Shilpa Medicare Earnings Call for Q4FY26 & Full Year

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[00:00:00]Care limited.

[00:00:02]As a reminder, all participant line will be in listenonly mode and there will be an opportunity for you to ask question after the presentation concludes.

[00:00:13]Should you need assistant during the conference call, please signal an assistant by pressing star 10 on your touchtone phone.

[00:00:22]I now hand the conference over to Mr. Monish Shaha from Shelpa Medicare. Thank you and over to you sir.

[00:00:30]Thank you Ria and welcome to our fourth quarter and full year FI26 results conference call. Today we have with us Mr. Kesha, executive director and CEO of Shilpa Pharma Life Sciences and Mr. Al Dal, our CFO. The financial results and the presentation are uploaded on the stock exchanges and the transcript along with the audio will be available on our website and the stock exchanges as well.

[00:00:56]Please note that today's discussion might include certain forward-looking statements based on the current expectations and assumptions. These statements are subject to risk and uncertainties that could cause actual results to defer materially. The company undertakes no obligation to publicly update or revise any forward-looking statements. With that, I would now like to hand the call over to Mr. Queso for his opening remarks. Thank you.

[00:01:30]Right. Very good evening everyone.

[00:01:33]There are certain years in company's journey where performance improves and there are certain years where foundation for next decade is built. For Shilpa Medicare FI26 has been one such year where we have built our foundation.

[00:01:48]Today Shilpa is no longer defined by single vertical. We are building a highly differentiated pharmaceutical platform spanning across complex APIs, specialtity formulations, biologics and ADCs with integrated CDMO capabilities.

[00:02:05]Few companies in India operate with the breadth of technology and capabilities across both small molecule and biologics.

[00:02:14]Importantly, we believe we are still in early stage of monetizing few of our platforms. As utilization improves across our manufacturing infrastructure and more differentiated products enter into our commercial phases, we see clear path towards sustainable growth, stronger margins and increased return ratios in coming years. Let me walk you through our Q4 FI26 performance and for the full financial year.

[00:02:41]I'll start with our API business.

[00:02:44]So uh in specialtity CDMMO segment we have first our USNC program which was launched in Q4 by our big farmer company. Our second USNC program with one of our partner where we are supplying them API for their phase 3 program. The phase three studies are ongoing. The third USNC program where we are developing API and formulation for uh our US customer unisive therapeutics.

[00:03:12]The program submissions are already done and they are expecting approval in this financial year FI27.

[00:03:21]The dedicated manufacturing production blocks for OLC was successfully commissioned in Q4 FI26 and we are planning to do the validation batches in this new block in to finish in Q1 FI27.

[00:03:37]Two new NCE programs where we the client audits were scheduled in Q4 FI26 were successfully completed in Q4 FI26 and we are expecting to start initial development revenues in FI27.

[00:03:53]Apart from that on the generic side we have added more than 50 new oncology very strong pipeline where there are global top oncology blockbusters which are expiring which are having patent expiry up to 2023 32 are already taken in the grid. One new non-oncology product which is completely import substitute product process validation was successfully completed in Q4 FI26 mytoric set which is again very complex import substitute oncology API CP for the product was received in Q4 FI26 new oncology block capacity which was a significant capacity which we are adding adding in our oncology journey the block is expected to get commissioned in FI27 Seven on peptides. We continue to remain optimistic on the growth for peptides where we are working on multiple generic peptides and CDMO peptides.

[00:04:52]New dedicated peptide large scale manufacturing block. The equipment ordering is already completed and we are expecting to commission the facility in FI27.

[00:05:04]We are also working on multiple payloads and lingers which are going into ADC program in Q4 FI26. The payload which we had supplied to one of the big pharma company the registration batches were completed at their end using our payload. So subsequently it will be taken in the filing at their end.

[00:05:22]Overall API business is likely to have a steady growth in next financial year FI27.

[00:05:29]Coming to formulations, our first new chemical entity which is noro deoxyolic acid. As explained in the previous quarter, the product is really doing good and we see very good clinical results in the patient and we continue to see good traction in FI27.

[00:05:48]N UDC as a product we are also planning to take globally. We have done scientific advice and submission in US and Europe and we are planning to start human studies in FI27.

[00:06:01]Three commercial 55B2 products are currently approved in USA and all products are doing really good and we expect the volumes to grow steadily quarter on quarter.

[00:06:13]Abrain which is pletexel alumine bound product which is a very complex injectable product. Exhibit batches were successfully completed in Q4 FI26 and we are expecting launch of this product in FI28.

[00:06:26]Enzelutamite tablets which is again a very complex product. We have successfully completed registration batches for this product which is fully non-infrrenching and we are planning to file this product in US and Europe in FI27.

[00:06:41]So both webexin and enzolutamide tablets are expected to get commercialized in FI28.

[00:06:48]Rotigotin transdermal patch Europe launch as explained in the previous call will be launched in Europe in FI27.

[00:06:56]We have also successfully submitted with USFDA rotiotin transermal patch in Q4 FI26 on Cetron extended release injection which is one of a very complex injectable product developed by us. We are expecting to launch in FI27 in India. We are also planning to take this product globally and we'll be starting human studies in FI27.

[00:07:21]Apart from above, we have very good complex differentiated 55B2 product pipeline for which details are already provided in our investor presentation.

