, and Europe. Excluding the one-off gains from brand divestment, loss of revenue from divested portfolio, and NLEM-related price reduction, India business registered a high single-digit growth. Consolidated gross profit margin for this quarter has been 68.7%, an increase of 880 basis points over previous year and 150 basis points over previous quarter. The improvement in gross margin was primarily driven by favorable product mix, supply productivity savings, better manufacturing leverage, partially offset by brand divestment income during previous period. Gross margin for the global generics and PCI were at 60.9% and 16% for the quarter, respectively. The SG&A spend for the quarter is INR 1,770 crore, which is $216 million, an increase of 14% year-on-year, while a decline of 2% quarter-on-quarter. The year-on-year increase is in line with business growth and is on account of investment in sales and marketing, digitalization, and other business initiatives. The SG&A cost as a percentage of sales was 26.3% and is lower by 340 basis points year-on-year and 230 basis points quarter-on-quarter due to better operating leverage. The R&D spend for the quarter is INR 498 crore, that is $61 million, and is at 7.4% of sales. Our R&D efforts are focused towards building a heavy pipeline of new products across our markets, including biosimilar development. The EBITDA for the quarter is INR 2,137 crore, that is $260 million, and the EBITDA margin is 31.7%. This is largely driven by gross margin expansion and productivity initiatives across the value chain. Our profit before tax for the quarter stood at INR 1,846 crore, that is $225 million, an increase of 26% year-on-year and 39% over previous quarter. Effective tax rate has been 24% for the quarter. The effective tax rate was higher than the previous year, mainly due to changes in the company's jurisdictional mix of earnings. We expect our ETR to be in the range of 24%-25%. Profit after tax for the quarter stood at INR 1,403 crore that is $171 million. Reported EPS for the quarter is INR 84.22. Operating working capital increased by INR 710 crores, which is $87 million, against that on March 31, 2023, mainly due to an increase in receivables and inventory. Our capital investment stood at INR 362 crore, which is $44 million, in this quarter. The free cash flow generated before acquisition-related payout during this quarter was at INR 674 crore, which is $82 million. We now have a net surplus cash of INR 4,985 crore, that is $608 million, as on June 30, 2023. Foreign currency cash flow hedges in the form of derivatives for the U.S. dollar are approximately $750 million, largely hedged around the range of INR 82.7 to INR 84.4 to the dollar. RUB 6,775 million at the rate of INR 1.02 to the ruble, and AUD 3.7 million at the rate of INR 67.9 to Australian dollar maturing in the next 12 months. With this, I now request Erez to take us through the key business highlights. Thank you, Parag. A warm welcome to everyone participating in our earnings call today. As always, we appreciate your interest in our company. We have commenced fiscal 2024 with a robust first quarter performance. Our sales for quarter one grew 29%, and EBITDA grew 20%, reflecting the strength of our portfolio and well-diversified geographical scope. Adjusted for settlement income in the current and base period and great divestment in base period, our sales for quarter one grew 35%, and our EBITDA grew 111%. We improved the drivers in our core business for sustainable growth through productivity improvement, market share gains, and new product launches. We are making considerable progress across our strategic priorities. Let me take you through some of the key highlights of the quarter. One, sustained strong revenue growth driven by momentum in the U.S. and Russia markets. Two, g enerate healthy EBITDA at 32% and annualized ROCE at 39%. High cash generation leading to net cash surplus of more than $608 million at the end of the quarter, after paying the consideration towards Mayne portfolio acquisition. Four, c ompletion of commercial integration activities and also of Mayne Pharma- acquired generic prescription portfolio. Five, received approval for four products in China, including our partner product since April 2023. Six, e mbarked trade generics in India and launched a dedicated trade generics division. Through this initiative, we will be increasing our participation in retail pharmaceutical market. Seven, entered child nutrition space in India with the launch of CeleHealth Kidz Gummies. Eight, biologics license application for purpose biosimilar rituximab candidate, DRL_RI, accepted by U.S. FDA, EMA and MHRA for review. This is another key milestone in our global biosimilars journey. Nine, forays into fast-growing OTC wellness space in the U.S. with the relaunch of recently acquired brands of Premama, a portfolio of high-quality dietary supplements designed to support the entire mother, motherhood journey. Ten, collaborate with Mark Cuban Cost Plus Drug Company, aiming increasing access to essential medication for Wilson disease patients and entering into a license agreement