Ladies and gentlemen, good day, and welcome to NATCO Pharma Q1 FY 2022 earnings conference call hosted by Investec Capital Services Private 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. Anshuman Gupta. Thank you, and over to you, sir. Thank you, moderator, and good evening, everyone. On behalf of Investec Capital Services, I welcome you all for NATCO Pharma's Q1 FY 2022 earnings call. Today, we have the senior management represented by Mr. Rajeev. He's the Vice Chairman and CEO. We also have Mr. Rajesh. He is Vice President, Investor Relations and Corporate Communications. Over to you, Rajesh, sir. Thank you. Yeah. Thank you, Anshuman. Again, good evening, everyone, and welcome to NATCO's conference call discussing our earnings results for the first quarter of FY 2022, which ended on June 30th, 2021. During this call, we may be making certain forward-looking statements, which are predictions, projections, or statements about future events, and anything said on this call which reflects our outlook for the future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces. I'd like to state that the material of the call, except for participant questions, is the property of NATCO and cannot be recorded or rebroadcast without NATCO's express written permission. We will begin the call with broad highlights and follow them interactive Q&A session. We hope you've received the financials and the press release that was sent out earlier. These are also available on our website. We will open up for Q&A, and then we'll discuss the details. Over to you, Rajeev. Thank you. Shall we open the floor for questions? Sure. Let's go. 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 the question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask the question. The first question is from the line of Ravi Dharamshi from ValueQuest. Please go ahead. Sorry. Just wanted to check, what is the status on the molnupiravir trials and what is the timeline, and when can we expect kind of an emergency use authorization for that? Ravi, we already filed for approval, Ravi. All the data has been shared. We have shared our interim clinical data, and it has been filed with DCGI's office. They are evaluating the file. At this time, I don't have any feedback on any timelines or not at this time. We have filed all the data, I think, and we have filed our clinical data and all the chemistry data and all that stuff is already done. The ball is with DCGI at this time. Right. One more question on the recovery on the domestic business front. If you can give us some sense on how the things are now today, now that the second wave has also subsided. Is the business back to normal, or where are we in terms of recovery? I think the domestic has done extremely well last quarter, driven by the pandemic. We had a few products which were used in the pandemic. I think we had good earnings in the month of April. May, we had very good earnings. May kind of petered out. Sorry, June, it petered out. I think April, May, we had very good sales. Regarding the pandemic, I think June kind of slowed. July, it dropped dramatically. August, we are seeing things are slowly, there's slow increase. I think that's what I'm feeling. It's based on secondary sales of our product from what I'm getting. I think there is some increase in cases. I think that's what we are seeing. Again, it's true, you can never predict the pandemic, Ravi. I mean, when it happens, it happens. Our sense is that, I think in the next few months, I think there'll be an increase in sales. Just one last question from my end. In one of our previous interaction, I think you had mentioned that there were some gaps in your overall strategy. One was the domestic piece, and second was maybe a front end in U.S. Just wanted to check if there is anything happening on that front. Have you taken any steps for the same? We are shopping for a U.S. front end. I think we've said that in the past. I think we're still shopping. We're looking at quite a few transactions. Nothing definite at this time where I can say that we're close to a transaction. We're shopping, I think that is clear. Regarding domestic as well, we're always looking for opportunities as well, and we are shopping there as well. Between the two, I feel U.S. valuations are far more reasonable than what's happening in India. I think that's my sense. Again, we're always looking for an opportunity, and I think that's where we are. Yeah. Okay, thanks. I'll join back for the Q&A for the question. Thanks. Thank you. Participants, you may press star and one to ask a question. The next question is from the line of Nikhil from SiMPL. Please go ahead. Yeah. Hi, good evening. Am I audible? Yes. You are. Please go ahead. Thanks for the opportunity. Rajeev, would you spell out how much of the domestic sales would be from COVID and from our regular onco and other businesses? Would it be 50/50 or something? For strategic reasons, we don't like to spell out literally how much we made in a particular product. I think if you look at the base sale, a good increase has happened on the base sale. I would attribute a lot of it to COVID. A percentage itself, top of mind, I don't have an answer to your question, my friend. I think that's the best way I can do. I think good percentage of the growth has come from I think a good trend you can see from last Q and the present Q, and I think you see a dramatic increase in domestic. I think if I remember, percentage is almost a 70% increase compared to the previous quarter. I think a lot of it is attributable to COVID. Okay. Okay. On the export side, if we go by the sequential run rate, in March, we were at INR 150, and this quarter, we are at INR 145, and if we look at it, we had a few product approvals which we had mentioned that we have launched. Is it like a lot of profit contribution or the partnership sharing will come in Q2, Q3? Or is there- Even though we got every approval in last quarter, the actual launches happened in this quarter because logistically, it took us a while to complete all the three validation batches and send. We didn't launch literally on the day of the approval. There was a lag between the actual approval and the launch. The actual launch of everolimus, the Afinitor where the second generation happened in this particular quarter. There's a bit of a lag there. Statistically, it's not comparable because we had the upside of chloroquine and oseltamivir. Now we don't have any sale on those two products, or we have minimal sales, so to speak. I think that's the reason why you're seeing a variance in the numbers. I think the exports will get better. I know they've been soft last quarter. I think there was two, three things happened last quarter. I think same quarter last year, COVID was raging. There