Good morning, ladies and gentlemen, and welcome to the Q1 FY23 earnings conference call of Natco Pharma Limited, hosted by Edelweiss Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Kunal Randeria from Edelweiss Securities. Thank you, and over to you, sir. Thank you, Michelle. Good morning, and welcome, everyone. On behalf of Edelweiss Securities, I welcome you all to Natco Pharma's Q1 FY 2023 earnings conference call. We have with us Mr. Rajeev Nannapaneni, Director and Chief Executive Officer of Natco Pharma, and Mr. Rajesh Chebiyam, Executive Vice President, Crop Health Sciences. I will hand over the call to Rajesh for his opening remarks. Over to you, Rajesh. Thank you, Kunal. Again, good morning, everyone, and welcome to Natco's conference call discussing our earnings results for the Q1 of FY 2022/2023, which ended June 30, 2022. During this call, we may be making certain forward-looking statements or statements about future events. Anything said on this call which reflects our outlook for future 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'll begin with the results highlight, and then go for interactive Q&A session. On behalf of, sent a press release earlier. Our results and press release are also available on our website. Just to summarize, Natco had recorded consolidated total revenue of INR 918.9 crores for the Q1 of FY 2022/2023, as against INR 427.3 crores for the same period last year, reflecting a growth of around 115%. The net profit for the period on a consolidated basis was INR 320.4 crores as against INR 75 crores same period last year, more than fourfold increase. Export sales of lenalidomide product to United States was a major contributor to the revenue and profitability of the business during the quarter. The domestic pharma formulation business remained steady. On the expense side, there was a one-time cost associated with the retirement schemes during the quarter and higher than usual R&D costs for product development. The segmental business split has been shared as well in the press note. We will go for Q&A, and we'll address your questions. Thank you. We'll take the first question. 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 phone. 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. Ladies and gentlemen, in order to ensure that the management will be able to answer questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. Thank you. The first question is from the line of Ravi Dharamshi from Valuequest Investment Advisors Private Limited. Please go ahead. Yeah. Hi. Thank you for taking my call. Good morning, everyone. My question is regarding the lenalidomide. Can you just explain to us how the recognition is going to happen in this case? Some of it we had recognized in the last quarter of FY 2022, and also there is a split between manufacturing margins and the profit share. If you can, whatever you can share, I understand the competitive reasons why you might not want to share a whole lot, but whatever you can share that will provide us with some sense on how the cash flow is going to pan out. Sure. I think in terms of profit share, we have booked a good amount in Q4 and a good amount in Q1 of this year. In terms of the further revenue, Ravi, I think it will taper off in Q2 and Q3. There'll not be much in Q2, Q3. I think most of it is booked. So there'll be a little bit left in Q2 and not much, I think, in Q3. I think that's my sense, but we'll see how it actually plays out. Again, Q4, I think things will get better. Q1 of 2020. Q4 of 2023, the March ending quarter ending March 2023, it'll again, things will improve. Again, we'll be very good again. June 2023 again probably will taper off. Yeah, that's what the trend looks like, I think, based on how things are. If I have to understand correctly, whenever the supplies are sent, at that time manufacturing margins are booked and maybe some amount of profit share, but in the subsequent quarters when the sales happen is when the profit share is booked. No, absolutely correct. Yeah, correct. Okay, my second question is on Copaxone. If you can just give us some sense on what are the trends in terms of volume and pricing? I think our guys are doing well. I think, I don't remember the last, the market share that we have, but I think we are 40% or close to 50%, if I recall it, but I don't remember the exact number. It's steady state. I think, overall volume has dropped a bit on glatiramer because a lot of the product has moved to the oral, as you're aware. I think for whatever size of glatiramer that is there, I think we're doing very well, and it's been a steady-state product, and it's doing well. Okay, thanks. I'll get back in the queue for further questions. Yeah. Thank you, Rahul. Thanks. Next person, please. Thank you. The next question is from the line of Ankush Agrawal from Surge Capital. Please go ahead. Hi, Ajit. Thank you for taking my question, and congrats on great set of numbers. Firstly, on Revlimid again. Wanted some sense from you, how do you see Revlimid growing for Natco post the first initial launch year? The reason I'm asking this is because in terms of volumes, if we say that the volume quota is going to increase from mid-single digits to one third over 4-5 years, so naturally the volumes are going to expand multi-fold. Based on that, do you think Revlimid from the first base year, for us in terms of value will grow, or do you expect that it will largely be stable in next couple of years given how the market develops? I just, again, I don't have all the information, but I think my understanding is this other generics are coming in a staggered manner. I think our expectation is that again, until the market formation happens, you can't really tell. Yeah, I think our expectation is it'll do well for the next few quarters. I think we have good visibility, and I think as you rightly said we should get more market share with time, and I think we should do well. I think that's our