Ladies and gentlemen, good day, and welcome to the Orchid Pharma Limited Q3 FY25 Earnings Conference Call hosted by Systematix Institutional Equities. 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 stars and zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Manchanda from Systematix Institutional Equities. Thank you, and over to you, sir. Thanks, Lizan. Good evening, everyone. On behalf of Systematix Institutional Equities, I welcome you to the Q3 FY25 Earnings Call of Orchid Pharma. We thank the Orchid Pharma management for giving us an opportunity to host the call today. We have with us the senior management of the company, represented by Mr. Mridul Dhanuka, Whole-time Director, and Mr. Sunil Kumar Gupta, Chief Financial Officer. I'll now hand over the call to the company management for opening comments. Over to you, sir. Good evening, investors, ladies and gentlemen. I'm delighted to welcome you to our discussion on the results for the Q3 of FY25 of Orchid Pharma Limited. First, let's review the financial performance of Q3 FY25. Our total income for this quarter reached INR 227 crores, and our EBITDA for the quarter was INR 37 crores. Looking at a cumulative view, which we always talk about, for the first nine months of FY25, our total income has been INR 710 crores, reflecting a 15% growth over the same period last year. This growth underscores our continued focus on execution, cost optimization, and strategic objectives. Our EBITDA for nine months FY25 stands at INR 115 crores, showing a strong improvement over INR 99 crores from the previous year. Our continued focus on profitability has seen our PAT improve from INR 62 crores to INR 78 crores over the same period, a marked increase of 26%. While this nine-month period has presented some shifts in pace, we view it as an opportunity to strengthen our foundation for sustainable growth. Several factors have influenced our financial performance, but we remain steadfast in our commitment to long-term value creation. The market is currently undergoing a realignment between demand and supply, which brings both challenges and opportunities for value optimization. In line with our strategy, we have focused on maintaining healthy margins rather than opting for higher volume at reduced prices. While our overall volumes have increased by over 20%, price corrections in a few major products have kept the total sales number muted. We have always positioned Orchid as a company focused on long-term sustainable growth. Our unwavering commitment to operational excellence and innovation ensures that we continue to chart a strong growth trajectory. We remain optimistic about the future growth prospects of the business, especially looking backwards five years from today. This quarter has been particularly dynamic, with key projects progressing from planning to execution and early revenue realization stages. While some are still in their initial stages, the momentum is encouraging. In terms of key business updates, let me first start with some good news. The long-awaited new GMP audit at Orchid's facility was conducted on October 24, and we have successfully received the certificate of compliance recently. In preparation for this audit, our general focus was on compliance and regulatory readiness, which has led to a one-time increase in expenses to the tune of INR 3 crores. Coming to Orblicef, which is Orchid's brand name for cefepime and enmetazobactam, we did a mega launch event in November 2024 during the Global AMR Week for this product in particular and Orchid AMS in general. The occasion brought together global experts on antimicrobial resistance to discuss emerging challenges and the role of new-age antibiotics to mitigate those challenges. This event reinforced Orchid Pharma's commitment to tackling AMR through innovative solutions. Domestically, enmetazobactam is performing as per our initial expectations. The acceptance among doctors and hospitals has been encouraging, and our partnership with Cipla continues to drive strong market penetration. On the global front, early adoption trends are promising, and we anticipate exponential expansion in this going forward. In the U.S. market, we eagerly await news of progress of a possible partnership by Allecra. Regarding our subsidiary filing in the U.S., we previously reported receiving an RTR observation from the US FDA. Since then, we have made substantial progress in addressing the noted deficiencies and are on track to refile in the next quarter in line with the 181st day launch tentative in Q1 CY29. Our approach remains focused on ensuring full compliance with regulatory requirements to facilitate a smoother approval process going forward. On the Orchid AMS division continues to gain momentum with growing doctor adoption and increased awareness of antimicrobial resistance. Our commitment to responsible healthcare solutions is being recognized, and we are encouraged by the engagement we are witnessing from the medical fraternity. This is a long-term investment for the company, and to support this cause, currently, it is the investment phase of the business. It is an EBITDA drag of about INR 6 crore on a nine-month basis currently, while we continue to build the team and start interacting with doctors, hospitals, and the medical community in general. Coming to the 7-ACA project, which is a crucial initiative that will further strengthen our API capabilities and contribute to India's self-reliance in critical pharma ingredients, I am happy to share that the project is advancing well since the breaking of ground on Ganesh Chaturthi last year. Despite initial weather-related and festive delays, construction is now moving at an accelerated pace. We have initiated the ordering process