Jubilant Pharmova Limited (530019) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '22 earnings conference call of Jubilant Pharmova Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pavleen Singh Taneja from the Investor Relations. Thank you, and over to you, sir.

Good evening, everyone. Thank you for being with us on our Q1 FY '22 earnings conference call. I would like to remind you that some of the statements made on the call today could be forward-looking in nature, and a detailed disclaimer in this regard has been included in the press release that has been shared on our website. On the call today, we have Mr. Shyam Bhartia, Chairman; Mr. Hari Bhartia, Chairman and Managing Director; Mr. Arvind Chokhany, Group CFO; Mr. Pramod Yadav, CEO, Jubilant Pharma; Mr. Syed Kazmi, CEO, Jubilant Therapeutics; and Mr. Arun Sharma, CFO, Jubilant Pharmova. I now invite Mr. Shyam Bhartia to please share his comments.

Thank you. Good evening, everyone. I hope all are in good health and keeping safe. Before we discuss the company's performance during the quarter, I have an important announcement to make. Board of Directors of Jubilant Pharmova Limited at its meeting held on July 23, 2021, has approved the demerger of the API undertaking of the Jubilant Generics Limited and vested the same with Jubilant Pharmova on a going concern basis to be implemented through a scheme of arrangement between JGL and JPL and their respective shareholders and creditors under Sections 230 to 232 and other applicable provisions of the Companies Act 2013. The business of reorganization is in that creation of a small molecule, discovery and chemistry-focused vertical present across value chain of CRO and CDMO of innovative and generic APIs. It will strengthen and sustain long-term growth, profitability, market share, customer service, risk management as it requires focused management attention, different skill sets and resources. This will ensure that synergies between CRO and CDMO businesses are realized more effectively under a holding/subsidiary company structure as compared to [indiscernible] subsidiary structure. This organization would also help in supporting our customers for their needs from early stage of research to commercialization of active ingredients and will provide competitive edge to this business. Now coming to the company's performance in quarter 1 FY '22. Though the Radiopharma continues to be impacted due to COVID, in Q1, we saw sequential improvement in Specialty Pharma segment with gradual recovery across Radiopharmaceuticals, Radiopharmacy and Allergy. In Radiopharmaceuticals, we have enhanced the efforts to promote existing products as well as expand our product pipeline with strategic partnership. With a gradual recovery in nuclear medicine procedures, the Radiopharmacy business has come close to pre-COVID levels and turnaround plan is on track. The CMO business continued to benefit from COVID-related deals. Our Roorkee facility was placed under import alert by USFDA while exempting some products subject to certain conditions. For rest of the products, revenue impact for the company is less than 3% of the total revenues. The company will engage with the agency to resolve the import alert at the earliest and ensure cGMP compliance. Contract Research and Development Service business witnessed strong year-on-year growth in revenues, led by healthy demand from customers. We have doubled our chemistry research capacity and the facility is operational now. Despite COVID-19-related lockdowns, we have been able to ensure continuity in most of our manufacturing operations across all business segments while, at the same time, ensuring safety of our employees. I take this opportunity to thank all our employees who have worked tirelessly across all our plants and offices to ensure continuity in company's operations while continue to serve our global customers. With this, I hand over to Pramod to discuss the pharma business.