expectation. Okay. Got it. Secondly, Ajit, I think couple of years back we had this guidance of INR 1,400 crore of PAT in FY 2022, which obviously didn't pan out because a lot of things didn't play out. Now since things have started moving back, any color on if we will be able to achieve that number sometime in the future? I think that assumed few things. I assumed that you know that the profit share that we had in will be booked in March, but we booked it over you know in 2023, I think. So in that sense it has not panned out. Still we've not met the 1,400 number clearly, we have not. I think that's primarily driven by the fact that the agro hasn't panned out and our domestic has not done too well. I mean that is the reason why I think we're unable to meet. I think these two things we need to address. Now let me start with domestic. I think domestic is steady, but I think we have money in the bank, and I think we are looking at different acquisitions. Hopefully we'll be able to strengthen our domestic with an acquisition. I think that's something we're looking at. agro I will share an update. The patent expires on August 13, 2022. We also mentioned in the last conference call that we got sued for a process patent, which is about, I think around 25, I think it's about 25 patents that they filed. Right. What has happened is the judge appointed a, what you call, a third party expert to look at whether we are infringing or not infringing. I think we've taken a position that our process doesn't infringe their patent, and they have asserted that, no, we are infringing the patent. They have appointed a third party expert. They have appointed two experts, their opinion is expected. We've been told not to launch till the next date of hearing, which is scheduled, I think around August 22. Subject to a resolution, a favorable resolution of the dispute with FMC, I think, we are very excited about the opportunity that this product presents. I think it will play out in the next few weeks. Hopefully we'll get a favorable order, and we'll take it from there. The domestic, I just said, I think, we need to you know see how what we should do on an acquisition set. I think, see, what has happened in the business, I mean, I'm giving a general industry. Yeah. A bit about generics is that the market has become extremely competitive and nobody's willing to let go market share. You'll only get growth either by acquiring market share, by buying an asset or you do a new launch. I think that's a challenge in our business today. I think that's a challenge that we'll see in the future as well. Yeah. Thank you. Thank you. I'll get back in the queue for further questions. Thank you. Thank you. The next question is from the line of Ahmed Madha from Unifi Capital. Please go ahead. Thank you for the opportunity. I have a question that last quarter you quantified that we are left with 70% of the volume for Revlimid. As of Q1 end, what percentage of volumes we are yet to book, which will come in Q2, Q3? There is some left. I don't want to reveal the number, but most of it is done. There's only a little left, I think. I know I'm being a little evasive in answering it, but for strategic reason, I can't answer that question. But most of it is done, Ahmed. I think that's the best way to answer that question. Okay. Thank you. Second question on the R&D expense. Can you explain what kind of nature this unusual R&D expense was mentioned in the press release? Do we consider that this will be the new base of R&D continuing the kind of cash flows we have been receiving? I think so, yeah. I think I've said this in the last quarter call as well. I think somebody asked you what we're going to do with the surplus. I think a good portion is at least some portion of the surplus we are using for spending on R&D. I think we want to build another couple of facilities that we have so that we can sustain the pipeline for the coming decade. If you see the increase in expenses, the two primary reasons. One is there's an increase in the exhibit batches and the clinical costs. We're doing hard-to-do generics, and we're trying to keep the most of the economics of most of the products. That's the reason why there's a higher expense on the balance sheet. The second thing is the general increase in the operating costs caused by the macroeconomic environment in the world, as you know. We've seen a dramatic increase in fuel prices, furnace oil, coal. We've seen dramatic increase even in electricity prices. I think that's probably contributed to the increase in OpEx a bit. But I think good portion of the increase is coming from more spend on R&D. Okay? Of course. Thank you. Thank you. Thank you so much. Thank you. Thank you. The next question is from the line of Hiral from Moneytech. Please go ahead. Good morning. Thank you for the opportunity, and congratulations for the good set of numbers. My one question is that if I see the quarter-on-quarter performance compared to March 2022, the June 2022 numbers, revenue has increased by more than 35%, while the cost of material consumed has gone almost half from INR 193 crore to INR 95 crore odd. Whether there is a reduction in the cost substantially, and how if this is sustainable for the future, or if I missed something in the past development. You missed something like that. You actually missed something. Basically, what happened in what you call in last March quarter was, we did a write-off of the COVID inventory. It is not true consumption. So a lot of the raw material that you see is the write-off of COVID inventory. So that's the reason why you see very high consumption. Okay. That's the reason why there's a difference in the consumption. Okay. From the current quarter, what I see the margin and the revenue utilization, these are the actual margins, right? We can expect- This is the margin with see, some portion most of it is actually consumption and, I would say, some portion of it is also R&D expense, where when you do