Gufic Biosciences Limited (509079) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Gufic Biosciences Limited Q3 FY '21-'22 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Ami Shah, Company Secretary. Thank you, and over to you, ma'am.

Good evening, everyone. I'm Ami Shah, Company Secretary of Gufic Biosciences Limited. I welcome you all to Q3 FY 2021-2022 Earnings Conference Call. I have with me Mr. Pranav Choksi, Chief Executive Officer and Whole-Time Director; Mr. Devkinandan Roonghta, Chief Financial Officer; and Mr. Avik Das of Investor Relations team to give the highlights of the business performance of the company and to clarify the queries of the investors during the call. After the opening remarks from the management, operator will open the bridge for Q&A session. But before we proceed forward with the call, please note some of the statements made in today's discussion may be forward-looking and are based on management's current expectations, and this may be viewed in conjunction with risks and uncertainties involved in our business. The company assumes no responsibility to publish or update or amend, modify, revise any forward-looking statements based on any subsequent development, new information or futures, all except as required by the applicable laws enforced. This call is being recorded, and the playback shall be made available on our website shortly after the call. The transcript of this call will be submitted to the stock exchanges and made available on our website. I will now hand over the call to Mr. Avik for his opening remarks. Thank you all. Over to you, Avik.

Good evening, everyone, and welcome to our earnings call for the third quarter. We thank each and every one of you also attending the call. It means a lot to us. As you all know, third quarter was a litmus test of our unique end-to-end business model, which is diversified across domestic branded business, exports, CMO and APIs, and we take pleasure in informing you that Gufic has emerged as the third fastest-growing company among the top 100 pharma companies in India. It was a critical quarter for us as the portfolio mix transitioned back to our normal strategy, which is spread across 4 exciting business lines and 15 well-chosen therapeutic segments. A point to highlight here is that the growth in the core non-COVID portfolio was contributed by not just a product or a division or a therapeutic segment or a business unit. Rather, there was an all-rounded granular growth across molecules and our well-diversified portfolio. Whether it was our anti-infective, infertility or the aesthetic dermatology division, we experienced growth across the board within our core non-COVID portfolio. This, of course, is a testament to the hard work of our various businesses, each of whom devised an excellent tailored product level strategy to navigate and capitalize on the transition to normal trend. And as always, we continue to focus on R&D with an aim to combine the unique art and science of lyophilization to new drug delivery systems and provide the patients with affordable and advanced medications. With that, I'll quickly take you all through the updates in each of the business lines. And of course later, later our CEO will give you further light on what are the exciting new things that we are doing in each of these business divisions. So to begin with, our domestic branded business registered a strong performance led primarily by our non-COVID products. The non-COVID portfolio of critical care group has shown very strong growth. This was fueled by our Penem portfolio, which has the entire range, right from Doripenem, Ertapenem, Meropenem, Imipenem. And also the Antifungal portfolio where we cover all the fungals. We saw a great very, very high double-digit growths in these 2 portfolios. Something very exciting, something that we've been looking forward to, our Core Infertility portfolio has really doubled now. We've seen healthy growth in this portfolio when compared to even the pre-pandemic levels. And this happened because we had certain product level, market level strategies, and there were some new products also which were launched in this division. Within the Herbal products, we launched a range of multivitamins which has led to high growth in this segment. Our Spark division, of course, has also seen great growth. And there, we intend to launch a cardiac, diabetic management range maybe somewhere in Q2 of FY '23. Stellar is a very young division, and it's growing at with leaps and bounces. And we are still continuing to see good traction. And to further augment the sales in this division, we plan to launch at least 6 to 8 new products in the coming 6 months. Our go-to-market strategy for all those products are very well mapped out. And Aesthaderm, which is one of our exciting BDs, in which we house our brand Stunnox, continues to grow very strongly. The acceptance in the market is phenomenal. And we are very, very sure -- and with every passing day, we are getting more and more confident that this will become one of our pillar brands going forward. Now, I'll give you all a quick overview of what happened in our CMO business. The company achieved strong and sustainable volume growth across multiple therapeutic segments. So our non-COVID portfolio has grown as we were able to complete some of our backlog orders, and we've seen high double-digit growth within this business segment as well. And in this segment, we are very fortunate to have some of India's leading pharma companies and global MNCs as our esteemed clients, and many of whom have awarded us with new projects in the past quarter. So this, of course, is a testimony to our continued effort to excel in R&D and at the cutting edge of quality. And the other new area of growth, which will become one of our big growth engines in time to come is our Export business. And we've seen huge volume growth in this business, and we have commenced exports to regulated markets for molecules such as vancomycin, clarithromycin, teicoplanin and tigecycline. We have received marketing authorizations for omeprazole from markets like Myanmar, azithromycin from Kenya, daptomycin from Colombia and our patented formulation tigecycline injection has received marketing authorizations on Russia and Myanmar. And I think we'll be able to go to many new markets with this patented formulation. And something that's exciting that has happened in the last quarter is we have broken into Brazil market, which, of course, is one of the most difficult markets to break into in terms of regulatory entry barriers. We've also gotten into Canada, Nigeria and Colombia with more and more products. So now, we are no longer one product in one market, but we are becoming a multiproduct in multi-market in the regulated market business itself. And I think with this -- and our Executive Director will further give you light on what our plans are on this side. And we've seen growth even in the API business to our existing portfolio of antifungals and anesthetic products. And as we have informed in our earlier calls, that our APIs, we have a dedicated R&D facility for API. And now we are coming up with an entire range, which will be in antifungals, peptides, antibiotics, certain synthetic progestins and antibacterials as well. So, this is an area which you will see great growth in time to come, and it won't be on the back of one therapeutic segment, which has been our strategy even in our formulations business. So it will be a very well spread out granular growth that we see here. And another update that we have on our ongoing CapEx is about our Penem block. There's a good market opportunity for these products, and to ensure that we capitalize on this market opportunity, we've shifted the location of the Penem block back to Navsari. This will significantly reduce our time to market as we can leverage our existing infrastructure such as utilities, engineering and testing facilities. And I think with this, even before our indoor facility go live, we should probably have a tenant block ready in Navsari. So with this, I'll hand over the call to our CFO Mr. Roonghta to give you all an update on the financials. And [indiscernible] will take over the call.

Thank you, Avik. I'm Mr. Devi Roonghta, CFO of the company. I will going to highlight the financial highlights for the quarter ended -- the Q3 for the financial year 2020/'21 and 9 months ended on 31st December 2021. First, I was going to highlight the 9-month financial result for the period December '21 compared with the financial results for the 9 months of December 2020. Total revenue for last 9 months was around INR 356 crores. This year, the total revenue is INR 617 crores. There is a upward of around 73% jump in the total revenue of the company. These also include around INR 150 crores revenue from COVID business. Otherwise, remaining is through our adjusting normal growth rate. EBITDA for last financial year, 9 months EBITDA was INR 63 crores. This 9-month EBITDA has jumped from INR 63 crores to INR 117 crores, there is total jump of around 85%. EBITDA margin has further improved in this 9 months. Last year's EBITDA margin was 17.8%. This year, the EBITDA margin for 9 months is around 19%. Profit before tax for last 9 months was INR 41 crores. This year, it was INR 101 crores. There is jump of around 148%. Profit PBT margin has further been improved from 11.4% to 16.3%. Profit after tax has jumped from last year, INR 31.4 crores to INR 75.6 crores, there is jump of around 141%. PAT margin last 9 months is 28.8%. This time, it was 12.2%. And there is also jump of around 50%. If I compare the Q3 of current financial year versus last financial year, the turnover for current financial year is around INR 122 crores, but actual turnover for this financial year was around INR 182 crores. This is because of the sales return of INR 10 crores related to COVID product, which was first sold in the Q1 of the financial year 2022. Last quarter's EBITDA last year, 2, 3 quarters the EBITDA was INR 27.5 crores. This time, it was INR 34.2 crores, there is jump of 25%. EBITDA margin last year was around 16.5%. This year, it was 19.9%. Profit before tax last Q3 was INR 20.5 crores. This Q3, it's INR 28.7 crores. There is a 14% jump. PBT margin last Q3 was 12.3%. This Q3 is around 16.7%. Profit after tax last year was 15.5%. This year was 21%, there is a jump of 36%. PAT margin last Q3 was 9.3%, this year [indiscernible] , and so this was the financial results for the quarter and 9 months ended. Thank you very much.

