Eris Lifesciences Limited (ERIS) Earnings Call Transcript & Summary

Thank you. Am I audible?

Yes, sir.

Great. Good afternoon, everyone, and welcome to our second quarter conference call. I'm Krishnakumar, and I'm happy to share the highlights of the quarter with you. As per the AIOCD retail audit, Indian pharma market grew at 15% in quarter 2 of this year, but this was on a low base of 1% growth in quarter 2 of last year. The 15% growth in quarter 2 was once again led by acute therapies, which enjoyed the benefit of a low base effect from last year, along with the surge of infections like H1N1, Dengue and Chikungunya after the wave 2 of COVID subsided. I'm happy to share that Eris grew at 11.4% in quarter 2 of this year on top of a 7.4% growth in quarter 2 of last year. We have also been looking at how our business has performed from pre-COVID levels. The Indian pharma market, from its pre-COVID level, has grown at a CAGR of 8.3% and this is excluding the COVID molecule, favipiravir and remdesivir, which were transitionary. Compared to this, Eris has grown at a CAGR of 12.2% from pre-COVID levels, which is nearly 400 basis points ahead of the market growth. The therapy-wise breakup of this growth is available in our investor presentation. And on this basis, Eris continues to feature among the top 10 fastest-growing companies in the market. In quarter 2, the chronic segments of IPM grew by 8%, which is a significant decline from the 20% growth witnessed in Q1. Eris' Chronic portfolio grew 15% in Q2, which is nearly 700 basis points ahead of the market. The cardiometabolic market grew by 4.7% in Q2, whereas our cardiometabolic portfolio grew at 12.7%, which is nearly 800 basis points ahead of the market. In CNS, our Q2 growth was nearly 40%, which is nearly 4x of the market growth of 11% during this period. Our V&M segment grew at 6.3% in quarter 2 versus a market growth of 7.6%. In terms of financial highlights. Our consolidated operating revenue for the quarter was INR 360 crores, which represents a growth of 9% over quarter 2 of last year. The consolidated operating revenue for the first half grew by nearly 14% to INR 709 crores. Our branded formulations sales grew by 7.3% in the quarter and 13% in the first half of this year. I'm happy to inform you that our stand-alone YPM has increased to INR 5.13 lakhs in the first half of this year, which represents 11% growth, up from INR 4.6 lakh in the first half of last year. Our Q2 consolidated gross margin stood at 81.5%, and it has improved by 88 basis points from Q2 of last year. Our stand-alone gross margins in Q2 have increased by 192 basis points to 84.2% compared to last year. This has been on the back of a favorable product mix. At an H1 level, stand-alone gross margin stands at 84.5% and consolidated gross margin stands at 80.9%. During the first half of this year, stand-alone other expenses grew by 12.3% and consolidated other expenses grew by 14.7%, led by a gradual normalization of field activities. Our doctors tell us that more than 80% of the patients are physically back in the clinic, the interaction between our people and medical practitioners has also been restored to the physical format. Even the CMEs have started to slowly return to their original formats. Consolidated EBITDA for quarter 2 stands at INR 140 crores, representing a growth of 12.1% over the corresponding period of last year. Stand-alone EBITDA margin stands at 42.5% in Q2, representing an increase of 294 basis points compared to the Q2 of last year. This is largely owing to the expansion of gross margin, as I mentioned about. Consolidated taxes for the quarter stood at 9.5% compared to 7% in Q2 of last year on account of the reversal of deferred tax liabilities. Consolidated net profit for quarter 2 stands at INR 118 crores, which represents a growth of 10% over Q2 of last year. Consolidated net profit for the half year ended September '21 stood at INR 225 crores, which represents a growth of 14.4% over the first half of last year. Our stand-alone debtor days stood at 39 days at the end of quarter 2, and our treasury balance as on 30th September was INR 519 crores. We continue to enjoy significant tailwinds from our Power brand portfolio. At the end of quarter 2, 9 out of our top 15 mother brands were ranked among the top 5 in their respective segments. Our latest generation diabetes products, Zomelis and Gluxit, continue to deliver resilient performance. They continue to maintain their #1 market position among other generic brands in their respective segments, and they ranked #3, including innovator brands. Zomelis, our brand, and Vildagliptin space has crossed annual sales of INR 54 crores as of September 2021, and its monthly sales run rate has grown to INR 6 crores a month. This represents a scale-up of 6x in less than 2 years since acquisition. Gluxit, which was among the first generic brands of dapagliflozin to be launched in October 2020, has crossed INR 25 crore of revenue in the first year of its launch and is run rating at approximately INR 3 crores of sales per month. Zomelis has now been a part of our portfolio for nearly 8 quarters and Gluxit for 4 quarters. Hence, this is the last quarter where we will talk about brand-specific details for Gluxit and Zomelis. Going forward, we will continue to showcase both these brands as part of our larger cardiometabolic portfolio, pioneering and supporting medical innovation has always been part of our DNA. After having lived through hundreds of thousands of webinars since the start of the pandemic, there was a dire need to rejuvenate the CME format in order to keep the medical fraternity engaged and excited. I'm happy to share that Eris has supported a first of its kind initiative in this regard with the introduction of a format called the roadinar, our first initiative called the metabolic roadinar will feature 18 well-known endocrinologists and diabetologists across the country in 9 episodes discussing topics related to cardiometabolic health. The first episode in the series is already up and available on YouTube. We are also happy to share that we have backed the prestigious award in the innovator category for digital transformation in an event kind of conducted by Moneycontrol and Network18. More than anything else, we take this as an endorsement of the business resilience we have demonstrated during COVID times with market-leading growth and robust financial performance. These were the highlights of the quarter. We can now open up for questions.

