Glenmark Pharmaceuticals Limited (GLENMARK.NS) Q3 FY2026 Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the Q3 FY '26 Earnings Conference Call of Glenmark Pharmaceuticals Limited. [Operator Instructions] Please note that the conference is being recorded. I now hand the conference over to Mr. Utkarsh Gandhi, Senior General Manager, Investor Relations for Glenmark Pharmaceuticals Limited. Thank you, and over to you, sir.

Thank you, Lizanne. Good morning, everyone, and welcome to the Q3 FY '26 Earnings Conference Call of Glenmark Pharmaceuticals Limited. Before we start the Q&A, let's review the performance for the quarter. For the third quarter of FY '26, Glenmark's consolidated revenue from operations was at INR 39,600 million as against INR 33,876 million in the corresponding quarter last year, recording overall Y-o-Y growth of 15.1%. For the 9 months of FY '26, Glenmark's consolidated revenue was at INR 1 lakh 32,119 million as against INR 1 lakh 655 million, recording a Y-o-Y growth of 31.3%. In terms of our regional performance, starting with India. Sales for the formulation business in India for the third quarter of FY '26 was to Page 12,986 million as against INR 10,637 million in the corresponding quarter last year, recording a Y-o-Y growth of 22.1%. In terms of secondary sales, Glenmark continues to significantly outperform the IPM in terms of Y-o-Y growth as per IQVIA. Glenmark's India formulation business recorded a growth of 15.8% in the third quarter and 13% as per MAT December 2025 compared to the overall market growth of 10.9% in the third quarter and 8.3% after at MAT December. Glenmark continues to outperform the overall market in key therapeutic areas like dermatology, respiratory and cardiac. Glenmark's India business is ranked 13th with a market share of 2.32%. The company has 11 brands in the IPM top 300 brands as per MAT December data. And in terms of its key therapeutic areas, we are now ranked second in terms of dermatology, second in respiratory and fourth in the cardiac segment as per IQVIA third quarter data. In terms of new product launches. So in Q3, Glenmark announced the launch of NEBZMART GFB Smartules and Glenmark AIRZ FB Smartules, the world's first nebulized fixed-dose triple therapy for the treatment of chronic obstructive pulmonary disease, or COPD. Both products combined 3 proven medicines, glycopyrronium, and budesonide to reduce area of structural inflammation and improve lung function. In a clinical study conducted in India, this triple nebulized triple therapy demonstrated rapid improvement in lung function and better control of -- among patients. The treatment was well tolerated and demonstrated a good safety profile, offering patients a simpler and more effective way to manage COPD. In terms of some of our other key products, particularly on the on the innovation/specialty front, TEVIMBRA BRUKINSA, which we partnered with P1 and launched in the first quarter. In a short period of time, these 2 brands have seen a very strong uptake in the market as a differentiated treatment option for patients across multiple solid tumors as well as hematological tumors. The company expects these 2 brands to meaningfully contribute to the India business growth over the next 2 to 3 years. LIRAFIT, the company was the first to launch the biosimilar of LIRAFIT. It continues to hold a clear market leadership position in the liraglutide market and gives a good segue for the company to launch other GLP-1 agonist also. And JABRYUS, which Glenmark partnered with Pfizer and launched in January 2024, this continues to be well received by dermatologists as a novel treatment for mandate to severe atopic dermatitis with improved efficacy as well as overall convenience to patients. In terms of the Consumer Care business in India, the GCC business delivered sales growth of 21.5% Y-o-Y. The flagship brand, Candid Powder, delivered a strong revenue growth of around 17% in the third quarter and has now more than 56% market share as per the IQVIA data. Call portfolio also delivered strong revenue growth of 50-plus percent in the third quarter, and some of the other brands like Bandra, Alovera, Atisoft also delivered high double-digit growth during the third quarter. Moving on to North America. The North America business reported revenues of INR 9,706 million for the third quarter of FY '26 as against revenue of INR 7,815 million for the third quarter. This includes the out-licensing income for ISB 2001. Net of that, the core business Y-o-Y group for the North America region was 4.1% in the third quarter. Glenmark launched 4 products in Q3, all injectable products, which included sodium bicarbonate injection, the ropivacaine injection, epinephrine injection and new covering calcium injection. Two ANDAs were filed during the quarter. Glenmark plans to file 3 ANDAs in the [indiscernible] quarter. In terms of our respiratory portfolio for the U.S., Glenmark has filed 2 ANDAs for generic new spray and the rating approval for the same. The company has already filed the ANDA for generic Fluent 44 in May 2024. And in Q3, we also filed the ANDA for generic flow and 110. And the company is also working on other respiratory products, which are in the pipeline and will be filed over the upcoming quarters. Glenmark's marketing portfolio consists of 214 products and currently has 53 applications pending at various stages of the approval process. In November 2025, Glenmark announced that we try received the EIR from the U.S. FDA for its foundation manufacturing facility in Mondo, North Carolina, with a voluntary action indicated, or VAI status. With this positive development, the company will restart manufacturing at the Monroe site. Moving on to Europe. Glenmark Europe operations for the third quarter of FY '26 were at INR 7,963 million as against INR 7,297 million, recording growth of 9.1%. The recovery in the -- business during the third quarter, particularly due to the onset of the winter season, which aided the growth of the respiratory portfolio. As per the secondary sales data, Glenmark continues to our performance covered market in CEE countries such as Czech Republic, Poland and Slovakia. There were 5 new product launches in that region, which also aided the growth in the generic markets of Western Europe. Glenmark's performance remained stable with strong achievement in Germany and the Netherlands. The branded respiratory portfolio in Western Europe also sustained its momentum. Glenmark continues to focus on increasing contribution from branded markets and portfolio in Europe. Glenmark announced the launch of WINLEVI in the U.K. market earlier this year, and the brand has seen a strong uptick throughout the year in the U.K. In October 2025, Glenmark's partner was more marketing authorization approval for WINLEVI in the European Union as well and Glenmark is now planning to initiate the commercial launch in its licensed European