with Takeda for launch of loratadine for private label opportunity business. Eleven, entered into agreement with Bill & Melinda Gates Foundation to develop injectable contraception drug for low- and middle-income countries in Asia and Sub-Saharan Africa, including India. This initiative will strengthen our portfolio in the women's healthcare space. Twelve, successfully conclude the U.S. FDA inspection of the following four facilities recently: Our API site, CTO 1 and CTO 3, and at Bollaram, our formulation site, FTO 2, and our API site, CTO 6 at Srikakulam. We continue to maintain a state of constant vigilance and compliance at our manufacturing sites. Thirteen, released our first integrated report, which we works together the material aspects of our business and their interplay with our purpose, value, strategy, governance, performance and outlook. Fourteen, the Financial Times of London named us as the Asia Pacific Climate Leader of 2023. This award is to appreciate companies that have achieved the greatest reduction in the greenhouse gas emissions intensity and made further climate-related commitments. Let me take you through the key business highlights for the quarter. Please note that all references to the numbers in these sections are in respective local currencies. Our North America generic business recorded sales of $389 million for the quarter, with a strong year-over-year growth of 69% and a 25% increase on sequential basis. The growth was bolstered by linezolid sales, new product launches, such as regadenoson injectable, cyclosporine capsules, integration of Mayne portfolio, and market share expansion in certain key existing products, which more than offset price erosion. We launched 8 new products during the quarter and expect to launch momentum to continue during FY 2024. Our European business recorded sales of EUR 57 million this quarter, with year-on-year growth of 13%, while growth is flat sequentially. The growth is attributable to increase in base business volumes and supported by new product launches. We launched 10 new products during the quarter and expect the launch impetus to continue during the balance of the year. Our emerging market business recorded sales of INR 1,155,000, with a strong year-on-year growth of 28% and sequentially increase of 4%. Within emerging market segment, the Russia business grew by 77% on year-on-year basis, and 7% on sequential basis in constant currency. The growth is driven by pickup in allergy season and further aided by lower base. Our India business recorded the sales of INR 1,148,000 and reported the growth of 40%. Excluding revenue from brand divestment, loss of revenue from divested portfolio and NLEM-related price reduction, the business is growing at very high single digits. India remains our priority market. We are progressing well on our innovation model. We have signed two innovative deals in this quarter and expect this to be an important growth driver in the years ahead. We are creating several growth engines for India business, including ramping up growth of existing portfolio, scaling up recently acquired brands, continuous improvement of in-store productivity, and surrounding integrated generics. Our PCI business recorded sales of $82 million, with a year-on-year decline of 11% and sequential decline of 14%. This is being due to lower volume pickup by customers for some products during the quarter. We expect sales to improve over the next couple of quarters on the back of increasing volume pickup, launch of new products, and collaboration opportunities. Our R&D efforts are focused on developing value of API products, including several generic injectable biosimilars that where there is a patient need. We have filed four NDAs in the U.S. during the Q1 of FY 2024, and we are on track to accelerate on this balance in the year of FY 2024. We are improving our operation and processes to increase efficiency and overall productivity. Our strong balance sheet provide financial flexibility to support future growth, and we will continue to maintain a disciplined approach to cash management and acquisitions. I'm confident we will continue to grow the growth momentum, strengthen our core business, and build a pipeline of products to shape a healthier world. With this, I would like to open the floor for questions and answers. 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 their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Kunal Dhamesha from Macquarie. Please go ahead. Hi, good evening. Thank you for the opportunity and congratulations on the good set of numbers. First, on the U.S. revenue growth, on a sequential basis, we have seen a significant uptick as well. Would you be able to give us some, I don't know, color as to which were the primary driver? Was it the acquisition, was it the lenalidomide uptake? You know, in order of their quantum, if you can provide even qualitatively, would be very helpful. This quarter, we had several growth engines, so it's not just in lenalidomide. We grew market share in key products, this was, let's say, more than previous quarters. We saw relatively less price erosion