So thank you, Roonghta, sir. I'm Pranav here. So before I go ahead and --

I will handover to our M.D., Mr. Pranav Choksi.

Thank you, sir. So before I start, I'll just check my mic because I'm trying a new mic today. So I hope I'm audible and everything is fine. Can someone just acknowledge that, and then I'll go ahead.

Yes, sir, you are audible.

All right. Thank you. So I think, perfectly said by Avik and Roonghta sir about the different salient features of your company, I just want to elaborate on certain key points. And I will also first talk about, in general, and then I'll take it for the SBU or the Strategic Business Unit-wise. So as Avik said, if everyone has been following the investor call since the last -- since June and then in September also, we have already mentioned there was a 25% traction of COVID-related revenue in the first quarter and around 5% revenue traction due to black fungus, and I would say residual COVID but more related to black fungus in the Q2. This was first quarter, where we have seen almost not only zero involvement, I would say negative involvement of COVID products as related to the returns which we had to take because of a non-movement in the market of certain COVID drugs. Otherwise, this was the first quarter where we have seen a complete organic business being represented in its most efficient manner. So just to add to points, I would say, division wise, the domestic business, as mentioned by Avik, has seen that growth going on. Of course, infertility division led the growth percentage this time because as and when the normal overall life was coming back to normal, we saw a lot of pregnancies, a lot of [indiscernible] procedures, which were kept on hold, had come back to normal. Also, with the launch of certain PFS in terms of enoxaparin as well as certain new launches in terms of hormonal gels, and also an improvement in our offering of our HMG portfolio where we have come with not only more drug delivery systems, but also come up with an improved product where we have seen a lot -- I mean, I would see a very accelerated growth in the infertility segment. Coming to critical care. Critical care continues to be the #1 division of Gufic. And I feel, even without having any new launches in October to December because we had a big inventory of products, which all we have aligned with us. And apart from I would say the COVID drugs, the non-COVID drugs came back to normal, and we saw a good traction there. A lot of planned surgeries and a lot of other, I would say, existing, I would say, procedures similarly like in the critical care space, got activated once again. In the critical care space, we have just launched in the month of February the Zarbot, which is the botulin toxin version, which is mainly focused on neurological conditions. So as we have Stunnox, which is dedicated to the Aesthaderm for only cosmetic purposes, now Zarbot will be another, I would say, feather in our cap which would drive the business forward. Zarbot will, of course, have a higher traction. The reason being that the Aesthaderm division is being promoted by 33 people, and now we're going to expand there. But with Zarbot, being the #1 division which we have a critical care, we have almost 200 people focusing on this and trying to create an equity with the neurological, I would say, community. And more importantly, we have, I would say, a lot of feedback in terms of use, in terms of trials, in terms of applications, which we feel that we will be giving them not only the competition, but also giving a big boost to the market also. So coming to Zarbot, it should be another launch. Also we'll be gearing up for our expansion in capacity also going forward in Navsari, which I had mentioned earlier also. Indore will still take time. Indore should be ready by March 2023, or a little bit before that. Because right now, we're on schedule. But before I talk on CapEx, let me focus on the impact on the critical care division. So we foresee that apart from the normal products, we are coming out with a new sign, I mean, a new basket, a new pipeline of certain critical care products, which are mostly targeted for primary health care and a separate division separately dedicated for microcare. So there will be offshoots of the critical care division, where there'll be 2 to 3 products launched in the month of February and 2 more in the month of March around a new drug delivery system coming in April, which should further fuel the growth and keep the consistent numbers going on. As Roonghta sir rightly mentioned, the main challenge and the main objective we have to do -- which we have to focus on that this year almost saw a INR 150 crore increase in revenue purely due to COVID. But we know for a fact that this INR 150 crores also came at the cost of certain other division business, which, of course, will come back to normal. But at the same time, we also have some, I would say, not some, we have in every division around 2 to 3, I would say, traction points, which will help us to not only recover this COVID business, but also to ensure growth in the future years to come. Coming to the COVID products, as we have mentioned, Healthcare, I would say, more than herbal. Now, we are coming with lot of neutraceuticals. We are coming up with a specific liposomal combination with neutraceuticals, which can be used on day-to-day basis. Just we are coming up with certain unique single doses products for kids because sometimes when we see the nutrition of kids are very important for us, and sometimes the kids forget -- since the schools are starting once again, sometimes if they forget to take the syrup in the morning or softgel in the morning, they have to wait for the entire day. So we are coming up with now small handy packs of certain products, which will be launched by Q2 or Q3 2023, which will be unique to multivitamins, to iron and to basically overall nutrition, which can packed in the form of their tiffin box or in the form of the snack box, which can be carried by them, and very tasty and very cosmetically-looking products, which can be taken in the form of a jelly or in a form of a liquid shot or in a form of suspension, which helps them to take care of their daily requirements. So these are just some of the products which you're looking at either for oral use. We're also working on certain topical, I would say, massage oils for infants that they get the nutrition via the topical route via massage. So these are just small, small, I would say, incremental innovations which we are trying to do, which help the patient compliance, which helps the overall administration of drug also much more consistent and much more unique, and much more, I would say, organized. So similarly in Spark as Avik rightly mentioned, apart from the antibiotic Gufidox which we launched, which right now, in the last 2 months, got traction because of the upper respiratory infections, which was a byproduct of this third wave of COVID. We could manage -- I think the only product which we could actually have some dent was the Gufidox because that's the only product which was prescribed in COVID. Thanks to God, and thank to everyone and thanks to the science now, a lot of people are not admitted to the hospitals and because of that, not much traction was there. And a lot of people recovered just by taking the normal routine standard of care or basic antibiotics or basic, I would say, Vitamin C and I would say normal nutrition and they were fine. So Spark, the reason why we are launching this cardiac diabetic annual as part of the Spark division is we have seen that because of COVID, a lot of increase in sugar levels in diabetics is being seen on a much more broader basis. And we foresee that we have some unique offerings, which will be coming in the next year, which will be the anchor products for us, which will offer us some differentiators. And that, along with the common basket of antidiabetics and cardios, which will be an important, I would say, booster tool for us going forward. So right now, maybe in adult population, the diabetes penetration is 10%, but there are certain data which is available in the market as per experts, where we can see this 10% going to almost 16% to 20% in the next few years because of the impact of COVID, and that is the increase in diabetics market overall in the country. Coming to Stellar, we, of course, got a good traction because of certain pre-fills within certain products. But what we realized also that in pain management and gyne, we have a good portfolio. But in terms of the ortho segments, we lack certain, I would say, allopathic options, which can be unique in nature, which can help us drive the Stellar business. So those, they came out of the brainstorming which we did in the month of December. And we hope by the month -- we already have launched one molecule, which is an extension of Sallaki known as Sallaki Max, which