BIOCON — earnings call

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Questions and answers

Moderator · Conference Operator

Thank you very much.

We will now begin the question-and-answer session.

First question is from Sidharth Negandhi.

Kindly announce your company name and proceed with your question.

Sidharth Negandhi

This is Sidharth from CWC.

Thank you for the opportunity to ask questions.

I had a few questions.

First on the generics business and then on the biosimilars.

The generics business has seen some strong growth, as you've mentioned, with the liraglutide launch.

But could you give us some colour on what the growth in the base business ex of liraglutide is?

And within that, if one looks at the generics profitability ex of R&D, it is lower on a quarter-on-quarter basis.

There is a 600 points lower R&D spend, but a 200-bps sort of improvement in profitability.

So, is that some competitive intensity playing out in your base business?

How should one look at that?

These were on the generics business.

And on the biosimilars business, if you could share any updates on your formulary listings for the insulin in the US?

And given that that wasn't the case, what are the products that are driving your North America growth, as you've mentioned?

And if you could give us some colour on the market share across products and what's the change in the market share?

Kiran Mazumdar-Shaw

I will ask my colleagues Shreehas and Kedar to respond to your query.

Shreehas Tambe

Thanks, Sidharth, for the question.

And I think the important part is to respond to your question and if I miss something then please do remind me about those.

The generics business has been exceptionally important for us to get back to profitability.

So, what's really underpinned that turn around right now is really a product mix that we've focused on.

We focused on getting cost out of the system that's helped as well and operating leverage has started to play.

We've talked about in previous earnings calls that you will see once we integrate the businesses that the operating synergies will start reflecting in the business and that's what you're starting to see.

We had said we won't quantify it until we have better visibility to it.

As we get to the second half, we'll start quantifying it and letting you know but you're starting to see that in the numbers already.

The part related to R&D is also another significant piece, which has contributed to R&D to the EBITDA that you see.

That's another clear incentive to see that the R&D outlays in line with what the business is right now slated to grow, so that it's not in line with its more than what we want to right now outlay in that business.

So that's on the generics side.

On the biosimilars side, there's been a couple of growth drivers that Kiran listed in her opening speech, which was about our denosumab biosimilars, which we talked about and most importantly, earlier this month, we announced that aflibercept is a product we are launching in the ophthalmology space.

It's launched now and available to patients in the United States.

That gives us a very unique play before a large part of the other competition comes in.

It's a big asset and we're very bullish about how that is going to grow.

You also did ask about the insulin play, and I would point you out to the fact that our insulin glargine market shares have been steadily growing over the last couple of quarters.

We've always signalled that we've been very responsible in how we've brought in other insulin products into the US.

Our market shares have grown for glargine over last quarter as well.

And we've got active conversations going, which we will make public about our insulin aspart, which is branded Kirsty, as we move from the closed-door network that we currently supply to in the US to the more commercial players.

I think I've probably tried to cover all the questions you had asked but in case I missed, do let me know.

Sidharth Negandhi

Shreehas, thank you.

And maybe Kedar can help understand the growth in the base business on generics versus the growth that's coming from the new product launches that you've done, liraglutide and a couple of others.

But just also to understand that R&D is obviously a need-based spends and that's clear.

But just to get some colour, because if I look at quarter-on-quarter, the revenue is more or less similar, but you've seen a change in the margin, right?

You've spent lesser on R&D by roughly about 6% in that business, but you've seen only a 2% improvement in EBITDA.

And therefore, is that more due to competitive intensity or is the EBITDA margin lower due to any other factor?

Kedar Upadhye

Yes, maybe I can add here Sidharth.

Actually, there is nothing particularly different to call out from a competitive intensity standpoint in generics.

As you know, the growth will always be dependent upon new launches.

This quarter, actually, the contribution from liraglutide is in single digits, so it's picking up and not fully reflected in this quarter.

And I think you should note the work that we have done on opex across all three companies from quarter four to quarter one and even year-on-year, you will see a significant drop in the operating expenses.

So as part of integration, we have taken a hard look on all costs and there is an effort to be more productive, more efficient, which will allow us to retain the EBITDA.