exhibit batches, you expense this off when we do the exhibit batches. A portion of this and a portion of it is the actual consumption. Okay. Sure. Sure. Okay. Thank you. Thank you. Thank you. Thank you. The next question is from the line of Rajat Sethia from iThought PMS. Please go ahead. Hi. Thank you for the opportunity. Sir, just one clarification. Did we say that when we said that we have booked most of the numbers in quarter one itself and nothing much will come in quarter two and quarter three, and the cycle will begin again from quarter four, did we refer to the manufacturing margin there or the profit share from Revlimid sales? You mean from this year you're saying or the last? See, okay, I'll tell you. Let me clarify. The profit share for the launch, we booked in Q4 of last year and Q1 of this year so far. Okay? One gentleman asked me how much of the profit share is still left. I said most of it is done, little bit is left. That will be booked in Q2 or Q3 of this year. The manufacturing also will be booked in the next few quarters. But the majority of the profit share will get booked when we get to launch the new quantity Q4 and Q1 of next year in 2023. Okay. Sir, a question here. It means basically we have sold, we are given an annual volume permission to sell some certain number, and we have probably sold most of that already in the first 5, 6 months. However, if you look at the BMS sales reported in this quarter, they have actually grown. How is that possible? I mean, we have taken away some share from them for sure. In fact, more than our permitted share in the first 5, 6 months, and we will not sell much in the next 5, 6 months, and that's how we will reach to our annual quota. However, we have taken some shares from them, but they have also grown in this quarter on QoQ basis. How is that possible? I'm not able to understand. I think there's a general growth in the molecule. Again, I've not looked at BMS's statements, so I can't qualify. I can only tell you what I have done. I can't. It'd be hard for me to judge what BMS has declared. I think my, the only logical sense is I think possibly the size has grown, but again, I can't answer your question. Okay, sir. Thank you. Okay. Thank you. Thank you. The next question is from the line of Ritika Aggarwal from Valuequest Investment Advisors Private Limited. Please go ahead. Hi, sir. Last quarter, you had indicated that this INR 85 crore of agro inventory currently in your balance sheet, and you classified that as a risk. In the current quarter, of course, you said that you are upbeat on it and expect a favorable outcome. What is the worst-case scenario? What if we do not receive a favorable outcome? What triggers this risk? Good question. We've not made an assessment yet. But what I can tell you is, for full disclosure, we'll tell you what we're dealing with. I think I just got an update on the inventory. The total inventory in agro is about a little over INR 100 crore. I think that's the current, INR 108 crore is what I understand. It is reflected in the inventory of the books. Okay. And there is also an investment on the facility. This is about INR 165 crore, I think, that is the total investment in the facility. The question now is what will happen if you get an adverse verdict? I think there are. Let's wait for the lower court verdict, the single judge verdict. Even if you're unhappy or if they are unhappy with the verdict, they'll definitely go to a DB. I think we'll make the assessment in this financial year. On what to do and if everything goes well, then I guess we don't have to provide. I think if we're not getting clarity then we have to make a decision on what to do. These are the numbers and what to do and all, I think we'll. Let's wait for the clarity, and I think we'll make a decision. Yeah, I think that's where we stand. Okay? Understood, sir. What you are saying is, could we expect that these inventory might expire and we might be able to. We may have to write off if things do not fall in the correct place? I think I don't want to answer that question now. Let's wait for the court to decide, and I think let's see how things go. We will update you, I think, when we have to make a decision. I think I don't want to answer your question at this time. I gave you the broad numbers what we are holding, and I think that's adequate disclosure at this time. Yes. Sure. Sure, sir. Sir, also last quarter our revenue was INR 760 crores. Could you update what the current revenue is? As of today, I don't have the consolidated with me. I have the standalone, which is most of the inventory. Our current inventory is INR 674 crore, and this includes the agro inventory of INR 110 crore or INR 108 crore, whatever that number is. Sure. Lastly, what is our cash and cash equivalents currently on the balance sheet? Rajesh, you want to answer that question? Ritika, so as of today, it's about INR 1,134 crore in the cash equivalents. Total borrowings is about INR 168 crore, after about INR 108 crore is the foreign loan in this currency, and about INR 60 crore working capital borrowing. Okay? Got it. Thank you so much. Thank you. The next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead. Yeah. Hi, good morning, sir. Sir, on the R&D, you mentioned you're taking more initiatives and filing more complex. Which areas are these? What is the percentage of sales we are doing on R&D, especially for the quarter, and which areas are these? I think I'll answer your question in terms of area. We're focusing on peptides. We're focusing on oligonucleotides. That's one area we're focusing on. We're focusing on onco products, specifically onco products which require clinical trial on patients. I think these are the initial areas that we're focusing on. As a percentage, I don't have the number on hand, Prakash, so I can't answer that question. I think we are spending reasonable amount of R&D, which is reflected in the costs. Okay. Next question please. How many