was a lot of supply chain disruption. A lot of people bought a lot more stock than normal. That was one reason. The chloroquine impact, the oseltamivir impact. These are missing now. I think that's the reason why they look a little soft. The business is fairly solid. I think you'll see in Q2, Q3, things will be fairly steady. We have our jackpot coming by end of the year. Overall for the year, I think we're very excited about our export business. Last question, on Nexavar, if you go by their own presentation, they themselves are saying that the sales are dropping year-on-year. Do you think that it's still a good enough product for us? Or would you say by the time we launch, how do you see the position on that product? I think it's a good product. It's a reasonable-sized product. I don't remember the sale numbers. I think it's like INR 300 million-odd, if I remember right. In that range. I don't remember the exact number. I don't want to guess, but I think in that region. Plus, minus this could happen. It's a reasonable launch. See, look at it like this. We have the sole FDA. We have the 180 days. We'll have a reasonable upside. Whenever that happens, we're not supposed to discuss the date. Whenever it happens, it'll be a good one. I think that's all. Sure. Thanks a lot. I'll come back in the queue. Okay. Sure. Thank you. Participants, you may press star and one to ask a question. Next question is from the line of Mr. Poonawalla from Anand Rathi. Please go ahead. Hi. Two questions from my end. First, on the India business, what is the status on apixaban, and what is the kind of traction we are seeing considering, I think we have relaunched this product in Q1? Could you throw some light on the new launches from the India business as well? I think, as I said earlier, I think the COVID portfolio did very well. I think apixaban, amphotericin B, posaconazole, baricitinib, these are the four major COVID products that we have had. I'm not going to split the sale for strategic reasons, but I think these four are the key products, and I think in all of them, a lot of the products had very little competition, so that's why we did very well in that particular quarter. Yes, sir. My next question was, is there any update on the crop protection or the agrochem segment? Could you provide some highlights on what is the status of the litigation, and are we prepared for launch maybe by next year or so? Okay. Let me play it out. Basically, we have already announced, as you know, in early July that we got injuncted by the Delhi High Court. We have appealed the decision. I think the judge is slated for hearing in, I think around September last week. I don't remember the dates exactly. I think around September 20th and 21st, I think. He gave one day to them and one day to us. Hopefully, again, this is all subject to the hearing going on time and everything going well. If the hearing is concluded in September, assuming, again, that's a big if. With courts, you can never guess. All goes well and we're able to conclude the hearings by September end, then the division bench will reserve a judgment, and then hopefully we'll get a decision which is in our favor. We'll see how it goes. We'll update, hopefully by the next quarter call, we'll have some clarity with the cases. I think we are hopeful about our legal position, and we believe that we have a very good case and argue that, if the hearing goes well and we're able to conclude on time, I think we could come back for rabi subject to the court decision, which is end of the year, rabi season. Awesome. Thank you so much. Thank you. Thank you. Next question is on the line of Sivaram Gutta from Aster Mind. Please go ahead. Hello, Rajeev. My name is Sivaram. I have two questions. First question is, with some of the cash generating ducks that are going off our portfolio like the Tamiflu and Hep C and clozapine, what is our next portfolio going to be in the next two to three years? That's my first question. And second question is, we've heard some information from the social media and all, that the Morgantown plant has been shut down, which basically does some quality checks for COPAXONE. How are the COPAXONE sales and how is it going to impact our sales? Is there any impact at all? I'll start on the portfolio. In the near term, obviously we lost the big ones, we have survived reasonably well. I know we have not grown, our profits have stayed flat in the last couple of years, in spite of the fact that we lost our blockbusters. In terms of portfolio update, we already spoke about it, I'll just reaffirm it again. For this year, my friend, I think there are two big ones. I think the chlorantraniliprole appeals verdict will be a very critical verdict to look out for. If that appeal goes in our favor, there's a reasonable upside that could happen this financial year. And another product that the other gentleman referred to was molnupiravir. Again, we are very bullish about this product. We are well prepared for the launch of this product. This is used in anybody who has mild COVID or in the first line. We all know COVID is going to be around for a very long time. We believe that this product has very good potential for the coming few years. In addition to these two, obviously, we have lenalidomide launch in some major markets. Publicly, we already disclosed that the U.S. launch is in the March quarter of 2022. Some of the earnings will come from there. The other markets also it's going generic. We'll disclose the date as we get closer to the launch date. I think I'm overall fairly bullish, and our everolimus portfolio also should do reasonably well. We have very good reasonable launch quantities that we have sold in this quarter. I think that will stabilize the business. I think for a reasonable upside, I think these three things will be very important. molnupiravir, the agro product, and lenalidomide. I think these three are the big things to watch out for in the next few months. Okay? The last question you had was on the Morgantown shutdown. We have an alternate site where they do the testing. So Morgantown shutdown has no- [Non-English content] A request for mute, please. Yeah. To answer your question, Mylan has an alternate site for testing the product. The shutdown has no impact on us. Okay. Thank you. Next question, please. Thank you. Thank you very much. The next question is from the line of Ankush Agarwal from Artifacts Capital. Please go ahead. Hi, Rajeev. Just one quick one. In case the agrochem decision doesn't. Hello? I'm audible? Please go ahead. Go ahead. Yeah. Rajeev, in case the agrochem CTPR decision doesn't go in our favor, in that case, what kind of cost or damages are we looking at in terms of say, litigation costs, damages, or inventory write-off? You can highlight something