Glenmark Pharmaceuticals Limited (GLENMARK) Earnings Call Transcript & Summary

Good evening, everyone. Thank you. Thank you for coming in today. If everybody can settle down, I think we can get started. Good evening, everyone. Thank you. Thank you for joining us today here in person and quite a few of you have joined us virtually as well. I'm Utkarsh. I lead the Investor Relations for Glenmark Pharmaceuticals Limited. And on behalf of the management, I welcome you all to the 2024 Investor Day. It gives me great pleasure to meeting you again after a couple of years since we last -- our last Investor Day in November '22. I think as we mentioned in our recent interactions, the last year has been a transitionary year for the company and today the management is here to provide a more detailed outlook on the future and some key priorities for the organization as we move forward. [Operator Instructions] The participants who are joining us virtually, please ask for questions through the question box or the chat box. [Operator Instructions] Before we start, just a reminder that the document and discussion today will comprise of certain forward-looking statements, which will concern the company's plans, objectives, strategies. These are obviously based on current expectations, forecasts and assumptions that are subject to risks and uncertainties, and actual outcomes may vary. So the document should not be regarded as a substitute for the receiver's judgments, just a disclaimer before we start. In terms of our agenda today, so we have from our management team, Glenn Saldanha, Chairman and Managing Director. Glenn will cover Glenmark's journey up until today and the strategic outlook for the future of the organization. Christoph Stoller, he heads our Europe and Emerging Markets business, He will cover all 4 key geographic regions of Glenmark in more detail, including our current presence and our future growth drivers. Cyril Konto is the President and CEO of Ichnos Glenmark Innovation at IGI. He'll walk us through our pipeline on the innovative assets and our road map for IGI. And V. S. Mani is Executive Director and Global CFO. He'll take us through the various measures the company has taken to strengthen the balance sheet, to strengthen the organization and some long-term targets for the company. As mentioned before, post the presentation, we'll have a Q&A session, so the 4 speakers will be joined by Ashish Mukkirwar, Group Vice President and Head of Corporate Strategy for the Q&A session as well. With this, I would like to invite Glenn Saldanha, Chairman and Managing Director on the stage to start the presentation.

Good evening friends and welcome to the Glenmark Investor Day presentation. So I want to start by saying our vision for Glenmark has always been to be a leading research-based global pharmaceutical organization. If you look at where we are today, we are about $1.5 billion in revenues. We have 10 manufacturing facilities, about 60% of our contribution comes from our branded markets, 80 countries, a very broad double presence footprint in many countries, 4 research facilities, and we are focused on 3 therapeutic areas globally. So we work in dermatology, respiratory and oncology. In India, we also have cardiovascular, which is a big segment and diabetes, but our global presence is in these 3 therapeutic areas. We are unique in that we have over $300 million that we've earned in out-licensing income through our NMEs. And today, we have 4 innovative clinical assets in development, mainly under IGI, which Cyril will cover, about 15,000 employees worldwide. So that's the footprint today. If you look at Glenmark, so I've been running Glenmark now 25 years, right? And the last 5, 6 years was super challenging for us because we got hit with 4 or 5 different areas, right? The first was the slowdown in the U.S. generics business. Clearly, the U.S. generics, over the last 5, 6 years, was very challenging and continues to remain a challenging environment. Glenmark's approach to working around that was to enhance our branded capabilities and strengthen our branded business, which we did pretty successfully. We launched Ryaltris, which is our first global branded product, which today is a very strong brand for Glenmark and growing from strength to strength every year. And we initiated some in-licensing activities of branded products to move up the value chain. The second area which adversely impacted us over the last 5, 6 years was the whole US FDA adverse audits that we faced in some of our sites, right? Today, we're pretty much done with all the remediation work in both Monroe and Goa and we are waiting for the FDA to come and reinspect. Also, we've -- over the last couple of years, we've totally overhauled our entire quality organizations, invested heavily in building systems through the quality area, and, of course, strengthened management oversight. So that's a big area, which we've addressed. And I think, going forward, we should come out stronger. The third area which hit us pretty badly was we were spending a lot of money on innovation. Clearly, we are the poster child of innovation in India with over $300 million of revenues that we've earned over the years through out-licensing our own intellectual property. But I think at one point, we were spending almost up to $120 million in innovation, which was way beyond the size of the company. So what we've done today is we've scaled it back. Now our innovative spend this year is down to about $50 million, right? So we've pruned some of our programs, been much more judicious and we've done some great partnership deals. So we have 2 partnership deals, which Cyril will talk about, but that's the other area we've addressed. Then on the litigation side, as you know, in the last 5 years, we faced 2 or 3 big litigations, primarily Zetia was a big one, the DOJ litigations. So on that front, we've actually done a good job in settling many of these. And I think going forward, we have very little exposure on the litigation side. And then, of course, the last point is the high leverage that we were carrying in a very high interest rate environment as an organization. I mean today, we substantially delevered the balance sheet and we are net cash positive as of March. So these are some of the challenges we faced as an organization if you just look back over the last 5, 6 years. And today, we've overcome, I would say, all these 5, 6 challenges as a firm, right? And we are well poised to propel the firm forward from here on. Glenmark's goal as an organization is to continuously move up the value chain, right? And we've been working on this for years, for decades now, right, as an organization. And if you look at the 3 therapeutic areas that we work in, so dermatology, respiratory and oncology on the branded side, we made substantial progress in these 3 areas. So in dermatology, as most of you are aware, we are among the leaders in India. We recently in-licensed Pfizer's product, abrocitinib, and we are commercializing that in the derm space. We also did a great deal in Europe in -- with in-licensing a product called Winlevi. Sun Pharmahas the U.S. rights. We have the European rights. So Europe, U.K., South Africa, these are some of the areas. All this is helping us strengthen our derm franchise, not just in India, but in most parts of the world, right? So given the significant strength that we have in dermatology. So the goal, of course, is to continue to build on these therapeutic areas. The second area is respiratory. In the respiratory space, we are ranked now #2 in India in the respiratory space. We're also #2 in the Russian market with Ascoril as an expectorant being among the leaders there. And then, of course, with the launch of Ryaltris, which has been transformational, right? We filed this in over 80 countries. We have 34 markets globally where we have a presence. To add to that, we recently filed -- we have almost 4 products in Europe commercially on the branded respiratory side. And we continue to expand in the respiratory area, right, as a company globally. And then the last segment is oncology. In oncology, if you see most of our business was mainly in generic oncology, cytotoxic drugs. With the launch of AKYNZEO in India, that was our first branded product in India. And now we've gone on to in-license a few more products. So we in-licensed a product called envafolimab, which is a PD-L1. The unique thing about envafolimab is it's a subcutaneous injection, the only PD-L1 in that space with a subcu injection, almost a $4 billion market in India and emerging markets. So a very large market. And the leader of -- in that space, immuno-oncology, particularly KEYTRUDA, which is a very large product, among the largest products in the industry. So envafolimab will be a big competitive advantage for us in India and emerging markets. We also did a deal with BeiGene recently. BeiGene is among the leading Chinese players with strong presence in most parts of the world, including U.S. and Europe, where we in-licensed 2 of their products for the Indian market, where we have the exclusive rights. And then, of course, with IGI, right, the strength that we've built in IGI, the capabilities, the technology, the BEAT platform gives us a very strong footprint in the oncology space. And IGI has 2 very exciting assets, which Cyril will talk about, right, which we think eventually can get commercialized as we go forward. So these are the 3 areas where we're very focused on continuing our efforts, right, and building as we go forward. The fourth pillar for us is the generic space. As you know, the U.S. generics market has been extremely challenging for everyone, and we believe will continue to remain challenging. Here, our strategy as an organization is basically to focus on leveraging our respiratory capabilities that we've built over decades across the world. And we launched -- we believe we will launch our first 2 nasal sprays this year in the U.S. market. And of course, we filed generic flovent, right, the 44 mcg and we have other strengths we are working on, which we believe we have a very exclusive position on that particular product. So respiratory is a big area. And then, of course, injectables. We have 5 or 6 injectables in the market we're launching once. We're hoping Monroe will get back on stream, and we will start commercializing some of the other injectables. So that's the other big lever for growth for the U.S. And then we have some complex generics and some FTFs, which have been settled and which are slated for launch as we go forward. So these are the different levers that we have as an organization by which we are moving up the value chain and continuing to add value. If I look at the global brand so far, right, so we have 3 brands that we classify as global brands, right? The first is, of course, Ryaltris. So Ryaltris, We think it's about $40 million, $50 million in last year. We think that will, this year, could be $80-plus million in revenues. And this will go to become a major brand for us, right, over the next 2, 3 years. So it's scaling up pretty nicely as we go forward. Envafolimab is the oncology product we just talked about. So we start launching in FY '26. And Winlevi is the product we -- clascoterone which we are launching in Europe, South Africa and the U.K., right? We think total estimated sales for our branded portfolio alone will be $300 million to $400 million over the next 5 years, if not more, right? That's the -- that's a key platform that we are expanding as we go forward. So just to show you the transition like FY '19, 55% of our business was branded, FY '24 at 60%, we think it will go up to 70%, 75% by FY '29. And this is despite having some great launches on the generic side and despite the respiratory build-out, injectable build-out the generic side, which should help starting this year propel the business forward. So the branded presence will go up significantly. So this is what I call as Glenmark 2.0, right? I mean if you see historically, as a company, we've always been a high-growth company, right? And that's what's got us to the $1.5 billion as an organization. However, we had a lower focus on return on capital employed and our overall margins. And of course, we built up a lot of leverage, right? In the Glenmark 2.0 era, right, the way we see the company going forward, right? Basically, there are 4 pillars for us, right, as an organization going forward. So the first is focus on revenue growth. We will continue to be a high-growth company. And you will see some of the projections. We will -- you will continue to see strong growth from Glenmark. However, we will continue to drive capital allocation basis ROCE. So we are very focused on return on capital employed for every investment that we'll make going forward. The second area for us, which is important is to further improve our operating efficiencies and to drive continuous margin improvements. Our move into the branded space will give us a big lever in terms of margin improvement as we go forward. Clearly, Ryaltris will be a significant contributor to the margins as we go forward, but even with -- even despite Ryaltris, there are certain geographies like Latin America and Europe till last year, which were under the company average, those now will continue to accelerate. So you will see substantial improvement in the overall GCs and margins as you go forward over the next 3 to 5 years. The third point is important. It's a big change and a shift in mindset at Glenmark. So stay debt averse, and we will make sure that whatever we will remain free cash positive net of post any CapEx, dividend and M&A that we do. We will continue to stay free cash positive from here on. So we will not leverage up again going forward. And the fourth area is drive shareholder wealth creation. By increasing our payout ratios, now historically, our payout ratios have been very low, but our goal is, from FY '26, we will increase our payout ratios via dividend and/or share buybacks. So these are the 4 areas we've said we're going to concentrate on as a company going forward. And you'll see through the rest of the presentation that the growth trajectory is significant and the runway is pretty significant as a company as we go forward. So with this, I would invite Christoph Stoller, who heads Europe and emerging markets to present our entire global formulations business for all the geographies. Christoph?

