GlaxoSmithKline Pharmaceuticals Limited (500660) Earnings Call Transcript & Summary

Good evening, and a warm welcome for those of you in person, and of course, those of you online. We'll of course, get to see your faces when you ask a question online. But really nice of you, to all of those who have come to the office, a warm welcome. As you can see, it's fairly warm outside. Without further ado, really pleased to have our new Managing Director, Mr. Bhushan Akshikar. Bhushan is a veteran with over 27 years and has been with GSK now for over 12 years. Done roles in India, Middle East, Russia, CIS and Africa regions. So -- and before that, Bhushan has been with Janssen for 15 years. So -- and in those roles, Bhushan has worked in India, South Korea and Belgium. So he's seen it all. He's been in India, gone there and now come back, and in 2 different companies. So Bhushan, really nice to have you leading us at this point in time. Of course, we have again a new person, probably some of you have met Juby or not met him before. Juby has a successful track record with GSK for over 14 years. He comes to us from his most recent role that he had in Singapore. But before that, he's been in roles in South Asia, Vietnam, Turkey and the Middle East. With that, I'd like to hand it over to Bhushan, our Managing Director, who will brief you for the analyst meet. Bhushan, over to you.

So just remind me, I'm not supposed to cross this -- all right, so that they're -- I'm still visible to them. So very good evening to everybody in this room as well as everybody online. Thank you very much for your interest and your time this evening. The way I structured the next 20, 25 minutes at best is just lay out the context of the industry where we operate as GSK. Then we'll zero down on specifically GSK India and what we're doing and where we intend to be in the next 3 to 5 years. We'll briefly touch upon the financial overview, and then we'll open it up for the most important part of this evening's session, which is the Q&A. One inflection point in our evolution as a corporation globally was in June 2022 where we split -- the pharmaceutical organization split from the consumer business, and we've now remained completely focused on what we call as biopharma. And I think that has allowed us to further sharpen our focus on doing best in terms of the businesses which we are known for, namely vaccines and pharmaceuticals. But I think more importantly, it's allowed us to sharpen our purpose, which is all about uniting science, technology and talent to get ahead of disease together. And I think there's -- every word there has a meaning. And in the next 20 minutes, I'll try and lay out how this global purpose also reflects in our ways of working in India. As many of you may be aware, the pharmaceutical industry in India is just short of about INR 200,000 crores. If you see the revenue in a calendar year, of course, this -- the data points are from IQVIA for 2022, just short of about INR 190,000 crores. And if you focus on the right-hand side of the graph, the tables there really outline how the industry is structured in terms of -- if you talked about the diseases on the previous slide, in terms of therapy areas, how is that all laid out. And the reason of putting that out is, as we've tried to sharpen our business operating model, we're making some conscious choices of where we want to operate, where we want to play, how we want to win. And as you can imagine, some of the growth end of the therapy areas remain in the therapy areas, which are colored in orange. And that's exactly where we've decided to remain focused and anchored. So anti-infectives, vitamins, pain analgesics and, most importantly, the derms business. These are a few strategic choices that we've made in terms of where we want to put our energy and remain focused. The reason is twofold. One, if you look at the last 5-year CAGR as well as what we see over the next 3 to 5 years, the compounded growth continues to be strong double digit or at least high single digit. And that allows us to play to our strengths. So clearly, the choices that we are making are aligned to our strength areas, and that's exactly what we will play out. Just a couple of minutes on how the past 12 months have been. Just again to drive home the point that, at GSK, we will not probably launch everything under the sun in terms of branded generics because you all know this is a nonpatented branded market in India. But we make some strategic choices, which are very aligned with our strengths. So although you might see the pharma industry, generally speaking, has got new introductions as in one lever, that's been conspicuously missing for us for the last few years. But I think what's heartening is we have volume growth in a market that's not really grown in volume. GSK as a company has really used the volume growth driver as one of the key levers. If you were to zero down from that overall market and see where is it that we are making our strategic choices, we'll split that further down at the TC-4 level, which is the therapy plus the molecular level. You will see it's clearly evident that the choices that we made in terms of where we play are strongly aligned to strong market leadership positions. So just to give an example, if you look at anti-infectives and if you look at all the molecules where we operate, where we have our research molecules or we have our strengths in place, if that therapy area has been growing by 9%, our growth has been better than that therapy area. So if you just look at the bottom side, it correlates. We have almost a 25% share, which is a significant share, and growing in double -- strong double digits, not just on a year-on-year basis but even on a compounded basis. So if you were to zero down anti-infectives, derms remain the most durable as well as strong areas for GSK as an organization. Pain where we operate with a couple of brands, mainly Calpol is where we operate. Now the therapy area has really seen, especially if you see the last 2, 3 years, what we've seen with the pandemic, that therapy area has really shown an upswing. And even there, if you look at our CAGR, it's ahead of the market. It's just in line 15% CAGR. Where we have not done well is obviously the vaccine market, but if you juxtapose that with the external reflections, in a market that's actually declining, we've been adding share. So our decline is not as sharp or not as significant. In a market that's overall declined by 18%, 19%, we still managed to hold share. So that's exactly where we operate. We made our strategic choices in terms of remaining focused in our represented market, which is roughly about INR 20,000 crores of the IPM. What really makes us relevant in the Indian market even today is that, even today, we are the second-biggest multinational organization in India with a very significant footprint. In a highly fragmented industry, we still have a value share in excess of 2.6%. But in volumes, given the sheer amount of lives that we're able to touch with our mass products, we have volume share just in excess of 4%. What makes this even more enduring is the people, the 3,700-plus employees who work for us across the value chain but, most importantly, our manufacturing footprint, which has remained intact. So just like this facility where we've operated right from independence, we still continue to have our factory in Nashik, which is definitely upgraded in the last several years with all the measures that we've taken there, state-of-the-art manufacturing unit that we still continue to have for India where we still manufacture for India. Apart from that, we still have about 2/3 of our products manufactured at contract manufacturing organizations. I think one of the datapoints that I want to share with you is that, in a population of 1.4 billion, where we still don't know -- if you go to different sources, you'll get different numbers. But the access to medicines remains a critical area. Globally, we're always proud to see that GSK continues to figure as the #1 company in the Access to Medicines Index. But even closer home, although we may not have a similar index, given the nature of our brands, given the nature of our products, we clearly touch in excess of 200 million patients every year. If you were to see the number of prescriptions that we generate for our brands like Calpol, Augmentin, it is in excess of 300 million prescriptions. And that gives -- it clearly tells you the wide footprint that we have. Similarly, we continue to be the #1 company in the self-pay private vaccine market. In spite of the decline that we've seen over the last couple of years, we still are the #1 company in private vaccines. And we -- in a typical year, we typically see about 6 million immunization sessions. So that's the real footprint that we have for us in India. And as I said, one of the things that's remained at the core of what we've done over the last several decades is our footprint in manufacturing, a short video, which summarizes what we continue to do in Nashik with our manufacturing facility. [Presentation] Thanks for your patience. As you can see, not just the manufacturing footprint, but as a part of our ESG commitment, we're doing a lot there to remain relevant and also complete our formalities. So specifically now zeroing down to our global strategy and how GSK India plugs in, post the split from consumer globally would see a similar nomenclature, we remain rooted around 3 areas: General Medicines, Vaccines and Specialty. And that's exactly how we play our strategy out -- play out our strategy even in India. Within the General Medicines business, this is a business that really touches millions of lives. As I said before, the strategic choices that we've made to remain relevant in anti-infectives, derms, vitamins and pain analgesics with those select few promoted brands is what shapes our strategy. We've just launched a couple of brands in Specialty, but in the coming years, given the fact that we also have several clinical trials ongoing even in India, the idea is to build that additional growth lever. We remain the leaders in private self-pay vaccines. But I think what you will see at the top of that slide is, probably I'll spend a few minutes in the subsequent slides, which is a new launch of Shingrix happening in exactly less than a few weeks, a couple of weeks from now. And that will really open up a completely new category in the form of adult vaccination for GSK India. As I said, we continue to make inroads in spite of the declining market that we have seen for the last -- at least the last 5 quarters now, things are turning around. But it's too early to say we've turned the corner. But whether it's products like Infanrix hexa, the 6-in-1, flu, Synflorix, we still continue to hold a significant stake. So if you were to anchor all these 3 businesses and see where is it that we play, it's really the focus that we have in terms of defining sharp strategies for each of those assets, our responsive go-to-market strategies in terms of our agility, and last but not the least, given the fact that we have an extreme level of commoditization and fragmentation in this industry, how do you remain relevant by differentiating yourself with science. And I think that continues to allow us to differentiate versus the other competitors. The only reason of that being -- the proof of the pudding is in the eating. So even after several decades, we're very proud to see the strong portfolio playing out in the form of recognition, not just in the form of sales, but even for the calendar year '22, Augmentin continues to be the #1 brand in the pharma industry overall. There's a lot of science that still goes behind each of these brands. So a reflection -- a clear reflection of the trust that health-care practitioners, in general, have in our brands is borne out of the fact that 4 out of our brands continue to be in the top 50 brands in the Indian pharma market. We also, as I said, are ahead of the market in terms of our growth. Therefore, most of our brands, promoted brands have evolution index in excess of 100, which means we are growing better than the market. Just to give you some reference in terms of the sheer long shadow that we cast with many of our brands with these brands no longer remaining trademarked, they're really trust marks in terms of the trust that patients and health-care practitioners in general have and just to give you a quick sense of the sheer volumes that we sell in India. Over the last couple of years, we've been trying to also reshape our strategy in terms of using ways to really improve our footprint, not just the physical