So, I think it’s difficult to give you precise movement about new launches or existing business or R&D, because there will be quarter-to-quarter fluctuation.

But if you take two messages, the new launches are expected to scale up even in generics in the subsequent quarters and the work on opex and the thinking on productivity remain very strong.

Sidharth Negandhi

Sure.

So single-digit growth in the base business plus new launches is how I'm reading it and then no increase in competitive intensity.

Very clear.

Thank you, Kedar.

Thank you, Shreehas.

Kedar Upadhye

Thank you, Sidharth.

Moderator · Conference Operator

Thank you very much.

Next question is from line of Neha Manpuria.

Kindly announce your company name and proceed with your question.

Neha Manpuria

Yes, thanks for taking my question.

This is Neha from Bank of America.

My first question, Kiran Ma'am, in your opening remarks you'd mentioned & I think you've mentioned this last quarter as well that with the improving momentum in the biosimilar business, our focus is on profitable growth.

So, if I were to read that a little more specifically, should I assume margins for the biosimilar business to improve versus last year?

Would that reflect with this focus on growth?

And how should we think about exit revenue or when you say meaningful improvement in the second half, could you give us some color on what that meaningful improvement would be?

Kiran Mazumdar-Shaw

Yes.

So, I'll start with my comments and then ask Shreehas to add to it.

But basically, when we talk about focusing on profitable growth, I think we would like to basically veer away from just focusing on market share.

Because I think a lot of the focus from the investor community is on market share, and if you're going to only double down on market share, there is a danger that it might lead to an erosion of margins and profitability.

And we would therefore like to really, really calibrate our business in a way that we maximize the profitable growth and profitable businesses that we are seeing across our biosimilars.

And maybe, Shreehas, you'd like to add to it.

Shreehas Tambe

Yes, thanks, Kiran.

I think that's rightly said in terms of how we are aiming, Neha, going forward and I think the expectation as new products come in, there will be those products will obviously be at a higher profitability margin.

So clearly, that expectation is accurate and we should expect.

It'll also help us offset the market dynamics, because price erosion is also another thing which is real in a situation in the market which will also happen.

Competitive forces will also happen.

And I think the competitiveness of Biocon is that we are able to bring in several products in a fully integrated manner, which is why the EBITDA margins are robust, and they continue to grow strong as you bring in more products.

So that expectation is not unjustified.

Neha Manpuria

So, just to be clear.

So, the 27% margin that we had done for the biosimilar business last year, that should be higher this year as we focus on profitable growth.

Would that be a fair assumption?

Shreehas Tambe

We have always directed this to say we will be in the mid-20s, and it will ramp up.

Kedar, do you want to comment on that?

I do not think we have guided anything beyond that, Neha, at this point, but Kedar, you can come in.

Kedar Upadhye

Yes.

I would just, Neha, I would urge you to normalize the 27% of last year.

If you remember in quarter three, we had allocated more products for North American region, and for that quarter and for the full year, that pulled up the profitability.

So, if you normalize last year's margins to maybe 24%, 25%.

Yes, then we are all driving towards margin expansion.

Neha Manpuria

Understood.

And my second question is on Aflibercept.

Given that the existing biosimilar has very high market share.

What's the thought process there?

Would that be a very slow ramp-up in market share?

How do we think we can get a fair market share in Aflibercept?

Shreehas Tambe

Well, I think if I can respond to that question, the first thing is that there was a large concern in the past that in the ophthalmology space whether biosimilars would be an accepted space.

I think that myth's been busted already and there is clarity that biosimilars are high-quality products and will be accepted and will thrive in the ophthalmology space.

So, I think that path has been paved, which is a very good sign.

Where it places us is in a very strong position as we come in this month with a with a clear path for the next few months.

We've got some active contracts that Matt Erick, who's our Chief Commercial Officer, and his team in North America have been tying up.

So, we believe, Neha, this would well, almost every ramp has a start and then it takes some time before it reaches peak.

We should have a good straight-out-the-gates a good start to this, which will build up towards the second half of the year.

Neha Manpuria

Thank you, Shreehas.

Moderator · Conference Operator

Thank you.

Next question is from Surya Patra.

Kindly announce your company name and proceed with your question.