Ladies and gentlemen, good afternoon. A very warm welcome from my side as well. It's a great pleasure to be with you here this afternoon. Glenmark has a true global commercial footprint. We have a diversified business from a portfolio point of view, generics, OTC, novel branded molecules and from a geographical point of view. Therefore, we have a very robust and derisked business. As laid out by our Chairman earlier on, Glenmark's core therapeutic areas are respiratory, dermatology and oncology. In our Indian market, we focus in addition on cardiac and diabetes. In our more tender-driven markets such as some European countries or the U.S., for instance, we are more therapeutic area agnostic and focused more on dosage forms, such as oral solids, injectables and devices. In India, our largest market, we have consistently and continuously outgrown competition in recent years. Glenmark is one of the fastest-growing companies in India, which represents 31% of our global net revenues. One of our key leverage is there that we have been able to build very strong brands. Emerging Markets and Europe are growth engines for Glenmark as well. In the last 2 years, we have been able to grow our business in Europe by 50%. In the U.S., as mentioned earlier by our Chairman, we have seen some significant challenges in recent years. We are convinced that we have hit the bottom and that things will only be better going forward. As mentioned earlier on, Glenmark is one of the fastest-growing companies in the Indian pharmaceutical market. We have continuously and sustainably been able to outgrow competition. This is being reflected in our ranking in the various therapeutic areas. We are #2 in dermatology, we have improved our ranking to being #2 in respiratory and #3 in cardiac. Glenmark is well known for creating mega brands. We have now brands -- 9 brands in Indian pharmaceutical mine in the top 300. Nine brands have a turnover of more than INR 1 billion and 15 a turnover above INR 500 million. Launch excellence is one of our key strategic levers and growth drivers. Roughly 4% to 5% of our growth is coming from new product launches. For instance, Glenmark has been the first company in India to introduce Lirafit, liraglutide indicated for type 2 diabetes. The launch is a success and, we see month-on-month higher sales. Another example of being first is Zeta DM, a triple-drug fixed dose combination in the area of diabetes 2 as well. In line with our global strategy to move up the value chain, we focus as well to in-license novel therapies for the benefit of patients in India. Last week, we announced in-licensing of TEVIMBRA and BRUKINSA in the field of oncology from BeiGene. Another example is envafolimab in-license for India and the emerging markets. In addition, we keep adapting our go-to-market model in our OTC/DTC franchise, we have been able to increase our sales fivefold to INR 3 billion most recently. In line with our strategy, we will continue to grow our core areas to manage our current brands and to build new, strong mega brands. Furthermore, we keep extending our geographical footprint in India. We will add 500 sales representatives in India alone in this current fiscal year. We will continue to excel in launch management, and we will keep adding novel medicines also through way of in-licensing. As mentioned earlier, we're also very successful with our OTC/DTC franchise, and we will continue to focus on that area and exploring new alternate channels. Glenmark has a real global commercial footprint. We are active in many high potential emerging markets in Latin America, Asia Pacific, Russia, CIS and Middle East and Africa. The overall market growth opportunity in these markets is huge. Please allow me to call out a few highlights across these emerging markets. Glenmark is second largest Indian pharma company in Russia. We are the #2 expectorant -- we're the #2 in the expectorant market in Russia and #9 in the dermatology market. I think in India, and all our emerging markets, we have been able to build very strong brands such as Ryaltris, Ascoril and Candibiotic. In Latin America, we have businesses in Brazil and Mexico, and many more countries, but Brazil and Mexico, which are key in Latin America as they account for more than 50% of the overall Latin American pharmaceutical market. We are amongst the top 10 respiratory in our covered markets in these countries, and we have very ambitious growth plans in this year and in the years to come to strengthen our market position in these countries. In Middle East and Africa, we have both our own presence in key markets, such as being the #3 player in Kenya, and strong partnerships with distributors in other markets. As we speak, we are strengthening our positioning -- our position and are expanding in Saudi Arabia. Our key markets in Asia Pacific and Malaysia, Philippines and Vietnam. We are the #1 in our covered market in the dermatology, and we have been able to build Ryaltris very successfully in Asia Pacific as well. The launch of Envafolimab, the new biological entity, will strengthen our market position further going forward. We plan to grow our business in the years to come with a CAGR, a compound annual growth rate of 15% to 20%. We will use the following strategic levers to achieve these growth targets. We have a very strong foundation, our commercial infrastructure in these territories. We will use that foundation to continue to increase market shares, for instance, for one of our key brands, Ryaltris, and to launch novel molecules such as Envafolimab successfully. In line with our strategy to move up the value chain, this will allow us to increase profitability further. We will expand our geographical footprint selectively, and we will continue to expand our product offering. As laid out when discussing our Indian market, we will as well add novel therapies to our pipeline and portfolio. And of course, it goes without saying in a growth company, launch excellence remains a key value driver for us. And last but not least, we will to continue to build local partnerships in order to grow our business sustainably and in order to enhance our offering. Europe has been the fastest-growing region of Glenmark. As mentioned earlier, we have been able to outgrow competition and to grow our business in Europe by more than 50% in 2 years, while increasing profitability significantly. We have our own presence in key markets such as the U.K., Germany, Spain, Italy, and we work with key market leaders in select markets in which we are not present ourselves, such as, for instance, France, where we do -- in these markets, we use the model of out-licensing. Again, in line with our strategy to move up the value chain, we have been able to strengthen our non-generic business segments. We have increased the share of our branded business by 10 percentage points in 5 years to today a level of 30%. This share will keep going up as we add novel therapies to our pipeline and our portfolio. As we have demonstrated in the last 3 years, we have a great foundation. By adding more branded products, more novel therapies, we will be able to benefit from that infrastructure even further, and this will lead to increased profitability. A key driver of our growth has been in the past and will continue to be our respiratory franchise. We will launch 4 key brands in the coming 12 to 18 months. We are very happy with the success of one of our key brands, Ryaltris, indicated for allergic rhinitis. In Czech Republic, to purchase one example, for instance, we have a market share of today, 25%, and we are very happy with our market shares in Poland as well and in Slovakia, which is the most recent country in which we have launched that brand. And last but not least, we will expand our geographical footprint further. We have recently entered the Italian market. And just a few months ago, we have started operations in Austria. This will also support our intention to increase profitability further, as we are changing our geographical footprint in Europe. In a nutshell, summarizing what I just mentioned, we will continue to grow our core business and to excel with launches. While respiratory remains a core therapeutic area, we will add novel molecules such as WINLEVI, clascoterone indicated for acne, the first NTE, new chemical entity launched in the history of Glenmark in Europe. WINLEVI will be the cornerstone of our dermatology franchise in Europe, which will be a key growth driver for us. We have a clearly defined plan how to expand our geographical footprint in Europe. And as just mentioned, we keep executing that plan, most recently, our expansion into Austria. We have a very strong agile team in Europe which will continue to identify opportunities and to execute these opportunities. All of these put together will allow us to continue to outgrow competition and to increase profitability further, in line with our global strategy to move up the value chain. As mentioned earlier, we have seen challenges in our U.S. business in the most recent time, which has led to a decline of our top line over the last 5 years. The key reasons being competition and price erosion, a lack of meaningful product launches and the FDA audits. We are convinced that we they have now achieved the inflection point, and that the situation will improve going forward, meaning that we will return back to growth. We have a very diversified portfolio. Our top 5 products in the U.S. account for only 25% of our revenue in that country. Glenmark has been able to maintain the leadership position in key products. In 27% of our portfolio, we are ranked #2 -- excuse me, in 27% of our portfolio, we are ranked #1 and we are ranked #2 in 33% of our portfolio. Our recent approvals and our pipeline. We have filed 47 products and have received approval for 51 products in the last 5 years. And we have launched 57 products. That number includes 6 in-licensed products. We have worked very hard and focused to continuously and rigorously work on quality improvements. The remediation at both our Monroe and our Goa sites have completed. We have engaged to resolve the warning letters at the earliest. Last but not least, 2 days ago, Marc Kikuchi has joined Glenmark as President, North America, another milestone to strengthen our position in our U.S. market. The key driver to be back on the growth path in the U.S. are our differentiated launches. We will continue to strengthen our injectable portfolio. Today, we offer 6, 7 molecules. By fiscal year '26, we will have a portfolio of 15 molecules which includes 4, 5 coming from our Monroe site. In respiratory, we have already launched 2 nasal sprays. By adding more files we are building a very solid respiratory portfolio with nasal sprays and MDIs. Complex generics and approved, settled first-to-files will be 2 other key pillars of our growth strategy. We have 3 first-to-file products in our pipeline. Due to confidentiality reasons, I'm not in a position to call these out. And last but not least, OTC and our institutional business will further support our growth ambition as well as our Canadian business where we intend to continue to grow our market share. Thank you very much for your attention. And with that, I would like to ask Cyril Konto, President and CEO of IGI to join me on stage. Thank you.