footprint but to use ways of reaching out digitally to health-care practitioners. So as much as we are well represented on the ground with more than 2,700 reps competitively in terms of the share of voice, so we do a lot of -- so you see on the left-hand side all the data points, which clearly tell us why we remain relevant as an organization. We cover in excess of 10,000 cities, distinct towns and cities. We have our reps based in 400 headquartered towns. So that allows us to really reach out to almost 300,000 HCPs on a daily basis in terms of the detailing of the promotion. But most importantly, apart from those physical touch points in terms of the science-based promotion, we also make ourselves relevant. I think in the last couple of years, we've really accelerated our digital strategy by way of opening up new channels of meeting out and reaching out to customers where they want us to be seen, be it e-mailers, be it channels like WhatsApp and Docker networking platforms. So this balance continues. I think as we continue to shape our journey in the next few quarters, we'll see more of being present where HCPs want us to be seen and not just the face-to-face interactions, which remain relevant and which will continue to be the mainstay of our operations. So if you -- if I were to summarize our strategic focus in the short to medium term, it's clearly about growing our promoted brands. The brands that I just shared with you in those 3 pillars in Gen Med, Vaccines and Specialty, really improve the competitiveness in each of those assets profitably. And second is to defend many of those brands with some optimization, we call them performance brands. And last, but most importantly, launch new assets, have some exceptional new category creation starting with Shingrix next month. All this is possible only with a culture where we really believe that people can thrive, develop and do the right things. One of the mainstays of our portfolio continues to be the General Medicines portfolio. We have sizable brands, significant in terms of the lives that we touch. But I think these are just pulling out 2 examples to show you that innovation is not just about launching new molecules. It is also contemporizing the portfolio and really putting energy into life cycle management. And just to give you an example about the #1 brand, Augmentin that we have, we launched Augmentin ES. Obviously, we want to address -- this molecule continues to be one of the most susceptible in terms of effectiveness and, therefore, to further help specialists, we launched Augmentin ES targeted specifically at certain appropriate patients and promoted only as specialist, which is ENT and peds. It's really helped reshape some of the thinking around how to treat these difficult-to-treat infections. So that's one example. The second example is about Calpol. This brand continues to save lives quietly apart from all the medicines that saved lives during COVID. I think paracetamol led by Calpol continued to be at the top end. But even on commoditized category like paracetamol, we've invested in newer technology. We launched Optizorb technology, which essentially accelerates the disintegration of the tablets potentially leading to faster effect. So Calpol 650 is not just trusted, but it's also trusted and advanced now. So these are just 2 examples of showing how we are doing a lot more in terms of -- unlocking value in terms of life cycle management. Vaccines market. We've clearly seen a struggle for the last several quarters. The market is yet to regain the momentum that we had pre-COVID. But if you see the last couple of months, there's been -- the negative declines have now started evening out. So probably in the forthcoming quarters, we'll see some reflection. But I think most important is even in a declining market where the market declined in excess of 18%, 19%, we've grown our share. So in this private market, our share grew from 34% to almost 37.9% on the left-hand side. One of the questions that keeps getting asked is our focus. So obviously, we have a portfolio aligned to the interest of all those birth cohorts, all those babies in the first year, second year. So in spite of many of the antigens going to the national immunization program, I think our portfolio remains relevant. And a case in point is the 6-in-1 Hexa, which continues to grow well for us even in the first 2 months of this quarter. We'll also have some supplies restored in the coming months in our vaccine portfolio. So that should also strengthen -- helps accelerate some of those growth numbers. So clearly, in the private vaccine market, our endeavor is to sustain the momentum and go back to the growth numbers that we had. I think the big area where we remain focused is the disease awareness campaigns that we have, especially to build the footfalls to encourage all those parents who may have missed vaccination because one of the themes that was predominant in almost 12 to 18 months was many parents were missing their vaccination during the COVID period. And as many of you may have seen, last year, we ran a very successful 6-in-1 campaign with celebrities like Dhoni. This year, we're launching -- we just launched a new campaign with some more brand ambassadors under an overall umbrella campaign called Faisla Sahi, Zindagi Sahi, and I want to give you a quick example of what we're trying to do given -- also what we are seeing around the flu vaccine right now. [Presentation] So as I said, this is an umbrella campaign that we've launched. The example that I just showed you was just about flu, given the topical nature of many of us navigating through this challenging time where flu is quite rampant right now. But we have a similar campaign for many other -- including, for example, meningococcal disease. So this is a similar one. We're using the social media extensively. There's a whole media plan that we have for the next few quarters. I will not show this. You probably get the drift of what I'm sharing, but that was for another area. I think where I want to spend the next 3 or 4 minutes specifically is opening up a completely new category for us, which is the launch of Shingrix. As some of you may have tracked our global corporation may be aware, this is right now one of the biggest products -- biggest assets for us, delivering almost GBP 3 billion on top line, growth of 72% for the last calendar year '22. It's been launched in 9 markets last year. So right now, as we speak, it's available in almost 26 countries, and we're very proud and privileged to have Shingrix being launched in India in the next few weeks. Clearly, this is a massive opportunity. Almost 90% of adults more than 50 years old, and this is all scientific data where we have the data points around epidemiology and prevalence available, they are always infected with the virus that actually causes Herpes Zoster or shingles. 1 in 3 estimated will have this reactivation from the varicella-zoster vaccine that remains in our cerebrospinal fluid when we've had chicken pox in our childhood. But I think most importantly, this vaccine helps protect adults over 50 from painful -- extremely painful and debilitating conditions like post-herpetic neuralgia or herpes zoster ophthalmicus, which are quite dangerous. And I think this is where we're opening up a completely new category. I think a lot of the organizational effort will be spent in ensuring that we spend our energy in ensuring that all available subjects get to know about this disease, but more importantly, have the potential opportunity to get vaccinated. Why is this vaccine so special? As I said, this is the first time we have a non-live vaccine for Herpes Zoster in India. So it's really a first-in-the-class in its category. It's approved for everybody who's 50 years and above. It's innovative to the extent that this is one of the first vaccine which has efficacy of 97%. Not just that, once you've taken those 2 jabs, you have protection. You have proven protection data for 10 years, which add up to 90%. And that's really at the deep end of efficacy, which you rarely get to see with innovative medicines. So this is exactly where we will be launching. We've just created a whole new adult vaccine team in the last few months, and we're going live with the launch in April. So that's about Shingrix. So as I said, this will open up the beachhead for us in creation of the adult vaccine category market in India because obviously, there's a lot of follow-on vaccines, including vaccines like RSV for which trials are happening. We'll see which of those innovative medicines and vaccines really make sense for India. But this really is a category for which the time has come. And that's where you will see a new platform of growth for us in the Indian context. I think one of the main questions that we will address, but I want to get that upfront is, yes, NLEM, which is announced once in 5 years, was announced, as you all know, late 2022. And this time, we have Ceftum & T-Bact. These are the 2 assets that we have, which were new inclusions. Just to give you a quick sense, if you follow the pie charts, till last year, we had almost 1/3 of our portfolio which was NLEM impacted. That's moving up by about 9 percentage points, and now we have about 42% of our portfolio which is included in the NLEM. Now obviously, to mitigate this exposure, the short-term exposure, we will use the Shingrix launch effectively to ensure that we're able to, not only create the category but build this additional growth lever in the immediate near term. We also are quite optimistic about stabilizing our pediatric vaccine business in the coming couple of quarters. But most importantly, as we've seen in the past, this is the third time we have the NLEM impact. And with every single impact, I think there's always a short-term impact, but we've always seen that we've grown the volumes 2x, 3x for some of our products, and that's exactly what -- we have seen the detail working, and we have the plans in place now in terms of specifically zeroing down on what kind of volume upsides we will have for each of the assets that's now included, apart from, of course, the tailwind that we may potentially get from WPI and, of course, cost optimization, which continues to be part of our ways of working. So that's the summary on the NLEM impact. I think if you were to ask me what -- how does it directly correlate on the EBITDA and margins? Yes, so in the last 3 or 4 years, we've definitely improved our margins. And as you would see, in the immediate near term, we don't see an impact for the financial year, but we certainly see in the financial year '23/'24, we will see some erosion there. But as I said, it's a short-term erosion, which we will -- which we are confident, given the volume growth that we will drive, plus the launch of new assets will help us tide over so that we're back to the EBITDA and the margin expectations in the near term. If you were to look at the 5-year ambition that we have at GSK India, obviously, it all begins with touching the lives of as many Indians as we can. As I said, at any given point of time, we touch about 250 million to 300 million lives annually. The question is how do we touch -- continue to touch a billion lives in India over this planned period or even more. And the 3 pillars, therefore, on which we'll base our strategies, one is driving all innovative launches to fuel this growth machine. Most importantly, deliver and continue to deliver the competitive performance with profitable growth for each of those assets in the base business, both general medicines and pediatric vaccines and, above all else, remain rooted in our cultural pillars of being ambitious for patients, being accountable for impact and doing everything that's right for our patients and for the organization and evolving a culture where our people can really develop. So that's the summoned substance of what I had to share. I also wanted to share with you that we are incredibly privileged and honored that this November 2023, we will start our centenary year of celebration of GSK's operations in India. We are entering our centenary year. So November '24 is when actually we complete 100 years, but our centenary years begins. And that's only because of the trust. So we continue to -- with all that you saw in the previous slides, our endeavor will be to build with a growth story, continue to build that trust, not just for the assets that we have, but for everything we do to serve the needs of patients and consumers at large in India for the next 100. So with that, I -- this is my last slide. I think I can -- I and Juby can open up the question-answer session.