for major engineered equipment, which will be completed by Q1 FY26. This project represents a long-term investment in Orchid Pharma's manufacturing strength and is expected to bring significant cost synergies upon completion. This is a pivotal element of our long-term growth vision, reinforcing our leadership position in API manufacturing and ensuring supply chain security. As we step into the final quarter of FY25, we are confident, despite short-term headwinds, our commitment to operational excellence, disciplined execution, and strategic expansion remains strong. The upcoming quarters will see an enhanced focus on regulatory milestones, ensuring a smooth refiling for subsidiaries, introduction of new products, and expanding our AMS division. Additionally, we will continue executing the 7-ACA project as planned. We are confident that these initiatives will drive sustained performance and create long-term value for all stakeholders. In closing, I would like to thank all stakeholders, employees, investors, and partners for your trust and support. With your continued belief in our vision, we look forward to achieving new milestones and creating further value. I now welcome your questions and look forward to a productive discussion. Thank you. Ladies and gentlemen, we will now begin with the Q&A session. Anyone wishing to ask a question may please press star then one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Vivek Patel from Citco Family Office. Please go ahead. Very good afternoon, sir. Thanks for the opportunity. Sorry, did you hear the question? I just had a quick. Yes, sir. Your audio is sounding very muffled. Can you come a little more closer to the mic or use the handset mode while speaking? Is it better now? Slightly better. Please proceed. All right. Thank you. Very good afternoon, everyone, and thanks for the opportunity. I just had a quick question on what could be the potential impact of the launch of WCK 5222 or Zavicefta on cefiderocol. Thank you. Sorry, unfortunately, your voice is not very clear. I could not hear the question. Is it better now, sir? Yes. Yeah. Sorry. Very good afternoon, sir, and thanks for the opportunity. I just had a quick. Hello? Yes. I just had a quick question on the potential impact of the launch of Zavicefta or WCK 5222 on cefiderocol. Thank you. Yeah. I think both are completely different segments of operation. Unfortunately, I would not have a comparable analysis on them unless Zenic submits long-term clinical trial data in the public domain. But as of now, I believe the market is really large. I've shared earlier that with the cefiderocol, currently with the five million people dying due to AMR, it has the potential to address one-third of that. That's a significantly large number in itself. And any new products which actually address the same market are actually welcome to save more lives worldwide. Thank you, sir. Thank you. Thank you. The next question is from the line of Viraj Parekh from Carnelian Asset Management. Please go ahead. Good evening, Mridul. Am I audible? Yes, Viraj. Hi. So a few questions from my end. In your opening remarks, you mentioned that there was price correction in a few of our products, which led to a little bit of a degrowth in our top line. So if you could elaborate more whether this price correction is temporary and is it in our top three products, and how do we look at it going ahead for the few quarters? Yeah. So the price correction is in the top three products. And as I explained, we have focused on retaining margins as you would have seen the margin profile is similar, what we expect. So we have maintained the margins largely due to what has happened since Aurobindo started making Pen Gs. Some of the prices from China have dropped. So they have been a little volatile. They've seen maybe Aurobindo is not producing in a full-fledged way. So, they've been a little volatile, whatever benefits are there, and I've explained earlier that the emerging market business works on a spot price basis, so customers track the starting material prices. And that's the impact which has come. Unfortunately, how it's going to behave in the future in terms of penny pricing and Aurobindo producing or not producing, I won't be able to give a forecast on future. So Mridul, I believe our gross margins may be in the range of 40% plus minus one or two percent as you've guided before. But what I'm trying to get a sense of is on the top line, how do we look at it going ahead? Due to the heavy concentration we have in our top three products in our core business, our nine-month growth stands at 13.5%. And I'm just trying to get some flavor in terms of the quarterly growth which we are looking at from our core business. I'm not looking at margins. I believe there's an AMS drag on our operating margins. That's fine. That's an investment we're making right now. But from a core business growth point of view, how do we look at sustainable growth going ahead? Yeah, so we still believe that if you look at Orchid as a long-term business and even three years from today, if you're looking backwards, you would still see that 20% figure which I have always promised. Will that stand true for this financial year? I'm not sure. I've always maintained QoQ, the quarter-to-quarter stock. I won't be able to give a guidance. Second question is more on the royalty front. We were expecting some kind of royalty to flow in in this financial year. So is there any update on that? Yeah. So we have received the royalty, but at this stage, I will not be able to share the numbers with you. So royalty came in even last quarter, but the number was a very small fraction. It is a significantly larger number than last time. And as expected, within the first