[Operator Instructions] The first question is from the line of [ Rahul ] from EV Advisors.

Sir, can you please elaborate on the product launch strategy? Also, in the last quarter in the earnings call, it was mentioned that the Q4 will be a little robust regarding the launches, is it still a scenario moving forward?

So as far as the outlook for new products this year is concerned, we had planned for 10 products, out of which we have launched 4 products in the first half of the year and we have some more launches lined up in the second half of the year in the areas of cardiometabolic, women's health and wellness.

Okay. Okay. And sir, new patent expiries, which are the new ones coming up, say, in the next 1 or 2 years?

So the major activity in this space will be witnessed in the field of oral antidiabetes where the newer generation molecules like DPP4s force and SGLT2s, those constitute a major pipeline.

Okay. Okay, sir. I got it. Okay. Sir, my next question revolves around the Gujarat facility. So what is your thought process on the Gujarat facility with sterile injectable? And to my knowledge it has also been approved by WHO. So what is the outlay plan there? And looking at the lower tax rate, which Guwahati has, will the Gujarat plan have the same?

So the thought process behind the Gujarat facility was that Guwahati is about 60% full now, if I look at our main tablets block. And we estimate that in the next 3 years, Guwahati will reach an 80% kind of a utilization at which point we definitely need a second site. So we said that we will plan well in advance, and that is the reason why we have decided that we will set up a second site. I think as a pharmaceutical company, it also makes a lot of sense to have 2 manufacturing facilities so that we don't over-depend on 1 facility. Sterile injectables is something in terms of manufacturing capability, we don't have that at Guwahati. So we are adding that in Gujarat. One of the prominent products in our portfolio, ReNerve, also has a sterile injectable formulation, which is presently being done by a third party. Once Gujarat is up and running, we can do that in-house. In terms of tax rate, the Gujarat facility will be eligible for a tax rate of 15%. So going forward, the Guwahati facility will -- FY '24 will be the last year for the tax holiday at Guwahati. So beyond that, one will see a blended tax rate come into play based on the combination of the business from Guwahati and Gujarat.

Okay. Okay, sir. And I just have 1 last question if that is fine? So could you please throw some light on the capital outlay? And also in the last quarter's call, it was mentioned that INR 120 crores to INR 130 crores will be the CapEx. Is it still the same?

Yes, that still remains the case. So in the first phase of the project, we will create a footprint, which is more or less equivalent to what we have in Guwahati. And the outlay for that remains to be INR 120 crores to INR 130 crores.

