Ladies and gentlemen, good day, and welcome to the Q3 FY 2022 earnings conference call of Sun Pharmaceutical Industries Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Nimish Desai, Head of Investor Relations. Thank you, and over to you, Mr. Desai. Thank you. Good evening and a warm welcome to our Q3 FY 2022 earnings call. I'm Nimish from the Sun Pharma Investor Relations team. We hope you received the Q3 financials and the press release that was sent out earlier in the day. These are also available on our website. We have with us Mr. Dilip Shanghvi, our Managing Director, Mr. Muralidharan, CFO, Mr. Abhay Gandhi, CEO of North America, and Mr. Kirti Ganorkar, CEO of India Business. Today, the team will discuss performance highlights, update on strategies and respond to any questions that you may have. As is usual for the ease of discussion, we will look at the consolidated financials. Just as a reminder, this call is being recorded and a replay will be available for the next few days. The call transcript will also be put up on our website shortly. The discussion today might include certain forward-looking statements, and this must be viewed in conjunction with the risks that our business faces. You are requested to ask two questions in the initial round. If you have any more questions, you are requested to rejoin the queue. I also request all of you to kindly send in your questions that may remain unanswered today. I will now hand over the call to Mr. Shanghvi. Thank you, Nimish. Welcome, and thank you for joining us for this earnings call after the announcement of financial results for the Q3 of FY 2022. I hope you and your family are doing well. Let me discuss some of the key highlights. Consolidated revenue for the quarter were at INR 98,142 million, recording a growth of about 11% year-over-year, driven by strong performance across markets. Despite rising costs, we've achieved higher profitability. We continue to focus on top line growth, operational efficiencies, and business continuity. For Q3, branded formulation business in India and emerging markets together now account for about 50% of global consolidated revenues. Let me now update you on our global specialty business. I am happy to inform you that our global specialty revenue for the first 9 months have already crossed previous full year revenues. For Q3, our global specialty revenues were approximately $183 million across all markets, up about 21% year-on-year. The global specialty revenues do not include ILUMETRI and ILUMYA revenues. As you all are aware, we launched ILUMYA in Canada and WINLEVI in the U.S. during the quarter. Recently, we also announced launch of CEQUA in Canada. Specialty R&D accounted for approximately 22% of our total R- This is the operator. Sir, we are not able to hear you. This is the operator. Sir, we are not able to hear your audio. Please try again. Ladies and gentlemen, the line for Mr. Dilip Shanghvi has got disconnected. Request you all to please stay online while we reconnect him. Thank you. Ladies and gentlemen, thank you for patiently waiting. The line for the management is reconnected. Thank you, and over to you, sir. This is Muralidharan, CFO. Sorry, we got disconnected. We are back again. Thank you, Mr. Shanghvi. Good evening, everyone, and welcome to all of you. Our Q3 financials are already with you. As usual, we will look at key consolidated financials. We recorded the highest ever quarterly revenues at INR 98,142 million in Q3, up by about 11% over Q3 last year. Material cost as a percentage of revenues was 27%. Staff costs were up by 8% year-on-year and stands at 18.9% of revenues. Other expenses up 13% year-on-year and stands at 28.1% of revenues. Increase is attributed towards higher selling and distribution and traveling expenses, while in Q3 of last year, these expenses were lower on account of global pandemic. As indicated in our past earnings calls, the expenses are seeing an increasing trend across all the markets as we reach full normalization. Forex loss for the quarter was INR 106 million compared to gain of INR 716 million for the Q3 last year. EBITDA for Q3 was at INR 25,574 million, up by 7.5% year-on-year, with EBITDA margin at 26.1%. It is important to note that we have been able to record EBITDA growth despite a significant increase in other expenses and a negative swing in Forex. Reported net profit for the quarter was at INR 20,588 million, up 11% over net profit of Q3 last year. The reported EPS for the quarter was INR 8.60. Let me now discuss the key movements versus Q2 FY 2022. Our consolidated revenues were up by 3% quarter-on-quarter at INR 98,142 million, primarily driven by the specialty business. Material cost stands at 27% of revenues. For Q3, other expenses were at 28.1% of revenues, higher than Q2 on account of higher selling and distribution expenses. We had a Forex loss of INR 106 million for Q3 as against Forex loss of INR 764 million in Q2. EBITDA for Q3 stands at INR 25,574 million, which is flat compared to Q2. It is important to note that in Q2 we had a milestone income of $10 million, excluding which we would have recorded a minor growth in EBITDA sequentially. Other income for Q3 was higher compared to Q2, mainly due to settlement income from DUSA / Biofrontera litigation and interest on income tax refund. Reported net profit for Q3 was at INR 20,588 billion, marginally higher than Q2 this year. Now we will discuss the nine-month performance. For the nine-month period, net revenues were at INR 290,403 million, a growth of 17% over the nine-month period last year. Staff cost stands at 18.6% of revenues, lower than nine-month last year. However, in absolute terms, the staff cost has increased on account of annual merit increases. Other expenses were at 27.3% of revenues, lower than nine-month period last year. However, in absolute terms, the other expenses