Eris Lifesciences Limited (ERIS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 and 9M FY '22 Conference Call of Eris Lifesciences. We have with us on the call today, Mr. Amit Bakshi, Chairman and Managing Director; and Mr. V. Krishnakumar, Chief Operating Officer and Executive Director. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. V Krishnakumar, Chief Operating Officer and Executive Director of the company. Thank you, and over to you, sir.

Thank you. Good afternoon, and welcome to our third 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, the Indian pharma market grew at 5.7% in quarter 3 of this year on the back of a 6.4% growth in quarter 3 of last year. In comparison, I'm happy to share that Eris grew at 7.8% in quarter 3 of this year on the back of a 14.5% growth in quarter 3 of last year. If you look at the first 9 months, the Indian pharma market has grown at 18%, but on a very low base of 1% growth in the first 9 months of last year, whereas Eris has grown at a 16.3% rate in Q3 on the back of a 7% growth in the first 9 months of last year. When you see the numbers from the pre-COVID days, Eris has demonstrated a 2-year CAGR of 13.9%, which is nearly twice of the pharma market growth of 6.8% during the same period. This has been driven by sustained market-leading growth in all of our 5 therapies -- top 5 therapies: diabetes, cardiology, VMN, CNS and women's health, which collectively account for 91% of our revenue. The therapy-wise breakup of this growth is available in our investor presentation. Eris continues to feature among the top 10 fastest-growing companies in the Indian pharma market from pre-COVID levels. The cardiometabolic market grew at 4.9% in quarter 2 and 3.3% in quarter 3 of FY '22. This has been the lowest growth rates for this segment in a very long time. So in terms of comparison, the 4-year median growth rate for the cardiometabolic therapy has been 11.2% per quarter. So from a long-term base growth rate of 11.2% per quarter, this market suddenly crashed to 3% and 5% levels in the preceding 2 quarters. And this has obviously had an impact on our primary sales in quarter 2 as well as quarter 3. Nonetheless, we view this slowdown as a transient phenomenon and we expect the market to start recovering in the next 2 to 3 quarters. Despite these unprecedented headwinds faced in Q2 and Q3, Eris grew at 7.8% in Q3 versus the IPM growth of 5.7%. In the cardiometabolic segment, which constitutes nearly 60% of our revenue, Eris grew by 15.5% in Q3, which is nearly 5x of the market growth of 3.3%. In CNS, which constitutes 8% of our revenue, Eris grew by 30% in Q3, which is nearly 4x the market growth of 7.5%. In Women's Health, which is another fast emerging therapy for us, Eris grew at 14.5% in Q3 versus the market degrowth of 2.2%. And our VMN segment degrew by 12.4% in Q3 versus a market degrowth of 0.6%. We continue to enjoy high prescription ranks among our focused doctor specialties as per the SMRC (sic) [ SMSRC ] data for MAT October '21. We maintained our #3 ranks with diabetologists and neurologists and #4 ranks with cardiologists and gastroenterologists. We have improved our rank among consulting physicians from #6 to #5. Coming to the financials. Our consolidated operating revenue for quarter 3 stood at INR 332 crores, which represents a 7% growth over Q3 of last year. The consolidated EBITDA for the quarter stood at INR 122 crores, which is a growth of 13.5% over Q3 of last year. Our consolidated EBITDA margin in Q3 has expanded by 210 basis points owing to improving MR productivity and a better product mix. Consolidated profit after tax for quarter 3 stood at INR 101 crores, which represents a growth of nearly 12% over Q3 of last year. The tax rate for Q3 stood at [ 7.5% ] of PBT as the Guwahati facility continues to contribute nearly 80% of the total revenue in quarter 3. On a 9-month basis, consolidated operating revenue stood at INR 1,041 crores, which represents 11.5% growth. Consolidated EBITDA stood at INR 388 crores, which represents a 15.5% growth. Consolidated profit after tax stood at INR 326 crores, which represents a 13.6% growth. At the start of the year, we had guided to a 15% growth, and I'm very happy to inform you that we are on track to deliver an EPS growth of 14% to 15% in this financial year on the back of a 21% EPS growth, which we delivered in the last financial year. In terms of operating cash flow, it stood at 73% of our EBITDA for the first 9 months of this financial year. Quarter 3 was a significant one for us in terms of a strategic foray to take our anti-diabetes franchise to the next level. On the back of a market-leading position in oral anti-diabetes, we have kickstarted our entry into the insulin analogs and GLP-1 markets through a joint venture with MJ Biopharm, in which Eris holds 70% equity stake. We are on track to launch human insulin next month. We are creating a new division with 140 medical representatives to kickstart our insulin business. The next big product from this joint venture would be Glargine, which is presently in Phase III clinical trials. We expect to launch Glargine sometime in calendar year 2023. Other important pipeline products include the insulin analogs, Aspart and Lispro and Liraglutide, which is a GLP-1 agonist. We expect to leverage our distinctive patient care platform to bring a differentiated value proposition to our insulin business, which is very involved in terms of patient engagement and service. I'm happy to share that our stand-alone YPM has grown to INR 5.1 lakhs in the first 9 months of this year compared to INR 4.6 lakhs during the same period last year. As discussed before, this has been a major lever in the improvement of our EBITDA margin from 36% to 37.3% over the first 9 months of the current financial year. We continue to execute on our identified growth drivers of power brand expansion and doctor reach expansion. We enjoy significant tailwinds in our power brand portfolio with 8 out of our top 15 mother brands continuing to be ranked among the top 5 in their respective segments. This is why we were able to maintain our growth trajectory throughout the pandemic period, when Eris grew at a CAGR of 14%, which is twice of the pharma market CAGR of 7% during the same period. Of the 10 new product launches planned for the financial year, we launched 4 products in the first 9 months, and we have several more launches lined up in the segment of diabetes, CNS and Women's Health in quarter 4. Significant launches include human insulin and [indiscernible], which is our brand of dydrogesterone in the Women's Health segment. Dydrogesterone is a synthetic progesterone that is used to treat hormonal disorders in women. This is a INR 500-plus crore market, which is growing in excess of 40% per annum. These were the highlights of the quarter. We can now open up for questions.

