Alkem Laboratories Limited (ALKEM) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Alkem's Q3 FY '26 Results Call hosted by Motilal Oswal Financial Services Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Tushar Manudhane from Motilal Oswal Financial Services Limited. Thank you, and over to you, sir.

Thanks, [indiscernible] Ira. Good evening, and warm welcome for third quarter FY '26 Earnings Call of Alkem Laboratories. From the management side, we have Mr. Sandeep Singh, Managing Director; Mr. Vikas Gupta, CEO; Mr. Nitin Agrawal, CFO; Mr. Kaustav Banarjee, CEO, Alkem MedTech; and Ms. Purvi Shah, Head of Investor Relations. Over to you, Purvi.

Thank you, Tushar. Good evening, everyone. On behalf of Alkem, we welcome you all to today's quarter 3 FY '26 results call. Earlier today, we released the financial results, press release and results presentation all of which are available on our website and have also been filed with the stock exchanges. We hope you've had a chance to review them. Before we begin the call, please note that this call is being recorded, and the audio transcript will be made available on the exchanges and on our website shortly after the call concludes. Also today's discussion may include certain forward-looking statements. So this should be viewed in the context of the risks and uncertainties associated with our business. Since we have made a major acquisition announcement today for Alkem MedTech, we also have our MD, Mr. Sandeep Singh with us on the call, who will throw some light on the same. And all the questions pertaining to the MedTech business will be answered by Mr. Sandeep Singh, along with Alkem MedTech's CEO, Mr. Kaustav Banerjee. So with this, I now hand over the call to Mr. Sandeep Singh.

Thank you, Purvi. So guys, it's great news that we have got into medical devices. I think after biotech, this could be one very valuable subsidiary that we will create in the long term. I would just like to share some facts about this market. And then, of course, Vikas will talk about the business operations and then we can go through Q&A. So largely, Medtech in India is a $10 billion market with significant headroom for growth. And India is still an underpenetrated market per capita is $7 for India. It's $50 for China and even Brazil is at $40. So we all know there's large headroom left in India. There are technology advances leading to propulsion of in use cases across disease areas. And there's low competitive intensity historically smaller value pools, limited tech know-how and lack of ad-scale domestic players even yet. And let's not forget, med tech can be like generic version 2. And India can become a supplier globally to the best parts of the world to the most advanced countries in the times to come. So a shift towards localized manufacturing and emergence of Indian players will happen, and we are very sure of it. The 2 areas which you want to focus is [indiscernible] cardio. And though I spoke about India, but play is global. I believe [indiscernible] and Alkem Medtech both can be value accretive, not just in valuation, but even on pure EBITDA margins. in 4, 5 years, both businesses will have an EBITDA margin of 25%. And with this, I'll pass it on to Vikas, and I'm happy to take questions later on.

Thank you so much, Mr. Sandeep. Good evening, everyone, and thank you for joining us for Q3 FY '26 earnings call. In Q3, we delivered a stable performance in a dynamic operating environment, supported by strong fundamentals in our domestic business and consistent execution across our international businesses. We remain bullish on the growth opportunities in domestic as well as in the international businesses and are on track to deliver our full year guidance. We are seeing good revenue growth across our core markets -- core markets. So in domestic market, if we look at our YTD numbers, we have grown at close to 10%. During Q3 of last year, we undertook major adjustment to our distribution setup in certain areas which was aimed at strengthening the channel effectiveness and improving the service levels and supporting overall long-term growth. So we had realized certain sales in Q3 FY '25, which led to a high base for that quarter. So if we adjust the base effect, there has been a still strong double-digit growth of domestic business that continues even in Q3 of FY '26. Our chronic business is seeing very strong growth trajectory both YTD as well as quarter for this year. We also have carved out our Alkem wellness business as a separate entity, which has seen certain However, our prescription business is growing at a strong rate, which is reflected in IQVIA data as well. We continue to gain market share across specialties as reflected by the prescription research data as well. I will now present some of the key highlights for Q3 FY '20 financial performance. The total revenue is at INR 37,368 million with a Y-o-Y growth of 10.7%. International sales were at INR 12,157 million with a Y-o-Y growth of 26.6% and by India sales, like I mentioned, is looking at Y-o-Y growth of 5.5% with 24,959 million. EBITDA margin of 22.2% in and EBITDA stands at INR 8,280 million with a 9% Y-o-Y growth. R&D expenses for the quarter were $190 million, which is 3.7% of the total revenue from our operations. PBT was INR 7,812 million with a Y-o-Y growth of 7% and net profit at 360 million with a Y-o-Y growth of 1.6%. There is an exceptional item for the quarter, which includes the impact of INR 528 million on a preliminary basis related to the notification by the government of India regarding the labor codes. According to IPA data, we have outperformed IPM in 6 therapies, which is anti-infective, which is our core. We are growing 1.4x vitamins and minerals, we are growing 2x of the market. pain at 1.4x antidiabetic is 1.2x. But if I adjust for the GLP-1, it is more than 2x of the market. Respiratory 1.2x and Derma 1.8x. So we are seeing a very strong trajectory, both in ITV as well as internal business performance. We are encouraged by the opportunities ahead, supported by our expanding portfolio upcoming launches and investments in the new growth areas. We will continue to navigate the evolving operating environment with Agility. Thank you for your continued trust and support. I would now like to hand over the call to the moderator so that we can open the session for questions.