Thank you, Mr. Bhartia. A very good evening to all of you. Pharmaceutical revenue was at INR 1,541 crore versus INR 1,096 crore in Q1 FY '21. In Radiopharma business, due to improving COVID situation in the U.S., there is gradual improvement barring lung stent, which are trailing the recovery curve. The RUBY-FILL installs are picking up, and we expect to gain momentum in the U.S. if COVID-19 situation remains stable. In Radiopharma, we continue to maintain majority market share and have long-term contracts in place. We are building a long-term pipeline of Radiopharmaceuticals, including Generics, as well as Proprietary Products being used as the diagnostics, therapeutics, theranostics and the devices via in-house R&D as well as strategic partnerships with key nuclear medicine companies. We are executing a detailed turnaround plan for Radiopharmacies to grow top line strongly with new customer wins, expand network to service newer geographies and enhance cost and procurement efficiencies. The Allergy immunotherapy volumes were normalized to pre-COVID levels in Q1 FY '22 as COVID-related restrictions eased. The CMO business revenue grew year-on-year based on strong demand from customers as well as COVID-related deals. The INR 200 crore COVID-related revenue for FY '22 indicated in the previous quarter has been realized in Q1, and we expect to realize an additional about INR 100 crore in the rest of FY '22. Though we have seen pricing pressure in API as well as the Generic business, especially on Sartans, however, the Generic business overall grew year-on-year as well as quarter-on-quarter on back of higher volumes, including remdesivir sales. Our R&D spend is primarily directed towards development of new products in Radiopharmaceuticals, API, Generics and Allergies. The Radiopharmaceutical spend is the highest given the complexity of the business and the fact that some of the products are innovative in nature. The EBITDA for quarter was at INR 360 crore -- INR 362 crore as compared to INR 179 crore in Q1 FY '21. The Roorkee formulation facility was placed under import alert by USFDA. The agency has exempted a few products from the import alert, namely the meclizine or Olanzapine ODT, Risperidone ODT, Spironolactone and Valsartan. The conditions for exemptions include testing by an independent third party, the certification by an independent third-party auditor and confirmation that no batch or lot offer was involved in an incident associated with an out-of-specification results. For rest of the product, revenue impact for our company is less than 3% of total revenue. We are engaging with the agency and are taking help of consultants and hope to resolve the issue soon. And the [indiscernible] status remains as it is. We have completed remediation activities and await USFDA inspection. With this, I hand over to Arvind to provide insight into Contract Research and Development Services business.

Thank you, Pramod. Our Contract Research and Development Services business under Jubilant Biosys brand continues to deliver a very healthy performance during Q1. This was driven by strong demand from biotech companies for our integrated discovery as well as functional services such as chemistry, DMPK and discovery biology. The business has a healthy pipeline of new contracts and customer acquisitions for FY '22. Q1 FY '22 revenue grew 55% year-on-year and EBITDA grew 90% year-on-year. As we informed in the previous quarter, the business has committed investment to double the chemistry research capacity in Greater Noida and the facility is operational now. With this, I now hand over to Syed to discover the Proprietary Novel Drugs pipeline. Over to you, Syed.

Thank you, Arvind. Good evening, everyone. In our Proprietary Novel Drug business, we are developing a pipeline of potential first-in-class and best-in-class agents to deliver precision medicines focusing on addressing unmet medical needs in the area of oncology and autoimmune disorders. We are also leveraging our industry-validated drug discovery platform to identify novel promising agents and move them from discovery to development on an accelerated time line. Our first-in-class LSD1/HDAC6 dual-inhibitor addresses multibillion-dollar market segments in both hematological malignancies and solid tumors and is undergoing investigational new drug IND studies with a goal to file IND and initiate first-in-human clinical studies in early 2022. Two more programs are following this lead, our first-in-class PAD4 inhibitor targeting autoimmune disorders such as rheumatoid arthritis subsets as well as metastatic cancer, and a differentiated PRMT5 inhibitor with potential best-in-class profile, which uniquely shows both blood and brain exposure and, therefore, [indiscernible] brain tumors, like glioblastoma as well as brain metastases. IND filings for these 2 programs are planned over the next 12 to 15 months. The U.S. biotech market is witnessing very strong investor interest in precision therapeutics in oncology and autoimmune diseases based on the recent equity raises at attractive valuations. In our forecast in novel drug business, we are developing very high potential and first-in-class assets in these areas. Four of our assets under development are at advanced preclinical stage and will transition to clinics starting early next year. The company is working towards creating shareholder value in this business through a private or public equity raise during the coming 18 to 24 months. With this, I now hand over to Arun to discuss the financials.

Thank you, Syed. A very good evening, and I thank everyone for taking out time and joining us on our quarterly earnings conference call. I would like to highlight the company's financial performance for the quarter ended June 30, 2021. As the LSI business stands demerged from Jubilant Pharmova effective February 1, 2021, I would cover performance of our continuing business, which includes Pharmaceuticals, Contract Research and Development Services and Proprietary Novel Drugs. Revenue from operations during the quarter was at INR 1,635 crore as compared with INR 1,156 crores in Q1 last year. Pharma revenue was at INR 1,541 crore versus INR 1,096 crores in Q1 FY '21, while Contract Research business reported revenues at INR 88 crores as compared with INR 1,557 crores during Q1 FY '21. The EBITDA reported during the quarter was at INR 379 crore as compared to INR 183 crore in Q1 FY '21 with margin at 23.2% versus 15.8% in Q1 FY '21. Depreciation and amortization expense during the quarter was at INR 88 crores versus INR 82 crores in Q1 FY '21. Finance cost during the quarter was at INR 35 crores versus INR 48 crores in Q1 FY '21, a reduction of 28% Y-o-Y. Average blended interest rate for the quarter was at 4.64% per annum. Reported PAT during the quarter was at INR 160 crores as compared with INR 35 crores in Q1 last year. EPS was at INR 10.1 per share versus INR 2.2 per share in Q1 last year. We continue to focus on deleveraging, and I'm glad to mention that during the quarter, the company reduced its net debt on a constant currency basis by INR 277 crore to INR 1,651 crores. Capital expenditures, excluding R&D capitalization, was at INR 106 crores for the quarter for FY '22. We plan to spend around INR 700 crores to INR 800 crores. With this, I would like to conclude our opening remarks. We will now be happy to address any questions that you may have. Thank you.

