Lupin Limited (500257) Earnings Call Transcript & Summary

Okay. Hello, and welcome to Lupin Limited Q2 FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to the management. Thank you, and over to you, ma'am.

Thank you. Good afternoon, good evening, everybody. Can you hear me?

Yes, the voice is breaking, Vinita.

Can you hear me now?

Yes.

Yes, yes.

Hi, everyone. Very pleased to welcome you to our Q2 fiscal year '24 earnings call. Online here, I have our MD, Nilesh; our CFO, Ramesh; and our Head of IR, Ravi, as well. We look forward to sharing our Q2 highlights and outlook for the fiscal year. We are very pleased to build on the momentum over the last couple of quarters and deliver significant improvement, as you saw, in operating margins, driven by growth across majority of our regions, U.S. launch of Tiotropium and continued focus on efficiencies. Our U.S. business delivered continued growth in revenues and margins for a fifth quarter in a row on the strength of a stable base business, launch of Tiotropium and overall strong performance on respiratory products. I mean, in the quarter, respiratory contributed 45% plus of our revenues. We expect to sustain a business at the $200 million-plus level now going forward with the continued ramp-up of Tiotropium and other new product launches in the second half and beyond. Switching to India, our business recorded growth in line with the market with better-than-market performance in therapy areas like cardiology, respiratory, GI and women's health that we are building. The diabetes TA, which was in a degrowth mode, is back to growth, but we'll continue to build on it in the quarters to come. As we look at the second half, we expect the investment we made in expanding our sales force to get to a level of productivity that will help us build on our growth rate from the first half. We've already started seeing gains in the start of Q3. October has been strong, and we expect to continue that in the rest of Q3 and Q4 for our India business. Apart from U.S. and India, other regions performed well, too. In particular, Europe recorded strong growth due to ramp-up of generic Fostair in our direct markets like U.K. and Germany as well as through partners in other parts of EU. On the R&D and pipeline front, we have continued to build on the momentum with both material first-to-files and complex generics. We are very pleased to get key product approvals like generic Tolvaptan and generic Xywav in October that will drive a big part of growth in the next couple of years, in particular, Tolvaptan. Our pipeline is now positioned well to evolve our business into complex generics with inhalation, injectables and complex ophthalmic products, given the Pithampur Unit-2 clearance. On the compliance front, we have continued to make progress and are committed to ensure that we get all our sites to a consistent and sustainable level of compliance. With the strong focus on delivering the pipeline, coupled with compliance gains, we can now see a clear path to sustainable growth over the next few years for our business. We are delighted to deliver strong performance in the first half of the fiscal year and look forward to executing on our new product launches, continued momentum in India and other markets, strong focus on improving our operating margins in the second half. With this, I will hand it over to Ramesh for a deeper analysis of our performance.

