Alivus Life Sciences Limited (ALIVUS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Alivus Life Sciences Limited, formerly Glenmark Life Sciences Limited, Q3 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Soumi Rao. Thank you, and over to Ms. Rao.

Good evening, everyone. I welcome you all to the earnings call of Alivus Life Sciences Limited, formerly Glenmark Life Sciences, for the quarter ended December 31, 2024. From Alivus Life Sciences we have with us Dr. Yasir Rawjee, our MD and CEO; and Mr. Tushar Mistry, our CFO. Our Board has approved the results for the quarter ended December 31, 2024. We have released the same to the stock exchanges and updated it on our website. Please note that the recording and the transcript of this call will be available on the website of the company, www.alivus.com. Now I'd like to draw your attention to the fact that some of the information shared as part of this call, especially information with respect to our plans and strategies, may contain certain forward-looking statements that involve risks and uncertainties. These statements are based on current expectations, forecasts and assumptions that are subject to risks which could cause actual results to differ materially from these statements depending upon economic conditions, government policies and other incidental factors. Such statements should not be regarded by recipients as a substitute of their own judgment. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Our actual results may differ materially from those expressed in or implied by these forward-looking statements. With that, I invite Dr. Yasir Rawjee to give his opening remarks. Thank you, and over to you, Dr. Rawjee.

Thank you, Soumi. Good evening, everyone, and welcome to our Q3 earnings call. I would like to extend our warm wishes from Alivus for the new year to each of you. It marks a notable milestone for us as we officially transition to Alivus Life Sciences. This name change reflects our deep commitment to creating life-enhancing solutions. Alivus, derived from the root word "life," embodies our aspiration to kindle hope, improve health and help people live fuller lives. This rebranding signifies a new phase in our journey as we continue to innovate and grow. Moving on, let me turn to the broader industry shaping our business. So within the pharma industry, we observe steady growth driven by increased outsourcing, rising demand for specialized APIs and supply chain diversification to reduce dependency on single regions. The industry is also witnessing growth in the areas of sustainable manufacturing and advanced technologies. Now focusing on our performance for the quarter, we reported revenues of INR 642 crores, a growth of 12% Y-o-Y and 27% Q-o-Q. This was driven by both GPL and non-GPL business, which grew 15% Y-o-Y and 11% Y-o-Y, respectively. Generic business grew by 16.9% Y-o-Y. From the geography perspective, regions like India, Europe, ROW and Japan have contributed to this growth. While we were able to recover some of the spilled revenues of Q2 during this quarter, some portion will be recoverable in Q4. Our CDMO showed encouraging Q-o-Q growth of 25%, whereas the year-on-year growth is subdued due to the cyclical nature of the demand. Coming to our profits for the quarter, we reported gross margin of 55.6%, which is in line with our earlier guidance. Our EBITDA margin for the quarter was 31.3%, up 90 bps Y-o-Y and 310 bps Q-o-Q. This is essentially a result of better product mix with stable expenses. Our pipeline remains robust with over 548 DMF and CEP filings globally as on December 31, 2024. Our high potent API pipeline, with a significant market opportunity, continues to advance with multiple products in various stages of development. We have 21 products today with a total addressable market of $45 billion, with 6 products having been validated and 6 more products in advanced stages of development. Our quest for high-quality innovative solutions and scalability continues in order to build a sustainable business over the long term. With this, I now turn the floor to our CFO, Mr. Tushar Mistry, to provide a detailed overview of our financial performance for the quarter. Over to you, Tushar.