[Operator Instructions] We have the first question from the line of [ Sachin Chaudary ] from Mount Intra Finance.

Sir, could you speak on the acquisitions and the growth for Eris and also on the outperformance with respect to IPM?

So when you talk about acquisitions and growth, are you talking of forward-looking? Or would you like me to talk about how the historic acquisitions have worked for us?

Sir, forward-looking.

Okay. So I think forward-looking would be all speculation, right, because our last 2 acquisitions, Strides portfolio and Zomelis have worked very well for us. If I just look at Zomelis, which was our last acquisition, we acquired Zomelis [Audio Gap] in less than 2 years is a commendable performance by any standards. So we are encouraged by those kind of value-accretive initiatives we've been able to take. And so we continue to be on the lookout for acquisitions. As we have said before, we don't wish to venture into very far-flung territories. So we will stick to our focus therapy areas of cardiometabolic, wellness, women's health, CNS and potentially dermatology. So these areas are segments where we continue to evaluate deals. Obviously, we are starting from a position where our stand-alone gross margin is 84%. So anything which is less than 70%, 75% gross margin is a tough sell in our system. So based on all these parameters, we do continue to evaluate deals all the time. I think when will something hit the bull's eye, that is very difficult to say. I think what we -- the deal that we did with MJ Biopharm, I guess you could call it as some sort of an in-licensing deal because that is a true partnership where MJ Biopharm will develop and manufacture and supply the product to us, and we will be doing the marketing. So we are completely open to inorganic opportunities to further the growth as long as it meets our return expectations, right? So that is -- that would be my comment on acquisitions. I think as far as the market outperformance is concerned, I think ever since COVID has broken out, I think the market has become very choppy. It has become very difficult to make sense of the quarterly market numbers. Something is up 1 quarter and then it is down the next 2 quarters and so on, which is why we always benchmark ourselves to the pre-COVID base of the market and see where we have moved corresponding to that. And that is where I have -- I commented early on that across all our 5 focus therapies, we have grown faster than the market compared to the pre-COVID base. So overall oral anti-diabetes, the market has grown at 6% CAGR in the last 2 years, and we have grown at 18%. In cardiology, the market has grown at 9% CAGR, we have grown at close to 17%. In VMN, the market has grown at a 7% CAGR in the last 2 years, we have grown at 12%. CNS market has grown at 8%, and we have grown at 17%. And in Women's Health, which has grown at 8%, which is the market growth and our portfolio has grown at 13%. So this is a very reassuring time for us because these are the top 5 therapies for us, which account for 91% of our revenue, and which are -- which continue to receive all our investment in terms of going forward. So that is kind of a bit of a color on the outperformance.