territories by Q1 FY '27. Moving on to emerging markets. For the third quarter of FY '26, revenue from the emerging markets region was INR 8,119 million as against INR 7,491 million for the corresponding quarter last year, recording a growth of 8.4%. Our Russia business continues to perform well. As per the IQVIA secondary sales data, our Glenmark Russia business reported growth of 15.1% in Q3 and at December. In core therapeutic areas of dermatology Glenmark recorded faster second lien sales growth than the overall market, and Glenmark continues to rank ninth in dermatology and second in the expectorant market. Real as one of the key brands in Russia continues to gain share. The Latin America region delivered high double-digit growth in the third quarter. Key markets, which as Brazil, Mexico witnessed a strong recovery on the back of multiple differentiated product launches in the respiratory segment. This, again, is a key brand here, particularly in Mexico, and the waiting of premium Brazil and is expected to help sustain the high growth in the region. In the Middle East/Africa region, our secondary sales growth remains subdued in key markets, mainly on account of some or new product launch delays. RYALTRIS, however, continues to see strong pickup post its launch in key markets in the region such as Saudi Arabia and in the leading energy product in South Africa. The reason is expected to show gradual recovery towards growth starting in the fourth quarter. Key markets in the APAC region, such as Malaysia, Australia, recorded double-digit secondary sales growth during the third quarter. The overall region is expected to maintain strong performance in the forthcoming quarters. Glenmark continues to remain one of the leading dermatology and respiratory companies in the APAC region. A quick update on our global innovative portfolio. RYALTRIS -- starting with RYALTRIS. So as of December 2025, marketing applications for RYALTRIS have been submitted in -- to more than 90 countries across the world. The product has been commercialized in 52 markets and is expected to be launched in additional 10 to 12 markets over the next few quarters in Q3. We launched RYALTRIS in 3 additional markets, including Colombia. As per the IQVIA data, RYALTRIS continues to see a robust performance both in terms of value and unit market share. And as reported global secondary sales growth of 50% plus Y-o-Y. Glenmark's partner companies across Europe and emerging markets continue to witness a steady increase in its market share in all licensed markets. Glenmark and its partner in Mainland China, Grand Pharmaceuticals, secured approval for RYALTRIS in October 2025. The product is expected to be launched by Q1 of FY '27. And Glenmark's partner in Thailand, Organon, is also planning to launch RYALTRIS in Q4 of this year. WINLEVI, as mentioned earlier, company launched WINLEVI in the U.K. market in Q1 and saw a strong uptake throughout the year. Glenmark's partner received marketing approval for WINLEVI Europe, and we are -- planning to initiate commercial launch in a licensed European territories by Q1 of FY '27. And WINLEVI is currently under regulatory review in South Africa as well, where Glenmark has the right commercial guide,. In IO, or Envafolimab, Glenmark has filed an IL marketing applications in 18 markets in day, the first commercial launch is expected in FY '27. Other companies received authorization from regulatory authority in [indiscernible] and [indiscernible] for supply of early access to patient programs. And as announced earlier, Glenmark also initiated a global center Phase III study in resectable Stage III -- neoadjuvant or adjuvant non-small cell lung cancer. Trastuzumab Rezetecan, partnered with Hungary in Q3. Glenmark advanced preparations for the initiation of marketing applications for Trastuzumab Rezetecan next-generation HER2-targeting antibody drug conjugate, which was in-licensed in the second quarter from Grand Pharmaceuticals for several emerging markets. The company expects the first wave of MA applications to begin in Q1 of FY '27. Lastly, envafolimab partnered with Hangzhou in the third quarter of FY '26, Glenmark entered into exclusive license and collaboration and distribution agreement with an pharmaceutical group for envafolimab, a third-generation EGFR tyrosine kinase inhibitor for the treatment of non-small cell lung cancer. Glenmark rights develop, register and commercialize on envafolimab across Middle East, Africa, Southeast Asia. Australia, New Zealand, Russia, and a few selected Caribbean countries. envafolimab was approved in the U.K. in June 2025 for the first-line treatment of adult patients with locally advanced or metastatic non-small cell lung cancer with activated EGFR mutations and the treatment of adult patients of locally advanced metastatic GFR, T790 mutation positive and [indiscernible] also received positive CHMP opinion in the third quarter with an MA approval expected in the fourth quarter. And envafolimab approved for 4 indications in China is already marketed in China. Glenmark is preparing to initiate marketing authorization applications for envafolimab in the first half of CY 2026 and commercial launch anticipated during the second half 2. Lastly, on IGI. So Glenmark -- IGI features a robust pipeline of innovative oncology molecules targeting multiple myeloma and solid tumors. And IGI also has 2 autoimmune assets which have been our licensed to leading companies and are in clinical development. For IGI 2001, IGI is currently executing the Phase I study in Australia, United States and several European countries. The study continued to dose expansion in April and is continuing to rapidly enroll patients. Our next clinical molecule in oncology, which is ISB 2301, part of the muni platform. This is a first-in-class multi-specific NK cell engager developed for solid tumors in the first program from IGI's platform. As mentioned earlier, the clinical candidate was selected in October 2025. The program has now entered IND-enabling stage, and we are expecting to file the IND before the end of calendar year 2026. In terms of our immunology portfolio, ISVAP, which is partnered with [indiscernible] -- so -- Phase II clinical study in intratenuprativa continues to advance with ongoing patient recruitment and dosing, reinforcing the program's strong operational progress. Almirall also plans to initiate POC additional inflammatory skin diseases for the FIT. And ISB 830, Phase I trial was initiated in the first quarter of calendar year 2025. Astria presented initial data at the EADV conference in September 2025. And now we are working to actively evaluate the most promising path forward for this molecule to accelerate development. From the Glenmark management team, we have Glenn Saldanha, Chairman and Managing Director; and Anurag Mantri, Executive Director and Global CFO. I'll now hand it over to Glenn for his opening comments.