[Operator Instructions] The next question is from the line of [indiscernible] from [indiscernible] Investments.

Sir, I have a couple of questions. First is, during very expensive private company valuation, do you see more accelerated buybacks or more bolt-on acquisitions in the near future given your tax position with Guwahati plant and cash generation ability?

So I think acquisitions and licensing opportunities are being evaluated all the time. And if the right deal is available at the right price, then I think the most important parameter here is strategic fit. So we have very clearly articulated that we are not pursuing acquisitions or licensing opportunities outside of 6 therapy areas, which is diabetes, cardio, V&M, women's health, neuro and derma. So these are the pivots there. And then within there, we have several other hurdles, which an opportunity has to pass through, including gross margin profile, including size of brands, where the brands are coming from? Do they have a superspecialty flavor or are they GP brands? So an opportunity, which fits all of these aspects will definitely be a worthwhile opportunity to pursue. I think as far as deal pricing is concerned, I think we've gone over this in the past as well that the deals that are happening in the market today, especially in the domestic formulation space, they are being priced in the range of 12x to 15x of EBITDA. I think as long as the deal meets our criteria, this is not an unreasonable bank in which acquisitions can be made. So yes, we are evaluating opportunities all the time. I think only time will tell in terms of what hits the bulls-eye.

Okay. Okay. Sir, I would also like to ask how has the increase in raw material prices affected Eris and its consumers? By approximately what percentage has the product prices increased?

So out of our -- so we took a close look at this. We looked at our top 25 raw materials by purchase value. And out of this list of 25, there are only 5 raw materials, which have seen a price escalation of more than 10% from last year's levels. So there has been no appreciable impact on our gross margin so far. In fact, it's been the other way around. Gross margins have significantly improved because of better product mix. But still, as a safeguard, these 5 materials -- these 5 raw materials are where we are building a stock for the next 5 to 6 months, so that we are able to mitigate the impact of any potential price increases.

[Operator Instructions] The next question is from the line of Prakash from Axis Capital.

My question is on the growth. So clearly, while margins, gross margin and EBITDA margins are much better, so is it due to higher chronic mix, I don't know, if it's already covered, but is it due to the higher chronic mix, a, and then why still single, high single digit? When do we go to double-digit? Are we looking at double-digit growth for the second half of the year or what is the outlook?

Yes. Interesting question, Prakash. So I think there are a couple of things that play here. One is that, as you pointed out, the growth of the chronic segment crashed from 20% in quarter 1 to 8% in quarter 2. So that is one part of it. But the other part, which has also played out is that I think post COVID wave 2, there has been a of other infections like H1N1, Dengue, Chikungunya that have played out. And because of these infections, the non-COVID acute market has grown at 24% in Q2, which is a little unprecedented. So when you look at this from the stockist perspective, it has a major implication because the stockist does not want to hold an inventory of more than 28 to 30 days, everything put together. So when stockists are seeing a growth in acute, they are naturally -- they have been stocking up more on acute products and less of chronic products. So whatever secondary growth rate that you see on the IOCD, the whole stockist strategy automatically leads to a lower primary sales growth in chronic and that is unavoidable. So that is one part of it. The second part is that I think for the last 5 or 6 quarters, it has been a little challenging to get one's arms around the quarter-on-quarter growth trend, which is the reason why to get a perspective, we took a strong look at how we've been doing since pre-COVID times. And if you look at that trajectory, the cardiovascular market has grown by 10% per annum in value terms since prepandemic times, which is completely in line with the expectation. If you look at overall antidiabetes, that market has grown at 7% in value terms, which might appear slightly underwhelming. But it's important to understand why this is happening. And in the last 2 years, the OAD field has significantly expanded due to the generic versions of molecules like Vilda and DAPA. Now the flip side of this has been muted growth in terms of values because both Vilda and DAPA witnessed 65% to 70% price erosion when they went off patent. So this is a trend that is going to continue in diabetes for some time, with more patent expiration set to happen, where I think in the next 18 to 24 months, you will see very, very good volume growth in diabetes, but muted value growth. So if we consider all these factors, the takeaway for us is that both cardiology and diabetes are projected to witness significant expansion and robust growth over the long term. So notwithstanding the quarter-on-quarter variation, we are reasonably optimistic about the overall outlook going forward. Now the second part of your question was how are we looking at second half? We definitely need the market to recover in Q3 because Q2 has been impacted, as we discussed. So subject to a market recovery in Q3, we are still on track to deliver a 15% earnings growth this year. I hope that answers your question.