on that part. There are no damages, no, because we have not launched the product. There cannot be damages when you've not caused any damage to anyone. Yeah. Legal costs are the only one. They're already expense in the balance sheet. Right. In terms of inventory? That is not much. Inventory, yes. We have built up inventory. I think we are very clear that, if you want to launch a product like this, you need to build inventory. I think the best case scenario is if we get the favorable verdict, otherwise we need to carry the inventory into next financial year. The patent goes off in August 2022, that's the worst case scenario. The launch will get delayed to August 2022. I think that is my understanding. I remember. Obviously, we need to write off the inventory. One moment. Let me complete answer the question. Yeah. Sorry. Write-off and all, I'm not taking a write-off. We believe that, if we don't sell it now, we'll be able to sell it in the next financial year. It should be fine. Okay? Okay. Got it. Thanks. You're welcome. Next question, please. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. Hi. Thanks for taking my question. Rajeev, on the U.S., there has been talk across various companies who've reported around significant pricing erosion in the U.S. Now, that is largely for the oral solids portfolios. In your portfolio, have you seen anything dramatic on the price erosion side in your in-line product? I think the other products have been fairly stable. It's been all right. I think we've taken a little bit of hit on doxorubicin. That is one of the big profit shares that we've seen a reduction compared to the last year. There's been a dramatic drop on that one. See, Nitin, I think that's how U.S. business works. If you're going to see competition, you're going to lose profit. This business is all about trying to launch difficult-to-do generics and try to be in the first wave. That's how it works. I think you just need to come up with a new rabbit out of your hat every time. And that's the nature of the beast. Yeah. Okay? Secondly, on our non-U.S. businesses, on the formulation side, obviously, you talked about the lenalidomide launch in a few geographies that will happen. X of that, how do you see these geographies in terms of growth visibility for the next few years? It's doing well. I think all our subs are profitable. Brazil has turned profitable this quarter. That's done well. Canada is doing reasonably well. Our other smaller subs like Singapore, Philippines are doing well. We're happy with our strategy of focusing on non-U.S. markets. These markets now are, even in the base case, are representing about 13%-14% of our top line. There's been a good diversification of our revenue, which was these markets contributed almost nothing three years ago. I think we're happy with how we are progressing, and we're also looking to expand other markets. We're looking for assets in other markets. I think the way this business works is, these are the sweet spots. I think, one, you need to have a smart U.S. portfolio, which are difficult to do. You need to have a smart branded generic business. And three, you need to have a geographical diversification. I think you get these three things right, I think then you can have a successful generic business. I think that's how it works. That's a formula for success if you ask me. I think that's what we need to work with. Okay? Okay. Thank you. Thank you. Thank you. The next question is from the line of Rahul Veera from Abakkus. Please go ahead. Hi, sir. I just want to understand that in terms of the domestic formulations, our earlier top line used to be around INR 800 crores-INR 1,000 crores. How soon can we get back to that? I understand the COVID impact, but X of COVID impact also, when do we see returning back to that domestic formulations? I think our peak sales were about INR 800 crores, and I think out of which INR 500 crores was Hep C, Rahul. At that peak year. That Hep C has now dropped to, annualizes drop to, I would say about INR 40 crores-INR 50 crores. There's almost a 90% dip in that business. In terms of coming back and all, see, we are doing well in these segments that we're operating in, and I think we repositioned our portfolio and focused on the COVID products. I think you're seeing the repositioning that we have seen on the COVID, and that has done wonders for us last quarter. We have a good position in the COVID portfolio going forward the next few months. See, what COVID has done is done a lot of disruption, honestly. What has happened is the whole today, 20%-30% of the growth of the business is COVID or COVID-related drugs or COVID-related supplements, and so on and so forth. Without being in COVID, you can't grow any business. Okay, that's one. I think in COVID, we have a fairly reasonable strategy. But the other businesses, we are doing reasonably well in cardio and onco and gastro. What we have done is to increase sales, we have launched a division called NATCO Reach. We're going to have about 150-200 reps is what we're targeting. What we believe is this division will focus only on COVID products and other diabetes and all for GPs. Because one of the biggest things that I've seen in COVID is a lot of patients don't go to corporate hospital immediately. They actually get in touch with their GPs who treat COVID initially before they go to corporate hospitals. We have actually launched a division which focuses on general physicians for COVID and also a allied portfolio of diabetes for the basket. That is one of the measures that we have taken. To increase domestic sale, this is one way, another way is you need to look at an acquisition, a strategic acquisition, which can help you build that momentum. I think this is one of the two things you have to do. Right. Over the next three-four years, cumulatively, our cash flows are going to be INR 3,000 crores-INR 4,000 crores at a minimum in my view, in my estimates. I was thinking maybe expensive valuation on the domestic side, but why not? It can be a high cash flow through in business, right? You don't want to buy something just because you want to buy something. No. You have to be very careful with how you would have some minimum return on capital expectations. No? See, even if you pay more, you need to have an idea with that portfolio where you want to take that portfolio. Just because for sake of doing valuation, an acquisition you don't want to do. See, a lot of people have said this to me many times. You get so much cash on books, you never did the acquisition. See, if you don't find the right acquisition, better not to do a bad acquisition. I think this is my philosophy. I think we'll do it at the right time. I think we have to find something strategic. We just have to be patient, that's