Lupin Limited (500257) Q3 FY2026 Earnings Call Transcript & Summary

Welcome to Lupin Limited Q3 FY '26 Earnings Conference Call. Thank you for your participation on the call today. [Operator Instructions] Please also note that this conference is on recording mode. I now hand over the conference to the management. Thank you, and over to you.

Good evening, everyone, and thank you for joining us. I'm pleased to welcome you to our Q3 Fiscal Year '26 Earnings Call. Joining me today are our Managing Director, Nilesh; our CFO, Ramesh; and our Head of Investor Relations, Ravi. We look forward to sharing our Q3 performance and our outlook for the year ahead. We are pleased to report another quarter of strong execution with revenue surpassing last quarter's record performance. This marks our 14th consecutive quarter of year-on-year growth. While the U.S. continued to perform well, I would like to highlight that growth this quarter was broad-based. Most of our regions, including India prescription business, Europe, LatAm and other emerging markets delivered double-digit year-on-year growth. Turning to individual business segments. This quarter was a particularly strong one for us in the U.S., where we recorded the highest sales in the region so far. [Technical Difficulty] exclusivity, first product from the proprietary Nanomi long-acting injectable [Technical Difficulty] milestone this quarter was the successful U.S. FDA inspection of our biologics facility in Pune, followed by the approval of pegfilgrastim.

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Yes, it's clear.

Okay. And could they hear us in the beginning? Or should we start from the beginning?

It's better if we start from the beginning, ma'am.

Okay. So welcome, everyone. We are pleased to report another quarter of strong execution with revenue surpassing last quarter's record performance. This marks our 14th consecutive quarter of year-on-year growth. While the U.S. continued to perform well, I would like to highlight that growth this quarter was broad-based. Most of our regions, including India prescription business, Europe, LatAm and other emerging markets delivered double-digit year-on-year growth. Turning to individual business segments. This quarter was a particularly strong one for us in the U.S., where we recorded the highest sales in the region so far. Growth was driven by new products such as Tolvaptan, where we benefited from being the only generic on the market. We also launched generic Risperdal Consta with CGT exclusivity, first product from our proprietary Nanomi's long-acting injectable platform. Our base business also grew, supported by higher volumes and seasonal tailwinds more than offsetting low single-digit price erosion. An important milestone this quarter was the successful U.S. FDA inspection of our biologics facility in Pune, followed by the approval of pegfilgrastim, our first biosimilar for the U.S. market. We have entered into an exclusive licensing agreement with Valorum to commercialize the product with an expected launch before the end of this quarter. We see meaningful tailwinds in this segment driven by favorable regulatory and commercial developments. As mentioned earlier, we remain focused on doubling the share of complex products in our U.S. business over the next few years while continuing to expand our specialty portfolio through a mix of organic initiatives and targeted acquisitions. Moving to India. Revenues grew 5.6% year-on-year with the core prescription business growing 10.9%, partially offset by lower local tender sales in our global institutional business. On a 9-month basis, prescription growth stood at 9.4%, broadly in line with IPM growth of 9.3%. Excluding the impact of loss of exclusivity on products such as GIBTULIO and AJADUO, domestic growth was 11.2% year-on-year for the 9 months. Volume growth remains strong at 5.6%, and the chronic segment now accounts for 67% of our portfolio, up from 65% last quarter. Both cardiac and respiratory therapies continued their strong momentum, growing at 1.4x and 1.6x their respective market growth. During the quarter, we also launched two new divisions, including one focused on obesity. This division will engage diabetologists, cardiologists and gastroenterologists ahead of the planned day 1 launch of injectable Semaglutide, while we continue parallel development of the oral formulation. In addition, we entered into a strategic partnership with Gan & Lee of China for Bofanglutide, a novel fortnightly GLP-1 agonist, further strengthening our diabetes and obesity portfolio in India. We remain confident that our India formulations business will continue to outperform IPM by 1.2x to 1.3x, supported by our strong sales force of over 11,000 people and pipeline of more than 80 new product launches over the coming years, including innovative in-house and in-licensed products. Our other developed markets, Europe, Canada and Australia, accounted for 11% of our total sales and delivered 11% year-on-year growth this quarter. We expect this contribution to increase as we roll out our pipeline of complex products and complete the acquisition of VISUfarma, which we expect to close this quarter. Emerging markets delivered an impressive 42% year-on-year growth, led by Brazil, Mexico and Philippines. Brazil, in particular, maintained strong momentum post the turnaround last quarter, growing 99% year-on-year in local currency, driven by successful commercialization of Dapagliflozin. On R&D, spend was 7.5% of sales this quarter, among the highest in the Indian pharma sector, reflecting our continued focus on complex and specialty platforms. We have over 50 active products in the pipeline with near-term emphasis on respiratory complex injectables and biosimilars. Over time, we expect a growing share of R&D investment to flow into specialty programs and value-added medicines, including long-acting injectables, green propellant products and 505(b)(2) assets. We are also strengthening our India innovation portfolio through both in-house development and in-licensing of late-stage assets. On the compliance front, we received NAI status with zero observations for our Nagpur Unit-I facility, along with EIRs for Nagpur Unit-II injectables and the Aurangabad facility. We remain fully committed to maintaining the highest global quality and regulatory standards across all our sites. Before I hand it over to Ramesh, I would like to reiterate that we remain optimistic about our growth prospects. We have clear strategic drivers in place to deliver sustainable long-term growth across our businesses. Innovation will be a key differentiator, supported by continued investments in technology, including AI, to make the company future-ready and resilient as we navigate opportunities and challenges ahead. With that, I'll now hand it over to Ramesh to walk you through a detailed review of our financial performance.