Thank you, Doctor. Good evening, everyone. Welcome to our Q3 and 9 months FY '25 earnings call. I would like to briefly touch upon the key performance highlights for the quarter and 9 months ended 31st December 2024, and then we'll open the floor for questions and answers. Our revenue from operations for the quarter stood at INR 642 crores, a growth of 12% year-on-year and 26.6% on a sequential basis. The gross profit for the quarter was at INR 357 crores, up 7.9% year-on-year and 26.6% sequentially. The gross margins for the quarter stood at 55.6%. EBITDA for the quarter was at INR 201 crores, up 15.2% year-on-year and 40.5% sequentially. EBITDA margin for the quarter was at 31.3%, up 90 basis points year-on-year and 310 basis points quarter-on-quarter, driven by better product mix, and the PAT for the quarter stood at INR 137 crores with PAT margins coming at 21.3%. Let me quickly discuss 9 months financial year numbers as well. Revenue from operations remained flat over 9 months FY '24 at INR 1,737 crores. Gross profit was at INR 939 crores and gross margins were at 54.1%. EBITDA at INR 509 crores with margins at 29.3%. PAT was at INR 344 crores with PAT margins of 19.8%. Looking at the therapeutic mix, CVS and CNS continued to lead the growth during the quarter, with both therapies collectively contributing 58% to the top line. R&D expenditure for 9 months was at INR 56 crores, which was 3.2% of our sales. For the quarter, it was INR 20 crores. Touching upon the balance sheet and cash flow movement, the working capital days were at 182 days as of December 2024. Coming to capital expenditure, we invested INR 33 crores during the quarter, while the total investment for 9 months were INR 119 crores. We continue to remain a net debt-free company, and I am happy to inform you that we have generated a strong cash flow from operations of INR 184 crores in 9 months FY '25, with cash and cash equivalents, including short-term investments of INR 499 crores as of 31st December 2024. In conclusion, I would like to say that we are optimistic of the future trajectory on the back of steady demand environment. With that, let us open the floor for Q&A.

[Operator Instructions] First question comes from the line of Ahmed Madha with Unifi Capital.

Congratulations on good set of numbers. My first question is on the CDMO business. Despite the contribution from the fourth project, the absolute number still looks subdued. So can you explain on this? And secondly, do you expect this number to scale up materially in Q4 with the new project?

Yes. So CDMO, the fourth project has kicked in, but it's just kicked in, right? So materially, it's not that significant in terms of contribution, okay? And the 3 projects that we have, we've explained before that they do have a cyclical nature in terms of demand. And so owing to weaker demand, right, we've seen CDMO not pick up as much as we had anticipated. But going forward, I believe that this is going to get better from next quarter onwards. But again, on a quarter-to-quarter basis, just given the fact that we don't have that many number of projects, we would see a cyclical performance on the CDMO segment.

Okay. And second question is, if you look at the -- what is your current capacity utilization? And did the 208 KL addition in Ankleshwar contributed in the current quarter also?

The 208 KL contribution -- the addition of capacity has contributed. But mind you, that's an intermediate capacity. And typically, we look at our finished API capacity when we are looking at sort of scaling up. However -- it does matter, but still in terms of connecting, right, we look at the API finished capacity, right? The utilization has been around the 90% level that we usually are at, okay?

Last question. If I look at the OpEx number, the OpEx growth is slightly ahead of our top line growth. So is there any element of one-offs or anything as such, or is this a partial [indiscernible]?

So Ahmed, some part of it is in line with the growth in the revenue numbers. But of course, there is some element of one-time as we are looking at some transition costs getting incurred in the -- in Q3 as well as in Q4. So some small element of that is there. And there was some higher cost on the sales and marketing front also in this current quarter.

Got it. Can you quantify the one-off transition cost?

Transition costs would be in the range of about INR 3 crores to INR 4 crores in this current quarter.

[Operator Instructions] Next question comes from the line of Sajal Kapoor with Antifragile Thinking.

Interesting name, team, Alivus. I like it. So congratulations on a good set of numbers. Happy to see some recovery in CDMO, and hopefully it should get better from here. Just a couple of questions really. One, which 2, 3 things will not change in this new avatar? And what do you think must change to strengthen the business?

So our approach to the portfolio, right, in terms of chasing higher value opportunities, is something that we will continue, okay? The geographic diversification that has made our business very stable, I would say, right, is also something that's a win, and that's also something that we would continue to drive, okay? As far as operational efficiency, I think we do a good job, but there's certainly room to do more. So these are the sort of business operations and R&D elements that would stay intact, because these are the things that have really helped us to continue to build a sustainable business, right? What will change, though, is that given the fact that we are able to invest more in the business, our approach will be to build new levers to drive further growth. So this is important, especially in light of the fact that, in the past, the investment that we have made has been largely limited to increasing capacities just to service the business. The only exception, I would say, is when we introduced the oncology platform, this was 2.5 years ago, and that also has paid rich dividends in terms of the portfolio that we've been able to build and the business interest that we've been able to generate. So given that kind of uptick potential in the business by building new platforms, it's very clear to us that we need to build in that direction in terms of new platforms, so that that can fuel further growth. And then we are positioned well because we do have the ability now to invest more. And I would say -- now do me a favor, don't ask me what that is going to be, okay, because I'm not going to tell anyone this, right, simply because, I mean, we have too many -- I mean, we have a lot of things in the pipeline that we are thinking of. Some of them, we are even ready to implement. But it's a generic business, and there's a lot of copycat culture in our industry. And so we'd like to keep it a little quiet while we build these platforms to fuel further growth. So I think that summarizes it, Sajal. This is how we are going to sort of go forward while keeping a very strong element of our current DNA intact.