Okay. And the outlook on margins?

So it's a little difficult to say now because as you can see, the margins in the first half of the year have been favorable because of a much better product mix. So even after the normalization of part normalization of market activities, the margins have overall improved. I think the interplay between top line and margins is something that we will get better clarity on once we have Q3 in the back, then I can give you a much better answer. Right now, a lot hinges on what the Q3 market growth rate and hence our growth rate comes out to be.

Working capital days, I mean, last time we spoke about that are reducing it. It is still marginally up? What has really happened on the ground? And how do you plan to correct it?

Quarter 2 is usually our heaviest quarter. So quarter 1 to quarter 2, we always see an increase in working capital days, and we've had a 36% to 39% kind of an increase. This is something that we expect will get normalized at the end of quarter 4.

End of quarter 4?

Yes.

[Operator Instructions] Next question is from the line of [indiscernible] from JK Investments.

I wanted to note that the reach of Eris right now in still Tier 1 cities. In the near future, do you plan on expanding the same?

So we are present right now in metros and Tier 1, you're right. And the reason this is the case is a function of our choice of doctor specialty because we have taken a strategic call to cover specialists and consulting physicians, and you find 80% to 85% of this population based in Tier 1 and metro. So going forward, at least for the next 4 to 5 years, we are expanding our penetration and reach within the specialist and CP segment. So we will continue to stay focused on metro Tier 1. There is no plan on the horizon in the medium term to get into Tier 2 and beyond.

My next question is, can you please throw some light on how the cardio, diabetic and V&M are growing? And if you could provide guidance for the next quarter on these therapies.

Yes. So I'm happy to do that. The only caveat is, we will not be able to comment on quarter-on-quarter fluctuations because as I mentioned earlier on the call, the variations have been quite huge, especially after the pandemic broke out. So the long-term trend in all these therapies looks pretty good. So as I mentioned earlier, from pre-COVID levels, oral antidiabetes has grown at 7% per annum in value. And we do expect this kind of a 7% to 8% growth rates to continue for the next couple of years. It will be slightly muted in value terms, but it will be explosive in volume terms because of the new product launches and the patent expirations and so on. Our growth rate has been 19% vis-à-vis the market growth rate of 7% from pre-COVID levels. Cardiology has grown at 10% per annum from pre-COVID levels, which is in line with what we expect of this therapy. We have grown at 12% from pre-COVID levels. The V&M growth from pre-COVID levels has been 9%, and our growth has been 12.5%. So we believe that there is some room for expansion in the V&M growth rate as far as the market is concerned because definitely post-COVID, there has been a heightened level of awareness around wellness and supplements and so on. So the V&M market in the long term could graduate to a 10% to 11% per annum kind of a growth rate. And the fourth therapy for us is CNS, which has grown at an 8% per annum rate since pre-COVID times and our portfolio has grown at 15.5%. So CNS is again 1 more therapy where we expect to see an 8% to 10% per annum kind of a growth rate. So these are the 4 therapies that we actively track, which make up 86% of our total revenues.

[Operator Instructions] The next question is from the line of [ Amit Naik ] from [ Naik Consultants ].

So I have 3 questions. My first question is in the quarter, how far has the digital penetration been for Eris?

So digital penetration was excellent for us since the start of the pandemic because when the whole CMEs and group interactions, especially when they shifted to the webinar format. We were very quick to adapt. In fact, since the start of the pandemic, we have conducted more than 3,200 webinars covering more than 46,000 medical practitioners. And starting June, July, when the wave 2 started subsiding, we have seen that the situation has been gradually reversing. So our doctors tell us that more than 80% of the patients are basically back in the clinic. As far as the interaction between our people and doctors is concerned, that is 100% back to the physical format now. So the next step will be, in fact, we conducted an event -- a physical event involving 150 to 200 doctors a few days ago in Bombay. So I think going forward, it is reasonable to expect that the CMEs and the conferences will slowly start coming back to their original formats. There is a very, very high degree of fatigue in the medical fraternity with online and digital events.