[Operator Instructions] The first question is from the line of Damayanti Kerai from HSBC.

My question is on MedTech to Sandeep. Sandeep, you clearly mentioned this could be generic to in terms of growth opportunities, which are available. And from Alkem'perspective, I just want to understand what kind of scale you want to build over the next 3 to 5 years? And then what kind of investment or costs will be required to build that stream?

Sure. Thank you. So yes, I do believe in that. So in the next 3 to 5 years, revenue could be around INR 1,000 crores and EBITDA would be around, say, 20%, 22%, 25% would take higher. But since the question was 2 to 5 years, I've answered that. And Kaustav, we can give more color to it, please. Go ahead

Yes. So if you look at from the business of ortho and cardio, our ortho business is more like organically growing, and we just introduced and the tech transfer product that we did last year, that is under manufacturing, and we expect to get in the end of end of June next year. If I give you a volume perspective, we should be around 10% of the market by in next 5 years' time. And if you ask me in terms of numbers, that would be around 250,000 implants in 5 years, cumulative numbers. So it will be a very strong growth. And we have already launched the product, the Indian brand manufactured product in the second quarter of this year. And if you look at sequentially, we are growing at a number, which is 50% quarter-on-quarter. if I look at the overall EBITDA, I think, which Sandeep already mentioned.

And your question was on incremental cost? So I think more or less, maybe it will take INR 200 crore, INR 300 crores more of investment in the next 3 to 4 years. Significant investment, I would say, is almost done.

Yes. So out of the INR 200 crores expected spend majority are already done. That's what you're seeing?

Yes.

Okay. Just continuing with that, we understand the Medtech is very different in pharma. So what gives you so much confidence that you can really scale of big just a matter of just 3 to 5 years? And what could be the major challenges if you can to talk on this business?

Yes. So Kaustav, maybe you can go ahead. But I'll just say this that, of course, it's different. Therefore, we have a different team. We have a different company. And that's why we acquired this company because those skill sets, we don't have it. So we are very clear about it. We will run it independently. And it is different, but it falls in the health care Yes, Kaustav, please.

Yes. So if you look at MedTech, we are in the process of building the team. And also, we have already built the team -- and the people we have brought in are from large global companies with significant experience, anything between 15 to 20 years. And if you look at -- look through my background, you will see that I have grown in the medtech sector before joining chem, and I was hired to build this portfolio. I have spent around 26 years into medtech. And starting with large 3 global companies, Medtronic, Strueber, and then Zimmerman. So it has been -- and I have worked through cardiology and orthopedic all through my 26 years before Alkem.

The next question is from the line of Saion Mukherjee from Nomura.

If you can provide some more color on this acquisition of PTC. If you can give some history about the company, the product segment geography, any concentration risk. And we on the profile, if you can just talk through the strategic rationale for this particular deal as to how this will sort of help in your long-term aspiration? And then the financial metric, how does it make sense that it is -- what's the EBITDA margin for the company whether it would be earnings security or not. If you can give color on that? And any breakeven time line for these?