[Operator Instructions] The first question is from the line of Alankar Garude from Macquarie.

Sir, can you update us on the key issues cited by FDA, which led to the import alert?

This is Pramod. The key issues cited by FDA in the 483 observations were mainly related to either cleaning protocols or some of the validations for our -- the data that they are backed up in the server, et cetera. While raising the imports alert, the FDA doesn't cite the issues separately.

Sir, my point there is, if I look at the issue with respect to cleaning, so that was also cited in the [indiscernible] which we received in March 2019, so -- and we had more than 2 years to rectify the issues. So why do you think we got the import alert? And why did these issues continue to persist even after 2 years?

So we had taken the help of the consultants, and we had resolved the issues to the best of our knowledge. But however, when the inspections happened, there were some issues related to the cleaning, which was not part of the process where actually material was not coming in the direct contact. And on that part also, FDA made the observation that these also need to be included in the SOP for the cleaning. And since the issue was related to cleaning, so your observation is right that this issue also came up earlier and probably that is the reason that FDA took the decision to raise the official action to import alert. But since the issue is only related to GLP and some of the practices, which are to be followed, including the cleaning, et cetera. These are not the issues which are difficult to resolve, and we hope that we should be able to resolve these issues very soon.

Understood, sir. So basically, there are no data integrity issues?

I'll say there is no any data fraud or that kind of issues.

Okay. So essentially, do you see a possibility of the systemic risk for any of our other facilities because of the import alert?

We don't foresee at this stage. We don't have such kind of observations at the other facilities. So nothing more to comment on that at this stage.

Fair enough, sir. Sir, my second question is, if you look at the restructuring, is it a precursor to a separate listing of the CRAMS and the API business in the future?

No, I will not -- no, at this point, the idea is to create a business unit which is synergistic both to the CRO where we provide chemistry service and early-stage CDMO and combine it with our plans to -- for large-scale CDMO in the API as well as Generic API. So presently, the idea is to manage this as a one single business unit so that we can provide end-to-end services to the customer.

Understood. And one final question from my side. Since cash has increased sequentially in this quarter, so would it be fair to say that out of the INR 700 crores, INR 800 crores CapEx, which you outlined for this fiscal, there was not much CapEx in the first quarter?

I think Arun had mentioned that we spent about INR 106 crores in Q1.

The next question is from the line of Rahul Veera from Abakkus.

Sir, in our Drug Discovery and Solutions businesses, we have been close to 38% kind of margins. So I wanted to understand the sustainability and also how many research scientists we have in the team? And what will be the number once we increase the capacity out there in the coming year?

So as you heard that we doubled our chemistry service offering and the start of Greater Noida unit, and we do see a good traction in the market, and we are hoping, by the time we reach end of next year, we should further look at increasing capacity. And we have room available in the Greater Noida facility itself. So we can quickly take up expansion out of the units if we need more capacity there. As far as other discovery services are concerned, we do want to expand it in Bangalore and -- for which the plans are getting finalized, which both integrated Drug Discovery as well as other biology-related services.

Sir, my question is, what is the number of scientists do we have right now on table? And post the increased capacity, what is the number of scientists in the Drug Discovery business?

I don't have the numbers ready in hand, but I'll make sure that it comes to you.

Sure. Sure. That will be great, sir. And sir, one quick question. Sir, post this reorganization, so the 2 units would be largely the Radiopharma and [indiscernible]. Is that the way to look at it?

No, no, not Radiopharma.

Okay. So could you give some highlights out there, like how will the business structure will look? Like, which would be the 2 large divisions for us after this restructuring?

No. Sorry. What was your question?