Thank you, Utkarsh, and good morning, everyone, and welcome to the Q3 earnings call. If I look at the third quarter, Glenmark, we delivered strong growth in the third quarter with a broad-based growth across most of our markets. While the overall geopolitical uncertainty remains prevalent, depreciating global currencies helped our overall performance during the third quarter. In the third quarter, we continue to launch some very exciting innovative products in our core therapeutic areas such as GFB nebulizer in India in the chronic respiratory segment. Also some of the products that we launched earlier TEVIMBRA and BRUKINSA continue to drive our India performance. The positive outcome at Monroe has long-term strategic value for our U.S. business. In this quarter, we also partnered with Hans for moat, which is the third-generation novel EGFR. We're pretty excited about this asset because it will come to market in the second half of FY '27 and can significantly enhance our overall innovative franchise. If you look at innovative franchise, we have about 7, 8 products, innovative-led global assets, which will drive our sales growth over the next 5 years, primarily in the areas of oncology, dermatology and respiratory medicine. IGI. On the back of 2001, we continue to do exceedingly well with our IGI platform. 2001 is progressing well in terms of the dose expansion study, and we're expecting 2301 filing by the end of this calendar year, which we're pretty excited about. Going forward, we expect a strong finish to FY '26 with the good growth, particularly in the U.S., where some of our respiratory launches that we are anticipating in the fourth quarter of this year. Our India business continues to outperform the market, and we see good long-term growth levers, especially in chronic respiratory and our oncology franchise. We think development of Rukenza is the first launches, we will also launch eventually abrocitinib and the Henry asset and various other assets in India, which will drive the sales of our India franchise. So we see very strong growth coming out of India over the next 5 years. We will also launch abrocitinib in the second half of FY '27, and we'll keep scaling our RYALTRIS and win levy going forward. RYALTRIS will be a $100 million product for us this year and continue to scale as we go forward. So in summary, the next 5 years, continue to remain pretty exciting for Glenmark in terms of growth performance across all the parameters, and we continue to move up the value chain in -- especially with our innovative franchise over the next 5 years through the 3 7 launches, which will clearly define the company and the future as we go forward. We clearly remain on track to achieve our overall objectives that we laid out as part of Glenmark 3.0. With this, I'll hand it over to Anurag to give his opening comments, and then we can take Q&A.

