Good morning, ladies and gentlemen. Welcome to the Q3 FY23 earnings conference call of Glenmark Pharmaceuticals Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note, that this conference is being recorded. I now hand the conference over to Mr. Utkarsh Gandhi, General Manager, Investor Relations for Glenmark Pharmaceuticals. Thank you, over to you, sir. Thank you, moderator. Good morning, everyone, and a very warm welcome to the Q3 FY23 results conference call of Glenmark Pharmaceuticals Limited. Before we start the call, a review of the operations for the company for quarter ended December 31, 2022. For the Q3 of FY23, Glenmark's consolidated revenue from operations was at INR 34,639 million, as against INR 31,734 million in the corresponding quarter last year, recording a growth of 9.2%. For 9 months of FY23, Glenmark's consolidated revenue was at INR 96,164 million, as against INR 92,858 million, recording a growth of 3.6% year-on-year. We start with the formulation business. We start off with India. Sales from the formulation business in India for the Q3 of FY23 was at INR 10,745 million, as against INR 10,069 million in the previous corresponding quarter, recording growth of 6.7%. India business contribution to the consolidated revenue was 31% in Q3 of FY23 compared to 32% last year. As per IQVIA Q3 FY23 data, Glenmark's India formulation business continues to record strong growth of 11%. As per the IQVIA data, Glenmark's India business continues to be ranked 14th with a market share of 2.2%. During the quarter, Glenmark's India business significantly improved its share in key therapeutic areas of cardiac and dermatology. As per the IQVIA data, cardiac market share for Glenmark increased to 5.37% from 4.85% last year. The dermatology market share also went up to 8.15% from 8.05% last year. Glenmark's market share in other key therapy areas also remained strong. The company's share in respiratory market was 5.34% and in the diabetes market was 2.38%. As per the IQVIA data for May and December 2022, Glenmark is ranked second in dermatology, third in respiratory, and was ranked actually second in the Q3 in respiratory. Glenmark is ranked sixth in the cardiac segment and fourteenth in the diabetes segment. Company continues to have nine brands in the IPM top 300 brands of the country on the basis of IQVIA May 2022 or December 2022 data. The company launched multiple new products during the quarter and continues to gain share in some of its key launches across segments. In the Q3, Glenmark launched a fixed dose combination of teneligliptin, pioglitazone, and metformin SR under the brand name Betapiomet. This is a novel and affordable FDC to help improve glycemic control amongst adults with high HbA1c and high insulin resistance. And it also improves adherence through a single pill. Earlier in FY 2023, Glenmark also launched sitagliptin and its fixed dose combination, followed by lobeglitazone and FDCs of teneligliptin, including combinations of pioglitazone and dapagliflozin, emphasizing its focus on the diabetes segment. In the cardiac segment, Glenmark recently launched sacubitril plus valsartan under the brand name SacciV for the treatment of heart failure. This combination belongs to the class, angiotensin receptor-neprilysin inhibitor. This drug helps reduce the risk of cardiovascular-related death and hospitalization. The company continues to have a healthy pipeline of differentiated products, which will let it then launch in the market going forward. For India consumer care business, primary sales for the GCC business, the consumer care business was in Q3 was INR 431 million, with a growth of 16%, which is mirrored by strong secondary growth of 13%. For the nine months of FY 2023, the GCC business revenue stands at INR 1,634 million, with a YTD growth of 34%. Our flagship brand, Candid Powder, delivered a revenue growth of 9% in Q3 and about 38% in the nine months. Our La Cream portfolio delivered strong growth of 36% in Q3 and about 80% in nine months. We also expanded the La Cream product range through La Cream moisturizer. Finally, Scalpe+ portfolio recorded 12% growth in Q3 and about 13% growth in nine months of FY23. Moving on to North America. The North America business registered revenue of INR 8,333 million, which was about $102.3 million for Q3 of FY23, as against INR 7,533 million, which is about $94.8 million for Q2 of FY23, which essentially translates into a quarter-on-quarter growth of 11%. North America business contributed 24% to the consolidated sales in Q3 of FY 23. In the Q3 of FY 23, Glenmark received final approval for Nicardipine Hydrochloride Capsules. Glenmark also received final approval and launched sodium phenylbutyrate tablets USP 500 mg. In addition, Glenmark also launched Fingolimod capsules 0.5 mg and a new pack size of Olmesartan tablets. Glenmark filed 1 NDA in the Q3 and plans to file 6-8 applications in the forthcoming quarter. In Q3, Glenmark also reached a settlement with Pfizer for Axitinib tablets, 1 mg and 5 mg, the generic version of their Inlyta tablets. Glenmark had previously announced that it had received a tentative approval by the US FDA for their Axitinib tablets on November 30th, 2020. As per the IQVIA data for the 12-month period ending December 2022, the Inlyta tablets market achieved annual sales of approximately $657.1 million. Glenmark marketing portfolio consists of 178 generic products authorized for distribution. The company currently has 36 applications pending in various stages of the approval process, of which 21 are Paragraph IV files. Moving on to Europe. Glenmark's Europe operations revenue for Q3 FY23 was INR 4,932 million as against INR 3,807 million, recording a growth of 29.5%. The Europe business contributed 14% of the total revenues in Q3 FY23 compared to 12% in Q3 FY22. The strong European business growth was driven by markets in both Western Europe and Central Eastern Europe. Key markets in Central Eastern Europe, such as the Czech and Poland, recorded strong secondary sales double-digit growth during the quarter. Growth was driven by uptick in base business as well as new product launches in the CEE market in the Q3. Western European business also clocked a high double-digit growth for Q3 with markets like the U.K., Netherlands, and Germany all growing significantly. In the U.K., the overall pharma market witnessed some supply disruptions which helped Glenmark gain additional share through continued supply to key customers. Also 16 products were launched in the Western European market. Growth was also led by our respiratory portfolio, which continues to do well in all the European markets. Key brands such as Ryaltris and Salmex have gained market share both in volume as well as in value across the Central