Surya Patra

Yes.

Thanks for the opportunity.

This is Surya Patra from Phillip Capital.

My first question is let's say the profitable growth again.

So, while we have been seeing a kind of steady and consistent improvement in the profitability of the biosimilar business, which is earlier was facing challenges.

But now we are facing challenges from other two businesses, Syngene as well as the Generics business.

So, the way Syngene guided for this year, there is low growth and challenges visible.

So, given that, whether despite the ramp-up in the biosimilars, should we see a kind of a moderated kind of a profitable performance for Biocon as a whole for FY27 or how should one see the challenges of Syngene for the current year?

Kiran Mazumdar Shaw

So, Surya, let me first direct you to a very important pie chart that we have shown in our press release, and I think you should actually pay attention to that.

As, you know 83% of our business comes from Biopharmaceuticals.

The Research Services business accounts for about 17%.

So, I think you should understand that the main growth drivers of our business is coming from Biopharma, largely from the biosimilars business as we have shared in my opening comments.

So, we do not believe that a temporary decline in profitable growth for Syngene is going to impact the performance of Biocon as a whole.

I believe that Biocon is positioned very well for good profitable growth because the main growth engine for Biocon is biosimilars, and even the generics business is now beginning to deliver better performance and better profitable growth.

So, I think you should read this in a very different way than assuming that every business is equally apportioned.

So that's really the way I would guide you to look at the Biocon business and not just jump to conclusions that because one part of a small business is not delivering as it used to will impact the rest of the business.

So, I hope I have answered your question.

Surya Patra

Yes.

That's clear, ma'am.

So, in fact, given the kind of biosimilar progress what we have been anticipating, it was expected that possibly this year onwards, we will see a kind of meaningful progress.

Kiran Mazumdar-Shaw

So, I must also remind you, Surya, that our performance in the past has been severely impacted by a lot of the structured debt that we had included in our financials because of the structured equity element, which is now retired and behind us.

And I think that's why you're seeing now a return to good, strong, sustained profitable growth.

Surya Patra

Sure.

My second question is about the biosimilar progression itself.

So, we have been guiding about second-half pickup from all the products.

So, is it possible to give some sense or colour about what is the kind of uptake that we are witnessing, either in terms of penetration or enrolment or the kind of marketing engagement that we would be having or even in terms of the kind of contracting cycle visibility that we would be having for products like Adali, Ustekinumab, Aspart as well as Deno along with Aflibercept?

Kiran Mazumdar-Shaw

So maybe Shreehas, you would like to take this but let me start by saying that we have guided for new launches, and you just heard that Aflibercept just entered the market this month.

And I think that is going to be a big contributor to growth this fiscal.

Apart from that, insulins are tracking very well and very robustly, and with the commissioning and approval of the second drug product line in Malaysia, that's of course now unlocking a lot of the capacity challenges that we used to face for in terms of addressing the demand.

So, I think when you look at all our other products, they are tracking well, and maybe Shreehas, you would like to add to what I am saying.

Shreehas Tambe

Yes, no, I think that's said very well.

It sets the base, Surya, in terms of where we are.

Just to add a little more colour to what Kiran said, the five products that we have always said we are going to be focusing growth on, two we just talked about Aflibercept, Denosumab.

But there is beyond that Aspart, Ustekinumab, where you've seen a tremendous offtake in the past year.

And then you've got bevacizumab, which is in in some sense understated at this point in time.

These five products will drive growth.

We have been contracting for some of these products in recent days.

You know that July to September is the window when most of these payor negotiations finalize for full year for the following calendar year, and I think what I can tell you at this point in time is we are in a good place to have those conversations.

It would be premature to disclose exactly what those are, but we are now in that place where we would be looking to bring these products to market.

Some of the other things like I was responding to Neha before, may not be really a commercial play.

They are also fee-for-service models, which exist for Part B products, which is in the medical benefit space, and those are something that will come straight out of the gate as we launch these products, and Aflibercept will see the benefit of it, which is why we have been saying that the second half of the fiscal year will be stronger than what you are expecting to see in the first half.

Just to give you some broad colour on that.

Surya Patra

Yes.

Thank you, sir.

Wish you all the best.