Thank you, Vinita. And good evening, friends. Season's greeting to you and your families. I welcome you all to our Q2 FY '24 earnings call. On the last occasion that we met, we mentioned that we would strive to achieve around 18% EBITDA margins by Q4 of the current year. I'm happy that we have delivered on our promise in this quarter itself. Now diving deeper into the numbers, sales for Q2 FY '24 came in at INR 4,939 crores as compared to INR 4,091 crores in Q2 last year, a growth of 20.7% year-on-year. On a quarter-on-quarter basis, the company reported growth of 4.2% and 8.9% after excluding NCE income over Q1 FY '24. We have registered robust growth across most of our key geographies. North America has grown at a strong 40% year-on-year and 17.4% quarter-on-quarter. India business has grown at 6.8% year-on-year, whilst EMEA grew at 24% year-on-year. Our API business registered growth of 7% year-on-year. Going on to the U.S. business. During the quarter, the U.S. business recorded a sale of $213 million, registering a growth of 34% year-on-year and 18% on a quarter-on-quarter basis. Just to indicate the size of the ramp-up, this number was $159 million in Q2 FY '23. This growth has been led by new products and by also our legacy products maintaining their market share. I'm happy to share that our strategy to build a complex portfolio is bearing shape. And today, inhalation products are more than 40% of our U.S. sales. Coming to India, the India region formulations business has grown by 6.9% year-on-year. Our growth, excluding NLEM, is 8.9% year-on-year. As per IQVIA, all our key segments, except for anti-diabetes have grown faster than the market in the quarter, including cardiovascular space, respiratory, GI and gynecology. Even in the anti-diabetes space, our non-in-licensed portfolio has grown at 10% vis-à-vis IPM category growth of 4.9%. Currently, the in-licensed portfolio constitutes around 13% of our IRF business vis-à-vis 15.5% in FY '23. Speaking about EMEA region, which constitutes our EU region and South Africa business, this performed exceptionally well during the quarter with a strong growth of 24% year-on-year. Growth in EU has been driven by our inhalation business going strong with products like Luforbec and Beclu gaining additional share and entering newer markets. EU also saw increased tender sales. I'm delighted to share that we recorded the highest-ever sales in Germany during the quarter. Going on to the margins front. Then coming to the profitability, Q2 FY '24 gross margins are at 65.5%, which has increased 170 basis points from 63.8% ex NCE income in Q1 FY '24 and materially from 58.1% in Q2 last year. This improvement was driven by multiple factors, which includes better product mix, lower share of in-licensed products, commodity deflation, increased volumes and realization of savings from few of the cost improvement initiatives like freight and other things that we took on. Employee benefits expense at INR 861 crores has increased by 11.5% year-on-year in Q2 FY '24, which translates to approximately 17.4% of sales as compared to 18.6% of adjusted sales, excluding NCE, in Q1 and 18.9% in Q2 last year. Whilst there has been a reduction in percentage to sales due to our cost optimization initiatives, I would like to mention that there is an offsetting impact due to the field force expansion, which we undertook last year and other new initiatives. Manufacturing and other expenses. Q2 FY '24 manufacturing and other expenses came in at INR 1,552 crores, which translates to approximately 31.4% of sales as compared to 32.5% of adjusted sales, excluding NCE, in Q1 and 30% in Q2 last year. The year-on-year increase is on account of higher volumes, higher spends in R&D, increased consultancy charges for nitrosamine impurities, increase in selling and promotion expenses, travel expenses due to the field force expansion and the like. Speaking about R&D, R&D is INR 376 crores, which constitutes 7.6% of sales in Q2 FY '24 as compared to INR 338 crores at 8% sales of Q2 FY '23. The increase in R&D year-on-year is on account of investments in newer platforms of biosimilars, injectables and the like. For the full year, we expect R&D to be around INR 1,500 crores to INR 1,600 crores. EBITDA. This has started in driving the EBITDA margins higher. Excluding ForEx and other income, EBITDA was at INR 923 crores, up by 113% year-on-year. Margins for the quarter were significantly higher at 18.7% vis-à-vis 14.4% in Q1 FY '24, excluding, of course, the NCE income, and 10.6% in Q2 last year. Going on to the ETR front. Our ETR was 22.9% in Q2 against Q1 FY '24 of 18.9%. The ETR for the full year is expected to remain between 21% and 22%. PAT for the quarter is INR 490 crores, demonstrating a stellar growth of 278% year-on-year. Diluted EPS is INR 10.72 per share, the face value, of course, is INR 2. Going on to balance sheet. Operating working capital was INR 5,676 crores as of 30th September '23, which translates to 103 working -- operating days. This is reduced from 119 days at the end of the previous fiscal. Net debt for the quarter -- at the end of the quarter stands at INR 1,806 crores. This reduced from INR 2,526 crores at the end of March '23. Gross debt has reduced by INR 720 crores during this period. Friends, I would also like to report about our initiatives on the ESG front. I would like to mention an important update here. We've accelerated our ESG efforts at a significant pace over the last 2 years. We have now also received the external validation of our efforts in the form of a latest assessment by the S&P Global Corporate Sustainability Assessment. And the great point that I would like to announce that our ESG score is 68. Our journey on S&P Global CSA, which is, of course, DJSI, began with a score of 17 in 2021. Last year, we marked a step forward with a score of 46. Today, we stand at 68, which places us at 95 percentile of the global pharma industry. We'll, of course, continue on these efforts and gain ground in the years to come. With this, I would like to open the floor for discussions.