That's a very thoughtful response, and I wasn't expecting anything less from you, Dr. Rawjee. So thank you for illustrating your vision out there. And I also appreciate why you need to keep this strategy close to your heart for now, you're not revealing it, and I completely appreciate that. And last question is, USFDA has not audited our plants for several years. And so I understand how difficult it is to estimate the time of the audit. But how can we interpret the relatively low frequency of USFDA audits on our facilities vis-a-vis some of the other API plants that they have visited twice in 2 years kind of a frequency? So I mean, how do you read into this?

Well, we do understand a little more than just sort of guessing, right? And that is these agencies talk to each other, okay? So they -- and I happen to have interacted with some investigators, right, informally. And basically, because they share information, right, they -- it's the risk ladder that they build, right? So their frequency goes up when they sense a riskier company, and their frequency -- we go down in their ladder in terms of the frequency of audits. We've had successful audits from Japanese PMDA recently. We've had successful audits from Anvisa Brazil recently. And these are all agencies that talk to each other. So we expect that FDA should come. It's been a while. And so, based on the fact that it's been a while and we've had quite a number of filings, we believe that this will happen. The good news for us is that our approvals in our facilities are not being stopped, okay? So we continue to get -- our customers continue to get approvals, and -- so it's not hampering business. But yes, I mean, it would be nice to have the USFDA come in and take a look at us and sort of we can move forward from there.

Sure, sure. And this PMDA, was that for Dahej or Ankleshwar?

PMDA was Dahej. Anvisa was Ankleshwar.

So both are good agencies. I mean, even Brazilians are very particular. So that's good to hear, and look forward to the next quarter and, of course, understanding what platforms is it that you would be revealing. But yes, congratulations and best wishes.

Thank you.

[Operator Instructions] Next question comes from the line of Harsh Shah with [ Rera Holdings ].

Sir, just wanted to get an understanding about how much our onco blocks are contributing? Because when I look at therapy-wise revenue, I would presume that onco would be sitting somewhere in the other segment line item. Sir, it is stagnant around 33%, 34%. I just want to get an understanding that how much is the onco contributing? And is there a thought process that we can give out a separate line item for the onco block, just like we give it for cardio, CNS, [indiscernible]?

Okay. You know what, you've been pretty muddled, your voice that came through, but I understand you're asking us about how much has onco contributed? Is that your question?

Yes, that is correct.

Okay. So see, the thing is that with onco, right, we are currently in the seeding stage, okay? So we've got 6 products validated and these are all going to customers who would eventually launch with these APIs. And we have another 6 that we will be validating soon. So that will be 12 APIs in a short time that would have been seeded with multiple customers. Commercially, they have not contributed a lot because we have only supplied exhibit batch quantities to customers. There has been some revenue from onco as a result of that. But we are not yet in the commercial phase with respect to oncology, our oncology pipeline, as yet.

Okay. And sir, when you say that the market size of the 12 drugs which are under various stages of development is $45 billion, so what would be the API market size out of that?

Okay. Now you know what, this is a surrogate marker, okay? And let's understand that most of this $48 billion, right, is basically an innovator marketplace. So let me help you to break it down, okay? So if you then look at what would this market size look like when the generics happen, it's going to reduce very significantly. And then the API is a subset of that, okay? So you have price erosion when generic launches happen to the extent of 95%-plus, okay? So -- but what this does, why we sort of give you the total addressable market, right, is basically to give a sense in terms of what we are going after in terms of the potential. That's the reason for putting out such a number. But I do understand it sometimes can cause a lot of excitement, right? And in terms of how much we could sort of do on the API side. But it's a substantial market that we would be catering to even after generic penetration happens.

