ZYDUSLIFE — earnings call

The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.

Prepared remarks

Moderator · Conference Operator

Thank you.

We will now begin the Question-Answer session.

Anyone who wishes to ask a question may raise your hand from the participant tab on your screen.

Participants are requested to use headphones or earphones while asking the question.

We'll wait for a moment while question queue assembles.

The first question is from Kunal.

Kunal

Hi.

Thank you for the opportunity, Sir.

So, the first one on this Sitagliptin franchise that we are trying to build on 505(b)(2) side.

How do you see the addressable market?

Is there any niche segment that we are targeting there?

Obviously because the innovator has been there for quite some time.

And, secondly, would it require any incremental front-end investment from us?

And what would be our pricing strategy there?

That would be the first question.

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Sharvil Patel

So, the Sitagliptin franchise, obviously, is a large, established franchise in the US market.

Most of the prescriptions are run through either commercial or Medicare segments and they are mostly filled by the retail segment.

So, our strategy will be to go into the retail segment and see how do we get access through different PBM contracts going forward.

And, I think, we'll have to slowly work on building the awareness for the product and also find the right ways to create the right contracts and look at taking market share.

So, I think, it is going to be a slow process to build up this franchise as it is not a substitutable or interchangeable product.

But the good thing for us is that we will be alone in the market for some period of time which will allow us to create a good brand over the period of next two to two and a half years.

Kunal

Sure, Sir.

And in terms of pricing, would we have any idea or we are still in the deciding phase?

Sharvil Patel

So, this is not a generic substitution.

So, pricing is going to be PBM contract.

So, it's difficult to give you an idea today till we launch and go through those phases.

Kunal

Sure.

And in terms of front-end marketing, do we require marketing presence?

Or can we use Sentynl…

Sharvil Patel

No, our current strategy is that we will go through our, as I said, through contracts and listing and awareness area.

So, I don't think we're talking about a front-end team yet.

Kunal

Okay, perfect.

And secondly, Sir, if I look at the other expenses this quarter, they have been quite substantially down on a sequential basis.

So, any particular reason for it?

How should we think from the future quarter perspective?

Nitin Parekh

So, other expenses also include R&D expenses as well as expenses related to Zydus Wellness Limited where there is some seasonality involved.

Also, certain professional, legal expenses, they are not uniform across all the quarters.

So, if you take out the R&D part, I think, 850-900 crore would be the base depending on Zydus Wellness promotion spend.

Kunal

Okay.

But R&D has also increased on a sequential basis, right?

Nitin Parekh

So, R&D should not be viewed on a sequential basis.

It should be viewed on annual basis because it all depends on the projects, filing, registration, other expenses.

On an annual basis, we have guided for 7-8%.

We stick to that guidance.

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Kunal

Okay, perfect.

I have more questions, I'll join back the queue.

Nitin Parekh

Thank you.

Moderator · Conference Operator

Thank you.

The next question is from Saion Mukherjee.

Saion Mukherjee

Hello?

Sharvil Patel

Hello, Saion.

Can you hear us?

Sayan Mukherjee

Hello?

Am I audible?

Sharvil Patel

Yes.

Sayan Mukherjee

Okay, sorry.

So, yeah, I was asking about the acquisition that you did for the liquid dosage form in UK.

So, firstly, if you can take us through medium term outlook for this acquisition.

Because the revenue base is quite low at this point and we paid almost £60 million.

So, if you can give us some color on the pipeline and how should, you know, we think about revenues improving and if you can talk about profitability.

And the other question I would have is in the specialty, innovation space.

You know, how are you looking at M&A opportunities at this point in time?

And anything that you can share in terms of activities, spaces that would interest you or you are currently looking at.

Thanks.

Sharvil Patel

Yes.

So, on the first point on the LiqMeds acquisition.

So, this is a specialized delivery business which develops difficult to do liquid products from products that are not available today.

So, most of the products are in the nature when you talk about US regulations then, the 505(b)(2) route, many of them, as I said, first to launch or first to file for those markets.

They meet an unmet need for people who need to have dose adjustment or have dysphagia.

The good part of this business is that they have already had important licensing arrangements with the large specialty companies both in UK as well as US.