than we normally do. We had the Mayne acquisitions that contributed and Lena. It's a combination of all of them. Even without Lena, it was a very healthy growth in the U.S. Sure. I'm just continuing on that. In terms of price erosion, you know, I think across companies there is now consensus that the price erosion has reduced. Do you see that this reduced price erosion to continue for some time, or is it more of a transitory phenomena, I don't know, which will kind of go away? The model hasn't changed, so in terms of price erosion, it's obviously a function of how many, how much competition you got from your baseline, on products that did not yet, if you wish, erode to their potential. I believe that in our case, we probably will see something similar also in the next coming quarter. Okay, thank you. I have one more question, then I'm done with the session. Thank you. The next question is from the line of Damayanti Kerai from HSBC. Please go ahead. Hi, thank you for the opportunity. Continuing the U.S. business, as you mentioned, even without Lena, the base business has grown very well for you sequentially. Can you elaborate bit more whether you are seeing lot of supply opportunities emerging in the market due to problems that some of the competitors, et cetera? Do you believe these opportunities will sustain for next two quarters? That's my first question. It's a combination of timing of RFPs, combination of a set of situations that happen to products in which we could supply more. Not necessarily supply shortage, but it could be service or other supply disruption situation that happens. Also activities that we did with certain customers as well. Overall, let's say it's primarily a volume-based growth that based on agreements with certain customers. Do you believe this volume-based growth opportunity will continue in at least in near term? I believe that the trend will continue, yes. Okay. My second question is on your R&D initiatives. Biosimilars you mentioned, can you talk about updating your global portfolio, which is, for all the markets where you're focusing? Biosimilar is global, initiative for us. We are planning to be in all the markets, including the United States, with our portfolio. We are working on about 11 biosimilars as we speak. That some will be launched before 2030 and some after 2030, starting probably in the beginning of 2027. At the time, I don't want to discuss specific products, but let's say that it is a very important initiative for us, and we believe that it's a place that we want to be a serious player. Sure. My last question is, how do you see your EBITDA margins moving up in next two years, excluding Revlimid, if you can provide some color on it? I'm maintaining, and for me, we've been in this discussion in the past, I'm not taking this product out or another product, because every year we have those products that contribute more to our performance. I'm still maintaining the long-term average of the 25%, 25%, knowing that right now, with lenalidomide, we will probably be above it. Overall, this is the area that I'm still maintaining, that we feel very comfortable, that will allow us to fully finance all of our growth aspirations of the future. What we are, what we are moderating now is the level of investment that we want to put. Naturally, the more we have, the more we can invest into the future, which what we are planning to do. Let's say in the next coming quarters, as long as we have this limited volume agreement in place, likely that it will be above the threshold of 25%. Okay, thank you. I'll get back in touch with you. Thank you. We have the next question from the line of Balaji Prasad from Barclays. Please go ahead. Hi, this is Mikaela on for Balaji. Thanks for taking our questions. Can you just talk a bit more about what led to the growth seen in Russia, and how sustainable this growth is? Thanks. In Russia, we grew, part of it is seasonal, we have most of our business is in the retail, and we are also playing in the biosimilars. In this specific quarter, we enjoyed the seasonality of the allergy as part of it, as well as the growth that the brand is there. I believe that the growth momentum will be in Russia. We are expecting a good year in that respect. We are also, I think so far hedged well on the ruble and protected it well. In that respect, the combination of investing in our brands and enjoy the growth momentum that comes from, the relevant products that we have, plus a good defense on the ruble, help us to achieve this result. There is also, in fact, of a low base in the growth that we have reported this quarter. As you know, by its very nature, Russian market is volatile, so there will be fluctuations from one quarter to another, but we are growing ahead of the market. Thanks so much. Thank you. The next question is from the line of Surya Narayan Patra, from PhillipCapital (India) Private Limited. Please go ahead. Yeah, thanks for the opportunity and congratulations for the great set of numbers, sir. My first question is on this Mayne portfolio that has been acquired. What is the kind of size that we would have seen this