have increased on account of higher selling, distribution, and traveling expenses. While in the nine months of last year, these expenses are lower on account of pandemic-related restrictions across markets. As a result of the above, the EBITDA for the nine months was at INR 78,900 million, a growth of 26.5% over the nine months last year, with EBITDA margins of 27.2% compared to 25.2% year-on-year. Excluding the exceptional items, adjusted net profit for nine-month FY 2022 was at INR 60,851 million, up by about 33% year-on-year. Reported net profit for nine-month FY 2022 was at INR 55,500 million. The company has repaid debt of about $254 million in the first nine months of the current fiscal. As of December 31, 2021, we continue to remain net cash positive, even at the ex-Taro level with $767 million of net cash. At consolidated level, including Taro, the company has a net cash of about $2.1 billion. Let me now briefly discuss Taro's performance. Taro posted Q3 FY 2022 revenues of $139 million, a net profit of $26.3 million, higher by 5% and 6% respectively over Q2 FY 2022. On year-on-year basis, revenues for Q3 FY 2022 were flat, while the net profit was lower by about 20%. For nine months, revenues were at $418 million, up 4% year-on-year, and adjusted net profit was at $99.2 million, down by about 7% year-on-year. I will now hand over to Mr. Kirti Ganorkar, who will share the performance of our India Business. Thank you, Muralidharan. Let me take you through the performance of our India business. For Q3, the formulation revenues in India were INR 31,676 million, recording a strong growth of about 15% over Q3 last year. India business accounted for about 32% of consolidated revenue for Q3. Despite a challenging and competitive environment, we have maintained the trend of the past few quarters of outperforming the average industry growth, which has led to increase in market share. Our market share has been gradually increasing over the past few quarters. For Q3, it was 8.6% compared to 8.1% in Q2 as per AIOCD AWACS data. On MAT basis as per AIOCD AWACS data for December 2021, our market share was 8.2%. We have witnessed a growth across most of our therapies. The growth was driven by combination of factors like improved demand for non-COVID treatments, which led to higher growth in chronic, semi-chronic segment, better patient flow to doctor's clinic, and increased healthcare awareness. As per AIOCD AWACS data for Q3, for some of our key therapy areas like CNS, CVD, and Gastro, we outperformed the segment growth. As per the data, our growth in CNS was 7.8% against 7.5% for overall CNS segment. In CVD also against 3.3% segment growth, our growth was 12%. Also in Gastro, the therapy grew by 15.7% against the segment growth of 10.8%. We had a negligible revenues of COVID products in Q3. Field force operations were near to normal in Q3, with almost all doctor clinics operational. The productivity of the new field force, which has started improving, and about 70% of the territories for the new field force are performing as per our expectation, while the performance for the remaining 30% is likely to improve going forward. Travel costs for medical representatives was near to normal, while we continue to see some savings in terms of cost of medical conferences. For Q3, we launched 25 new products in Indian market. Sun Pharma is the largest pharmaceutical company in India, and as per SMSRC report, we are number one ranked by prescription with eleven different doctor categories. We also continue to remain the partner of choice for in-licensing of products, given our strong number one position in many therapy areas, including therapies for the treatment of COVID infection, coupled with our large distribution network. I will now hand over the call to Abhay. Thank you, Kirti. I will briefly discuss the performance highlights of our U.S. businesses. For Q3, our overall formulation revenues in the U.S. grew by about 6% over Q3 last year to about $397 million. The main driver of growth was the specialty business. U.S. accounted for about 30% of consolidated revenues for the quarter. While doctor clinics are open in the U.S. during the quarter, the situation is yet to fully normalize. Patients flow to doctor's clinics as well as frequency of doctor calls by our medical representatives are still both below pre-COVID levels. Our specialty revenues in U.S. have grown over Q3 last year, mainly driven by ILUMYA, CEQUA, and LEVULAN. Specialty revenues are significantly higher compared to September 2021 quarter, mainly driven by ILUMYA, CEQUA, LEVULAN, and ABSORICA. We have done well in the specialty business in U.S. as well as globally over the last few years. Global specialty revenue contribution has doubled from about 7% in FY 2018 to about 14% in Q3 FY 2022. As you're all aware, we launched WINLEVI in the U.S. in November 2021. We have received a good response from doctors for the product, as there is a need in the market for a new mechanism of action to treat acne, which WINLEVI is addressing. It is the first time that an androgen inhibitor is being used for treating acne. Our established presence in the dermatology market will help in ramping up WINLEVI going forward. For competitive and strategic reasons, we will not be able to share granular details on WINLEVI on this call. Let me now update you on our U.S. generics business. While the U.S. generic business continues to be competitive, the Sun ex-Taro generic business has stabilized. While we do experience price erosion, we have been able to counter it by a combination of new launches and better supply chain management. During the quarter, we launched five generic products in the U.S. market. We have received approval for generic amphotericin B liposome injection, and we are eligible for 180 days of exclusivity for the product under the competitive generic therapy