[00:07:30]Overall with existing and new product launches, there is likely to a good growth possibility in FI27 in the formulation divisions.

[00:07:38]Now coming to biologics which is one of our most complex opthalmic product. Our human clinical study is doing good and we are on track for launch for FI27.

[00:07:50]Our second product which is Neolum. Our human clinical clinical study approval received for India and also for EMA. We have sub submitted our scientific advice. We are expecting response in Q1 FI27.

[00:08:06]Four new biosimilars were added in portfolio in Q4 FI 27 26.

[00:08:12]Coming to new biological entity pipeline, our first program with map three biologics. The program development is successfully completed and we are planning to enter human phase one studies in FI27.

[00:08:25]Our second program where we have partnered on this product with Alvolus Bio. The program development work has been initiated and we are expecting the program to enter into human studies in FI27.

[00:08:38]Two NB programs will be entering in the phase one studies uh in FI27.

[00:08:46]Coming to CDMO business as mentioned previously five active CDMO NC NB programs are ongoing and in the Q4 FI26 the phase one clinical study batches for one of the uh innovatoral program was initiated and we are planning to finish the supplies in FI27.

[00:09:05]Our first ADC bioimilar which we have developed completely using payload linker and conjugation was successfully completed. The development work was successfully completed and we are planning to enter human studies in FI27.

[00:09:22]We have also initiated development of second ADC bio similar product. The main strength what we are building in the ADC space is we are building our own ADC manufacturing suit which will have manufacturing of map manufacturing of payload linker and conjugation. with that integrated manufacturing capability. It will be one of its kind in India.

[00:09:47]Now coming to our recominant human album aluminine program. Global phase 3 clinical study approval was received from CDSO for our Europe study. We are also planning to submit IMPD which is required to be submitted in Europe when you are planning to start a study in Europe. That submission is planned in first half of FI27.

[00:10:10]Overall, our focus remains on monetization of all our investments and we remain confident that work we are doing today is shaping Shilpa into a global technologydriven healthcare company in years ahead. Thank you everyone.

[00:10:23]>> Yeah, good evening everyone. Uh this is Al Shalal here. Uh you know uh a warm welcome to each one of you to our Q4 results call. Uh let me briefly take you through the financial performance for Q4 as well as the full year ended uh in March. Uh I'm pleased to report that we have uh delivered our highest ever quarterly uh revenues of 439 crores recording a growth of 30% yearon year and the and for the full year 26 again we have had uh historic uh uh you know revenue number delivering uh uh 1549 crores growing at 18%. Our gross margin uh continue to remain healthy at 68% for the quarter and 70% for the full year.

[00:11:10]And uh along with our highest revenue that we have uh reported, we continue to report highest everida also both on quarterly as well as yearly basis. For the quarter, IDIA was at 121 cringing at 40% year-on-year uh with an IBIDA margin of 28% uh improving 2% around 2% yearon year. uh whereas for the full year IIDA was at 445 crores reflecting a growth of 30% year-on-year uh with uh yearly margin of 29% again uh approximately 3% uh year-on-year uh improvement. Uh this improvement in IITA was uh largely driven by increased revenue from key verticals driving positive operating leverage. Uh moving to our other financial highlights, our interest outgo for FI26 has uh seen reduction on year-on-year basis and we believe that uh it has now stabilized at the current quarter run rate for the near future as we expect to fund our capex programs broadly uh via internal approvals. uh during the quarter we also had an exceptional gain amounting to rupees 30 crores on account of uh stake sale in one of our JV companies shawati advance uh where we have sold 31% stake and now hold 34% stake uh this company uh no longer remains a JV company is now it is now classified as an associate company uh our overall our adjusted p uh you know before considering any exceptional gain for the quarter was 86 uh 87 crores and for the full year it was 232 crores growing at about 135% yearon year.

[00:12:55]On the debt front, our net debt for the year increased uh to 613 cr from 550 cr in the previous year which is in line with the growth in our business operations and our capex of 361 cr in fi 21 uh 26 was primarily funded by in uh by internal approvals and deployed in key verticles of API CDMO and aluminum facility. I would also like to draw your attention to our improving ROC uh ROC profile. There are adjusted ROC excluding investments made in high growth potential businesses like uh biologics and alumin. We have seen a significant improvement from 4% in FI23 to 20 17.4% 4% in FI26 uh and uh you know all these have been contributed by all the verticles across the board and uh you know with uh our in the recent past our formulation business and biologics business uh showing steady growth we remain confident uh that you know this improving operating leverage uh will help us achieve better uh ROC in future.

[00:14:05]Uh now just uh getting on to the quickly on the segmental performance our API business clocked a revenue of 259 crores for the quarter uh and uh 985 crores for the full year growing at 16% both on quarterly as well as yearly basis. The growth was on account of improved uptake of key products uh from newly expanded capacities coupled with strong captive demand from our FDA uh finish formulation uh vertical. This vertical integration of our uh formulation products help improve the overall margin profile of the entire group. Formulation revenue for the quarter were 205 crores growing at 54% yearon year and revenue for the full year were 618 crores uh growing at 30% yearonear. Uh but importantly uh excluding the licensing income the base business reported robust growth of 64% for the quarter and 75% for the full year.