all. Sure. Fair point. Thank you so much. Thank you. The next question is from the line of Kunal Randeria from Edelweiss. Please go ahead. Good evening, and thanks for giving me the opportunity. Rajeev, you have been mentioning, right, that you want to buy some strategic assets. Share with us what exactly you have in mind, and what kind of deals you are looking for? Will you co-develop a filing with a partner or license it or buy it outright? I think we've mentioned that in the call earlier. I think what we're looking for are two things, Kunal. I think one is we're looking for a front-end presence in the U.S. I'm not looking for any large front-end. I just need a reasonable front-end with basket so that we can launch our own label. I think we've done lot of licensing deals for the last decade in the U.S., and I think especially for the tablet products and all, you need to have your own front-end. The complex generics and all, I'm still comfortable doing out-licensing deals with bigger companies because the regulatory and the expenses and the pathway for that is not as straightforward. We have changed the model in the U.S. I think we'll do front-end for our straightforward portfolio, but we will do alliance for complex generics. That's one acquisition target. Another one is the branded generic space, anywhere India or any other market. These are two areas I believe we need to do, which is, I think the two big things we need to fill in our portfolio. Yeah. Okay. Just clarification here. Rajeev, any other market I believe it could be maybe a Brazil, right? Because that's your biggest branded market maybe outside of India. I mean, any reasonable market. We look at a lot of opportunities, but yeah. I think, the core markets are India and U.S. I think these are the big markets. We don't mind looking at other markets also because I'm also very keen on diversification of revenue. But, see, it's all... You have to test the transaction by its merit, I think. We're not averse to any particular market, but anything that, there are only two, three. We need to diversify our revenue, build a good branded generic business and have direct access to the market. If it meets the criteria, we'll look at anything. Okay? Sure. Just one more on domestic oncology. Has the competition really intensified or hospital visits haven't picked up? Do you think that you'll probably be able to go back to a sort of INR 400 crore kind of a peak revenue that you had hit a couple of years back? I think the portfolio is doing reasonably well. There is price competition, absolutely what you said is right. The hospitals are okay now. Right now, if you ask me this month, things are fairly normal. Yeah. At the peak of the pandemic, again, sale dropped a bit. There's a lot of yo-yoing in the sale in onco. I think I'm not able to predict anything, but so we have good pipeline, we have good launches. The portfolio is doing reasonably well. I will not say that it's not doing bad. Again, we face the brunt of the pandemic and the erosion in the portfolio, both we have seen. Yes. Right. Thank you, and all the best. Thank you. Thank you. The next question is from the line of Kunal from Aikyam India Discovery Fund. Please go ahead. Thank you for the opportunity. Kunal, you're sounding very distant from the phone. May I request you to speak on the handset? Yeah. I wanted to understand on the CTPR judgment. We don't want the exact details, but could you please throw some light on the reasons why the judge decided to rule against us and grant the injunction to the innovator? Why did the judge decide to rule against us, is your question? Yeah, as a company we had acquired fair amount of confidence that this would work in our favor. So just, I mean, I don't want to know the exact legal thing aspect of it, just does it materially reduce our chances of getting a better decision as we appeal to this? I personally believe we have a very good case. Obviously the judge disagreed with us, I think we believe we have some very good points, I think we're taking it up in the appeal. I think that's the nature of the beast. In business, when you do patent litigation, you're going to get some decisions in your favor and some decisions sometimes go against you. That's the nature of the business. Regarding the judgment, our lawyers still believe that we have a good chance. We're appealing, we'll see how it goes. Sure. Just one question. REVLIMID Canada, would it be launched in this year itself in the March quarter along with REVLIMID in the U.S., or would it be launched at a different timeline, either this year or next year? Yeah. I think we are bound by confidentiality about the date. I will speak about the date as soon as we are closer to the launch. Yeah. Just last question from my end. I wanted to understand whether are we looking to augment our ANDA pipeline, given that, because when I look at the pipeline, we do have high value assets like ibrutinib and REVLIMID coming up in the next three, four years. REVLIMID this year and ibrutinib after two, three, four years. Do we have any more plans to add more medium-sized assets which are more niche in nature so that we may have more continuity and less peaks and troughs in our U.S. revenue? I think as a portfolio, we have a lot of niches. Those are two-year cycles. We have few other niches where we have FTFs. They're obviously not as large as REVLIMID. We have a very good pipeline. We have got eight or 10 ANDAs that we intend to file this year. I think we have a robust pipeline. In terms of the approval dates and launch and on, there are some things are two, three years away, but some things are seven or eight years away, depending on how the litigation goes. You need to invest for the future. That's the nature of this business. If you really want the big jackpot, if you want your 2028 earnings to be very good or 2030 earnings to be very good, you need to invest today. You need to balance it out. You look at all the big products that we have filed, the benefit of that, these are stuff was filed over 10 years ago. The really good stuff you need to do eight, 10 years ago. That's how the business works. You need to mix it up a little bit. You need to take care of your future seven to eight years, and again, balance it out with the near term. We're trying to do that with our pipeline, but we like doing things which are more long-term than near-term, I think, because I believe that's where the real value is. Got it. All the best. Thank you very much. Thank you. The next question is from the line of Jay Shah, an individual investor. Please go ahead. Hello. Hi, my question has already been asked, so you can pass on to the next participant. Thank you. Thank you. The next question is from the line of Nikhil from SiMPL. Please go