three, four quarters, the growth and the volume spreading will start materializing. So anything material to report, maybe in the next quarter, when we share the annual report numbers, maybe we will talk about some royalty numbers then. So are we tracking the kind of sales that are happening on the basis on which we're getting royalty? Is that something we're actually tracking as a company? Unfortunately, because it's a new product, currently it's not having coverage from the reporting agency. But we do have audit rights, and annually, we will exercise those to make sure that there is no leakage. Sure. And just the last question before I get back in queue. Can you have some kind of a timeline we have for our 7-ACA project to come? I believe we started construction last Ganesh Chaturthi, so. Yeah. So we have talked about the water trials happening in April of 2026. Currently, it looks that we should be able to meet those deadlines. Thank you, Mridul. All the best. Yeah. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. Participants, if you wish to ask a question, you may please press star and one. The next question is from the line of Niraj from DAM Capital. Please go ahead. Yeah. Hello. Thanks for the opportunity. Sir, my question was around our potential launch in US. It seems like our partner, Allecra, they are still yet to finalize on a partner. Just wanted to understand what is happening on that front. Actually, companies spend their lifetime going through trials and US FDA, but it's almost one year. Everything is clear. The US FDA has also cleared our product, but it is very unfortunate. A partner, we have not been able to finalize on the partner. So what is happening on that front? Yeah, Niraj, that's really a cause for concern. I agree with you. Unfortunately, we don't have any control over Allecra, and their communication is also poor. So when we spoke to them last time, they talked about that they are aware of this challenge, and they are actively working on several discussions. That's what they said. I don't have any further information. Okay. And secondly, to answer to your previous participant, you mentioned that in the just quarter which ended Q3, we did receive some royalties from the European region. I'm not looking for the exact number, but I believe that must have flown through in our P&L. But as I can see, they were quite one-offs as well, because of which our EBITDA number came down. But assuming that all of those royalties went straight to the bottom line, so excluding those royalties, our EBITDA would have been even lower. Would that understanding be correct? Yeah, but I don't think the number of royalty would be material enough to affect the EBITDA by much. But yes, logically, your math is correct. Okay. Understood. Thank you so much. All the best. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is from the line of Rupesh from Intelsense Capital. Please go ahead. Hello. Thank you for the opportunity. Sorry to interrupt, Mr. Rupesh. Sir, your audio is sounding very muffled. Just give me a moment. Is it better now? Much better, sir. Please proceed. Yeah. Okay. So my first question, sir, is can you give some update on the India market update for enmetazobactam? How is the traction? What is the hospital coverage? How do you see it going forward in the next one year? Yeah. So as I alluded in my opening speech, we are progressing as per our plan on India, and we are able to leverage the distribution network of our partners significantly. So it is going as per our plan. As a policy, we don't share product-wide numbers, but we expect continued healthy growth in this going forward as well. This is not counted in your AMS division, right? No, that is not counted as the AMS division. AMS division is only the sales that this is a partner sales, not part of the AMS division. So Cipla sales is not part of this, that I understand, but our own sales force doing selling in enmetazobactam, that would be part of AMS division, right? Yes. Our sales force, I mean, enmetazobactam sales through our sales force, that hasn't picked up materially yet. Yeah, yeah, so it will take time. You see, nobody knows who Orchid is in the domestic market, so for the first considerable period of time, we don't see people creating significant traction. Most of the time is just getting the foot in the door, talking to the hospital, asking them to approve us as approved vendor. All of those things take time, and currently, the time is to build these relationships. That is why we decided that we need to partner with somebody because patent life for the product is minimal rather than trying to reach the universe on our own. Okay, and I mean, how do you see this progressing? Can it contribute, let's say, meaningfully to our revenue in FY26? You see, Orchid AMS, you mean? No, no, no, i n enmetazobactam. I'm not sure what you mean by meaningfully, but it would significantly contribute to the overall EBITDA of FY26. Okay. Okay. And the second question is, how is the avibactam doing? We launched avibactam about one year ago, and some competition has also come in. So how is that product doing in the India market? Avibactam itself, when it was launched, we have the same share about more than 50% of the share is with Orchid in the India market. Due to the initial launch, there was a lot of exuberance, and I think about 50 brands or more than 50 brands launched in the initial days. Due to competition, there has been some price erosion. This is a product which will be becoming more stable because it is more of a second-line treatment. Whatever growth was there was largely because Pfizer product was expensive and not available. Once those numbers are achieved, it is not going to have exponential growth even