designation by the U.S. FDA. We will be launching the product shortly in the U.S. I will now hand over the call back to Mr. Shanghvi. Thank you, Abhay. I will briefly discuss the performance highlights of our other businesses, as well as give you an update on our R&D initiatives. Our branded formulation revenues in emerging markets were at $239 million for Q3, up by about 17% year-on-year and lower by about 2% over Q2 this year. The underlying growth in constant currency terms were about 15% year-on-year. Emerging markets accounted for about 18% of total revenue for Q3. Among the largest market in local currency terms, Romania has grown by about 25%, Russia by 17%, South Africa by 33%, and Brazil by 29%. Formulation revenues in rest of the world market, excluding the U.S. and emerging markets, were $181 million in the Q3, up by about 3% over Q3 last year. Rest of the world markets accounted for approximately 14% of consolidated third quarter revenues. API revenues for the third quarter were at INR 4,710 million, higher by about 5% over Q3 last year and by about 8% over Q2. We continue to invest in building a R&D pipeline for both the global generics and the specialty businesses. R&D efforts are ongoing for the U.S., emerging markets, ROW markets, and for India. Consolidated R&D investment for Q3 were at INR 5,471 million compared to INR 5,593 million for Q3 last year. Our current generic pipeline for the U.S. market includes 88 ANDAs and 13 NDAs awaiting approval with the U.S. FDA. Lastly, the board of directors today declared an interim dividend of INR 7 per share against INR 5.5 per share declared last year, keeping distribution percentage of the profit constant. With this, I would like to leave the floor open for questions. Thank you. 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 touch-tone 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. Reminder to the participants, anyone who wishes to ask a question may press star and one. First question is from the line of Neha from Bank of America. Please go ahead. Yeah. Thank you for taking my question. My first question is on the U.S. specialty business. Abhay, if I heard correctly, most of the quarter-on-quarter increase you indicated was from, you know, your other products other than WINLEVI. So is it fair to assume that the $183 million does not include any large launch quantity sort of supplies, you know, and therefore should not normalize? Is that a fair understanding? What I understood from whatever I could hear, Neha, is you're asking whether there was an extra large stock-up during the launch of WINLEVI. Is that the question? Yes, yes. That's right. No, I don't think so, because I think what we are seeing today as buying from the wholesalers is almost as per what they are selling out of their warehouses. It's like, so there is no, you know, buying that you are seeing at the launch, which we will have to carry forward. No. Understood. In terms of, you know, LEVULAN and ABSORICA, particularly for LEVULAN, has the momentum improved back to what we were doing, pre-COVID levels, particularly given there was a spike in cases again in December? Was there some sort of an impact in December and therefore you could see more build-up in LEVULAN as we go ahead? I think the number of elective surgeries has clearly come down. If I look at it from a, you know, on a three-year basis- We are nowhere near where we were, say, two years ago, you know. That's not because we have lost share, it's mainly because the number of patients who are treated have come down because of new requirements of how many cases you take in a day, and can you postpone surgery. It's definitely not normalized. We see a seasonal uptick in this quarter, which is normal, but the numbers for maybe the last year or even the previous year would be higher. Understood. WINLEVI, I know you don't want to share granular details, but in terms of, you know, initial launch, it's fairly early days. Any feedback that you think, you know, you would like to highlight, is it in line with expectations? Also, we saw uptick in SG&A. Was that related to WINLEVI launch? WINLEVI launch certainly would have increased our SG&A because during the launch you would have a higher expenditure, that's for sure. See, as I said in my readout itself, for competitive reasons, I wouldn't give too many granular details on this call. The only thing which I will definitely say is that the initial response has not just met, but maybe exceeded expectation. Of the doctors that we covered for the product in the first three months, 80% of them have given at least one prescription for WINLEVI, which is a very good indicator that the interest level at the customers for a new mode of action is very high. Of course, it's for us to be able to use that as a base and increase the depth of prescriptions from these doctors and continue to improve on our launch performance. Understood. That's helpful. Thank you. Thank you, Dev. Thanks, Neha. Thank you. The next question is from the line of Kunal Dhamesha from Emkay Global Financial Services. Please go ahead. Good evening, and thank you for the opportunity. Just one question on the, you know, how we account the specialty sales. Do we kind of account the sales as a pre-coupon rate, or we kind of net out the coupon or any assistance that we provide to customers in our sales number? Coupon. This is accounted as part of net off from top line. Net off of top line. Okay. Okay. Because I think, as far as I remember, when we had ABSORICA coupon program, I think that at that time we were accounting the gross sales, and then I think coupon was netted in marketing expense, if I remember it correctly. No, no. I do not think so. We have been having Okay. Policy of accounting toward coupon. Okay. Sure. The second question is on if I look at the ex-Taro, the gross margins are kind of sequentially