Good questions actually from your side. So we start with the rationale and what the company is about. Very briefly, this is a research-oriented company, which has solve one of the biggest metric problem in the world, which is being in high entry market warier markets. [indiscernible] viral markets, which is -- which include United States and Western Europe as well as Japan and Australia. And this segment is a very niche segment of cardiology. So for us, it's more like a platform. So if you look at intervention cardiology this is a subsegment of that intervention catalog where the crudes, which is basically treating the sector effects of the heart. And the 3 primary areas is definitely #1 is atrial septal effects. Number 2 is the treatment of heart failure. And number and prevention of stroke. So that's a therapeutic area. Now why this is important to us? This is -- in this particular segment, they are the third largest company in the world. And given there are revenue coming from Western Europe and U.S. to the to of 85% of their total revenue, it's a very, very strong portfolio, which is waiting to be expanded across the group. And in Europe, this company is already holding a #2 position. Apart from this, this company has a very strong R&D setup, with their own research lab, multiple research lab, own clean room and own testing facility, which is not very commonly seen any of the other companies that you come across in the segment. And as a result of this, this company has a very strong product pipeline, and 1 of states product pipeline is another true which is lifted til appendage whether revenue in the -- I mean the global market size is $1.4 billion. And which is a oligopolistic market today, I would still say opening being shared by Abbott and bottom entity. These are 2 companies which are leading this crude segment, and this is a product which is in the pipeline, we'll be very soon getting approval. Another important thing you need to recognize while they have gone into U.S. just in the last 1.5 years. And within this one we've got one product, they have already achieved 5% market share. is about to be launched, and we are expecting a market share. Again, we are expecting approval by 2027, that can significantly help us scale up in a high-value market. Now coming to your question on EBITDA. First, this company is already EBITDA positive in the comparison year, which is financial year -- sorry, calendar year 2026. And our estimate is to have 10% EBITDA by FY '27, which will take us to around 23% to 24% in 3 years' time. And our market share, if you see in Europe already is 23%, and we expect to replicate the same experience in the United States and given the company do not have significant presence in emerging markets, that's a huge opportunity for us to grow. So if you have more financial question, we can ask I think would answer please go ahead.

I just wanted -- like you've got 55%. So who owns the company? And why not only 100%, is there a plan to own 100% at some point in time?

So if you look at the shareholding, there are around more than 150 shareholders currently in the company and majority around 32% is held by the founder himself. And so the reason why we are buying 55% because the balance shareholders, they want to retain their shareholding and the gain is part of the, say, value creation, which we are going to do in the next 5 years together. So the current management will also continue the current promoters will also grow the company along with us and maybe over a year, would say, next 4 to 5 years, they may look for an exit. But as on date, there is no such plan and they want to grow the company with us. So that's the reason that we are buying 55% stake. But yes, maybe after 3, 4 years, we can again look at buying the balance stake from them.

So 30-odd percent for the promoter. The promoter is still owning that with stake?

No, he can sell some part of it. But definitely, he will own a significant stake after we take control.

Okay. Can you share like how much stake we would own after the transaction?

So we will share once we sign the SPA, still in that discussion process. But yes, but we will -- overall, we'll acquire 55% stake that has been decided. In terms of the promoter stake, how much they will continue, that exact number will come to know once we reach the signing of SPA stage.

And the promoter will continue as the CEO of the entity. Is that like already

Yes. So the plan is that the same management will continue. And definitely, we have taken a commitment from him to continue at least for a year. And even for the other management say senior management staff also the commitment has been taken. So the plan is that this company will run as it is because of the strength we have bought this company, their R&D and manufacturing capabilities. And as Kosta said that there are a lot of opportunities to use the brand name of Acrotech and launch more number of products in the structural heart and other similar cardiovascular segment. So definitely, this is a big, big brand, which we have bought, and we want to retain the brand image.

The next question is from the line of Neha M. from BofA.