is a good option for the orthopedics for this quarter. And in the next quarter, we are hoping to launch 3 more products, which will be helping us to take care of -- to ensure that the gap in the treatment basket, what we offer to the orthopedics is taken care of, and we can get a better share of the prescription in the coming months to come, in the coming years to come also. Aesthaderm is anyway, I would say, Stunnox month-by-month has been on the rise. And now along with, I would say that not only the acceptance, but more importantly, the recognition, which is getting in the market is quite encouraging. And hence, because of this, I would say, 9-month data what we have of Stunnox in the market made us very encouraged to launch the Zarbot also, and that is in the critical care space and neurological issue. We said we should also launch it fast because the doctors acceptance is overwhelming. At the same time, what we realized where we were lacking is in terms of marketing and in terms of the noise level, we have to improve. So we have recruited certain experts who have a prior history in handling toxins and fillers. And we hope that with them, and with also some international faces who will be joining us as an advisory board for us in India, we will be having a much more -- I would say much more, I would say, amplified launch. I would not say launch, it's a much more amplified noise level in the field of Aesthaderm with the Stunnox range. And this very soon, we should be applying for the topical option also for Stunnox, which should be ready for filing by April. Followed by [indiscernible] , which we'll be filing in the month of July. So that is in the case of the domestic market. As I mentioned, for the CMO business, there is a lot to an R&D than what we can market. So then as Avik was saying that when we talk to a particular client of ours, and we are offering them maybe 4 out of 6 or 4 out of 8 options in a particular therapeutic , I would say, treatment regimen, they ask us to develop the other 2 not only for the Indian market but also to take to our international markets. So like that, in the last 3 months, we have signed almost 3 minimum agreements. There are two under discussions but 3 agreements have been signed, where we will be sort of a contract research and development and manufacturing partner for 2 big multinationals and also for 2 companies based in Europe where we will be taking care of their gap in their therapeutic regimen. And we will be the, I would say, the partner, ensuring that they get the entire channel taken care of. This is also in a reason, I would say, helpful. Why? Because of the backward integration of the API, which we already invested in the last 3 years. We've become a good API, I mean, so we start with the research in APIs and we start with the research in formulation. We can offer the entire basket from scratch. Of course, in the areas of our strength, I'm not saying everything, but in the areas of our trend. And hence, it makes us a good partner as a contract CDMO in the years to come. This is going to be complemented by the expansion capacity at Navsari which is going to be ready by March 2022, where we will be increasing the capacity by 400,000 vials for lyophilized and we'll be increasing the liquid capacity by further -- by around close to maybe 1 million vials. So now, the total lyophilized capacity in Navsari would come to around close to 4.4 million vials per month. And this will be complemented by additional capacity at Indore, which will be ready by end of next year, which will be another 5 million. So we are looking at a 9.4 million vials capacity per month, which I think should make us -- like I said, I had mentioned earlier, the largest manufacturer in the world. So apart from having an economic of scale, and like I said, in Indore, it will just not be the lyophilized products, it also will be suspensions. It would be suspensions, it would be pre-fill syringeal, it would be dual-chamber bags, it will be dual-chamber syringes and it would also be ampules. So the entire spectrum of an injection in whatever form, whatever way is possible will be made there. And that will make us a single window, I would say, manufacturer, supplier and marketer of high-end injectables and also generate injectable source. Apart from this, the decision for us to shift Penem from Indore back to Navsari was that we had an existing, I would say, infrastructure, which could be converted and made into a Penem block much earlier rather than putting up a bigger investment in Indore. So we took the option by which we pre-poned the commercial launch of penems to June 2022 instead of July 2023. So this just helps us to penetrate the market much faster, and because of this -- and it was a great job done by my CEO and his team. And I think the way we have expanded, I think we should be ready by May. However, I give the commitment that by June 2022, we should be ready with this block and so we can see revenues coming from Q2 2023. Coming to exports. Already, I think Avik has mentioned the specific approvals which we have got. But keeping in mind our focus on multiple countries and multiple products, the pipeline continues to grow. There had been some challenges last year, reason being that most of our capacity still around July was occupied with, I would say, COVID and these black fungus and mucormycosis drugs. So after that, we had a very big backlog of our export products, and we had some backlog of a domestic market also, which we got into. And then from January itself, we have started now taking care of new batches, new launches for -- I mean, these are the new pipeline which we want to file in the international markets in the years to come. We have started the validation batches from them from January. And we foresee that, again, by maybe September, October 2022, we should have new [indiscernible] lined up so that the pipeline should always be, I would say, come out full and there should be no lull period, and we should keep on getting this churning months on months. Coming to our R&D development, which is I think the backbone of us, I would start with the F&D department, the formulation department first, and then I'll come to the API one. The formulation R&D in Navsari has all these -- apart from the botulin toxin projects and apart from the normal generics we are working on, they have started now working on certain biological peptides and certain, I would say, specific niche products in regard to liposomal options and nanoparticles. This will be complemented by the Indore R&D, which is starting in the month of February. As I mentioned before, our foray into vaccines should start very soon. And that is where the Indore R&D should start not only this, but also start the various new drug delivery systems, also biologics are there. So since the projects were increasing day by day, and of course, with the growth which we have seen and the cash flows which we are getting, a big chunk of our money is being invested back into R&D and infrastructure. So maybe certain milestones which we have planned 3 years, 4 years, 5 years down the line can be pre-poned to earlier year. The last point, which is the most important point, is about the bulk drug API business because going forward we have seen a lot of interest in terms of derisking from countries beyond us, and that is where the API R&D business has seen traction in terms of the number of portfolios. So earlier, we had decided to have a team of around 25, 30 people working now in the space is there to increase it to maybe 50 people, specially dedicated to API and India. I'm talking about the scientists and the chemists. And we feel that in different therapies, apart from cardiac, anti-infective, antifungals, anesthetic, which is already our foray, we will expand to diabetes, and we will be expanding to peptides. So whatever we offer in the front end, we should be at least, like I said, 60% of those portfolios -- I mean 60% of the products which can be game changers down the line should be backward integrated all the way to API basis. There, we also try that even the intermediate and the basic scratch should be derisked from the countries beyond us. So this is a nutshell of, I would say, overall, whatever efforts the company is getting into and we are getting to. I think that's enough from my side. If I have missed any point, please feel free to ask any questions, and I'll be more than happy to answer those. So I'll hand over the, I would say, the session back to the operator, I think, and you can take it forward.

[Operator Instructions] The first question is from the line of Rajat from [ IoT ].

So I just wanted to -- Pranav, I just wanted to understand one thing, what really is the differentiation of our company? Is it lyophilization or is it new drug delivery system? Or is it new drug delivery system within the lyophilization or something else?