of the filings we've already done or all of these complex filings are still WIP? I would say some we have done and some are WIP. We're targeting about 8-10 this year. I think what we are spending now are in the WIP, most of them. Okay, understood. You mentioned about the bulk of the profit and supply of the goods of Revlimid in large volumes. How do you expect the run rate for the export formulation business going ahead for the second half of the business? You expect a drop there or there are I think, Revlimid contribution in Q2 and Q3 will be minimum. Yes, that's correct. We'll have the numbers without the, What is the compound because of that? I mean, our run rate is different. I'm sorry? What is our normalized run rate, base business run rate? I don't want to answer that question. I think we will because there will be some element of Revlimid also there. I don't want to answer that question this time. Yeah. Okay. For the India business, you mentioned that you're trying acquisition, new initiatives. If you could talk about little more on that. We're looking at different assets. I think we said that in the last quarter call as well. I think there are a lot of assets available now. We're weighing different options. Hopefully we'll be able to close the transaction in this financial year. Any particular areas you are looking at? I don't want to answer that question. We're looking at all areas. I think once we consummate a deal, definitely we'll definitely. why I ask is because our focus area has been highest MR productivity. With less MR we get quite good mono sales-based kind of portfolio. Is it similar or we are coming into the broad IPM? We have to come into broad IPM, Prakash, because otherwise we'll not have growth. I think there's a limitation to my niche portfolio. I think we've done well with the portfolio, but there's a limitation to how much you can grow in that segment. We have to go into a more generic GP, CP, cardio, gynec, anti-infective. I mean, the area is very wide. I mean, because we are. I mean, for us, because we're not present in any of the mass segments, any segment could be interesting, as long as we're able to get some synergy where we use that segment with the acquisition and bolt-on a couple of our own R&D products so that we're able to get the synergy. We are open to any segment as long as we see that there's potential there. Okay, great. Thank you. All the best. Thank you. The next question is from the line of Surya Patra from PhillipCapital. Please go ahead. Yeah, thanks for this opportunity, and congrats to the good set of numbers, sir. Sir, just a couple of clarification. Regards this Revlimid, this volume limited condition, whatever that is there, for the period. How rigid is that? Whether the volume condition is for the annual condition or it is periodic, like quarterly, one should be having that mid-single digit kind of number. Some clarity, if you can. It's an annual number, sir. It's an annual number. That means one can be having a larger number in the initial period or whichever part of the period, and in other period it could be lull. That can be possible. That is possible. Correct. That's absolutely. Okay. Sir, may I know, sir, what is the R&D sequential rise? Let's say last quarter, what was the R&D absolute amount, and this quarter what could be that? I don't have the number on hand. I don't have the number, but, I think, I can't answer that question because I don't have the number on hand. Actually, overall for the last financial year, if you get 12% of your top line was spent on R&D, so it's like incrementally higher than the prior year, which was around 8%-9%. No, my point what I was trying to draw you, sir, see, basically sequentially, if I see the formulation export growth, it is near about INR 360 crore kind of incremental business sequentially. At the EBITDA level, let's say if I adjust for the previous quarters for the adjusted FG inventory and all that, and this quarter's this voluntary VRS payments. Then there is a INR 330 crore kind of sequential improvement at the EBITDA level. If I just, having limited information, just think that, okay, the majority of this sequential revenue rise is led by Revlimid contribution, and same is the kind of, or majority of the EBITDA contribution is also from that only, then the profitability of this product looks really great. It is beyond anybody's expectation in terms of margins for this revenue stream. Whether I'm right in thinking that way or if you can give some sense? I don't give a profitability split of product. I think I mean, as this product is, we have launched it first, so then it's certainly very profitable. Yeah. Indirectly, if I can just try to get a sense of like whether the pricing of this product is like 10%-15% lower than the I can't answer that question, my friend. I think I'm a bit forbidden to answer that question. Teva has given us guidance to what we can say, what we cannot say. We can't say. Last one question if I can ask on that, sir. Is it a 50/50 revenue sharing or it is a profit sharing? One second. Revenue is 30%. Okay. Revenue or profit, sir? Profit. That means we would be booking partial revenue at the time of this thing. Partial revenue when you send the raw material, and the profit is booked as and when it's accrued. Sure. Okay, sir. Okay. Thank you. Thank you, sir. Thank you. The next question is from the line of Danesh Mistry from Investor First Advisors. Please go ahead. Hi. Thank you, Rajeev. Just one question I had is that on domestic business, which is there that you mentioned that last time there was some pricing pressure, especially on Copaxone. Is that past us, number one? Number two is that are we seeing any volume growth or pickup in that piece? Number three is that in terms of our US business or export US business ex. I mean, I think last year, maybe some of our infliximab business was not doing well because of last year. But any sense on whether you see that improving