Sorry, I missed the number for what is the incremental investment that we are planning on growing the due assets?

So the initial investment will be of around INR 1,100 crores. But yes, over 2 years, since we want to also explain a few of the R&D projects as cotesthat they have L.A., which is a great product in this segment. And we want to definitely eat launch of LA in at least in Europe market over the next 3 years. So we will maybe invest INR 100 crores to INR 200 crores more over next 2 years to fund their R&D program. But definitely for -- I think, a at the operations level, they will be cash flow positive, and there I don't see any challenge from operating cash flow.

And this INR 100 crores to INR 200 crores is largely R&D?

Yes, mostly to fund or accelerate their R&D program. EBITDA positive. I think there are some concerns on the PAT numbers because they have a loan also in their books of around INR 450 crores to INR 500 crores. The loan is currently at 10%. But yes, definitely, we have plans to reduce the interest loan since Alkem such the cash equity in the market. So definitely, the PAT will also improve once the loan is supported by the corporate guarantee on us.

And because we plan to launch more, I think the products that you mentioned in '27 in U.S. and expand in other markets that wouldn't require to much investment or that would be over and above this INR 100 crores, INR 200 crores...

No. So as Kaustav spoke about, PFO launch in U.S., that will be June '27. So most of the R&D spend or investment on that project is already done. So we are just waiting for the approval to come and we will mostly launch that in June -- from June '27 onwards, we'll start marketing that product

Okay. So what in time on it is this INR 200 crores number includes all marketing spend as well

Yes, yes. As we said that we are already, say, if you look at cash flow at the operating level, we are already -- we have positive cash flow. So we don't need to invest further in sales and marketing. The current business can manage its own sales and marketing expenses. But for R&D program and to accelerate the R&D program, definitely, there will be some amount of investment which we will do in the clinical trials and also the clinical program.

And what would be the payback period for this acquisition based on your initial assessment?

See, as we said that this will be more for us. This will be a platform to access developed markets like Japan, U.S. and Western Europe. And there is a plan to also launch more number of, say, product in cardiovasculars using this platform. But if you don't consider the additional portfolio which we are going to launch, or you don't consider L.A., which is a big opportunity. The payback is around 1010 years on this asset. But after considering L.A. or a new set of products, which can be launched under this platform, the payback will significantly be lower. As I said, it keeps 10 years, it can be significantly reduced. But it's very difficult to predict as of...

Okay. And sorry, my last question. The additional cardiology assets that you're mentioning, are we looking at more acquisitions, asset acquisitions to add on to this portfolio? Is that the eventual idea other than what 's there in the pipeline for...

The idea is not about acquisition. So when we get a to understand the business, and this company is very well manufacturing, a simple scaffold kind of technology will be based on Micronor. There are many existent technology to that which can be very easily manufactured by it doesn't require an inorganic acquisition, but product can be developed and manufactured through the same organization because they have already mastered one of the most difficult skill of delivery system. And given that they have already done it, I feel that whatever investments in R&D, Nitin mentioned, that should help us and suffice to introduce our newer products.

The next question is from the line of Kunal Dhamesha from Mcquarie.

The first question on the domestic formulation business. Dr. Vikas alluded that we had some higher base last year same quarter. But if I can say last year same quarter also, we had kind of mid-single-digit growth, right? And if I look at the 2-year CAGR, removing that whatever the restructuring we did are still at mid-single-digit growth, right? So what is happening in our domestic formulation business? I mean now that continues to grow at a lower level, much lower than the IPM level

So I would disagree here because if you look at our YTD numbers, I think we are close to 10%. And if I split that out even further, like I mentioned, we have this year some headwinds in the generic business. maybe carve it out as a special separate entity. So if you remove that, we are actually close to around 11% or 12% in that range. Now in a market which is growing at around 7.5% to 8%, YTD numbers are looking at around early double-digit kind of numbers. So in fact, we are seeing very good traction across segments within our domestic business. In chronic which always has been a quotient that people have used or whether you look at IQVIA numbers, whether you look at our internal performance numbers, I think it's -- the growth story is at it's high. We have a high teens kind of growth that we are registering in our overall chronic segment. So I think...