quarter out of that? Also, if you can give some clarity about the profitability of this portfolio? I'm asking this question because it looks like, excluding the revenue performance, your base business has seen a sequential improvement. From that angle, I was just trying to understand, the contribution from the acquired operation in U.S. and, its profitability versus the company's rendered base business profitability. Indeed, our base business did well, even without lenalidomide. We closed the deal and practically started to sell in the end of April. We are actually launching products after product through this period of time. I believe that the main pickup will be in the next coming months, when customers will open their bids, and we will be able to do more. Overall, let's say that the contribution of Mayne will be more significant in the next quarter to come than it came in this quarter. Okay. Is it a kind of still a $100 million annualized size? Yes, in that range. Okay, sure. Second question is that regards the lenalidomide. We have almost kind of approaching to finish the first year of supply. Obviously, as per the prescription trends, we see that, okay, we have already kind of achieving 6% kind of volume share now. Is it fair to believe this is the kind of first year number, and we should see a progressive improvement in the volume share going ahead? You know, we cannot share a specific number on these products. We are in agreements in which the volume. This is there in the public domain in terms of the RX volume, so that is why I'm asking question, sir. I appreciate the question, but I cannot share. I have the full knowledge of the quantities, and I cannot share them as per our agreement. What I can say is, this kind of levels of sales of lenalidomide is likely to continue and fluctuate from quarter to quarter, based on the orders and based on the preference of customers. We believe that it will continue to play to be an important selling product until the end of the agreement, which is likely to be in January 2026. Sure. Third, my next last question is about the API side business. We have seen sequential correction in the revenue as well as the margin share. You have also mentioned in your opening remarks that there is a inventory personalization trend that is ongoing. Do you think this is a kind of couple of quarters more kind of situation? Generally the APIs and the manufacturing supply opportunity kind of business are likely to face this inventory destocking kind of a trend and could have impact on the margins generally in the near term? I think we in during the quarter, we had a certain pickup that is related to timing of picking up the orders primarily. I believe that it will cross it actually relatively fast, already from next quarter completely. Overall, I'm confident that our API business will grow this year. Sure, sir. I have a couple more and I'll join the session. Thank you. Wish you all the best. Thank you. The next question is from the line of Neha Manpuria from Bank of America. Please go ahead. Thanks for taking my question. My first question is on the India business. you know, if I look at the numbers that we reported in fourth quarter and strip out the brand divestment, you know, based on that, we've seen a pretty sharp increase, you know, on that base in the first quarter. you know, did the trade generic. I know we officially announced the launch in, you know, in July, but was there any contribution at all of the trade generic business in the first quarter? If you could give us some color in terms of what's driving the improvement that we are seeing, and how much more can this, you know, continue to, you know. I know you talked about a bunch of initiatives, but how should we look at growth in this business from the high single digit that, you know, you pointed in your opening remarks? Yes, thank you for that. The trade generic did not yet contribute much because we just recently launched it. Most of the growth happened from our brand generics, our key brands, that we are focusing on. This trend is likely to continue as expected and actually going to improve. The activities that I mentioned and we discussed in quite a few occasions on our journey for top five, it's a combination of both the innovation as well as the investment in the portfolio that we have, including the trade.... Most of the deals that we signed and going to be signed, we have actually quite a few deals that are in discussions, is to bring innovation to India. Actually, Horizon 2, that we have discussed in the past, is all about to bring innovation to India. Mostly license again, some product acquisitions, and some potential partnerships with other players. These partnerships definitely likely to have an impact from FY 2025, FY 2026 onwards. FY 2024, which I believe we will grow significantly, will come primarily by the current branded generics, the focused brands that we have. Sorry for the long answer. Yeah. Understood. Thank you so much for that. Second, on, in your remarks, you also mentioned approvals in China. If I look at my ROW business, you know, excluding Russia and, you