Thank you, Glenn. Good morning, everybody. We delivered on our near-term guidance with a strong revenue performance and the margin perform of 20% in this quarter. The business growth was helped in part by the currency acquisition across our key geographies. However, our base business performance continues to remain strong, especially in key branded markets. With our gross margin in current quarter was impacted by the product mix. However, we saw a good operating leverage, which helped overall margin. We continue to remain net cash positive and are on track to be a target that goes back by March Multiple initiatives are ongoing to help normalize working capital movement to remain around 115 days of net working capital days, in line with our guidance by -- we remain confident of closing FY '26 on a strong note and foresee a good start to our net growth venue of Glenmark 3.0 from 2027 onwards. Thank you.

Thanks, Anurag. So with that, I think we can open the floor up for Q&A. Lizanne, over to you.

We will now begin for the question-and-answer session. [Operator Instructions] The first question is from the line of Damayanti Kerai from HSBC.

My first question is on comment around gain from currency depreciation during the quarter. So if you can just quantify how much was that? And excluding that, what kind of growth you have the content?

So Damayanti,currency acquisition sets and it goes into the multiple part of the agreement. So in a normal business case, whatever the revenue and in terms of the changes converting that revenue from that geography into the rupee term, that does ante normal EBIT, right? And you see on an exceptional item, there is a currency difference of INR 7.3 crores which is only on exceptional items. So out of exceptional item, INR 17.8 crores is due to the labor cost and balance INR 77 -- sorry, INR 7 crore is because of the exceptional item. And so it fits into the multiple part of the businesses, and it's difficult to actually quantify that.

Okay. My second question is on the [indiscernible] from the FDA. So since your last communication, have you heard anything incremental? And when you set the agency to come back with [indiscernible]?

So all I can say is we've had multiple discussions with the agency, and we are very close to -- we're hoping we'll get an approval very quickly on February 24.

You mentioned respiratory will be significant in the fourth quarter. So [indiscernible] will be part of that?

We are hoping that Flovent is part of it, but we also have the nasal spray and various other products in the respiratory franchise, which could get approved in Q4.

Okay. And my last question is on your working capital management. You mentioned 115 days is something which we are targeting by March '26. So in terms of key changes and progress we can walk like what are the key initiatives and how things are shaping since last quarter when we had some write-offs, et cetera. So if you can just and talk a bit about your working capital management part?

Yes. So Damayanti, we have initiated multiple options basically. So one was on the sales side, basically to get the debtors reduced and that is through the factoring and some of the other instruments. So including the other market like Europe and Lat Am, which we were not doing again, and which obviously at a -- we will be very cost conscious on this part. So that's one on the sales side. And similarly, on MSME and vendor side also, we are trying to elongate the payment cycle. So the RBA-related legislate channels, which include vendor financing and some of the vendor bill discounting sort of thing, which will help us to move both on the sales side as well as on the purchase side to reduce the working capital cycle.

Okay. Against December, where do you time against this target of 115 days.

Right now, we are actually, again, lower than 115 days. But as the business activities increase, that's why we are keeping. But right now, we are at close to 110 days.

The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services.

Sir, on Monroe now that U.S. FDA issues [indiscernible]. So how do we -- what would be the sort of trajectory in terms of business? I guess, product approvals or since -- so how do we start the commencing production?

So I think we will start commercial production in this quarter. And we have 1 or 2 approved products, so we will start commercializing that next year, you can anticipate we will sell above 3 products with a number of filings, right, next year. And I think the way to think about Monroe is it's -- it will take some time, right, for the decide to be fully -- in full flow, right, in terms of commercial production. And at the operating level about, I would say, about 4 years, right, from today, we will we will break even at the operating level.

And also, how do you intend to increase the number of filings from this side maybe over the next 12 to 15 months?

I think every year, we will have at least 3-odd 5, filings, right, from the site. And we are working specifically on very complex injectables, right? So we're not doing any run-of-mill products. So that is further enhanced the filings.

And sir, secondly, -- as you highlighted it's [ $100 million ] out now, major geographies and their contribution litany geographic is contributing than 10%, 15%. If you could just rephrase that.

It's pretty broad-based. So Europe, obviously, is a big driver, along with some leading emerging markets like Russia, Australia and multiple other countries, right, which where the bulk of the sales are coming from. But I think it's pretty broad-based overall. So there's no country which is more than no geography, which is more than 20%, 25% of sales, somewhere thereabouts.

Got it, sir. And lastly, on gross margin, like I exclude the licensing income. The gross margin [indiscernible] highlighted that it's a product mix, but is there anything further because without the out-licensing and the gross margin is much lower [ 169%. ]

So it's largely because of the product mix and geographical mix because of that. I think -- but I think we are on track. I think we should be I think you will see a recovery on this. And what we see our guidance is the overall at EBITDA level, we are on track to deliver our guidance of 33% on a sustainable basis.