Okay. Sir, I have 1 more question. In terms of the organic move, do you see opportunities coming your way to differentiate in organically?

Sorry, could you repeat that question? Are you talking of acquisitions? Or are you talking of organic growth?

The organic growth.

I think what I can say about organic growth is, if I look at the next 2, 3 years, as a company, we are far, far more excited about the next 2, 3 years and the opportunities coming up organically in the next 2, 3 years compared to what we were in the last 2, 3 years. So if I just -- so we are heavy weight on cardiometabolic, right? So whichever way that market goes, we will also fall that -- by that way. So if I just look at the opportunity in the cardiometabolic segment in the next 2, 3 years, it's amazing. It's something that we have been waiting for, for the last 10 years. So the organic opportunity is phenomenal.

[Operator Instructions] The next question is from the line of Anubhav Aggarwal from Credit Suisse.

Just 1 question on the base business. Actually, when I just take standalone numbers, and if I just remove Zomelis and Gluxit from this quarter number and from the base as well approximately, I don't see that our base business is growing more than 2%, 3% here. Can you comment what's happening in the business? In the presentation, you mentioned that the vitamin portfolio is not doing well. But still that 2%, 3% growth is looking very low.

Yes. So I think if you take out Zomelis and Gluxit, then I think the 2 dominant molecules that remain in the portfolio are glimepiride and telmisartan right? And I think we have all seen what has happened to the telmisartan market. There has been a secular degrowth in the market in -- for the foreseeable past, whatever time you take ever since COVID broke out. And as far as glimepiride is concerned, we know that the whole oral anti-diabetes therapy is being taken over by the DPP-4s and SGLT2s at a very rapid clip. In fact, our outlook for glimepiride is very, very big over the next 5 years. So when we say that we look forward to a robust opportunity in oral anti-diabetes, this entire opportunity is built on the DPP-4, SGLT2 and their combinations. So the current penetration of DPP-4 and SGLT2 in India is 44%, and we expect that the penetration will grow by leaps and bounds. So we have, let's say, grown at 18% in diabetes over the last 2 years. And this growth -- a big part of that has come from Zomelis or dapagliflozin and not just because we were able to be in these molecules, but because we have consistently been at #1 position in these molecules. I think that has been a big driver of growth. So if you take away DPP-4 and SGLT2, there is no growth in diabetes. Not for us -- neither for us nor the market. That is where the market is growing. And as far as antihypertensive is concerned, it's again part of that mind-boggling phenomenon, which I articulated in the start of my call, that a market which has grown at a secular [ 11% ] quarterly growth rate is suddenly crashing to 3% and 5% levels. And starting from the flagship brand, Telma, in the category, I think the biggest molecule has consistently degrown. So I think this is part of the trials that we have to go through. And there is no way that we will be showing growth when the underlying market is growing slow or degrowing. We don't expect it to last long. We expect that post Q2, the market will recover, but it is what it is.

Query is, so what's happening in the anti-hypertension market? Where is the patients who were taking a Telma, where -- what are they taking now?

I would request Amit to answer this. You might get more insights.

This is a question which we have been asking the prescription data people and also the product data people. So what the answers which we are getting are like this. Number one, whenever the acute becomes very heavy, the stocking -- the overall stocking on chronic goes down. That's how the balancing happens at the stock level of his own capital management. So this is one piece, which we are hearing. The second piece, which we are still hearing is there had been a lot of stock-up which has happened in April, May. And for some, it would have lasted a longer period of time. The other thing is there could have been some erosion in the patient pool because of whatever has happened. So these are only 3 explanations which we have. Other than that, it's like anybody's guess.