Sir, would it be fair to assume it would be somewhere in the range of 10% to 20%, the size of generic API market from the surrogate? If you have to derive it from the surrogated market size?

No. Like I said, it could go down to 5%, right, of what it is today, when generic happens. So say, $48 billion becomes like $3 billion, okay? And then API is part of that, right, in terms of the overall market. You get that?

Mr. Shah, please rejoin the queue for more questions. Next question comes from the line of Karthik with Catamaran.

Sir, can you help us understand what is the long-term strategy on the CDMO business segment?

Sure. So in the CDMO spectrum, which is pretty wide, I mean, we are looking at end-of-life cycle projects, okay? So that commercialization is relatively quick. And the other part that we focus on is the specialty segment, where, again, basically, it's not a full clinical study repeat, but short clinical studies that specialty companies do with an enhanced formulation, okay? But they still end up getting quite a good exclusivity period. And this basically gives us, again, a relatively quick entry into the market, along with a pretty good realization. So that's the strategy that we've been following so far. And we would continue to do that. We -- again, we see a fair amount of traction, right, with newer projects, especially because we've got a pretty big portfolio that helps us in both end of life cycle as well as specialty.

Okay, sir. And in terms of people in the team, like have you hired more manpower for -- to especially focus on CDMO? And how many would these people be? How large would this team be?

Currently, it's the same team that drives the generic business in Europe, North America and Japan. But these are the 3 large regions where we get traction on the CDMO side.

And sir, is there any perceived conflict of interest between CDMO clients giving you business because you're working for a lot of generic clients as well?

Not anymore. I mean I've had this issue crop up years ago, right? But I think, again, because of the segment that we are in, right, there is no real threat. In fact, they prefer to go with an established manufacturer because we've achieved economies of scale. We've achieved a pretty strong supply chain security. I mean we've ensured that. So the combination of a strong supply chain as well as optimized costs on manufacturing and materials procurement basically gives them a significant advantage for their end-of-life cycle business.

Next question comes from the line of Nitin Agarwal with DAM Capital.

Doctor, in the past you've talked about, post the transition, you're looking to sort of step up some of the growth investments. Have there been any specific areas where some of this activity is already underway? And if you can sort of highlight them?

Yes. So we've -- I was answering Sajal, right, earlier, where I said that we've already started looking at things, right, and started work in R&D already, okay? We hope to move into -- we hope to have our own R&D facility in about 1 year, 1.5 years. But we are not waiting for getting that extra space in order to expand. We've already started doing work in a couple of areas, okay? Unfortunately, I won't be able to tell you what all that is, but work has begun in earnest on 2 areas, okay, basically new platforms that we have already started working in, and we'll be adding a few more in the next 6 to 8 months. We hope to sort of commercialize these kind of -- these -- some of them in early FY '27, right? So it's work-in-progress, and we've started making early investments, small investments, because it doesn't yet involve manufacturing, but it's certainly happening at the R&D level at this point.

And given the fact that we've got now relatively unfettered access to the cash that we have, in the past we've been giving out larger dividends given the structure that we were in. How are we looking -- and we continue to generate a pretty reasonable free cash even at this point of time. So any thoughts on how would we look on the cash utilization for the business? One part is R&D, you mentioned, will take up some amount of incremental cash. Where else does the money really go from here beyond this?

So Nitin, there is also the greenfield expansion that is coming up in Solapur. So there's a good amount of investment that is happening in that area as well. So CapEx for next 3 to 4 years is well laid out, should be in the range of another INR 400 crores to INR 500 crores easily. And -- so that's how the surplus cash will be utilized. Of course, post that also, there will be some surplus cash on the balance sheet. The dividend will not be as high as what it used to be in the past. But obviously, there will be some element of dividend also that will come.

And secondly, Doctor, on the slide where you talked about the cumulative filing status, we've got 168 DMFs which are there in North America. Now all of these are -- I mean, are these -- I mean, what proportion of these products would be sort of supplying literally on an annual basis or have some sales that are coming through on a regular basis?

About half...

On a rough basis...