compressed by roughly 100 basis points. Would you ascribe this to geographic mix shift or just the higher raw material prices? Or any particular mix of both the items. My suggestion would be that we should look at annually instead of quarterly. Taro also published the results and, given the press release in terms of their results, then look at that. Okay. Lastly, if I may please. We have said, you know, our specialty sales are doing well. Would it be fair to say that ILUMYA nine-month sales are comfortably above the FY 2021 level? Yes, they will be. Sure. Thank you. Thank you. Thank you. The next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead. Yeah. Hi, good evening. Thanks for the opportunity. My question is on R&D. Just trying to understand better. We've been talking about higher R&D and also expected trials to start, you know, further trials for ILUMYA, et cetera. How do we think about it? I mean, if you see the run rate is still about 5.5%, under 6%. In the past, we have talked about 8%. How do we expect the year to close, and what's the outlook for the next year? What kind of trials we are talking about for next year? No, I think the objective is to spend that kind of money. I think, like what Abhay said, is that some of the challenges in terms of patient recruitment, especially in the kind of studies that we are doing, which are extremely competitive trials where competition for all potential patients to participate in study from multiple companies is very high. So it's kind of leading to a much slower recruitment, and thereby this. We are making multiple efforts, including diversifying the geography in which we are doing the studies so that we can spend the intended money. What I think we share with you every year is the plan to spend. I think your assessment as to we have not been able to spend is a fact, but hopefully we should kind of go back to the kind of money that we wanted to spend. Does that impact, sir, some delay as the trials are getting delayed in terms of the new trials starting and closing and hence the commercialization? It would have impact, yes. I mean, that's where the effort would be to find a way to minimize that impact. Okay. Thank you. Second one was on the U.S. There was a comment that, you know, kind of bottoming out and, with the new launches and, supply chain improvement, we expect, you know, things are bottoming out and to improve from here. What we heard from the different other companies also is about that pricing pressure has been continued. In fact, they talked about more, you know, supply chain challenges like freight cost, et cetera. I mean, what is changing for us? Are we seeing a spate of new launches? And there are some corrective action being done? Or what exactly gives us confidence on the base business ex-Taro for the U.S.? Typically, in a quarter, we have been able to launch close to five or six products each quarter. That's one thing which helps us. Of course, we have been consistently saying on every single call in the past few years actually, that pricing pressure, which is product specific, we continue to face. We have to be able to overcome that with launch of new products, which we have been able to, and better supply chain management. These are the only two tools which can help us stabilize our business and find a way to grow in a competitive market. Okay. We're expecting launch rate to improve or what is exactly changing? Launch rate may not improve. I mean, we are very clear on what are the products we have in our R&D portfolio, when are we supposed to launch them. I think the visibility I have as of now going ahead is also we should be. I mean, don't look at it as each quarter, but average for each quarter should be in the same range of, you know, anywhere from 5-6 products. Okay. Okay, great. Thank you. Thank you. Thank you. The next question is from the line of Anubhav Aggarwal from Credit Suisse. Please go ahead. Yeah. Thank you. Good evening to all. One question is on the U.S. specialty business. This one at key run rate, would you say, Abhay, that this new base that on which you can grow even in the March quarter? I'm asking because I remember last year in December we had some stocking benefits, and March quarter number was much lower than the December quarter. Would you say that was just one-off last year, which is not the case this time? It's a combination of not just one or two products, but we also need to see how in Q3 the overall ABSORICA franchise contributes or does not. But the whole idea is, I mean, when we run the business, we don't look at it on a quarter-on-quarter basis necessarily. We look at it that long term do we have headroom to grow, and what do we need to do to continuously grow on each of our franchises. I think the way I look at it, each business has opportunities to grow their own franchise and their own product. Rather than answer it as a next quarter question, I would look at enough headroom for the businesses to grow their own franchises. Just a clarity on that, like you mentioned that LEVULAN typically has a seasonality which peaks out in December quarter. Any other product you- A little bit spills over to January, February. A little bit spills over to January and February also. It's typically in the winter months, which goes up to at least February, where you see a seasonal impact on a lot of derm products. Not just LEVULAN, but even acne, there is a seasonal impact. Other than the derm product, the other portfolio normally does not see any spike in these numbers in the December quarter. Not as prominent, of course. Not as prominently. Sure. Second question is on the other expenses. As C. S. Muralidharan was saying that we have seen increase across business but- Sorry, I'm not able to. I mean, I have a sort of a mechanical sound when you are speaking, so I'm not very sure I'm catching your