Eastern European markets. The product continues to do well in the Western European markets also through our partners. Tyziga also continues to grow in the Western European market. Moving on to the ROW region, which consists of our Asia, Middle East, Africa, Latin America, and RTI regions. For Q3 FY23, revenue from the ROW region was INR 6,541 million as against INR 5,348 million for the previous corresponding quarter, recording a growth of 22.3%. ROW business contributed 19% to the total revenues in Q3 FY23 compared to 17% in Q3 FY22. Glenmark Russia business recorded secondary sales growth of 26% in value and 3% in units in Q3 versus the same period last year. Strong growth has been driven by all the key brands in the market, including Ryaltris, Molnupiravir, and Candiderm. Ryaltris continues to gain share and has now been included in the guidelines for Russian Rhinology Society as well. Dimetindene gel, Fenistil was launched in October 2022, additional registration approval has been received for the oral drops of this product as well. These two launches will further boost the dermatology segment. As per the IQVIA MAT December 2022 data, Glenmark Russia business growth was about 13.9% in value terms, in line with the overall market. Volume growth was also in line. Amongst the dermatology companies, Glenmark ranks twelfth as per the MAT December 2022 data. Amongst the companies presently we expect to run market in Russia, Glenmark continues to maintain a strong position, ranking second as per the MAT December 22 data. Moving on to Asia. Among the key markets in the Asia region, Malaysia and Philippines continue to record double-digit secondary growth. Certain macroeconomic headwinds are slowly easing out in other key markets like Sri Lanka. Myanmar continues to have challenges related to currency depreciation. In the Asia market, dermatology and respiratory are our key therapy areas, contributing the majority of our sales. Ryaltris continues to do well in the overall market, we hold about 15% share in Australia. Our partners in South Korea, Yuhan, also launched Ryaltris in the Q3 of FY 2023. The product has already shown a very strong pickup in the market with 30%+ share in the combination market in a very short time span. The Middle East and Africa region recorded close to 30% growth in secondary sales during the Q3. While the Kenya market continued to be impacted by some instability, Glenmark achieved strong secondary sales in South Africa and Saudi Arabia. On the back of key launches, Glenmark continues to gain scale in other markets of the region, such as the UAE, Uganda, and Tanzania. The company has also signed multiple business development deals to further augment the business growth. Latin America witnessed strong growth for the 9 months of FY23. Respiratory again remains a key therapeutic area and a key contributor for Glenmark and its growth in the Latin American market. Glenmark has a high single-digit market share across the chronic respiratory products in Brazil, is actually ranked 5th as per the IQVIA MAT data in the covered market for the chronic respiratory segment. Glenmark is growing faster than the covered market, across all the segments in Brazil. In Mexico as well, which is another key market, secondary sales growth has remained strong, growing at about 15% for Glenmark compared to market growth of 8% in terms of value. This is as per the IQVIA MAT December 2022 data. We'll just give a brief overview of our respiratory, key respiratory products, starting with Ryaltris. At the end of Q3, marketing applications for Ryaltris have been submitted in 58 countries across the world, while it is commercialized in 23 markets, including major markets like US, Europe, where we have marketing approval and commercialization in UK and 10 different markets across Europe, Australia, Russia, South Korea and South Africa. Glenmark's partner in the EU, Menarini, initiated the commercial launch in the Nordic countries of Denmark, Finland, Sweden and Norway, and Germany as well in the 1st quarter, and intends to launch the product in additional European markets in Q4. Apart from in the US, Hikma has also launched the product. Ryaltris is now stocked at all major wholesalers. Discussions are also ongoing with insurance companies to increase coverage for Ryaltris. During the Q3, Glenmark submitted marketing authorization applications for Ryaltris in Hong Kong, Morocco. Glenmark received marketing authorization grants for Ryaltris in Tanzania and is awaiting approval in other key markets like Belgium, Mexico, Vietnam, et cetera. Glenmark's partner in mainland China, Grand Pharmaceutical, aims to complete enrollment of the ongoing phase three study in China for Ryaltris and submit the marketing authorization by the end of 2023. Glenmark partner, Bausch Health, intends to soon launch Ryaltris in Canada as well. In terms of other key products, the clinical trial continues for our generic Flovent pMDI product, and we expect to file the NDA in calendar year 2023. We also plan to file at least one more generic respiratory pMDI in the U.S. in the calendar year 2023 and continue our filing momentum beyond that. In terms of our innovative R&D pipeline, we'll cover GRC 54276, which is our HPK1 inhibitor. It is being developed as an orally administered IO adjuvant treatment for patients with solid tumors. For GRC 54276, it's a no-novel orally active HPK1 inhibitor that demonstrates excellent standalone efficacy and enhances current immunotherapy efficacy. A phase I dose-escalation study is ongoing in India. Successful recruitment of patients in cohort 3 was completed in the Q3 of FY23. No dose-limiting toxicities were observed or have been observed to date. IND submission and DCF submission is planned in the Q4 of FY23 to initiate a phase II combination study of GRC 54276 with pembrolizumab and atezolizumab in the U.S. and India. GRC 39815 is a RORγt inhibitor and is in the company's respiratory pipeline assets, which is being developed as an inhaled therapy for mild-to-moderate COPD and currently undergoing phase 1 development in the U.S. Moving on to our API business, Glenmark Life Sciences. When revenue from operations including captive sales for GLS was INR 5,407 million as against INR 5,225 million, recording a year-on-year growth of 3.5%. Generic API revenues increased 5.9% quarter-over-quarter and increased 1.8% year-over-year. Regulated market business continued strong growth momentum. Further contributions of over 7%-6.5%. Our CDMO business decreased by 9.6% quarter-over-quarter, but demand is expected to pick up from Q4 onwards. Multiple projects are either completed or ongoing for capacity expansion across the manufacturing sites in Klasa and Baddi. External sales for GLS in Q3 FY23 were