[Operator Instructions] So the first question is from Bansi Desai.

So my first question is on the U.S. business. So whilst Spiriva, it looks like it has contributed meaningfully in Q2 and so has darunavir, if one were to exclude these 2 products, have you seen sequential growth in the U.S. base?

Yes. Actually, we have seen our in-line products pretty stable, growing a bit, and the new product launch is contributing as well. I'd say darunavir was launched in Q1, so there was pipeline build in Q1. So the darunavir level in Q2 is obviously lower than Q1.

Okay, that helps. And what is your sense on the price erosion levels in the market? Any difference from what we saw in Q1?

Yes, we've seen a level of stabilization at that mid-single-digit level on our baseline products, in-line products. So hopefully, that continues.

Got it. And secondly, on Spiriva itself, our initial expectation was that this product probably will see ramp-up similar to what we saw in albuterol. But clearly, it looks like it has done better than that. So how should we look at market share ramp-up here? And any visibility on the AG launch?

Yes. So the ramp-up has been pretty much along the lines that we anticipated. We expected that it would start at 20%, 25% level. And then as we looked at other analogs, Advair and other inhalation products over a year or so build up to 35%, 40% level. And we're seeing that right now, our substitution rate is 25%. So -- and it's hard to predict when an AG would launch and if an AG would launch. But at this point, we are just working hard to keep up with the demand as well as make sure that we scale up the business effectively for the product.

We take the next question from Neha, Neha Manpuria.

Vinita, if we do think Spiriva ramps up to 35%, 40% market share in the next year, a, would this require, in your view, more pricing action from us to go after this market share? And second, if that is the case, should we then expect the current base that we have reported to see a step-up over the next few quarters? Because in your opening comments, I think you mentioned that we'll keep the base at 200 plus, but shouldn't we see a step-up from the current base if we get to the 35%, 40%?

Yes. So Neha, we would expect pricing to be stable as we ramp up the product. We don't see any additional entrants in the near term. So we don't see a reason for price not to be stable, unless we see a challenge in substitution. But like I said, substitution is along the lines of what we had anticipated. So it's been a very effective launch from our team. I'd say that in Q2, we have some effect of the pipeline fill on Spiriva that we're continuing to see in Q3, but we think it might level off a little bit as other inventory with our customers gets into sync with the product substitution. And therefore, we think that certainly, Tiotropium will continue to ramp up, especially into the next year. But when I -- when we look quarter after quarter, we might see some impact of inventory correction over the next couple of quarters. And as we also lose exclusivity on couple of other products where we have exclusivity, we might see some downside. Of course, we have products that help us grow the business, which gives us confidence that both in fiscal year '25 and, in particular, in fiscal year '26, given the Tiotropium ramp-up, plus injectables, plus ophthalmic products that we have on the new product launch calendar, we should grow the business pretty well.

Got it. And I remember you once mentioning that you think you have enough capacity to get to your fair share. Should I assume the 35% to 40% is the fair share that you were talking about and capacity is not an issue, therefore, you've given that number?

Yes. Yes, we have built capacity not only for the U.S., but also for our other markets. So in the next 6 to 12 months, we expect to launch in Australia, Canada, Europe, multiple regions that we built capacity for. So we are well positioned.

Got it. Ramesh, on the cost side, I understand that the employee cost obviously has gone up this year with the MR addition that we have seen. But the other expenses also seem to be inching up. It went up last quarter on a quarter-on-quarter basis. It's gone up again this quarter on a sequential basis. Other than the SG&A spend associated with the India business, is there anything else that we are investing in outside of R&D, which is leading to this quarter-on-quarter increase?

Firstly, I would like to stress that you should see this vis-à-vis the previous quarter where there's, of course, been an increase of -- in operating leverage of just about 1.2%. But going on to on a year-on-year, yes, there has been an increase which is close to 26%, but I would also rush to add that you should look at the level of activity in terms of the volumes of API and formulations that have grown significantly. That's actually kind of reflected in the inventory buildup, and that actually translates to a slightly increased gross margins, which in turn kind of reverts back to a higher increase from our expense base itself. But I would also, again, add that there is, of course, an element of onetime expenditure, which is also contained in here. So our focus on driving down cost is still very much there. And we expect to kind of keep it on a leash around the levels that we just spoke about for -- in the quarters to come.