Thank you, Vinita. Friends, I welcome you all to our Q3 FY '26 earnings call. As you may have seen from the results, we have again delivered a very strong quarter, continuing the momentum of the last few quarters. Revenue from operations and EBITDA scaled a new high, exceeding the record performance we had delivered last quarter. EBITDA margins reached 31.1%, 681 basis points higher than the similar period last year. Sales. Diving into the numbers, total revenues from operations in the quarter came in at INR 7,168 crores as compared to INR 5,768 crores in Q3 FY '25 last year, a growth of 24% year-on-year. Amongst the key markets, the U.S. grew by 46% year-on-year. India grew 5.6% year-on-year. Other developed markets have grown 11% year-on-year. And emerging markets have grown 42% year-on-year during this quarter. Our GIB business grew by 7% year-on-year. The U.S. business. Coming to the U.S. business. This quarter, the U.S. business recorded sales of USD 350 million, a growth of 46% year-on-year and 11% quarter-on-quarter on constant currency basis. The highest sales ever recorded for this business. This growth has been due to new product launches, including Tolvaptan and growth in base business, led by higher volumes and seasonality offset by low single-digit price declines. We're pleased with the recent approval of pegfilgrastim, a first biosimilar approval for the U.S., by which we launched -- which we expect to launch shortly. We have a very exciting pipeline of products in this segment, which reinforces our growth prospects in the U.S. going forward. Turning to India. The India region business grew by 5.6% year-on-year during the year. I'd like to highlight that the core prescription business grew by 10.9% year-on-year during Q3 FY '26. For 9-month period, our prescription business has grown 9.4% against IPM growth of 9.3%. In fact, if we normalize for the loss of exclusivity on some of our diabetes products, the growth would have been 11.2% in the 9 months period. Key segments like Respiratory and Cardiovascular grew 1.6x and 1.3x IPM, respectively, during the 9-month period. Chronic share has increased to 67% from the 65% levels in Q2 and share of in-licensed products is only 6% as compared to around 12% in FY '25, which also has a positive impact on our profitability going ahead. Other developed markets. As far as other developed markets are concerned, which includes markets in Europe, Canada and Australia, revenues in these geographies was INR 812 crores, representing a growth of 11% year-on-year. Other developed markets constitute around 11% of our total sales, and their share is expected to increase going ahead with the anticipated closure of the acquisition of VISUfarma during this quarter. Emerging markets grew by 42% year-on-year with strong growth in Brazil, Mexico and Philippines, offsetting tempered performance in South Africa. Brazil has another strong quarter, growing at 99% year-on-year in local currency terms. Getting on to the P&L, other operating income. Other operating income for the quarter was at INR 67 crores as against INR 149 crores in Q3 FY '25 and INR 216 crores in Q2 FY '26, largely impacted by lower export benefits from the PLI scheme during the quarter. Gross margins. Gross margins continued upward trajectory during the quarter at 73.5%, up from 69.4% in Q3 last year and up from 73.3% in Q2 FY '26. This 420 basis points year-on-year improvement is driven by multiple factors, which includes better product mix, lower share of in-licensed products, including higher profitability and loss of exclusivity products in India, increased volumes and other cost improvements and efficiencies, which we have undertaken over the last several quarters. Employee benefit expenses. This stood at INR 1,143 crores, an increase of 16.1% year-on-year from INR 984 crores in Q3 FY '25, translating to 16.1% of sales as compared to 17.5% in Q3 last year. This change is largely attributable to higher costs due to regular annual increments and business growth during the period. Manufacturing and other expenses. Q3 FY '26 manufacturing and other expenses came in at INR 1,937 crores, increasing 14.2% year-on-year from INR 1,696 crores in Q3 FY '25, translating to 27.3% of sales vis-a-vis 30.2% last year. The expenses were higher mainly due to higher volumes in the normal course of business. R&D at INR 535 crores is 7.5% of sales as compared to INR 441 crores in Q3 last year, with almost 70% of our R&D directed towards complex portfolio. For the 9 months ended -- 9 months FY '26, R&D spend at INR 1,555 crores is 7.7% of sales. For the full year, as indicated, we expect R&D to be around 7.5% to 8.5%. EBITDA. EBITDA, excluding ForEx and other income during the quarter was INR 2,210 crores vis-a-vis INR 1,366 crores in the same period last year, an increase of 62% year-on-year with a margin of 31.1% vis-a-vis 24.3% last year in the same period, an increase of 681 basis points over the last year. On a 9-month basis, EBITDA was INR 5,988 crores, an increase of 50% year-on-year with margins of 29.8% vis-a-vis 24% over the same period last year. We expect full year EBITDA margins to be in the range of 27% to 28%, higher than our earlier guidance of 25% to 26%. Whilst we expect business to continue to exhibit robust performance, overall margins in Q4 will be tempered by higher R&D expenditure and a lower PLI income. ETR. Turning to the tax rate. ETR is expected to be about 21.4% for the 9 months FY '26. For the full year, we expect ETR to be about 21% to 22%. Operating working capital, which stands at INR 7,948 crores as of 31st December against INR 6,821 crores as of 31st December '25, which translates to 101 days of working capital against 103 days in the previous quarter. Net cash. Net cash stood at INR 2,879 crores as against INR 310 crores as of 31st March '25. Whilst we focus on increased cash generation for our business, we would like to highlight that we continue to explore strategic allocation of our capital to ensure the long-term mission of the company, including on the specialty front. ESG. On the sustainability front, Lupin has achieved the highest A leadership rating from CDP for both Climate Change and Water Security, placing us amongst the select group of global companies recognized for excellence in sustainability performance and transparency of disclosures. In addition, Lupin's greenhouse gas emissions reduction targets have been formally approved by the SBTi, reinforcing the scientific rigor and credibility of our climate ambitions. Together, these recognitions reflect the strength of our climate strategy, disciplined execution and our unwavering commitment to creating long-term sustainable value for all our stakeholders. With this, we open the floor for discussions.