Ladies and gentlemen, it's a pleasure to be back and present the progress made towards the last update 18 months ago. My name is Cyril Konto. I'm the President and Chief Executive Officer of Ichnos Glenmark Innovation. So we launched IGI in January to combine forces from Ichnos Sciences Incorporation and Glenmark, the Innovation Medicine unit. With that, we achieved a robust pipeline, combining biologics. And you may remember, last time I presented the BEAT platform, a protein platform for building new molecule, multi-specific molecules. And now we're also integrating small molecule out of the Mahape, Glenmark Research Center. And this will enable developing drugs in both heme malignancies and solid tumors. We are leveraging experts from different parts of the world. Our clinical development group is located in New York, led by Lida Pacaud. We have biologics capability, including pharmacology and protein engineering in Lausanne, Switzerland and now have a small molecule research capabilities in Mumbai. We're also leveraging Glenmark footprint in India. We have both our lead asset, ISB 1442 and ISB 2001, approved by the DCGI in India, so that we can increase speed of patient recruitment and at the same time, leverage cost efficiencies. I'm glad to report that we treated our first patient with ISB 1442 in India yesterday. Lastly, when I joined here, Ichnos Sciences was burning a lot of cash. Glenn mentioned $120 million. We've been cost efficient to a point that we expect to spend $50 million in fiscal year '25, while we continue to grow the portfolio. Few words on our portfolio. Made of a diversity of immune cell engagers and now small molecule across different type of cancer indication. I'll start with ISB 2001. This is our world renowned trispecific BCMA CD38xCD3 T-cell engager that we are developing in the relapsed/refractory multiple myeloma setting. We are in Phase I with this asset. It has received orphan drug designation by the FDA and we expect to disclose proof-of-concept clinical data at the American Society of Hematology Annual Meeting later this year. ISB 1442 is an innovative drug, again, multispecific with 2 CD38 biparatopic binders and 1 CD47 binder, engaging myeloid cells. We're developing these assets in multiple myeloma, with plans to initiate clinical trials in AML later on. And the key differentiating factor of this asset is the fact that it engages myeloid cells in a crowd of T-cell engager. So it's different subset of immune cells, which could translate into a competitive advantage. Again, this drug has received orphan drug designation by the FDA. We are now embarking in small molecule coming from the Glenmark innovation pipeline. And I'm glad to report that the Cbl-b inhibitor or GRC 65327 is expected to treat its first patient in early 2025 with the DCGI submission scheduled later this year. This will be our first asset with a solid tumor -- pan solid tumor indications. You may remember last time I came here, I reported a recent deal with Almirall Therapeutics, a Spanish pharmaceutical company on our ISB 880 asset. I'm glad to report the progress of our alliance partner with this anti-IL-1 RAP monoclonal antibody in inflammatory disease. We also, in the meanwhile, licensed our telazorlimab Phase IIb asset and its follow-on molecule ISB 830x8 to Astria Therapeutics. And we have the plan to file the IND for the follow-on molecule with their YTE modified version before the end of this year. This is very important for us because those are the intellectual property revenues Glenn mentioned earlier with, I'd say, world-class type of outlicensing deal. And lastly, I want to leave you with our road map. It's a simplified road map to highlight the key information. We formed IGI as part of our cost efficiency model. We will deliver clinical proof of concept with ISB 2001 and/or ISB 1442 this year. At the same time, we have expanded our BEAT platform, the protein platform that Ichnos Sciences fully own. With that, we -- in parallel, we're also expecting to divest our manufacturing plan to remain even further cost efficient. We will, on the basis of all these elements set a partnership with one of our lead assets, at least in fiscal year '26. All combined, plus the recovery of the biotech market in the U.S., we shall expect to go to the NASDAQ for a capital raise in fiscal year '27. Thank you for your attention. I'm now welcoming on stage V.S. Mani, our Executive Director and Global Chief Financial Officer for Glenmark Pharmaceuticals.