Sorry, what was this onetime expenditure that you're alluding to?

The one-time expenditure is captured because of, essentially, the expenses that we incurred on the CDMO spin-off, essentially the stamp duties and other costs that we incurred on that. And we also took some provisions relating to some issues that we had out there.

So what is the base cost, excluding all of these one-offs, just to get a sense on what the fair number should be going forward?

I would say that it should be closer to the 30% mark.

Okay. Including...

Yes, around that, so give or take based again on the level of activity and the like.

The next question is from Damayanti Kerai.

After a remarkable improvement in first half in terms of operating performance, how should we look at margin trends ahead? So as you said earlier, you expected 18% margin by end of this fiscal, but it came a bit earlier, and now things seems to be on improving path. So how should we see margin trajectory from here on?

So we think, insofar as America is concerned, the overall -- the sales there should hover around the $200 -- $200 million mark. And there would, of course, be a ramp-up in the other parts, including India. So I would actually expect the growth trajectory to kind of continue, and the second half would also be around the 18% mark in the third and fourth quarters.

So second half, broadly around 18% margin.

Yes.

So maybe for the full year, we could be in higher teens.

It's obviously because the first 3 quarters are in the 18% and 14.5% in the first quarter. You can average it out.

Okay. And just want to understand, ma'am mentioned in her opening comment that now $200 million-plus level is sustainable for the U.S. business, and that includes Spiriva and all other new launches, right? Or how should we look at that?

That's right. That's right.

Okay. And just another question on the U.S. side. How much is branded portfolio contribution right now of the total U.S. sales?

It is small. It's under $5 million for the quarter.

Under $500, okay.

No, $5 million.

$5 million, okay. Yes, sure. And my last question is your presentation mentioned you are building up quite well on the complex project side, 40-plus injectables and then 20-plus inhalers, et cetera. In next, say, 2 to 3 years, how many filings we can see on the complex opportunity side, inhalers, injectables, et cetera? And if you can also call out some near-term key filings which you are expecting.

Sure. So majority of our R&D focus has been on the complex generics, in particular, inhalation and injectables, ophthalmics as well, as well as first-to-files, exclusive first-to-files in particular. And we have got a good pipeline in place right now to drive the business growth towards complex generics. Already a good part of it in the U.S. is now respiratory. But as I look at the next 2 years with the pipeline that we have in place, on the ophthalmic front, given the Pithampur Unit-2 clearance, multiple ophthalmics, 5 or 6 products that we expect to bring to market second half of this fiscal year as well as into the next fiscal year, we have products like Bromday, BromSite, Loteprednol, Prolensa, all that we're expecting approval for and then launch over the next couple of years. On the injectable front, we have a good pipeline now in place, multiple products in development, a few products that we expect to launch in the current fiscal year. We think Ganirelix, famotidine will launch this fiscal year. And then next fiscal year, we hope to launch glucagon. That would be a material one for us. And then depending on litigation outcome, also liraglutide in fiscal year '26. And then lastly, I would say on the injectable front, Risperdal Consta, our long-acting risperidone out of Nanomi, should come to market by fiscal year '26. So both ophthalmics, injectables ramp up in the second half of this year, but more so in fiscal year '25. And then also the first-to-file oral solids, like Tolvaptan in fiscal year '26, we're very pleased to get that approval in October, our goal date; as well as products like Mirabegron and Oracea and doxycycline, we expect both approvals as well as litigation outcome over the next couple of months that will enable us to confirm launch dates, but we expect to launch in the next 2 years.

The next question is from Karan Vora.

So my first question is on the India business. So going forward, assuming the IPM grows at, say, high single digits, do you think even on a base which has the in-licensed diabetic product, which went off patent, we can still outperform the IPM over the medium term? Or we -- or it will be slightly [ to last ]?