[00:15:05]Now to uh sustain this momentum in our FTF vertical, we continue advancing a pipeline of complex products and our strategy of developing and launching niche products globally through strategic partners is gaining uh very good traction. uh as evidenced by our uh European formulation business which delivered revenues of over 200 crores growing uh by more than 100% yearonear.

[00:15:30]Uh our another product no UDCA which was launched in India in the previous quarter continues to gain traction and the strong reception has translated directly into a healthy order book for the upcoming quarters. Uh moving to the biologic segment, the revenue for the year uh were 150 crores growing roughly 100% year-on-year and this strong growth was uh driven by continued deal momentum that we are recognizing in our CDMO business. Uh with that uh brief introduction, I would now like to uh open the uh session for Q&A.

[00:16:05]>> Thank you very much. We will now begin the question and answer session.

[00:16:11]Anyone who wishes to ask a question may press star and one on the touchstone telephone.

[00:16:17]If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question.

[00:16:30]Ladies and gentlemen, we'll wait for a moment while the question assembles.

[00:16:37]First question is from the line of Kiran D from Table Tree Capital. Please go ahead.

[00:16:44]>> Uh thank you so much for the opportunity sir. Uh couple of questions. The first question uh especially our US partner uh has significantly grown its market share in 35% in PMX and 5% in bottom based on prescription data. However, our US formulation revenue has grown only from 54 crore in FI25 to 80 cr in FI26 and it's kind of flatlined over the last 2 three quarters right around 28 crore despite all this uh I mean sorry US part scaling uh right for these two products so my question after this elaborate introduction is why aren't we seeing a steep growth in our US revenues in line with our US partners market share gains Yeah, thank you Kiran. Okay, I think on the US revenue front as you rightly mentioned right we have seen a increase in revenue and that will most likely continue in the FI27 also only against last year this year you will see we have stopped selling our generic product which was cited in in US so that supplies to us we don't want to do it because the margin is no longer sustainable for us so now we are moving for even US market more onto the super specialtity products Got it. Got it. Got it. So, uh I mean would assisted in be like 8 crore revenue previous in the previous year for example or more.

[00:18:16]>> Pardon can you repeat? Sorry, your question was not >> how much was the assistant in revenue in FI25?

[00:18:22]>> Sorry, I don't remember that off late.

[00:18:24]Maybe that is something we can send you later. You can coordinate with Mr. Monisha or investor relations.

[00:18:31]Sure, sure.

[00:18:32]>> So then uh the second question uh as far as uh in terms of our uh Norduka uh scaling uh with three of our partners and our own brand and so on and so forth. Are we seeing a steep scale up or have we kind of flatlined over the last four months in terms of demand and there are multiple other studies going on or the doctors are still trying to test it?

[00:18:59]So what I'm trying to understand is are we going to see a speed scale up in FI27 of this NUKA along with our partners or are we kind of saying okay last quarter results is what might get repeated for the following year.

[00:19:13]No Kiran I think one thing I can tell you if you see nor UDC we have launched the product in Q3 right sometime in November December and if you see from day today we are in Q1 so we have seen just on quarteronquarter basis itself we have seen a steep growth so we have to see how the trajectory will be for the upcoming quarters because the total disease the curability duration is 6 months so once the 6 months duration is completed then we will have more data from doctors from hospitals.

[00:19:47]>> Got it. Got it. Got it. Understood.

[00:19:49]Understood, sir. So, we probably get a better hand by by end of >> Sorry to interrupt, sir. Uh, could you please wait for a moment? The management line has been disconnected.

[00:20:10]check.

[00:20:23][music] About [music] [music] Heat. Heat.

[00:20:44][music] [music] >> [music] >> The management line is connected back.

[00:21:09]>> Yes sir, please go ahead.

[00:21:12]>> Yeah, I audible.

[00:21:14]>> Yeah, now you're audible.

[00:21:16]>> Yeah, sorry for that. Sorry for inconvenience everyone. So yeah, as I mentioned or DCA we have just launched in November and it's a 6 months disease duration. So we have to observe how the volumes will further grow. So we will be able to give you more clear picture in sometimes in second quarter of this year.

[00:21:35]>> Got it. Got it. Got it. Last question ma'am is u our aida margin for the year again is 29%.

[00:21:42]Uh do we uh expect over the next one to two years as and when shield path scale sure our margins to go to 35% back and second question is service income is around 200 cr. Do we expect a similar kind of run rate I mean expectation similar or more uh in FI27?

[00:22:02]Yeah, see as far as the beta margins are concerned Kiran the fact is that you know as the business grows uh a bit of operational leverage does kick in right but uh you know obviously 35% is an ambitious uh target which we would be working towards achieving but uh you know we can't really say that you know it would be achieved immediately because as we grow the business we also have to spend more for growing the business.

[00:22:30]Yeah. And your second question was on 200 crores business in >> licensing.

[00:22:38]>> Yeah. Licensing licensing income.

[00:22:41]>> Yeah. See again licensing income is something which is uh you know which at times could be a bit lopsided but uh you know you can see in our presentation also that we have uh you know a very uh robust pipeline of molecules coming in.

[00:22:56]So there is certain visibility that we have got uh for our existing deals that we have signed and then there are uh a lot of other things which are in the pipeline. So it will depend on some of those aspects but generally we do expect our uh licensing revenue to remain in similar range at least.

[00:23:16]>> Okay. Thank you so much. I'm joined by >> Thank you.