know, CIS, we are pretty much in the, you know, range that we've been doing for the last four, five quarters, you know, the 400 crore range. When do we see meaningful contribution start from China, or when do we see how does the step up from this level happen in the emerging market business? Yes. All the EMs markets are actually growing in double digits. Obviously, Russia being a very big market in that space, and it's growing 77%, although share that the other. All of them will grow double digits, not just with Russia. Ask specifically for pickup in China, we are now starting to see the results, so likely that this trend of approvals will continue. The most of the values we start to see, if you call it a year or more significant growth in FY 2025, but we will see already in FY 2024 a certain growth. The levels that we have discussed in the past, of course, correction in China, likely that we start to see some next week. Last question, Parag, in terms of our, you know, investments into business, should we expect our absolute SG&A and R&D spend to trend up from the, you know, current spend that we are seeing, you know, for FY 2024? I understand, you know, this will obviously continue to increase, but is this level of investment that we've seen in the quarter enough to sort of sustain the growth that we have in result, or should I expect an increase from the current levels? We are continuing to invest behind multiple levers, as we have been talking, in digitalization, behind our brand, in sales and marketing. I would expect a slightly higher trend in absolute terms. As a percentage in sales, of course, it will remain very constant. Because of our top line growth, we will see the benefit of operating leverage. In absolute terms, we will see a marginally upward trend. Understood. That's helpful. Thank you so much, Parag. Thank you. The next question is from the line of Cyndrella Carvalho from JM Financial. Please go ahead. Yeah, thank you so much for taking my question. Congratulations on great set of numbers. Bringing question back to India, you mentioned about the innovative products, two products that you have signed for India. You mentioned about mother and child, you spoke about gummy, so if and the generic division. What kind of investment are we envisaging in all these three different categories that we are talking about, consumer health, generic, gender business, and, you know, getting the licensed product, and in what range should we see this over coming 2-3 years? We are not going to see more investment that what you see already, perhaps just a little bit, maybe a slight up. The some of it is what we call balance sheet money, meaning that we will sign a deal or acquire a product, it will be a balance sheet move rather than P&L move. It's relatively, it's not expensive or not going to require much, and I'll try to explain why. Most of the stuff that we are doing to India is a late stage innovation, means the product is already there. The product also proved itself in other markets, in most of the cases, it's got approval already, either by the U.S. FDA or by European authorities. The activities it requires are either a licensing fee, some trial, local trials, registrations, and we are mostly going to leverage our teams in India for doing that. If you wish, it's a marginal investment that, give or take, we are already spending the last couple of quarters, and maybe it's marginally up, the more deals that we will do. I don't anticipate a major use of cash or cost in that element. It's actually pretty straightforward in that respect. The returns will be fairly high, is what you're trying to tell on with the minimal investment. In terms of revenue, how should we see these, like, you know, if we divide into three segments, how sizable these, each segment could be for us, agent generic, innovators, enlightened? How big these could be? From a brand perspective, I understand, you have something like INR 150 crore per brand size in your mind over three to four years. What it could mean to the entire India business? The intent is to bring a significant number of products to the India market in the next coming years. If everything will be successful, we are talking about tens of agreements like that, which we believe will be the main leader to bring us to top five. If top five means that we need to double ourselves give or take in the next coming years, that's the expectation that the innovation will bring in most of that value come into play, and the rest will come from the normal growth of the brand that we will have, as well as the credit generic. The innovation will be the key, the key focus on the main growth drivers. In terms of timing, as we sign the deal, of course we need to allow some time for clinical trial, registration time, and then, of course, the pickup of the brands as we are introducing it to the healthcare community. It will be kind of a pickup of the brand. Every one of these brands will take a few years before it will come to its peak sales. The beauty about it, these are true innovation. They are not switchable, and they are bringing a real solution for places