in the coming year? That's it from my end. Thank you. Okay. Your first question is on the U.S. business environment. Yeah. The second question. What is the first part of the question? The first part was essentially in the domestic onco business. You had mentioned that there was some pricing pressure last time in the last quarter. Is that kind of past us? Are we seeing volume growth coming back? I think it's stable. The domestic is being stable. I think we're doing well, and I think we have done well in the cardiology division. I think overall the business is stable, but it's not growing. I think that's the challenge that we're having in that business. The diagnosis that we have done in that business is that we are too limited in terms of the reach that we have, because we're only covering niche amount of doctors. Even our core business is covered by only 300 reps. Which is not. I mean, even if they are covering about 150 doctors on average, we're not even covering a tip of the iceberg of the whole ecosystem of doctors. I think one of the biggest changes that we need to make is cover a larger segment. We started a new segment now, which will give us a mass coverage. We're slowly ramping up the reps. But again, it's a very slow business. Unless you do an acquisition, where you have a basic portfolio, then it doesn't allow you to cover a larger segment. I think that's what we need to fix, and that's what we intend to fix in the next few quarters. That's on the domestic. Regarding US is it's a tough business. I mean, that's the only way I can answer that question. I think you need to have a good launch or a niche product, otherwise it's very difficult to make money in the US. That's the way it works. The way the market is set up, that's the only way you can do it. There's nothing. Does that answer your question or? Just one question. I think you've got you've been very clear on that. In terms of the other parts of our business, ex revenue made in the US. The last few years we had this whole influenza thing not working out because of, obviously. I'm sorry. I missed that question. Influenza as a business also is gone now, Danesh. I don't see it coming back at all. We'll book sometimes some revenue, but the margins are very low. It's nothing exciting where I can come back and tell you that they'll make a substantial dent on the bottom. If you ask me the whole Tamiflu thing is dead. I mean, I'm not saying I don't sell Tamiflu. I mean, that is a very commodity product. I will not deny that, but it's a very commodity product. There's nothing special about it. Got it. Does that answer your question? Yeah, it does. Very clear. Thank you so much, Rajeev Nannapaneni. Wish you the very best of luck, especially for the Q4. Thank you. Thank Thank you. Next question, please. The next question is from the line of Sameer Shah from Valuequest Investment Advisors Private Limited. Please go ahead. Yeah. I had two questions from my side. One, on the rest of the world geographies, what are the things, say, next 2, 3 years to look forward to? I think Canada is doing well, but if you can give some more color on the other markets. Yeah, sure. I think in the earnings, we did almost CAD 9-10 million in Canada last quarter. We've done well in that particular subsidiary. Just give me a moment. No surprise, sir. Canada, we put those INR 53.67 crore in the balance sheet in Canadian sub. That has done well. Brazil has also done very well. Brazil has done INR 18.2 crore. I think our core business, I mean, our whole subsidiary business is doing about INR 105 crore. That's a very good situation to be. I think our idea is that we should strengthen our subsidiary business. All our subs are making money except for the US sub, which we have recently acquired. That's also a something that we need to fix. But overall, I think the near term, to answer your question, to improve our base earnings, we need to fix two things. One is we need to enhance our domestic reach through an acquisition or with new launches. Two, I think the agro, we need to have clarity. Three, our US sub, where we're launching our own products, that also has to start making money. US, my sense is we'll lose money for the next one year, one and a half year, but it stabilizes. Next year, I think our expectation by 2024 financial year, I think we should be able to see some clarity there. Agro, we're waiting once the court verdict comes. domestic as I said, I think we're looking at different options. Yeah, I think acquisition and domestic growth is what's going to. These are three major things we need to focus on. Okay? Secondly, on the agrochemical piece domestically, while we understand this CTPR, whatever is happening, that we are very clear. Apart from that, if you can whether pheromones or everything else, what are the other things that we are targeting, if there is some color on that? Pheromone is something that we are running right now. We have this product called PBW, pink bollworm in cotton. This has done reasonably well this year. I think our expectation is that business should do well this year. I think our expectation is that whole agro business minus CTPR should do about INR 10-12 crores this year. I think that's our expectation. It's not going to move the needle. You need a larger portfolio, and I think we have other products that we applied, but we don't have visibility on them at this time. CTPR is the only one that's near visibility, and that's, as a very, very large product. This CTPR, from what I understand, is more than 10% of the whole agro business. I think you need to get this right. You know how we are as a company. I think we always like to bet on jackpots. Yeah. It's the nature of the bet. In the near term, I think that's what you're looking for. I think in the end. Right. Thank you. Thank you. Thank you. The next question is from the line of Pinaki Banerjee from AUM Capital Market Private Limited. Please go ahead. Yeah. Sir, good morning. Sir, thanks