Good evening, everybody. Welcome to Glenmark Investor Day. I'm V.S. Mani. So Glenn had earlier articulated our transition through various uncertainties and all the mitigation measures that we took to emerge stronger. One of the key objectives in the past 5 years has been to derisk the business. And we took a number of measures to derisk the business and the critical ones are -- I would like to sort of list out. One is, obviously, you all are aware that the U.S. benchmark interest rates in the last 2 years went from 0.5% to almost 5.5%. So therefore, it was imperative for us to kind of reduce our gross debt, which we could do very substantially. Second was also on the substantial progress in closing of key U.S. litigations. And obviously, we had cases for Zetia, one of our products, as well as some of the cases at DOJ. I think we have managed to settle some of these cases and obviously, it derisks us substantially. This is very critical in terms of the operational efficiency. And you know that if you want to improve your EBITDA, et cetera, I need to do a lot of work on the SG&A side, which includes R&D as well. As you can see, our other expenses over the last couple of years have come down and that's due to the continuous focus on the operational efficiencies. And last but not the least, we have done a lot of work in terms of -- and you'll see in the next couple of slides, in terms of the work that we have done on the CapEx, as well as the R&D allocation. I mean all this is, probably, obviously, helps us to improve our ROCE and minimize the risk, okay. Over the last 5 years, we have taken a number of initiatives to actually strengthen the balance sheet, which is very important, okay? And I would like to bucket these initiatives into 3 slots, okay? One is obviously the SG&A operational excellence program that has really helped us to shore up our margins much better in a very challenging environment; second is, obviously, we did sort of divest some of our noncore portfolios; and third was, we actually spun out two of our divisions. One was the API into Glenmark Life Sciences and the innovation into basically Ichnos. And at a very opportune time, we could actually list Glenmark Life Sciences and now we could actually find a strategic buyer as it was already explained that we are now looking more at our branded business, so it made lot of sense and it has absolutely helped us to deliver a balance sheet. Also now with IGI, we are looking at sort of being more rationalizing or optimizing our further R&D spends. All this will help us. What you can see is that because of this, our net debt-to-EBITDA has improved substantially. We used to be about higher than 2x in '19. Now we are a net cash positive company, okay? That made a lot of -- makes a lot of difference. Also, if you can see over the last 5 years, the rating agencies have also upgraded us across the board, okay? Thank you. This slide will critically show you how we have managed to sort of optimize our R&D investments and rightsizing the CapEx. In '19, our R&D spend was almost 13.2% and we were almost at INR 12,980 million. It's really substantial. And now we're looking at something like a 7% to 7.25% in the coming year. So this brings down substantially. And as earlier Cyril had pointed out, our innovation spend would be about $50 million. And as far as the CapEx goes, again, in '19, we were at almost INR 12,372 million and now we're talking about INR 7,000 million. And this has been the ballpark in which we have been spending our CapExes in the last 3 to 4 years. So I think these are achievable numbers. So what does all this do, okay? So in a way, if you really look at it, our estimated earnings and also, obviously, the kind of balance sheet that we have today, if you put it all together, you can see that our ROCEs and our ROEs are better than -- on an average basis, if you look at it compared to the peer average, we're -- definitely will look better. In terms of our ROCEs, we're looking at almost 19%. And in terms of the ROEs, we are looking at almost 15%. I think both this should help us, very important. So this is a very critical slide, as far as I look at it. So in November of '22, we met you all and we gave you guidances on 7 key metrices. And I would like to now show you what we had guided in '17 -- in November of '22 and where are we today, okay? So in terms of revenue growth, et cetera, we had spoken about 10% to 12% growth over the next 3 to 4 years. Today we are saying, in FY '25, we'll be at about INR 1,35,000 million or INR 1,40,000 million depending on how growth happens. R&D expenses, we have guided to about 8.5% to 9% from FY '24 and we're now talking about 7% to 7.25% in the next year. And the EBITDA margin, we said would be 23% by FY '27 and now we are saying that coming year will be 19% and we are expecting to improve it by 1% to 2% over each year. And obviously, as we have already articulated earlier, that we have a number of products that are going to come up in the market. We -- Ryaltris is growing or the number of other branded products that will come. So obviously, growth will fuel this improvement in the EBITDA margins. And obviously, rightsizing some of our expenses will also help us to reach there, okay. In terms of CapEx, we had guided to about INR 7,000 million over the next 4 years and we pretty much were there most of the times, give and take some small changes. We have said that we would be a 0 debt company -- net debt by '26. Happy to say that we are net cash positive at the end of this year. ROCE, we had guided to about 23% in FY '27 and we are pretty much on track there, okay, as you can already see, it's very easy to. And in terms of the payout ratio, we said that we'll evaluate enhancing dividend payout ratio, buyback over the next 4 to 5 years. What we would like to say is that we're looking at a 15% to 20% minimum payout from FY '26 and this would be via dividend or share buyback. Earlier, Glenn had spoken about Glenmark 2.0 and the evolving ideologies. What I would like to bring out here is that how the long-term targets are now very aligned with the evolving ideologies. So one was focused on revenue growth and continue to drive capital allocation basis ROCE. So obviously, with the 12% to 15% revenue growth on CAGR and the focus so much on the -- in terms of the ROCE, I think in terms of the capital investment of whatever, I think we should see it growing further. We are looking to generate further operating efficiencies to drive continuous margin improvement. We are looking at a long term of 7% to 7.5% in terms of our R&D spends. And obviously, we already guided to about 19% in the next year in terms of EBITDA and a further improvement each year by 1% to 2%. This is important, stay averse to debt and remain free cash positive post any dividend, CapEx, M&A, et cetera. Obviously, there will be a INR 7,000 million spend on CapEx, which is very important in terms of looking at the growth and what we are -- ambitions that we have. But we will look to drive further improvement in ROE and ROCE in the next 4 years. And the most important, we would like to drive shareholder wealth creation, 15% to 20% payout over the next few years. With that, thank you very much. We'll now be ready.