Thank you, Bhushan. May request you, Juby, to come. So I think the first preference for questions would be the people here. And because you've already taken the time to come here. So maybe we'll start with Alka, maybe just introduce yourself first so that everyone knows who you are and your questions and if you have a preference for a response from Bhushan or Juby, just state that, yes.

Alka from Centrum. Sir, if you could explain a little bit more on the Shingrix market size in India in order to help us in understanding how big the opportunity is going to be for us because I'm a bit confused because I was reviewing a few articles. So I -- the cases in India for Shingrix, I have received for some multiple sources. So some sources say like annual cases in India about 1 million, some say like 3,000, something like that. So if you can share some on a broader level prospects on that, that would be helpful.

So just to give you, again, a context, remember, one of the things that's unique at GSK is that we operate -- probably we're one of the few companies that still continues to be broadly diversified in terms of operating at both ends of the spectrum, prevention and treatment. So even if you look at the treatment of Herpes Zoster, you -- what you talked about is the actual treatment. And obviously, Shingrix is to prevent. So the numbers, depending on what sources you see, are different. But even there, for example, acyclovir is again, a research molecule of GSK, continues to be the main line of treatment for Herpes Zoster. Now when you look at who all potentially can benefit. The label that we have is every single person above 50 years, given the fact that we are -- it's well documented that the immunity -- immunogenic responses go down after 50, plus coupled with some of the concomitant illnesses that people may have that may also trigger immunogenic responses, and therefore, lead to reactivation because most of us are infected with this virus, and it remains in our cerebrospinal fluid, as I said, when we have chicken pox in our childhood. This gets reactivated and then gets -- manifests itself in the form of Herpes Zoster. So if you look at the scoping, clearly, everybody above 50 years, and that cohort is very significant in our country. We're talking of millions of people who can potentially benefit. Now obviously, it's a vaccine. As I said, it's a new category. So we're mindful of using all appropriate filters in terms of who can benefit, who can access and who can afford these kind of preventive medicines and vaccines. So that's, prima facie, the cohort that we're talking about is in excess of 10 million people to begin with. And that's the kind of change you can bring about with a vaccine like Shingrix.

Talking about the affordability. So if you could explain like -- this is also self-pay, okay? So like when do we see the -- like now for us, the sales to start coming in because in the specialty portfolio, we are already seeing like Nucala and Trelegy are roughly about 1% or 2% of the overall sales. So like how do you see the ramp-up in Shingrix post the launch?

Yes. So I just want to contextualize. Probably Nucala continues to be a niche product. As you're aware, it is indicated for severe eosinophilic asthma, which is really at the top of the pyramid in terms of -- it's an incredible product. It's a biologic, but it's indicated for a select few group of patients, unlike the base of the pyramid, which continues to be mild to moderate or even severe asthma. This is really severe asthma with patients who really need a biologic. So to begin with, the comparison might be a little incorrect. But Shingrix -- coming back to Shingrix as a -- and if you look at most of the markets where it has been launched, the trajectory has been significant in the first 6 to 12 months itself because, suddenly, you have now an innovative vaccine, which has 97% efficacy. Most importantly, it helps avoid serious complications like postherpetic neuralgia, which is extremely painful. We will start -- so the stocks have already arrived in the country. They're undergoing testing, and we estimate that we should be able to offer this vaccine to consumers at large from next month, from April.

Yes. Okay. Can you pass the mic? Yes. Okay, go ahead. Just introduce yourself.

Gokul from Awriga Capital. So just 2 questions. One is that you break up your business in terms of promoted brands, others and vaccines. So in the last 9 months results, what would have been the growth rates between the 3 broader segments of the business?

For General Medicine, so the way we categorize General Medicines, Private Vaccines and of course, the Specialty. Now given the size of the Specialty business, it's still relatively small because it's the muscle that we are building for the future launches. A bulk of our business, so almost 80% of our business still comes from General Medicines portfolio. And that part of the business has been growing in high single digits.

So General Medicines is growing 10 percentage, okay? So General Medicines make almost 80% of our total business, okay? And Vaccines is 20% of our total business, which is degrowing roughly 34% in the last quarter -- 35% in the last quarter. But we expect that is going to stabilize. Now inside General Medicine, which makes 80% of our business, okay, so the promoted brands grows 10% to 13%, depending on the last 2 quarters. Q2 was 13%. Last quarter was 10%. So broadly double-digit growth across most of the quarters you could see. It's a very strong portfolio, and we expect the same might be continuing also.

Just to clarify, you mentioned Vaccines is decline of 34%?

So Vaccine, if you see Q3 of FY '23, which is the last quarter, the decline -- discrete quarter has been 35 percentage decline year-on-year, okay? The quarter before, it was also around 30%, 32% decline. Now what is interesting is absolute value of the last 2 quarters is remaining almost stable. So we're seeing a stability coming through in the Vaccine portfolio. So this decline is mainly driven by the market decline as well as those in NIP business, which is there's a decline from National Immunization Program. Some of the antigens are getting there. But the good news is, we started seeing growth in some of our key assets. That's one part. Second is the overall portfolio started stabilizing in the last 2 quarters.