Also just one point on gross margin. If we get these new product approvals, right, in Q4, you will see a definite uptick in the gross margin.

Got it. And sir, just a question on the suggestion that if you could put the R&D expense in the presentation or the press release itself, given that it's a poor sort of for Glenmark Pharma, it will be good into commentary in the presentation.

Sure, Tushar. And just to reiterate to R&D for this quarter was INR 290 crores, total R&D.

The next question is from the line of Kunal Galeria from Axis Capital.

Glenn, in Europe, you have shown a repeat growth of around 9%. But I think the currency appreciation. I mean -- sorry, repeat would be around 15%? So do you decline in constant currency in Europe

See, I think Europe, the way to think about Europe is we've had a phenomenal last 3 years or 4 years, right? I mean, the business have done exceedingly well, if you look at our European business, right? Given that the first half, we've had some challenges in terms of growth, right, in the first half. Going forward, I think Europe, you should expect like a single digit to low-digit growth from here, right, given that we've grown our 25% CAGR over the last 3, 4 years.

Sure. But I think you had earlier mentioned that pay in the medium term, it can grow in double digits. So is it the core launches are a bit slow. See, '26, I can understand from but about FY '27, '28. Can you stir on double digit?

I think we can grow double digit in Europe. I mean the key is we are waiting for some new product approvals, right? I mean, for example, in F '27, we should have at least a couple of respiratory product launches, right, which should drive Europe. Also, we should see some incremental growth coming in Europe in F '27 and beyond. So overall, the business and WINLEVI also will contribute, right? I mean we're just launching win levy in U.K. and in Europe. So overall, the business should continue to do well, right? But I mean, just to be conservative, we are seeing high single digit to low double digit, right, growth for Europe going forward.

Increasing contribution of branded market related to this actually.

Sir, secondly, on the ISB product at 13, and I see both products are progressing well now. So can you share what can lead to milestone payments for you?

We don't give any visibility to specific milestones, right, as a company. I mean, we've stayed away from that. So I think look, I think the takeaway message is we have 3 innovative assets all progressing well in the clinics, right? So 2001 continues to do well for us. Additionally, 880 with Almirall starting the Phase II, that's an exciting asset. And then, of course, 830, right? So I mean, we have these 3 assets in the clinics. And hopefully, this year, by the end of this calendar year, we'll have 2301 also going into the clinics, right? And we have a good pipeline of innovative assets from here on, right? But I think from a commercial perspective, the way to think about it is the next 5 years, right, will highly -- will be contributed by these 7, 8 innovative assets, right? The Hansa Hungry envafolimab, Ryaltris, wind levy, TEVIMBRA, I mean these are the next 5 years. And then post that, the following 5 years, will be all about 2001 and some of these immunology assets and some of the rest of our portfolio. So I think that's the next 10-year journey right for the company, right, on the innovation side.

Sure. And just one more if I can. You have increased your filing base in the U.S. So can I ask for which plants are you doing the filing because indoor battery are still active in the rental?

So I think the way to think about our U.S. business is there are 2 plants, Aurangabad and Monroe, right, where the bulk of our filings are coming out of Goa and Indore under warning letter. So we've transferred some of the products to some U.S. CMOs. And I mean we got a sucralfate suspension approved which was from one of the warning letter sites. And likewise, we have some other products which are [indiscernible]. But the, we have completely discontinued U.S. commercialization and filings. Yes.

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

Just some numbers. This INR 290 crores of R&D, if you can split between Iconas and the rest of the business?

Around 50% was out this was IGI-related.

Okay. Okay. The second one was regarding your other expenses, which seem to have come off on a year-on-year basis despite currency depreciating impacting costs in minor international markets. So if you can give some color on why the other expense is coming down? And how should we think about that going forward?

So other expenses broadly remains in line, but you see on a quarter-on-quarter basis sometime because of approval and the phasing of the expenses sometimes it goes lower. But I think, overall, we should see inflationary related impact on the other expenses. So this quarter, it looks lower, but I think it's more a phasing and booking it.

Okay. And then final, sir, if I can ask on -- if you can share the net cash number and also the CapEx that you have done for this year, both tangible addition and intangible addition fees?

So CapEx in this quarter was around INR 215 crores, and YTD CapEx was INR 715 crore. And on this quarter, CapEx, around 55% was on intangible and 45% was tangible. So that's what the broadly CapEx number was. On net cash, if you see, we remain net cash positive. And in fact, gross debt was close to around 100, and net cash was also close to INR 600 crores. In fact, we had a large payment in this quarter of around INR 120 crores, which includes IPI tax, dividend, we have said we had a CapEx amount. So that's -- despite that, actually, we remain on cash overall net cash positive.