[Operator Instructions] We'll take the first question from Nikhil Mathur.

This is Nikhil from HDFC Mutual Fund. I have two questions. First and foremost, congrats on the continued great performance. Now my first question is on the U.S. outlook, let's say, going into FY '29 as well. Now obviously, with the Mirabegron settlement, it seems that Mirabegron should continue into FY '27 and certain part of FY '28 as well. But ma'am, can you highlight what will be the drivers of the U.S. business once Tolvaptan and Mirabegron start tapering off? I believe you have -- I mean, you have pegfilgrastim approval. We have talked about other respiratory assets. So any help on how should we look at launches, meaningful launches over the next 2 years, so that once Mirabegron and Tolvaptan come off and you go back to a growth path in the U.S., that would be helpful. Any color on this?

Sure. Yes. So, we are very pleased that we have Mirabegron as a material contributor in the next 2 years as well as hopefully, Tolvaptan also continues just given the size of the product and the share we have so far. We have 35% share of that market, given that it's a specialty product. So we continue to build share on Tolvaptan. Having said that, we have multiple new product launches planned over the next couple of years, in particular, on the injectables front, some on the respiratory front, as well as the biosimilars front. So as I look at the last couple of quarters, we've got approvals for injectable products like glucagon, liraglutide, Risperdal Consta, and with the pegfilgrastim approval getting into the biosimilars market as well to build the institutional business. So the institutional business will be a material build over the next 3 years. And we see it really ramping up very nicely over the next 3 to 5 years to be a material contributor to the U.S. business. Likewise, the biosimilar business, in particular, will also be a material contributor to the U.S. with pegfilgrastim, then ranibizumab that we hopefully will be able to launch in fiscal year '27. And then the on-body pegfilgrastim, which is making good progress. And then aflibercept and etanercept in '29 -- calendar '29, that will be actually fiscal year '30. And then we have other products that we have planned as well like mepolizumab that are in the pipeline. So pretty rich pipeline of biosimilars that -- we believe, given the current momentum in the marketplace, access into the market will be a material growth driver for the organization. The additional, I'd say, growth driver, which so far has not featured into our business is 505(b)(2)s. The company has been working on 505(b)(2)s for the past couple of years, especially on the injectable front. In fiscal year '27, we will start our first 505(b)(2), and that's going to ramp up in the next couple of years as a material contributor as well. So we have multiple growth drivers at this point for the organization and feel fairly confident that we can, one, sustain this $1 billion-plus revenue level over the next couple of years and build from there as we bring material biosimilars, respiratory products, as well as injectables, including the other First-to-Files that we have in our portfolio to market.