So, they work with Rosemont in UK. and three big specialty companies in US who specialize in selling these type of products.

So, I think, from that point of view, there's already a model which is accepted.

They have a good relationship and partnership with the companies.

They have a very large pipeline which is partly licensed and still under development, which in future will also be available for launching as well as licensing out.

So, we see this business as, obviously, a niche business, a good business which will have a technological differentiation, will be built on the specialty footprint in the US mostly and also in many other markets in terms of creating access for it.

And, obviously, it 8 of 25 is just the first 12-15 months of launch.

So, it's just the beginning of the company in terms of launch.

So, the scaling up will happen over the next three years and we expect, because of the nature of this business and which is to do with mostly the manufacturing, development and licensing, it would have a significantly high profitability like specialty companies do.

Nitin Parekh

So, Saion, also the nature of the business as of now is that currently they don't have their front-end, as Sharvil bhai mentioned about certain customers and contracts.

So, the topline is not important.

The stream of income is a 3-part, One is whatever manufacturing goods they sell and the profit that they make on that.

But large part of income would come in terms of profit sharing as well as certain milestone-based incomes based on sales.

So, these are going to come in times to come.

So, whatever number of revenue that you are looking at is actually misnomer and that should not be, you know, given so much of importance.

Saion Mukherjee

Okay-okay.

Thanks.

And on the landscape for specialty, how are you sort of thinking?

Sharvil Patel

So, yeah, on that front, as I said, our keen interest is to continue to look at ultra rare diseases and orphan diseases in the US.

We have our currently two products Nulibry, which is commercialized, and Zycuvo, which is delayed, but we still believe we have a sufficient room to build this rare disease portfolio.

We are looking to do further acquisitions in this ultra rare portfolio and we have some good leads.

So, we continue to hope we will be able to exercise more options of acquisition for late-stage products or ready to commercialize products in the US.

So, that will be one important aspect of what we will do on the specialty front in the US, on the rare disease front in the US.

And that's our current expectation of what we would hope to build out for which is buying niche small assets which are sticky and commercialize them with small commercial infrastructure both in US and also take them to Europe.

Saion Mukherjee

Okay.

And, Dr. Sharvil, do you have like a 3-5year plan on this?

How many assets you would typically like to have?

You already have a couple of them, which you have acquired, anything that will be from our own pipeline?

So, how should we think about and what is the medium-term vision here like when you look at this acquisition how many products?

I mean, how should we think about this particular business, let's say from a 5-year perspective?

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Sharvil Patel

Yeah.

So, I think, we are looking to at least add 2-3 more products to the portfolio.

We have at least two under our own development, which are organic, and we continue to look for two or three more assets on the M&A front as I said which are late stage or near to commercial approval.

So that’s what our hypothesis is.

I would say, the next 3 years, our target should be that if we can achieve aspirationally 100 million dollars of revenue on that part of the business.

Saion Mukherjee

Ok. thank you and I will join back.

Thank you.

Moderator · Conference Operator

Thank you.

The next question is from Bino.

Bino

Hi, good afternoon!

Sharvil bhai, is there any IP related issue around this because there is still drug substance patent around the salt which is there?

Sharvil Patel

We don’t have an issue around launch.

We are clear for launch.

Bino

Ok.

Second, we had, in the last quarter itself mentioned that Revlimid would come down significantly from Q1 to Q2. So, has it come down or is it kind of insignificant in Q2?

Sharvil Patel

There is no Revlimid sale in Q2.

Bino

Ok.

And on Asacol HD, anything, any further colour from the last call?

Are you still expecting a competition this year?

This financial year?

Sharvil Patel

Ya, we have built for that, assuming competition.

We are not aware of it but we have built for competition.

Bino

Ok, understood, understood.

And finally, just on the product Mirabegron, where you have an FTF share.

One of you competitors have said that they may be looking at a launch this financial year.

Is there any colour from your side that you can give?

Sharvil Patel

Ya, we are evaluating that product.

So, it is an important product but I think it is too early for us to make any comments on that yet.

Bino

Ya, thank you.

I will join back the queue.

Moderator · Conference Operator

Thank you.

The next question is from Surya.

Surya, I think you may have to unmute.

Surya

Sorry, hello?