for taking my questions. There is a news article where you are investing in that cell therapy startup iSystems. Sir, can you please throw some light on it, sir? Yes, sure. I think, as part of our we have about INR 30-40 crores investment that we do in healthcare related sectors. As part of that, the future of business is doing innovative work. In our core business, we don't our focus is primarily on generics. We do some work, but I think most of it is on generics. This is an interesting opportunity that we're investing about $1 million, INR 7.5 crores, roughly looks like $1 million. This startup is doing some work on Macular degeneration. I think it's a very interesting niche portfolio, but it's a very minor single-digit share. It is nothing. Mm-hmm. Substantial. It is just part of our larger portfolio, just to get a feel of what's going on in the ecosystem. We do these investments just to get a feel of the ecosystem, yeah. Okay, sir. Sir, next question is, sir, actually Agro Impulse has been just a minuscule part of your revenue now. Actually, sir, are you contemplating any ways to actually increase this revenue share considering the fact that you have a number of stiff competitors in the Indian market also, and both national as well as international? I think we are. I we are. I think we're looking at acquisitions in this space, and we're also looking at some success in our product launches. This business at this stage is at infancy, but I think our thinking internally is that this business has to go large, and I think hopefully it will become about 10%-15% of our sales in the next 2-3 years, depending on our success. Okay, sir. Thank you, sir, and all the best. That's all from my side. Thanks. Okay. Thank you. The next question is from the line of Gagan Thareja from ASK Investment Managers. Please go ahead. Good afternoon. Mr. Thareja, I'm sorry to interrupt. We are not able to hear you. Can you hear me now? Uh- Yeah. Speak a little louder, sir. Go ahead, Gagan. Go. Yeah. Sir, on CTPR, I think you indicated that the patent goes off by August of 2022. Irrespective of the litigation, you should be able to launch one way or another, right? No, I've answered that question, Gagan. I think you missed the answer. I'll just tell you this again. The patent of the product goes off on August 13, 2022. We have been sued for a process patent, which is how to make CTPR through a process, for a patent which expires in December 25. We are telling the court that we're not following their process. We have a non-infringing process. Court has appointed a third-party expert to evaluate what are processes and compare it with their process, and it listed the matter on August 22. We're awaiting the expert opinion. Once we get a favorable outcome, we'll be able to launch the product. I think that's what I said. Does that mean that other companies can potentially come in and launch their product post thirteenth of August who would not have challenged? Anybody who has a non-infringement technically can launch the product. I think that's why I cannot answer that question. Okay. I get it, sir. Second question is on the domestic sales. You indicated that it's not grown year on year. If I look at one of your competitors, AstraZeneca, who has an oncology portfolio in India, they have grown significantly over the last three years. Has there been a case of them bringing in some patented molecules which might have impacted the existing generic portfolios in oncology and therefore sort of shifted market shares away? Astra business model is different, our business model is different, okay? What Astra portfolio has done is something I can't comment on because I'm not. I don't understand it. I don't know it. Okay. What I can tell you is about the generics portfolio, which is what we are as a company. The portfolio that we have has been steady, and we have seen price erosion. It's not a true comparison because theirs is an innovator portfolio, ours is a generic portfolio. I think it's not a fair comparison because we're operating in two different environments. Overall, our portfolio has struggled. I mean, there's nothing to hide there. I think because of the limitations of the segments that we're covering. I think we have good launches that we are planning, so we are seeing the sales have been steady. I will not say that it has not declined or not increased. I think it's been steady. I think our idea is that we need to launch new segments and consolidate that segment. Okay. Final question on US, if I can. I mean, a lot of your peers have indicated continuing double-digit, in fact, mid to high double-digit sort of a base price erosion on their generic business. What has been your experience on your portfolio and what has been the year-on-year sort of performance for your base portfolio in US? I think, see, if you remove lenalidomide, which is the elephant in the room, the other portfolio has been steady. It has, in fact, maybe declined slightly, but it has been steady. We have made it up with like, launches in the other ROW markets. I think that's what has happened. Well, in the US, the pricing is difficult. I think I've always said that. I think unless you have something interesting and special or there's, limited competition it's very difficult to make money. I think we have been reasonably successful. I mean, we had a reasonable launch of avelumab last year. It's not that all of it is it's been a complete decline in the business. Having said that, see, it's a tough business. I mean, I can't hide. There's no way getting around that. It's a very important market. You just can't avoid it because 50% of the possible market is the United States. You just have to be there and just try to do something interesting and just hope that it works. That's how you're going to do this business. Thank you, sir. I'll get back in with you and wish you all the best. Thank you. The next question is from the line of Kartik Mehta from Slate