question. Yes. This second question is outside the US, that's on the overall company. This is on other expenses. This question is that, as in the initial commentary was mentioned that we have seen increase in other expenses across the business segment. Just trying to understand how far away or close we are to the normalized level of the company. Like we've been talking about pre-COVID, we are at a certain level. We will not go back to the pre-COVID level, but how close we are to that number? Are we very close? Because we've seen a, let's say, surprising increase sequentially, which we were not expecting. Are we very much close to that normalized number now? Anubhav, the thing is that as I said in my talk that yes, we have been guiding the sales inch up as market operations normalize, which we have witnessed. More importantly, the product mix and the geo mix also helped us to maintain the margin despite the cost pressure increase. However, having said that, we are having a close watch on that so that we can contain and maintain the momentum of growth on revenue. Sorry, there was some disturbance. What's the response? Are we closer to the normalized level or are we still far away from that? They go up slightly higher than the current level, but not anything significant. Okay, sure. Thank you. Thank you. The next question is from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead. Yeah. Hi. Thanks. Good evening, everyone. Abhay, just on the U.S. specialty business, when do you expect the footfalls, you know, in the doctor clinic to, you know, sort of normalize to pre-COVID level? And which products are getting impacted because of that? I guess it's LEVULAN and ILUMYA. Anything else? First of all, I mean, to the first question, I mean, I really cannot guess, Sameer, because even today, I mean, I saw the morning news. The average seven-day cases are still, like, 500,000. So that's not small. So footfalls at the doctor's level, I mean, are restricted, and clearly access to reps also much lower than pre-COVID. When will it stabilize? I mean, your guess is as good as mine, so I don't know. If I look at it very broadly, then, you know, every single product does get impacted. Only the extent of one over the other really changes. Electives are the worst hit, but really speaking, the impact is on all products. Okay. Abhay, it's quite commendable that despite, you know, lower activity, you know, you are able to grow your specialties so well, you know? Thank you. I will definitely communicate your comment to my team members. It's nice of you to say that. The way I look at it and I guess this is true for everybody. When you have a level playing field, it impacts everybody. That way you are not disadvantaged over anyone else. It's a common scenario for everybody. I think it's all a question about how you execute in a change environment as a team and as a company, which eventually makes the difference. Okay, great. The second question is on WINLEVI. I know you won't give any specific detail, but you did not cite WINLEVI as one of the specialty product that, you know, drove quarter-on-quarter growth. So was WINLEVI not an important contributor? Because your prescription trends in IQVIA shows a pretty good traction over there. Sameer, if you recall, I mean, we launched the product only on the first of November, so we didn't have the full quarter. That's one. Secondly, I think November and December are also many days of holidays. Yes. The real impact of WINLEVI sales will not be seen in Q3. Some of it may actually be seen in Q- Okay. Just final one on WINLEVI, Abhay, that was quite helpful. What's the typical, you know, duration of, you know, of treatment, if the patient is using WINLEVI? In the sense, you know, is it a chronic use? There's argument for a lot of repeat uses or no? Too soon for me to really give you a you know a quick handle on that because see the one tube is supposed to be used by a patient for a month. Even if it is not used the patient is supposed to discard that and use the next one. Now whether that is really happening whether they are this product unlike an ABSORICA for example doesn't have a REMS program. The patient may or may not visit the doctor every month. What kind of, you know, prescribing and adherence behavior is being demonstrated? Sure We are also trying to understand more. Okay. I don't think I have a very accurate answer for you, Sameer. It's a great question. I understand. It's something that I am also trying to get an accurate answer to. Very good. Sorry, I'll just take one second more. Abhay, this is helpful, but I guess what I'm trying to say is, fine, you know, real life is, situation is different. We don't know what's going on. Just medically speaking, scientifically speaking, what do you think would be a typical duration? I know it varies from patient to patient, but on an average, is it a three-month treatment cycle, six-month treatment cycle? Just any range would work, you know. I don't know, Sameer. I don't want to, like, give you an answer which I cannot back it up with scientific data. Because even today, I'm not, you know, 100% clear in my own mind whether this has been used in a majority of patients as a first line monotherapy or in combination with existing therapies. If it is used as a sort of a combination therapy with other products, then what the doctor decides to continue, what the doctor decides to maybe stop or wean away from are the questions in our ad boards we try and get answers to. As of now, the information is so sketchy. If I give you a sort of a clear answer on this, I may be misleading you. Sameer, I think if it's helpful, then WINLEVI, like most of the acne products, the clinical trial is a 12-week trial, and the primary endpoint is reduction in the severity of acne. Now, along with that, all products also have to do a 12-month safety study in certain