So in the prescription data, sir, what kind of data you have seen, is it like for prescription? Is it down low single digits, double digit?

Yes. Yes. I will send you the SMS of the data. You will see the same reflection in the data also. I missed on one thing. The one thing which people say is that the new patient initiation post April/May had gone down because the footfall of the chronic patient hadn't been normalized. I think people were talking about November, December when normalization was happening quite a bit. And then there is the Omicron stuff. So that -- those are the 3 areas where everybody is putting their bets on.

And this weakness in prescription, you've seen only for Telma? Are you seeing for the entire category?

Entire category.

Entire category.

So our representation in the chronic is quite robust. It's not that we are selling some part of the therapy. So if you look at our therapy, it's quite robust. So the whole therapy business is like this. Diabetes, we understand that glimepiride is no more a first line treatment. What is also working well for us is a combination, which we call Glimisave MV where we have kept growing ahead of the market, and now we have become #2 brand, almost INR 80 crores, INR 84 crores and still growing by 15%, which is the highest growth in the market. But beyond that, that's what it is.

That's helpful. Amit, just one clarity on what Mr. Krishnakumar mentioned. Is that -- why is that so weak? So what's happening as you also mentioned glimepiride. So it's no longer -- even if it's a combination, let's say, are people -- doctors not using this as a first-time therapy at all now, even combination of glimepiride?

So Anubhav, what has happened, look, anti-diabetes were always -- people of diabetes were dying of cardiovascular disease. And there was no anti-diabetic which had a cardiovascular protection profile unless gliflozin came in. So the treatment -- the ideal treatment of diabetes would have been one, which reduces the complication, either it is cardiac or [indiscernible] and then it is weight neutral or it loses weight. So dapagliflozin and DPP-4 were one of their kind, which I know -- anti-diabetes which the world has seen. Therefore, the whole guidelines have changed. All this depends upon how the bigger -- the American Diabetes Association, the Society of Diabetes, how do they position. So they have moved sulfonylurea to #3 now. So what we expect is that sulfonylurea will slow down in terms of growth. We will see a very small marginal growth, that too not coming from units but coming from value gain. So glimepiride era is more or less over. But as we know that drugs do sustain over a long period of time, so the sustenance would be longer. But like, for example, SMSRC has already shifted this market to a mature market. So it was there for 25 years in the growth market. So it has now been shifted to mature market.

Okay. So what is the doctor's first line treatment now between, let's say, gliptins, DPP-4 versus, let's say, SGLT2?

The data starts with DPP-4. So metformin has always been the gold standard. Post metformin it used to be glimepiride, which has now moved to metformin and [indiscernible] as the second line drug.

Understood. Very helpful And just a couple of more questions. One is on dydrogesterone. You were launching this product this quarter. Can you just talk about -- so you mentioned about INR 500 crores plus as a market. What -- how quickly this can be opportunity for you? Can this be in next 1 or 2 years, INR 50 crore kind of product for you?

INR 30 crores in the next year, and INR 50 crores very much possible in the next 2 years. We have just launched it, and we feel that we will have a INR 6 crore run rate in this quarter. And we are quite -- the market is very robust actually. This is, again, a complicated API. So we had to pay a license fee to acquire this. So the competition is going to be limited. I think there are 5 to 6 players as of now. And the API is quite complicated. And the market is very robust, very, very robust. So it has the potential of changing the entire progesterone market in India. And gynecology, INR 500 crores is not a small thing. It has never happened before other than progesterone. And at INR 500 crores, it is showing around 40% growth. So clearly, this is a winner.

Okay. Okay. And you mentioned that this can be INR 50 crores for you by end of next year, something like that...

2 years, 2 years.

2 years. And just a related question. This year is largely done now, a quarter is left. But the expectation for next year, do you think that on the top line, can you do -- what kind of range -- just as a range, whether it be 10% kind of range for us organically or 15% kind of range for organically next year...