ahead. Yeah, hi. Thanks for the follow-up. Rajeev, my question was, for CTPR, as we understand that the patent will go off in August 2022. Would you say there is enough complexity on the product that even if it goes off patent it would still be good enough for us as a revenue opportunity, or would you say then it will not be very attractive for us? Just to understand. See, thing with August 2022 is, if the launch happens in August 2022, there'll be more competitors. When there are more competitors, obviously the value will not be as much. It will be more valuable if it happens in this financial year. I think if you were to weigh whether it's better this financial year as opposed to next financial year. To answer your question, it's better if it's done this year as opposed to next year. Again, we just have to go with what the judge says. We'll just wait for the court verdict, and then we'll see how the things fall in place. Yeah. Okay? Okay. Just one last question, and this is in continuation with the previous question on the volatility, I understand the efforts which we have put 10 years back have always yielded results. First it was COPAXONE and then now REVLIMID. On the domestic side in last year, similar quarter when we had discussed, are you looking at the secular pillars of growth which can sustain a 10%-15% growth? How are you looking at building those pillars? Would you say over a five, 10 years, NATCO will remain as a company which would more focus on one time big opportunities? How should I understand over the next five, 10 years, not near three-five years, we understand there is a good near-term tailwind, but beyond that, how would NATCO be built as a company? It is obvious to us as a company that we need to have more stability in our earnings. I think when we were a smaller company, we could take these risks, and when these things happened, there's a disproportionate increase in our earnings. Now I think we've reached a more mature stage, and I think a more stable portfolio is required. I think you're absolutely right. We don't have an established portfolio of, let's say, a larger peers of ours, like a Dr. Reddy's or Lupin or some type of portfolio. The thing is, you have to put yourself in my position. I cannot, you cannot recreate that basket that they have in the branded generic space because these molecules have been around for the last 20 - 30 years. I can't launch, let's say, for example, atorvastatin, try to do something dramatic on that because that ship has already passed. What I can actually do is only do newer products. That's something that is in my control. Which you'll actually see the benefit of what we're trying to do. It looks like we're being disruptive. See, if you were to establish a very large brand of, for example, a product like apixaban, for example. This product is going to be around for many years. The benefit of that you will see in the next seven-eight years because a lot of these brands which were about INR 20 crores, INR 30 crores about a decade ago have become INR 80 crores, INR 100 crores because of general increase in market and more acceptance and just general secular growth that has happened. I think the benefit of what we're doing, you'll see in the next seven, eight years, which should bring about more stability. But in the near term, you'll see a lot of volatility because we're trying to get into a market through litigation and all. That's what brings about volatility. I think you'll see more stability as time goes. Sure. Thanks a lot. Thanks for listening. Thank you. The next question is from the line of Sivaram Gutta. Sorry, Sivaram Gutta from AsterMind. Please go ahead. Sir, I came back from the queue. I have one more question. In fact, two. Go ahead. How is our business in the emerging markets like Brazil and other countries that we are in right now? Number one. Number two, we've been a replicator of complex molecules and all. Are we making any efforts to develop our own molecule or drug for any of these diseases that are prevalent in the world right now? To answer the smaller market, I think we already spoke about that a few minutes ago. I think this business now is contributing about 13%-15% in that region. We're doing well in this business, and we're trying to scale this business up. We are primarily a generics company, obviously. I think that's most of the Indian pharmaceutical market. I think most of our revenue comes from generics. In terms of your question specifically, are we doing any NCE work? We're doing some work. I think it's very early stage. I don't have anything to report at this time. We are doing some work. To answer your question, yes, we're doing some work. Thanks, sir. Thank you so much. Okay. Thank you. Participants, you may press star and one to ask a question. The next question is on the line of Sameer Shah from ValueQuest. Please go ahead. Yeah, hi sir. Two questions. One is on the agrochemical side. We seem to be following a similar strategy of targeting blockbusters. What kind of ramp up or team size are you looking at this as an optionality to the business, or you will also make this as a sustainable larger business? How are you looking at this business? I think, this is a reasonably large business, and I think this product is a very large product, and this product represents almost 15% of the whole agro business, so it's a very important product. I think, you know, sometimes, as I said, these things work, sometimes they don't work. That's the nature of this business. We believe that we bring about 10%-15% of our top line coming from agro. It's a good diversification. I think, this comes back to the earlier question the other gentleman asked. We don't have stable earnings, then how do you get stable earnings? I think how do you get stable earnings is when you have a more diversified portfolio, which is diversified in terms of therapies, segments, and geographies. That's what gives you stability. I mean, that's what stable earnings, in my world, that's what it means. I think these segments and these entries that we're trying to do in these markets are trying to bring about that stability. I think that's what we're trying to do. All right. In terms of segments, like biologics or some other, these acquisitions, one you said is U.S. front end where you can market your own molecules. Anything else that appeals to you? As of now, I think our focus is on our U.S. front end, and our focus is on diversifying our branded generics business. I think these are the two capital allocations I would like to do in the event of acquisition. I think these are the two things we are looking at this time. In terms of biologics and all, I mean, I'm always tempted, but again, that's a different, again, it's a very, how do I say this, it's a large capital allocation