Thanks for the opportunity Sir.

I am sorry for this.

My first question is on the sequential decline on the US business.

You 10 of 25 mentioned that there is no Revlimid sales in this quarter.

Right Sir?

Sharvil Patel

Yes.

That’s right.

Surya

So, practically about Revlimid, you had a kind of a thought process that whatever Revlimid revenue that you will be making, it would be distributed throughout the quarter in the year, evenly distributed.

Sharvil Patel

We have never said Revlimid will be evenly distributed.

We have always said that it is quarter 4 and quarter 1 of the calendar year, financial years.

Surya

Ok.

Till FY26, that is how it should be.

Sir?

Sharvil Patel

Ya.

Surya

Ok, quarter 4 and Quarter…

Sharvil Patel

Quarter 1.

Nitin Parekh

That is our current thinking.

Surya

Ok.

Since we have completed the first year of Revlimid and it is a volume limited one, now in the first year, what is the kind of volume that we would have achieved?

Is it fair to believe that it is more than 6 percent?

Sharvil Patel

We are not giving volume.

It’s a settlement agreement that exists.

So, we are not giving that kind of guidelines.

As I said, it is a very important aspect of our yearly revenue and with an increase in market share that we will get, we will see an uptake in revenue for Revlimid, at least for the next calendar year.

Surya

Related question Sir.

Although the Revlimid number is not there which was in the previous quarter was almost like 70 million dollar plus or something like that, despite that kind of revenue stream not there which is such a high margin business, your gross margin in this current quarter without Revlimid almost maintained the same number what you had achieved in the previous quarter.

So, what is supporting this kind of number and how sustainable the base business is in achieving this kind of gross margin?

Sharvil Patel

So, as I said, it is a mix of our base business and new product launches and overall product mix, lesser realization from consumer health in this quarter because of their seasonality.

I think all of that has led to a decent GC margin but Nitin bhai if you can add something… 11 of 25

Nitin Parekh

Input cost reduction has also helped especially in Zydus Wellness and they have also taken selling price increase in Zydus Wellness plus the new products that are launched in the quarter in US, they are at better margins.

So it’s a business mix and product mix, both helping us, as well as cost reduction.

Surya

Don’t you think that this Revlimid is such a significantly influential gross margin product?

So that means, is it fair to believe that once we again see the Revlimid number which will be again elevated versus last year, then our gross margin profile will really be meaningfully better than the current number, what we are seeing?

Sharvil Patel

So, if we do not see Asacol competition, then what your hypothesis is right.

But we are building for Asacol price erosion.

So, then we will have to see how much we can compensate.

Surya

Ok, fine.

My second question is on the LiqMeds.

Is it a loss-making business or is it on the verge of turning around or something like that?

Sharvil Patel

It is not a loss-making business.

Moderator · Conference Operator

Thank you.

The next question is from Akshat Gupta.

Akshat

Hello!

Yes Sir.

I can see that there is reduction in business in US formulations.

Sharvil Patel

Sorry?

Akshat

After analysing the quarter on quarter numbers, we see that there is a 24 percent decrease in business of US formulations.

Sharvil Patel

Ya, because we don’t have Revlimid sales this quarter.

Akshat

What about the margins?

Sharvil Patel

It’s what we reported.

Gross margins are 66+ percent.

Akshat

And the quarter on quarter margins have been reducing Sir.

Sharvil Patel

That’s because of Revlimid.

Revlimid last quarter was there versus this quarter.

Akshat

Ok, thank you.

Moderator · Conference Operator

Thank you.

Do you have one more question?

Akshat

No, that’s it.

Thank you.

Moderator · Conference Operator

The next question is from Kunal Damesha.

Kunal

Thank you sir for the opportunity again.

On the Asacol, while we are building in one competitor, now that our product has become reference product, have we seen anymore para 3 filer for that which would come in future, not just in this year but probably in future?

Sharvil Patel

There are people who have filed, who continue to work on it.

So, I don’t think there is any patent is left but as I said, we have assumed one competitor and potentially another competitor at the end of the next calendar year.

So, we have to assume the worst.

But so far, we have no idea when we will see competition.

Kunal

Can you provide update on Saroglitazar trials, for PBC and NASH for the developed markets?