[00:23:22]>> Thank you. Next question is from the line of Ankit Gupta from Bamboo Capital.

[00:23:28]Please go ahead.

[00:23:30]>> Yeah, thanks for the opportunity. I'm audible.

[00:23:37]>> Hello.

[00:23:37]>> Yes sir.

[00:23:38]>> We can hear you.

[00:23:40]>> Yeah, sure. Congratulations for a good set of numbers and uh for the full year as well as for the quarter. So the first question is on the uh uh European uh formulation business. So if you see that nilotin is doing well and uh we have scaled up pretty well during the fi 26. So uh you know given uh when do you expect the first gen the second gen launch for new happening and secondly you know we know about the uh roti launch in this financial year. Apart from this we've mentioned seven more uh seven products. Which will be the remaining six product that we are planning to launch? What can be the scale of this products? If you can elaborate on that and how should we see the Europe formulation scaling for us in FI27.

[00:24:32]>> So Ankit there are two questions here.

[00:24:34]So first part on as we mentioned in the previous calls also we are expecting some generic competition to come in current financial year. But as uh in Europe is a very typical market where usually the tender contracts and all are for more than one year or even two years for many of the markets. So we don't see that there for the current financial year there will be a significant change in the neurotin volumes with respect to uh value but uh we have to observe it the more impact will be there for the FI28.

[00:25:07]So to answer it that is what is the answer for nilotin. Uh and on second question on the launches for Europe uh apart from roti goin there are many other generic products also like I mentioned previously we have tadala fil oral disintegrating film that will be launched in Europe in this financial year and apart from that there are some generic products like exitini and many other products which we will be launching and further market share will be improving in fi 27.

[00:25:37]>> Sure. So, so we should be assuming decent 40 50% growth in Europe in FI27 as well given the base of FI26.

[00:25:47]>> Yeah. So, uh you know, we may not be in a position to provide any guidance but we do expect uh the European business to uh you know have a healthy growth.

[00:26:00]>> Sure. Sure. Sure. And uh the second question was was on the biologics business. Uh so if you look at it like this year we had 150 road sales we would have gone some got some milestone payment from oran also for the album. So uh like how should we look at the growth for FI27 and FI28 FI27 what will be the three triggers because you know Adali as a molecule in India is growing at a decent pace but it's still a small molecule. How should we look at this number for FI27 and FI28 especially given you know F3 will be launched towards the later half of FI27 and the remaining NEO PMRO you know launches will happen only in FI late FI28 and like uh the other the CDMO business on the biologic side is something if you can elaborate more how how should we see the growth so if you can broadly talk about the biologics business the three drivers for the business for FI27 and what kind of growth should we expect uh in FI27 and FI28.

[00:27:11]So Ankit I think in biologics as I mentioned in my speech also the most important part in biologics is if you see till last year right we were still a product and partnering everything we have done more for India we just started in Q4 where we have partnered our first product neol that also for latam market with a company called right so for the current year you will see mainly in biologic the main growth drivers will be CDMO we have existing CDMO like five programs which are going on and some more programs which are in discussion we'll surely convert some programs so there will be good uh revenue contribution from our CDMO business and also we will be doing licensing for this biologics whatever we have bio similar products and ADC products right both we will be partnering for current year in Europe and RO markets so there will be good amount of licensing income also what we would achieve in FI27 Sure.

[00:28:12]So uh in this can we expect the growth rate for last year to continue this year given our base is small still small currently but last year also had the the oran milestone payment. So beside that what kind of growth rate should we expect for FI27 and FI28 I can clearly see the changes but for FI27 how should we look at it and even FI 28 can this segment X of album become a 400 500 cr revenue uh generator for us >> so Kan I think on future numbers we don't give any accurate data on that but what I can tell you is there are lot of growth triggers which are possible in biologics and we are seriously working towards monetizing of each of these assets. So yes, there is a good growth possibility. What would be that percentage? How much we will grow? I think we have to observe that more details you will get to know in upcoming quarters.

[00:29:05]>> Sure. Sure. Sure. And uh on last question on OLC you know uh the the padfa date is approaching and you in your presentation you have still mentioned that we are hopeful for launch in FI27. So u like how should we look at this because it becomes a very uh key growth driver for us for uh if for the current financial year given we'll receive milestone as well as you know our formulation supplies for the product. So like how sure are we on you know getting clearance for the product and going ahead with the manufacturing here. So I think even in current financial FI27 right in our business plan there is no like major contribution from OC because what we anticipate is this year they will get approval but major revenues what we feel will get will get started in FI next financial year so but it's a pro program which is of our partner when they will get approval how is their filing strategy many of these details they don't share with us so we have to observe it's completely dependent on our partner Okay. Thank you.

[00:30:20]>> Thank you.

[00:30:22]>> Thank you ladies and gentlemen. Please limit your questions to only two question per participant. Should have a follow-up question. We request you to rejoin the queue. Next question is from the line of Krisha Kansara from Molecules Ventures. Please go ahead.

[00:30:40]>> Hi. Um so first of all uh congratulations on a very good set of numbers. The first question is quickly on the P&L side. Um the share of profit of 18 crores from associates and JVS which we have reported in this quarter.

[00:30:55]So from which entity or rather from which joint venture or which associate entity has this profit come? Um was there any oneoff in those companies?

[00:31:05]Because we have never reported this kind of profit from our JVS. Uh that is my first question.