Yes, Karan, that's clearly the plan. The plan is to continue growing at better than the market. Diabetes is the one category that has been a challenge for us, but that also has come around to growth now for us. So certainly, we would expect growth to continue better than the market for the mid to long term.

Okay. And how do you split this? Say, if you grow at 10%, how do we split that out into price and volume?

So usually, it's -- yes, I think for the industry, it is more or less similar. I think you usually see 2% to 3% volume increase. You see another couple of percentage points from new introductions, and the balance comes from price increase.

Okay. Second question, on Spiriva, so just needed some clarity. So basically, is this understanding correct that because this was the first quarter of launch, there would be some amount of channel filling and so Q3 and Q4, the amount of Spiriva, which you book would be lower than Q2, so that could impact your U.S. Q-o-Q growth? Or is that understanding correct?

Yes, there may be some phasing. We're still tracking it very closely. So we'll find out over the next couple of months, but we would expect that there will be some leveling off in the next month or so.

Okay, okay, okay. And just 2 quick ones on U.S. business. So any update on REVLIMID launch?

Yes, that is out a couple of years for us. So it's, I think, fiscal year '26, if I'm not mistaken.

Okay. And lastly, at the current run rate, is the U.S. business EBITDA and PAT breakeven or not? If you could give some qualitative sense.

Yes, it is -- at the current level, it is EBITDA accretive to the company average margins. And yes, we hope that we'll continue at this pace and get -- improve further as we ramp up the business.

The next question is from Kunal Dhamesha.

First one, on the biosimilar, is there any update on the Pune facility and pegfilgrastim filing for us?

Yes, I can take that. So we had the EIR, which was issued by the FDA. We identified areas of improvement in the EIR, which were actually underway. And we hope to send an update to the agency by March, post which we would follow up for an approval.

Sure. And what would be your strategy here for commercializing, let's say, if we get approval in FY '25? Will there be any field force required, front-end commercial infra?

Yes. So we're tracking the market very closely right now and, of course, waiting for the site and product approval before making concrete plans. But as the market evolves, the access model gets a little bit simpler as we see it with established channels in the marketplace. So we are constantly tracking. And our plan, even with a direct-to-market sales force effort, was to really have a very targeted niche sales force that can double up with our injectable business, so we can have some operating leverage as opposed to having a single product investment. So watching that carefully. And we also have, apart from our own plans and potential to launch, we also have interest from partners. And we're going to closely track our OBI product development to determine what is the best route for us to go.

Sure. And any update on ranibizumab? And that is also something that we are developing, right?

Yes. So on -- go ahead, Vinita.

Yes, it's -- go ahead, Nilesh.

So I was just saying, on ranibizumab, we're well on our way on our clinical trial. We've got the last patient in. It's still going to be about a year to do the filing itself, but this is a clear filing for the next fiscal.

Sure. And the second question is on the seasonal product uptake in the U.S. Typically, during this time around, there is flu season, and we have cephalosporin as well as Tamiflu. So have we seen any uptake in this quarter or probably we could see it in next quarter?

We've seen some uptake in this quarter in anticipation of a flu season. And the season has just started, so we just started the last couple of weeks tracking. So it has ramped up and -- but we'll have to really get into the next month or 2 to see how strong the flu season is going to be. And it certainly has ramped up, but it's at a level below last year right now.

So like-to-like, it's a level below, at least for October and November is the way to look at it.

That's right. Yes.

The next question is from Nitin Agarwal.

Vinita, on the -- when we talk about 25% market share on Spiriva, we take into account the entire portfolio of Spiriva, Respimat inhaler and HandiHaler both? Are we just talking in terms of the single strength?

I'm talking about the HandiHaler.

Okay, percentage of that market. But how do you see the substitution happening from Respimat inhaler? I mean how do you see that playing out?

Actually, the encouraging sign for us was in the last couple of years, we have seen the HandiHaler decline versus Respimat, that the brand has been working hard to convert. I mean they had also moved their couponing strategy to the Respimat to drive hard conversion. We actually saw in the last couple of months a flattening of -- so no decline in the HandiHaler, which is a promising sign. And we hope that as we continue to ramp up the product, as it gets utilized, that it will definitely flatten the decline or hopefully take some share from the overall molecule.