So yes, first of all, if you ask me in 2008, 2010, what was the differentiation, I would have said definitely lyophilization. But lyophilization is more of a commodity now. It's not that lyophilization is not accessible by everyone. So still in lyophilization, the economics of scale and the pipeline is, of course, still our USP where we offer a lot of products for the first time in India and we also offer some new drug delivery systems, which might be sometimes first time in the world. But if -- or also, we have patents by which if certain lyophilized products have patent, we always come up with our own unique process, and that's how we bypass them and we launch it at a much economical rate. Going forward, the company has evolved, keeping in mind the basic fundamentals of innovation in mind. So new drug delivery system in injections is, of course, sometimes or maybe or maybe not related to lyophilization. However, we have always come up with options in new drug delivery system where we can make the patient compliance much more easier. So as I mentioned before, sometimes it's about patient compliance, but sometimes in the injection industry or the ICO industry, it's all about administrator compliance also. So you see the new launches, which will come up in the next 3 to 6 months, they will be specifically related to administrator compliance, where you don't have to go through much mixing, matching and by which they can be chances of cross contamination and there might be chances of, what I say, inaccurate dosing. And hence, we moved on to specific devices and use our own, I say, intellect or I would say, our innovative capability in terms of stabilizing those products apart from lyophilization in those drug delivery systems, which we use some new, I would say, procedure. Going forward, as a differentiator, one more reason is that there are certain -- I'm a MS in biotechnology. And when I joined Gufic, we're always into pharma, and we continue to be -- we will always try to be a force in pharma. But biological is something which we are very passionate about because that is where the core competency of the management lies in also. So with my mentor, Dr. Balram Singh who has helped us to -- the first drug being Stunnox and followed by Zarbot and many more. We also have a separate pipeline, which is the next trend of Gufic in the field of recombinant proteins, in the field of biological vaccines, also in the field of maybe some immuno-onco therapy, which will be seen in the next few years. So everything is related to life-saving and niche products where we get into. Can it be lyophilization, new drug delivery systems, biological peptides, and lastly, complemented with our backward integration in terms of API. So that is where I feel our company is a little bit more different. So we might not be great in generics, in tablet, capsule for certain products but these are the fields which we more normally try to focus on. I hope, I think I've answered your question.

Pretty much. Thank you so much for the detailed answer. The other question I had was around -- if you can give some examples where you have been able to launch some products under the new drug delivery system, so as to be able to understand this aspect better, some new examples. And what kind of revenues, let's say, those products launched under NDDS, what kind of revenue contribution is coming from such products as of today?

I'll definitely give you examples of new drug delivery systems, but revenue is something which I might be refrained from answering that. Because not that I don't want to share it with you, I may be wrong in those numbers. So you can always send an email to us and we can let you know. I'll give you an example, first of all, about certain antibiotics which are in the form of a separate vial. You have a diluent and you have to mix it, then it will come in the form of a dual-chamber bag and we make it more administrative compliant . We also give you in the -- so let's say, example of Immunocin Alpha, we have launched it in the form of a lyophilized vial earlier, which is as per the innovator in the United States. But we are the first company to come up with, I would say, a pre-filled syringe. So you can imagine it's an intramuscular product, which you don't want someone to go through the trouble of taking a big needle, putting 1 ml water into a lyophilized vial, then again removing 1 ml water in a form of insulin needle and then putting it in the stomach. So that entire process is too tedious and it can lead to -- when you're playing with 1 ml, there can be chances of inaccurate dosing or it can be chance of spillage, or I would say, contamination also. So that is where we have come up with pre-filled syringe option for Immunocin Alpha also. The same example goes for human menopausal gonadotropin, this is a product which is used in fertility, in IVF treatments. There, we have come up with -- again, it is a lyophilized product, which is stable for 24 months or 36 months. We have come up with ready-to-use pre-fill syringes. We have come up with ready-to-use liquids, where the doctor has [indiscernible] sometimes, the doctor feels the lyophilized [Foreign Language] putting multiple vials and all that. So what we have come -- we have come up with -- so the normal strength, which we used to give in a vial earlier was 150 IU. We have now come with multi-dose vials of around 1,200 IU, and it's ready-to-use liquid without any dilution, without anything, doctor can just take 1 ml and put it in the patient's body, and they are done. They don't have to go to the entire process of reconstitution and contamination and all that. And if they want something even superior to that, we have an option of pre-filled syringe. So we have a liquid stable -- so from lyophilization, we have now moved to ready-to-use liquid where we can have a shot of 150 IU or 225 IU or 300 IU ready where we can just put it in the form of, I would say, syringes going forward. In the future, what we are coming up with there might be certain powders and certain liquids, which you need to mix and then you have to give it intramuscularly. So we have options of a single pre-filled syringe where you have a powder in the front and you have liquid behind. You just press the liquid onto the powder, it gets mixed and directly goes in the patient body. You know that 100% of that molecule is going into the patient's body. This is very important in cases where certain products are only 40 milligrams, which is hardly -- to measure 40 milligram to measure maybe 0.5 ml or 0.6 ml is very difficult. And when you have such a device, it ensures that the patient gets complete, I would say, the right dose at the right time, and it lasts for the right time as well. These injections are supposed to be lasting for 28 days in the patient's body, these are Depot injections. So we ensure that the patient will get that 28 days full treatment. Of course, I can go on and on and on. I can go on to topical botulinum toxin, I can go to penems in the bags and all that, but I think it will be long. But I hope you get an extent of what I'm getting into?

Yes. Yes, pretty much. The other question I had was around --

Can we please request you to please rejoin the queue for follow-up? We have other participants waiting in line. [Operator Instructions] We move to the next question from the line of [ Umang Shah ] from [Sarath Capital AIS].

So the diabetes and cardiac foray, would it be oral medication or lyophilized medication?

Primarily, I think they are lyophilized, very frankly. Primary, they're oral -- I'm sorry, primarily they are oral. But we are working on certain peptides which might be, of course, of injectable in nature. Maybe lyophilized, maybe pre-filled syringe, maybe liquid, depending on their development cycle. And because there are type 1 and type 2. So when I talk about the diabetic portfolio, there might be a combination of starting with oral and eventually moving on to certain injections also. Coming to cardiac, yes. Mostly, we already have a very strong cardiac portfolio in terms of contract manufacturing, in terms of injections, but we do not market those. So our idea is that we will come up with a special task force for cardiac oral first, and then that will be complemented by the pipeline of cardiac injection which we already have in our portfolio. But we don't market them, we only offer them as a contract manufacturer.

Right, sir. This is very helpful. Sir, and the second question is that in your critical care segment and fertility segment, there is a lot of competition in terms of number of players and most of them tend to be MNCs like Merck and Sanofi. So just wanted to understand, like, are we get better sales because of lower cost of our drugs or better marketing, or if you could shed some light on it?

Sure. I think the first thing is the drug has to be affordable to the patient, that really helps definitely. But for us, in the market, the price will not be the determination factor. So when we go to the head of any big hospital or we go to the -- when we go and meet the doctors who are the decision makers on which brand do we use in each patient, they first talk about quality, they first talk about that whether this company can offer me the entire basket. They also see that if tomorrow if something is compatible with some particular new combination, can the company offer that. And then, of course, it has to be affordable by the patient. So again, I'll not name names. But in certain cases, price works I will tell you how. When certain MRP of the products are maybe INR 15,000, INR 18,000, and the doctor refrains from using that product because the patient cannot afford them. And then Gufic comes and tells them, why don't you use that same molecule, that same product, I'm giving you at INR 4,000? Now at least you can upgrade that patient to that therapy which he or she would not have afforded just because it was out of his budget and the insurance will not cover it. So definitely, in those cases, we help. So that's how the critical care has got traction because we have brought very, I would say, internationally quality products. And the same product we sell in Germany, the same batch, the same product is also sold to a patient in India. Where in certain cases, we have brought the price by almost 1/4th down and still making money. It's not that we do it for charity, still, we make money out of it. The only reason is economic of scale, the product -- I mean, the pipeline and also the backward integration, where we have the API also. So these are a lot of factors which help us to, I would say, create a mark in the market -- create a dent in the market and maybe defeat our competitors.

Right, sir. This is very helpful.

The next question is from the line of Ayush Agarwal from Mittal Analytics.

Pranav, I much appreciate the detailed opening remarks. I have my first question, which is that now that the domestic branded business is around INR 300 crores plus, which is a stable business now. So what will ensure 20% growth for the next few years in a domestic branded business? And a follow-up to this is that, what could be the addressable market for our critical care and fertility care where we are already very big?