Thank you to all the presenters and the management team. So I would request Glenn, Mani, Cyril, Christoph and Ashish to come on the stage so that we can start with the Q&A session. [Operator Instructions] We'll first give the opportunity to the people present in the room. Anybody has a question, I think we have a few people who can help you with the mics. So I have a few questions coming virtually. So let's start with those. So one question is on the CapEx guidance. So while we have said that INR 700 crores is the guidance in terms of future CapEx, how do you see this in terms of fixed asset addition and any licensing that we do? Are we planning to add any more new manufacturing sites? Or where is the fixed asset addition specifically focused on?

Well, I think given our rollout, right and the 15% -- 12% to 15% top line growth CAGR, right, I think it will be important for us to invest in CapEx, particularly in terms of building our manufacturing capabilities and capacities mainly on the respiratory area as a big driver for the company going forward. Additionally, I think in-licensing is something we will continue doing. We did Envafolimab recently, which will commercialize in F '26. We'll continue to look for novel assets, which can further help accelerate our vision to be a branded company, while remaining disciplined in terms of the overall CapEx, right and so that we don't impact the overall return ratios and the other parameters.

We have another question on IGI. So maybe you and Cyril can both chip in. So question is, so there are 2 parts, basically. One is in terms of the pipeline, what's the most exciting asset that you are looking forward to? And maybe, Glenn, you can address this. So how are we looking at investments into IGI beyond F '25? So obviously, there is a road map but how are we looking at the investments and what's your take on that?

In terms of excitement, they're all my babies and they are all sourced from our proprietary multi-specific platform. I'd say based on the clinical data available and the recent approval of T cell engagers, we know the T cell engager works. And ISB 2001 being our leading T cell engager and targeting 2 myeloma targets is by default my favorite asset. That being said, I also believe that there is so mainly T-cell engager and we need something else than a drug that engages with T cells because they're going to be exhausted in those patients. So if we can demonstrate the value of a myeloid T-cell engager or down in our pipeline a T-cell engager against solid tumor, that would be also a great competitive advantage. I think this is also the overall strategy we're building in IGI. We are leveraging different type of immune cells against heme malignancies and solid tumors. Now with regards to further funding, I will turn to the Chairman.

So I think, look, we've said that we will be at $50 million this year. Next year, the path forward is, we will -- I don't see us crossing $50 million. We will get additional revenues coming out of partnerships. And subsequently, we are looking at a capital raise. So we believe that from a funding perspective, there's a strong possibility from FY '26, Ichnos will self-fund itself, right, going forward. So that's the journey forward from a funding perspective that we are hoping to achieve, right, as we go forward.

Maybe an opportunity for -- go ahead.

So my question is a slightly backward looking. You sold off GLS. How did you arrive at this decision? Now, there you also had a -- I mean, you also could have contemplated shutting down the U.S. business or selling it out at whatever 1, 1.2x sales, whatever the balance sheet would have got. Because it seems that you have sold off a business which was cash generating, higher-margin to kind of keep on funding a business which is structurally challenged. So -- and did you take the help of any external advisers, any consultants were engaged who kind of recommend this kind of a strategy? So a slightly backward looking question because it's important to understand how the decision making will happen in the coming years?

And I think the GLS asset decision was purely based on the fact that if you go back in time, right, we entered the API space, right, back in 2005, primarily with a vision that we would be a vertically integrated company with the lowest cost structure in the generics business, right, thinking that the U.S. generics business was supposed to be this pot of gold, right, where being vertically integrated would be important to succeed in that marketplace, right? The operating landscape has changed significantly over the last 5, 6 years, right? So that thesis doesn't hold true, right, where you can actually be a major player and having the best cost structure means the most successful company in the U.S. generics market. So given that thesis change, right, holding GLS, holding an API platform, right, which -- where Glenmark was using only 30% and 70% of the API platform was being sold to external customers, right, made very little sense for us to keep it within the umbrella. So that's the reason we spun it out and eventually, we recently sold the asset. The rest of the business is a pure branded formulations business while obviously, running our formulations business has its own challenges, right? But if you look at our presentation, it's a well-diversified business, right, coming from multiple geographies, so with very little exposure to any one geography. We've done a lot of hard work in building our capabilities in rest of the world markets. We have some unique positioning, right, in the rest of the world markets, where we've got all the -- we've got a ready platform, particularly in the area of dermatology, respiratory and oncology, right? And we are an ideal partner of choice because of the platform that -- and what we bring to the table. So I think being in the formulation space, being a branded company, has a completely different connotation, right, as we go forward, for us. So I don't know if that answers your question, right? But the API -- the sale of GLS and the spinout of GLS was purely because our ambitions were very different way back in the day, right, when we built GLS, right? And today, the U.S. generics market, there are lots of players, there's lots of competition, there are a lot of guys vertically integrated. And as you clearly know, right, the challenges are very different.

And even for the U.S. business, right, as Christoph mentioned in his presentation, we believe that we have hit the bottom. So with the pipeline that we have on nasal spray, MDIs, injectables, I think we should be able to grow at a much faster clip from here onwards. So that gives us confidence that even on the generic side, the growth will come back on track.

So the vertical integration aspect doesn't hold good anymore, right? We are working more on respiratory products, on injectable products, on various complex dosage forms.

And in terms of the margin guidance we're talking about in FY '25 and beyond. Now FY '24 has also benefited from a lot of costs that have come off, right? I mean, you talk about various base chemicals, APIs, intermediates, those costs have kind of eased out a bit, in fact, quite a bit in FY '24. So when you are giving a 19% EBITDA margin guidance in FY '25, does it incorporate some bit of cost escalation as well? Or I mean, how do you see the costs panning out? And whether they can be a risk to your margin guidance or not?

So when we talk of 19% EBITDA margin, obviously, there is a benefit of some of the R&D expenses, et cetera. And also the advantage of number of products that we have launched or the products that are going to come. So the expansion of some of the markets, all that taken together, will take the margin to 19% and plus. That's how we look at it.

And of course, Ryaltris is a big driver there also, in terms of improving the overall margin growth.

Right. And so one final question on cash generation for FY '25. Now the debtors have come off sharply as of end March balance sheet. I believe India sales reset in 3Q had a role to play in that. So with debtors likely to go up again in FY '25, would we still be in a position to be net cash by end of this year?

Yes, sure. So I'll answer that. So obviously, the debtors or overall working capital may go up by 10 to 12 days. But even taking all that into account and including our CapEx, et cetera, we also see some payout in terms of -- for our litigation also. We have what, INR 300 crores that may come up, which we had given in our call also. We still have a small -- at least a decent INR 200 crores to INR 300 crores cash generation this year. That's what we're looking at.

What kind of payout are you budgeting for FY '25 for these litigations then?

About INR 300 crores.

INR 300 crores and then going forward '26...

It will be about INR 80 crores or $10 million, that's it.

Just 1 quick question on R&D. So you are expecting your revenue to grow at 15% to 20%, while maintaining your R&D spend at around 7%, 7.5% of revenues. This -- your IGI spend should be flat at around INR 400 crores. So this means that your R&D is actually going up very, very fast in the next 3 to 4 years. So can you just guide us on where exactly you're spending money or the kind of assets that you are looking at on spending on, this one year?