at INR 3,756 million, as against INR 3,032 million in Q3 FY22, recording a growth of 23.9% year-over-year. For the updates on GLS, you can log on to the website of glenmarklifesciences.com. Covering Ichnos Sciences, Glenmark has invested INR 1,518 million, which is about $18.5 million in the Q3 of FY23, compared to INR 1,520 million, which is roughly $20.5 million in the corresponding quarter last year. For the first 9 months of FY23, Glenmark has invested INR 4,880 million compared to INR 4,987 million, which was invested in the corresponding period in the previous financial year. For further updates on the pipeline and the organization, please log on to the website ichnos-sciences.com. The pipeline update for the Q3 of FY23 has already been published on the website. Just want to cover a few objectives for FY23. Revenue growth of 6% to 8% during the year. Sustaining EBITDA margins at similar levels as they were in FY22. A CapEx of INR 700 to 800 crores. Strategic priority is to enhance our free cash generation and further debt reduction. We continue discussing with potential partners for out-licensing of our innovative assets. Some notes to the results before we begin the Q&A. Forex gain for the quarter was at INR 47.6 crores, which is recorded in other income. Total R&D expenditure in the Q3 was around INR 276 crores, which is 8% of total net sales. For the full year, we expect R&D expense to remain around 10%. Investment in Ichnos, as noted earlier, was $18.5 million in Q3, compared to $20.5 million last year. For nine months, the investment was $61.3 million in FY23, compared to $67.5 million in nine months FY22. The exceptional item in consolidated results is net gain of INR 33.9 crores arising from sale of cardiac brand Vasin for the India Nepal business, net of expensive trade receivables, inventory write-off and some other reinvestable expenses, as well as remediation costs related to the Monroe manufacturing site. Inventory for the period ended December 31, 2022 was at INR 3,010 crores as against INR 2,865 crores as of September 30, 2022. Receivables was at INR 3,359 crores as against INR 3,328 crores as of September. Payables as of December was INR 2,367 crores compared to INR 2,348 crores. There was a net working capital increase of about INR 158 crores as of December 2022 when compared to September 2022. Total asset addition in the quarter was INR 139 crores, of which tangible asset addition was about INR 107 crores and intangible asset addition was about INR 32 crores. Gross debt for the period ended December 31, 2022 was at INR 4,210 crores as against INR 3,954 crores as of September 30, 2022. Net debt for the period ended December 31st, 2022 was at INR 2,615 crores as against INR 2,715 crores as of September 30, 2022. The net debt has been reduced by INR 100 crores as of December when compared to September 2022. Before we open the floor for Q&A, I would just like to introduce the management of Glenmark Pharmaceuticals on the call today. We have with us Mr. Glenn Saldanha, Chairman and Managing Director, Mr. V.S. Mani, Executive Director and Global Chief Financial Officer, and Mr. Brendan O'Grady, Chief Executive Officer, Global Formulations Business. We would like to open the floor for Q&A. Over to you, moderator. Thank you. Ladies and gentlemen, we will now begin for the question and answer session. Anyone wishing to ask a question may please press star and one on your 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 Nikhil Mathur from HDFC Mutual Fund. Please go ahead. Hi. Good morning, everyone. My first question is on the recent divestments of brands in the Indian market. Now I have two questions tied to this. The first question is that what's the logic behind divesting brands in India when, if I understand correctly, Ichnos is where you are looking to make the capital allocation of Ichnos is going down. The U.S. itself is structurally challenged. Why is this pressing need to divest brands, especially in areas like cardiac and derma? The question tied to this, another would be that the companies which are acquiring these brands, they are the ones which are the challenges to the larger companies in Indian market in the next five, six, seven years. Why hand them over such brands and so that they might get a platform to launch more brands on these platforms and they might actually threaten companies like yourself only at some point in time. Just wanted to understand this entire brand investment strategy in the Indian market. I think, Nikhil, this is Glen. Our thought process is basically, you know, we divested some of our tail-end brands, right, which are not getting actively promoted because of the sales reps concentration going to the core brands, right? We are rechannelizing that capital into driving our front-end brand much harder, right? It's more, you know, portfolio rationalization effort, right? Places which we have taken out those brands and we are channelizing the, you know, the capital into our front-end brands and growing them faster. Yeah, I understand that. The point being that, why don't treat those brands as cash cows to further your initiatives, whether in India or even certain other differentiated assets globally? I mean, you have taken time and effort to build those brands. I mean, there must be something attractive in those brands. Why some of these smaller companies are kind of pursuing those brands? I'm just sort of trying to be able to understand that. Our scale, we are operating at a very different scale, right? Our India business is almost, you know, INR 3,500 to R 4,000 crore business, right? Our objectives in terms of brand size and brand potential is very different from a smaller company, right? They would look at it very much, much more differently. We are not able to provide the kind of time and energy involved in growing those brands. If we just keep them in the portfolio and we don't resource them, over time they're gonna keep declining, right? So we think it's better to take that capital and redeploy it into growing the front-end brands much faster. If you see, I mean, brands like Telma and some of the others that we have, we are still launching new variants. They're still growing at a much faster pace, right, than the market, right. There's still a lot of potential that's untapped, right, which we are now going after. Okay. How much is the net cash inflow from Razel divestment? Again, this is Manish here. Just let me address this little more comprehensively rather than just. First and foremost, our net rating this quarter is INR 100 crores lower as compared to the previous quarter, okay. As far as, you know, you have to understand this in a holistic way. EBITDA was INR 620 crores. We had a cash interest of about INR 94 crores. We