On YTD basis, on widely basis, we also have [indiscernible] adding the inorganic growth in Bombay or also getting aided, right?

That's hardly -- if you ask me the number of IT for Android had crores. So that's not a very big number, which is -- even otherwise, if you look at our prescription business is seeing very strong growth. And you can see even at in IQVIA. So we have I think we do not have any challenges. In fact, our growth is very good -- we are very bullish. On the same, in fact, now with we all getting ready for semaglutide launch also, which will be -- we are also geared up for day entry into semaglutide. So -- and in fact, that would require addition of some people, but even in other therapies, looking at our growth trajectory we are very bullish on our domestic market, and we will add some more manpower to drive the growth further in the coming years as well.

Sure, sir. The second one on the Ocelote business. How will the gross margin profile of the business? And when we say that will improve the EBITDA margin from around 4% to more like 25% over the next 3 to 5 years. Is it more driven by operating leverage, gross margin improvement and -- does the company have manufacturing facility if you are very wet and what kind of utilization it is currently [indiscernible]

Yes. So first of all, the gross margin of the company is as of now, close to [indiscernible] -- there are multiple things that will be driving our margin going forward. definitely, one of them is operating leverage. And number 2 is there is a lot of opportunities to optimize cost, utilizing the significant back office that Alkem already has including the GCC. And also, one of the things we need to recognize that there are certain new products that will be introduced in very high ASP market. For example, when we launched our CFO in U.S. And the ASP is almost to the tune of $9,500. And number four, that is going to drive the margin going forward, we recognize the fact anything that is labor-oriented or that can help us will lever arbitrage or anything which is labor-intensive process, we will move to India, but we still want to retain the organizations international DNA. So we will continue to make investment on optimization, but ASP increase coverage, operating leverage and utilizing Alkem's strong back end to reduce operating costs.

And sir, regarding the manufacturing facility?

Yes, the manufacturing facility, as I said, it will take time because it is also regulated. And already, currently, it is in Germany and Turkey as well. And this manufacturing facility will continue to operate and eventually, we will see opportunities to utilize -- optimize.

Sure, sir. And lastly, the INR 400 crores, INR 500 crores debt on the balance sheet, which is at a high interest rate. So is there a plan to kind of provide loan from the Alkem balance sheet by the lower percentage point? Or you would refinance from the market? How should we think about it?

So we will not provide loans from Artica. -- but definitely, we will get it refinanced with help of quarter guarantee, the rate can be reduced from current 10% to 5% to 6% easily and this is the way we pay for our other subsidiaries also for working capital loans. I guess to answer your question, it will not be from Alkem, but it will be a refinancing.

The next question is from the line of Mikel Marco from HDFC Mutual Funds.

So I wanted to understand the India numbers a bit better. So there is a divergence what you were suggesting between the primary sales and the secondary sales -- so 1Q, 2Q were much better possibly on the secondary side. And so on the primary side in this quarter, the primary is worse than secondary. So any particular reason for this divergence between the 2? And when do you see this normally getting corrected in the business?

So let me clarify it once again. There is no divergence or no anomaly in this number. If you See, it is just a cutoff adjustment. When we had changed our distribution setup in last year, Q3, there were certain markets where we could realize the -- it is just the spillover impact which already got corrected in Q3. So there is no divergence. It is looking at a life of 5% growth. But if you see YTD this year numbers, there is no divergence in primary and secondary -- and YTD numbers are 10% kind of growth, which is overall domestic. And as you know, in our overall domestic, there is a large component of the generic business as well. Now that generic business this year has been more flattish. So if you look at only the core business, the branded generic business, then the growth trajectory is strong. It is early double-digit kind of growth -- and we are also bullish of ending this whole year also at that number only. So just to clarify, there is no divergence in any primary or secondary. It is just because last year, because of the cutoff base impact Base impact in the last year Q3 because of which only this quarter is looking a little sluggish. Otherwise, there is no -- I hope it is clear, Nickel.

So you'll be back to a 10% growth level from 4Q. Is that right?