for going forward. Okay. Okay. And the third is cefiderocol project. I mean, where are we? Can you give some update and timelines on commissioning? Yeah. So, cefiderocol project, we are under construction phase. The current launch in India is November, December of 2026, subject to the approval of the drug in India. Currently, the drug is not even registered in India. Our facility will be ready by that time. December 2026. Yes. Okay. Okay. And on 7-ACA project, I mean, have you got some clarity on PLI? Has anything changed there materially, or how is that? No material change there. So I mean, whatever the duration of the PLI scheme, the incentive, all of that remains as originally planned because I think the project is significantly delayed compared to original, whatever was the government's requirements. Yeah. And as I've explained on a few previous calls, the government letter has not changed, but the communication that we are receiving from the government is full of assurances. They are saying all the other projects are late. You don't worry. You go and execute the project. We are behind you. So all of that support and communication is there. We expect the letter they have not given as an extension to anybody, not even Aurobindo, where they were also two years late. So we don't have any letter from them saying this is extended, but only assurances. So that risk is there, like I've talked about in previous calls. Okay. Okay. And then the final question is this. I mean, at least my expectation was when the Aurobindo Penicillin plant will come online, there would be dumping from China, which is what has happened in some of the other pharmaceutical products. And at least I was expecting some sort of margin expansion. But what you are saying is, in emerging markets, at least, or unregulated markets, the end product prices have also reduced. But how is it with respect to the regulated markets? So regulated market, the prices have not much impact with respect to what's happening in the starting material prices. But obviously, because in regulated markets, we have a very good share, there is always a competitive strength, not strength. Let me say competitive pressure from the Chinese to try and enter. So that pricing pressure is always there, significantly muted compared to the emerging market, which is like a daily battle. So then, I mean, do you have some view on how this can evolve, let's say, in the next six months or next one year? So nothing short term, but what's going to continue to happen is basically we need to work with expanding our customer base to reduce that risk of anybody switching to a Chinese. And while we may have to watch out for what is going on between customer and China. Okay. Okay. Thank you. Thank you for answering my questions. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is from the line of Kumar Saurabh from Scientific Investing. Please go ahead. Hello, sir. My question is on the enmetazobactam USA launch. I think we are, and sorry in case it's repetitive, I missed in the beginning. So I think we got approval, but there has been a delay, and there's a patent expiry, so we are losing on time. So what's the update on that, and do we have a backup plan? Yes, Saurabh. So unfortunately, this license is not in Orchid's control. It will be whenever Allecra decides to license, it will be licensed only then. Okay. Okay. And the second question I have on, if we look at all the three, four triggers which we have in the business, whether it's the Indian formulation launch of these molecules or the backward integration, everything looks like margin accretive, but you have given a guidance of 17% margin. So is it more a short-term margin guidance wherein long term over a period of four, five years, as some of these things play out, you see the margin expanding beyond 17% there? Unfortunately, I have never stated a 17% number. I don't know which margin you're talking about. The guidance we have only given is on the gross margin remaining stable, 40% plus minus 2 for the near term. So that's the guidance I've given. And the other thing I've talked about is due to our volumes increasing and productivity enhancement, we should see an EBITDA margin expansion of 100 basis points or so every year. So from which year you are calculating 17, I don't know. So unfortunately, I can't answer. Okay. And the last question is the Indian AMS business, the formulation business, which we have launched, and we also have a Cipla partnership. I think there in one of con calls, we have said INR 100 crore in three-to-four years. So does it include Cipla numbers also, or is it only done through our team? No, that imagination is only for Orchid's own AMS business, not including Cipla's business. Okay. And last question, sir, on the sterile business, what is the CapEx expansion plan, and what is the growth plan for coming years? So, sterile, we expanded some capacity last year we commissioned. So, right now, there is no capacity expansion planned in the sterile business. So, whatever we commissioned last year, that is going to serve us well for going forward for a couple of years. Okay. Okay. Thank you, sir. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. Participants, if you wish to ask a question, you may please press star and one. We take the next question from the line of Viraj Parekh from Carnelian Asset Management. Please go ahead. Hi. Thanks for the follow-up. So just two questions. How much money do we still have in our banks from the money we've raised? Mr. Gupta, can you please answer that question? Yeah. Sir, it is INR 194 crore. Sir, approximately from this, how much interest income are we earning? How much? We are getting around 7% interest. Around 7%, right? Yeah. Yeah. Right. And within your opening remarks, you mentioned that we had our European inspection completed in October. So just wanted to have a follow-up for the US FDA. Have you received any kind of notification from them in terms of the audit? As we speak, the inspection is going on. We came on Monday. Okay. Okay. Thank you so much. That's all. Yes. Thank you. The next question is from the line of Vidit Shah from Spark Capital. Please go ahead. Hi. Thanks for taking my question. My first question was on the AMS division. We've seen a significant ramp-up of expenses in this quarter in terms of both the employee costs and other expenses. So if you could just help, is this in accordance with new product launches, increasing geographies, and when are we expecting this division to break even going forward? Yeah. So this is not just new product or geography. This is a completely new business segment, which is B2C. Orchid till now was only present in B2B business. So we expect negative EBITDA run rate for another year or so more after this financial year, and then it will become EBITDA accretive to us. Okay. And what would the revenue have to be? Are all the costs factored in now? So I mean, so we're doing about 200-300 lakh rupees as cost. So is that the break-even revenue, or do we have to go up to 40-odd crores to sort of break even? Sorry? Can you come again, please? Yeah. So I was asking that we're doing about 3 crores of cost on a quarterly basis or, let's say, annualized run rate of about 12 crores. So is that the break-even revenue that we should expect, or is the break-even number something different in terms of revenue? So the revenue number, unfortunately, I will not be able to share as a break-even, but it would be higher because out of the revenue, there will be significantly gross margins would not be the same amount as revenue. So there would be a certain amount of gross margins, and then whatever is the gross profit on that INR 12 crore drug if you calculate the same extrapolation. Fine. And just a clarification on the EU GMP audit that we got done, did you say in your opening remarks that the expense incurred was about INR 3 crores for this? Yes. Do we expect a similar number on the US FDA as well? No, that was in general. We were expecting that was a planned audit for Europe. So we had called them, and we knew about it. So that was general, let me say, look and feel of the facility kind of one time. So nothing more needs to be done for the US FDA. Okay. Thanks. Understood. Thank you so much. Thank you. The next question is from the line of Harsh Bhatia from Bandhan Mutual Fund. Please go ahead. Yeah. Hi, Mridul. Just one clarification. I joined the call a bit late. You mentioned on the pricing part from the Chinese counterparts, particularly for the top three products. So we have been seeing the pricing coming off sharply since the last couple of quarters. Is that the same thing that was going on for these three products, but this time around we decided to not basically give up profitability and therefore reduce the volumes? Or what exactly happened? Yeah. So the general price that you were seeing from China was not reflecting in surplus for it. And Orchid is never the first one to go out and reduce the price. So while we were able to maintain significant growth in the first two quarters and maintain the pricing, what we realized while coming to quarter three was that those prices were no longer relevant, and we had to drop the prices. Of course, the cost had also significantly dropped. That's why you see that the gross margins have been maintained. So this time, we decided to not sell the capacity that we had, and even the product in stock, you would see that the inventory has increased for this quarter. So we have decided to keep some stock with us rather than sell at a lower price. So I'm not sure what's going to happen this quarter. I don't expect any further fall. But it's not that we were not passing to the customer. The customers are tracking the price of the starting material and negotiating with us. But you would say, after this Q3, whatever you could share, you are sort of benchmarked to the pricing for the Chinese competitors. That would be fair to say. Yeah. Yeah. Spot market prices business is like even for $1, which is like less than 1% of the price at times, the business will shift. So the prices are that low. Sure. And in that as a backdrop, you mentioned Q2 as well as Q3. Fractional royalties have already been booked. Obviously, Q3 would be slightly higher than Q2. Yes. Okay. Sir, thank you. Thank you. The next question is from the line of Aashita Jain from Nuvama Institutional Equities. Please go ahead. Hi, good evening. So just two questions from my side. Firstly, is there any update on the Dhanuka Labs merger with Orchid? We are just receiving dates after dates from the court, so. Okay. So what are the internal expectations of this merger now? Unfortunately, I stopped forecasting in this March. Okay. Okay. And secondly, in terms of capacities, I understand sterile had expanded last year and overall was this year. So what are our current capacities and the capacity utilization for nine-month FY25 vision? Yeah. So as I've explained earlier, the capacity in terms of tonnage is not relevant for Orchid because of the fungibility and the price varies between different products ranging from $100 to almost $10,000 a kilogram. So let me say that for the next two years, we don't need any capacity expansion to be on the growth track as we imagine. Okay. And just one clarification. When you say 20% growth for over three years' time frame, are you including enmetazobactam also in your 20% growth forecast? And cefiderocol, or is it? No, enmetazobactam with respect to the