So essentially, in FY '24, you should see a growth in the Vaccines portfolio?

That's right. That's what we're expecting.

Absolutely. Just to add to that point, if you recall, there were enough data points available to actually show that the birth cohorts were indeed suppressed for at least 3 to 4 quarters. And when you look at some of the surrogate markers in terms of the pregnancy tests or some of the products used for pregnancy, those have gone up from September, so which means birth cohorts will start normalizing as we speak. And that's another indicator for us to tell us that we will definitely see stabilization in the pediatric vaccine market.

Okay. And secondly, WPI last year allowed us to -- I mean, the price hike in the NLEM was 10% because WPI was that number. In the NLEM portfolio, did we take the 10% kind of a price hike across?

Yes. We've taken on all the portfolio a full 10% price increase. But that said, it is little bit phased out. Some are coming after April, May kind of time. So there's a bit of a phasing there, but it's full -- annualized impact on that for FY '24 will be completely 10 percentage. It has been fully taken to your question.

So the impact of this will be felt going forward?

That's right. That's right.

Okay. And lastly, just on the slides, which you mentioned a high single-digit growth aspiration, that was for the next 3 to 5 years. Correct?

The next couple of years, given the fact that we will definitely have -- so we don't foresee much of an impact for the overall financial year ending March 2023. But '23/'24, we definitely -- with all that we are doing, we certainly see there will be some marginal impact, both top line, bottom line. And that's why I said single high digit obviously, when I have scoped it over a 5-year period, the ambition is -- the aim is to grow by double digit. You can just pass it on.

Just pass the -- okay, to your right hand. We'll come to you. Just introduce yourself.

Yes. I'm Satish Bhatt from Anvil Shares and Stock Broking. Sir, I've seen Glaxo from maybe 1990s, so literally a span of 35 years. You had a good phase still maybe 2000, then you had a very bad phase till maybe last 10 years, I think, maybe very erratic, maybe because of any NLEM coming in and those things. Sir, in the last 5 to 10 years, we have seen that the entire market is going more towards a chronic area, that way how Indian -- things are also getting changed. You can see from your portfolio, cardiovascular, which was just 5% maybe years back. Now it is gone for 30%, 40% of the market. And your portfolio is now more confined towards vaccines and respiratory, which we feel is one of the specialty of -- GSK's putting money in the R&D side. You told us in this year, you're targeting a market of something like 1 crore population, maybe the Tier 1 and 2 cities max where they can understand such type of products. So just you if you do mathematical work and you launch at INR 5,000, which will be a decent thing. So that's roughly INR 5,000 crore product. So I just want to know what type of thinking is there in terms of management to mix if not 5 -- to maybe INR 500 crore to INR 1,000 crore product because that is really going to move the needle for Glaxo, for a company whose size is 3,500 crores. You need some good products really which are -- you can make INR 500 crores or INR 1,000 crores. And you're the only person who has such type of vaccine. So what type of marketing -- differentiated marketing investments you want to make it? Maybe if we were to spend INR 100 crores, INR 200 crores on a product, is the Board or management thinking on those lines? Because you have something -- a good product. So what was management's thinking on those? Then I'll talk -- we'll talk on Nucala also, sir.

Sure. So first of all, thank you very much. It's a great question. In terms of scoping out the size and potential, we would love to have this kind of an aspiration translating. But as you would also agree that, in a market where, not just pediatric but adult vaccines are self-pay, there are definitely filters of access, affordability. But that's exactly the reason why we are playing at the deep end now in terms of placing these bets in areas where we think we have the advantage. We know we're confident that we have a differential advantage in terms of the innovation but, more importantly, the ability to build that market and build that category. So that's exactly the reason why we are spending our money and our energy there. To the point that you made, I think you made a very good point. If you look at the -- if you remember, one of the points I made on my slide, we are one of the few companies which still has 4 brands among the top 50. That's almost 10% of the top-50 brands are from GSK stables. And that's one of the reasons why, as an organization, you will not see us launching products which just make INR 5 crores, INR 10 crores. It doesn't make sense to put our energy and focus. It's better to invest in areas where we know we have a differential advantage, where we know we can make a significant impact and solve a critical medical need. And so you'll see most of the subsequent launches that we have or the work that's happening is all in areas where we believe we have the ability to build such mega brands, just following up. So the question that we asked internally is, which is the next Augmentin for us, which is the next Calpol for us. And that's the intent with which, obviously, we want to build and spend and create that new category for Shingrix. So the answer would be definitely aligned with what you're thinking.

Sir, vaccine is basically preventive. The next is on Nucala. I think 2 or 3 years back, I think in your annual report, you told the eosinophilic-based asthma, we have around 9 lakh patients in the country. So -- and maybe the cost of treatment is something INR 1 lakh, INR 1.5 lakh for the entire 4 or 5 doses which you take. So that itself is another big market. So this is a product. The market is ready. So what is preventing you from not making INR 500 crores? What is preventing the -- what differently you have to do which Glaxo has not done to-date to make it something?

Sure. Yes, we truly believe Nucala is a great asset. And as I said, it continues to offer benefit to patients. Now obviously, we have aspirations in terms of taking it to the next level. We've just created a new structure now to support our entry into the institutional segment, build key account management capabilities. The brand has done -- I think for 2022, we did cross INR 15 crores, INR 20 crores. The question is, what will it take to make it INR 50 crores, INR 100 crores in the coming time? And I think that's where we are spending...

But you have a market. You have 9 lakh patients already there.

But also you have to remember, it's a biologic. And I think like any new category, physicians have to be ready to start choosing biologics. And I think that's an area where we have invested in the last 12 months and will continue to invest even in the coming times. So that's exactly where we're putting our resources and energy in terms of category creation. When categories get created like this, they will not follow a linear curve. They follow an exponential curve at some point. So although the buildup might seem like a slow burn, at a certain point, it really creates a different exponential trajectory, and that's exactly what we're aiming for.

So are you ready to spend INR 50 crores, INR 100 crores on a particular brand in a particular year? Maybe for the next 3 years, you will spend INR 150 crores? Maybe the payback will be a fact, maybe after 3 years, you will see suddenly top line becoming -- what is at that point is INR 100 crores, INR 300 crores, INR 500 crores. But that's already a $3 billion drug for you globally. So -- and that's a product which I think India needs. Just starting the education by the science provider to your doctors. So what is -- I still don't know why Glaxo's not making that -- make it a killing here? So what is preventing from that?

So I think there's nothing preventing. As I said, even if you look at all the biologics that are used in this space, it is a significant new entrant. The reason I say that new entrant is we started getting into some of the key accounts because these kind of products also need to get into the right institutional accounts. So that's happening in the last few months. And I don't think anything is stopping it. it's just a question of the right time for us to swing that needle because, as I said, category creation of biologicals is definitely -- it's not a linear curve. It's definitely an exponential term.

Thank you for your question. Can we pass it? Introduce yourself.

This is Anuj from M3 Investment. I want to drill down on vaccines a little bit. So first on the short term, see industry after industry, we've seen a pent-up demand showing up. And if I see the parents portfolio, the vaccines have grown by 20% ex-COVID -- post-COVID. It's interesting that India continues to show a degrowth. And it's not a normal scenario. So you said the cohort is showing up, but isn't it too delayed? So why is India behaving differently than global? That's question number one.

So 2 things happened. As I said, 1 is we did see suppressed birth cohorts. But again, in a population of our country and where you have a birth cohort of 26 million average annually, should it really be material enough to start denting is a question we can ask together. But we did see that the footfalls in the clinics of pediatricians definitely had gone down. The other reason that Juby just alluded to was also the introduction of some of the newer antigens in the national immunization program. So you had a PCV, the pneumococcal conjugated vaccine, got into the National Immunization Programme. And that was probably the biggest -- if you look at the immunization rates in our country, even in the targeted cohorts, the largest -- the highest immunization rates are in some of these categories. And when these get into NIP, a large part of the population also starts moving to places where this is given free. And I think that was also one of the reasons why the vaccination for other antigens started getting mixed in the private chambers. Again, these are anecdotal. These might seem anecdotal, but in terms of connecting the dots with all the data points, this is exactly what we know was happening on the ground. As I said, some of the surrogate measures that we've seen in the last few months tell us clearly that -- you've seen that it's turned the corner. We are stabilizing in terms of both volume as well as value. And the growth will only start coming in the next few quarters.