and with a long duration of return. We're doing a lot of stuff which is eight, 10-year return kind of stuff. I mean, a lot of the ANDAs we're filing now are launches in 2028 and 2030. I think we're already fairly investing in stuff which the payoffs are eight, 10 years. If you add biologics to it, then you're adding another one which will take about 7- 10 years. If I see more cash next year, maybe I'll start making that capital allocation. As of now, I'm not making that allocation at this time. Got it, sir. Thank you. Thank you very much. Thank you. Participants, you may press star and one to ask a question. The next question is on the line of Nitin Agarwal from DAM Capital. Please go ahead. Hi, thanks. Rajeev, just on CTPR again. For your India agrochem strategy, how critical is a favorable court decision on the launch in the rabi season for this product? I mean, does it meaningfully derail that strategy for this business, if you don't get a favorable verdict? As we spoke about, I think if we don't get a favorable verdict, obviously the launch will be in August of 2022. If the launch is in August 2022, obviously the upside that we'd have got for launching this year. Because if you launch now, that's where the real upside is, isn't it? Yes. Nitin, you just have to wait here. I think let's wait, and let's see what happens. Okay. Secondly, in terms of your filings for the U.S., anything that you're looking at for filing, any large filings in your assessment due for this year that we should possibly come to? I think so. We're targeting at least two to three first files. I think we'll speak about it, I think as the year goes by. By March, I think we're hoping to report at least we've got two to three first files, and that's where we are. Yeah. Very interesting products. Okay. Two to three first to files before March. Before March, hopefully. I think if all goes well, yes. I think that's the target. Okay. Thank you. Thank you. Thank you. The next question is from the line of Viraj from Securities Investment Management. Please go ahead. Hi. Thanks for offering. Most of my questions have been answered. I just had one question on REVLIMID and it's more from an understanding perspective. We have a volume sharing agreement with the innovator, and similarly, similar agreements have also been made by other operators as well till 2026. If in case there is a regulatory ban or any supplier issue or any regulatory issue in the supply chain. Sorry to interrupt. Hello. Your voice is breaking terribly. I didn't understand your question, my friend. Can you, you have to repeat that. Sorry, do not? It's very garbled, your voice. If you can just carefully, slowly speak and ask your question again, please. I can. Sure. My question is on REVLIMID, and it's more of an understanding perspective. We have a volume sharing agreement with the innovator and similarly other competitors also have. Sorry to interrupt you. One more thing, your voice is breaking terribly. May I request you to come in a better reception area and talk through the handset, please? Handset. Is it better now? Hello. I'm sorry, my friend, I'm not able to understand your question. Can you just dial back again, please, if you don't mind? Okay. Okay. Next question, please. Yeah. Participants, you may press star and one to ask a question. The next question is from the line of Jay Shah, an individual i nvestor. Please go ahead. Hi, Rajeev. Just one question. What kind of a strategy do we have for the agro business for the next three years? Are we looking to scale up organically or are we looking to acquire some company, what is it? Also you're talking about some pheromone-based products that we're planning to launch. When are we expecting that to be launched? That's it. Thank you. We have a whole pipeline. Typically, I don't reveal the pipeline. We announce once we make enough regulatory progress on these pipelines. We have an interesting set of about 10 products I believe are very interesting and which could make a difference. In terms of pheromones, I think we launched one pheromone. We are the first pheromone for that particular product. We launched a product for cotton, for pink bollworm, which is one of the pests that afflicts cotton. That product has been launched for this season. We did a launch this year. That is driving some of the revenues for this quarter. We'll see some benefit of that. We are betting one on the pheromone platform and also our chemical platform as well. We have a portfolio of products. That's right. Just one question on this. Would the agro business be completely domestic, or what kind of sharing do we see between domestic and the international business? We are looking at both the opportunities, but at the near term, it's primarily driven by domestic. All right. Thank you. Thank you. A reminder to all the participants, you may press star and one to ask a question. The next question is from the line of Viraj from Securities Investment Management. Please go ahead. Yeah. Am I audible right now? Sir, we can hear you, but it's still the same. Okay. Hello? Go ahead, Viraj. Go ahead. Yeah. I just had one question on REVLIMID. We have a volume sharing agreement with the innovator, and similarly, other competitors also have a similar agreement. What happens if in the period up to 2026, if any of the suppliers is facing a supply chain issue or faces a regulatory ban or an oversight? Does the volume come to the first player who has filed the product or it goes to the innovator? I can't answer that question, Viraj. You're playing out a scenario. I can't answer that question. Okay. In our case, how are we managing the supply chain or the regulatory risk in terms of any perspective? I can speak for myself, Viraj. That's a very good question. What I've done, Viraj, is I've kept two plants. Our primary plant is out of Hyderabad, where we got the approval, and we also have a backup plant in Visakhapatnam, which is in the SEZ in Visakhapatnam. We filed a CBE-30 there. Even that got approved. We actually are approved from two sites. Our primary site is Hyderabad, our secondary site is Visakhapatnam. Because it's such a large product, so we wanted to make sure that we have two facilities. I'm happy to tell you that we have approval from both the sites. Okay? Okay. What are the challenges you see in terms of scaling this up and capitalizing on this coming? What challenge do we see in terms of capitalizing? Yeah, the risk in terms of capitalizing it. Yeah. I think I covered the first risk. You asked me, do I have a backup facility? Yes, I have a backup facility and we have approvals from both the sides, which is a very good position to be in. In terms of the upside and all, let the market formation happen. There's a simple rule in life. It depends on how the