Sharvil Patel

Ya, so on PBC, for Saroglitazar, we hope to complete all our recruitments this financial year, for the recruitment of the trial.

So, we are on track to do that and then, obviously subsequently follow-up and then, filing.

For NASH, phase II(b) is still on-going.

It’s a longer phase II(b).

So that is still sometime away.

We still need to recruit 130-150 patients.

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Kunal

Sure.

Sir, would there be any change in strategy from NAFLD or NASH perspective given the weight loss drugs gaining momentum because my belief is NAFLD, NASH are directly linked to the higher weights etc?

Sharvil Patel

So, again, for our current focus on commercialization and plan is for Saroglitazar and PBC and not in NASH.

NASH is still long way out for us in terms of developed market strategy.

And we have to see how the therapies do get developed.

Yes, these products are also important but maybe in the future, there will be a need for not only this much combinations.

So, I don’t think a single drug or a single molecule will exist to solve for a particular indication like NASH and NAFLD which is very complicated with multiple issues.

So, I would say that there is still enough opportunity for that segment but we are still far away from any commercialization capability for NASH in the medium to long term.

Kunal

And the 100 mn target that we have given for specialty, would that include PBC approval for Saro?

Sharvil Patel

No, the 100mn aspiration that we have said for our rare disease business is not to do with Saro.

Kunal

So, it’s over and above, whatever we do on Saro.

Sharvil Patel

Saro is our orphan disease platform which is a different business unit that we are targeting.

Kunal

Ok, perfect.

And sir, given there is, while you have suggested that Q4, Q1 is where Revlimid would be.

But would you be comfortable giving us some direction as to where we could see our US revenue for the next couple of quarters.

We have said that it will grow but what that growth could look like based on the products that we have in our portfolio?

Sharvil Patel

As I had said, for this financial year, we do expect a double digit growth for the US.

As we have new launches, significantly important new launches as well as limited competition products that we hope to continue, our expectation is to continue to grow the US generics business.

Kunal

And overall within US, have you seen any improvement in price erosion, the competitive dynamics because the shortage environment continues there?

Sharvil Patel

No, I think it’s similar.

I don’t see any drastic change in the market.

Kunal

So, what would be our price erosion for this quarter?

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Sharvil Patel

We don’t give price erosion for the quarter but overall, we are expecting mid-single digit price erosion.

Kunal

Because historically, we have said that almost 1.5 to 2 percent sequential price erosion, which kind of adds to high single digit price erosion.

Sharvil Patel

I think that’s our best estimate and it will all depend on the portfolio.

When we see competition on Asacol and others, then obviously depending on that, the erosion will be more but on a normalized basis, we are seeing mid to high single digit depending on the portfolio.

Kunal

Sure, sure, thank you Sir and all the best.

Moderator · Conference Operator

Thank you.

Requesting everyone to limit their questions to two.

Next question is from Vishal Manchanda.

Vishal

Thanks for the opportunity.

Did we get any benefit from PLI incentives during the quarter?

Sharvil Patel

Yes.

Nitin Parekh

Yes.

In the quarter, we have 40 crore rupees accrued in this quarter for PLI scheme.

Vishal

Was this booked as part of other operating income?

Sharvil Patel

Yes.

Vishal

Ok.

And second on LiqMeds acquisition, can you share how many products have been commercialized so far?

Sharvil Patel

There are 16 products that are approved in UK.

All are not commercialized yet and there are 5 505(b)(2) products approved in the US which are getting commercialized.

Some are commercialized and some are to be commercialized and they have multiple products filed and to be filed.

Vishal

Any guidance in terms of how many approvals we can expect in the next say, 2 years from LiqMeds?

Sharvil Patel

I don’t think we will be able to give that right now but as I said, currently in the next 3 years planning wise, most of the products are developed or filed.

So, the visibility is much clearer for over the next 2-3 years.

But the future pipleline, we still need to come back to you.

But there is a very large pipeline so the main is, how do we prioritize and file these products?

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Vishal

On the products which are commercialized, these are early stages of launch and so they can ramp-up?

Sharvil Patel

Yes.

These are early stages of launch and these are all specialty products.