Moderator · Conference Operator

Thank you.

Next question is from Shyam Srinivasan.

Kindly announce your company name and proceed with your question.

Shyam Srinivasan

Hi.

This is Shyam Srinivasan from Goldman Sachs.

Thank you for the opportunity.

Just going back to the biosimilar, both approved as well as the launches that have just recently happened, if you could just characterize how some of the franchises are working.

Let say for example the oncology franchise Ogivri, how are they doing in terms of either market shares, because I think Kiran Ma'am had also mentioned a de- emphasis on market share as a metric to measure success, let's assume.

So how should we look at our core portfolio maybe U.S., Europe, if you could also comment, oncology as well as diabetes portfolio, the insulins, and Aspart, for example, and I know the launches have happened in immunology, so just want to understand how the base business even in biosimilars are tracking?

Kedar Upadhye

Shreehas, you might want to take this.

Shreehas Tambe

Yes.

That's a very comprehensive question, Shyam, probably a longish response.

I will try to be brief, and I will lean on my colleague Matt to jump in if and when needed.

Matt, please feel free to jump in.

I think your first question was in terms of how the legacy products, established products have been performing.

I do want to point out to you and others on the call is, and this is something that I've been saying for a very long time, that the biosimilars business is very enduring, both in terms of its margins and its revenues.

The products continue to be strong.

We launched Fulphila in 2018.

It's now eight years that that the product is been in the market, continues to drive margins and continues to have market share, in case that is one of the ways to look at how it's been performing, continues to be a fifth of the market, a fourth of the market, whichever way you look at it, continues to deliver strong performance and contributions to the bottom line.

Same with Ogivri, which is in the HER2 breast cancer space.

We are looking to add some more products in that.

Bevacizumab I just talked about.

But the legacy products are these two.

Insulin, you talked about, was another legacy product which we launched in in late 2020, early 2021.

It's been there for a very long time, continues to hold market, continues to deliver margins.

We have been very cautious, if the market shares for the taking, we have not gone all out and wanted to take everything at a go.

But this is a very sustainable business in that sense, and very responsibly we have taken market.

This was the U.S. In Europe, it's a play where we have focused on the immunology space, the inflammation space, and you have seen adalimumab do extremely well for us for the last 7, 8 years.

We have had a very strong position, despite the fact that there is competition which played around with concentration and strength, because of the kind of quality that we brought to the market and the reliability of supply that we've been able to provide.

So, I believe that legacy products in biosimilars is a very strong indication that they provide enduring margins for a very, very long time.

So, this was one myth which was again challenged and busted, that they will fall off in a few months.

So that's not the case.

On the new product launches, I think I responded in a fairly detailed manner to Surya, but I'll pause and check with Matt, because Matt's the one who is really driving a lot of this growth that you are seeing in our advanced markets along with Susheel in the emerging markets.

But over to you, Matt.

Matt Erick

Yes.

Thanks, Shreehas.

Just a little more colour, particularly around the oncology products in the U.S. So, those established products remain very strong from a market access standpoint.

And as Shreehas said, with that strong stability comes strong margins.

And that's what we're looking at.

Our focus is continued on select channels to drive the sustainability.

So, you see this market share maintained as profitability continues to be strong.

Also, on our other products, market access, as Shreehas said, going through into the July calendar year remains very robust in our ability to add additional market access in contracts in the U.S. This is why both Kiran and Shreehas have commented on you will see these growths start in the second half.

So, lots of good momentum there.

As Shreehas said, not a lot more to add in Europe.

Exactly what's going on there with the adalimumab and continue momentum in some of our key oncology products, and absolutely we're excited about all the new launches, especially Aflibercept, which we see strong demand and strong opportunities within the U.S., particularly around the market access piece.

Thank you, Shreehas.

Shyam Srinivasan

Thank you.

Thank you for the detailed response.

Just a second question, and I will be brief, is on the generics part.

And maybe Kedar, just on the profitability, so we are showing 7% EBITDA.

I know it's been a little volatile on that line item, but do you foresee now, with the kind of growth that we have seen, that there's a path to higher profitability, and the split of API to formulations, how is that trending?

Thank you, all the best.