Okay. Yes. That's very good to know. So my second question is that is there a brand substitution being observed at pharmacy level that we see that the e-pharmacy channels are being opened up?

So e-pharmacies, we have been spending a lot of time studying this market and seeing how it is evolving and how is the conduct. And suffice to say that we have concluded that e-pharmacy could be a force multiplier for us and not necessarily a challenge because as far as substitutions are concerned, e-pharmacies need to work with all pharma companies. They can't pick and choose between the top 25 companies saying I'll work with 5 of 10. So because of this, e-pharmacies do not actively substitute prescriptions. So if there is a prescription for Glimisave and Glimisave stock is available with them, they will most certainly fill that prescription with Glimisave. The only case in which substitution is observed in an e-pharmacy is when Glimisave is out of stock in their system. And at that point, they will propose -- they will actively propose something else. So they are not seeking to spoil the market. They are seeking to work with all companies.

Okay. Noted. Yes. So my last question is regarding in the second quarter as the COVID cases declined significantly after wave 2. How are the sales impacted when we look at the products, which were helpful in treating or supporting the treatment?

So we did not have any COVID products in our portfolio. So that is the reason why when we look at the market growth versus Eris a is growth, we always look at it, excluding remdesivir and favipiravir because we were not in these molecules. So our growth has -- I think the real impact that COVID has had on our growth can be expressed in terms of how the chronic therapies have grown slower than the acute therapies. That has been the direct hit for us. But at an overall market level, you can see that favipiravir, remdesivir have come off their highs. Antithrombotics segment was roaring during COVID times. That has also fallen back to normal levels. But the V&M segment, which was enjoying a hyper growth during COVID times, that has also fallen back to normal.

[Operator Instructions] The next question is from the line of Hardick from Union Mutual Fund.

I have 2 questions. First is on this -- on the state activities. In the presentation you mentioned that operating expenses have gone up to the extent of some gradual normalization in field activity. So I just wanted to check going forward, are we expecting that this will continue to go up? Or is this level basically the new norm now as far as field activities are concerned?

We can expect some more increase because complete normalization has not happened. Part normalization has started happening. And there was a bit of a myth when the pandemic started that everybody is happy to sit at home and conduct their business on over the Internet. But clearly, practical experience has told us that this is not the case. Our doctors are trying to get back to physical interactions. So that normalization just about started in Q2. And as it picks up pace in quarter 3 and quarter 4, it is likely that expenses could go up a bit more.

Got it. So it should ideally go back to the pre-COVID level in terms of both activity and costs?

That would be the expectation. I think over what time frame it happens, that really depends on if there is going to be a wave 3, and if so, then that.

Understood. Fair enough. Second question is on -- do you have a section where you have spoken about the growth drivers going ahead, where you have spoken about significantly increasing the coverage of specialists and consulting physicians. Is there a target in terms of addition of field force that you have in mind that you can share some indication on that?

So we have 2,000 reps on our roles at this time, and it is likely that in the fourth quarter of this year or in the first quarter of next year, we will add 1 more division, which will be another 200 reps. And then later on in the next year, which could be again in the third or fourth quarter of next year, there could be -- get another division added. So this is basically what we have on the horizon as of now.

Okay. And this next one -- next division that will be added in 4Q for FY '23 would be similar 200 sort of...

Yes, 200 is kind of what we have in mind right now. It will be a cardiometabolic.

With these 2 additions that we'll do, just to understand this would take care of the growth for how many years, 3 years, and then we'll have to revisit?