So I think we've been a little conservative in guiding, right? I mean our R&D spends could even be lower than 7%, 7.25%, going forward. At this point, as we've said, right, our biggest spends are on respiratory development, right, as we go forward. So building the portfolio of respiratory products, building some branded products that we are developing to commercialize as we go forward. That's where the bulk of our R&D spends would go, right, going forward.

So it's just respiratory or you have something else in mind onco or derm or any of these other products?

So look, respiratory is the biggest driver for us, right, in terms of R&D spends. But additionally, of course, we have oncology, we have some clinical trials that we'll run, Envafolimab, some of the others, right, to get the products registered. But you're right, it's clearly a conservative view, right? 7%, 7.25%, there's a strong possibility we could be below that as we go forward.

And just one more. So how many of your U.S. launches today are contingent on your plant approval because you have 3 plants under regulatory scanner for now.

Sorry, can you...

How many of the U.S. launches -- approvals or launches that you expect in the next couple of years are dependent on your plants getting cleared?

So today, we have -- if I look at the U.S. business, right, we basically have 4 plants which are supplying the U.S., right? So we have our Indore and Aurangabad facility, which are clear right now. We have Goa, which is under a warning letter and Monroe, which is under a warning letter, right? Most of our filings are all coming out of Indore and Aurangabad, right? So we are hoping that there won't be any major impact on any of the approvals, right, going forward.

So in FY '24, what was the drag because of the Monroe facility, the overall EBITDA, both in terms of remediation cost as well as the fixed cost? And what type of that...

Can you just repeat that? I can't hear you well.

What was the impact of the Monroe facility on the EBITDA in FY '24 because of the remediation cost as well as the fixed cost? And what type of debtor swing can we see this year sort of reduction in '26 hopefully, when it comes on stream, what type of upside we can see?

Sure. We spent about $25 million in Monroe. So that's the OpEx that we have. And in the last year the remediation costs were much lower. It's about $4 million. We spent about INR 30 crores there.

This $30 million of fixed cost and remediation costs, how do you see that number in FY '25?

It was about $4 million. So both put together, we spent about $29 million last year.

So in FY '25, how do you see this number of $30 million?

The OpEx should be similar, around $25 million. We don't see much remediation cost at all, very insignificant.

And secondly, in terms of India, on the productivity front, how are you seeing the numbers in the next 2, 3 years?

On the product -- sorry.

Productivity per MR.

Well, our India business, we are clearly among the fastest-growing companies, right, in the Indian space. So I can't give you a specific number on productivity of MR but clearly, it's up there, right? We have about 5,000 reps today in the India business. It's about a INR 4,000 crore business, right, in this year. So you can do the math, right, on the productivity per MR, right? But that's something which, if we're able to run the -- continue on this trajectory, right, of the pace at which you're growing in India, I think we're pretty comfortable and confident that the India business will continue to fire, going forward.

And one last thing on your revenue stake in Glenmark Life. So what are your thoughts on that? When would you look to monetize the remaining stake that you have?

I can't hear you.

The remaining stake in Glenmark Life, what are the thoughts on that? We have some more stake left in Glenmark Life? So how are we looking to monetize that?

So we have the stake. We'll...

I mean, currently, it is there. So we'll take -- at an opportune time, we'll look at what we have to do next year.

So my question is, what is the share of in-licensed products for the total revenue currently? And where do you see it, going forward? And the follow-up, whether the in-license contribution will affect the margins?

Clearly, the in-licensed product share is very, very small today, right? I mean, we've just done these deals, right? But I mean the margin profile of the in-licensed products is pretty good, right, at the gross margin level, so very significant. So I -- we don't think the overall margins will get negatively impacted by the in-licensed product.

The second question is, what is the current share of those 3 brands, Ryaltris, Winlevi, Envafolimab; to the total revenue? And where do we see it, going forward?

Ryaltris, as I said, was $40 million, $50 million last year. This year, about $80-odd million in terms of revenues. The other 2 are yet to launch.

In the future, where do you see...

So if you see my presentation, right, we said that 3 of them will be almost $300 to $400 million in the next 5 years.

So my question was related to Ichnos. Ichnos, we indicated, in FY '26, some capital raise may be considered. If you give some clarity, what kind of capital raise we are talking? It is about out-licensing funding we are talking about or for capital raise we are talking about?

We are advancing the portfolio, and we're going to reach a point where we will get prepared for our pivotal phase, which is expensive. So that's where we don't have the definitive digit figure, but we know that this will require further support than -- in addition to Glenmark, so in replacement to Glenmark, I think. So that's our plan. Here, we have a growth estimate of a minimum of $100 million in terms of capital raise to help us get the funds to run through the pivotal trial execution and prepare the launch of our first asset.

I think to answer your question, right, the thinking is more in terms of partnership, which will help fund FY '26 and capital raise in '27. And it's hard to predict what the amount is and what the situation will be like, right, as we go forward, right, in terms of IGI capital raise.

Yes. So in this context, like in our R&D expenses towards innovation, we have reduced the expenses there, in total R&D. So it is -- it would have been funded internally. So instead of doing this, what we are thinking that going forward, we will raise the money. That is what the strategy we are working.

Yes. So look, Glenmark has invested substantially on innovation, right, over the last decade or 2 decades. The goal is at some point, IGI should be self-funding, okay? Right? I hope that makes sense to you, right? So from -- in that perspective, next year, we're hoping to do a big partnership, which will help IGI to fund its expenses. And the following year, we will do a capital raise. From there on, IGI will be self-funding. Does that answer your question?

Yes. Understood. Understood. Some clarity. And now the balance sheet is in a good shape, so are we thinking of some M&A opportunity or something we are scouting something?

Currently, we have nothing on M&A, right? I mean for the kind of growth that we are seeing as an organization for the next 2 or 3 years, we may do some small tuck-in acquisitions. But really, our focus is to continue growing the business organically, right, and to continue to scale the business organically.

I think we can take some questions from the virtual audience. So one question is on Europe. So obviously, we've seen phenomenal growth in the last 2 years particularly. So how do we see in terms of a growth percentage or a CAGR for Europe going forward? Can we expect a percentage which is similar to the last 2 years? Or something -- some guidance that we can provide basis the initiatives that we are working on?

So the first part of the answer will be the growth in Europe came from different countries. So it was really well spread. Now, to be able to maintain a growth of 50%, that is, of course, a challenge. See, the beauty in Europe is it's quite a complex region, many different cultures, many different languages, right? But we have a very strong team, and we are able to find the opportunities and -- to maximize. We have -- of course, we will grow further with Ryaltris. We will grow further with Winlevi, our new chemical entity in acne, clascoterone, right? So certainly, the growth will be there in Europe. To maintain a 50% growth over 2 years, that, I think, is a challenge, especially the bigger we get, right?

And on the India business, so compared to the rest of the large players in the industry, we are much more focused in terms of our therapy areas. So we are strong in 4 or 5 therapy areas. So obviously, we have grown substantially over the last couple of years, and we've grown faster than the market. Are we confident that we can sustain this market-beating growth only through these 5 areas? Or do we feel the need to expand into maybe a therapy area #6 in the near future?