We have left this question for -- to answer in quarter 4. But what I can tell you, Anubhav, that if we end up -- if the cardio-diabetes market end up between 5% to 6% or 5% to 7%, in my mind, I feel 2 years CAGR will again come back to 10%. So whatever will be left out in this year should be covered in the next year, by which I'm meaning that this market should grow at 12% to 15% next year because there hasn't been any instance at any point of time where on a yearly basis, this diabetes market hasn't grown at least in a double digit. And we have seen this earlier in the GST era where there was a blip for a year, but then it gets compensated. So we are running -- you have to understand that we are running a very different game. Last year, we were around 7%, 8%, 10% growth, industry was 1% because acute was completely down and the whole range of growth came from the chronic. Then we get into the next year because of reasons you know. The acute is the king, and chronic has taken a back seat. So because of COVID, the secular growth, which we had seen over a period of time has got a little disturbed, little disrupted. In my mind, cardiovascular market, this year and next year CAGR should be at least double digit, which means that this market will have to grow 12% to 15% in the next year.

We have the next question from Tushar Manudhane from Motilal Oswal.

Just taking a little forward on the anti-diabetes [indiscernible] growing are -- how does it look like...

I'm sorry to interrupt, but there seems to be the echo coming from the boardroom.

Is this better?

Kindly be on line, we'll just reconnect the boardroom. [Audio Gap] The management line reconnected.

Am I audible?

Yes, Tushar, please carry on.

Yes. So just wanted to understand anti-diabetes again, that while the DPP-4, SGLT2 category has been aggressively big trend that is impacting the product portfolio as such. Considering that we provide [indiscernible] CAGR [indiscernible] 16% last year. How do we see this [ as a growth product ] trending [ for Gluxit ].

So I think that is the right observation that the base effect for Gluxit and Zomelis will start kicking in. But what will keep this therapy vibrant over the next 2, 3 years is that we have more products that are going to come available to us because of the loss of exclusivity. This is something that we've discussed before. So we don't see a challenge either in the diabetes market growth or for us to be able to sustain the growth in the diabetes therapy over a 2- to 3-year time frame. There is enough and more that will keep rolling off the conveyor. So are you able to hear me, Tushar?

Yes, yes, very much, very much.

Amit would like to add something.

Tushar, whenever a drug moves to the first-line therapy, the new initiation of patients happen in large quantities. So if you see how glimepiride, metformin had done in the first 10 years, vis-a-vis any of these markets, these markets have done far better. So the adoption rate in these markets will continue. So we will see a growth at a higher double-digit level for a very, very long time of the entire category. And dapagliflozin, these are just early years. It's been 1 year it has been out of the pattern. It has at least in some form, either in combination or alone, it has at least 7 to 8 years of very high growth available for dapagliflozin.

No, no. So the prospects remain definitely interesting on the B2B for SGLT2. Just that from -- if I look at it from an Eris perspective, glimepiride probably initially as a brand is a considerable base of the sale. So from that perspective...

We did well from glimepiride to the newer therapies. The fact that we are market leaders in 2 of the brand. The combination of these, [ like the glimepiride ] family, the same way in the next 7 years, there will be a Zomelis family, and there will be a Gluxit family. So we have transitioned very well from the conventional, now we have to call them conventional OADs to the newer OADs. Even if you look at how our shares are now. Our shares in DPP-4, SGLT2 has become more than what is in metformin. So the transition for us has been quite smooth. Therefore, there is a huge runway for growth in these areas.

And Tushar, just to supplement that, I think the conventional -- I mean, glimepiride is very, very important to us, and it is very important to all the companies which ranked on the top 5 with OAD therapy because it is not enough to only have the new molecules because in order to build brands in the new molecules, you need aggressive investments. And where does this investment come from? It comes from cash cows like glimepiride. So I think between glimepiride and Zomelis and Gluxit and all the upcoming DPP-4s and SGLT2s, they form a very neat little package. Where on the one hand, you have a mature molecule which is throwing out the cash flows. And these cash flows are being invested into the new growth molecules. So this is pretty much the combination that every company, not only us, every company who's in the leadership therapy in oral anti-diabetes this is pretty much the ecosystem that we are all in. And this will continue to be the growth story going forward as well. And I think I had mentioned this to you earlier that we are scripting a 10-year story in diabetes, right? So between dapagliflozin and the upcoming molecules, the next 10 years are sorted. There is nothing to worry.