So that is not how it works because when we talk about your expanding doctor penetration, you don't always do it by adding new divisions. In fact, expanding doctor reach is never the rationale to add a new division. The rationale to ad a new division is new products. So our plan to add new divisions and the timing of those will be codeterminant with a significant important new products are becoming available. The expansion of reach is something that can be achieved within the existing division structure as well by simply reorienting the efforts from Part A to Part B, which is what we have been actively doing over the last 3 to 4 months. And we can also add people to existing divisions, which is not a big thing. So we -- so for example, if I take one of my divisions, which has 250 people, I can significantly expand my reach by adding, let's say, another 20, 30 people to that division, which is not a huge thing. When it all adds up, it is still a very modest effort. So that is the combination. So we haven't set ourselves a number target that we want to achieve this penetration by this time. If I look at the total specialist and CP population, our penetration is about 11% to 12% this time. And suffice to say that we want to increase it significantly. And I think the only place where we have really defined a number for ourselves is in the case of cardiologists, where we said that we will achieve a 50% expansion in the next 18 to 24 months.

[Operator Instructions] The next question is from the line of Priya Gupta from Hem Securities. Due to no response, we move on to the next participant. The next question is from the line of [indiscernible] from JK Investments.

So I have 2 questions. How are you planning to utilize these free cash flow? And what is the current field force and are we planning to increase this?

So I just spoke about the outlook on the field force expansion. But I'm happy to quickly recap, we have 2000 field force at this point. And over the next 15 to 18 months, we might add another 400 people, that is the broad outlook that we have. The exact timing is something that will fall in place as we go forward. The first leg of expansion would be quarter 4 of this year or quarter 1 of next year. And -- sorry, your other question was about?

How do you plan to utilize the free cash flow?

Sure, sure. So as of September, we had INR 519 crores of cash balance. So the capital project that is coming up, that has an outlay of around INR 150 crores. We have also been actively evaluating acquisitions and in-licensing opportunities. So there are some opportunities in the pipeline at all times. So it is good to have some cash in the bank, so that we can move quickly on these opportunities whenever they reach traction. And last, but not the least, we have clarified our dividend policy that we will endeavor to maintain a minimum DPR of 20% going forward. Towards this, we have declared an interim dividend in quarter 1. And at the end of the year -- at the end of every year, in fact, we will take a call. And if there is a case to a dividend of some more, then we will be very open to that.

[Operator Instructions] The next question is from the line of from Rahul [indiscernible] from [ EB Advisors ].

Sir, so my first question was on NLEM exposure. I just wanted to know from your end as to what update you could give on NLEM exposure. As well as there has also been an update from the government end on this. So just a thought process from your end?

Yes. So there have been 2 updates in the last 2 months. Our NLEM exposure, by the way, is at around 7%, which is by far the lowest among the top 25 companies on the IPM. I think the IPM averages 16% to 17%. So the first development happened a couple of months ago when Teneligliptin went into NLEM. And I don't think the prices have been notified yet. I think, as and when they are done, we'll have a much better assessment. But I think if you go by the usual NLEM formula, then the impact is minimal. The second development that is more recent is glimepiride being covered by NLEM. And there, if we quickly run the math -- because metformin is already under price control. So all our glimepiride-metformin combinations have already been priced keeping that into account. So the recent announcement on glimepiride has practically no impact on our numbers.

Okay. Okay, sir. That does explain. Sir, so my next question was on the revenue growth. The revenue growth has been a bit less when we compare it to previous 2 to 3 quarters. So if you don't mind, could you please provide some light on it? And also, it would be really helpful if you could provide some outlook for the future?