I think there's substantial growth in the India segment, right, in the 4 or 5 areas that we currently operate. So derm, we are ranked #2. We will continue to gain market share. In the respiratory area, we are now #2. We still have a good runway in terms of market share gains. Cardiovascular, now we are #3. And there also -- I mean, there are various areas where we still don't have a presence, even within the segment, right? For example, lipid-lowering drugs, heart failure, these are areas where we are clearly not up there. And then, of course, diabetes, which is the fourth segment, we've got a number of launches coming in the diabetes obesity segment, right, with all the GLP-1 products which are out there. So I think there is enough of a runway in the 4 segments that we operate. And of course, now oncology, which we were historically just selling cytotoxic oncology products with the 2 in-licensed products, both Envafolimab and the BeiGene assets, right, that should help us launch more differentiated oncology products. So I think we've got our work cut out for the next 4, 5 years in India, right, with these 5 segments that we operate in, right? And we think there's enough of growth levers and growth opportunities in the 5 segments that we're operating. Besides that, of course, our OTC/DTC segment continues to gain a lot of scale. So we are now almost up to INR 400 million -- INR 350 crores, INR 400 crores revenues in OTC/DTC. So that's a substantial piece, and it's growing very nicely. So that will continue to drive India growth. So I think the India business across these 4, 5 levers, right, will do exceedingly well over the next 3 to 5 years.

One more question again on the business. So ROW, obviously, we, again, are slightly different than our peers because we have a pretty broad presence across various markets. So what risks do you see in terms of the growth, going forward, as a region, not individual markets, but as a region?

Well, I think emerging markets are, of course, different because -- by default, right? You do not have the political stability that you would have in a region such as Europe. So there will be inherent risks, which can be currency risks or it can be political risks by itself. But at the same time, of course, emerging markets offer -- also offer huge growth opportunities, right? I have shown this on the slide, when we look at these 4 regions, LatAm, Asia Pacific, Middle East, Africa, Russia, CIS; the potential of the markets there are huge. Now when we talk about what we can influence as a company, right, then we are very well positioned. Now we have a very strong foundation. And now we -- by adding more products, by adding new novel molecules, right, by strengthening our brands, by growing the core, by adding new molecules that we will be able to outgrow competition significantly in these markets.

On ROCE, while the overall target is 19% as a company, do we internally also have a minimum threshold that each of the business segments have to achieve? Because while we all understand that the India piece has much higher ROCE, so it looks overall 19% looks at it. Is there a minimum threshold ROCE that each of these segments have to achieve in FY '25 over a medium-term period? And secondly, when you are now being capital allocation every year of INR 700 crores a year, what is the minimum threshold there that you look at for any large CapEx?

So obviously, when you look at the ROCE, each business will have a different ROCE. But that is how the capital allocation over the years also have changed. Earlier, as I explained, we were almost at INR 12,000-odd million. We're spending now at INR 7,000 million or INR 700 crores Obviously, we looked across the board and looked at each business and how we look at the capital allocation, so we'll try our best to ensure that we get to a minimum threshold. It's not good to tell each number for a minimum threshold. But obviously, there could be businesses which could grow in future, so we would look at it. But on an overall basis, we'll try to be as careful as possible in terms of allocating CapEx or working capital or anything to ensure we get to our ROCE.

That is on the incremental basis. But overall as a business, is it that in the medium term, once this business plan works out, is it like minimum 12% or 15% ROCE, each business division has to earn?

So we'll try our best to be very close to the number that we just indicated. We said 19%, not all of them will be 19%, but many of them will be slightly higher also. But at the same time, there are some businesses which are pretty high. So obviously, you cannot today stop doing anything there. We will obviously try our best how to optimize and improve the profitability there. That's how you get to the number.

But to answer your question, yes, of course, we have internal thresholds, right, in terms of how we are allocating capital, right? But it's impossible to publicly state, right, what they are.

Glenn, you mentioned scaling up of prices will be a big contributor for your margin expansion you had. So with $40 million, $50 million sales currently, is the margin profile substantially ahead of your corporate average? And you say, like we move from $40 million, $50 million to $80 million next year, so what kind of delta can come in there?

So there's a substantial delta that we are gaining out of Ryaltris, right? I think at the company-wide level, right, it is having an influence on the overall EBITDA, right? So there's -- it is definitely moving the overall EBITDA needle, right? So when we're guiding this year 19%, Ryaltris has a big role to play in that. I can't give you any specifics beyond that. So obviously, it's ahead of the company average, right? But it's -- and every year that we scale this brand, be rest assured that a big chunk of the EBITDA is coming out of the Ryaltris branded presence that we're building on.

Yes. And with product launched in so many markets, how do you book -- like is it booked at the sales? Or you have different arrangements, like sometimes, it will be booked at the net profit level?

So when we are giving you the number, right, of $40 million, #50 million, that includes sales, it includes licensing revenues, it includes -- it's a mix of various different pieces, right? So I don't know if that answers your question, right? Some markets we are selling on our own, some markets it's through a partner. So you've got licensing revenues, you've got royalties. You've got all kinds of things built, baked in there.

So end of the day, that is the revenue that we derive from the sales. So partners may sell sometimes a little higher. So we are present in multiple ways. Somewhere, we have our own presence. Somewhere, we're doing through partners. And obviously, there are somewhere where there is a royalty or a profit share. So all that bakes in and comes to...

What kind of spend you do for this brand to further expand? Like do you spend on marketing or it's done by partners?

So in the markets where we are present, of course, we spend on marketing, right? But the good news is we continue to leverage the infrastructure we've already built in respiratory, right? So in most of the emerging markets, markets in Eastern Europe and multiple other markets, right, we have already an existing infrastructure in respiratory. So we have field forces on the ground, all that in place. So we are not adding, so we're just leveraging that infrastructure much more effectively, right, in terms of costs, right? So we're getting a lot of operating leverage in the markets where we are selling. Obviously, the markets where the partners are selling, it's their responsibility, right? So they invest in all the marketing spends and field force and so on and so forth.

Sure. And my second question is like what gives you confidence to say that U.S. bottom -- U.S. business is finally bottomed out? Because I guess we have been waiting for this business to recover for last few years, but things have been shifting quarter after quarter.

So I think the U.S. business clearly has been challenging, right, for us. And we think we've hit the bottom purely because we've now finished most of the remediation work. Some of the plants now are -- the productivity output is going out up from some of the plants. In addition, we've started to get some new product approvals like [ BrimoTimo ] was a good approval we got. The next quarter also, we are expecting a couple of good approvals. We've launched a number of in-licensed injectable products, almost 5, 6 injectable products, which are doing very well, right? So I think -- and that, coupled with the nasal spray launches hopefully yet this year, right, that we will do, that can be quite substantial. So we -- all these factors make us believe that the U.S. has bottomed, right? The increased productivity, increased volumes, increased new product approvals, some new businesses that we are picking up, the launch of the injectable portfolio, the nasal sprays, all these things make us believe that we've hit the bottom in this year. And of course, subsequent years, with the launch of not just the nasal sprays, but generic FLOVENT getting launched, hopefully, we'll be able to commercialize sometime next year. And then we've got the first-to-file products. So it's a full runway of products which are highly differentiated and high value added, right, which will help grow the U.S. business, going forward.

Maybe I can squeeze in a couple of the virtual questions. So on Envafolimab, we have a question. So obviously, this seems like an important opportunity for the future. So what -- so there are three parts to the question. So basically, what are the differentiating factors of Envafolimab? And why we are confident about the opportunity? What is the overall size of the market or the opportunity that we are targeting? And what kind of investments will be required in the next few years to -- for us to realize that?