that we believe that there is no such a solution or the solution we are bringing is much better. Okay, thank you. Just one last question. We've seen a lot of Dr. Reddy's name in terms of shortages, products in the U.S. Are you seeing some opportunities meaningfully for us over coming few quarters? Are you planning to participate in some of them, which could be potentially large for us? We do from time to time, but to be honest, I don't enjoy when we are growing on the expense of others. I actually want the supply to be there for the patient. So whenever it comes, we are taking it, but I don't see it as a strategic growth either. I'm happy to supply if it helps patients, but I actually wish that all the companies will be able to sell normally and not to see it as a little growth, but it is coming to us as well from time to time. Thank you so much and all the best. Thank you. We have the next question from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Yes, thanks for the opportunity. Particularly on the trade receivables, as I see, there has been a good jump of almost INR 400-INR 450 crore, both year-over-year or even quarter-over-quarter. Is this more or less linked to North America business? Is this more to fill up the channel and so the sales could moderate to some extent in the coming quarters? The increase in the receivables is broadly in line with the growth in business and the normal fluctuations that we see, depending on the timing of supply and the credit term. There is nothing unusual, and it's in line with the business growth. Okay. Secondly, on the overall gross margin, I think we used to guide for, at least in the past, before Revlimid in the range of 52%-55% for the base business. Since launch of Revlimid, we've seen good at least 250-300 basis points improvement in the gross margin. If you could just indicate the gross margin guidance, for say, future? Yeah, actually, first of all, we can't ascribe a certain portion of the gross margin to a specific product. As you know, we manage the business on a portfolio basis, and we are launching new products all the time. This quarter, again, we have launched eight new products, and in the next two or three quarters in this year, we are going to launch more products. We have to look at the gross margin as a composite. Overall, you know, the drivers of gross margin, as you know, are, you know, the price erosion obviously brings it down, but we are seeing softening of solvent prices. We are seeing softening of gray rates and so on, and we are also seeing favorable product mix. Overall, I expect our gross margin to range between 50%-59% in the next few quarters. Interesting. Just, on extending to your, launch aspects, any further, new products which you would like to call out, which could be interesting launches over the next 12-15 months in North America study? I don't want to call out specific. We are trying to avoid it because after that, we have a lot of discussion on this product. What we can say is that we believe that we can sustain... Also, the level of activities in North America, even post the lenalidomide, because we have quite a few, very high value, products that we can bring to the market. Great. Thanks, and all the best. Thank you. We have the next question from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead. Good evening, thank you for taking my question. I'm just looking at the sales mix for the quarter. When I look at it, 47% of revenue is coming from the U.S. currently, 17% from India. I remember we had some kind of an aspirational goal to narrow this over time, but we seem to have gone the other way. I know there is a limited item there, which is probably skewing things, but is there just a broad guidelines of a more diversified geographic mix? You know, I'm a little also confused with the India strategy, because we keep divesting things, right, like the Eris Lifes ciences or the JB Pharma. How do we get to top five if you keep divesting? You mentioned innovation to kind of help you double, but I'm just wondering, what are these opportunities? Shouldn't it be more like a transformative M&A, where we acquire assets like WCAG deal perhaps a few years back, right? That are small. Just want to understand your thought process on this. Not sure. Thank you so much for the question. Indeed, the lenalidomide make the U.S. obviously in proportion, more than than before. I reiterate our commitment to the India market, actually being a very important market for us and also reiterate the aspiration to be top five. How should we go to be top five? It's not because we are going to buy a number six. I wish I could, but it's, first, it's not available, and second, it's expensive, and I don't think our shareholder wants us to do that. The way to do that for us is by launching innovation. We are, we saw that in India there are two trends that are coming up. One, some of the brand generics will have a headwind in the future, either because of the price of generic, either because of the digital channels, there will be certain level of potential switches also. When we looked at our portfolio, we saw what brands