Yes. So I mean the revenue growth on the primary side does track the market, right? That is not a reality that we can escape. So if you look at the chronic therapy growth in quarter 1, that was 20%. And this crash to 8% in quarter 2. And we don't believe either of these numbers, right? In the long term, the reality is somewhere in between. But the other interesting thing that happened in quarter 2 of this year is that given the non-COVID acute portfolio, I'm talking from a market perspective, so the non-COVID acute market has grown by 24%. This was unexpected. And the reason this happened was post-COVID, you had this whole plethora of infections exploding, including H1N1, Dengue and Chikungunya. So what happens is when you look at it from a primary sales growth, you have to take the perspective of a stockist, right, because we bill to the stockists. And the stockist will not hold more than 28 or 30 days of inventory. So when he sees that the growth is coming more and the demand for acute products is more, they are automatically shifting their stocking next to more of a pure products and less of chronic products. And this leads to less absorption for us by them, right, which has a direct impact on our primary sales. So for the growth to, let's say, 14% to 15% is kind of the growth rate that we are looking at, right? And that is benchmarked based on the assumption that the market growth rate will be at 10% to 11%. So whenever this equation swings, it is going to have an impact on primary growth rate. So that is how it works, which is why I don't know if you were there on the earlier part of the call, but I spoke about the growth trajectory of the therapies as well as our performance from pre-pandemic levels because that, I think, is a better benchmark to evaluate the health of a therapy, not only for the market but also for Eris. So if you look at the 2-year trajectory from prepandemic times, you can see that cardio has grown at 10%, V&M has grown at 9%. These are all market growths. And CNS has grown at 8%. Oral antidiabetes has grown at 7%. And we have outperformed all these segments by a huge margin. So that is the yardstick that we have been using, not only us, but I think the entire industry is now talking about how are we performing from prepandemic levels. So the medium- to long-term growth story in all these therapies are still intact. I think the one thing where I would not be willing to hazard a guess is the Q3 market growth, right? Because, again, for us to start looking at those kind of growth levels, it is important for the market growth also to bounce back in chronic. And whether it is going to happen in Q3 or Q4, that only time will tell. But I think it's reasonably clear that by the first quarter of next year, the market should achieve some kind of normalcy.

Okay. Okay, sir. That does answer my question. And I just had one last question. So can you please provide some highlight on the impact?

Sorry, which impact?

[indiscernible].

Sorry, I couldn't hear that clearly.

Sir, do you mean the generics?

Sir, the line from the participant dropped. We move to the next participant. [Operator Instructions] Next question is from the line of [ Goran ] from Motilal Oswal.

So actually, sorry if I missed your comment on cardiometabolic segment because I joined late. But how do you see this segment growing going forward?

So the cardio segment has maintained a 10% per annum growth rate from pre-COVID levels. And I think this is a reasonable expectation to have going forward also that the cardio market will keep to that 10% kind of a growth rate. If you look at the oral antidiabetes market from pre-COVID levels, it has grown by 7% per annum, which might look a little underwhelming on the face of it. But I think it's easy to understand why this is happening because if you see the last 2 years, there have been 2 blockbuster molecules that have been available to the generic players. One is vildagliptin and the other is dapagliflozin. So there has been a very good expansion in the market because of these 2 molecules. But the flip side is you will have muted growth in terms of value because both these molecules typically whenever a patent expiration happens, the generic versions are launched at a 70% discount, 65% to 70% discount. That is very normal. And so because of that, you can see the value growth in oral antidiabetes at 7%. Now how will this pan out going forward? We think this could remain at current levels for the next 2 years because there are more patent expirations set to happen in the diabetes market. So in the next 2-year kind of time frame, we expect to see robust volume growth because as more and more molecules go off patent, the generic versions come in, the market gets expanded. And then once the price reduction effect wears out, and the prices stabilize, then the stage is set for a healthy volume as well as price growth.

But if I can just get in here. Hello? Hello?

Please go ahead.

Yes. So look, what is going to happen is this has been explained earlier also in the call, it has been 5 to 10 years. We waited for the expirations to happen. So the companies who haven't had the patented product, those people will sell these products at a lower price like [indiscernible]. And because we didn't have an access, companies like us will grow significantly more than the market. That's the reason you see on a 4% or a 6% market, we grew at around 15%, 16%. And this will continue to happen over the next couple of years because more -- number one, after generalization, the markets are expanding; and number two, there are more products, which are coming out, which will happen -- continuously happen in the next 2 to 3 years.

Yes. So just to add to that. If you see over the last 2 years, the market grew at 7% in diabetes and we grew at 19%. So that is the point that Amit was illustrating that. Going forward also, it's reasonable to expect that, that kind of performance can continue.