So sir, what is the number, sir, sorry? Net cash number is it?

Around INR 600 crores.

Net cash is INR 600 crores.

Gross debt is about INR 600 crores. And the net cash is...

[indiscernible]

Okay. Okay. And just in terms of your future liabilities, if you can, what should we sort of pencil in because some of the licensing deals that you've done from various companies in the recent past and also some liabilities related to litigation, if you can have some visibility for this year, next year, how should we think about payouts that if we have to factor in.

So I think just a couple of things on the legal settlements, obviously, Saion, we can't give too much of visibility. However, if you look at the MDL, right, we have done a settlement with the DPPs. That's public information, right? And we still have some of the other classes to go, right, which is mainly the AGs and the EPPs, right, on the MDL, which is probably the largest right now in terms of legal cases. So that's on that side. On the innovation side, with us doing these 3 transactions, right, the Hungary transaction, obviously, some of it is built into the intangible number that Anurag mentioned. And abrocitinib, we are still in the process of paying that. I think that is [indiscernible]

So timing-wise, it could be this quarter or it could be early next quarter. I think because it's difficult to actually give you that specific because it depends on the commercial progression of the deal. But I think it could be somewhere at the end of this quarter, early next quarter.

And then going forward, beyond that, Saion, the next big milestones are all linked to the launches of these products, but we don't anticipate any big amounts being paid on any 3 of these assets, right? So I think that's kind of where we stand. It's more back ended, royalty-based and sales in milestones and -- which are the drivers to the numbers.

Thank you. The next question from the line of Krish Mehta from Enam Holdings.

I have 2 questions. The first is on your specialty business. With the 78 innovative assets which Glenn mentioned earlier, so if you could broadly tell us in terms of how the gross margin level would differentiate from the rest of our portfolio in the 78 innovative assets, including the ramp-up you see in us and where you can see the gross margin eventually settle as we scale up these 78 assets?

I think that's a very good question. Look, see, oncology assets, the gross margins are significantly higher than where we are today, right, the core business, right? So I think more than the gross margin is also the EBITDA margins will be significantly higher. So there will be a definite margin uplift, right? I would anticipate a lot of this will start playing up on FY '28, not 28. By '28, you'll have abrocitinib fully commercialized in many, many markets as well as the Hungary assets starting to commercialize in some of the markets by F '28. So I think the real uplift in the margin profile of the company will happen from the current 1023-odd levels, right, will happen from F '28 onwards.

Okay. No, that's helpful, Glenn. And if you could throw some light on how the Iconas quarterly revenue and cost will be accounted for going forward in terms of how we're recognizing the repayments. If you could just explain on the accounting for the next few quarters in revenue and cost both?

So on the revenue side, whatever, as you recall, the upfront payment, which we got, we booked INR 525 million last quarter -- last quarter, and now there will be equalized the run rate of $17.5 million every quarter. On expenses side, we get a reimbursement, but which remote be netted off and goes into the other expenses. So that does not impact the top line and bottom line simultaneously. So that actually gets netted out as per the reimbursement part and the other expenses.

That's very helpful. And my last question was what will be the number for this Iconas quarterly revenue? I mean, I can ask quarterly cost that we spend going forward for the next 3 to 5 years?

So we've guided to a 70 million run rate, right, in terms of bond for IGI, right. Like [indiscernible] annualized 70 million, so we'll stay within that.

And we are booking the exactly 17.5 million per quarter, which is again 70 million every year. So that's how we are booking the revenue also on next [indiscernible]

The next question is from the line of Sukrit Partin from iSight Private Ltd.

I have 2 questions. The first question is to is across Glenmark core business. You have spoken extensively about the portfolio focus and a little bit clarity. Just want to understand the key trade-offs you are currently making between investing behind scale in established markets versus nurturing new therapies in newer areas? And what internal signals would you lead to rebalance the capital or the management attention between these 2 sectors? That's my position.

So I mean, Glenmark, we've always been therapy focused, right? Unlike many of our peer companies, we are focused on these 3 areas, right, derm, respiratory, oncology. And I don't think it's that easy to switch areas, at least for us, because we have built deep expertise starting from R&D right up to commercialization in these 3 areas, right, which actually is a competitive advantage for us. That's the way we view it. So I think given that our, given the expertise that we've built in these 3 areas, we are now expanding our EM franchise, right? India and emerging markets in terms of commercialization. It's a clear view that longer term, as we get more innovative assets, we could continue to move up the value chain into much of the developed markets as we hope so. So I mean, the capital allocation between the therapy areas versus getting into newer areas doesn't exist for Glenmark because we built our business basis that, at least for now, right? And that's the next 5 to 10 years, we will continue to focus on the areas that we have defined for us.