competition comes. If there are many competitors, then obviously, you will see further erosion. We just have to see when the other guys come, and then we can make a judgment of where we are. I don't have an answer to that question. I think only time will tell. Sure. Thank you, and good luck. Thank you. The next question is from the line of Jay Shah, an individual investor. Please go ahead. Hi, Rajeev. One question on REVLIMID. We have an arrangement of revenue sharing about 30% and 70%. This might be a naive question, but does that arrangement stay even after the patent expires in 2026? Is there any way that we can amend the agreement after the arrangement, you know, the profit share might vary very low. The arrangement is the way we have signed the agreement. I think, if we make a lot of money, we'll share a lot of money. If we make less money, we'll share less money. That's how it works. Absolutely. All right, Rajeev. Thank you. Thanks. Thank you very much. Next question is from the line of Rahul Veera from Abakkus. Please go ahead. Sir, just one quick question on REVLIMID. In terms of the backward integration, like securing the supply chain from KSMs to APIs, do you see any risk there in the system in terms of our volume that has been decided for us? In terms of supply chain, in terms of the raw material supply, you're saying? Yes, yes. We are secure on the raw supply. I think we have already ordered the quantity that is required for the launch, so we're good to go. I think we have secured everything. Because it's such a large product, we've bought enough API, which will cover enough demand. We're all set to go. I think I don't foresee any challenges on the launch. We have ordered the API, we got the capsules, we got both the sites approved. We have covered every possible base. I think we played this out in our head and we have done all the investments which are required to cover to secure the launch. Right. No, just a thought process. Because of the COVID, lot of plants, API plants or even different facilities, we saw some shutdown. As you mentioned out at the starting of the call that COVID is here to stay. Suddenly it shouldn't happen that because of a supply chain from our raw material suppliers, like the plant at the last moment or during a launch time is shut for two months and we are stuck. Oh, no. I think we've been very cautious in this product. I think we have ordered the API, we already have stock. As you can see, we have approved two sites for this product. We have done everything that we should do to protect this upside. Sure, sure. Fair point, sir. Thank you so much. Thank you. The next question is from the line of Ashish Thavkar from Motilal Oswal Asset Management. Please go ahead. Yeah. Thanks for the opportunity. Sir, one question on this Zolgensma. Earlier we used to guide for around INR 200 crores-INR 250 crores in peak sales, if we had got a favorable approval in time. Supposing if the approval comes, obviously during the expiry time, would you still say that whatever we have guided, we could still make 30%-40% of that number? You're asking me something hard to judge. What I can tell you is this, okay? I'll be very straight with you. If the launch happens now, we'll make more money. If the launch happens later, we'll make less money. I think that's the best way you can answer that question. Okay. In terms of quantum, less would be far lesser, you're saying, or you would still be satisfied at the end of the day? It'll be nicer if it happens sooner than later. But, you know, end of the day, we have to hope that these are all subject to the court case. I think we have said that in our communication many times. What I can tell you is the opportunity. I can tell you that they're challenging the patent, but it's all subject to the court verdict, and I think if the court verdict is favorable, yes, of course, we'll have the upside. That's how it works. If you get it right, you get it right, and if the court verdict is not in your favor, then that's the nature of the business. Then you launch later. That's a risk that you take, and sometimes they work, sometimes they don't. That's it. Yeah. Fair enough. Sir, next question on this, obviously our arrangement with the partner for REVLIMID. Was just curious to know why are the terms more favoring the partner and not us in terms of when it comes to profit and revenue sharing? I signed that agreement many years ago. I signed it when I was a much smaller company. I think at that time, we needed coverage of costs and so on and so forth. I think that's the nature. We had signed it then, and at that time in life, we were not such a large company. Will I sign that agreement today? Obviously no. You have signed it then, and you honor what you signed, so that's how it works. Would it be fair to assume therefore, IMBRUVICA, the terms would be in our favor? Yeah. IMBRUVICA is a higher profit share. It's a 50/50 share. Plus the cost of API, which is capped. We actually will get majority of the revenue in our favor. That was signed much later, so obviously. We invested a little more on that. Okay. Yeah. We're a bigger company now than then. This is a function of how much of the money you're putting on the table, right? If you put less expense on the table, then obviously the other partner will ask for a higher share. If you put more money on the table, then obviously you can ask for a higher share. It's all directly linked with what you're willing to risk. Yeah. This is helpful. Thanks and all the best. Thank you. Thank you. The next question is from the line of Alisha Mahawla from Envision Capital. Please go ahead. Hi, sir. Good evening, and thank you for taking my questions. Sir, my first question is with respect to in the domestic business, what is the strategy to grow our cardio and diabetes portfolio? Because we have been quite positive on it, but what is the strategy to really grow it? I think we spoke about that a few minutes ago. I think, we have these three segments that we are active in, gastro, onco, and cardio-diabeto. I think we have a good pivot on the COVID portfolio, and I think, I alluded to the products that we launched in the COVID portfolio, and last quarter we did reasonably well. I think we are there in all the major growth portfolios at this time. We have a very good pipeline. I think we spoke about molnupiravir as well, so that's going to be a big product as well. That's it. I think we're looking good. It will really make it a very large business and we also need to obviously, probably do an acquisition because we still have a very limited coverage. For example, before we launched this new division that I spoke about, we only have 300 reps for whatever business that we do. If you look at deals per man, I think ours is probably one