Sure. My second question is, if I again look at the parents portfolio, the growth for vaccines, it seems has been 10% CAGR for past 22 years, maybe 23. And if I take the India data, it seems that it's nowhere close. So again, there are 3 parts to it. One is the NIP program, one is the competition and one is -- so can you just give some more color as to -- so as you explained some part of the loss is structural because of the NIP program, so some more details as to every year, how are we losing in terms of the NIP expansion?

Sure. So if you look at the vaccine market over the last 2 decades, I mean, if you look at GSK, 20 years ago, our biggest vaccine brand was a brand called Engerix-B. Now that no longer even is available. Most of the countries, it's -- so as vaccines evolve, where you have higher valencies, where you have tetravalent, you have pentavalent, you have 6 diseases covered in 1 single shot, obviously, the nature of your portfolio evolves, and I think that's the nature of the vaccine business. Today, if you look at the pentavalent and the hexavalent, these are the ones which are mostly -- so if you look at these 2 categories, they're really driving the growth. And therefore, if you look at even internally within GSK, our own hexavalent brand that we have, Infanrix hexa, has -- it's not fall in the same curve as a PCV, which is going to NIP. It's growing. So compared to the minus 35% decline that we see in the market, this brand is still growing, maybe in single digit, but it's never seen a decline. So which means -- you see the market is shifting to vaccines that really makes sense for physicians in terms of lesser jabs, lesser pricks for children. I think that's the nature of the vaccine business.

Okay. On the specialty portfolio, I think the last you communicated that it was 4% to 5% of our revenues, and we had aspiration of 10%, where is that heading up? So some -- and also the portfolio which could be transferred from the parent in let's suppose the next 3 to 5 years, some light on that area, please?

I don't know about 4%, but we've just launched. So we have only 2 products in the specialty portfolio right now. We have Nucala, which is, as I said, a biologic. And we just launched the triple [ dose ] SITT, which is an inhaler called Trelegy. But again, that's indicated for COPD, not for asthma. So these are the only 2 products we have right now. We'll see -- as I said, there are more than 20-plus clinical trials -- global trials happening even in India for many of our assets. We'll see in terms of the access strategy in terms of what makes sense for us in terms of unmet needs. We'll see what to tap into from that portfolio. But that's something in the future. As we talk, the idea right now to build the specialty muscle with the 2 assets that we have in the form of Nucala and Trelegy.

Okay. And one last question. I think the earlier gentleman was talking about the investments. So could you talk about the org structure or the sales for which you are aligning to this segment, so that it'll give us some thought flow to how is building the segment?

It's a brilliant question. In fact, just both are brilliant questions. In terms of the appetite that we have to really fuel the growth at the growth end, and just to give you an example of Shingrix, we've created a completely new team for the vaccination especially for Shingrix, almost 200 people on the ground with specialized capabilities, with experience in creating new categories. So that should also tell you, plus these kind of new launches will also depend on how we're able to resource all areas around disease awareness around creating consumer campaigns, really creating patient assistance programs. So I think those are all the levers that we are unlocking and that something that you will see in a very significant way beginning with Shingrix.

My name is [ Dheeraj ]. I'm from [ Symphony ]. Just couple of questions. First was, you talked about high single-digit growth rate next 3 to 5 years. So -- and I'm assuming it's post the impact of NLEM. Now if I look at '24, so based on current prices of the plans we have, what will be roughly the impact of NLEM, and post the WPI increase, what'll be the net impact? So that is question one, if you can.

Sure. So I'll hand it over to Juby. But before that, look, the NLEM prices are coming at different stages. So even as we speak today, a lot of these draft prices are out. Some of the draft prices are still not out. The final selling prices are. So I think it's coming in a staggered fashion. So it really depends on which quarter it falls in and, therefore, which year it gets accounted for. And that's why I made that statement that, for the financial year ending this year, March 2023, we don't see a significant impact. But for the coming year, definitely, we have -- we definitely have an exposure, and that's why we have lined up all the initiatives that I just shared in terms of how we intend to mitigate primarily through new launches like Shingrix but also learning from all the lessons that we've had in the past where, as I said, Augmentin was -- has had an NLEM impact twice. And today, I just showed you, it still continues to be the #1 brand in the industry by way of revenue or in terms of value. So that gives us confidence to mitigate a large part of that exposure. But I'll hand it over to Juby, if he wants to add something.

Speaking on NLEM, I think, first, there are 2, 3 new assets got added into this, right, which is Ceftum, T-Bact. These are big additions into the NLEM. Now the total impact, annualized impact for next year, FY '24, could be in the range of 8% to 9%. We're talking about INR 240 crores to INR 260 crores, INR 270 crores. That's massive. Now we should not see this impact as discrete price impact because most of these price impacts are so massive or significant that the price volume gains will kick in. So net, we've been thinking about how we can mitigate it. There are several things we are doing to mitigate. One is the volume, which we were talking about in the slide. Second is new launches, which is like the product life cycle extensions, which we're seeing in Calpol Plus. Third is the cost optimization. Fourth is the expense or the SG&A optimization. All these things will help us. Net-net, what we're talking about is roughly we have very good line of sight of 70% profitability mitigated as we speak, okay? So 8%, 9% top line impact flowing into the bottom line. 70% of that, we will be seeing mitigated. Rest of the things we are still exploring. As we had in 2014 and subsequently similar level of impact, but we've been mitigating it. The same perhaps will be happening this year also.

So this 8%, 9% is pre-WPI price increase?

Pre-WPI. WPI will be further helping us to mitigate further on this one.

Okay. Got it. Second question is on the vaccine part and what you were answering to one of the earlier participants was how the mix has changed over let's say a 20-year period. So there are 2, 3 questions on vaccine forces. If I were to look at last 5, 7 years, can you just probably give some more color in terms of how the, say, the contribution? So what were the top 5 vaccines contributing to the portfolio. How has that changed, say, versus last 5, 7 years and now? What are those? And if we wanted us to understand further the market segmentation, if you can provide a little bit more perspective on which segments you have seen more sharper degrowth and which segments are still growing. And in that sense, how is our overall competition in each of those segments. So -- yes.

So I'll -- there were multiple questions in that, but I'll try to unpeel those layers and try and answer the broad themes. But yes, I think if you look at the biggest launch that we had in the vaccine -- private vaccine business was almost a decade back when we launched Synflorix, which was our brand of pneumococcal conjugated vaccine indicated for obviously prevention of pneumonia. And this was -- in fact, this was the first vaccine in the industry to cross INR 200 crores in annual revenues. And today, this is exactly the vaccine which is in NIP. So will -- in the private segment, obviously, will this demand evaporate completely? Absolutely not because there will still be parents who will want to vaccinate their kids in the private setting, and that's why we still believe that any given point of time for a company like ours, we will still have access to vaccinating about 25,000 kids every month in the pediatrician's chamber with this vaccine. So that's one part of your -- so from a criticality standpoint, this vaccine -- so to the broader question, if you look at our vaccine portfolio today and look at what's in NIP and what's our exposure, our exposure, because you already mitigated that, is now less than 6%, 7%. So Rotarix, for example, which is our other brand for rotavirus, which is also in the National Immunization Programme, or now Synflorix, both these are accounting for less than 6% of our top line. So I think the globe is already factored. Where we're now playing is this hexavalent that I said, it's the largest vaccine now. It's almost INR 165 crores in top line value growing. So that's where we're investing all our energy. We have flu, which was one of the best Fluarix Tetra, which is not just doing the COVID times, those 2 years, but even today, as you can see, it comes in both Southern Hemisphere and other Northern Hemisphere 2 variants, given the seasonal changes. So that's another vaccine which is significant for us. And of course, we continue to have leading brands like the Tdap in maternal immunization with BOOSTRIX and HAVRIX and MENVEO. So clearly, our portfolio is now very well aligned as opposed to in the past where one brand was pulling up the whole portfolio. Today, it's much more balanced in terms of the contribution and also the growth end.