These are not generic substitution products.

Vishal

Ok.

And just one final, you talked about a launch, around REMS product that you were expected to launch.

So, any guidance there?

Can we expect this in the next 2 quarters?

Sharvil Patel

I think we are about to launch or launched one already.

The second, we will launch in the last quarter or the first quarter of next year.

Vishal

Which is the one you already launched?

Sharvil Patel

Isotretinoin.

Vishal

Ok.

Got it.

Thank you.

Moderator · Conference Operator

Thank you.

Next question is from Nitin Agarwal.

Nitin Agarwal

On the US business, I mean we look at sequential decline, you said that decline is entirely attributed to Revlimid or other parts of the business have also contributed to the decline?

Sharvil Patel

No, the decline is because of Revlimid.

With new products and base business, we actually improved from the base of Revlimid.

Nitin Agarwal

The question that I am asking is, we are almost on a 70 mn delta on a QoQ basis.

So, I am suggesting that Revlimid was higher than 70 million dollars in Q2?

Is that right inference to make?

Sharvil Patel

Yes, ya.

Nitin Agarwal

If you look at, for example last year, we were at about 215 mn dollars of business, obviously Revlimid was not in the base.

We have had a reasonable number of new launches coming through the years over the last few quarters.

We are still around the same level, 215 becoming 225 in the current quarter.

How should one look at this progression of this business, ex of the contribution probably from the likes of Revlimid?

Sharvil Patel

As I said, overall, we believe that, this year, FY24 we will see a double-digit growth for our US business and that will be our endeavour, with new launches we continue to do that.

The only point is, it’s wrong for us to remove Revlimid.

Revlimid is not a one year phenomenon.

It’s already been there for 2, almost 2 17 of 25 years and it will continue at least for the next two years.

So, this is really with inclusion of Revlimid, which will continue every year.

Nitin Agarwal

So, I'm saying about you know, and on the India part of the business, you know, do we have now visibility of maybe, inline market or higher and comfortable market inline to above market growth on a going forward basis from here on?

Sharvil Patel

Yes, we will grow in-line with market.

And we will now I think with the better growth in October for the market, we hope to have better, much better growth in the coming quarter also.

Nitin Agarwal

Last if you can squeeze in, on Sitagliptin, when are you looking to launch these products?

Sharvil Patel

Next financial year.

Nitin Agarwal

Okay, do you have in your experience, or any sort of past experiences where 505(b)(2) launches like these have happened and companies who've done that have been reasonably successful in there, whatever success they've had in such launches in the past?

Sharvil Patel

So, it has been, I won't say there have been any meaningful big successes on oral 505(b)(2).

So, something new for all of us or the industry also but we are hopeful that we should aspire for 8 to 10% market share to begin with.

Nitin Agarwal

Okay, thank you very much.

Moderator · Conference Operator

Thank you.

Requesting all participants to refrain themselves with two questions only.

The next question is from Bino.

Bino

Hi, thanks for the follow up.

From your press release, I can see that there are two biotech products in one of which you have completed the trial and one for which you have finished recruitment.

So, are these phase three trials?

Sharvil Patel

Yes, these are phase three trials.

One we have finished and filed and one we have just finished recruitment and hope to file in the last quarter.

Bino

Okay and I assume these are in India and in that case are they more like kind of biosimilars or is it a completely new bio products?

Sharvil Patel

Yeah.

So, these are biosimilars and these are when I said that clinical trials, these were done in India for India market and developing countries.

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Binu

Okay, biosimilars basically.

Great, thank you.

Moderator · Conference Operator

Thank you, the next question is from Damyanti.

Damyanti

Thank you for the opportunity.

So, my question is on India business.

So, you mentioned you'd like your India business to now grow at least in line with the market.

So, if you can talk about the key growth drivers for India from here on, and also what is your expectation for Desidustat, which seems like an interesting product in your portfolio.

Sharvil Patel

So, we continue to reiterate that we will grow in line with the market.

The strategy is going to be driven by our growth booster brands that we have, which will drive large part of the growth for the company and which also include the innovative products like Lipaglyn, Bilypsa, Oxemia, which is desidustat and Ujvira and also adding few more products in the coming year in terms of differentiation, like Dydrogesterone and others.