Kedar Upadhye

Yes.

So, I think the split of API to formulations is about 60:40 this quarter.

Historically it's been two thirds and one thirds.

So maybe eventually it will go there.

The profitability improvement is an agenda across all three businesses, Shyam.

So, we are not guiding specifically, but as the new launches kick in, as our work on the cost continues, margin expansion will remain a priority.

And that will also include a hard look on operating expenses, hard look on what is relevant for us to pursue in R&D, and we do have active cost improvement program in the materials and factory overheads as well.

So, all of this is expected to improve, and not only the portfolio improvement because of launches.

So, we'll continue to do work on all these levers, Shyam.

Shyam Srinivasan

Thank you, and all the best.

Moderator · Conference Operator

Thank you.

Next question is from the line of Damayanti Kerai.

Kindly announce your company name and proceed with your question.

Damayanti Kerai

Hi.

Good morning.

This is Damayanti from HSBC Securities and Capital Markets Limited.

So, my first question is again continuing on your efforts for optimizing cost.

So Kedar, you mentioned you have been working on a lot of initiative to really assess the cost and make improvement wherever it's feasible.

So just want to understand on two things.

First, if you can update on utilization of some of the new units, including unit in the US and what kind of cost drag you are incurring as these new plants are scaling up?

So that's my first question.

Kedar Upadhye

Yes.

So, I think, Damayanti, we will not call out any specific number at this stage in terms of the cost drag, but what has happened is the improvement that you're seeing in the Generics profitability is because of three things.

One is some of the premium on API products, pricing premium; secondly, optimization of the R&D portfolio; and thirdly, opex.

So, I think all these three levers are helping, and you know there'll be some time lag before the new units start contributing meaningfully in terms of utilization.

But our numbers for the subsequent quarters do show that.

So as the things improve, the numbers will reflect at higher utilization and the associated benefit on revenues and margins.

Shreehas Tambe

And just to add to what Kedar is saying, I think the focus there has clearly been on fiscal discipline.

And that is why you're seeing that what Kedar just mentioned is whether it is in the R&D alignment to business in terms of whatever we've outlaid there, or the cost synergies that have come in because of the operating leverage because we were able to merge the two businesses that it has offered.

That is the first level of benefit that you are seeing come through in the cost benefit, and we expect this to remain.

So, it's not a one-off that happened.

We expect this to carry through over the course of the coming quarters as well.

Kiran Mazumdar-Shaw

Yes, I think Damayanti, I would like you to remember that one of the key objectives of the integration of Biocon and Biologics was to basically unlock a lot of synergies and avoid a lot of the duplication in our businesses which has actually been delivered and will continue to deliver.

Damayanti Kerai

Sure, Ma'am.

So, when we look at the current operating cost structure, a lot of improvements were already achieved, and you think we can continue to improve on current structure as well.

And then obviously the growing top line will contribute towards the leverage benefit.

That's the way we should assume?

Kiran Mazumdar-Shaw

Yes.

Damayanti Kerai

Okay.

Also, my second question is again on cost.

Kedar, can should we look at the current quarter depreciation number as the numbers to sustain in coming quarters as well?

So, if also you can also explain, what has led to increase versus last quarter's depreciation number?

Kedar Upadhye

Yes, yes.

So that line includes as the new launches happen in the market, the corresponding amortization gets charged to P&L.

So that's the reason the number will keep moving as the new launches do come in.

So that's primarily the reason, and whenever the facilities get fully capitalized and start operating, that will come in as well.

Damayanti Kerai

And my last question is, you have launched, I think, all the targeted products, five products, which we discussed.

So, when I look between now and say FY28, FY29, what I understand, we don't have more, like much more products to be added to the portfolio, and focus will be on ramping up the recent launches, or is any other product apart from Etanercept which could come in '29, should we assume between now and next two years’ time frame?

Shreehas Tambe

We would be happy to surprise you, Damayanti, in a nice way.

Would that be okay?

Damayanti Kerai

Yes, definitely.

Thanks.

Shreehas Tambe

We have been working on the pipeline.

We've not necessarily talked about everything, but the focus has always been to see that we have a new product launch either in the US or in Europe every year from here on till the end of the decade.