Capital. Please go ahead. Yeah, all my questions have been answered. Thank you. Okay, thank you, Kartik. Next person, please. Thank you. The next question is from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead. Hi. Thank you, and good morning, everyone. Rajeev, a quick one on Revlimid. Are you doing a continuous manufacturing and supplies to Teva, or are you doing it on a campaign basis? We do it on campaign basis. Okay. That's why you have two quarters when you get a lot of profit share, et cetera, and two quarters when you're not getting. It depends on, like, you know. Yeah, in a way, yeah, sure. Yes. Yes, that's correct. Yes. Yeah. Okay, great. Just one final one on this. Even when the other competitors do launch end of September, whenever they do. Mm-hmm. It's highly volume controlled launches, and my guess is the market will always be undersupplied, you know. Therefore, is there really a pricing risk here or you think that you can maintain a high profitability and pricing for a period of time? I think the product should do well. I think that's the best way to answer that question. Regarding the other competitors and all, I think there'll be staggered entries, so that will obviously play a role on the price erosion. It'll be a good product overall. Yes. Okay, great. Thank you, sir. Thank you. Thank you. Thank you. The next question is from the line of Ravi Dharamshi from Valuequest Investment. Please go ahead. Yeah. Thanks for taking my question. I just had a small follow-up. Did the current quarter number have any contribution from Nexavar? It did, yes. It did. Yes, it did. Okay. All right. Thanks. Yeah. Thank you. The next question is from the line of Sandeep Kothari from East Lane Capital. Please go ahead. Hi, Rajeev. Quick question on the FMC litigation. Appointing of an expert committee or experts, is it very normal in process patents in India, or this is something unique? Do you have a say in appointing this or court picks up somebody and appoints them? What is the potential for delay? There have been a couple of hearings. It's now August 22. Just how this plays out. How it will play out, I don't have an answer to that, Sandeep. I don't know. What I can tell you is the process. In our experience in litigation, at least, I would like to say that we are fairly experienced in this because we've done a lot of litigation patents in India. In one other case, we also had an expert appointed. When the court is unable to decide whether if they need technical help, they do ask an expert. Is it unusual? No, I think we had it in the past. This is again this is now the second time it has happened. Okay. That's the first question. The second question is, there are two experts appointed, so essentially there's a panel that the court has. We chose one member, and they chose one member. I think we're just awaiting what you call their response on the questions posed by the court. Once the opinion comes, how quickly the judge will make a decision? Hopefully soon. I think that makes you know. I think that's our expectation, but I don't want to speculate on a timeline at this time. I think it is what it is. I mean, we're hoping that we'll get clarity in the next few weeks. I think that's all I can say. Yeah. Great. Thank you. Thank you, Sandeep. Thanks. Thank you. The next question is from the line of Nikhil from Simpl. Please go ahead. Yeah. Good morning. Thanks for the opportunity. I'm audible? Yes, Nikhil. Go ahead. Rajeev, just adding 2-3 points. You, in the whole discussion, you mentioned that we do campaign production, which means we provide the substance to Teva on a quarterly basis. Then somewhere you also mentioned the profit booking happens as it approves, which means when we do the sale, then only the profit will be booked to us. That's right. If we go back to what Teva and BMS reported on a sequential basis in their revenues, I'm unable to add up what you say in what happened in Q4 and Q1 because neither Teva has seen such a strong sales growth on a QoQ basis in their generic business, nor BMS is seeing such a strong growth in Revlimid in the US business. How do we add these two with your commentary? Nikhil, first of all, go read the Teva earnings statement carefully. They have clearly stated that, lenalidomide is a significant, what you call, contributor to earnings. For the size of Teva's business, lenalidomide doesn't make much of a difference because of the size of Teva's balance sheet. It makes a lot of difference for us because we are a smaller company. Regarding, BMS' numbers, I again can't comment about BMS' numbers. I can only talk about what market share we have taken and I think what we have approved. As I said, there's a general increase in the portfolio of that, what do you call, of that product. Therefore, maybe it's not impacting. I'm speculating, but yeah, I think that's what I believe is probably happening. Is this right, that the profit will accrue only when Teva sells in the market? That's totally correct. That does not mean that Q2, Q3, Teva will not sell anything in U.S.? Nikhil, okay, fine. I'll answer this question again. See, what is happening is there's a limited amount of quantity that is given. So because you have a limited amount of quantity that's given, basically what happens, a lot of the sale happens as soon as you launch. So basically, once that quantity, what do you call, is done, then the sale kind of tapers off. You understood, Nikhil? Nikhil, I suggest that you have a separate call with with our IR person. I I think they'll actually explain you the process. Yeah, okay? Sure. Thank you. Okay. The next question is from the line of Ankush Agrawal from Surge Capital. Please go ahead. Thank you for the follow-up, sir. On domestic acquisition that you've talked about, so would it be possible for you to quantify in terms of what kind of size we are looking at? For example, currently there is INR 1,000 crores cash, so it will be around that number to be materially