we believe are long-term for us, we decided to focus on them and to divest those that we decided to not to focus on. At the same time, we have a major effort to bring a lot of innovative solutions to India, and once this will pick up, this will bring us to the desired level, even without acquisitions. Acquisition, I'm happy to do with a reasonable price, with a reasonable risk, but we are not building on it. We can be top five even without. Got it. helpful help. My second question is on the cash file, about INR 50 billion of net cash, sitting now on the balance sheet. Parag, what are your, like, top priorities in terms of capital allocation, at this point of time? you know, where, what is the rank order of things that you would be using that cash file for? Obviously, we want to use it for driving business development, M&A. I think in terms of priority, I would say, first of all, it has to be a strategic fit. We have a clear strategy for every segment in our business, for every geography. Secondly, it must come at the right price, so we are not going to chase acquisitions just because we have cash on the balance sheet. Within these boundaries, I would say that acquisitions in India and emerging markets would probably rank higher. I will say that if there are good opportunities that come up in U.S. and Europe also, we will grab them, just like the Mayne acquisition that we did recently. I think it's a great fit. Yes, we are making acquisitions. I believe that instead of seeing a large acquisition, we will probably see a series of smaller acquisitions. A string of thought strategy, but it depends on what kind of opportunities are available at the right price. Got it. Thank you, and all the best. Thank you. The next question is from the line of Saion Mukherjee from Nomura. Please go ahead. Yeah. Hi, thanks. If you can, you know, talk about, you know, what's the revenue base in China currently? You mentioned about, you know, the significant growth from FY 2025 onwards. I understand you're getting, like, 10 to 15 approvals per year now. From a three-year perspective, with 30, 40 products, you know, added to your basket in China, how should you think about revenue, you know, in China in three years' time? How does, like, per product revenue potential you see in China versus, let's say, in U.S.? I'm wondering, can it be like, you know, $200, $300 million more in revenue in China? If you can give some color on, you know, how should we think about the growth trajectory in that market? I see any number of around 2x in the next three years. This is the time. The baseline that we are talking, that I'm talking about in market share, is not necessarily the way we report. Is around $180 million a year. It is, it means like additional INR 180 million is what you would book, let's say, three years down the line is a fair number to look at in China? It in this range could be even more. Understood. Okay. Perhaps my second question would be around R&D. I think you mentioned run rate of around INR 500 crore a quarter, right? Is it possible for you to sort of indicate, you know, how much of this is going into say, biosimilar development at this point? Secondly, you know, at the time of Analyst Day, you talked about new Horizon initiative, Horizon 2 initiative, having an impact of 1,500 basis point on your EBITDA margin. That's the kind of investment you are doing. What's the number at this point in time, if you have anything to share on that? Yeah. Saying on the second question, right now, we are in this range, so 50 to 100 basis points on an annual basis is what we are investing behind Horizon 2. Of course, going forward, depending on how many of these succeed, it might start inching up. We'll obviously, you know, discuss that subsequently in the subsequent call. Your first question was regarding? Biosimilar, R&D, yeah. Biosimilar. Actually, right now, our R&D behind biosimilar would be approximately 20% of the total. We expect it to progressively grow up, because we are investing behind biosimilar. Some of the products that we've discussed in the past, you know, tocilizumab and etanercept and so on. We expect it to progressively go on. Okay. This 50-100 basis point, if you mentioned, does not include or does it include the biosimilar investment? Do you consider it as part of Horizon 2 or this is, like, separate? No, this 50-100 basis points does not include the R&D investment in biosimilar. Okay. Thanks. Thank you. Thank you. The next question is from the line of Bino Pathiparampil from Elara Capital. Please go ahead. Hi, good evening, and congrats on a great set of numbers. Just a couple of questions. One on regadenoson, could you please help us understand the competitive landscape there? I know a couple of them, a couple of you guys have launched, but there are more approvals. How many competitors are there in the market right now? For regadenoson, it's a multiplayer product, right? We've launched it in April, and we've seen good progression in terms of our market share. We are happy with the way things are progressing for us. Okay. Any update on your product which you have out licensed, that