So, those, the innovative products will add a significant uptake to our overall growth story while we continue to maintain and grow on our base business also.

I would say, near term, as I already reiterated with the improvement in market in the segment in October and going forward, we would see a better uptake on growth for the India business.

And with a larger base being built on these innovative products, we would also see better than market growth over a period of time.

Damyanti

Okay and in terms of sales team like are you broadly okay with the current team strength or you plan to add on more to improve reach and penetration, etc?

Sharvil Patel

So, in next financial year, we are increasing our footprint.

Damyanti

It will be in the next fiscal year?

Sharvil Patel

But not in a drastic manner but in a measured manner, we would add field force, feet on street in the coming financial year.

Damyanti

How many MRs right now in your team?

Sharvil Patel

6500.

Damyanti

Okay.

My second question is on the US business.

So, like you have seen good pickup in approvals, launches, etc. So, in your current year’s portfolio, if you can mention like how much sales is contributed by say non-oral solids, some differentiated products, which will be the key drivers going ahead also.

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Sharvil Patel

So, US business of generics is a basket business which has oral solids, topical products, injectables and complex products like suppositories as well as transdermal patches.

So, I don't think we have any segment way of doing this business.

It's a portfolio business that we build.

And that is how the generic market also functions.

So, I don't think we can give dosage-wise breakup.

But as I said, the business is constituted of all of these dosage forms.

Damyanti

Okay, and all going ahead also like it depends on the nature of the product, rather than the dosage, which will determine…

Sharvil Patel

Yeah, there will be always a mix of all of these, which I mentioned to you.

Damyanti

Okay, thank you for your answers.

I'll get back in the queue.

Moderator · Conference Operator

Thank you.

The next question is from Charul Agarwal.

Charul Agarwal

Hi, can you hear me?

Sharvil Patel

Yes.

Charul Agarwal

Sir, I wanted to understand more about the co-marketing agreements for the India business for the innovative products that you have recently signed.

So, what would be the rationale for these given Zydus already has a strong field force presence?

Sharvil Patel

So, I think, first starting with Saroglitazar, I think it is to create a larger access.

We have a certain reach and capability and capacity to reach a certain number of patients.

And with the indication coming through for NASH and NAFLD for Saro and the only drug to be approved for this, we do see that potentially adding more patients and by creating awareness for more physicians, is a need for us.

And from that point of view, we did go through a whole process of identifying the key partners.

And so far, we have been able to have two, one for the desidustat and one for Saroglitazar.

We hope to add one more partner very soon.

Charul Agarwal

And what would be the agreement like in terms of profit share or would it be a fixed fee, how would it be like?

Sharvil Patel

It's a typical out licensing agreement like others that exist in India.

Charul Agarwal

Okay.

My next question on opex.

You did mention that the cost could moderate over the next quarter, but could you throw more light on the nature of these expenses?

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Nitin Parekh

We only talked about other expenses on a quarterly basis, what is the base?

So, we said that excluding R&D spend, the quarterly base will be 850 to 900 crores.

Charul Agarwal

Okay, what were the lower expenses due to QoQ?

Sharvil Patel

Savings because of higher input costs last year versus this year, and product mix also has helped us.

Nitin Parekh

So, I think she is asking about other expenses reduction.

And as I said other expenses, they are affected by two major factors.

One is R&D spend, which is not uniform across the quarters.

Other is Zydus wellness related spend, which is seasonality nature.

If you remove these two, which are going to be different for different quarters, the normal base will be 850 to 900 crores and that variability is also because of you know, legal and professional spend and other spend, some spend which are related to sales or production, so which again vary from quarter to quarter, but that range, you know, gives you a ballpark number.

Charul Agarwal

Thank you, sir.

I’ll get back in the queue.

Moderator · Conference Operator

Thank you.

The next question is from Tarang Agarwal.

Tarang Agarwal

Hello!

Am I audible?

Sharvil Patel

Yes.

Tarang Agarwal

Hi, three questions from me.

One, you know, this is with reference to, you know, onboarding Mr. Patel in North America.

You know what really drove this decision and you know, considering that you've been in the market for almost two decades now, how are things likely to change with him coming on board?