So we are already at YTD also, we are at that number and Q4 also will be that because that base was only which got corrected. Now after that, it has been the same cut of principle that we have followed. So even in Q4, you will see touch or if everything goes well, a similar

Just to add what Dr. Gupta said, if you look at billing to billing growth for the quarter, it was 10% plus for the prescription business. So it was just because of the cutoff adjustment that the reported growth looks lower. But billing to billing, if you look -- if you compare the growth, it is 10% plus for quarter 3 also.

Understood. And so slightly medium term, let's say, FY '27, FY '28, now this generics business, I don't know, I mean, if we want to grow this business or not, -- would it drag your overall growth in FY '27, '28, if you...

See, as I said, it's a large business for us, and we would definitely want to grow it. Of course, because we had carved it out as a separate entity, whenever you do that, we have seen that in the short term business goes through certain headwinds. And even in the market, you know that it has become a highly competitive market. I think we will be back to our high single-digit to early double-digit kind of growth, even in generic business, from next year. So this year, we have taken conscious calls also in the interest of keeping the margins intact from that business. So we are very hopeful. So overall, if I have to give you a domestic story picture, then we are very bullish on this. I have always maintained that we will continue to grow at 100, 150 basis points more than the IPM growth. In the recent months, we have seen even IPM growth getting recovered. So -- and similar trajectory, we are seeing actually in the recent months in our overall domestic business as well. So I think this kind of growth would persist and continue even in the coming year.

Got it. And I want -- I have a question on [indiscernible] as well before that. Just a final question on the core business. So you are at 66% gross margin now. If I look at 9 months, somewhere around 6% or 6%. So any particular guidance on the gross margin going into FY '27, '28, especially in light of the MIP that has been announced for Pen and its derivatives -- does that get some sort of a headwind?

So see, of course, MIP is a very recent event. We are just waiting and seeing how the market pricing would unfold. If the India players increase their supply then clearly, the cost impact would be lesser on our balance sheet. But as of now, the way it looks like, it looks like overall, close to say, INR 80 crore to INR 100 crores impact, but some of this would get -- should get notified by some of the market pricing because even our trade generic business, we have a big portfolio on that front. So we can pass it on to the customer. So we will try and see how we minimize that impact. And then there will be certain other products as well, where we are working on improving our overall procurement. So I think put together, as of now, we are looking at, say, a similar guidance on the gross margin, maybe 0.5 to 1 percentage basis points are there. But we'll try and -- we will actually get to see it closer to how the market unfolds in the coming quarters.

And how many months of inventory do you hold of these derivatives?

We have close to 5 -- 4 to 5 months of inventory with regards to the number of days.

Got it. I have a set of question on Optical. Sandeep, sir, historically, Alkem has been very conservative with regards to capital allocation. Only a it we are seeing these acquisitions -- what gives you confidence on these acquisitions, especially this 1 I mean your conservative nature and the competing loss rating, it seems a bit departure from your past practices.

So you said many acquisitions. So I think this is the first one, not many. You can't count Bombay or Canara. Don't even bring it up. So this is the first one. And many times, you all were kept asking that you should acquire and acquire. So maybe we listen to you. Now what gives me confidence is what we -- answering the first question, I think we believe in people,we I think -- we have the best people in the medical devices. We have acquired a company, which I'm kind of repeating. So this is not an in-house development or in-house management. This is an acquisition not only of company but of talent. And yes, and Costa can add on that, if you want anything.

Sorry to interrupt sir. Please return to the queue. [Operator Instructions] The next question is from the line of [indiscernible] from DSP Mutual Fund.

Sir, when you think about the acquisition in 3 years, this incremental growth that is going to come, is this is going to come in similar markets or similar products in new markets? If you can just flesh out some details here. That will be helpful. And the second one was that as and when you get comfortable with the share purchase agreement, we need a lot more color around how the balance sheet looks like, what you paid and what the historic financials of this company look like and maybe some literature around what product approvals they have, et cetera, that will really help because this is a fairly large acquisition, large capital allocation, but a lot more details required the feedback. I just wanted to sort of...