Okay. So another one was since the e-pharmacy space is targeting mostly chronic therapies, so do you think that maybe the -- I mean the IPM numbers may not have that included in the estimate? So is that -- could that be the reason why the cardiometabolic therapy growth looks muted?

No, that can't explain it because the pharmacy products also go through the regular channel.

Okay. Okay. So -- and one more thing. Again, I have joined late, so I'm not sure whether you have answered this already. But what is your outlook on new launches over the next 12 to 15 months?

I think the next 20 to 24 months represents a very, very exciting period for companies, which are between diabetes. And as Amit just mentioned, we have been waiting for as much as last 5 to 10 years for this kind of a pipeline to emerge. So between the SGLT2 and the DPP4 inhibitors, you have a very, very interesting pipeline ahead. So it is a little early to quantify how many -- exactly how many new products do we plan to launch in the next 12 to 18 months, if that is your question. We will -- we are in the process of developing clarity on that, and we will obviously come back to you with an update. But right now, suffice to say that we are evaluating a large -- very large number of options.

[Operator Instructions] The next question is from the line of from Hardick from Union Mutual Funds.

So just one question on the MR productivity. So at the current level, I think our MR productivity is already above the industry average from what I can see. But it appears some of the peers in the industry who are also chronic focused have aspired to improve upon this metric reach close to 80 lakhs per MR sales per year. I'm just -- and I think based on the indication you gave on MR addition, I think you will improve upon your productivity if you achieve your target. But just trying to get a long-term sort of a guidance that are we also looking to reach something like this 80 lakhs, 85 lakhs per year number? Is that something which is part of our strategy?

So there is a very strong interplay between growth and MR productivity. So some of -- I think, one of our best-performing divisions that's close to INR 1 crore per annum, right? So we do have that kind of a mix in our divisions also. But I think we are at a stage where there is such a tremendous growth runway ahead of us that MR productivity is not the only parameter on which we are going to optimize our performance around. The primary objective will be to drive growth, right, while maintaining a healthy MR productivity at a corporate level of 5-plus lakhs per annum -- per month, sorry. So that kind of approach works very well for us, then we are still in an aggressive growth phase.

The next question is from the line of [ Rahul Talwar ] from EB Advisors.

Sorry, I got dropped off. My question was if you could provide some highlights on Jan Aushadhi Kendra impact.

Okay. The trade generics, you mean?

Yes, yes, yes.

Yes. So what we have seen is it has -- trade generics, it's not just Jan Aushadhi, but I think I will also add the private sector trade generics businesses, and we all know which one of them they are. Obviously, this business segment has had a massive impact when it comes to Tier 2, Tier 3, Tier 4 and rural. If you look at the business mix in trade generics, I think the estimates are that trade generics as a business is about INR 7,000 crores to INR 8,000 crores today. And it is dominated by acute medications, right? But when it comes to chronic; when it comes to the affording population; when it comes to the prescriptions from specialists, which is what we are targeting; when it comes to metro Tier 1, the penetration of trade generics has still been limited because chronic therapies, hypertension, diabetes are high involvement therapies and the whole thought of trade generics making inroads into a specialist chamber is, at this point, very, very far-fetched. Does that answer your question?

Yes, sir, yes. That does answer my question.

Ladies and gentlemen, I now hand the conference over to the management for closing comments.

Thank you all for your participation in the quarter 2 call. By way of summary, Eris delivered a consolidated revenue growth of 9%, EBITDA growth of 12% and PAT growth of 10% this quarter. And for the half year ended September 21, we delivered a revenue growth of 14%, EBITDA growth of 16.4% and a profit after tax growth of 14.4%. We have a robust power brands portfolio with 9 out of our top 15 brands being ranked among the top 5 in their respective therapies. We have launched 4 new products in the first half of this year, and we expect to launch more products in the second half in the areas of cardiometabolic, wellness and women's health. We expect our organic growth to be driven by expansion of our power brands portfolio, new products pipeline, expansion of specialists and CP coverage and our expansion into newer specialties. Thank you all. I wish all of you and your loved ones a safe and a happy Diwali.

Thank you very much. On [Audio Gap].