So Ayush, thank you very much. So the moment when the company clocked INR 250 crores in Q1 and in Q2, whatever we did there, that is the first question which came to my mind which my CFO asked me, how will you sustain this? It's not that -- and we all hope and we all pray that COVID should go away and we should get back to a normal life. So that is where, like I said, options like new drug delivery systems, option like the dual-chamber bags option of Zarbot coming in Critical Care. Options of isoconazole, which is now -- I'm hoping any, in the next 2, 3 months, I should get the DCI permission options of Dalbavancin where we'll be doing our -- we should be finishing a clinical trial by coming year, and we should launch it by maybe Jan to March 2023. Options like many more molecules I cannot name, which is in the pipeline and we are working on a filing to DCI should sustain the growth in critical care. In fertility, we have a new modified form of HMG coming in because the total market of HMG, we right now only have around a 6% to 7% market share. We are targeting in the next year, we should have at least 20% market share in HMG because of the offering, which is going to come. And like that, it's going to be complemented by 3, 4 other hormone, either NDDS or even new molecules, which will take us through. I already mentioned that in health care, with those unique, I would say, convenience in terms of products which will come for the pediatric use followed by a strong launch in certain immunomodulators. And of course, vitamin should drive that growth. In Spark, cardiac -- again, cardiac is something which we have to clear with patients because it's not something which can happen overnight. But it is something which we want to really capitalize on because we know that we have certain offerings there also which are a little bit revolutionary, which you might see it in the next 3 years. But for me to be launching something in 3 years, I need to have some anchor right now. So my next 3 years, I would say [Foreign Language] in terms of creating a market and at least getting known. Because right now, no big cardiologist or diabetologist knows Gufic, and maybe it's nothing for them. That is where in the next 3 years, we will have to create some sort of equations saying that we are a standard company, and that's why the new launch, which we'll come up with, will have relevance and we'll have that decision channel and that entire market share set up. So we continue to capitalize on that revolutionary product. So these are just some examples, like I said, following Aesthaderm skin care followed by hair care. And in Stellar, like I mentioned, we already saw a gap in the therapy basket and we're going to add it up with certain products. So that is an ongoing process and it will keep on -- because there are also instances that we work on 10 things, we fail at 5 things, something you think will click might not click. Something which you feel will not click will click, so that trial and error continues. But that is where R&D backup and same time what we have as a team, I'm very lucky and blessed to have them. And at least now, we're not running out of ideas. My thought process to get -- I will get worried if I run out of ideas in the years to come. So I think I'm okay until now.

That's really good to know. Just a follow-up to this is that what is the addressable market for Gufic in critical care facilities?

Yes, sorry, I forgot to mention that. Yes. So yes, I still -- I'm not very good with numbers, but still I -- according to me, the current market size, what we have is close to around INR 4,500 crores to INR 5,000 crores, which we are currently doing. The new products which we'll be launching in the next 1, 2 years always will be adding maybe INR 500,000 crores XYZ to it when we opened. So like Penem when we are coming with a new drug delivery system, so I'm sure it will be part of the existing thing. Plus, there will be an expansion of the market also. With Zarbot, also we foresee that, apart from just taking a market share, we should increase the market in the neurological condition. Plus the certain multivitamins, which are coming in a form of a dual-chamber syringe, we should also help to expand the existing market, which is right now mostly just oral. Because there, if you have a better biology and a much more convenient method, then that will go through. So Infertility, Critical Care is INR 4,500 crores, INR 5,000 crores, but Infertility is around close to INR 2,000 to INR 3,000 crores and growing, yes.

My next question is that what are the other therapeutics which are large enough right now, back the next 2, 3 therapeutic segments, which are large enough right now? And what are we doing to grow them half the size of our critical care and fertility business?

You're talking about our own existing basket, right?

Correct, correct.

Yes. So like I said, I think critical care is a very broad word now because that's why we're dividing to primary health care and mycocare, normal anti-infective, and now we are coming with neurological division. So now in particular also, we are hiving off and creating 2 different specialties which can be focused in a much more attractive manner. So again, I would say neurology in critical care and urology as a complement to infertility. And Aesthaderm, where -- which is our cosmetic thing, is something which we feel should be going up in a much bigger way. Cardiac/diabetes, again, I'm saying, is something which we hope to do because of the anchor products. And I feel that keeping in mind the market size, what we see, we should see that also should give us a good traction. So both cardiac/diabetes and Aesthaderm and neurological should give us a good amount of chunk in the years to come.

Awesome, awesome. That's really good to know, and I wish you all the best.

Thank you.

[Operator Instructions] We move to the next question from the line of Aman Vij from Astute Investment Management.

My question is regarding the -- if you can talk about the capacity utilization as well as peak sales as well as our ranking in these 3 categories, which is lyophilized injection, pre-filled syringes and liquid syringes?

So Aman-ji, first of all, I think since you're working for Astute, you were asking a very Astute question, which I think you'll have to repeat again for me to understand. So is it -- you're asking me about my capacity and how much we are utilizing and how much we are the leader? Can you please repeat that? Maybe I missed it, my apologies, please.

Yes, yes. So your capacity numbers are mentioned in the presentation very nicely. I was asking about what is your utilization in these 3 parts, as well as what is the peak sales we can achieve in this? And what is our ranking? Because we have 2, 3 years back numbers only. And I think Cipla is #1 in like-for-like, I may be wrong, and we are #2. But what is the ranking and sales as of now, if you can talk about these 3 categories?

So yes. So again, answering your second question first, that in terms of our capacity, how much revenue we can go for depending on the product mix, which we have. So I will not answer that question because we have a pantoprazole which is sold for around INR 60 or INR 50 or even cheaper in India to maybe Dalbavancin, which we will be selling for maybe close to $300 or $400 also per vial. So depending on the -- I mean, of course, internally, we have a road map for them. I'm not saying I'm not denying that. For me to share that right now would be a little bit more of a preliminary thing. I'll answer your first question, that is your capacity. So as I mentioned that currently, we have a 4 million capacity. We are right now at around 60% to 65% capacity in utilization in lyophilized products in Navsari. We are just increasing this 0.4 million in Navsari as a back up till the Indore facility comes because of -- we foresee that with Brazil, Canada, with South Africa, and very soon, U.K. coming up, we should fall short of capacity by March 2023 or maybe June 2023. So at that time, you should not -- because you always see that the domestic market also will increase, that there will be a natural organic growth. Plus, the new geographies entering, plus our pipeline will start kicking in. So we have now decided for the additional capacity in Indore, which should be okay. This combined capacity should be okay for us at least for the next 3 to 5 years. If not, I'll be happy then I'll make a new factory if required. Coming to, I would say, the other facilities, I forgot to mention this before and it's a point of relevance which you have talked about. Since a lot of our injections, we are also now planning to come up with an entire basket of oral options also. To give you an example, Isovuconazole is something we'll be -- the first Indian manufacturing in India as injection. But we also want to now start working on the on the oral option because we are going to make the API in-house. So for such capacity, we are now leaving some capacities outside where the moment we reach the economics of scale, we will be making that capacity in-house in Indore in the next 2 years to come. So capacity utilizing, I'm quite okay. And in terms of the leadership, which is a third part of the question. Yes, we are in the, I would say, still #2. I would believe in the -- if I combine all my numbers and everything we are still #2, Cipla is amazing, doing great job. And of course, they are [indiscernible] dealing much. But yes, we are still #2. But in certain products, molecule-wise ranking, I might be #1, might be #2 or #3 depending on those areas. In fertility, we might be in -- not might be, we are in the top 5. But again, like I said, we might be in the -- different modules might have a different ranking as such.