Sure, sir. Got it. And just secondly on this, given that Q4 would be having a good number of launches. So how different would be the other expenses, as you say, will there be a meaningful increase?

There would be. It is logical to expect that whenever you have new product launches, you will have promotion expenses going up. But since 9 quarters are -- I mean, sorry, 9 months are already done, so we have a very reasonably good handle on the entire year, right? So which is why instead of talking about Q4, we have mentioned that we are on track to deliver that 14%, 15% growth in EPS this year. I think that is something on which we have good line of sight.

We have the next question from the line of Saion Mukherjee from Nomura.

[indiscernible] impact of organized and online players what fraction of [indiscernible]. I'm assuming chronic therapy online would have gone up. Are there any discounts there? And how the business is sort of getting impacted? What's your view on the long-term [indiscernible]?

So there are absolutely no discounts there. Organized pharmacy retail, I think only 1 player who has taken a clear lead in this market is PharmEasy. Overall, organized pharma retail accounts for about 3.5% penetration of the IPM. So the penetration is of a similar order of magnitude for us also. It is very interesting to note that there is absolutely no discounting happening in these channels. And the kind of working relationship that we are starting to establish with these players is based on a very symbiotic model, which is to do with some kind of pay for performance because these people have very insightful data in terms of PIN code level performance of our brands, which there is no way we can get access to. And based on what they see -- so I mean, you take Bombay as a city, they have segmented it to 100 zones, right? And then they tell us that in Bandra, your brand is doing this whereas in Kandivali, it is behaving like this. Now that's a lot of insight, right? So they come up to us with ideas based on analysis of their own data, that we believe that this is what you should do. You should follow ABC strategies. So it's turning out to be a very consultative symbiotic approach where the end goal is how do both of us emerge with a win-win situation. So, so far, it's been a very positive experience in working with these players.

Right. And sir, I mean also instruments brand selection or in any way, push their private label. So those are the risks that one can foresee going forward. How are you thinking about it?

So private label, I think, is a question of time, right? Because these people also have to justify their balance sheets at some point, and they cannot keep bleeding cash forever. So it is expected that they will launch private label. But private label will not be in cardiology, it will not be in diabetes, it will not be in CNS, it will not be in any of the hard core prescriptions categories. Their private labels will come up in Wellness. So Wellness and Nutrition, I think the whole market has to contend with that. And I think it is something where the market will have to achieve an equilibrium over a period of time. But as far as substitution is concerned, these guys do not substitute. I think that has become very clear now because they want to work with all the top pharma companies, right? So substituting drugs aggressively will only set 1 client from that perspective, and they don't gain anything. So there is no reckless substitution happening. I think private label, wellness category, VMN, I think as and when it plays out, we'll have to see. But there is no threat of private label in the core chronic therapies that we are in.

We have the next question from the line of Utsav Mehta from Edelweiss AMC.

You referred to a [indiscernible] earlier. Could you just elaborate on that? I'm not aware?

Utsav, there is a lot of disturbance on your line. I think are losing chunks of your conversation.

Yes. Sorry, What I meant was that you earlier alluded to telmisartan losing a lot of market and generally, not doing well. Could you just elaborate on that?

Yes. So I'll invite Amit to share his comments on it. I gave telmisartan as an example, to showcase the overall slowdown that has been happening in cardiology and antihypertensives in particular. And we picked telmisartan because it is the largest molecule, right? So whatever happens to telmisartan kind of sets the tone for the market. But over to Amit for more comments.

Yes. So look, the whole market has been some kind of a slumber this year. And telmisartan being the strongest market has represented most of it -- sorry. What I was speaking to, it's the same thing. There are 3 things which we are talking about, but we don't really know what is happening because it is unprecedented and it will never happen. And I've talked about all those 3 things. We are quite hopeful and confident that this is a 1-year blip. And once we look at a 2-year CAGR, you will find most of these things coming together because unlike glimepiride, telmisartan is a clear winner. So for any scientific reason, chemical reason, there could be no disruption. So it's only to do with what we have already alluded to. And I think we should wait for a year, they will average out pretty well.