[00:31:12]>> Yeah. So uh uh you know Krisha uh you know this particular entity is our associate entity. It is not a joint venture. It's an associate entity by the name of Maya where we hold 35% state. Uh it has been a uh you know research-driven company uh which over a period of time has been investing in lot of programs and uh hence we were taking our share of you know their accumulated losses that were coming up which made our investments in consolidated results uh come to zero right obviously the business and the company was good so we have never impaired those assets in our standalone books of accounts but in our consolidated results uh We as per accounting standards we had to take impact of our share of loss. Uh this year when we have received their financials they have shown a very significant improvement in the performance based on which the entire value has been reinstated.

[00:32:13]Also you know the profit part of our or profit share of our uh portion has also been accounted for. Uh so this is something that you know the company has started uh generating revenues and all and which is showing up whether it can continue with the same uh set of performance or not is very difficult for us to comment because that's not an entity that we control but uh you know we are in touch with them we closely monitor their operations and all but at this stage we will not be in a position to comment whether you know this is something that can continue as a regular feature.

[00:32:51]Okay, understood. And um so my second question is on biologic segment on Fleet. Uh so we had outlices molecules for India and Russia markets. So have we received uh some part of the licensing income from these two partners or it is expected after the faith completion and will the licensing income in case of a percept behal?

[00:33:19]>> Yeah. Krisha so for the first question right uh we have received only few milestones in last few financial years but major part of milestone will be received in the current financial year on launch and on then on one year completion and all okay and uh I think second question was uh >> yeah so it was uh that will map the license map that is Right.

[00:33:50]>> Okay. Okay. And for the 150 cr of biologics revenue which we see in FI26 uh would it be possible for you to break it up in um terms of how much was from CDMO, how much was from our own uh bioimilar revenue and what kind of revenue was from licensing income. Yeah.

[00:34:11]>> Uh I think it would be you can reach out to Mish to get those details uh later on. Yeah. Sure, I will do that. Thank you.

[00:34:24]>> Thank you. Next question is from the line of Darth Ma from Valum Capital.

[00:34:29]Please go ahead.

[00:34:33]Uh the line of Mr. P has been disconnected.

[00:34:37]Next question is from the line of Raghav. Please go ahead.

[00:34:41]>> Hello sir. Am I audible?

[00:34:44]>> Yeah, we can hear you. Sir my question is on the biologic side. So uh when do we see our biologics portfolio entering uh you know Europe and US developed markets?

[00:34:58]>> So Ra I think in the current financial year right as I mentioned I'll repeat again Neolum and our ADC product and also the NV product which we are doing.

[00:35:08]So two of them so totally four products will be entering human global studies in current financial year. So once we enter that in FI27 so we expect sometime in FI 29 the commercial revenues to starting from US and Europe not from US from Europe and RO >> okay but Adali and said we don't accept expect that to be already we are getting India revenue and Europe and RO market revenues will come again in FI29.

[00:35:43]>> Okay. And for applyership currently there is no plan of going into Europe market because it's a very long study and very costly study and we are we feel that we are late for Europe market. So we are not planning to go for this product until and unless there is some partner who is ready to invest in the clinical studies.

[00:36:01]>> Understood sir. And uh sir what would be the timeline for same forka when when do we see that reach larger parts in the developed market?

[00:36:12]Even nor good cars would be in FI29.

[00:36:16]>> Okay.

[00:36:17]>> In Europe. But if I tell you about RO market, we will start seeing revenues in FI28. In RO markets.

[00:36:26]>> Any any color sir on what could be the opportunity size for this in RO market.

[00:36:33]>> See, I think that can only be told maybe in this financial year on the second half of this year, right? because now we have started discussing with uh some RO partners also and we will have lot of Indian study data also. I think we are also generating phase 4 data. So I think once with that when we start working with our RO partners you will be able to throw more insight but there is a decent potential what I can tell you.

[00:36:56]>> Okay sir thank you.

[00:36:58]>> Yeah thank you.

[00:37:01]>> Thank you. Next question is from the line of Shik Muhammad an individual investor. Please go ahead.

[00:37:08]Congratulations for the excellent set of numbers. Uh my I'm not I'm not having that much knowledge about company products which is because it is very uh in detail products. I just want to know regarding the FI27 guidance and top line and bottom line if any if it is if you can provide.

[00:37:29]>> Yeah. Uh so uh thank you for your question uh Shik Mohammed. I think as we have been uh explaining that we uh do not provide any guidance per se. Uh but I think we have been growing since past uh uh two three years at a very healthy rate and uh you know we expect that trajectory to continue.

[00:37:52]>> Okay. Uh sir, transexemic acid uh acid spray uh some product hasn't launched in India or is it is exclusively for any particular country?

[00:38:06]>> No, it is currently not not launched in India because we are working on some government regulations. So currently it's not launched in any of the market in India.

[00:38:18]>> Okay. So previously we have launch launched green tea films right. So is that product continue or we have discontinued that product?

[00:38:27]>> We have discont okay okay thank you very much. Thanks a lot.

[00:38:33]>> Thank you.

[00:38:36]>> Thank you. A reminder to participants you may press star and one to ask questions. Next question is from the line of Sanjay Kumar from I thought PMS.

[00:38:46]Please go ahead.

[00:38:49]Uh hi Kish. Uh first set of questions on uh uh due test. Correct me if I'm wrong.