A little more than half, because the thing is that patent expiries also have not happened, right? So many of these are not commercial. I mean they have filed, okay? But the patent expiries are going to happen in the next few years, and that's when we'll be supplying commercially. So you get it, right, why it's about half?

Yes, yes. And the link point is, versus the filings are there in North America, the number of filings in other regions are far lower, especially like countries like Japan and Brazil. So I mean, how much of an opportunity is it for us to sort of geographically expand the current basket?

So that's a good question. I mean the thing here is that these markets, Brazil, Japan and so on, we've been filing on the basis of customer interest, okay? Because you see what happens is that we've already got all the data in place, right? And we also have either validated material at the commercial scale or we are supplying commercial quantities to other regions. So here, it's a relatively easy sort of thing to do to make the filings happen, because we've got the stability data, we've got everything in place. So the thing -- but then you don't want to have an empty file, right? If there's customer interest, they want to go ahead. Yes, we are ready to file, we file. They take our material, file -- you produce exhibit batches and then file the dossier. So that's the way things have been going, and I think it's a good optimization in terms of resources, right, how we plan our resources.

And so when you look to the next, say, 3 to 5 years, you see most of your growth, if you were to break it up, will be coming from your existing portfolio, or it's going to be largely driven by the newer launches?

A big part is going to come from newer launches. I mean, a big part is going to come from new launches. And if I look at 4-, 5-year horizon, I mean, half the revenue will be from new. Right, Tushar? So about half the revenue that will come in, let's say, year 4 or year 5 from now will be from new launches.

Okay. And last one, if I can squeeze in, in terms of the competitive intensity in the business, have you seen any changes over the last few quarters?

No, it's -- the competitive intensity remains the same. It's high. But then again, right, I mean, we do have our differentiators, right, in terms of being in the regulated market space, offering better service, better product, better cost many times, right? So all that is there. So we continue to sort of tread along the same lines in that sense.

Next question comes from the line of Tarang with Old Bridge.

A couple of questions. One, how is the volume growth for this quarter? And second, for the CDMO business, you averaged about INR 140 crores in FY '24; 9 months, you are at about INR 100 crores. So would we expect some growth, I mean, given that we are already about 3 weeks into the quarter? So some view on the CDMO business in the immediate term? And secondly, given that the fourth project has just been commercialized and you're expecting 1 more project to be commercializing in H1 of FY '26, how should we see the trajectory of that business for FY '26? Or is it too early to really forecast FY '26?

So Tarang, FY '26 is a little early because we are expecting approval on the fifth project, right? Just like any project, right, I mean, the initial uptake is a little slow. And so I answered Ahmed earlier, right, that the CDMO on the fourth project has started. But it's not very significant, right? And then the 3 projects that we have, right, they do have a bit of a cyclical demand pattern. And so that is playing out essentially on the CDMO. On the volume growth, I'll just come back to you on that.

Yes, volume, I mean, price erosion that we have seen is around 6%, so volume growth is about 18% for us in the quarter.

Okay. Just on the CDMO and overall business, Doctor, I mean, generally, do you -- what is the kind of advantage that you have in the business? I mean, do you have a good view of how the quarter or how the next 6 months are going to pan out, or generally it's really a monthly tab that you have on the business?

Good question. See, what happens is that when these kind of projects start, right, initially you get a lot of feedback because the customer wants to make sure that you're going to service them. But as your service levels are at a high level anyway, then they don't worry about it and they just sort of take you as a regular supplier, right? So visibility in that sense becomes lower because it's just like, yes, we'll get the material anyway, there's a certain lead time, and that's it, right? So that's how it usually happens. So as you -- you kind of get taken for granted as you...

Get better at your work.

Yes. So that happens.

Okay. Sir, last question on CapEx. I think FY '25, my notes might be slightly incorrect, but were we anticipating INR 300 crores to INR 350 crores in FY '25?

Yes, that's right. Your notes are right. And the first 9 months is about INR 119 crores. As I explained earlier, the budget allocations are already there for the projects that we have earmarked. For example, the greenfield project in Solapur as well as the new R&D center that Doctor spoke about, some of these are not yet fructified. I mean while Solapur has started, the spends have not yet hit the balance sheet yet. And the R&D center, we are still scouting for the land parcel. Once that is done, then we'll have the outlook.