Okay. So when we're expecting the growth for this portfolio vaccine to grow next year, ex of Shingrix, what kind of a growth we see start coming for us because of the effects at the end of immunization and other elements, that kind of going -- that kind of behind us now. So how should one look at the vaccine portfolio ex-Shingrix behaving for us? And what kind of a team -- MR team is kind of supporting this particular division?

So it's a very good question again. Look, from a massive slide that we saw for the last 12 to 18 months, consistently the pediatric vaccine segment, as I said, the last couple of months, which means 2 months of the last quarter of this financial year, we are seeing the business stabilizing from as opposed to the 19%, 20% growth, we have low single digits, 3%, 4% growth, which means we've turned the corner, at least in terms of holdings. The idea is as we enter the new financial year, get back to double-digit growth. Of course, as I said, we also have the advantage of some of the vaccines which were stock constrained like the -- we have a vaccine called varicella, which was out of stock for more than a year. So that's coming back, which is for chicken pox, basically. So that's coming back this year. So with all of that, we should be able to get back to -- our intent will be to drive double-digit growth again. Juby, you want to add something?

No. I think you completed it. It's double-digit growth we are expecting, particularly with the vaccine business stabilizing, some supplier assumption, ex-Shingrix. And also just to add one more point, the NIP part which was having some impact, it's so miniscule at this point in time, so that's not going to have a big impact in terms of decline.

Okay. Just one more question was on the MR team, if you can provide more perspective in terms of how's the individualization in terms of the specialty vaccine and then other segments, what kind of MR team is focused in each of these -- just to get a perspective of how we are going about, where are we kind of putting more resources into the future opportunity?

So as we -- as I said on the -- one of my slides, our strategy is very clearly aligned in terms of therapy areas and the customers that we serve. And that's how the strategy is dictating this current structure. So as we speak right now, we still have a large -- if you were to look at this as a continuum, at one end of the spectrum, you have the mass teams, which are largely the general practitioner-led pediatrician teams, which promote products like Augmentin, Calpol, which are more of the reach, more of getting the share of voice out. Then we have the dermatologic business team, which is a very specialized focus, and we have the pediatric vaccine team, and then we have the Shingrix team. So that's how we're structured. On top of that, I think we continue to provide a lot of access to science. We still have a rural team, which is based in the Tier 3, Tier 4 towns. We have about 175 of them who are based in the interiors of India. And they cover the entire portfolio because, largely, the practitioners in these areas also double up as specialists. So this is how we are structured currently, and that's exactly to serve the strategies that I showed you in the earlier slide. So this is how we are structured. What's changed in the last 3 months is we've tried out a completely new Shingrix team, and we have a specialty team, which we're just reinvesting similar to what you heard. We just expanded that team to build some of the new capabilities. So this is how we're structured as an organization.

Just 2 more questions. One is on the employee base part. I think we rightsized around 125 people in the distribution -- sales and distribution function. And so post this change in employee base, we're doing something around INR 140 crores, INR 150 crores quarterly run rate in terms of expenses. So should this kind of sustain, or we have avenues to further...

So the resizing, if you see from '22 financial year exit till now, it's almost 200 headcounts we have resized down, okay? So this is the trade team. So the inflationary pressure what we are seeing in the -- what you said, the employment cost, it is helping this -- resizing is helping us to manage that. Other than Shingrix, we are not investing in headcounts in other areas because we have resized it already. We have already categorized into these 3 categories, and we are putting. Shingrix is again a new headcount, which we are positioning 200 headcounts into the business.

Just one last question for you. If you look at our own listed entity for the last 10 years, the returns -- shareholder returns have been below FDA returns to put it in that sense. If I have to look at the top management, if you can provide some perspective, how are they incentivized? Do we have formal ESAP policy, which kind of may bring more focus in terms of the growth part of the business? And how is parent looking in for the listed entity in India?

Well, we continue to be listed here. As I said, we have listed here for more than 50 years now. So that should tell you that we continue to -- and we have a Board of independent directors who are absolutely focused on revving up the growth engines of this company. So that's the top line. Yes, I think the global organization, so we do have visitors in India, including our global leadership. Obviously, given the geopolitics, India continues to be now an even more important market for us as an organization. So I think, yes, if you look at the last 10 years, the TSR is definitely -- it's left a sour taste in everybody's mouth, including ours. Can we -- what are we doing about it? I think we've -- as with any organization, we place some bets. Unfortunately, as the nature of business development of the bets that you place, some of them work, some of them did not work at all and have taken us back, including, for example, what happened with our plant and some of the key assets that fell off the radar for us. So obviously, the idea is to be forward looking and see what is it that we can do. And that's why I said my last slide was clearly focused on what will it take for us to deliver a 10% growth as an enterprise. If you look at the last couple of years, there has been double-digit growth on our -- on parts of our business. If you look at the general medicines, which is 80% of our business, that's grown by 10%. So hypothetically, if our vaccine business has delivered, if it was not these externalities that were completely out of syllabus, so to say, we would have probably been able to solve that growth story and answer some of your questions. But that's the intent moving forward. I think the whole organization, both globally here as well as the listed entity is focused singularly on the growth agenda right now.

This is Jinal from Awriga Capital. Just taking -- I have only one question. The global reorg that we had between the consumer and pharma business, does it have any implications for India in terms of focus for pharma from the points that you've been mentioning. So does that really have any focus from that trends?

From an Indian standpoint, not really because we were always -- we were -- there was no umbilical cord between the consumer and the pharma business connected in India because we have our 2 separate legally listed entities here. So to that extent, on the Indian market, it hasn't really made any difference. I think the only difference is, globally, obviously, it sharpened the focus in terms of putting energy into the biopharma, and that plays to our advantage because the whole organization is now focused on how we can increase the growth trajectory within the pharma business, of which India is continuing to be the largest business within the emerging market business. So we are the largest business within the EM group. So therefore, the focus even further improves moving forward. Joby, do you want to add something to this?

No, I think you said it. It's a completely different business. Now 2 things. One is we become more relevant in the emerging market group. Second is globally, as they're completely different entities, and the focus on research, development, finding new entities, all those things will go up globally. Eventually, that will flow into India, right, directly once they find something. So that is the simple connection we'll have. Other than that, logically, at this point in the ground, there's no difference. We are completely 2 different management teams. Everything is separate, not sharing on expense, nothing of that sort. So it's business as usual for us at this point in time.

So we have 2 folks who have raised their hands online. We have about 58 people at a point in time who joined, but 2 of them have raised hands. Melroy, if you can unmute one of them. And if you can introduce yourself and then shoot the question to Juby or Bhushan. Melroy?

Yes, I've asked them to unmute.

Yes. If the name is visible, maybe you can call them out.

Mr. Gagan?

Am I audible?

Yes, you are.

Sir, the first question is more of a clarification. You indicated a INR 250 crore impact of the revised NLEM on T-Bact and Ceftum on the top line, and you said you will be able to offset 70%. Does that mean the operating level EBITDA -- EBITDA-level impact would be around INR 75 crores because of this?

So obviously INR 250 crores is not for Ceftum and T-Bact. It's a total impact across all the NLEM portfolios, okay? So we got around 34 stock-keeping units under NLEM, so it's a total impact on all the portfolio. So yes, roughly 2% to 3% impact we'll be seeing on the bottom line for the first year at least, but we are expecting to mitigate in the outer years as we speak.

Right. And in the last few months, I think the prices of paracetamol API and also some other APIs have sort of come down and softened a bit. So as you enter the year, you -- on the NLEM piece, you probably get an 8% to 10% increase. You also get input prices correcting and the full impact of the last year's 10.7% increase. Would all of this not in some measure offset the impact of the revised prices? Or are you saying that after considering these positives, a net impact of 2% to 3% is what you estimate?