[00:38:56]Uh it seems to be a blockbuster product based on the phase 2 trials. Okay. Uh despite completing phase 2 in uh late 2022, you didn't file for phase 3 till April 24. You didn't start phase 3 till Jan 2026. Now that we going global for most of our products, we should speed up our uh clinical trials processes. Right.

[00:39:17]And on that note, we feel this is not a good point. Can you talk about this product and the potential for topical detailed?

[00:39:27]>> Yeah. So Sanjay on the uh I don't understand the product name but what I can tell you that SML Top09 right the product what we are doing in that product is that's a product where why we did not start in last year human studies because there were additional preclinical study data which were requested by the regulatory bodies that we were generating. Okay. So all that data generation is completed and now we are entering into global studies. So that is what we will be starting in the current financial year.

[00:40:01]>> Okay. Can you uh talk about the potential of this uh product and it is better to sell it and do we have any outlicensing uh conversations for India at least for this product? No currently we don't have any outlicicensing discussion Sanjay currently because the product is still in clinic and especially androgenic alopeia is a very big market but there is lot of data generation on safety which is a very important requirement. So the data what we will be generating in the phase three study I think after that we will discuss more on the partnering.

[00:40:34]Okay, that's correct. And uh uh we have three novel products in India uh in F27 or early F28 and uh the one that we just discussed deterate. Uh can these three products do like cumulative 56 all three put together 568 crores in two three years because all three are very niche novel and uh huge potential.

[00:41:01]Yeah Sanjay I think that will depend on our partners also right because you will see for many of the products we partner and our partner performance is very important for us you will see that for all these products like in norudca case you have seen we have partnered with the very good three companies right so even for the other products we would love to partner with the best companies in India I think if we get a good partner and the product is performing well we feel it's a very good possibility Okay, just last question before I come back on the patent and the FTO question for onetron and nudca because nudca I think has a uh problem of patent in EU and uh I think globally. So do we have a different custom form that's on na and then on on citron do we have a free to operate versus keron uh the innovator uh I know on citron is not polymer based it's a insoluble solid but do we will our patent be at risk uh when we go global for both these products >> see what I can tell you Sanjay these are very confidential strategies but what I can tell you we are having our own IP strategy on this okay and we are starting ing human studies for global markets. Obviously all this work we would have done.

[00:42:20]>> Okay. All right. Thank you. Welcome back.

[00:42:22]>> Thank you.

[00:42:25]>> Thank you. Next question is from the line of Girish Bakru from Med. Please go ahead.

[00:42:32]>> Yeah, just wanted to actually talk on album. Why is the IMPD submission delayed? I think last quarter we mentioned it would be Q4 and now we are seeing first class.

[00:42:44]So Girish I think as I mentioned previously also on IMPD submission what we are planning to do is we are planning to do it from our new facility right. So in the new facility the execution of exhibit uh sorry the batches for IMPD submission is ongoing. So once that is complete then we will be submitting that is the reason I mentioned it will be in first half of FI 27 >> and typically after submission how much time does the regulator take for giving you trial approval?

[00:43:16]>> It takes usually 3 to four months.

[00:43:19]>> Okay just uh >> right so the Europe study is divided into two parts the Indian patients and Europe patients. Okay. So in Indian patients the study approval already we have received. So once the batches are completed we will be starting our India study which is for Europe submission. Is it clear?

[00:43:42]>> Can you again explain these two patient uh studies what individual differences are there in between two studies?

[00:43:50]>> So there is no individual difference only there is a requirement in Europe when you submit such complex products.

[00:43:56]They want some patient data also on European patients.

[00:44:00]>> Understood. Okay.

[00:44:01]>> Yeah.

[00:44:02]>> Uh and phase three let's say does it u I mean um addresses again uh more uh data on um whether this can be therapeutic grade or imunogenicity. What exactly uh would the outcome be focused on here? So in phase three right we will be evaluating both safety and efficacy of the product on more number of patients and that is the data we will be submitting to the agency >> and because I mean I'm just asking because it's a new technology right and there are very few products out there recombinant ones so uh would you say this uh would not require any further investments or additional studies before you see some revenues from FI29 I'm just trying is I think if you have followed our previous conference calls we have successfully completed with European agency scientific advice. So scientific advice is like a written document which you submit to the agency and take their approval on our clinical study. So that approval is already taken. So we don't expect after this any other additional study.

[00:45:11]>> Understood. Understood. Uh and just lastly I mean so how big uh would you say would be the market size in India particularly u uh and because it's a largely import dependent uh product right so would there be a let's say some sort of u u incentives that uh we can see even if the product is approved >> so I think Albumin everyone knows it's a very good and decent opportunity and there is always case in the market so incentive and all I don't think there is any other incentive we are expecting on the product the product itself will have a differentiation the re combinant highly pure product so I think that should drive the volumes >> understood thank you >> thank you >> thank you next question is from the line of Pratik Shvastava from Nvesh wisdom please go ahead Uh yeah thank you for giving me opportunity to answer question sir.

[00:46:16]First of all thank you for the first of all congratulations for great set of numbers. My first question is on the API oncology side of things sir. Uh so we have this new oncology block expansion which is underway and uh notice about it's ready to be completed by FI27 for around like 15 plus new oncology APIs.

[00:46:38]Right.