Got it. So this is just a timing mismatch, there's nothing really changed?

Right. That's right.

Next question comes from the line of Damayanti Kerai with HSBC.

My question is for Dr. Yasir. So I just want to understand the generic business pickup a bit further. So very strong performance. So can you clarify a few things? First, whether like without spillover benefit from the previous quarter, how is the performance? And does 3Q number also reflect some sort of front-loading by the channel partner? And then on the broader industry part, if you can comment on the demand and pricing scenario. So I guess -- I just heard like 6% price erosion. How does this stand versus erosion in the prior quarter? So these are my questions.

Thank you, Damayanti. So as far as the servicing in this quarter, yes, there was -- we partially made it up, okay? It's difficult to kind of give an exact number, but it's -- even without that, let's say we had done that number in Q2 already, you would still have a pretty strong growth in Q3 as well, okay? So of course, and like I said, right -- and the reason for that is that we've got to meet customer expectations first, right? So if we've sort of slowed things down for a customer in Q2, we had to make it up in Q3. That was the most important part. And it's a multipurpose facility, right, that -- our facilities are all multipurpose, so we've had to sort of stack that up depending on -- to ensure that customer servicing happened. So I mean, short answer is, it would have still been a pretty strong quarter in Q3, right, even if, let's say, we have done some of the servicing in Q2. And that's why we said in our commentary that some more will also happen in Q4, some of that servicing that needs to happen. That's still sort of pending from Q2. On the front-loading, you'll have to help me a little bit. I didn't quite understand when you say -- I mean, are customers stocking up? Is that what you're asking?

Yes, yes. Actually, in December quarter, which is a calendar-end quarter, right? So I guess we have seen in the U.S. that there's a bit of front-loading or stocking up by the channel. So I just want to understand if that was the case for your numbers as well?

No, I don't think so. In fact, we've actually seen in the past a reverse kind of trend, because it's their last quarter and they are rationalizing inventory, right? So they want to sort of order less. But I mean, it hasn't really happened, right? As far as erosion goes, erosion remains more or less steady at about 4.5%, 5%. It's not -- and that's on the bucket, okay? It doesn't happen at a product level, right? We see that -- on more mature products we see more erosion, and on newer products we see less erosion. So that's -- but as a function of the bucket, we see about 4.5% to 5.5% kind of erosion on the overall.

And just from the demand perspective, are you seeing better demand from your customers? Or it's more steady, say, compared to last few quarters?

So demand is stable in India, Europe, Japan. In fact, it's really good in Japan, ROW and Europe, right? India is stable. But the U.S. and Latin America are a bit weak, okay? So we are seeing -- we've been talking about Lat Am for some time now, that because of the Argentinian currency situation, right, our Argentinian customers are very conservative these days in terms of their demand, right? And so that is impacting Lat Am demand overall. And then the U.S. also, the demand coming from the U.S. also is a little subdued. So overall, I mean, because we have got strong demand coming from Europe, Japan, ROW, right, it's kind of covered it up. And going forward, we'll see this trend for a couple more quarters, right, with these regions that are performing well to continue to perform well, and these other 2 regions, that is basically the Americas, right, going to be a little subdued.

Next question comes from the line of [ Shubham Patidar with Tamohara Investment Managers ].

I just have one quick question on working capital cycle. So it is at 182 days. I just want to ask, is it -- are we standing at the top end of the spectrum? And is it going to go down from the next -- for the next quarter, or is it going to still go up for a little bit?

Yes, we believe this should be the peak-out for this working capital. From this level, it should ideally come down.

[Operator Instructions] The next question comes from the line of Jay Patel, an individual investor.

Congratulations on a good set of numbers. My first question is regarding, sir, our thought process for backward integration. So we have backward integrated at Ankleshwar. And now even at Solapur, we are doing a significant backward integration for 400 KL. So just wanted to get your thought process around that. Is it for -- to protect our margins or you want to derisk your raw materials from China? So your thought process would be good, sir.

So it's for both. I mean, there is a margin benefit also, usually. But it's also, where we've got a pretty substantial business, right, and a narrower supply base, there, we don't want to risk it. And so we are going to -- we're going in that direction and -- by backward integrate.