And secondly, you talked about U.S. stabilizing around $200 million now. When you take, I mean, a 2-year view from here on, I mean, where do you see the next milestones, something like a $250 million thereabouts, when you start to hit that at a consistent level?

I'd say that next year is going to be a ramp-up year for us, both with Tio as well as the other product launches. And certainly, fiscal year '26 is one where we see with -- on the strength of the new product launches, Tolvaptan, which is going to be a material one for us; potentially liraglutide, depending on, of course, approval as well as litigation; and the ophthalmic injectable ramp-up. We expect to be at that closer to the $250 million a quarter.

So when is the Tolvaptan launch? What time lines are you looking for that, potentially?

It's fiscal year '26.

Okay. And last one, we've seen a reasonable ramp-up in our non-U.S. export geographies, across a bunch of these geographies. Any color on the kind of scale-up which has come through and where are these from a profitability perspective and its contribution to our overall profitability as we go forward?

Yes, certainly. I mean, apart from the U.S., when we think about -- apart from U.S. and India, Europe has been a very strong contributor this fiscal year so far, and we expect that to continue over the next couple of years. Likewise, Australia, Canada, all of them have had a pretty strong run rate over the next -- over the last couple of quarters, driven by, again, complex generics. I mean, if you look at Europe, Fostair generic has become the largest product there. And we are continuing to ramp it up. So respiratory has become a big part of the focus in Europe. In Canada as well, we're looking forward to launching Tiotropium soon. Australia as well, we expect to launch Tiotropium soon. So we do -- I mean I believe we are under-indexed right now in the ex U.S. developed markets. And our complex generic portfolio inhalation, also biosimilars and injectables really will enable us to grow these markets as well. So they will become a larger part of the company over the next 3 to 5 years.

So this group as a whole, can it sort of compound in mid-teens over a period of time?

Yes, for sure. Already, Europe has ramped up. Canada and Australia are already at a good level. So we would expect them to be in the mid-teens.

Last one, if I can. On the Consta product, where are we on the filing and approval process? You talked about '26 launch on that.

Yes, so the -- we are filing it this month. it's in the final stages of the filing. And we would hope by fiscal year '26, as that gives us a couple of cycles to get approval.

We'll take the next question from Bino Pathiparampil.

Vinita, just a follow-up on Spiriva. You had mentioned earlier that you have seen a substitution rate of 25%. How is this defined? What does that mean?

That's a prescription ramp-up rate that we are seeing of generic versus the brand, HandiHaler.

Okay. And how -- one bottle or one canister, however you call it, how long does it typically last for a patient? 1 month? 2 months?

I think it's a 60-day supply, if I'm not mistaken.

It is 30 days, Vinita.

30 days, yes.

30 days, okay. So if substitution rate is 25%, then 30 days, we should be hitting 25% market share, right? I mean, am I -- is something wrong with that assumption?

Yes, I think so. That's just right.

Okay. And second...

That's the kind of unit share -- we are seeing the unit and prescription share coming close together at this point.

Okay. Are you talking this about only new prescription? I mean, people going for refills are still -- the substitution where it is not that high, is that the case?

No, no. No, we are seeing overall substitution, not just NRX.

Okay. Understood. Second, a follow-up on Mirabegron. You mentioned that in a couple of months, you are expecting some litigation outcome, which will decide the launch date. So could you let me know, in case the litigation outcome is favorable, then what could be the launch date? And if it is unfavorable, then what could be the launch date?

So we have prevailed on one major patent in litigation in the District Court. That's on appeal right now. We have settled on another, and the brand has continued to file patents that we have been battling. So -- and we are actively working on our litigation strategy to determine how soon we can launch.

Okay. So what is the earliest possible or the latest possible? Is there a range that you can give?

I wouldn't be able to share an actual launch date. It's fair to say that we are actively working on this one. And the fact that we won on the major patent was very heartening for us, gives us confidence of our ability to launch.

Understood. Just one last one on Nascobal and Diastat, are these now already kind of part of the base? Is it currently in 3Q? Or we are yet to ramp up?