[00:46:39]uh sir how how does that translate into uh you know contribution to the revenues per quarter because most of the time I think our contribution has been like lower than 130 cr per quarter for last several quarters I know that some of that has been translated to formulations but can you share uh some more color on this uh on the on the contribution to the revenue from this side so >> Pratik I think in AP API oncology side you will always see that even in future right lot of our sales will be to our captive formulation okay because our main strength in oncology API is we are very strong in developing non-infringing APIs and we usually try to backward forward integrate with our formulation and then go to the market that will have maximum realization so even going forward it's not that these products are something which will be launched once the batches are done like next day the launch will happen once the batches are and the formulation people have to do the batches and then launch it. So oncology as a business for us in API will further grow but it is not a steep growth it will be a steady growth.

[00:47:50]Got it. And it is and you're saying it will continue to contribute more towards the formulation business. This is more of a backward integration story or this will have its own you know uh sales cycle channel different commercial D filings uh things like that sir.

[00:48:08]>> So it will be both but major contribution will be to formulation our own captive formulation.

[00:48:15]>> Got it. Got it sir. And my second question is on the semaglutide GLP1 side of things sir we completed the validation in Q4. Uh congratulations for that sir and and what I read is DMF is to be uh ready by first half of 27. Uh sir there are I see in the market now there are lots of different players uh you know lot of Indian several Indian peers are also developing semaglutide story. So what will be our differentiation?

[00:48:49]So I think I mentioned in the previous call also simaglutide as a product our main strength is we are doing both synthetic and semiynthetic API and also we are forward integrating with our own formulation. So simaglut itself is a very big opportunity and because our facility has the global accredititions we still deal in such a big opportunity if we get even small pie of that market share right that is a decent revenue which is possible with the product.

[00:49:18]Got it. And are we targeting India first and then the regulated markets ro?

[00:49:25]>> No, our will be on the export market.

[00:49:28]India will be our second priority in this product.

[00:49:33]>> Okay, got it. For that have we identified any partner for commercialization sir?

[00:49:39]>> Yeah, as I mentioned right, we are also doing our own formulation. So our biggest partner is our own formulation business.

[00:49:46]>> Okay. Okay. All right. Thank you sir.

[00:49:48]Thank you.

[00:49:49]>> Thank you.

[00:49:52]>> Thank you participants. Please limit your question to only two question per participant. Should have a follow-up question. We request you to rejoin the queue. Next question is from the line of Amish Kanani from Novice Investment Managers. Please go ahead.

[00:50:08]>> Yeah. Hi sir. Okay. Uh so uh one uh thing which is noted is you know API is now 50% of the business and you know formulation and biologics is 50%. So congratulation on you know kind of going in that direction where you know we are value adding. Uh the question sir is uh as we grow at a high rate and given our gross margins are high you know our revenue margins also are uh you know reaching at a very healthy level. uh but uh given the programs that we have and the R&D needs that we have uh we'll also have you know uh reinvestment that will be done. So how do you think sir uh about uh you know a better margins uh uh given that you know otherwise uh if we restrict our investment it can go uh really very high and obviously as a businessman we would like to reinvest back. So how do you think about investment versus you know increasing the margin at some level you know we will reinvest back. Uh so any thoughts there sir? uh it'll be helpful and uh on the API sites are any challenges on on the uh incpns or you know key starting material that uh you know because of the supply chain uh disruptions globally if any are there any issues that we need to worry about.

[00:51:22]See I think on your first question Amish as a as we previously mentioned also Shilpa as a company principally what we are doing is we are not investing into anything which is long-term so whatever investments we are doing which are near-term and midterm right only on those we are investing and all these are like decent sizable opportunities which are possible for the group. So yes we don't want to like we are not investing anything which is long-term. So if we continue this investments in our existing near-term and long-term opportunities then only there will be decent growth which is possible. So we will continue to do that. That's the answer. And on second question on the raw material and solvent availability.

[00:52:03]Yes, we don't see any major challenges on that but only the prices have gone up significantly. So that is the only thing but availability is there. No problem.

[00:52:13]Okay. And sir quickly can you recap the capex for this year and next year? Yes, possible.

[00:52:20]like for the current year already it's available so we don't see any significant capex growth than last year it will continue to sustain.

[00:52:29]>> Sure. Sure. Thanks. Thanks a lot and all the best.

[00:52:31]>> Yeah. Thank you.

[00:52:33]>> Thank you. Next question is from the line of Aishek from Padama Investment.

[00:52:39]Please go ahead.

[00:52:42]>> Am I audible sir?

[00:52:45]>> Hello.

[00:52:46]>> We can hear you. Yeah. Uh on the USSA audit it should not come by now. Uh is there any issue with this as such?

[00:52:59]>> So Abishek I think as previously mentioned in our quarterly calls also for majority of products which are required for us right we are now doing it from our third party CMO sites and we don't have a pipeline of like 10 20 products launch every year. So we have very complex differentiated products which we want to launch. So our major focus on us will be from third party CMOS that is what we have as a company.

[00:53:24]There is no issue with the FDA. It's just that the facility when the audit happened the FDA has given some observations. We have done the compliance and now we are again waiting for the reit of that. So we can come out in some time. It's not that we will never come out but it will not have any impact on our revenues.

[00:53:43]>> Okay. But the audit already happened but the decision is still pending if I understand it. Is that the case as of >> Yes. correct. So there we are working closely with FDA on the next steps with USFD audit.