Understood. Understood. Market issue as such as more sort of time right now some issues, rather than ...

I guess it is a market issue, but it is not because of science or medical reasons because in the case of glimepiride, there was a clear scientific reason why the molecule were losing ground because there are superior alternatives available on the market. In case of telmisartan, there is no scientific reason, it is more of a phasing out thing, which we believe is a combination of, A, #1 overstocking in the prior months; and B, because of the acute therapies taking the lead in the more recent quarters.

We have the next question from the line of Anubhav Aggarwal from Credit Suisse.

The question is, can you talk about this market a little bit? I don't understand it fully. So why are there only a few generics right now? What in this market tends to think generics right now and given that you're buying the API, you're doing formulation yourself or you're just getting the entire product done from outside?

Entire product from outside. My knowledge in ops and gynae is a little limited. But in all difficult pregnancies, whether they have a history of spontaneous abortion or it's a late pregnancy, the biggest task is to hold the fetus for the first 3 months, which is called the luteal phase support. Now in all these IVF hormones, which you see, most of them are placed towards that 3-month period where the fetus could be hold properly in the uterus. So that's the idea. And for the same purpose, progesterones are used. So this is a product which was in fact in patent and was doing very well. It opened up last year, but the API was very complex. So the access is very poor because there are only 2 people who are doing the API. We -- so we had to pay a license fee to get the product. And this product is a clear cut side winner in the gynecology market. It is INR 500 crores at 42%. And it is just opening up. It's in the midst of opening up at a lower price point. You must have heard of that -- of the big brand, [indiscernible]. Yes, yes, yes. So this will replace [indiscernible] over a period of time. And this is the only progesterone where there's a lot data available for supporting the luteal phase. So we are all of this opinion. While I don't understand this as good -- as much as I would like to, but we are all of this opinion that this is going to be the biggest market in gynecology.

And what is the price at which you launched your tablet?

We have launched it at a INR 60 tablet.

Which is very same as [indiscernible]. We are about 75.

Yes. So INR 75 and INR 60, yes, there is some saving. But I hope when the API gets more and more popularized, the prices still have a scope to come down.

But at this price [indiscernible] but you're sourcing it outside. Will it make the corporate average margin in this time?

No, we will not be able to make it, Anubhav in the 1-year time. We haven't accounted for that. It's only when the market opens up over a period of time, then the margins will kick in. It's typically like any other product. First 6 months of Gluxit were also like this, [ Zio ] had been like that. So these products will follow this trajectory unless and until that clears up.

Okay. Next question was, can you just talk about the market size of vildagliptin and, let's say, the dapagliflozin today in the IPM?

You will have to come again, I'm sorry.

Does the market [indiscernible] today?

INR 15,000 crores plus, I think, INR 1,200 crores, still growing at 19%, 20%.

Dapa is 600, 700.

Dapa is around...

Dapa is around 650. This quarter, it grew 90.

90%. So it's just crazy. So what I meant when I was talking like glimepiride, we saw some kind of a buildup over a long period of time. The buildup in these markets will be very quick. And you have a little bit of price advantage because of these newer products, the price points are higher.

The next question is from the line of Neelam Punjabi from Perpetuity Ventures.

My question pertains to [indiscernible]. Sir, you mentioned that the INR 500 crore market growing at 40%. Just wanted to know what do you anticipate is the potential market size for this molecule? Do you think that it can be a INR 2,000 crore molecule or what, if you can please the answer?

I mean if I look at the current level of momentum, then I would not rule it out, right, because things are just opening up. And as we discussed previously, there is a INR 75 price point, and then we are launching at INR 60. And this is flow that we have seen in every molecule, molecule after molecule that when the market opens up, more and more people start making the APIs and then the time is not far off when you start getting this product at INR 50 and INR 40 and INR 30, right? So as the price point becomes more affordable, the market just explodes. So this is a saga that has played over in molecule after molecule. And at such a high price point, already at INR 500 crores and growing at 40%, I would not rule it out that it can become a 2,000 molecule in a forecast period.