had cash tax of about INR 182 crores. We had, you know, basically increase in our assets of INR 139 crores. Working capital increase was INR 158 crores. Dividend we paid during this quarter was INR 17 and a half crores. All in all, this is about INR 646 crores. Against the EBITDA, this is higher, okay. As far as Razel goes, we got about INR 314 crores. Again, you know, as we have put across, around INR 150 crore will be basically the expenses and the write down against that. We, obviously, there is a remediation cost also, INR 129 crore. Broadly, I think, this should answer your question. Sorry, Manish, I couldn't catch the number on net cash inflow from the Razel divestment. There are two ways you can look at it, INR 314, and then the various expenses and the write down on inventories, et cetera. After that, net gain is INR 162 crores. If you look at inventory or something of the past, then in that case, we would have got at least about INR 245 crores, okay, from this transaction as of that point of time, okay. What is the Monroe remediation cost? I think in the footnotes, it's mentioned that Monroe. Yeah, that is INR 129 crores. The entire consolidated standalone exceptional item, expense difference is Monroe, basically. Not standalone. Consolidated. Yeah, consolidated standalone difference is Monroe on the exceptional side. Standalone is basically what you got from sale of Razel and all the expenses attached to that. That is a standalone deal. At the, at the consolidated level, you went on Monroe, so the net gain looks at about INR 33 crores. That's how it is. Okay, understood. Then one final question is that, I mean, EBITDA margin guidance continues to be reiterated at FY22 levels. If I look at 9 months, I'm looking at reported numbers, both FY22 and this year. Last year it was 18.9%, and this year, 9 months, the company is at 17.4%. This implies that ask for 4th quarter is pretty huge. I'm not sure what I might be missing here. Nikhil, we have guided to about 18% to 19%. So far we at about 17.5%. I believe by the end of Q4, we should be past 18, I think. Okay. I mean, Q4 has to be much more than 18%, right? Yeah. Absolutely. Yes, I agree. We are working towards that. As you can see, quarter to quarter there has been a improvement. Also, I'm not getting into the adjusted EBITDA side. If you look at it in the one or two quarters, we also have got, you know, those fab inventories, et cetera, which when adjusted for, they were better. I'm now purely talking from pure EBITDA perspective. Okay, understood. Thank you so much. Thank you. The next question is from the line of Saion Mukherjee from Nomura. Please go ahead. Yeah, hi. Thank you. Good morning. Manish, you know, I couldn't understand the net cash inflow from the JB Chem, Riverside 13 divestment. Why there is an inventory write-off in that? There will be there, because you know, there are inventories in the channel. As of a particular date, you sort of only take as much as you can. Beyond that, you write down. There will be some expiry. All that comes back, no. Those are the reasons, that. It won't be transferred to JV, correct? Not all of it, no. Some of them will only go, not all of them. You can take at a particular level, and we won't go for all of them. What you're saying is the net realization is INR 150 crore? Yeah. Yeah. 150 crores. It's not yeah. No, 162 crores. INR 162 crores. Similarly for the transaction on the Derma brands, which is at INR 340 crores, would be realized this quarter. How much will be the cash inflow in that? That again will, there will be some amount of expenses, et cetera. I would value to answering that during that quarter. It could be less than 50, you think? Maybe little more than half of that, yeah. Okay. Okay. also on Monroe, INR 129 crore, this remediation cost, why is it treated as exceptional item? It's an operational expense, right? I mean, most companies. No, I wouldn't look at it that way because it's not something that we keep funding regularly, right? These are based on, basically we have to do, needful to do the regulatory action, right? It's not something that on a year-on-year basis I will keep on getting this, right? This is coming up at, based on the, you have to remediate your site. We're spending on that. That's why it's an exceptional item. No, I mean it is a one-time expense, I understand, but this is not exceptional, right? This is part of operation. You don't get these every quarter or every year. You have to remediate the site for a couple of quarters and it ends there. That's why. People come to clearly know what it is. Otherwise, if I put it up, you will ask me the next question, why is it higher and the expenses are higher? I have to respond to that. I made it very clear. I put it how you look at it is differently, but I have to put it separately, it is an exceptional item because it's not something that I'm gonna have every quarter or every year. It clearly comes to the for a person who is looking at the financial statement, very clear that this is happening. Okay. On the U.S. sales, there is an increase quarter-on-quarter. We had import alert At the Baddi site. Is the impact already there, and how should we see revenues for the Q4 in the US? This is Brendan speaking. The Baddi impact is already, it's already included into our, into our thinking. We don't expect any further impact as far as our volumes. I mean, if you think about the US quarter two was better than quarter one, quarter three was better than quarter two. And we expect quarter four to be slightly better or in line with quarter three. You know, we see the US business is certainly recovering and about $100 million of expenditure per quarter as we go forward. Okay. Any outlook on, you know, how should we think about it for FY 2024, given, you know, we had Monroe, which is still sort of under, you know, it's not cleared from a regulatory perspective? Right. you know, going forward again, you know, we expect, you know, low to mid single digit growth, going forward. I think we'll see the quarter on quarter things look strong for the business. you know, we'll see how things turn out with new product launches, et cetera. We do see recovery in the US business. As we bring Monroe back online, which we expect to do later this calendar year, then that will even add to the growth in the US. Okay. Thank you. I'm done. Thank you. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead. Good morning, and thank you for taking my question. Just the first one on Europe and ROW. I think we have seen very good strength in both QOQ and YOY for both those. Just want to understand what's happening there. Any specific products or anything you would like to... I'm just looking at the presentation that talks about sales. If you could give us some granular details on both these markets, please. Sure. I'd be happy to address that. Again, this is Brendan. I'll take Europe first. If we look at Europe, overall our respiratory portfolio is doing well across all of the markets. Our brands there, we also continue to launch through our partner Menarini. Of course, we have it in care. That continues to be well accepted across all of Europe. As I mentioned, our respiratory portfolio with products like Salmex and Asthmex continue to gain scale. We've also done a very good job with our big generic business as far as gaining volume there. That's really fueling the European growth. If we look at the rest of the world, Malaysia and the Philippines are doing well. Brazil, our respiratory portfolio continued to be strong in Brazil. We're seeing strong secondary sales in Mexico, and our Russian business has been resilient also. Had an early cough, cold season in this year in the Q3, which helped with Russia as well. Across all the segments, whether it's rest of the world or Europe, we're seeing strong growth and we expect that to continue. Nothing in terms of one-offs, right, other than the flu season, which could be different, but otherwise these are levels on which we can show sequential growth, you think? Yeah. Not really one-off. I mean, if you look at our business, it's been strong in all those markets across all products. I think one of the things that we'll point out is the growth of Ryaltris, right? It's doing really well in Australia. It's doing really well in South Africa. It's doing really well in Russia and the Czech Republic. We continue to see the acceptance of Ryaltris, which that will, you know, fuel the growth going forward also. Not really one-off opportunities, more just kind of growth in our base business and new product launches. Helpful. Just second question on employee costs. Historically, I always remember Q2 to be the strongest one, and then Q3 comes off. We have grown like even on the Q2 base. Just want to understand, are we now making the employee wage provisions even through the year, or how should we look at that? Basically, we phase it out between Q2 and Q3, so that's why the Q3 also looks a little higher. Q4 will be lower. Also just to, Shyam, just to tell you know, it looks a little higher this year for 2, 3 reasons. One is obviously the phasing that came in. Also the overall, you know, especially outside the currency impact is also there, right? When you translate to rupee, the overall thing is going to be 10%. That's another reason why it is higher. These are two, three reasons why it looks higher than last year. Also obviously the increments which are happening in the second quarter. Helpful, Mani. Last question, just want to get the CapEx numbers again. You have done INR 440 for 9 months and you're guiding for another INR 200 to 250 for the Q4. Where is this generally going towards? This will be all, in a way, you know, on a yearly basis, we've always been spending much higher than that also. You know, routine CapExes, some lines that we put, essential lines that we require for some respiratory products, all those are coming in. Those are the reasons why. Also, I think GLS get consolidated, so their CapEx also. Got it, sir. Thank you and all the best. Thank you. Thank you. Before we take the next question, we would like to remind participants that you may press star and want to ask a question. The next question is from the line of Kunal Randeria from Nomura. Please go ahead. Hi. Good morning. Just one clarification, Rajul. This was a INR 70 crore brand, right? How come you had around INR 140 crore of inventory lying in the channel? No, it's not just that alone, inventory or anything. It's also to do with the transaction costs. It's got to do with people will, you know, sort of expatriate the people. It's multiple costs that is there in that. The reason I'm asking is I mean, it's a very big number for a 74 brand. A bit more color would be helpful. The color that I'm telling you is that, basically, there is a banker's cost, there will be employee cost. We have, I mean, other in terms of what we said about inventory, et cetera, they're expiring. All that put together, that's how the cost has come together, yeah. Of course. Can you share how many maybe employees are being laid off or transferred to JB Chemicals? Sorry. We've got about 314 employees. How many employees, we're promoting in that? We've got about, 50 to 60 employees we transferred, yeah. 50 to 60. Okay, perfect. Okay. Secondly, if you in your presentation, you have mentioned some market share details for Ryaltris, I think 40% Korea, 15% Australia, and so on. Just to see, you know, from my understanding, what do you exactly mean by that? You compare against which standard of care treatment, sorry? typically we take the allergic rhinitis Okay. for that specific market. Right. A lot of these market shares are computed basis the allergic rhinitis market. Right. Okay. That means, I mean, the standard of care might be different. I mean, in some markets it could be maybe a you know, it may not be a combination product. There is a fair to understand you are taking the rhinitis market that particular country. Yeah. Kunal, basically, for example, in South Africa, it's the overall allergic rhinitis market where we are, where we have 15% share, and in Korea it's particularly the combination market in basically because it's just launched. I mean, first direct competitor is of course the other combination product. If you take the Korea market, it's the share is essentially across the across the combination therapy for for rhinitis. Okay. I take this, applied. Just one last one. Monroe, I think you spend around INR 150 crores in the quarter. I mean, it's a fairly new plan, and the number seems fairly high for one quarter. Maybe can you just share a bit more of the kinds of improvements that you're doing there? I think Monroe we are pretty much done with our remediation effort, right? Q4 it'll come to an end, right? I think, you know, we're hoping to start manufacturing by late Q4, early Q1, right, of next year. I think, you know, the remediation effort is, it's a cumulative impact, right, of all the work that we've done so far. We've been working on the site for a long time. I mean, we've not been producing product for the last 18 months in Monroe, right? Just keep that in mind. Now we are almost done with the remediation work. Please from Q1 we'll start, you know, early Q1 and Q4 we'll start manufacturing batches again. Okay. Thanks for that. Thank you. The next question is from the line of Tarang Agrawal from Oldbridge Capital. Please go ahead. Hi, Mandeep. Thank you for the opportunity. A couple of questions from my side. One, ex remediation