subset of patients. My sense is that depending on the severity of patient and the type of acne that they suffer from, the duration of treatment will be different. I think the challenge is to understand what is the percentage of severe, moderate, or mild acne patients and, how doctors treat them. If it's helpful. Yes, absolutely, Dilip bhai. Very helpful. I've got few more. I'll get back in the queue. Thank you so much. Thank you. Thank you. The next question is from the line of Krish Mehta from Enam Holdings. Please go ahead. Thank you for taking my question, and congratulations on a great set of numbers. I had two questions. The first of which is on the psoriatic arthritis trial. Could you provide any update on how you're seeing footfalls for enrollments or how we are progressing on that front? When I explained about the relative challenge in terms of recruitment of patients, psoriatic arthritis, one such trial. We are not on schedule, and we are trying to find a way by which we can catch up by multiple strategies. Okay. My second question was actually on the R&D front. As we've seen that the quarterly spends have gone down as a percentage, and you explained that it's due to the lower footfalls. Assuming that the footfalls normalize after a few quarters, how do you see R&D going forward in terms of building a steady state increase in organic R&D versus more of you know acquisitions or partnerships that we saw with WINLEVI? What's the strategy in terms of R&D going forward? I think our sense is that the steady state R&D should be around 8-9%. Because, like, we have this SCD-044 study in phase II. After the phase II is complete, we will then have to enroll subjects for phase III, and that will be much more expensive than phase II. So like that, there are potential indications that will keep on increasing the cost going forward. Okay, thank you so much. Thank you. The next question is from the line of Damayanti Kerai from HSBC Securities and Capital Markets. Please go ahead. Hi, thank you for the opportunity. My question is on specialty spend. With pickup in all the key brands, how should we see costs moving ahead? Are you near to cost breakeven for your specialty portfolio? Madhu, you will refer to the costs or should I? No, generally, I think, Abhay, we haven't been sharing segment-wise profitability and costs. In the past, I think we've indicated that we are in an investment phase with this business. I think, depending on how the clinical trial costs continue and how we capture the clinical trial costs, it will require significant investments going forward. I think, overall, I'm happy with the margins that we've been able to improve in the whole business. Okay, just to clarify, on the clinical trial part, obviously it depends on progress in the pipeline asset. Like, have you optimized costs more on the marketing and promotional part for the key brands? Abhay, that you need to respond. Yes. I think for most of the major products, we are clear now of what is it that is required for us to succeed and keep stable expenses. But for a new product like WINLEVI, of course there will be disproportionate investment going in. Thank you. My second question is on your capital allocation strategies ahead. Like, where are you looking to invest mostly, say for next one or two years? I think philosophically as a company, we've always looked at our preference for investing in businesses or creating businesses with ability to grow steadily year after year. I think that philosophy will continue to drive our future investment. Okay. Can you call out, like, what are your CapEx plan for FY 2022 and 2023? CapEx? No, I think this year we haven't given any specific guidance. In the past, I think we've indicated that our major CapEx plan has been kind of complete till our volumes go up significantly. Till that point of time, I think we will have marginal new CapEx in all businesses, all facilities. Sure. Thank you. I'll get back in the queue. Thank you. Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Yeah. Thanks. Thanks for the opportunity. Sir, just on the U.S. generics ex-Taro, if you could share what kind of price erosion you're experiencing on the base portfolio. We look at it on a product to product basis. It's never on a portfolio. Each product has a different kind of scenario. Like, I think in the last call, Mr. Shanghvi, we also mentioned that it's not a basket. There are some products on which we face pricing pressure. On some products we're able to take a small price increase as well. Net-net we always say that there is pricing pressure. Yeah, obviously we wouldn't give a number to say that we have this percentage of price erosion on the base business. Okay. Because if, like, with what that net number is and the kind of launches we have and the kind of base at which currently we are, like if I normalize the three Qs like generic ex-Taro sales, then we are more or less at a $1 billion kind of a number. Going forward, will the new launches be able to offset the price erosion? That is what, you know, I'm trying to understand. I mean, that will be our attempt. Okay. Just on the ILUMYA per se, like the conditions of mild to severe psoriasis and the psoriatic arthritis are quite often related, and the peer having now approval for both the indications. You see the change in the way the doctors look at like, let's say ILUMYA and the peer products, or you will see it still continuing prescription rate on a single indication. In a way, Mr. Shanghvi has answered this question in response to a question asked on this call earlier, that not having the indication does have an impact, clearly. That's why we are trying to speed up our trial so that we are not disadvantaged versus the peer products. I'm so sorry, I missed that. Sorry. No, no problem. Thanks. I hope this helps you. Yeah. Thank you. Thank you. Thank you. The next