Yes. So your -- I'll take the first question. First, that is your question on how are we going to grow, right? So fundamentally, there are 3 things that will drive our growth. One is definitely newer products that will be introduced, which are awaiting regulatory approvals. For example, PFO in the United States, which is a very large opportunity. Similarly, increasing the footprint in emerging markets. That's the second large opportunity that we have with this product. And third thing is we will -- it's about going deep into markets where we just have a little bit of presence where we have low market share because Western Europe, we already have a very good -- very high market share. Thereafter, APAC and EMEA are the markets where we have the headroom to grow. So multiple factors. And you said the PF launch and deeper penetration with ASD.

Did you flesh out any guidance for these numbers on the next 3 years kind of growth? ?

Around INR 600 crores, we are estimating in the calendar year '26. And then subsequently, we will grow that number up to INR 780 crores in -- yes, approximately 14% CAGR about -- for the next 5 years.

And this 15%, 14%, 15% growth, is pulled across all the 3 aspects that you talked about your domestic expansion, new markets and, of course, existing markets, the higher segmentation almost equally is how we should think about it?

It would be difficult say equally because in certain markets, you will drive higher volumes may not be at the very high ASP and certain markets like U.S. that will have very high ASP may not be at the same volume. So it would be distributed. But largely, our estimate is we'll grow at 14% CAGR over the next 5 years.

Just to add on what Costa said that this 14% CAGR is without any new product as we have alaalso in our product pipeline. And also without adding any portfolio, any addition to the portfolio like we can add Cavion or other products also. -- going forward. So 4 CAGR is only from the existing products.

I understand the reason I'm deliberating on this point so much is that the execution holders across these 3 markets. is very, very different, right, getting products in our markets versus making our developed product market holding India, what all of these are very different execution projects, right? So -- and I guess the point that you polish about the business -- so when you think about just you have to send over this time, we have some sense on or taking among these 3 verticals [indiscernible] contribution comps.

We are already having a full 1 team with a protease acquiring 55%. The team remains the management continues. And we would like to continue with the DNA of our international companies.

The next question is from the line of Tarik Sallerom Equirus Securities Private Limited.

I just wanted to understand on active. So we are moving this acquisition from something effective, what do they expect what we will be adding a overall What we are going to add as a value

Yes. So definitely, number 1 is we are going to put muscles into the company by making investments. We are a strategic investor into it. Number two, we are going to add is in terms of the Alkem strength in building organization sector of the globe. And third is Elkem's large infrastructure and DCC to reduce the SG&A

When we say to reduce SG&A, what exactly we are doing there per se because we don't have a manufacturing facility. So what exactly we are pursuing there?

SG&A is outside manufacturing. We are talking about cost of sales -- so cost of sales, eventually, we will look at optimizing by moving some of the labor-intensive activity. But SG&A, I'm talking about is more on the expenses side, admin expenses side for the support function.

Right. And when it comes to the future as [indiscernible] Up to even further to meet any longer or the in different if you could explain that?

No, I think so first, I mean, we will look at investments. But as you know, somebody said we have been conservative. So we are very selective -- so coming to medtech, I think more or less is done, we might look at something small, but nothing significant for sure. I think a large part is done. Yes, we will look into our core business as well, obviously, like pharmaceuticals. -- at a reasonable valuation, something is reasonable, we will look at it. But we continue to be a company which doesn't have acquisition at is the main thing. So don't look at it as we'll do some big ticket acquisitions.

Right. And what the ROIC expectations will go for future acquisition or the former side?

I think a business which generates 20% is great return on equity.

And it has a good cash on for us as well when we are investing

Yes. But just theoretical, if it's a great growth, we can compromise the return on capital. It depends, right? I mean...

And Vikas, sir, since you were mentioning about trade, are you doing an absolute number of what was our trade business during the quarter?

So I think that will -- there's no Not -- we've not called out that, but we know that our percentages in terms of our overall business, I think you know how it has been. I can say that it has been flattish for this year.

You are saying YTD, right?

Sorry?Yes.

On a quarterly basis?

For the quarter, it was flat. For the YTD at YTD level, it was low single digit

The next question is from the line of Sandeep from Sylvest.

Could you please provide some insights about the [indiscernible] and not you have recently submitted -- and as elliewhat are the recent status in the Europe region and when the Stabil be some metals?