No. So we are yet to ramp up. Actually, Diastat, we launched last week. It's been -- it was a fairly challenging product, but the team had launched it effectively. And Nascobal, we expect to launch in the next week. So both of those will contribute to the growth in Q3 and Q4.

The next question is from [ Sanjay Khullar ].

First of all, I would like to compliment Vinitaji for delivering excellent results. I have a couple of questions. Madam, where do you see our company in over the next 2, 3 years, as you mentioned that we are on a steady growth plan? So next target is $5 billion, maybe 3 to 5 years down the line? Second question is, when do we surpass the record profits achieved during Shri DBG's times? We achieved record profits. So when do you see we achieve this in the next 2, 3 years?

Two very good questions. Both the long-term prospects on the revenue front and profitability, and our goal is really to get our company back to consistent growth on revenues as well as improve our profitability, so profitable growth more than just growth. So on the revenue front, we see -- I mean fiscal year '26 is going to be a material year for us, as I mentioned in the last couple of minutes, given the material launches as well as ramp-up of current products, continuing to solidify the gains that we have made. And then I'd say, in a 5-year time frame, we expect the overall company business to grow substantially. And both across the U.S. as well as India and as well as other parts of the developed markets that are -- we are currently under-indexed on, we should -- they should be a larger part of our business in 5 years. I'd say on the developed market side, U.S. as well as Europe, Canada, Australia, but we would see a majority of our portfolio, 2/3 of it switching to complex generics based on the investments that we've made and the execution so far, inhalation, injectables, really contributing a material part of our growth over the next 5 years. On the profitability front, we have come a long way over the last 1.5 years. Still a long way to go. Our highs of high-20s margins certainly are aspirational for us. Right now, we can see a path over the next few years to get to a good 20% plus. Mid-20s is our goal to really close the gap with our peers. There's no reason why we should be below that. But as we continue to look at the company prospects beyond 5 years and look at investment plans, in particular, in areas like specialty, which long term are our aspiration for our organization, we'll have to determine what kind of investments we make. So we'd hope to get to 20% plus, then the mid-20s and then we'll determine what's the best way to grow our organization for the long term.

Okay. And one last thing, madam. I used to meet DBG when I used to be a friend with him. He used to say, Lupin will be the #1 pharma company from India. So I'm sure your dream will also be that. So do you see happening in next 5 years, 7 years down the line, madam?

Yes, what we are -- given the complexity of our business across the globe, India being a big part of it, U.S. being a big part of it, and our chosen strategy of going into complex generics as opposed to a broad-spectrum generic company, I would say that at this point, our focus is to be the best in what we do. We want to be a leader in the areas that we have chosen. So like respiratory is one that is turning out to be one of our biggest growth drivers for the organization globally. We're already a big player in India, and we want to be a material player ex India as well. It's a big part of our business in the U.S. and as well as a growing part in other parts of the world. So I'd say the areas that we choose to be in, we'll target to be the best.

[Operator Instructions] We'll take the next question from Ankush Mahajan.

Ma'am, we have a U.S. revenue in the range of $211 million now. So this run rate, could you give me some sense of what kind of a run rate that we can expect in upcoming quarters? Now you already have inched to $211 million from $185 million -- $181 million.

Yes, as I mentioned, $200 million plus is what you should expect.

For the upcoming quarters?

That's right.

So I think that pretty much ends -- brings us to the end of the Q&A session. I now hand the conference over to the management for closing comments. Thank you.

Thank you, friends. Thank you for all your questions. And as we mentioned, we are very excited about the progress we have made so far. We look forward to a very successful second half of the year and building from there into the next 2 fiscal years. So look forward to strong quarters ahead and reporting the same back to you, all of you. Given the holiday season, wishing all of you a very happy Diwali and a prosperous New Year. Have a wonderful holiday weekend and look forward to speaking with you again next quarter. Thank you.

Thank you so much, ma'am. So on behalf of Lupin Limited, that concludes this conference. Thank you for joining us. And before we sign off, here's wishing all of you all a very happy Diwali. And now you may exit the webinar. Thank you very much.