question is from the line of Surya Patra from Phillip Capital. Please go ahead. Yes, thank you for taking my question, sir. This Amphotericin B CGT exclusivity, what you have in call. How bigger is this opportunity that you think because it's a old product and discontinued by many. The prescription progression and all that, if you can see, then it looks like a larger product than that is looking like. Is it a kind of a rightly timed product approval that we can see considering the COVID trend that is what we are witnessing in U.S.? No, I don't know what information you have that it's a discontinued product, because that's not my understanding. Now, it's the only approved generic, and because it is a difficult product for which no generic was approved, FDA, by a separate direction, said that the first approved generic will get six-month exclusivity. One is approved, launched within 75 days. We should be able to launch this shortly. It's an interesting product. It's not a very large product, but the sales as well as the growth of the product are in public domain, so you should be able to see that. At the same point of time, I think in the U.S. it has never been used for- COVID. Because this mucormycosis is a local problem that we faced in India, it is not a problem faced by any patient in other geographies. It's not been used for COVID. Sure, sir. Sir, secondly on the, can you split the R&D spend between the specialty and, the normal generic? I think it was part of my readout, 23% specialty. Oh, sorry. Yes. Okay. I missed that. Just last one question, sir. Sir, is the price erosion trend for the Taro portfolio is meaningfully different than the non-Taro portfolio? You commented obviously it is the price erosion cannot be portfolio-based, but No. Also we can't share any information about Taro beyond what they have shared. Sure, sir. Fine. Thank you, sir. Wish you all the best. No, thank you. Thank you. The next question is from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead. Hi. Thanks for the repeat. Just a couple of them. Will there be any update on Halol re-inspection? No, I think we haven't heard back. I think last time also I said that is that we've requested them for inspecting the facility, and we are yet to get any indication as to when they will be inspecting. Hopefully soon is our expectation. Sir, is it hurting our business a fair bit in terms of not getting new launch new approvals, especially some complex products? I believe so, because it would be affecting our business and growth. Sir, one final one. For other income, INR 430 crore, I don't know if you have given the breakup or if there is any one-offs in this? We have given the breakup in the readout I just said, Sameer. Oh, I missed that. It's a settlement income for DUSA Biofrontera of $22.5 million and interest on income tax refund. Yeah, you know, how much is the income tax refund? that we have not disclosed, but the Biofrontera settlement amount, $22.5 million, we disclosed. Okay. Okay, that's fine. Yeah. Thank you. Thank you. The next question is from the line of Ritesh Rathod from Nippon India AMC. Please go ahead. Yeah, hi, thanks for the opportunity. Can you give some quantitative color on the India outperformance in terms of the We had done MR addition, we have launched number of products. So how much increase has been on the doctor coverage? How effective has been this product launches in last 12 months? Sure. Yeah. I think India business, as all three quarters has done well. I think we are doing well in India business is a combination of a lot of things. One is, whatever strategies we thought during this financial has worked well. The team has executed all the strategies, and the team is also performing above the expectation in most of the territories. We're also focusing on building brands. So that's also working in the right direction. As far as the prescription is concerned, we are already leading in 11 doctor categories where we are number one. The new product launch momentum has also gone up substantially in last two, three quarters, which is also helping us to grow the business. As I said in my readout, we have expanded two years back, and that has also worked well for us. Almost 70% of the territories are meeting our expectation. What we are seeing is that the remaining 30%, how they will improve their performance in next one or two years. India business performance is a combination all of these things, which are working well, and we are gaining market share from quarter one to quarter two to quarter three. In quarter three we are almost with market share of 8.6%. That's the highest in the recent times. Yeah. Thank you. On the second question on the derma sales force in U.S. From Vyleesi, you will leverage the existing sales, the sales force or MR, or would you set up a separate thing for that? We have a separate field force for Vyleesi and ABSORICA franchise. Would there be an opportunity for cross-leveraging? Or you would be deploying ABSORICA field force and basically there won't be any incremental cost happening. There was an existing ABSORICA field force, and we expanded that to be able to meet the requirement for the Vyleesi launch. Okay. Thank you. Thanks so much. Thank you. Thank you. The next question is from the line of Anubhav Aggarwal from Credit Suisse. Please go ahead. Yeah. Thank you. One question to Muralidharan on the accounting for the specialty sales. I think you mentioned on the coupons that you report sales net of coupons, but what are the royalties? For example, ILUMYA that you pay to Merck or Vyleesi that you'll pay to the partner. Where is the royalty component shown? Royalty expenses are expensed as paid. Pardon. Can you say that again? Royalty payments are expensed out payment. That will be captured in other expenses? Correct. Other expenses. Okay. Thank you. Second question is to