So the overall market size of these products, right, between KEYTRUDA, nivolumab and various other products, it's almost a $20 billion market worldwide, right, of which $4 billion is just emerging markets, right, for which we have the right. So India, an emerging market, is almost $4 billion, right? And given that we have a huge differentiation, which is a subcutaneous injection, which can be given in a home setting compared to the infusion, which has to -- where the patient needs to go into the clinic and take the infusion, now go into the hospital and take the infusion, right? So the subcu injection can be a significant differentiator, coupled with -- of course, we expect to use pricing as a strategy also, right, to gain market share. So these are the two big drivers for Envafolimab. Our belief is that FY '26, we will start the rollout in some of the emerging markets, but the real traction will be FY '27 and beyond, right, as we go forward.

And in terms of investment required...

Investment, a lot of the investment is leveraging our current oncology infrastructure. So we already have the infrastructure where we have sales reps calling on the oncologist, selling cytotoxic drugs and some age-old products, right? And that, we can further leverage by now putting some novel drugs in the bag, right, in the -- from a promotion perspective. So that will drive pretty similar to what we're doing with Ryaltris, right, where we are continuing to leverage the existing infrastructure that we've built out in emerging markets in India. We're doing the same -- the model is the same for Envafolimab.

One question on the 2 sites, Goa and Monroe. So given that we've said that the remediation is concluded, so when are we expecting the reinspection and the warning letter to be lifted?

So we can't give a concrete timeline. We've already in -- we're ready to inform -- requested the FDA for a meeting on Monroe. So hopefully, that should come through quickly, and we can restart manufacturing on Monroe. Goa, we are ready, we are done with the remediation, and we'll wait to see when the agency comes.

Maybe take one more from the virtual audience. So what is the expected revenue or expected income from the respiratory device-based products? So we have obviously quite a few. We have Ryaltris. We have the generic products in the U.S. But globally, how do you see the whole respiratory device and the contribution to the revenue in the next 4 to 5 years?

I think that's a little too granular. I don't think we can give that kind of visibility on the specific device-based products. But again, if you see ex India, right, India, we have a big acute business along with chronic -- acute driven by Ascoril and Alex, 2 big brands, right, in India. If you see outside of India, most of our business is device-based, right? So almost all your respiratory business, whether it is Europe or in Latin America, right, or in most of the markets, it's all device based. So it's hard to give a specific number there.

Sure. Any questions from the audience?

Glenn, just one question for you. You mentioned earlier that -- I mean, we have been a poster child of innovation within pharma in the country. Now, given that you have had a vision of creating NCEs, NBEs out of India, do you think IGI in its current shape and form, with barely $50 million of annual spends and possibly, which could come down further going forward; do you think you can realize that vision of creating NCEs, NBEs out of India?

So I feel IGI has 3 or 4 very exciting assets, okay? 2 of them are partnered out, right? So there's always the possibility we'll continue to get milestones and royalties from the 2 assets. Additionally, the 2 assets that Cyril mentioned, right, 2001, 1442, very exciting assets, right? And even if one of these play out, right, Alankar, all it takes is one asset, right, in this game, right, because you're talking of highly differentiated opportunities, right, in the oncology space. So all it takes is one of these to work for us to be transformational, right, both for Glenmark, IGI and for innovation as a whole, right? So we've done this for a long time. We've invested substantial amount of capital, right? And the journey for us from here on is to be disciplined about take very concentrated bets, right, with 1442, 2001 being the key ones, right? And I also think that IGI will be self-sustaining, right, from next year. So it's not like we won't have any exposure to innovation going forward. So even if IGI does partnerships, subsequently, they do a capital raise, right. We will -- Glenmark will still have exposure to IGI by way of equity. It's just that we won't need to invest more capital, that's what I believe, right, in the years to come.

And just one follow-up there. On 1342, what is the status? The trial has been stopped, right? So what's happening there?

So thank you. And I will add to what Glenn has taken the opportunity to in-license a BEAT protein platform. And we have the capability within IGI to create new molecules for a partner interested in building their multispecific out of our proprietary BEAT platform. Your question is about ISB 1342, our CD38xCD3 T cell engager, we decided to pause the development of this asset after we demonstrated the clinical proof of concept, the good tolerability and also the lack of immunogenicity of this protein. And we presented the results at the ASH Annual Meeting last December. The reason why we paused the development of this first-generation bispecific that we already have 2 innovative assets in relapsed/refractory multiple myeloma. And in our cost efficiency model, we decided to focus on the most innovative assets and to leave this asset for licensing. So we are actively looking for partners willing to take on ISB 1342 for oncology, but also non-oncology assets -- indications, excuse me.

My question was on the U.S. business. So you mentioned that we are ready at Monroe and Goa for the FDA audit. We are expecting a favorable outcome. But just in case the outcome is not favorable, does it derail our plans there? And what is the plan of action in case there is unfavorable outcome?

So Monroe is a nonoperational site, right? There's no commercial product being sold out of Monroe, so frankly, other than the cash that we are burning there, right, which you'll have to decide, depending on how the agencies -- how the inspection goes right? Goa is under a warning letter. We are hoping -- we've done a lot of remediation. We've done a tremendous amount of work. So we'll wait to see how the agency views the work that we've done.

A couple of questions I'll, again, squeeze in. So in line with the last question, so one question has come. What is the preparedness level on the other sites, basis the learnings that we got from Monroe and Goa?

So as I said, it's been a great learning for us as an organization, right? And I think over the last 2 years, we worked really hard in the whole -- building the whole quality organization, right, rebuilding the quality organization, right? We have a new quality lead, who took over a couple of years ago. And since then, we've been transforming the whole quality organization throughout the organization. So lots of systems, lots of electronic systems that we've invested in. So all that makes us believe that the learnings we've actually -- that we've -- whatever we've learned from Monroe, Goa, now we've implemented a lot of those changes in the other sites, too. So we're much better prepared as an organization.

And on the IGI pipeline, so while we mentioned that we have the POCs coming up in FY '25, is there a more specific timeline that we can give in terms of when are the -- and also given the fact that we are now using some of the India sites for the trials?

Timeline, we will be -- the data disclosure at the -- first in the ASH abstract, which will be disclosed close to November, and then during the presentation in December, which will leave us even more time to continue our dose escalation, mature the data and present a more robust asset in December at the ASH Annual Meeting. So I'll invite you to join us at the ASH meeting to watch those data together.

Any questions from the audience? So I have one more, which just came in. So in terms of our EBITDA margins, so we've guided to a 19% EBITDA margin for FY '25, which is about 2%, 2.5% improvement from our last run rate basically. So obviously, this year, a lot of it is coming from the optimization of R&D expenditure in IGI. But we also said that we are going to target 1% to 2% improvement. So where is that improvement going to come from in the subsequent years?

As we already explained that Ryaltris and some of the other brands that we're going to launch, especially Ryaltris has a very good margin, and it's going to grow quite fast, and we've already seen it happening. So I think that would obviously help us to grow it further. And as we grow further, there will be some economies of scale as well. And this whole -- how we are working on the SG&A, we'll continue to work on that. But I think with newer markets and more respiratory products being launched everywhere, I think we're going to see some improvement because of it.

I think with the improved growth rates that we have, as we mentioned, right, our growth for the next few years will be around 12% to 15%. Obviously, the costs will not grow by the same rate. So we will have a much higher EBITDA growth and a much higher PAT growth that gives us confidence that there will be a 1% to 2% improvement in EBITDA margin, going forward, on a year-on-year basis.

Any other questions from the audience? We have a few more, but I think we have answered those as a part of the discussion, so I won't probably take those up. So I think if there are no other questions from the audience, then I think we can conclude the Investor Day session today. Thank you all, again, for joining us and interacting with the management team. And we look forward to further interactions in the near future. Thank you so much.