domestic market, Cipla would be part of that. The royalty piece will not be part of that. Cefiderocol is not part of that? Cefiderocol also will be commissioned only in December 26th. So next two years, so I don't see any revenue there, right? Okay. And lastly, how are you looking at enmetazobactam pricing in India as it compares to meropenem? How are you looking at it from the Indian perspective? Yeah, so in India, meropenem is now under DPCO, and enmetazobactam is priced at a significant premium to meropenem. Significant premium is there. Okay. Yeah. Okay. Understood. That's all from my side. Thank you. Thanks, sir. Thank you. The next question is from the line of Rupesh Tatiya from Intelsense Capital. Please go ahead. Hello, sir. Thank you for the follow-up opportunity. Sir, can you, I mean, what is the CapEx spend for 7-ACA total planned, and how much have we spent already? This is for fixed assets. Yes. The budgeted spend was INR 600 crores, out of which, Mr. Gupta, can you just say how much have we spent till now? Yeah. It is around INR 80 crores we have already spent. Okay. Okay. So then, if you're expecting water trials by April, so significant spend will come in Q4? Yes. A lot of material has been booked. It will be, the payments would be back-ended. Some of the largest orders for equipment have gone, but their payments will be staggered, and closer to delivery, there would be large chunks of amount going down. And I mean, given how these trials go, is it fair to assume, sir, that in second half, there will be significant capacity utilization, at least 50%, and even on the quarterly run rate, there can be full capacity utilization because everything needs to be consumed internally? So I don't think there is going to be any challenge with respect to the demand of the product in terms of capacity utilization. But fermentation is a typical product, and if it was a chemical product, I would have fully agreed with you. But in a fermentation product, it does take some time to actually scale up and get everything ready and up and going. So we have multiple fermenters, and each of them have almost like a mind of their own, right? So if sometimes they don't like the food, they will say, "We are not going to produce the product." So I don't want to scare you. The idea is basically the ramp-up will be slower than a chemical product typically. But yes, our intention is to do as fast as possible. Okay. Okay. And sir, I mean, including PLI and your own margin assessment, what would be the return period in which we will recoup this investment, at least in your assessment, in planning? So, in terms of, I've not looked at the business like that, but within three years, it must come back, the investment. Okay. Okay. And I mean, generally, what I have seen is when Indian companies are trying to backward integrate for some of these large volume critical products, a lot of dumping happens. I mean, with Aurobindo Penicillin is happening for metformin backward integration. I think those people are facing the dumping problem. So I mean, how do you see the dumping in case of 7-ACA also when our line comes online? So obviously, there's going to be pricing pressure, but it's going to be different than Pen-G because Pen-G long-term weighted average price is about $10-$12. And just recently, after India announced the PLI, the price went to $30. So I think the Chinese can still make money in the long-term average price at $10-$12 kind of number. So I do see a possible crash once India starts producing full-fledged. I don't think current prices are sustainable. But in 7-ACA, the long-term average price is only $63. Now, I am not saying that the Chinese will not drop price, but I don't think the price can drop by 20%, 30%, 40%. So a small drop in price, we are significantly cushioned with the PLI, the GST benefit, and the customs duty impact that any import from China would have. So I mean, are you working at some proactive anti-dumping duty with the government as and when the line comes online? So we've had conversations with the government, and they are like, "We will support you," but the dumping actually has to happen before anti-dumping duty can be placed. Okay. Okay. And then, sir, with US FDA inspection, did I hear you right that this is like you invited US FDA? This is not triggered due to some product filing, anything like that? No, no. That was for the EU GMP. We triggered the EU GMP. Okay. But how about US FDA? US FDA, they walk in as it is. But then how is the business development going? I mean, one of the customers we were working with, that customer had issues with his plan. But how is the business development happening in the U.S. region? That has significant setback. Unfortunately, there are not too many customers who can take our product because of the limitation of size. So we are working on how to mitigate that. Maybe in a couple of quarters, we will come out with a new plan. Okay, sir. Thank you for answering my questions. Thanks, Rupesh. Thank you. The next question is from the line of Romil Jain from Electrum PMS. Please go ahead. Hello. Thanks for the opportunity. Yes. Am I audible? Yes, you are. Sir, just one question. On the enmetazobactam, so because we've already got we are selling in Europe, so just want to understand how is the ramp-up in that as compared to your expectations because we already started getting royalty from last quarter, and this quarter also, you mentioned that there is a substantial growth. So just want to understand whenever we get approvals in Europe in terms of distribution, can it be a similar kind of a ramp-up? So just some directional points on that. Can you just repeat your question, Romil? I could not completely understand what you were trying to