[00:53:59]>> Okay. Okay. Thank you. And the plant utilization even though it is even though it is not actually is being used for USA is being used for other geographies.

[00:54:10]>> Yeah. Because our facility right has all the global accredititions starting from Europe, Latam, Saudi, all the markets right so the plant occupancy is not at all issue and because we have such a strong pipeline of differentiated products so we don't see any capacity crunch issues currently in our formulation facility >> but uh there are certain tentative approvals trending because of this issue how many products are in that uh coland See the whatever products which are in tentative approval space right they are not they are many of them are already like very much genericized and we don't see even if we get the approval for these products we'll have significant launch opportunities.

[00:54:55]So only there are few products which are having tentative approval which but the patent expiry and the launch for those products are late.

[00:55:04]>> Okay. Okay. So there is no last. Okay.

[00:55:07]>> Yes. uh congratulations on the most.

[00:55:09]Thanks.

[00:55:11]>> Yeah, thank you.

[00:55:14]>> Thank you. Next question is from the line of Vishal Manandana from Systematics. Please go ahead.

[00:55:21]>> Uh hi, good evening and thanks for the opportunity. Uh on Rotigotin patch uh Europe launch, can you share like what time uh can we take to reach full potential and any sense on the peak potential that you expect from the product?

[00:55:38]So yeah visha roti goautin transermal patch as you know is very complex product and uh we have approval for this product. So in the current year it will be more like initial launch and ramp up and in subsequent year in fi 28 we will see a uh like full potential for the product.

[00:55:56]>> So uh you can reach full potential by next year. Substitution will not take uh long once you are approved across markets.

[00:56:04]>> Yes, you are right.

[00:56:05]>> Okay. And on nilotin do we expect approvals in other markets or we are kind of fully uh in terms of geographic uh reach we are we are there to our >> No you are right actually nilotin in our rest of the world market is also expected to do pretty well and we will be launching in some of the rest of the world markets also in next financial year.

[00:56:28]>> Okay. In Europe you are fully entrenched in terms of the potential opportunity.

[00:56:33]>> Yes you're right.

[00:56:36]Okay. Uh and if you could share what uh on our CDMO business like what was the total CDMO business across all domains API formulations and biologics.

[00:56:50]So if you see for the full financial year right just on the API side of the business also we have clocked approximately around 110 kats of CDMO business right and we are also doing similarly our CDMO business in biologic side also. So majorly our CDMO revenues are in API and biologics. So what is that number and more details you can work with our uh person Monisha or investor relations person he'll be able to provide you. Got it. And uh if on the on the licensing fee number, do we have any contribution of the CDMO business or the licensing fee doesn't have any CDMO contribution?

[00:57:31]>> That doesn't have any CDMO. That's pure product licensing.

[00:57:35]>> Okay. And just one uh final one uh the the the oncology breakthrough molecules that you uh are servicing to an innovator any any color there can that be meaningful this year next year.

[00:57:52]>> Yeah, we expect it should be meaningful in FI28.

[00:57:57]>> Okay. And so would that be larger than the numbers you would have attained in the past? Can that can that Okay.

[00:58:05]Thank you. Thank you. That's all for my >> Yes. Thank you.

[00:58:10]>> Thank you. The last question is from the line of Kiran D from Table Tree Capital.

[00:58:16]Please go ahead. Please go ahead.

[00:58:18]>> Thanks so much for the followup. So, a couple of questions. One uh sir uh a polymer business. I mean we had uh uh we had a contract I mean 4 million contact I think was mentioned in the annual report uh last year. So this year what is the kind of revenue and more importantly more than the polymer revenue this year? How do you see the potential of uh our polymer business in the next 1 to two years? Is it the potential to reach a 20 million kind of run rate? If you just elaborate that >> so Kiran I think I will not be able to give you exact numbers but polymer as a business right it is a uh it's a there it's a business which will have good growth possibility but uh it takes some time so like currently we already have one commercial product in the polymer space so that is adding that has added decent revenue in FI26 so we will see how the opportunities are scaling up in FI27 but Yes going forward like in very few like few of years it has a good potential what I can tell >> got okay cool and one question for Ali Ali you you mentioned ROC 17.4% 4% in FI26 excluding investments made in potential high growth biologics and NV business. It's in the in the presentation as well. Um so our gross block is into 81 cr. So when you're saying excluding investments made in high potential high growth biologics and NBE how much is that is it like uh approximate 700 800 cr is that the right number?

[00:59:52]>> Yeah. Yeah. I think some of those numbers you know you should reach out to Monish to get those details right. we he should be able to provide you the exact details over there.

[01:00:03]>> Okay.

[01:00:08]>> Thank you. Due to time constraint, that was the last question of the day. I now hand the conference over to Mr. Alp Dalal for closing comments. Over to you sir.

[01:00:18]>> Thank you. Thank you. Thank you uh everyone for your time and your thoughtful questions. uh you know each year we remain committed to growing and scaling the company to new heights and your continued interest and support mean a great deal to us. Uh should you have any questions that have remained unanswered, please reach out uh to Manish and we'll be happy to provide those answers to you. Thank you.

[01:00:42]>> Thank you on behalf of the Shelpa Medicare Limited that conclude this conference. Thank you for joining us and you may now disconnect your lines.