Yes. So after considering all these things, we are talking about 70%, 75% mitigation at this point in time because you have to see, this is a massive impact, right? So 8% to 9% is a massive impact on top line. So the mitigation covers all these things, including the cost savings, including the WPI, which is going to come up, as well as some of the changes which we are making in the manufacturing. For example, when you're seeing that video of Nashik, there's some packaging changes we are making on some products like aluminum to lami tube. So these are all going to help us on the cost savings. Now just to add, we've been working on this for a long time. If you think about 2014 or 2015, our EBITDA used to be 14%, 15%. It used to be higher. It has come down at some point in time, 14%, 15%. Now it has gone up after that several initiatives have gone through. So we are working on several initiatives like that. So as we speak, we are talking about 70% mitigated, 70% to 75% will be mitigated.

Right. And you also indicated that, for '24, you are aspiring to a high single-digit top line growth. If the impact on your top line is of the order of 8% to 9% negative from these 2, 3 products or whatever more SKUs you've talked of, it means the balance portfolio has to grow very sharply, probably closer to 20% for you to be able to create that sort of a top line growth. Could you elaborate a little more? I mean, is the new product that you're going to launch plus the baseline growth on other products going to be able to give you that much?

Yes, that's right. I think what we are seeing is 2, 3 dynamics playing out in FY '24. One is Shingrix launch. It's a big launch for us. That's one piece. Second is the volume increase against some of these price reductions, particularly T-Bact and Ceftum, you'll see a massive volume increase. That's what we are expecting. So with the volume increase, with the new launch, with some of the supply coming back on Varilrix, we are expecting that kind of a double-digit growth. So the net-net, we are talking about high single-digit growth.

Yes. And final question from my side. One of your slides showed the operating margins initially come down and then, over the next 3, 4 years, you aspire to take it up to, what, 25-odd percent, if I could eyeball it correctly. So what are the levers for you to be able to take your margins up once you sort of digested and encountered the impact of the revised NLEM?

So 2, 3 things. One is the NLEM is once in a 5-year impact, right, then you'll keep on having this WPI as well as the normal price increase coming up. So that is one major factor which will be helping us to improve on the margin. Second is a promoted category, which is a relatively high-margin business because that's going to grow high double digit or double-digit growth. That's also helping us to improve the margin. Last but not the least, the cost-saving initiatives which we are working on, that's also going to help us on margin improvement.

Sir, final question. Why is it that you have 2 SKUs in paracetamol, which is Crocin and Calpol. And Crocin is with your other entity, which is a consumer health. Essentially, they are both the same products. I mean, it could have been captured very easily in the listed entity. What's the size of Crocin versus Calpol for you? These are the 2 questions.

So I think I'll take that question. First and foremost, we are -- as I said earlier, we are 2 separate legally listed entities. So there is absolutely no connection between Calpol and Crocin. Crocin continues to be now a trademark owned by Haleon, as that company is now called. So there is no correlation. But if you were to look at the IQVIA data, I won't hazard a guess in terms of their size, but -- we continue to be the #1 paracetamol brand when it comes to the -- not just within paracetamol, but if you look at all the prescriptions that are written in India across all categories, across all brands, the #1 prescribed brand in India is Calpol. And also it is...

Sorry to have interrupted. My question is that what was the rationale behind putting one paracetamol brand in a consumer entity and one paracetamol brand in a listed -- I mean, in this entity, which is an Rx entity. Logically speaking, either it is a consumer brand or it is an Rx brand, which means that either the whole of the package should be with you or the whole of it should be with them. Why is it split up?

So I think we'll have to go -- yes, it's a good question, but I think you have to go back to history because this is a brand originally owned by a company called Duphar, as some of you might know. And it was divested by that company and then picked up by SmithKline. Then it went to the consumer business. There's a long history, but that's the reason why it stayed there, whereas Calpol remained anchored around ethical promotion. So it's sort of brand that you will see in the public media being advertised. So we're clearly rooted around ethical prescriptions, whereas the route that I think that company took was more towards leaning towards the OTC space. But again, as I said, you'll have to go back and see the history of how that brand had moved from Duphar.

And likewise, what was the rational thought?

Also the Calpol was having [indiscernible]

Absolutely.

Yes. That's true. Okay.

Gagan, I hope we've answered your questions. I don't know whether it's comprehensively as far as your mind goes, but I think you should tell us you've been tracking GSK for a longer time, so we'll connect with you for answers to some time on the history of Calpol and Crocin. There is one more hand raised, Melroy. If you could just announce the name and unmute.

Nikhil.

Am I audible?

Yes, yes.

Yes. I'm Nikhil Upadhyay from Securities Investment Management. Just 3 questions. One is a clarification to Juby. When you said this INR 250 crores of NLEM impact, and if we build in the WPI price increase and volume increases, what I understand is that the impact does get watered down significantly. And considering the growth and the cost initiatives, the impact on the margins would have been much more normalized. So when you say this 2% to 3%, do you consider that WPI price increase from April '23, which we will get? Just a clarification.

Yes, we countered that as well.

Okay, fine. Now 2 questions. One is, if we look at like, in your presentation, you mentioned that from '23 to '25 or '26, we would like to grow in high single digits. But if we break GSK's portfolio, there are 3 buckets. One is vaccines. One is specialty, and one is the general medicines. Now both on vaccines and specialty, if we look at our launches, these are more launches which are focusing on unmet needs, or there is a higher -- lower penetration of these products. So in a way, intuitively, this part of the portfolio can grow at higher single digit, and it used to grow in past pre-COVID. On the general medicines, if we look at it, we got brands where we've got significant market share. Like on an average, it's -- in our focus brands, our average market share is beyond 30%, 40%. And that part of the portfolio has also grown in high single digit or high double digit. So when you say over 3 to 5 years, the company's growth rate of a high single digit, and if I look at the portfolio breakup, which looks like intuitively can grow at a higher double digit, what part of the business is pulling this growth down?

So just like someone asked here, so the whole NLEM is sitting in general medicine portfolio, right? So that is approximately 10% of general medicine portfolio. Now to grow in double digit or high single digit, the business has to grow double digit, high double digit. Okay, so that is -- the pricing -- the whole pricing element is pulling it down. There's nothing else. We are expecting our promoted brands continue to grow double digits.

Okay. And the end markets...

The pricing element will be offsetting it, meaning it's high single digit.

Okay. The end markets are still -- so if we look at the end market, say, for Augmentin or of Ceftum or CCM, the addressable markets, are they still seeing healthy mid-single-digit or high single-digit growth because we've got significant market share. So maybe increasing market share beyond in some of the brands looks very difficult. So how do you see the end markets growing over? And do you see that can sustain at healthy growth for us to sustain growth in the general medicine portfolio?

So just -- let me just give you a bit of flavor of what I'm talking about. So if we talk about Ceftum, so which is one of the biggest impacted NLEM product, the price cut we are going to see is roughly 60%, the price is still to be notified to 60%, which means our price is going to come such low, the price volume play will play. So what will happen is there are a lot of patients, a lot of doctors who are not able to prescribe because of the high price of that product, will now start prescribing. So we mapped it out very clearly how to play on this one. So we believe some of those factors, particularly when the price becomes much more accessible, will be going to access the lower end of the pyramid. And that's what we're seeing in other products also like Augmentin. So it's the same analog which we have used as we were building up all this forecast. And we have seen that in the past also when the NLEM impact has been significant. So the volume play will be definitely the -- there's a market share gain will be the -- as well as the doctors who are using generics, there will be a shift. Some part of that will be from that. Some part will be from the market, building also will be happening. The category also will be expanding as the price dynamics change in the category. So it's a function of all those things. but we'll be expecting to see that.

Okay. Okay, fine. And just one last question. Now -- what we've seen is like there's a constant change in the management at the MD level, like in last 10 years, there's been a fourth change which has happened. And as an outsider, what we see is that the new incoming is always trying to clear out the problems of the previous. And by the time the problems get cleared, the management again changes. So there is no continuity in terms of, say, like a focus on how we have to grow and probably make the company stronger. And that's clearly visible in the earnings also of the company, so that we are flat where we were. So is there -- so how does the parent look at it because these 3, 4 years change in the management, how -- who's driving the focus in terms of making the company longer or larger over 5, 10 years. Who is driving this whole idea of the company over the next 5, 10 years? Where we want to be and how we have to be better than the market?