Understood. And you mentioned that there are 2 players making the API, right? So if you can just name those 2 players.

Yes. It would be a little unnecessary to get into that, but those are information which are public. So let me not get into that. The more important thing is, look, the age at which the [ presidencies ] acquired these days have moved on substantially. So we are seeing a lot of urban people having their first child in the early 30s. So at the late age, there is more support, which is required to keep the pregnancy good. So these kind of products, as we have seen how IVF market has grown, this kind of product will keep on having more and more traction over the coming years.

We have the next question from the line of [ Vital ] Patel from [indiscernible] Securities.

So my first question is, can you please comment on the chronic and subchronic segment? And if you could throw some light on the future growth, it would be helpful.

Yes, we have spoke about this in the start of the call, right? So the growth of the chronic and subchronic segments have been disturbed in the last few quarters because of the unnatural circumstances brought about by COVID, whereas the acute market has never seen a double-digit or some crazy double-digit kind of growth numbers has never happened, but that has been brought about by COVID. So if you -- the right way to look at the acute market as well as the chronic market is on a 2-year basis. And if you see a 2-year performance -- if you look at...

There seems to be a...

Yes, that was a little jarring here. So if I look at a 2-year basis, then it is -- the chronic market growth is completely on track. I don't -- see any aberrations when I look at it on a 2-year basis. So our expectation going forward -- I think quarter 1 -- I think this is important for all of us to take note that quarter 1 for the IPM is going to be choppy because there was a huge wave in quarter 1 of FY '22 because that coincided bang with the wave 2 of COVID. Whereas quarter 1 of next year, we don't expect any COVID, right? So I think quarter 1 is going to be a bit of a washout for the entire market. But post quarter 2, if the pandemic starts getting into the endemic phase, then I think the acute therapies and the chronic therapies will both start normalizing. As far as our core cardiometabolic therapy is concerned, as Amit has already articulated, we are very bullish and optimistic that this market will return to a 11% to 12% kind of a growth rate by the end of this year.

Okay. So my second question is the company is planning on coming up with women's health and derma. So why do you think this is a good product mix? Any reason why you [indiscernible]?

Because both of these therapies have a specialty angle to it, right? One thing that we understand very well in Eris is specialty play. And when you say specialty play, the opposite of a specialty play is a GP play, general physician, which is usually focused on the acute therapies. So what we do very well at Eris is working with specialists and engaging with specialists, building mind share and credibility with specialists. This is what we have done for the longest period of time since inception, right? Incidentally, we turned 15 last week. So for 15 solid years, this is what we've done. Which is why when it comes to growth, we are not very excited about acute therapies. We always look for therapies where there is a specialty play. So in dermatology, there is a specialty play with the dermatologists. And in women's health, there is a specialty play with gynecologists. So this is the reason.

Ladies and gentlemen, due to paucity of time, that was the last question. I now hand the floor over to the management for closing comments.

Thank you. Thank you all for your participation in the call. By way of summary, Eris delivered a Q3 consolidated revenue growth of 7%, EBITDA growth of 13.5% and PAT growth of 11.8%. And for the 9 months ended December '21, we delivered a revenue growth of 11.5%, EBITDA growth of 15.5% and a PAT growth of 13.6%. As guided at the start of the year, we are on track to deliver an EPS growth of 14% to 15% in this financial year on the back of a 21% EPS growth delivered in the last financial year. Our stand-alone MR productivity has expanded from INR 4.6 lakh last year to INR 5.1 lakh this year, and this has led to an expansion in our EBITDA margins. Our power brand portfolio continues to perform well with 8 out of our top 15 mother brands continuing to be ranked among the top 5 in their respective segments. We launched 4 new products in the first 9 months of this year, and we expect to launch several new products in the areas of diabetes, CNS and Women's Health in quarter 4. We expect our organic growth to be driven by growth in our power brand portfolio, new product pipeline, expansion of specialists and GP coverage and our expansion into newer specialties. Thank you all. Have a good day, and stay safe.

Thank you. Ladies and gentlemen, on behalf of Eris Lifesciences, that concludes this conference. Thank you for joining us. You may now disconnect your lines.