Right, sir. And sir, secondly, there is a lot of chatter regarding U.S. BIOSECURE Act. So many players are very much hopeful about Indian pharma industry, U.S. really wanting to derisk from China. So how do you see this, sir?

Yes, it's certainly going to be positive, right? The Act has not passed, right? But with enough awareness in the pharma community, right, in terms of how the U.S. is thinking about this whole thing, right, I think the word has already got around that people need to derisk, if they are completely dependent on just China alone. So that has gone well, I would say, and that momentum has picked up. So people -- it's going to, I think, be a positive thing for us going forward. I mean, we've seen -- we've definitely seen more interest, right, even on existing commercial products, more inquiries. And I would say that it's because of this.

Sure, sir. And sir, last question is regarding high potent API and as well as the iron complex molecules. So sir, what is the competitive scenario domestically in India? And the broader question related to that would be, do we have -- do we choose our products, newer products based on competitive intensity or market size? So just wanted to get a sense of how do we choose newer products?

Okay. Let me just address the iron complexes and high potency. Iron complexes are complex molecules. It's very difficult for anyone, everyone to do it just like, let's say, small molecules are done, simply because in order to establish equivalence with the innovator, the amount of characterization that has to be done has to be very significant, okay? So iron complexes -- so basically, the bar that agencies like USFDA put is very high in terms of establishing equivalence. And that's why the competitive intensity is pretty low, okay, in these complex molecules. As far as high potent goes, it's a different -- sort of, it's a different approach you take. We basically target getting in early with customers, right? And because the R&D investment is quite significant, basically it's how quickly you can lock in the customers. And if we are able to lock in a good number of customers at the beginning, then you end up getting a sustainable business over the long term. So that's how that game is played. As far as the domestic market, we don't do much, frankly, in the domestic market in either iron complexes or in terms of high potent, right? We are largely targeting the export markets and the India [indiscernible].

Sir, actually I was asking regarding competitors -- Indian competitors in these segments.

Yes, so the high-end companies who are operating at our level in terms of quality, regulatory, those players are our competitors. And -- but then there's a handful, right? You don't have like everyone that you find on Google can be a competitor for us, right? That won't happen.

Last question comes from the line of Dileep, an individual investor.

Congratulations to the company and the management for good numbers to see in this quarter. I have a very specific two questions. The first question is that will the company pay the dividend this year as they used to pay? Last 2 years -- and some dividends have been paid -- but I think last year the dividend has been not paid. That's one question. However, they would be -- I mean, they are in a position to pay because there is a lot of cash available with the company, almost close to INR 500 crores cash I could see from the figures. The second question, what I could see that the change in the management and the ownership from the Glenmark to the Patels of Nirma, it has gone to that company. And I believe the new management, they have a lot of expertise in chemicals, pharma and many other areas, supposed to be having a lot of keen interest in such kind of pharma companies, so probably they have acquired. That could be my guess. So any idea -- being a top management, any idea if they are going to have some kind of a forward integration, any kind of a pharma formulation things, sectors in future, they would like to go? These are the very simple two questions.

Okay. So Tushar will comment on the dividend question. As far as the management of Alivus goes, right, the management remains the same, okay? We have been -- this management team has been running the company for the last 6 years. And Nirma, who has come in as the majority shareholder, continues to back this management team, simply because we've got the track record and they like our approach with respect to the business so far and the plans that we have to take the company forward. They do bring in a lot of very good experience and understanding about the chemical business, and that will certainly play a very important role when we get into more automation in terms of handling, let's say, if we get into larger high-volume -- larger volume products. So that benefit will certainly come to us as a result of Nirma's ownership of the company, okay? So -- but directionally, it's the same approach with the same management team that is going to continue to drive the company. Okay. As far as dividend, I'll hand over to Tushar to give an answer. Thank you.

Yes, the dividend till last year as till the time we were a part of Glenmark Pharma was also from a requirement for upstreaming the cash to the parent company, and that's why the dividends used to be higher at that point of time. There is no such direction at this point of time from Nirma. And in fact, as Doctor mentioned in his earlier comments that the cash on the balance sheet is going to be used for future growth capital investment. So dividend may not be as high as what it used to be in the past, but it will certainly be there to some extent moving forward.

Thank you. On behalf of Alivus Life Sciences Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.