My second question to Mr. Mantri. Beyond high level margins and cost commentary, what are the key early indicators you track internally across pricing, product mix and working capital that give you confidence on profitability and cash flow sustainability before these trends reflecting the reported rep?

So good question, basically, what we track, and this is very critical for us because especially when we are operating in emerging markets and across the markets. So we track closely our working capital. One is that on a debtors and inventory side because these market consumes a large working capital requirement and also on the purchase side. So actually, how to be in the working capital cycle more efficient and reduce this cycle. So if you see industry has been maintaining almost operating at 125, 130 days, but we are targeting 115 days this year, and then we will continue to improve on the improvement further. So this is what we closely tie debtor, intent criteria how to actually improve the with the various instruments, but at a more sufficient cost matter.

And as for the next quarter.

The next question is from the line of Zidi Kirani from [ Carlisle Securities. ]

I would like to ask that what is the planned CapEx for the next fiscal year? And what are the strategic movements [indiscernible]?

I think the CapEx typically is around running at around INR 700 crores, INR 800 crores a year.

You should see the same INR 800 crores is the CapEx for next year. Actually next year, we should see.

So that's the way to think about it. And I think the investment is all going into, one, is ongoing CapEx, right, in terms of plants, expanding our current lines and various facilities, right? That's the bulk of it.

And we...

And some of the in-licensed product.

The next question is from the line of Tarang from Old Bridge Capital. We cannot hear you. Can you speak a bit louder?

Am I audible?

Yes.

Yes. go ahead, Tarang.

Just a bookkeeping clarification. The net cash as on 31st December '25, is over and above what you've reserved at Iconas or this is on a consolidated basis. So cash is at a consolidated basis. Basically, I know actually keep utilizing as per their phasing requirement. So it's not that we keep that cash separately. So it's a consolidated number, which I told you on that INR 600 crores of net cash.

The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services.

Just one question. Sir, any of the assets now where there is a further scope of the deal for at least the current assets or are any new assets that can come up, let's say, over the next 6 to 9 months?

So Tushar, I can't give you any visibility to further partnering right now. But all I can say is the [indiscernible] yes, go ahead.

No, I meant to ask that at least the products which are already sort of out licensed to the partner. So is there a scope for getting more partners for such product firstly?

Look, there is always scope, Tushar, right? I mean, on each of these assets, right, we can always look for some regional partnerships, some smaller partnerships. I mean it can go on and on, right? But I think it's not right to give any visibility around partnering, right, on each of the assets. One is that we already have and even subsequent assets, right, that we are developing, like 231 and beyond, right? All of them can be partnered at any point in time. Our bigger challenge for us is that what is the optimal time to do any of these partnerships? And do we really need to do it because otherwise, we end up giving up too much if we do it too early.

The next question is from the line of Damayanti Kerai from HSBC.

Glenn, I have a question on the ISB 2001 asset. So you're still conducting and enrolling patients for [indiscernible] studies, right? So just want to understand when this R&D and clinical trial responsibility will be going to the partner? Or you will complete the trial and like how to [indiscernible]?

So unfortunately, I can't give you too much visibility on our relationship with AbbVie, right? But all we're saying is the dose expansion will end, and we will -- we've made significant progress with the dose expansion. And I think any further information you will see in some public communications as and when we are ready to put it out.

Sure. And my second question is again, yesterday, during the buddies, I guess there was performed by manufacture production in India by the finance investor. Any initial thoughts because I guess you were emphasizing on oncology and other NCDs [indiscernible] Since you are a focus in these segments, any thoughts here?

So currently, we don't we don't do any manufacturing of biologics within Glenmark, right, in-house. We continue to outsource a lot of our -- even a lot of our biologic manufacturing, right. However, I mean we never know how things play out in the future. So it's definitely a positive for the industry.

The next question is from the line of Nitin Agarwal from DAM Capital.

Glenn, on 2 or 3 business into the U.S. U.S., obviously, with a couple of recipe approvals you talked about likely coming through this year in the next few quarters. And you talked about some of the first to file, which will probably come towards the end of the year. So that probably give us decent visibility on '27, '28 growth in the U.S. Now how should we think about U.S. subsequently? I mean, are these sort of one-off drivers which come in and business gets to a base, a relatively high base? And then how should we think about U.S. subsequently from here on? I mean, after these are sort of drivers in the business?

So I think the way to think about it is '27 is all about Flovent, Flovent 24 and maybe one more strength of Flovent and the -- out of the 3, at least 2 sole FTFs right, coming on to the market in the second half of F '27. '28 and beyond, we will see some of the Monroe approvals, injectable approvals starting coming through as well as the additional respiratory filings that we're doing over the next 12 to 18 months, right, which, again, are super complex and difficult, right? So I think these are the 2 main drivers to the U.S. business from '28 and beyond, right, as we go forward.