higher given that the kind of cash flow we will be getting. We're looking at any good opportunity. I don't want to comment on the size, but I think we have to start somewhere. Anything in the INR 100 crore-INR 200 crore sales range would be interesting to start with. Sales range, and then depends on what multiple they'll ask, I don't know. It all depends on how the negotiation goes and the nature of the portfolio, the profitability of the portfolio. Yeah. I think that's what we'll look at. Got it. Secondly, on the CTPR again. You mentioned that the first case, the case on the lower court, and then they might again appeal to the tribunal and all that stuff. Don't you think there's a material risk that this could keep getting stressed and the opportunity for us by the time we're able to do it's not really there? I think, see, it's not a tribunal, it's a high court. Basically what happens is, typically a single judge will give an order, and whoever is aggrieved will go to the double bench. Okay. That risk is there. I mean, that's the nature of the beast. I think that's all I can answer that. That risk is there, absolutely. Your question is, there's a risk that if the DB can overturn the decision? Yes. There's always that risk in any court case. That's a risk that you take. Right. The The reason I was asking that even if we get a favorable outcome over there, then they can again appeal, then we are again not able to launch because it has always been delayed by more than a year now, I believe, from the initial. then we run into major risk of IP because if you continue to get stressed, the opportunity just keeps on reducing. So that is where I was asking. Okay, like, obviously you yourself can't control it. Let's not speculate. Let's wait for the order, and I think we'll see what happens. Then, see, that's the nature of the. That's how the legal system works. No, I think I'm not getting into whether Natco gets favorable or FMC gets favorable. Whoever is on the losing side will appeal in the DB, isn't it? Double bench. Right. If you're not happy with DB, you'll go to Supreme Court. That's the natural course of the process. It is what it is. Yeah. That's all I can say. Let's wait for the verdict, and I think we can give you more light on where we stand and what we do. Understood. Thank you. Thank you. The next question is from the line of Mitesh Shah from Nirmal Bang. Please go ahead. Thanks for taking my question. I just have one question about the domestic. As you said that we struggle mainly because of the smaller of the team size, and we are looking for the more assets. How it will work that we first ramping up our size and then looking the assets or the straightaway with the assets we are taking the team as well? It depends on the nature of the acquisition. I mean, we have ramped up the people, but the people are not yielding much. I mean, the revenue that we're getting from the Natco Reach division, which is the more wider coverage division, is not as much where it is meaningful. If you do an acquisition, typically they give you people, sometimes they give you the brand. It depends on the situation. To answer your question, the best way to ramp it up is with the people and the brand. I think that's probably the most ideal way of looking at it. Yeah. Got it. Then any particular team size you are looking to increase in next couple of years? I answer that. I think the first one, I think in my mind, I'm looking at a sales target of about INR 100-200 crores and whatever multiple that the deal transaction ends up being. No, I'm talking about team size ramping up over a period of two years. You need, like, to cover, like, the biggest segment that we're not covering is consulting physicians and general physicians. You need to do an all India coverage for a segment like that, probably need like 300-350 people, which is double of what we have at this time. Okay. Thanks. Thank you very much, sir. Welcome. Thank you. The next question is from the line of Ahmed Madha from Unifi Capital. Please go ahead. Mr. Madha, I have unmuted your line. Please go ahead with your question. Thank you. In risdiplam, any, we are awaiting update, maybe settlement. No, not at this time, Ahmed. Nothing at this time. Okay. Just a confirmation. From March 20, 2023, we will have a higher team. That's correct. Okay, thank you. Thank you. Thank you. The next question is from the line of Ritika Aggarwal from Valuequest Investment. Please go ahead. Hi, sir, I have a question on domestic formulation. Last quarter you had indicated that INR 100 crore base run rate is what we are at currently in the domestic formulation, and we expect 10%-15% growth this year based on the new launches. Do we still stand on this, what you indicated last quarter? I think so. I think things are okay in domestic. I believe, I think we're able to meet that target, I think. Yeah, that's our expectation. That's correct. Okay. Sure, that's it from me. Okay, thank you. Thank you. The next question is from the line of Gagan Thareja from ASK Investment Managers. Please go ahead. Yeah. Thanks for taking the follow-up. This one is again on CTPR. If the verdict goes in your favor, would you be given an exclusivity for the launch of CTPR or because the patent would have expired, in which case you would be launching with other people in the market? We will be the first wave launch. India doesn't have a concept of exclusivity like the U.S., so yeah. Anybody else also could launch, provided they have a non-infringing route on the process. I would have thought there's a marketing exclusivity period for a launch in a three-year exclusivity. No. No. No. No? No, no. Okay. Absolutely. Okay. Thank you. Thank you, sir. I'll get back in touch. Thank you. This is my last question, yeah? Okay. Thank you. Thank Thank you. As that was the last question for today, on behalf of Natco Pharma Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Okay. Thank you. Thank you all. Have a good day.