ask. My question is the distribution that is happening in the world. Romil, your audio is breaking up. Can you hear me now? Yes. Yeah. My question is, in Europe, we've started selling enmetazobactam. So how is the pickup versus your expectations? So we had planned for the three geographies which we thought would be large geographies in a cumulative way. This is only one quarter of actual business which has happened. And looking at how we are looking at launch in India, the same thing would repeat for Europe. It's not going to be that easy because the doctors need to be convinced country by country. US would be significantly better or faster, I would say, because it's one country. Europe being an amalgamation of several markets, each would have their own dynamics, and the ramp-up would be slower. But obviously, it would be exponential month on month, year- on- year, quarter- on- quarter. Okay. And let's say in Q4, the quarter we are in, how is the growth versus, let's say, Q3? I mean, is there also a substantial growth happening? Q4 is what is starting. We don't have month-on-month visibility. We only get to see the numbers once Allecra reports to us, which is the period is 45 days at the end of the quarter. Okay. Okay. And just one question on the tax rate. So from when do we see the tax coming in fully, or if you can give some understanding on that? Mr. Gupta, can you please answer that question? Yeah. Actually, sir, right now, we have carry-forward losses of INR 790 crores, still in our booking. INR 790 crores? INR 790 crores. Okay. So all depends on our future profitability and assuming and investment also because then we will get depreciation benefit also, income tax depreciation benefit. So I don't think for next four, five years, there will be any possibility of tax. Okay. And sir, just one last one on enmetazobactam. If you can just reiterate the kind of market size that we are seeing because obviously, it's a very important drug for the whole world. So just want to understand a little bit on that. The market potential is immense. Unfortunately, I don't understand the new drug market very well. I don't think anybody in India, having not invented anything, understands that. I do have certain key guiding numbers which give me comfort that it could be a very large product. Some of those I've shared earlier, I'll just repeat. This product is targeted directly against the comparison against piperacillin and tazobactam. The originator brand name was Zosyn, which was a $1 billion product just in the US in 2007 when the patent expired, right? It is also comparable to meropenem because it provides an opportunity for the doctors to treat patients with cefepime and enmetazobactam rather than meropenem. It is called a meropenem sparing therapy for a large percentage of patients. Instead of meropenem, this product can be given. And even if we just look at the Indian market, that's a thousand crore business just for India for meropenem. So it can replace that also. And other antibiotics, it's a very, very potent product being a new antibiotic. So it can be a significantly large number. Now, what number actually translates to our sales, I am unable to forecast. Okay. On the global number, just wanted to understand what can be the size of the market over the next two to three years? Yeah. So I have imagined when I came out with the first guidance note on this product three years ago, my imagination was a $2 billion lifetime sale across the world. Okay, sir. Thank you so much, sir. Thank you. Thank you. The next question is from the line of Nikhil from SIMPL. Please go ahead. Yeah. Hi. Good evening. Thanks for the opportunity. Mridul, you'll have to bear with me because I missed the initial part of the call because there were a few other calls there. So I joined the call a bit late, and some of the questions could be repetitive. Just on the sales, we've seen some drop year on year while a lot of new capacities had come up for us in the first half. So if you can just spare a minute and explain what exactly happened here. Yeah. So our volumes have increased by 20%, but there has been price correction in two, three key products, which has led to the overall numbers being muted. Okay. And on enmetazobactam, I think you were discussing about we're getting the revenue visibility in 45 days. But if I remember, Electra launched it in, I think, October or November. So one is how do we book the royalty? Is it at the end of the year, or is the royalty booked on a quarterly basis? Some guidance here. Yeah. Quarterly basis. Have you booked anything in this quarter? Yes, we have. Have you shared those numbers or? No. We don't share product-wise numbers. Okay. And on the domestic side, have you launched the product? And how large is the MR team today? And added to that, what all other products we have launched? Yeah. So on the domestic Orchid AMS business, the team is about 50 people on the ground. It's a hospital business, so it does not involve doctor-to-doctor promotion like a typical product. The business is only for injectable products, so sold in hospitals. And this is launched with a wide portfolio of about 25-30 products covering the entire gamut of antimicrobial resistance management. Okay. And last question from my side on our CapEx is if you can share the timelines, any changes there, or largely we are meeting the guidance? Yeah. No changes as of now. On both 7-ACA and the cefiderocol line? Yeah. Yeah. No changes. Okay. Fine. Thanks. I'll come back in a few. Thanks. Thank you. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. Participants, if you wish to ask a question, you may please press star and one. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is from the line of Vishal Manchanda from Systematix Institutional Equities. Please go ahead. We have lost the connection for Mr. Vishal. Mr. Vishal is reconnected. Please go ahead, sir. Good evening, and thanks for the opportunity. Sir, you had talked about filing for Zavicefta through a different route in Europe. So if you could update on that, where are we? Sorry? You're talking about selling in Europe? Yes. Earlier in one of the calls, you had indicated you are also planning to file generic Zavicefta in European markets and you have a process innovation or a patent non-infringing route. So the U.S. and the Europe products both are ready. So for Europe, we are currently preparing the documentation for filing the DMF, and then we will go with the MA registration. So while in U.S., our intention is to file ANDA on our own. For Europe, Orchid being we don't have local entity, and we don't plan to have in the future as well. So we are looking for partners to partner with to sell in Europe. Okay. And so with this non-infringing route, how early can we be there on the market in Europe? Unfortunately, I don't have the number right now, but I think it should be slightly earlier than US. Okay. Okay. And any sense on how large the market is? So the ex-US is about $500 million around. And how much of that would be Europe? I'm just making a very wild guess here. I think ex-Europe, one-third of the market should be Europe. Okay. Around about what the US is, about $150-$200 million? Yeah. Yeah. Okay. Just a clarification, you said we have 20% volume growth this quarter, but have you brought us flat. I was talking about nine months cumulative. Okay. And how about this quarter, if you could? Unfortunately, I don't have the numbers handy, but it would not be much different. Should be around 15%-20%. Okay. And so do you think we can grow 20% like we have grown in the last few years on a YOY basis for full year FY25? I don't give short-term forecasts, Vishal. Things can happen. So unfortunately, with the price correction, I'm not sure whether I can say that YOY basis we should reach that number. But like I said earlier, if you look three years from today backward, you would still see a 20% kind of take-up. Okay, and for the price correction that you're talking about, is this more related to the oral products or also with the sterile products as well? One of the sterile products, but yes, largely related to other products. These are spot prices reduction, not for your long-term contracts that you run with your customers? Yes. Largely the spot price reductions. Okay. And these prices are volatile. So we can also expect prices to go up as you would have seen in the past. Or is there a case to worry? They tend to remain at lower levels for a longer time? No, I don't think so. It's also dependent on the demand and the supply. So they will continue to remain volatile. Although this correction is a sharp one, which normally does not happen in such a short period of time. Right. So what we have also been witnessing is what China typically does is they tend to kind of lower the final API prices while they do not reduce the key starting material prices as much. And they lower it to the point where your gross margins are negative if you kind of use the raw material to manufacture the final API. The gross margins are negative. So how are we looking at this from a ceftriaxone perspective? So when we do 7-ACA and we do ceftriaxone and they cut down on the ceftriaxone prices. And I think right now, even the ceftriaxone prices spread is not very encouraging. You are absolutely right. And that's the idea that we want to be free from the clutches of China on the starting materials. That's why the investment is 7-ACA. So even at current prices, we can compete on ceftriaxone, but that's a product we don't want to increase significant volumes because it's not significant margin accretive as I've explained earlier. But in principle, your argument is correct. And therefore, we have decided for the 7-ACA, how do we become free from China and not allow them to control our margins? Okay. Okay. And, sir, just one final one on the EU GMP inspection. This was triggered by one of your customers whom you would be supplying the API? Correct. Correct. But we requested the customer to trigger that because the period had become long. So we asked them. We were talking to a few customers. Unfortunately, because of the after-COVID, there is a significant backlog. And I think we were planning it for more than a year before we got a confirmation of a possible order. Okay. And sir, any sense on the market opportunity for this product? Would this be a decent opportunity for you, or this is a competitive market that you would be selling for? Which product? This product-specific inspection that happened at the EU GMP inspection. It's not only for just one product. It's for the entire range of Orchid products for the European market. Okay. Got it, sir. Got it. Thank you very much. Okay. Thanks. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. Participants, if you wish to ask a question, you may please press star and one. If there are no further questions, I now hand the conference over to the management for the closing comments. Thank you. I would like to thank all the participants for their insightful questions. Keeps us on our toes. I would also like to thank all our stakeholders, the employees, partners, and investors for their trust and support. With the continued belief in our vision, we look forward to achieving new milestones and drive further value creation. Thank you. Thank you, members of the management team. Ladies and gentlemen, thank you. Ladies and gentlemen, on behalf of Systematix Institutional Equities, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.