I'm sorry, the clarification, utilization levels in pre-filled syringes and liquid?

Pre-filled, we have enough capacity. Pre-filled capacity is 3 million per month right now, and there will be additionally 3 million coming in Indore. And right now, we are using hardly 500,000 out of the 3 million per month.

Sure. I have more question, I'll get back in the queue.

The next question is from the line of [ Divin Dareja] from ASK Investment Managers.

Yes, sir, am I audible?

Yes, sir, please go ahead.

Yes. Sir, my first question is around the funding of your CapEx. If you could give me the debt required additionally for funding the CapEx and the total CapEx that you will require for Indore and Navsari expansion?

Can I request Roonghta sir to answer this question, because I think you'll be much more precise than me?

Yes, sir. We are expecting around INR 240 crores CapEx for Indore plant, that is fixed asset. Then another around INR 50 crores will be required, between INR 50 crores to INR 60 crores will be required for working capital. So the total requirement is around INR 300 crores. And for Navsari, Penem plant and other CapEx will be requiring around INR 20 crores. So there is a total INR 320 crore requirement. Out of INR 320 crores, we will be borrowing around INR 150 crores from the bank and remaining will be from internal accrual for this year as well as from next year.

So this total CapEx will happen over FY '22 and '23? And what would be the gross debt position as of now and at what levels would it peak?

As of now, my current CC limit utilization is nil, only term loan is there around INR 40 crores. And after CapEx, we see the peak will go up to INR 30 crores plus INR 150 crores, around INR 180 crores will be the peak outstanding.

Okay. Okay. And also, if you could help me with the OpEx that will come on board with the Indore and the Navsari facility? Because these plants when they get commissioned, will it be related cost?

This is now depending upon the capacity utilization, how much we will hit the margin initially. Whether capacity will be between 30% utilization, 40% utilization. But I can say from March onwards, there will not be any cash losses. It will be a breakeven in the first 3, 4 months, and then we will start operating. But what will be the total expenses depending upon the top line is what we are going to generate from the Indore plant.

Okay. And also if you could give me the --

[Mr. Dareja ], may we request you to please rejoin the queue for follow-up. The next question is from the line of Runjhun Jain from Nirmal Bang.

Yes. Just a great set of numbers for this one. Just wanted -- I'm new to the company, so the question is probably very new and the different from what we have been hearing till now. I wanted to understand the basic strategy of the company. You are saying that you're spreading into many 3 or 4, other strategic area of therapy. You have said you're also going to export, you are also going to BMO. I'm just trying to understand the strategy here. Is it not spreading too thin? Do we have that kind of a capabilities in terms of management? What kind of an MR trend we do have in domestic market?

So I'll take the MR trends, but spreading thin in terms of too many segments or spreading thin in terms of revenue, can you elaborate on that? The MR trend is anyway, by the way, 850.

Okay. So what I mean we are, sir, so there are too many with the MR strength of 850, you have to cover so many therapies. So is it not that we are going sort of going deeper in any selective therapy, we are going in 3 or 4 therapies where probably we don't have that kind of expertise in particular therapies, but it is like spreading too thin? So is this a strategical move to diversify? Or is it not to go those -- we don't have kind of an expertise to go deeper in that particular therapy?

I think if I understand it well, I'll take an example of one therapy, and then I think maybe just correct me if I understood the question right. So when I talk about a critical care therapy where we are #2, as I mentioned before, in the representative market totally. So there, any way we will keep on having new product pipeline. But for -- let's say, if I'm working on antifungals, which we launched on for the first or I launched certain antibiotics for the first time, I will not expect my team to go and now start selling more of generic products, which the GC contribution is less than around 30%, 20%, 10%, just so that I can get a higher revenue. For me, to sustain the pricing and for me to sustain the critical care division in the way we need to the scientific marketing, we need to always be present in new and new pipelines, new drug delivery systems or maybe new therapy options in terms of new molecules or via an alternate molecule in terms of technology. So we never decide to go thin in those because if you see, we are a R&D and a manufacturing company where we have a lot of USP in terms of certain segments. But if you honestly, see them, it's mostly related to a very niche specialties. It's not that I always say that if you see, I think Micro has wonderful job in Dolo 650 and then you have Zincovit and you have all those of the world. Maybe -- we cannot -- I mean, we have not tried, and I'm sure we might not be as good as them, but we don't get into those. Because those -- we have no USP or we don't have any differentiation which we can offer. So in things where we have differentiation and then -- so things where we have differentiation, we try to complement with the basket, but the aim of us is to sell that differentiation. And for that, there is enough scope. So I normally have actually studied in the United States and have worked in United States for some time. And there, it's mostly not related to therapy, it's more related to what is your offering. What is your USP and your differentiation? There are certain companies we see, this market size is INR 18,000 crores, this market size is INR 20,000 crores. Why don't I go into marketing and I launch a division so I can take a 5% share or 10% share? Our approach is when we see up to current market of INR 18,000 crores, what are the market drivers in the INR 18,000 crores? If there's something which we have, if it is different from those drivers? Or is there something which we have, which can make that -- like I gave an example of certain injection which we can play the price differentiation, we can play a molecular differentiation or a technology differentiation in terms of new delivery system or XYZ, and then we enter those markets. And then we focus on those things. And of course, since we are there, we have a basket which we complement to take that. Even the foray into Aesthaderm was because I saw botulinum toxin as a $6 billion, $7 billion market international, $3.5 billion market in the United States, was having almost 36 crore population. With India's INR 1.3 billion or 130 crore or 140 crore population, I saw that the numbers of 120 crore, 150 crore or whatever, 180 whatever numbers you have in IMS is not enough because there's a big penetration opportunity there. And hence, we went into those because that molecule itself can be a big game changer going forward. And now, entering into maybe cardiac diabetes also, we, like I mentioned before, we will have the basket to complement us. But the main goal is to have that anchor product launch in the next 2 years or 3 years, which will be a game changer for us. So we are a company which normally try to see a gap analysis and differentiating as per our trends and as per our weaknesses rather than just seeing that the market is big, and we have to just go there and take a market share. Because sustaining that market share without innovation, without differentiation or without any USP will be very short term. And then people use other mediums of spending to ensure that market share is sustained. But eventually, there will be always someone else who will come and maybe spend more or give better margins or bigger, they have better discounts and they'll just take the market share away from you. So that is where we come from, and that is what we believe. I don't know if I answered that correctly. Is it right? Or did I miss the point completely?

No, this is really helpful, sir. Actually, I was more interested in knowing more of the company. So just one request. Actually I have sent a mail to Avik, sir. If you can just reply to that, we can connect offline also. Sir, just last question, what is the growth you're looking for in medium term? I'm not looking for immediate number or next quarter number. In medium term, what you would think that sustainable margins and sustainable growth rate? Thank you and best of luck.

Okay. And I think going from [indiscernible] to whatever you are clocking is a 1-year scenario because of the COVID. But as I mentioned before in all my calls, the minimum 15% to around 20% year-on-year growth is something which we feel we can sustain. As I mentioned, we might have tanks for more, but some things work, some things don't work. It's not in our hand, environmental factors start kicking in. But at least when we know that they're inflated for 15% plus year-on-year.

And margins, sir?

Margin, I think Roonghta sir, I don't want to say something which is wrong. So Roonghta sir, can you elaborate on those, please?

Thank you, sir. We are expecting the EBITDA margin will be around 20%. The PAT will be in the range of around 12% to 13%.