Sharvil Patel

So, our US, as I said, we have two important geographies that we have a strong focus on.

Now, obviously, over the last 15 years, we have built a good US generics business.

But as we move forward, we have an intention to build a rare disease portfolio.

We hope to build a Saroglitazar and build an orphan specialty business in the US.

We have an animal health business. we have Viona pharmaceuticals.

We hope to explore Canada and enter that market.

So, looking at all of that, I think there was a need to consolidate how we run the operations in the US.

And we have been looking for somebody to come in and look after all as a consolidated North American business.

So that was the main reason for us to do that.

That we are able to harmonize, consolidate and grow this business.

So, Punit brings both the understanding from the customer side, which is important, but 21 of 25 also brings in his understanding of specialty business in his earlier efforts that he has put both at CVS and his earlier job.

So, I think that was the main reason for us to see that how do we continue to build our generics platform, but also all these other new platforms and consolidate the leadership in the US.

Tarang Agarwal

Okay, got it.

Second, you know, my sense is, there was some Revlimid in the base quarter of the previous financial year.

So, would it be safe to presume that the US business must have grown by almost 15 to 18% on a constant currency basis?

Sharvil Patel

Definitely.

Karan Agarwal

Okay.

And last, how many launches could we see in US over the next half year or say next four quarters?

Sharvil Patel

Next, how many quarters?

Tarang Agarwal

I mean, next one year from today or next half year till March 2024.

Sharvil Patel

So, we hope to launch anywhere between 30 to 40 products every year.

So, it varies, but at least 30 products is something that we would continue to launch in the next 12 months or so.

Tarang Agarwal

Okay, thank you.

Moderator · Conference Operator

Thank you, the next question is from Saion Mukherjee.

Saion Mukherjee

Yeah, thanks for the follow up.

Just that I wanted to, in the US generics, you mentioned 30 to 40 products.

But is it possible to give some granular like what kind of products we should sort of look forward to over the next three years and just one specific one, you got an approval for a transdermal, I think a few months back.

Just wanted to confirm whether that's launched or when is it going to be launched?

Sharvil Patel

So yeah, we are launching two transdermals and potentially, by the end of this year, financial year, we would have two commercialize transdermal products beyond Rivastigmine, that is already launched.

And going forward, we have, obviously, plans to launch two more on the transdermals franchise.

We also have some important launches coming both where we believe we will be exclusive going forward.

And I think, almost 25, 26, 27 we do believe, we have one exclusive product to launch every year.

That is what our current belief is.

But obviously it has to pan out in terms of both IP and litigation and other areas.

But we do have a sufficiently exciting basket of products to be launched.

In the near term also, we do have 6 to 10 products, which are you know, in 22 of 25 the 8-10 million plus range kind of value.

So, it is the good basket of products that are there scheduled for launch and some of them being very important as well.

Saion Mukherjee

Okay, and any comment you have on the GLP-1 portfolio, which you have filed?

Anything you'd like to share, is that an opportunity you see over the next couple of years?

Sharvil Patel

I would say not in the immediate future.

But this is definitely a very important opportunity.

And we do believe that we are also amongst the few companies who have a good position on this.

So, it will be an exciting launch, obviously beginning with India and emerging markets but then moving into the developed markets, but I don't think it's a short-term opportunity.

Saion Mukherjee

Okay, and in India when would these opportunities play out for you?

Sharvil Patel

I think, post patents.

I think it's 26 is when the patents go off, I think in India and some other markets.

I'll get back to you Saion on that.

Saion Mukherjee

Okay.

Thanks.

Moderator · Conference Operator

Thank you.

The next question is from Kunal Damesha.

Kunal

Just one clarity sir.

I believe that we had another product called generic Trokendi XR as well as a good contributor in quarter one, which would have also come down and would have been...

So, then the 70 million declines cannot be given to Revlimid, right?

There'll be some Trokendi because it was…

Sharvil Patel

That was in quarter four bigger because that was the month then quarter one there was competition already.

Kunal

Okay.

So, then the Revlimid decline would be less than 70 million?

Nitin Parekh

So almost.

If not 100%, 90% plus, you know, decline is related to Revlimid only.

Kunal

Okay.

Thank you, sir.