Sir, post the restructuring, how will our business appear? And which will be the one large division, which will be the second division? Right now, we report a specialty CDMO Drug Discovery?

Yes, yes. Jubilant Pharma...

Will be large business and then CDMO will also be large business and Generic business, the 3 business sectors.

Okay. And then.

And then there will be Drug Discovery and API and Innovative and Generic APIs.

The next question is from the line of Ranvir Singh from Sunidhi Securities.

Sir again, on this restructuring, just wanted to get clarity that currently, our CDMO business is U.S.-based, right, on Montreal facility. So that U.S. business of CDMO and CRO business under Jubilant Biosys and plus API, that is -- that will be getting clubbed?

No, no. Absolutely no. No, no, no. The CDMO business is a sterile one. That is -- that will stay as one single business unit. That is a sterile contract manufacturing that will stay as a separate. Only the chemistry part, which is the API part, will get integrated with the CRO business. And both are in India as you know.

Okay. Okay. Okay. So only that CRO API, which was earlier clubbed under CDMO, that is carved out and that CRO business would be clubbed.

The Biosys business and the API business will be managed together.

Okay, fine. And sir, secondly, you mentioned INR 200 crore COVID-related revenue came, which was related to earlier year. That INR 200 crore is part of our Pharma business, right, in this quarter?

Yes, it is.

So this INR 200 crores was not revenue of earlier year. I said that in the last call, we mentioned that during FY '22, we expect about INR 200 crore revenue to be realized. And in this call, I mentioned that this entire INR 200 crores has been realized in Q1. However, on top of that, we expect another INR 100 crore plus to be realized during the rest of the FY '22.

So I believe that should come in second quarter or that will spread across year -- rest of the year?

Yes. So it's spread across the quarter. But there can be variation quarter-on-quarter.

Okay. So if I reduce this INR 200 crore, the rest of the business has actually been lagging on Q-on-Q basis also and year-on-year, there will be some growth. But on Q-on-Q, there has been -- even the Pharma business, you see, has declined significantly, right?

No. But in last year also, there were a lot of COVID-related deals we had, and we mentioned that they were close to about INR 535 crore over the 3 quarters of FY '21. So the non-COVID-related business continues to remain strong, and that business continues to grow as well.

Sir, in Specialty Pharma segment, allergy therapy, you have mentioned that volume has normalized now, whether we have -- saw growth in this quarter in revenue?

Yes, since the volumes have normalized, which in the previous quarter were close to about 95%, so to that extent, there is a volume growth and revenue growth.

The next question is from the line of Sriraam Rathi from ICICI Securities.

So firstly, on the Specialty Pharma side, I mean, the Q-o-Q recovery in Radiopharma, how has that been in Radiopharmaceuticals particularly? Has that business grown on Q-o-Q basis?

So on quarter-on-quarter, we have seen that there's a gradual recovery. And for the -- most of the products, if -- by the time the quarter ended, especially the month of June, we were back to pre-COVID levels, except the longest trends, which we mentioned are still trailing the recovery curve, and we expect them to also recover soon with the time. But we did mention in the previous calls also that we expect for the lung stent recovery to be a little slower than the normal products.

Okay. Okay. So -- okay, and I mean, it is slow but it is recovering, right? In the coming quarters, we should see continued momentum in terms of sequential recovery of the revenue?

Yes. In that business, we should see the sequential improvement.

Okay. Okay. And on the CDMO side, I mean, if we look at the base business, excluding the COVID deals, it seems that the revenues have been impacted on Y-o-Y basis. And last year also, in quarter 1, the overall revenue was down 18%. So I mean just wanted to understand what -- I mean on the lower base also, we are flattish. So the base business, though we have the, I think, order book of around INR 3,600 crores, this was last time, but that is not somehow given in the number. Am I missing something on that? Or is there any specific reason?

So I don't know from where you are getting this analysis that the revenue is flattish. We have the contracts in place where we do the annual price increases. Those annual price increases directly go into the growth of the revenue as well as they go into EBITDA. And that business continues to remain strong and is growing. Quarter-on-quarter, there could be some bit of the variation depending upon the customer requirements. And also since we had a lot of COVID-related deals and, of course, they were having the higher margins and they were getting the priority, so there could have been a variation in some of the customer-specific requirements. But overall, that business remains strong and continues to grow.

Okay. Okay. Okay. Sure. And on the Generics business, I mean, this quarter, did we see any benefit of higher industrial supply or something like that? The revenue seems to be quite strong.