That's what we've shared visibility to, and we will continue to strive towards that.

So, you should continue to expect us to or at least see that we try to work towards that.

Damayanti Kerai

Okay.

Thank you.

That's helpful.

Wishing team all the best.

Shreehas Tambe

Thank you.

Moderator · Conference Operator

Thank you very much.

Next follow-up question is from line of Sidharth Negandhi.

Please go ahead.

Sidharth Negandhi

Hi.

Thanks for the opportunity for the follow-up.

Just continuing on the previous discussions on profitability and cost improvement, thanks for a really detailed colour, Shreehas and Kedar.

Just to understand this further, given that there have been a few new launches on the Generics side, is there any launch expenditure that could see some operating leverage later as those scale and therefore could we see profitability improvement?

And in context of what you mentioned on looking at both operating costs and R&D projects, how should one think of the growth trajectory on the Generics business if R&D projects are going to be prioritized to really only the focused ones?

And on the Biosimilars business similarly, right, in the current profitability, given the spate of new launches that has happened recently, are there meaningful launch expenditures that could see operating leverage going forward?

Shreehas Tambe

Kedar, you want to take that?

Kedar Upadhye

Yes, yes.

I think, Siddharth, you've asked two, three interesting questions, and maybe we'll take it offline, some of those queries, specifically in a detailed manner, but the operating expenses we're not cutting what is required to be spent.

So, I want all of you to remember that, and keep in mind that we are not cutting the muscle, we are cutting the fat wherever required.

And the integration offers us synergies in operations, commercials, enabling functions.

So those are the areas which we are taking a very hard look at, and the numbers do reflect that.

The relations between new launches and the support required in terms of marketing and commercial expenditure, that will get done, and that will get more than offset by revenue increase.

So, we'll be very calibrated, and we'll be very mindful on what needs to be spent and what can be optimized.

Kiran Mazumdar-Shaw

I think in my opening comments, I clearly talked about I used two words.

I said strategic and synergy.

And I think that's what we're doing.

I think we are basically calibrating all our expenses in whether it is R&D, whether it is other opex, we are really looking at the synergy that we can derive through a very, very well thought out strategy.

We are not going to compromise the future of any growth opportunity by cutting back on anything.

So, when we talk about R&D, we have a very strategic view of where we should be playing in and investing in R&D.

And I think that's what you will see, delivering better robust growth.

I don't think we want to become just opportunistic in R&D investment, but we would rather be strategic in the way we are investing in high-growth opportunities.

Sidharth Negandhi

Very clear.

Thank you.

And Kedar, I'll take that offline.

Thank you.

Kedar Upadhye

Thank you, Sidharth.

Moderator · Conference Operator

Next question is from the line of Ankit Shah.

Kindly announce your company name and proceed with your question.

Ankit Shah

Yes.

Hi.

Thank you for the opportunity.

This is Ankit from Canara Robeco AMC.

My question pertains to debt and working capital.

So, I noticed that net debt has increased sequentially by around INR1,100 crores, and also the working capital has risen because of higher inventory and receivables.

So, can you please explain the reasons for this, and how do you expect it to trend for the rest of the year?

Kedar Upadhye

Yes, see, the increase in inventory, working capital is largely in inventory, and that's basically we are getting ready for the second-half scale-up in both biosimilars and generics.

So that's a good increase in the working capital, and that shows our confidence in expected scale-up in the second half.

Net debt increase is linked to the working capital.

It's not any other term loans.

So, we are in line with the plan that we have, and the idea is to look at productivity and efficiency even in working capital.

So as things progress, you should expect us to maintain robust days of receivables, and DIO, days of inventory outstanding, which used to be more than 400 for biosimilars in the past, it's been normalized to about 280, 290.

And there are opportunities to improve on that further.

But the investment that we have made in this quarter in inventory and working capital is to funnel the growth of the expected scale-up in second half.

Ankit Shah

Got it.

And do you expect the net debt to reduce by the end of the year, or would it remain flattish?

And also, the quarterly interest cost, I mean, we had talked about INR210 crores, INR220 crores range.

Would that also stay, or that can increase in the coming quarters?