Moderator · Conference Operator

Thank you.

The next question is from Surya Patra.

Surya

Yeah.

Sir, just a query on the Mylabs acquisition.

So, what is the thought process there and where it fits to our overall growth strategy?

Sharvil Patel

So, we haven't acquired any majority stake in Mylabs.

We have taken six and a half percent equity stake.

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Surya

Correct.

But any thought process going ahead there?

Sharvil Patel

I think one strong belief as a company and as a product portfolio that we say that beyond being a pharmaceutical company, how do we bring better solutions for patients beyond the pill.

One area, which is very interesting for us is at home testing and point of care devices.

And I think Mylabs is pioneering in both of these areas and completely homegrown and which also brings efficiencies and cost efficiencies.

So, we believe, we will find an important area to work on creating access for these types of PCR point of care devices which can revolutionize the way molecular diagnostics and advanced diagnostics happens for many of, not only the current conditions and issues, but future diseases as well.

So that's where our focus is going to be and that is why we have partnered with them to bring these kind of portfolio to the physicians and the patients.

Surya

Okay.

But don't you think that is a kind of relatively generic in terms of the earning potential, in terms of the competitive landscape that is there in the market, and whether it is targeted for the domestic market or you're thinking, taking to the other market?

Sharvil Patel

No, it's for domestic and it is not at all generic.

The large diagnostic testing places are generic in nature.

These are molecular diagnostic tests, which are highly specific and sensitive and in real time, and where you can do it at home or point of care at a clinic.

So, this has not been done in India yet.

So, there's nothing generic about it.

Surya

Sure.

My second question is on how big is the injectable portfolio?

We have certainly seen some few approvals from the injectable front targeted for US market.

But right now, at what level that we are and how important this segment could be for US business going ahead?

Sharvil Patel

So, the injectable segment is a very important part of our overall generic strategy.

And it will continue to be critical for us to grow in the US.

But it is just one part of our overall product mix that we do.

So, I would say obviously it is growing and it's small, but the most important part is that we have a franchise that is in injectable, complex orals, suppositories, transdermals, topical.

So, the whole franchise is going to be important.

Surya

Okay, other than the oral solid then including injectables, what is the pipeline it would be looking like for you?

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Sharvil Patel

So, as I said the pipeline constitutes of orals, injectables, inhalation, transdermal, topicals and some suppositories.

Surya

In terms of number, pipeline can you say?

Sarvil Patel

We have more than 100 products that we need to file.

Surya

Okay.

Sure sir.

Thank you

Moderator · Conference Operator

The next question is from Kunal Damesha.

Kunal

All my questions are answered.

Thank you.

Moderator · Conference Operator

Okay, thank you.

The next question is from Tarang Agarwal.

Tarang Agarwal

Hi, just one quick question.

How are you looking at the Zydus Wellness business, purely from where it stands today?

I mean, on a consolidated entity level, it's a fair, big drag on the return metrics.

So, just wanted to get your sense in terms of how are you looking at this business?

Sharvil Patel

So, I think from our India strategy point of view, Zydus Wellness is a very integral part of our strategy and future profits and growth.

And I would say, obviously, in the last two to three quarters, we have had issues on margins because of cost escalation that happened.

But I think, as you see in the last quarter that is corrected and the gross margins are back to the original gross margins that it had.

So, one part of the problem gets solved in terms of the margin profile, and it's been a tepid quarter because of low demand, as you can see, for most of the FMCG.

But going forward, it is a business that will drive double digit revenue growth and with improvement in margins, also profit growth.

So, for us it is a very integral part of what we plan to do in terms of the overall India business.

Karan Agarwal

Okay, thank you.

Sharvil Patel

Thank you.

Moderator · Conference Operator

Thank you.

I now hand the conference over to Dr. Nayak, for closing remarks.

Ganesh Nayak

Thank you very much.

And we look forward to interacting with you again in the month of February when we declare the next quarter results and wish all of you a very good evening and wish you a very Happy Diwali and a prosperous New Year.

Good night.

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Moderator · Conference Operator

Thank you on behalf of Zydus Lifesciences Limited that concludes this conference.

Thank you for joining us and you may now disconnect your lines and exit the webinar.

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