And Avik, sir, if you can just reply to my mail.

Thank you. I'll do that for sure.

Next question is from the line of [Ashita from Ashita Stockbroker].

I apologize if it's something that you already answered. So just quickly on Stunnox. If you can -- you mentioned that it has been some months that Stunnox is on the market. So if you can tell me what the sales have looked like? And just to understand the IP arrangement with Prime Bio, does IP rest with Gufic, is there a royalty setup? Or what does that look like? And what is our R&D spend just as a percentage of revenue?

So [Ashita], thank you. So I'll first answer. Yes, it's a product which is developed in principle by the -- the stream has come, and the main development part has done by Prime Bio. We have, I would say, partnered with them in terms of the formulation development and in terms of the entire regulatory process going forward. So we have a profit share where the net margins are divided between both the companies in a particular percentage. And that is quite a win-win model, and it's quite substantial for Prime Bio also going forward. Answering your first question, that is about Stunnox. So Stunnox was launched in February 2021 just before the second wave came in. So the actual launch has been since subdued, but we did it in around June and July, whatever we could with the mobility which we had, which was still restricted. But for the first 6 months, we saw a doubling happening of terms of numbers. In the last 3 months, we have seen a 10% growth. I mean, sometimes 15%, sometimes 10% growth month-on-month. I, at this point, would not like to disclose the number specifically about Stunnox because there are other parameters associated with it. But of course, when the time is right, I'll be more than happy to share those numbers with you. But going forward, as I mentioned, it's going to be a very -- it's going to be a pillar brand specifically. And if you have access to ORG IMS, you can just get an indication of what the numbers are because there it is something which is public. So that is what we are. And I think, what was your -- did I answer both the question? Or there was a third question?

R&D spend.

Yes. So R&D spend overall, apart from Stunnox and the vaccines and everything, I think if I include all, I believe, Roonghta, sir, numbers, you are better than me. So can you elaborate on -- I should not make any wrong mention. Yes, Roonghta sir, are you there?

Sir?

Yes. Sorry, so the question is the R&D spend is how much, sir?

R&D spend is depending upon year-to-year. This year, we are expecting it will be the range of around 8% to 10% because the top line will be around INR 775 crores. So we will be spending around INR 50 crores to INR 60 crores in this year in R&D. And next year also, our plan will be around INR 50 crores to INR 60 crores we'll be able to spend in R&D.

And just to clarify, Roonghta sir, this is without the -- of course, the capital expenditure, and this is without the regulatory output?

Without the capital expenditure, this is the revenue expenditure, which we are going to charge from P&L.

Yes. And for clinical trial expense, might be a little bit more than that, especially for certain candidates in the future. But yes, like Roonghta sir rightly said, that clinical expenditure will be a little bit beyond that INR 60 crore, INR 70 crore mark in the next year.

Got it. I have many more questions, but I don't think I have time.

The next question is from the line of Ankit from Bamboo Capital.

Congrats for a good set of numbers. Sir, I wanted to understand around to INR 300 crores, INR 320 crores of sales in the domestic business. How much of our sales is coming directly from selling to the hospitals?

Question is related to a hospital, or you are mentioning specifically critical care?

So specifically in the domestic business. So I think you would have clocked somewhere around INR 300 crores, INR 310 crores of revenue for the 9 months. So out of this INR 300 crores to INR 310 crores of revenue that we have clocked for the 9 months, how much of the sales is directly to hospitals?

Yes. So do you also count the nursing homes and, I would say, basic single centers also as a part of that? Or you are talking about tertiary hospitals?

Yes. Yes, sure.

Yes. So like -- so definitely, when we talk about the critical care products, I think the entire sale of critical care is from hospitals. And that is primary, secondary and tertiary nursing homes and in single chamber, I would say, clinics. And IVF, the infertility also, the majority of IVF centers which may be part of the hospital or stand-alone. Like you have Indira IVF and you have many other of that sort. And of course, when you see our Aesthaderm also, there are cosmetic clinics and which may be or may not be part of hospitals, okay. But to give you one in a nutshell, it might be around, I don't know, maybe 60%, I guess, would be indirectly either single chamber centers or primary, secondary, tertiary setups. I would say that. So when you say about those normal physicians and stand-alone doctors who prescribe would be around 35%, those would be 35%, yes.

Okay. Because I wanted to understand this from your perspective, this institution sales would relatively come at very high discount compared to what the prescription sells. So as a company, when we transition to diabetology and cardiology, I think, in that case -- in those segments, the prescription sales will be much higher compared to our existing sales. So when we transition to that company, how do you think they will build our field force as well as try to bring this portfolio? If you can elaborate on that.

Yes. So yes, absolutely. But as you know, the scalability of these divisions will be always much faster and much more activated. So let's say, in terms of a PCPM, because you mentioned the field force. So you have a PCPM where critical care is normally around INR 10 lakhs to INR 11 lakhs per month, a person is selling that. But you, of course, luckily being a manufacturing, being in those segments where we also do on a backward integration and we have that economical scale, so we don't have that erosion. But yes, you're right. I think sometimes when there is a 70%, 80% gross margin and in overall, you get only around 50% or 45% to 50% gross margins. And that is where the PCPM and the new launches and the new drug delivery system help us to manage that on a year-on-year basis and the basket is growing. But when I come to maybe healthcare, we have a INR 1.5 lakh to INR 2 lakh PCPM and then we have Spark which is INR 1 lakh to INR 1.5 lakh. And with the Stellar we have high margins, we have almost INR 1.5 lakh to INR 2 lakh. So our focus and our -- I think, even with cardiology and diabetes coming in very soon where big company and I have a lot of respect for them. So when you come to a INR 3 lakh to INR 5 lakh PCPM on a, I would say, oral sort of a division or a multi-specialty division where you have 70% to 80% GC. And in a critical and IVF, you have a 45% to 50% GC, but then you come with the PCPM of around INR 10 lakhs to INR 15 lakhs on an average. That is something -- maybe critical care much more, IVF would be around INR 8 to INR 10 lakhs, yes.

Sure, sir. So on this --.

[indiscernible] I request you to please rejoin the queue.

This is just a follow-on with respect to the question I asked, yes.

Please go ahead, Ankit.

Sure. Pranav, how do you see these margins panning out for us as we see that these new businesses like diabetes and the cardio, because I think the margins will be higher. So when both these divisions scale up, how do you see the margins of the company?

Again, Ankit, I think what I feel until we have an anchor launched it after 2, 3 years now. I will never see the cardiac/diabetes evolve to that fast sort of, I would say, a number as how critical care, IVF and my export and my CMO and other divisions will go up. You get my point? So even I'm sure in the next 2 to 3 years, cardiac/diabetes is kicking. But they are -- GC will not -- and also when I launch a division anywhere apart from the RM, PM as you share the GC, there is a lot of other expenditure which goes through in terms of developing a market, getting the relationship settled, getting those trials done and all that. So of course, there will be overall improvement in margins because we have export coming in, economic of scale coming in, PCPM of people going up, and backward integration going on, and that is what we commit and we continue to do so. But I would not say that the cardiac/diabetic scale up will be so far that in the next 3 to 5, you will see that playing a big role as compared to the other divisions. Because other divisions have their own road map of growth, which will be maybe much more and -- because they are our core competency. So until the anchor has not launched where I know that I have a good margin, and I think the cardiac diabetic will play a role, but not so much as what we think in terms of the margins. My organic business will help in the margin much more.

The next question is from the line of [Rohit Balkrishnan] from [iThought PMS].

Am I audible?