Yes. So we had this unfortunate wave 2 of the COVID in India, and that did lead to the additional sales of the remdesivir.

Okay. In the coming quarter, that should normalize [indiscernible]?

Yes, it will depend upon how the COVID situation remains. But now India -- but now the government has also opened up the exports. During the peak of the time, the exports were stopped. And as you see, COVID globally remains a little bit of erratic. In many of the countries for which we have the license, the overall number of cases are increasing there. So it all will depend upon how this COVID situation continues to evolve. But it will be lower than Q1, that you are right.

Okay. Got it. And just 2 questions on the financials. The gross margin seems to be significantly higher this quarter at 78%. Is it because of COVID-related supply?

Yes, that did have an impact. And also there was the impact of the remdesivir.

Okay. So remdesivir drove higher gross margin compared to the [normal situation ], okay. And any specific reason for the higher SG&A expenses this quarter? I mean it looks like around INR 400 crore is there versus normal run rate of around INR 300 crores to INR 330 crores in the past.

No, there's no any special reason for that. It may have been the normal marketing-related expenses. And in the previous quarters, especially in Q1 of the last year when the COVID was there, so all the traveling, et cetera, had totally stopped. And as the situation improved, some of those expenses start coming back. Plus we are also spending the additional amount for the growth of the RUBY-FILL, and that impact is also there.

Okay. So it is this [indiscernible] model with this current run rate now for the future quarters?

I think we can do a bit of the detailed analysis and then take that off-line.

The next question is from the line of [Sati Gutari] from [Unique BMS].

Sir, my question is regarding our Roorkee import alert. I believe we were pretty ambitious in terms of the number of new products that we wanted to plan there. We had some big plans out there. If you can just throw some light what gets affected because of that and what those plans were?

So you are right that since -- now this import alert is there and we didn't get the [VAI], So till the import alert is lifted, that plan gets postponed. So we can assume that at least there could be a delay of about a year because of that. But in the meantime, we are also exploring the possibilities that all the important products, which are there, if we can file that from different locations so that we are able to push our -- bring the products earlier in the market. So we are in the process of doing that evaluation. And at the same time, likewise, the products which currently have been restricted for import into U.S., they can also -- we can stick to the other sites and then bring them back into the U.S. market. So that evaluation is also ongoing in parallel.

Okay. Fair enough. And sir, on the specialty side, our expectation was that in the first half, the quarter 1, quarter 2, we'll be back to pre-COVID levels. And I believe our pre-COVID levels were anywhere around INR 700 crores, INR 800 crores a quarter. And we have clocked only INR 630 crores right now. So one, you did highlight that the radio part on the lung side is an issue. But is the new competition coming in resulting in us reporting lower numbers?

So yes, to some extent, competition impact will be there. And this we have been seeing that we have given -- whenever a generic enters in this space, you have to give some market share and a bit of the price correction happens, but not to the extent what you see into oral solids or to the other generics. So to that extent, impact will be there. But that impact is not as large as the impact we had because of the COVID. So the COVID impact was larger than the competition effect.

Fair enough. And sir, my last question on the CDMO side. I mean like you mentioned the 4, 5 deals COVID-related, which we won last year, I mean we'll be completing that in the next quarter. So post that, will we go back to the numbers that we used -- the quarterly numbers that you used to report earlier or do we have something to fill in those gaps? I mean I'm talking about, currently, we're INR 450 crores, INR 550 crores a quarter. Do we go back to INR 250 crore, INR 300 crore Or do we have something to fill that gap?

So one is that the COVID deals are not ending in Q2 at all. They are extending for the rest of the year. And when we had been doing the debottlenecking of these capacities, we were doing because we were seeing the additional demand in the market and the customers of our existing products were asking the higher volume. Last year and the current quarter also, because of the COVID deals, we -- that the rest of the business volumes have been more or less stagnant. As the COVID deals starts to waning out, we will have the capacity available to take care for the normal business which we had been running, and we will have opportunity to grow the volumes there. So we have already engaged with the customers on that front. But in the CMO, you are aware that all the scheduling, et cetera, is done well in advance. So we are engaged with the customers and are already exploring how many additional batches we can make for them. Then the COVID-related deal is freeing up the capacity.

The next question is from the line of Vishal Manchanda from Nirmal Bang Institutional Equities.

Sir, with respect to your Drug Discovery Services, where you have doubled your chemistry capacities, can you quantify how much revenues can it add to your base? And how long will it take to do that?