of the best in the industry. Again, I don't cover large set of doctors. If we talk about our other peers, they all have 5,000, 10,000 reps. We only have a fraction of that. I think to achieve that, you need to cover more people and have a larger portfolio. Either you get that through more launches or you get that through an acquisition. Okay? Sure. With respect to the agrochemical portfolio, while we are expecting a rapid launch for CTPR, and last call you did mention that there's a pink bollworm product that you have launched. What is our agrochemical pipeline looking like? What are the number of launches we're looking at doing, say, next year if we want to be in time for the kharif season for this business to grow substantially over the next couple of years? We have a pipeline, the big one obviously. The pink bollworm we already launched. That is already there in the market. We just launched this year. It's a new concept we are selling. It's the first time in India. We'll see the benefit of that in the next couple of years. Regarding chlorantraniliprole, it is subject to the court verdict. We'll see how that goes. In addition to that, we also have other products. They'll start kicking in around 2022, 2023. We have a pipeline. As I said, we don't usually reveal our pipeline. Once we are closer to a marketing approval, we'll speak about that. To answer your question, we have a good pipeline. Yes. Okay. Thank you, sir. Thank you. Thank you very much. The next question is from the line of Vishal Manchanda from Nirmal Bang. Please go ahead. Thanks for the opportunity. On agrochemical, could you share what is the burn that you are taking in your numbers currently? What is the cash burn? I tell you top of my head, I can't recollect exactly, but I would say about INR 15 crores-INR 20 crores a year. I think that's the burn we're probably facing at this time. You said INR 50 crores? INR 15 crores. INR 15 crores-INR 20 crores operationally. INR 15 crores-INR 20 crores. Okay. Plus depreciation of the asset. I don't recollect what the depreciation on that asset is, but it's a INR 150 crore s-INR 200 crores CapEx, and depreciation on that. Plus the cash burn of about INR 15 crore s-INR 20 crores at this time. Right. It's reflected in the balance sheet. Okay. On the pheromone product, are there entry barriers which would restrict the competition in the product going forward? Something on how fast this can scale up, and what's your expectation on the scale-up of this product? We're working with our partner, ATGC, on this. We out the technologies from them. In terms of scale-up or not, the pink bollworm has been a reasonable launch, but the problem with the pheromone platform is the adaptation. It's not like a generic when you already have a very large market and then you're cutting price and you're entering, and the market is already well developed, so you just have to do a discount and you start taking market share. Pheromone is the exact opposite. What it is essentially what you're trying to do is, you're trying to build a concept and sell the farmer the concept of using the product. That takes about two, three years. I think to say that there'll be a dramatic increase of revenue, probably not. I think it'll probably take a couple of years before you actually see the benefit of that. At this stage, I think we're just trying to get the adaptation going. People have to adopt, so it takes time. You'll see the benefit of that over a period of time. Thank you very much. And just a- Yeah. Sorry, sir, go ahead. Yeah. I think this is it. I'll take one last question if anybody has. The next question is from the line of Kunal from Aikyam India. Please go ahead. Okay. Thank you very much for the opportunity. I have a single question. I wanted to understand, commercially, how hard would it be for any player, considering, after the last set of agreements, we have probably eight-nine players in development who would come into the market gradually. How hard would it be for any player to build share? The reason why I'm asking is that, if it is hard for any. I'm talking about building share commercially. In terms of the commercial challenges of getting a market share. Because the rationale which I'm thinking about is that, if it is hard for someone to commercially build share, then it will have a higher incentive for them to probably reduce the price a bit, and that will be dilutive to all the players involved. We saw the same case happening in the case of COPAXONE, where Mylan found it very hard to gain share because of XYZ reason and the price had to come down quite a lot for Mylan to gain a reasonable share. Effectively, COPAXONE ended up making half the profits of what it would have made if the pricing would have not been eroded. Just applying the same scenario to REVLIMID, how do you think about that? I think you can't really predict the future. I think what I can say is that we are the first-mover advantage. I think that is worth something. We are the first generic, so that makes a lot of difference in our business. Typically, when these REMS type of products, we are the first generic, and once the registry is, and you have started the registry and, you are the first generic that's getting dispensed. I think generally you tend to do reasonably well, and you get to keep market share. I think the price and all, you're selling generics, my friend. Price has to go down. That's the nature of that business. I think initially when you're on the first wave, obviously you make more money, but as more competitors come in, prices do fall, but that's the nature of it, and I think you can't really stop that by any sense. You just have to come up with more interesting things and offset what you're losing, I think. That's the nature of the beast. I think that's how I can say it. Okay. Thank you so much. If the price declines much, much faster than what anybody would expect in a scenario like this, that could also be profit dilutive. Would you say that? Obviously, no, I think, yeah. See, thing is, until the market formation happens, until we see how the other generics play out, it's very difficult to judge. Only time will answer that question. What I can only tell you is that we'll be the first generic, from what I understand. Based on what is there in the public domain, I think we should do well, and we're hoping that we should do well with this product. Yeah. Thank you very much. Okay, thank you. That will be the last question. I will now hand the conference over to the management for closing comments. No, thank you so much, guys. Thanks for attending the call, and very nice interacting with everyone. Thank you so much. Good night. Yes. Thank you all. On behalf of Investec Capital Services Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.