And again, on the recipe filing, when you say these are complex filings build by when do you think you'll be probably able to be the first of these filings beyond Flovent?

It's probably happening in the next 3 to 6 months.

Okay. Okay. And secondly, on the emerging market business. There has been some slowdown this year. But how -- you talked about Europe being a slightly slower sustainable growth from year on? How should we going about the emerging market fees?

So emerging markets next year should be a strong year for years, okay? And the core business, we see some significant growth plus, of course, with the launch of this abrocitinib, right, in the second half of next year, right, starting from the EM should be a significant driver, right, over the next 5 years for the company.

So this is what like a 15%, 20% growth business on a accounting basis, like a 10%, 15% compounding business? How do you...

If you see on a 5-year basis, it's north of 20%, very clearly going forward.

Okay. Okay. Okay. And lastly, Glenn, on the specialty business, authorizes obviously scaled up to close to 100 million as you talked about. Ex of [indiscernible], when do you -- how meaningful -- when do you see the other launches start to become meaningful for us, say, 50 million to 100 million bracket in a collectively when do we get there?

See, RYALTRIS is currently growing at 25%, 30%, right, top line. So it's still -- the growth numbers are still very strong in the existing markets. Over and above that, we're still waiting for the Chinese launch to happen coming up. We're expecting a Brazilian approval coming through. So there are still a number of markets where it's still not commercialized, right? So I think getting up to 200, 250 is not going to be a huge challenge for us, right, over the next 3 to 5 years.

On the ex RYALTRIS portfolio, when do you think it starts to become meaningful?

Sorry, say that again?

Ex RYALTRIS.

Ex RYALTRIS innovative portfolio. Is that what you're talking about?

Yes. I mean, when does this start to become meaningful to $50 million plus thereabout in the range overall?

I think F '28, you'll see a big, big upswing, right? Because F '28, as I said, you'll have this abrocitinib plus you'll have some of the Hungary, some markets of Hungary. Plus, of course, India will be really meaningful. I mean starting F '27 itself in the second half with -- being launched, right, and in India, right? Then TEVIMBRA BRUKINSA are doing well. The run rate already is massive for BRUKINSA. And then F '28, we'll have these other -- the Hungary asset also launching. So I think the build-out is very solid, right? And you'll see some good growth numbers. F '28 for sure, you'll be ahead of 50 million, right, collectively ex RYALTRIS.

That's nice. And if I take a last one, on the -- when you think about, again, EBITDA margins for the business over the last couple of next 2 to 3 years. I mean, do you see operating leverage. So what will drive business from here on? It is gross margin improvement or this is a capital business which can drive both -- we probably add to the margin improvement as we go forward?

So basically, if you could see, as Glenn pointed out, is that all these new innovative assets coming in, more branded mix share increasing in our overall mix, emerging market playing very strong for us. I think all this put together, you will see a margin expansion not quite of what our guidance is there. But our guidance is right now mostly for this year, next 3 to 4 quarters. But as Glenn mentioned, FY '28, we see all these newer in-licensing assets coming up and all these things playing out, we should see a good positive consolidation in our gross -- our EBITDA margins. Because it will be operating leverage after this actually because our base expenses have been built out. So it will be a cost to remain fix and then you can build it on the platform, we see a build all geographies.

The next question is from the line of [indiscernible] from [indiscernible]

One question from my side on domestic sales. We have a very good performance during the quarter at posting at around [ 28 1,300 crores ] order sales. So is it a to assume that I think is normalized and this run rate is sustainable in the domestic business?

As I said, see, India is a very strong market for us, right? We are among the fastest-growing companies in India. I mean if you look at December also, we grew at 19% when the market grew at 10%, 11%, right? So very strong numbers, right, coming out of India. And I think for the next 3 to 5 years, India will be a strong growth market for us. And especially when we launch these oncology products, right, that will further give a good flip to the India growth, right? So both chronic respiratory and oncology will drive India. So you should see this run rate remain more or less at this level or keep growing from your, right, as we go forward in the quarters ahead.

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Utkarsh Gandhi for his closing comments.

Yes. Thank you. A quick reminder to everyone that the information statement and analysis discussed during this call in the company or its affiliates, objectives, projections and estimates are forward-looking statements, and these are based on current expectations, forecasts and assumptions and are subject to risks and uncertainties, which could cause actual outcomes to materially differ. No representation of warranty, either expressed or implied, is provided in relation to the conversation and the documents provided. And the company undertakes no obligation to update or revise any forward-looking statements, whether because of new information, future events or otherwise. With that, we can close the Q3 earnings call. Thank you, everyone, for joining us today. Thank you.

Thank you, members of the management team. Ladies and gentlemen, on behalf of Glenmark Pharmaceuticals Limited, that concludes today's conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.