As you know, 50% of our business comes from integrated and about 50% comes from chemistry service. So by -- hopefully, by the end of next year, we would have doubled our chemistry part of the business.

Okay. And sir, basically, is this chemistry services has to do with API process development? Is that right to -- is that a fair understanding?

While doing discovery work, pharma and biotech companies need chemistry support because they need FTEs and they need sometimes manufacture of very small quantities of molecules. So we do both.

Got it. And sir, second on your specialty business, which is currently at a run rate of INR 630 crores. So if I analyze it, it's at around about INR 2,500 crores. And if I go back to FY '20, it was, say, around INR 2,900 crores then. So we are almost kind of INR 500 crores -- running at the run rate therein we'll be INR 500 crores below the FY '20 numbers. So does that mean that INR 500 crore number losses has largely to do with the [DTPA and NA] business loss that has happened in the current quarter?

So I'm not getting your numbers on the analysis part. But yes, whatever is the impact because currently that is related to NA and the DTPA, which are impacted because of COVID, as well as some impact because of competition. So both of the impacts are clubbed into that.

So the entire Radiopharmacy business has normalized. That's fair to assume, the distribution business?

It has normalized towards the later part of the quarter. Even in the month of April, in U.S., there were the cases. But in May and then June month was much better.

The next question is from the line of [indiscernible] from Equirus Securities.

Sir, just wanted to understand [indiscernible] to quantify what sort of revenues have come from remdesivir during this quarter? And as well prediction when we say that the COVID-related revenues have been around INR 200 crores, we are not including remdesivir revenue in this. Can you clarify that?

So in -- INR 200 crores is the revenue for the CMO, which doesn't include the remdesivir. That's the revenue we get from the North America market for the CMO business that we do for the innovator companies. And the remdesivir, we have voluntary license for India and other developing countries, which doesn't include North America markets. So both are totally different businesses.

Right. And can you quantify how much has come during the quarter from remdesivir?

I think the product-specific quantification we should avoid.

Sure, sir. Sure. And sir, just wanted to understand on the gross margin part. Since there will be a bunched up revenue of remdesivir, which will be having a relatively low margin, still our gross margins have increased sequentially. So what exactly could be the reason for that? Because remdesivir will be relatively far lower margin and [indiscernible] during the start of the quarter.

No. Margins in the remdesivir were reasonably good and plus also the margins in CMO for the COVID-related deals were much higher than the normal CMO business.

Understood. Understood. And sir, just wanted to understand one more part. On Roorkee plant, how many products have filed from that facility? And what sort of risk mitigation strategies we are taking over there? Are we moving any product to some other facilities back to U.S.?

Sorry, I missed your question.

Yes. So how many ANDAs are filed from Roorkee facility, if you could clarify that? And how many are we looking to site transfer to some other facilities?

So we have total 98 filings from the Roorkee for ANDAs. Out of it, 60 were not approved and 37 are pending. So which are approved, that's there. But the ones which are pending, which we were to launch after the site would have got out of the bonding letter, out of that 2 important products, we are looking at taking to the other sites. But we are, as of now, doing that evaluation. We haven't decided yet completely because this is very new development.

Right. And how many products will we file from the U.S. facility Hollister?

So ANDA then, we file -- other than from the Roorkee we file from the Cadista, which is in the Salisbury, and those products have no issue for the approval. So [indiscernible] to the normal process.

Right. So how many products are filed from there, which are pending approval on Salisbury plant?

Okay. Okay. I may not have the exact number, but it's into single digits.

The next question is from the line of Aejas Lakhani from Unifi Capital.

Two questions. First, the entity that you're carving out in the form of a demerger is just a pure play API business, which is, give or take, INR 600 crores. Is that understanding correct?

Yes, yes.

Okay, fine. Second, I just wanted to understand that now Triad, our radio distribution businesses, it's been 3 years, and when we acquired that as well, the business was a loss-making entity, if I understand correctly. So just wanted to pick your thoughts on how this acquisition has played out 3 years down the line. How do you think about it? Has it met your strategic sort of thinking? What are your key learnings from this? And how do you -- do you have any time lines regarding the turn around?