expenses, what would be the per annum operational cost from Monroe currently? It will be roughly about INR 25 million a year. That will be the normal cost of running the facility, yeah. $25 million? Right. Okay. The second is, I mean, just to get a sense on the U.S. business, right? Roughly about INR 3,000 crores of revenue, assuming a large proportion of your generic R&D gets spent to the U.S. Almost 17% to 18% of that revenue is R&D spends. At the same time, we've got Goa, Baddi, and Monroe under FT action. How should we look at it in terms of your capital allocation, whether it's on the operational front or on the capital front going forward? I mean, typically, do we expect this business to continue being a $100 million odd business and it stays there? Just some flavor on this too for that side. I think, you know, there are a couple of things here, right? One is, you know, we think Q4, the remediation will be across Monroe, Goa and Baddi, right? After that, from Q1 onwards, right, you'll the remediation cost will come down significantly. It's because Monroe will be done, and then the other sites also will be very insignificant, right? From an overall perspective. I think the bulk of the remediation work is in Q3 and Q4, right, which is what we've taken up. The second point is talking about your US, the US business. See, we have some very exciting products which are, which we're working on, right? Like Flovent we've got, we've got another respiratory product getting filed this year. We've got a couple of CGT products we've just filed, which is in the drug device combination space. I think the portfolio looks good, right? If you see beyond FY 2024, right, while Brendan O'Grady guided to 2024 being, you know, mid-single digits, right? I think beyond 2024, from 2025 onwards, a lot of these products will start kicking in, right? If you see the outer years, we have some exclusive products where we've done some settlements, right, where we have the sole 180-day exclusivity, right, on almost 3 such opportunities, right, from, I think 2026, 2027, 2028, right. I think the portfolio looks strong as we go forward, right, both in terms of what we've filed and what we are working on filing, right, in the next 12 months for the US. Of course, Monroe, if Monroe starts kicking in second half of next year in terms of commercial sales, right, next financial year, then that will also add to the, you know, give us an injectable site, and that will further drive our US portfolio forward. There is a very clear path that we're working towards, right, for the US business, which, we're building on, right, as every quarter goes by. Okay. Again, just one last question. GLS cash flows would largely be ring-fenced to for GLS growth aspirations, right? Absolutely. That's, I mean, anyway, it's a listed public company, so everything is at arm's length. Okay. Thank you. Thank you. The next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead. Yeah. Hi, good morning. Thanks for the opportunity. First clarification on this Monroe. You're expecting exhibit batches to start from Q1. Would this, you know, currently I understand it's an OAI, so would this require an inspection or the remediation actions aren't good enough and you expect FDA to clean clear it? Prakash, all we're saying is we are starting commercial manufacturing and manufacturing from Q1, right? Obviously, FDA will come in, we believe, and re-inspect the facilities, right? That's part of the expectation. Okay. Do you have a date, it's post-remediation. What is the process? I'm just trying to understand. Post full remediation you will invite them? I mean, Prakash, we can't comment on that specifically, right? I mean, all we're saying is we expect an FDA inspection, right? The process of remediation is underway as we speak. Okay. Just a commentary on the R&D split. I'm sorry if you've already said, there's another call. What is the current R&D split between GX and innovation? GX is innovation is about 4% of GX is 6%. We've guided to about 10% for the full year. That's how the split is. How does this look for the next financial year? Prakash, it may trend a bit lower by about half a percent or so. Innovation, Prakash, because of Ichnos, right, will come off quite significantly, okay, next year, right? I mean, as we said, Ichnos will, you know, the spend there to come to $60 million from current $85 million in that build up. There is a significant drop on innovation spend next year, on account of some back in Ichnos spend. I think the overall R&D spend will trend at around 8% odd, 8.5% for the full year for next year. There is a significant drop coming out in the total R&D spend also. Okay. Largely GX remains similar. The innovation comes down the quarter. Correct. That's right. Okay. It is the coming out of innovation cuts. What about the, you know, the monetization or IPO plan? I mean, we always believe that, okay, we are at, you know, the back end of monetizing one of the large assets. Is that plan still on or what is the plan B for this? Very clearly, right, I mean, the way I see it is FY 2024 we have 4 strong innovative assets, right? 3 with Ichnos, right, GBR 1342, ISB 1442, ISB 2001. All these 3 should get to a POC by end of FY 2024, right? Then you got the HQONE, right, which is doing very well, right, and which also will get to a POC, right, in FY 2024. FY 2024 is a very critical year for the innovation work that we're doing at Glenmark and, you know, even if 2 out of 4, you know, we get good POC that we think will be transformational. Obviously the path is then to partner out and monetize it and do all that, right, which is what we're working on even as we speak. Okay. Got it. What is your dollar debt today? Sorry. The dollar gross debt and net debt. In gross debt the dollar will be about $440 million. Okay. Plus some rupee loans. The net debt would be lower by about $100 million in the currency loans. INR 100 million currency loans. Yeah. Yeah. Foreign currency. Okay. The divestment which are largely rupee lent. Yeah, rupee lent only. Okay. You would have knocked off some of the rupee debt? If you look at it, obviously, net debt is lower by INR 100 crores. To that extent some INR debt would be lower, yeah. Okay, great. Thank you. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. All right, thanks for taking my question. Nitin. On the staff cost, I think in the last couple of years, we had done a pretty solid job on controlling the staff expense increase. This year seems to be a bit of an outlier. Barring the currency, is there anything which has changed, and how should we look at this, you know, kind of staff cost as well as other expenses on a going forward basis? Let me address the other expenses first. Other expenses, we are pretty much at about 26% or so. I mean, give and take a percentage here and there as quarter wise. There we are not too much worse off, you know. If you really ask me, I think last year if you look at it, first quarter was a COVID quarter. Till July we had COVID and all that. This year it is not there. Also, the other issue that we look at this year is because, you know, outside India, when you translate to rupee, there is a rupee depreciation of 10%. That's also looks a little on the higher side. That's why these are there. Next year when you go to a full year, it will correct itself. I think other expenses, I don't see it as a, you know, broadly where we are. In terms of the staff costs, basically again, as I told the first, I mean the second and the Q3 looks a little higher because of the phasing of the bonuses. Also outside India, again, there is a, you know, when you translate there is a good 10% increase in the overall cost, you know, because of the currency. Q4 it will correct itself. Full year I look, we look at it at about 21% against 20 last year. There's a one percentage higher, I think, which are making up in other areas. Sir, on going forward, staff costs about 21%, other expenses 26%. You don't see much, much opportunity in sort of reducing these percentages, you say? Yeah, there'll be some opportunities there. You could see it 1% lower as we go along. That will improvement in the EBITDA, I think. At least 1%. This is what we did. The other expense used to be 29, we brought it to 26. Staff cost will definitely get lower than 10% as well. Okay. Secondly, on the, for the quarter, what was our mark-to-market impact of the currency on the loans? It will be about INR 1. What it moved, you know, from 81.47 to around 82. It's about INR 35-40 crores here. Okay. It wasn't meaningful. Sir, on the working capital, looking beyond Q4, how should we look at working capital now? I mean, we've had some higher inventory, working capital over the last few quarters. Do we see opportunities to bring it down further? How are you looking at the working capital from going forward? Nitin, actually it's a more of a commercial call, okay? As of now I would say. Obviously, you know, with our customer requirement being higher, especially some of our India sites where, you know, we have to work on remediation, et cetera. Obviously the requirement for inventory have gone up. I think for a couple of quarters we've seen the inventory levels higher. After that it will kind of come up. You know, it's been a, you know, in the first part of the year there were more in terms of the, you know, situation in China, et cetera. That is why we had higher inventory. I thought it would come down, because of these we need to keep it up. I think it is worth it, Nitin, because it helps us to grow our business better. Lastly, on the tax rate, any thoughts on the tax rate on a going forward basis? As you see, during the last 3 quarters it has come down. I think going forward you'll see. There are two things. One, you look at the effective tax rate, which I think should go lower than, you know, should be about in the between 30%-34% or so next year. Cash tax is anyway, you know, at about 30% only. India is much lower, but overseas because of the pension Ichnos, which as we see it coming lower and lower, both the ETR as well as the cash tax is lower. Okay. Thank you. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is from the line of Charul Agarwal from Bank of America. Please go ahead. Charul, your line from the top. Please go ahead. Hi, am I audible? Yes, ma'am. Please proceed. Thanks. Thank you for taking my call, taking my question. I wanted to understand a bit more about the US business outperformance this quarter. What was driving it? Does it impact, does it include any benefits from supply disruptions or seasonality benefits? Yeah, what is driving the outperformance here? The performance in US business this quarter is really due to just increases in volume and share gains in our base business. I think we're doing a better job executing in the market. There has been some disruption in US market that we've been able to take advantage of, which overall is helping with the recovery and the growth. As well as the new product launches. There's nothing really as a one-time outstanding issue that led to the performance. It's just kind of better execution and growth on the base business. Thank you. Thanks much. Sure. Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Yes, thanks for the opportunity. Just to go to the overall Ryaltris sales for the quarter, now that you are you know, kind of commercializing 23 markets, if you could give some ballpark number? This year, we are trending at around $20 to 25 million for the full year. For the current year, Ryaltris, our view is over a 4 to 5 year time frame to peak sales, we'll get to about $100 to 150 million in revenues. This year standing at around $20 to 25 million, primarily driven heavily by Europe and the rest of the world markets. U.S. is not yet. I mean, it's just launched, so not a meaningful conclusion for this The U.S. Go ahead. In the US, we also took a pause at the end of last calendar year, and we're working through, you know, insurance and payer coverage. There's really not a lot of Ryaltris sales in this quarter, and it probably we won't see Ryaltris sales start to pick up in the US till the second half of this calendar year. Okay. I heard correct, it would be expected to pick up second half of current year. That's right. Yeah. Secondly, how many ANDA were being filed from Monroe till date? We don't have the exact number, but my guess is it's around five, six, which are pending right now. Will the remediation measure, would we have to kind of revalidate, these products and then resubmit or what's the procedure? Unfortunately, I cannot get into that level of detail. Right. We are working through the remediation, right? You know, we're hoping to bring some of these products to the market. Did that require significant amount of infrastructure change? I mean, considering the amount that has been spent at Monroe. I mean, the amount is purely consulting cost. Okay. Bringing in third-party consultants to remediate the site. It is pretty standard, I mean, for all companies that go through remediation, right? Especially, you know, the amount of remediation that we've done at Monroe is pretty standard, right? It's not extraordinary. Okay. That's it from me. Thank you. Thank you. The next question is from the line of Saion Mukherjee from Nomura. Please go ahead. Thanks. Just one follow-up, Glenn. On India business, these divestments that you've been doing, are we done with it or you think there would be more divestment that you are sort of considering the non-core brands? We have no