is pegfilgrastim and the novel product, E7777. Any updates regarding timelines? On the first one, it was already launched, and the favor in the consideration will come, of course, with the progression of the sale of this product. As for equal seven, likely that in the next quarter or the third quarter, it will be December, January, we should expect to see whether it will get approval or not. Okay. Any milestones or any royalties included in the current quarter from the first product? No. Sorry? It's a low single-digit number in absolute terms. Okay. Do you have. It's not material. It's not material, so. Okay. Finally, on, generic, rituximab, you know, now that FDA has, accepted your filing, what sort of timeline can we look forward to if everything goes fine? You know, would you be looking forward to launching it, in 12 months, 18 months or something like that? Yes, this is the timeline. Somewhere between 12 months to 18 months, depends, of course, on the approval by the U.S. FDA. Once it is getting approved, we will launch it. It depends, if, you know, responses will come or anything like this, but likely in this, in that timeline. Got you. Thank you. Thank you. We have the next question from the line of Ankush Mahajan from Axis Securities. Please go ahead. Thank you, sir, for providing me the opportunity, and congrats for good set of numbers. This is an extension of the question that our base business is improving, and it seems from the number that our base business in the U.S. market, that has improved a lot. Can we say, sir, a high single digit growth Q1, Q2 in the base business? I would really appreciate if you tell us what are the factors behind that base business is improving. What is happening in the U.S. market, sir, at this time in the generic? I mentioned the part of it is timing of RFPs, agreement with customers, shortage of some products and relatively lower than normal price erosion on the base. It's a combination of all of it. Can we expect this trend will continue? It should, yes. This quarter, so there's a high single digit growth, Q-on-Q, on base business? I would just say that it is healthy growth, even after excluding Lena as well as Mayne, it is healthy growth. Yeah. Thank you, sir. Thank you very much. Thank you. The next question is from the line of Kunal Dhamesha from Macquarie. Please go ahead. Hi, thank you for the opportunity again. Just coming back to the in-licensing opportunities for the India market or the innovation that we have talked about, how does those opportunity fit into our 25%, 25% framework for EBITDA margin and ROCE? Are they accretive, neutral, or would you say dilutive? We, that's absolutely possible. We should reach those margin with the investment, it's maintenance including. That's why right now we have that, and we have even higher margins than that. I use the 25 always as a kind of benchmark of where is our comfort zone. It doesn't mean that we necessarily get it quarter-on-quarter. Likely that in the next couple of quarters, it will be higher than that, including that investment. Likely that the 25 anywhere needs to include all of the other sales, so it will not be below that, the 25%. Sure. second one. Great, yeah. just to clarify, 25% EBITDA, obviously, is for the entire portfolio across all the businesses. There are business segments which will be higher, and there are business segments that will be lower than that. The 25% is our overall experience, and that model includes certain part of portfolio, which will be licensed. Sure. Sure. Okay. Secondly, on the trade-changing business, can you provide some, you know, details as to, you know, we have launched this division, how many people have we kind of, you know, hired for this? How many products that we are expected to launch, let's say, over the next two-three years? Which are the geographies that we are targeting or any particular therapy areas that we are targeting for this business? We are now participating in about 50% of the India markets. When you look at our portfolio today, there are certain therapies and segments that we are not participating, which is about half of the market. We are targeting, obviously, a place in which we believe there is a meaningful play in those areas that we are not participating. We will launch it all over India. Geographic geography-wise, it will be in all the states of India. In terms of number of products, it will be, I don't have the exact number, but it's few kinds of products that will be launched in the direction. As for the pick-up and staff, we probably need to see the response of the customers to that, which at the moment, we cannot say. We probably need to wait a quarter or two. Sure. Thank you, and all the best. Thank you. That was our last question, ladies and gentlemen. I now hand the conference over to Ms. Richa Periwal for closing comments. Over to you, ma'am. Thank you all for joining us for today's evening call. In case of any further queries, please get in touch with the investor relations team. Thank you so much. Thank you. On behalf of Dr. Reddy's Laboratories Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.