Yes. So in terms of strategic thinking, I'll say that we are very pleased that we have this entire distribution within our business of the Radiopharma. It gives us the direct access to our customers. And as well as, as we continue to grow the pipeline for our -- all the developmental products, which are in the development in the R&D and which we plan to launch soon in the near years, this distribution gives us the ready-made market for those products. So whatever market share we have into the distribution, that much market share, the assets that -- for those products directly as soon as we launch them, plus, as I mentioned, that every buyer would like to have the alternate vendors. So even in rest of the market, also we get the share. So rough calculation, suppose you assume our market share is about 20%, 25% and then we get another 20%, 25% market share for the other. So when we launch the product, we state away it is close to 50% market share. So that's a huge strategic advantage we have in this business, and that's the reason we continue to focus on this business. But you are right. Since we acquired, we have been into red. And the reason for that we mentioned earlier that during the acquisition process, the acquisition process because of the regulatory challenge lasted much, much longer than what it should have been. In the process, customer got panicky and they had done some long-term contracts with the competition and those contracts are now coming up for the renewal. But unfortunately, in FY '21, we had this impact of the COVID, so that has made some dent onto it. And during the time of the COVID, all the customers were having the priorities for themselves to sustain their business and not to look for the alternate supplies, et cetera, because when they go for the alternate supply, they also have to make a lot of changes into their systems or their all the -- the entire supply chain software, et cetera. So during the COVID times, the customers have withheld any discussion on the changing of the vendors. Now as the situation has started getting normalized in U.S., now we are seeing all those customers are opening up for the discussions. We already have a very strong funnel of the various RFPs, and we are in the discussion with the customers. So we -- that's why I mentioned that we have planned to continue to grow the top line very strongly. And as of now, we see that in another about 2 years' time, we should be at the breakeven in this business, and then we will continue to grow this business and generate positive EBITDA margins. When we see this business as a stand-alone, but at the same time, it will continue to support our own Radiopharmaceutical business.

Just a quick follow-up that currently from the INR 1,900 crore Radiopharmacy business, give or take, I think the distribution business is roughly INR 1,400 crore and the manufacturing portion is roughly INR 500 crore. Can you just give me a ballpark understanding that from this INR 1,400 crores, what is the throughput of our manufactured products going through this INR 1,400 crore pipeline? And what is it from the outside? And how do you think this is likely to change in the years in the future?

One is that I'm getting lost in your numbers because they are quite different than the reality. But however, I mentioned we have about close to 20% to 25% market share, and -- but in this business, we don't distribute only our product. We are also distributing the products of our competitors. So for our product, mostly the priority always remains that we are distributing our own. But however, it's not on exclusive basis because we also have to take care of the customers' requirement and the customers may have the contact with our customers -- with our competitors, so it's a mix.

Sure. So could you just give the proportion of...

Sorry to interrupt you, Mr. Lakhani. May I request you to rejoin the queue for follow-up questions as there are several others waiting for their turn as well. [Operator Instructions] The next question is from the line of [Shanti Patel], an individual investor.

Sir, my question is, what will be our return on capital employed and return on equity approximately as on 31st March 2022 and 31st March 2023? And the second is in respect of various verticals, what is our market sales in India?

So if I'm able to understand the question correctly, you are saying return on equity or return on capital?

Return on capital employed and return on equity as on 31st March '22 and '23?

So return on capital employed is 15% plus and return on equity is around 14% plus.

Sure. And are you expecting same as on 31st March 2023?

No, but we are expecting an improvement from these levels.

Okay. And what about market share of our various verticals in India?

You mean market share?

Yes, sir. No, we have got a dominating percentage. I mean how much, 25%, 30%, 50%, 70% in respect of previous verticals?

Sorry, this is Pramod here. So the market share for which products because we have very diversified portfolio? And you're asking for India?

That's right.

Yes. So in India, if you may have seen our overall revenue, that is -- in the last quarter was about close to 10% to 12%, which also included the contribution from the remdesivir. Other than -- the other products that we have invested in the business, that is a business which we called IBP, Indian Branded Pharma. And that's the business which is the lesson business, which is the incubating business, and we are growing that business quite aggressively now, and -- but that -- the overall revenue of that business as of now is not of material.

The next question is from the line of Alankar Garude from Macquarie.

Sir, just one clarification on the 5 molecules, which have been exempted. So till the time the third-party tests and audits are completed, are we allowed to sell these 5 molecules? Or they can only resume -- supplies of them can only resume once all the tests are done and all the 3 conditions are met?

Yes, so supplies can resume only when the conditions are met. But we don't expect to take a long time to meet those conditions.

By long time you mean, sir, say, a couple of quarters?

No, it could be probably 1 month, 1.5 months, 2 months next.