more plans, Sayan. I mean, we're pretty much done with it right at this point. Again, just keep in mind, look, this is all being done in order to drive us. A lot of that capital is being redeployed into driving our front-end brands. India growth will continue to remain strong even going forward despite these divestments. They are insignificant. I mean, if you see the total divestments, we are talking of, you know, around INR 150 crores on almost a INR 3,500-4,000 crore business. That is just being done to redeploy capital into our front-end portfolios. Okay. The other one on Ichnos, you mentioned, you know, the proof of concept by end of 2024. There seems to be some delay, you know, in the timelines here. If you can, you know, clarify what's happening and any more granular detail in terms of quarters that we can expect these. I think GBR 1342 should come in Q1, ISB 1442 maybe Q2, Q3, and you know, 2001 in Q4. Okay. I mean, now with COVID gone, things are on track, you think, I mean, in terms of getting or meeting these timelines? Yeah, I think so, Sayan. I mean, there are always hiccups in drug development, right? It's not a linear path, right? There are, you know, GBR 1342, there are some delays really, but we think by Q1 we'll have visibility. Okay. Okay. Thank you. Thank you. The next question is from the line of Vikas Sharada from MP Asset Management. Please go ahead. Yeah. Hi, good morning. Two questions. One regarding your net debt. The medium-term guidance is zero net debt by FY 2026, if you were to give any milestones, say by the end of this year in FY 2024, so that will be helpful. Secondly, for this Ichnos transition, that INR 150 crore of transition cost, I mean, the banker and the employee cost and the inventory, the three main items, if you could break it up, it'd be helpful. Vikas, the net debt obviously we have guided to zero net debt by 2026. I think as we go along quarter-wise, you will see it come lowering. In the next quarter also it will come a little lower. I mean, it's not, I mean, it will not be appropriate to start breaking up everything into this, you know. I've given a overall what are the spend. Obviously all this put together is what it came to. Yeah. Okay. No problem. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. Just on the U.S. business, Glen, how are you looking at, you know, the approval pipeline for the next four to five quarters? I think, Nitin, it's, you know, the portfolio is looking strong. Okay. FY 2024, as Mani said, you know, if you get to a mid-single digit, I think we'll be okay. From there on, right, starting I think second half of FY 2024, we should see some good approvals coming through, right, for the U.S. For our respiratory filings of Flovent, it's going to be a FY25 filing, if I remember the earlier guidance. No, FY calendar 2023. End of calendar 2023, right, is when we- File. we file, right. Launch is 25. Okay. The other respiratory asset, you're again looking to file in FY 2024 sometime. Calendar 2023. FY 2024. Yeah, FY 2024. Correct. Again, we're looking at FY 25 launch even for that asset. Correct. 2 large respiratory assets sometime in FY 25. I mean, that's the target. Correct. The CGTs that you talked about, Glen, what kind of timeframe would you look for those? One could get approved in second half of FY 2024. That could be a meaningful product for us. The other one, probably Q1 2025. FY 2025. Okay. That's where I think you're commenting around second half onwards is when- Exactly. some of the additional can begin to come through. Exactly. Monroe, right, to add to that. Thank you. In second half. Monroe, how will it work? Have you informed the FDA to come visit or it's gonna do it some point in time? We have constant updates to the FDA, right, on the remediation work that's going on. I think that's the only visibility that we can give at this point. Okay. Okay. Thank you. Thank you. The next question is from the line of Ajay Vora from Motilal Oswal. Please go ahead. Yeah. Hi, good morning. If you look at, you know, the current quarter, in spite of high remediation costs and inventory loss and, you know, lot of restructuring that has taken place, we are at an EBITDA run rate of close to INR 620 crores. Now that if you are looking at some sort of cleanup in Q4 as well, from Q1 and then moving forward, we are looking at, you know, U.S. improving and contribution from Monroe. Do you think somewhere in the second half that run rate of around INR 620 odd crores of EBITDA can move to INR 700 crores plus? It will definitely move, yeah. I mean, I think if you see next year, right, I mean, if we are able to grow sales, you know, 10%, 12%, you know, margin expansion because of the lower R&D spends, right, you know, margins going up substantially, right? I think that will clearly translate into higher EBITDA, right? Hopefully starting from Q1, you should see that flow-through coming, right? Some of it, at least in terms of sales growth as well as margin expansion coming through. From Q1 itself, can we be closer to the INR 680 crore, INR 700 crore of run rate? I would not like to dwell on giving a number quarter-wise, but you are right saying next year second half onwards there will be a big, I mean, bigger improvement. Should be there, yeah. Therefore by end of next year, what can be our net debt level? It will definitely come down. Yeah. I will not like to- Substantially. See, there are here and there uncertainties that come in. Instead of giving any number, all I can tell is we constantly will endeavor to bring it down. Okay? That's what we've been doing. Okay. Cool. Thanks a lot. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Utkarsh Gandhi for his closing comments. Thank you, moderator. We'll just read the disclaimer before we end the call. The information, statements, and analysis describing the company or its subsidiary's objectives, projections, and estimates discussed during the call are forward-looking statements. These statements are based on current expectations, forecasts, and assumptions that are subject to risks and uncertainties, which could cause actual outcomes and results to differ materially from these statements depending on economic conditions, government policies and other incidental factors. No representation or warranty, either expressed or implied, is provided in relation to this document and the comments discussed during the call and should not be considered as a substitute for exercise of an recipient's own judgment. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. With this, we end today's call. Big thank you to everyone for joining us today. Thank you, members of the management team. Ladies and gentlemen, on behalf of Glenmark Pharmaceuticals Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.