Kedar Upadhye

Yes.

So, year-on-year now, there is a significant decrease.

So, there is a 23% decline in finance cost from last year.

Last year, we booked around INR280 crores, this quarter, we've booked around INR213 crores, and this is despite the rupee depreciation impact on the dollar interest that we pay.

So, the constant currency reduction is actually far higher.

And we have said that we are working on this actively, every single dollar that we get from free cash, the first use of that is in reduction of the debt.

So as things progress, you will notice the debt reduction as well.

Ankit Shah

Got it.

Thanks a lot, and best of luck.

Kedar Upadhye

Thank you.

Moderator · Conference Operator

Next question is from the line of Chinni.

Kindly announce your company name and proceed with your question.

Chinni S

Yes.

Myself Chinni, I'm an Individual Investor.

I just would like to know what would be the impact of tariffs announced by Trump, which would be applicable after two years?

However, are we well-positioned about improving the manufacturing capacity in USA?

Shreehas Tambe

Matt, do you want to respond to that?

Matt Erick

Yes, sure, Shreehas.

So, the recent announcement by the US President, Donald Trump, in regards to additional tariffs was just a tweet.

Right now, the law states within the United States, generics and biosimilars are exempt.

So, legislation would have to be passed and redone.

And I can tell you from spending numerous days on the Hill in Washington that it is a bipartisan review that access and affordability of generics and biosimilars must continue to exist.

And by putting tariffs on this and adding additional cost would absolutely conflict with this.

The other interesting thing about this is that in the next two years, the current President, Donald Trump, will be very close to his last month in office.

So, there's a lot that has to happen.

What we're doing as we look at it today, because it is law in the United States, we're continuing to push with our congressmen and women as Biocon and with our associations and affiliations in policy, that biosimilars and generics are great.

They bring cost savings to the United States, and it should continue to be bipartisan between the Democrats and the Republicans to save costs to the American citizen.

So right now, it's just a tweet.

Certainly, with our President, you have to take anything he says seriously and continue to watch it.

But current law states it does not apply, and it'd have to be a change in legislation.

Thank you for the question.

Kiran Mazumdar-Shaw

And I would also say that the Biocon Group is certainly looking at having the required footprint in terms of local manufacturing wherever needed.

So, I think that's something else we are also looking into, and we do have a number of partnerships in this respect, so we will watch the space.

Chinni S

Yes, Ma'am.

Does it mean that are we increasing our capital expenditure within USA in manufacturing?

Kiran Mazumdar-Shaw

No, I don't believe that we will be increasing our capex in establishing new facilities or capacities in the US.

We will look at it through partnerships, if required, and we already have some of our own manufacturing facilities, which we will obviously utilize.

Chinni S

Thank you.

Moderator · Conference Operator

Thank you.

Next question is from the line of Vipul Shah.

Kindly announce your company name and proceed with your question.

Vipul Shah

What is our current stake in Bicara, and any plan to monetize it?

Kiran Mazumdar-Shaw

I would like to answer that by saying that Bicara is no longer a significant investment for Biocon, and we will look at monetizing it at the right time.

Bicara is doing exceedingly well, and we are very pleased that we have been able to create this value for Bicara by establishing it in the first place, and we will decide when is the right time to monetize.

Vipul Shah

What is our current stake, Ma'am?

Kiran Mazumdar-Shaw

The current stake is, we have a small holding in Bicara, and we are in at this moment not contemplating to monetize.

Vipul Shah

Okay, thank you.

Moderator · Conference Operator

As there are no further questions, I would now like to hand the conference over to Mr. Prashant Nair for closing comments.

Prashant Nair

Yes.

Thanks, Neerav.

And thank you, everyone, for joining this call.

If you have any questions that are unanswered or any other questions, please reach out to the IR team, and we'll be happy to address those.

Thank you once again.

Shreehas Tambe

Thank you.

Kiran Mazumdar-Shaw

Thank you.

Moderator · Conference Operator

Thank you very much.

On behalf of Biocon Limited, that concludes this conference.

Thank you all for joining us, and you may now leave the meeting and disconnect.

Thank you. -Ends-

Note

The contents of this transcript have been edited to improve accuracy and readability