The next question is from the line of Tushar Bohra from MK Ventures.

So just one thing, can you help me with the comparison on a quarterly basis, Q-o-Q, for the 3 headline numbers? Because you had -- last year, you also had the -- rather last quarter, you also had Life Sciences business for some part. So exactly how are we doing on a Q-o-Q basis purely for the Pharma business?

Quarter-on-quarter, we are doing well in Pharma business, and we have given the numbers of Pharma basis in Q4 also and Q1 also, and the numbers are comparable.

The Q1 performance of last year does it include the -- our chemical ingredients business.

No, Q4, I'm saying, sir, Q4 business, Q4 vis-a-vis Q1, if you can just help -- because the presentation in most places mentions only a Y-o-Y performance. Can you just help us with the headline number and...

Like-to-like Y-o-Y performance.

Like-to-like Q-o-Q performance I'm looking for.

It's all like-to-like. I can enter in. You're asking comparison of Q4 last year versus Q1 this year?

Right, sir.

Yes. So the revenue has grown by 4% and EBITDA is more or less flat.

Okay. Now, sir, my question is that, in this quarter, we had -- in India as well as maybe some of the emerging countries, remdesivir sales have been strong for the company. And U.S., I suppose, relatively was a bit more normalized Q-o-Q. Plus we would have also had some revenues on the vaccine side for -- I believe we will be working on some of the vaccine categories. So despite that Q-o-Q, the performance delta is not visible, sir. So I just want to understand why would that be. And also post-COVID, what could be a normalized run rate for the quarter? Assuming that we don't have any COVID product-related one-offs as well as business one-off, what should we look at as a stable quarterly base for the company on which then we should assume growth going forward?

In terms of Q4 over Q1, that impact that you are mentioning not seeing because of the -- in spite of higher remdesivir sales, so that is coming from 3 accounts. One is that our COVID-related deal in Q1 were marginally lower than Q4. In API, I mentioned that we had some pricing pressure on the Sartans and into some pricing pressure on the Generics in the U.S. And third impact was the exchange rate fluctuation where we had to take some impact of -- the Canadian dollar strengthening in comparison to the U.S. dollar.

Right. And sir, what would be a normalized run rate? So vis-a-vis, let's say, INR 1,500 crore revenue on the Pharma side this quarter. When you assume things should get fully normalized, what kind of base should we assume on an average quarter?

So I will say, business to business, we will have the variations like some of the CMO COVID deals will go down, but then we will have the growth coming in from Radiopharma business as the COVID gets normalized. Both these businesses are compensating each other due to the impact of the COVID. And also, we need to watch the pricing development onto the API and into the Generic space, and we should see the recovery over there.

Sir, on the -- just a follow-up on this. So on APIs, as you mentioned, Sartans being one of our key product basket is facing pressure. And on the Generic side, given our plants are facing regulatory issues, a couple of key plants, so some of the growth has got hampered. So how exactly do we expect this basket to grow? And on the Radiopharma side, would it be fair to assume that since a large part of your normalization is to come from the Radiopharma business only, which remains a high margin, it should more than compensate for the drop in margins because of the COVID-related business? So on an overall basis, as the things get normalized, should we see a gradual improvement in margins further from here?

If the lung stent procedures come back to the normal level, then what you are saying is right. But the only issue is that we are seeing that with slow the recovery. However, we are making efforts in terms of conducting the webinars and educating the physicians to start using this stent because the entire procedure is absolutely safe. The SNMMI has also issued the guidelines that is asking all the physicians to go back to NA and the DTPA because the entire procedure is safe. So there's a development -- so the efforts in the direction are going, and we have to see the recovery over there happening. But overall, when that happens, then the business should be back to normal. Plus then we will bring the additional products, which are into the R&D, and we also continue to grow the RUBY-FILL. We also will have the capacity in the CMO to grow our other products when the Allergy business continues to do well. And in API, we have the traction for the volumes. Though we will not -- though we will have impact on the Roorkee for the supplies to the U.S. market, but the Roorkee will have additional capacity available to take care of the rest of the world market. So when you look at all these -- many of the opportunities for us to grow, then just lung stent procedures where recovery is little slow, has -- there are many other places where we can not only compensate that but grow even more.

Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.

We thank you, everybody, to joining on this call. In case you need any further clarification, please contact our Investor Relations, and we'll be happy to answer all your questions. Thank you.

Thank you. On behalf of Jubilant Pharmova Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.