Yes, sir. Yes, sir, you are audible. Please go ahead.

So just a couple of questions, one was just a bookkeeping one. So one was, if you could just share what was the export sales in the 9 months and the percentage growth in exports as compared to the last 9 months? I mean, 9 months FY '21 was over FY '22. So that was one. And should I ask my second question also? Or --

Yes, sir, of course, you may ask the second question also.

Just one question on this merger with Gufic Life, and please correct me if I'm wrong, I just wanted to understand. So I think Gufic Life was valued at INR 140 crores if my calculations are right. So just to understand, I think they had a sale of about INR 45 crores, and this merger led to a valuation of about [indiscernible] . Just wanted to understand what was the rationale given that of this high valuation in sales will also [indiscernible] capability that we acquired, or just wanted to understand in more detail?

So your question is that how is this INR 45 crore business, which was of Life, was valued at INR 140 crores? Is that the question? And why it was so highly valued?

Correct. Correct.

Okay. So of course, Roonghta sir will answer the valuation part, but I'll give you the answer in terms of the business sense, okay? So maybe then, maybe that will throw some light over it. But before I answer the question, I go to your question number one. I think, Avik, maybe you can help me out? I'm not -- I know that there's definitely 80% growth over last year about exports, but how much percentage would that be? Export would be how much percentage of our revenue? Can you elaborate on that?

Exports was roughly 12% of our total revenue.

All right. So 12% of our revenue is exports, and you can just do the math with the 9-month data. And around 80% of what I believe was the growth especially, of course, because of geographies and because of the multiproducts. So I'll go to the next question now, which is -- so when you say Gufic Life Sciences, Gufic Life Sciences is valued not only on numbers, but also because of the, I would say, geography access of what it would offer. Also because of the economics of scale and manufacturing, what it would offer. And also because of the overall -- there are certain product lines in terms of liposomal and in terms of PFS, which, of course, BioScience did not have at the time, which it offered. So of course, BioScience has the R&D. But in order to scale up, you needed certain things, which if I go and make at that time, the infrastructure itself would cause some X amount of money. When you club that with 2 years of gestation or 3 years of gestation after that after construction, you have to wait for 2 to 3 years in order to get the different regulatory approvals of regulated markets, that's another cost associated with it. And third thing is, I mean, you can just see the benefit last year when you had Life Sciences capacity to help us, and we had an opportunity of dwelling into Immunocin Alpha, remdesivir and the black fungus. That was the capacity which helped me reach those numbers, in spite of my capacity of BioScience, which already help me to take on my organic basic business that is going through. Tomorrow, also why Indore then? Why Indore we are going for? Again, when you have a regulated, I would say, a factory. And for -- it's always sometimes -- it's always cheaper sometimes in terms of the opportunity cost to get something ready rather than go and create and then wait for a long time. The very fact maybe Indore might be needed in 2024, maybe I'm saying, maybe. Right now, what we foresee on optimistic manner, we should be running off capacity in March 2023. But with Indore coming in, not only the derisking part of it there because we already are almost going to be full capacity. But the new product lines which we'll offer in terms of, again, the ampoules and the dual chamber bags and the dual chamber syringes, something which makes sense for us, and that's the call which we are taking right now for that. So again, I think the business sense in terms of that makes much more sense for us for us to go for that. But Avik, I think in terms of the valuation, Roonghta sir, would you like to add something to this? Roonghta sir, are you there?

So I think this really helps.

Yes. All right. No problem.

Yes. The other question that I had is that typically you see the main products tend to face competition after 4, 5 years. So and then there are -- then the margins tend to erode both in domestic and exports markets. More in export, less in domestic, but in general, there is a lot of competition that comes in after 4, 5 years. So I just wanted to understand in terms of our top 5 products, where are we in that life cycle? And how do you see that panning out in the next 3, 4, 5 years. So just in terms of our top 5, 7 products, if you can just give some comments on that?

So the top 5 products continue to be in the mid of the -- I would say, I would say, in the middle segment only. Because again, when we talk about these -- it's always about molecule and its not about some improvement if we get in that. So let me give you an example of vancomycin. When we entered the German market with vancomycin, I think you might be almost at the tail end of the product cycle where we know that we are playing -- I mean, we are competing with the worst pricing possible ever. But the advantage of the vancomycin is once we get that entry through, then we follow it with the teicoplanin and where we are in the first window where teicoplanin is still the molecule, which is still not going through the same process. So again, it's not about the top 5 or the top 10 because it's all geography wise and it's all strategy wise in terms of listening. But that's an ever-growing pipeline. At the same time, the backward integration helps us to take care of the erosion. But yes, there will still be erosion, there'll still be there. But even when -- in the height and the peak of erosion, we should be having the economy of scale and that product market penetration, because still I'm looking at my numbers of maybe -- right now, we have done INR 620 crores. If I take, extrapolate my representation on a global level where the reach is there, even with the pricing which are often, I've never seen those margins which maybe your company might have seen earlier in the U.S. or Europe or XYZ. Even in India or be it beyond, I have always entered the market with a sort of an aggressive order, those tail-end or maybe middle-end margins also. But the new things and the new innovation which we'll come up with, will always help us to always amp the game in terms of margins going forward. So -- and that is where the ongoing pipeline is going to determine the way going forward. But still, like I said, in a peak load off, I would say, the tail end of the product cycle also, we have enough to sustain us and ensure that those margins keep on coming in because of the economics of scale and backward integration. Because the products are not going to stop using, they are going to be used perpetually. I mean, I wouldn't say the word perpetually, but they will still be used for a long time. And that is where the Indian market combination with the international market helps us for the use to go ahead.

Right. Got it. And can I ask another question? I have one more question, if I'm allowed to?

It's literally before -- I don't know if the coordinator will crucify me for that. So coordinator, your call, what can you do?

Sir, you can continue.

So I just wanted to know about the global demand for lyophilized products. So I mean, if you can just talk a bit about what is the global market in terms of size and which therapies, and which products are used the most? And I mean, going forward, in terms of -- I mean, I was just trying to understand. Going forward, if there is going to be a greater need for such products? And if you can just probably give a sense what rate is the market growing at? I mean, that's it.

This is the most amazing question that you can ask me, because I'm going to answer in a very short way. If I tell you why I'm getting into something and why I am going to do something in my future because of XYZ and this reason, what will be the novelty inside which is left behind with me. So the very fact we are very bullish upon it is because of some internal data and numbers, which we have really worked very hard on accumulating and getting it such. And I would not like to give it away free to any competitor or anyone in the market. But yes, I can just assure you there are a lot of independent reports and published reports by AC Nielsen or even Thompson or even for that matter IMR, that you can just go through. And just take the example of the last 2 years where a lot of life-saving products in different fields have come up with lyophilization. So how much percentage, how much growth? I mean, we have a business plan. I'm sure if you become part of Gufic and you want to join us, we'll be more than happy to share as part of business development to you in the times to come. But right now, I think this platform is not the right platform to share all those intricate details on this platform. I hope you understand. Please don't take it any other way. Yes.

Thank you. Ladies and gentlemen, due to time constraint, this was the last question. I now hand the conference over to Ami Shah for closing comments. Over to you.

Thank you, everyone, for joining this call. I hope we have clarified all your queries. And in case there are any further queries that have remained unanswered today, you can reach out to us. Also, Mr. Deven Dhruva from SGA Investor Relations partner. The contact details are provided on the last slide of the presentation uploaded on the website of the stock exchange and also on the website of the company. Thank you so much. Please stay safe and take care.

Thank you. Thank you, members of the management. Ladies and gentlemen, on behalf of Gufic Biosciences Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.