So probably, I'll take a stab at that. It's a relevant question. It's a good question, indeed. But as a listed company, as you might be aware, we are also having an NRC committee. We have a Board that's actively involved in terms of ensuring that there is leadership and, more importantly, leadership continuity in shaping and reshaping the organization so that we can continue to leverage this incredible equity that GSK has enjoyed for the last century. Now again, in a global organization like ours, it is also quite likely that talent moves from geographies, I mean, both of us have spent 12 years, but we've -- I mean, he spent his -- probably for Juby, this is the first job in India, although he's been with GSK for more than 14 years. And for me, in this 12, 13 years that I've been here, I also had a chance to work outside for almost 5 years. So point I'm making is it's also a function of when you operate in a global organization, some of these choices of who has to move where is also driven by how the organization is seeing the individual talent moves. Having said that, the leadership continuity is absolutely critical, and that's why I think even moving forward, I can't predict. I don't have a crystal ball to gaze and tell you, but clearly, in terms of our appointments also, I think the Board has been quite clear about ensuring that type of leadership continuity. More importantly, I think even when I look at my own example, I've been here for the last 2 years. I was a commercial head for the GenMed business. So one thing that you will not see happening is me cleaning anything because I was very much a part of the team running the pharma business before I got this job 3 months ago. But I think I don't have an answer which can directly tell you whether -- this is -- I mean, whether to say whether this is right or wrong. But I think in global organizations, this is a part and parcel, but I think -- in terms of ensuring leadership continuity, the organization is fully aware of why we need to have that continuity moving forward. That's all I can say right now.

Yes, I think the company Secretary has a word to say.

Just to add, while the earlier one was for 2 years, your appointment itself is for 4 years, and that's an indication of change.

Okay. So...

I thought they wouldn't be knowing it...

So we have Ajay, our company Secretary in the room, so since that this contract with Bhushan is for 4 years, if that's some indication of how things are. No, thank you, Ajay. We have 2 more hands raised. We'll take those 2 questions. One is from Rohan Samant, and after that from Mr. Sameer Baisiwala. So Rohan, your question.

Yes. So on the NLEM portfolio, where the price reduction would be effective mostly in FY '24, so the WPI-led price increase would be allowed in FY '25? Is my understanding correct?

Yes. I think WPI starts from April. It depends on government notification, right? So NLEM will start some of the product started got implemented from early Jan this year. Some will start from next quarter. So depending on the timing of implementation, this works, okay? So theoretically, WPI starts from April every year.

Right. But let's say, a product, the price cap is implemented from, let's say, April or May of '23, the WPI would be applicable from April '24 onwards, right, for those [indiscernible]...

It depends on how government is going to notify that price, right? So we're still waiting for the final pricing to come out. It could be how government is going to notify that. It could be with WPI also that could be notifying it. We don't have clarity at this point in time, but we have to wait and see how the prices are going to get notified.

Okay. So we go to Mr. Sameer Baisiwala.

So the question is, how are you thinking about Shingrix pricing here in India?

Well, I mean, if you look at the global pricing, I would say in India, it's priceless. But on a serious note, obviously, we will not -- so if you see what the pricing is in the global setting, it's significantly different. But coming to the Indian -- the reason I'm not giving you the price because it's still -- the product will be -- the brand will be launched next month and -- let me say it is competitive. Given the fact that it brings -- it's an innovative vaccine that has 97% efficacy. And the first of its class, nonlive vaccine for Herpes Zoster. It's fairly competitive.

Sir, I asked this question...

We'll have to just wait for a few more weeks.

I asked this question because I think it's priced about $200 in the U.S. per dose, and 2 doses need to be taken. So that seems to be very prohibitive, even at a 30% pricing for India. So therefore, you may not be able to realize a lot of value that we were discussing for the last hour or so.

No, it's a fair point. And I can assure you, it's not the U.S. price. I mean in that sense. We will definitely have a competive India price for our Indian subjects.

Okay, great. And just one final one. You mentioned about taking 10% price increase through fiscal '23. So -- and I think the industry in general took 6% to 8%. So what has been the response from the doctors in such a price-sensitive market? And what's the outlook for fiscal '24 because of our WPI seems to be 3% to 4% range. So are we looking at a much lower price increase next fiscal?

So for WPI products, we can only take what government notifies. So we're not going to decide what is the price we're going to take, right? So last year, government has notified, it has 10.7-odd percentage. So we are taking that. It's a completely price-controlled portfolio, and it's completely up to government to notify.

But on the noncontrol, obviously, we have a -- in a calendar year, we have the opportunity to take...

We can take, but that is, again, depending on the competitiveness of the product in the market.

Just going back on this. So how has been the response by the doctors when you did take 10% price increase through fiscal '23? And based on your estimation for next year, price control and noncontrol, the government notification of WPI is also based on what WPI has seen through these months, isn't it, so just for, say, outlook for fiscal '24?

No. I think -- so I mean, look, over the last 8, 10 years, when you look at our portfolio and all the assets that I had outlined in the general medicines portfolio, except for Ceftum, which was probably a statistical outlier, most of our brands have always been in a certain band. So it's not that we're being comparatively so expensive that we have been out of the range. So when we took the price hike also last year, I don't think it really made a material difference in terms of the elasticity. Physicians do understand. I mean, look at -- I'll give a listed example of Calpol. A pill that costs INR 2 per tablet. I mean, when you look at the cost of the raw material of paracetamol having tripled over the last 12, 18 months, the price was still under INR 2 per pill. So to that extent, even if you were to increase it by 10%, the materiality doesn't exist. So to that extent, I don't think physicians really -- given our portfolio -- given the nature of our portfolio, it didn't really make a difference. And that's exactly the reason that Juby was saying earlier. We are absolutely confident that this cut that's going to happen on Ceftum is going to help us reshape the whole market for cefuroxime. And Ceftum is a trust mark. So we are very confident that that's going to play out favorably for us in the coming fiscal in driving volumes.

We have one last question from [ Behzad ]. Behzad, if you can ask your question. That's the last question for the day.

Am I audible?

Yes, you are.

So 3 questions from my end. So on the 6-in-1 vaccine which you have launched, do you have competition in the market?

So Behzad, yes, it's a fairly competitive segment. We do have competition, both from multinationals as well as Indian companies.

Okay. And on the vaccine front, Synflorix is quite a meaningful product for you, and now since it's in the UIP, how do you see the private market shaping up? And since you'll be facing competition from [indiscernible] Biologic in the field, do you expect this product to sustain us?

So look, very good questions. I'll just probably half answer a part of your first question. So in spite of that competition that I talked for 6-in-1, we still have a market leadership position in the hexavalent category. So we still have more than 50% market share, actually 60% in hexavalent as we speak. Coming to the PCV category, yes, over the last 12 years, we've had -- we've retained our leadership. As you rightly said, a part of that business has started going towards NIP now. We have new players even in the private segment. But I think that's exactly the reason why companies like ours are continuing to invest. So if you're following our vaccine strategy globally, we just acquired a company called Affinivax globally, which has a successor to Synflorix. So that's going to be the first 24-valent vaccine for pneumonia. And pneumonia will continue to be one of the most important vaccine-preventable disease for consideration. So as a strategic imperative, this is -- this antigen continues to be important for us. This area of pneumonia continues to be important for us even moving forward.

Great. You have one more question, Behzad?

Yes, I do. So -- and what percentage of your raw materials are imported and in which currency you are trading?

So raw materials, the whole vaccine portfolio is imported. This vaccine portfolio, 20% of our business is in vaccine portfolio. The whole vaccine portfolio is imported. Other than that, hardly anything is imported, less than 5% is imported products. So 97% of our pharma business is from local sources.

Thank you. So with that, we call it a close. Thank you, everyone, for joining online and especially all of you who came here to join us for snacks for those of you present here. Thank you very much. We can now close the call, Melroy. Thank you. Thank you, Bhushan. Thank you, Juby.

Thank you very much, everyone. Thank you.