Abhay. On the ILUMYA, just want to understand that for this product roughly, Medicare and Medicaid put together will be what percentage of the product? I'm not interested in the exact number, but will it be less than 50%, more than 50%? Some indication. Sorry, what is the question? Royalty on ILUMYA? Of ILUMYA revenues, how big is Medicare and Medicaid put together? It is a significant portion, but I would not be able to give you an exact percentage, but it's meaningful. I was trying to say, like, will it be more than half or less than half of when you say meaningful? I really don't want to get into that granular detail because what you're asking me is a question of strategy and that information may hurt us. Okay. Thank you. Thank you. The next question is from the line of Anubhav Aggarwal from Credit Suisse. Please go ahead. Hello. Yeah, hi. A couple of questions on specialty. One, could you share views on competitive landscape for ABSORICA, as such and what could be the market share now? Is it still around 7%? All our forms of ABSORICA, the original brand LD and the authorized generic put together, we are more or less maintaining the market share we had earlier. I think marginal bit, but more or less there. Okay. Okay, that's great. Secondly, last quarter you mentioned that for Nidlegy there were some supply chain issue. If you can just mention what was the issue, it was more from the supply or raw material side kind of, or distribution side? Is that issue, are we over with that issue? More to do with the quality testing which is outsourced and because of COVID they had their own issues. This quarter has been much better and I think the next quarter we'll be able to improve further. Okay. That's quite helpful. Thanks a lot. Thank you. The next question is from the line of Saion Mukherjee from Nomura Securities. Please go ahead. Yes, good evening. On emerging markets, in your initial comments you mentioned some strong growth across markets, and we have seen that traction in the recent past. Can you provide some color, what is driving it? Is there a COVID-related element there? How sustainable is the growth in the emerging markets that you're seeing? I think a large part of our emerging market business is branded generic business, and they are all based on generation of prescriptions. There is a certain amount of consistency and continuity in that business. Now, I don't have that level of granular understanding of different markets, that whether the markets are positively impacted because of the, what you call COVID or not. Generally, in most of the geographies that I am familiar with, COVID has a negative impact on overall business. We don't have a large portfolio of COVID specific products in emerging market. And also if you see over last, few years, emerging market has been consistently growing year after year. Hopefully we should be able to maintain that continued growth. Okay. No, sir. I'm just saying because, you know, despite COVID, we are seeing, you know, good growth in those markets. Sir, are you in terms of strategy, are you looking at own development products or partnerships? Is it new products or market share gain in existing products? Broadly speaking, I know it may be, you know, different for different geographies, but any broad trend that is there driving the growth? Actually I think it will be both, the increased share of business and new product. What I think the business has made up in spite of, significant erosion in currency of some of the key geographies, say like Russia, South Africa, Brazil, which are important geographies which have seen significant erosion in the value of their local currency. If we actually, adjust for or at a constant currency, actually every year emerging market has grown at double digit. Just one question on capital allocation. You know, because your cash generation is quite strong. You know, you have been investing in specialty quite a lot, as you were building it out. At the same time, you know, what kind of opportunities you're seeing, let's say in branded business in India or emerging markets or even in U.S. generics. I mean, given all the pressures that are there in these markets, do you think, I mean, there is a possibility of opportunities beyond specialty? If there are, would it make sense for Sun to sort of, you know, pursue such acquisitions, especially meaningful ones? No, I think in the past we have indicated that we are continuing to look at specialty assets, either existing products or products close to market, or existing businesses where we believe that we can add value and the business is of strategic long-term importance for the company. That philosophy continues to be the same is that we want to find a way to put our capital to use whereby it can help us grow profitably year after year. Challenge for us has been to be able to get businesses which we believe that will help us. Hopefully, I think we should be able to break this what you call drought of potential acquisitions that we've seen in last few years in next maybe one or two years. Okay, sir. That's helpful. Sir, last question, if I can, you know that specialty number, is it possible to break up between U.S. and non-U.S. or any color in terms of growth that you want to give, between U.S. and non-U.S. geographies? We are sharing the global specialty revenues for competitive reasons. We would like to stick to our current disclosure. Okay. Thank you, sir. Yeah. Thank you. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Nimish Desai for closing comments. Thank you, everybody, for taking time out to join this call. If any of your questions have remained unanswered, please do send them across. We will have them answered. Thank you, and have a good day. Thank you. Ladies and gentlemen, on behalf of Sun Pharmaceutical Industries Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.