No, great. So I mean, denosumab, we have both things, Gandria boats, nbn part quick. -- number 1 answer is that U.S. we're undergoing FDA inspection as we speak. And our entry date would -- maybe it would be later on, not during this year because of litigation with Amgen, even though there are many players, Amgen litigates on it. So U.S. entry is going to be 26 and hopefully. And Europe, we'll be entering very, very soon in the next couple of months.

[Operator Instructions] The next question is from the line of Khunal Dhamesha from Macquarie.

Mr. Kaustav, the PDA approved device, which is currently in the filing. So is it already filed? Or is it under clinical trial and we are yet to [indiscernible] and June 27, is the approval date. So June does it refer to calendar year '27?

Yes. So your question, PDA or PFO PD is already an approved product. If you are talking about PFO, the not only filing even the clinical trials, are being conducted. The results will be shared with U.S. FDA, and we are expecting by mid of June 2027. And when I say June specific like it's a.

So that's the target action date we have already received or it's a clinical trial is still going on? Silicon is done. It's the

Okay. And on the -- some of the antibody portfolio, we have here Dr. It alluded that we can pass on some of the increases, IP-related increases to customers. But my understanding is all of these products are under ADM, right? And the price increases are linked to the WTI index?

Yes, let me clarify. I didn't mention on MRP. What I said is in the trade generic business, where it is sold at a, say, a higher discount right, to MRP is where we can look at increasing the pricing. So that is there -- I mentioned we can pass on some of the cost to the customer, but I don't we will see how it goes and how it plays out in the market.

So sir, of our anti-infective portfolio, how much is in the generic division and how much is in the prescription division if you can share the percentages?

On our large brands, that's a branded generic market, say, Clavin, say, Taxximo, the injectable range, et cetera. So it's a mix. the breakup of the same, we have not shared, but we'll have to look at overall.

I say the IQVIA numbers which you get is only for the prescription -- so for generic, I think trade generic, the IQVIA numbers, they don't cover it. So you can make out IQVIA number, what is the prescription size of that.

My understanding is I do kept some of the rate, but we can take that

Some doesn't make it representative.

Yes. I agree But some gets captured yes.

The next question is from the line of [indiscernible] from DSP Mutual Fund.

Yes, thank you for the follow-up -- so the trade generic business 9 months, the margin on that is given that we've been flattish the percentage margin on the change in business this year as last year or a

Chirag, I think we mentioned that the growth was flat for the quarter. And at YTD level, the sales growth for trade generic was in lower single digits. If you look at EBITDA, as we have given our share in previous calls also that the EBITDA for Zenix business is a 2% or 3% lower than our corporate EBITDA, but not very much suits not very different from our corporate [indiscernible] from quarter-to-quarter but on the same line that for

Understood, sir. And just the second one, sir, on the anti marking business on being the volume-wise, would the branded business be larger than the integrated business, just whatever is dependent on a.

I think we will have to do that calculation, but it's more or less similar. Because all big. So the fact will be almost similar because the volumes are higher in trade [indiscernible]

Understood. And this INR 100 crores of total number, sir?

[indiscernible] gets offset by it generally a bit higher as compared to the system, so the back on the organ.

Ladies and gentlemen, we will take that as a last question for today. I now hand the conference over to the management for closing comments.

Thank you, everyone, for joining us today and for your thoughtful questions and have tie participation. I'd like to, as you know, inform all the participants that we have organized an investor meet on the 18th of February, that's Wednesday, to outline the strategic direction of the Alkem MedTech and the invite will be shortly shared on the exchanges with the registration link. So kindly register yourself, and we wish to see you in person. We look forward to engaging further with you there, the venue is [indiscernible] So you'll have all the details on the registration form. And please feel free to connect with us and get if you need any further help. And should you have any follow-up questions, you can reach out to us. We appreciate your continued interest and support. Have a pleasant evening and a happy weekend. Thank you.

Thank you very much. On behalf of Motilal Oswal Financial Services Limited, that concludes this conference. Thank you for joining us today, and you may now disconnect your lines.