Yes. So if I look at the three biosimilars that you talked about in the more near term, which are pegfilgrastim plus ranibizumab plus aflibercept. Now assuming that approvals come through in FY '27, in FY '28 and '29, the combined these three products, can they contribute, let's say, $100 million or around about that kind of a number in the next 2, 3 years, the combined basket of these three products?

Yes, the potential is there.

Understood. Also, I wanted to check on, you have tentative approval for this product, Xywav. I guess the litigation is ongoing. Any probabilistic launch timing of this product? And I suppose Lupin could be sole FTF in this product?

Yes, we are exclusive First-to-File on that product. The launch date, I believe, is fiscal year '29, if I'm not mistaken.

Got it. Understood. And one final question I have on the India business. I think the Jan IQVIA data is showing good growth. Also last quarter, x of the tender business, I think the growth has come in good. So are we in a good, let's say, 12%, 13% growth environment for the company and with all the IL issues in the base now and insulin tailwinds?

Yes. So, I think 20% to 30% ahead of the market is what we would see ourselves at. The market is growing strong. So double-digit growth is assured. And I think not just for the next couple of quarters, but I think for the next couple of years, we would expect to continue growth. I think a lot of the exclusivities are behind us. The insulin opportunity is there. Semaglutide will come in as well. So, lots of positive growth drivers for India.

We'll take the next question from Tushar Manudhane.

And congrats on the good set of numbers. So just on your comments on use of AI. So if you could elaborate which geography or which divisions have we sort of started implementing use of AI and how faster or difficult, whichever way the use of AI has been on the development side on the manufacturing side?

Yes. We have made some good progress on AI, and this is across the entire company. We started off with sales and marketing, but clearly, we are looking at other divisions also. Manufacturing and maintenance is one of the part. The other is, of course, quality and the like. We are working with multiple consultants. The first most important thing is the fact that we need to bring all of this data together. Over time, we have actually created several repositories, and it's important to actually bring everything together under one architectural roof. And that's exactly what we are trying to do at this stage. But clearly, we have set our eyes on AI for all our functions, including finance, HR, legal and procurement and the like. And we expect a lot of these pilot projects that we have been working on to be kind of implemented over the next 9 to 12 months.

Got it, sir. And secondly, the opening remarks also alluded to forming a new division for semaglutide with respect to catering to diabetologists, cardiologists, gastroenterologists. So, how many MRs is like sort of getting focused for this particular product?

It's about 200 people, but I think we'll scale it up as needed.

So, how do you see this because given that there are going to be multiple players, of course, there will be a pricing impact, but volumes scaling up, again, how the demand is expected to shape up, that is something really interesting to watch out. But if you could throw your insights on this opportunities for India.

Yes. I think, many companies are going to launch it. But the fact that we are a large cardiometabolic player, we will make sure that we are able to get the right kind of prescription share in this product. There's a lot planned. Again, what we're saying is not unique. Everybody else is planning extra bells and whistles from that perspective, but I think we have a very deep patient support program that we intend to engage into this as well. We believe that we'll be there on day 1. And again, as a large cardiometabolic player, it should be a nice opportunity. We -- while we have created this division, we have the ability to scale up. We have the ability to add it into other divisions as well. So, I think the -- it would be interesting. Let's see. I think, it's just a month away.

We'll take the next question from Bino Pathiparampil.

Just a follow-up on Mirabegron settlement. From your notes, I see that you have taken a provision of $15 million, whereas the total payout is $90 million. So, why only $15 million provision?

Yes, $15 million is essentially what relates to as the past, whilst $75 million is linked to, in fact, future being in the market. So clearly, it relates to the future. And that's the reason why you finally $15 million at this stage. The balance $75 million will be spread over the next -- up to September '27.

Okay. So that will come in other expenses later on in quarters?

It's actually would not impact the EBITDA, because it's actually a license that we need to kind of amortize over a period of time.

Got it. Second, now that we have a license in place, is there room to improve our Mirabegron market share? Because I believe we were selling much lower quantity than the other generic competitor. Is there a chance to equalize this?

Well, so we have 40% generic share, and generics between us and Zydus, we also have 40% of the overall molecule. So we'll see what makes sense. It's a really good contributor to our P&L, and we'll determine if it makes sense to take on additional share.

Got it. And why this end date of September '27? Because the next Orange Book patent of Mirabegron expires only in 2030. So what prevents you from being exclusive in the market till then?

Till 2030, you mean?

Yes.

Yes. We believe majority of the settlements that the brand has entered with other companies are to the date in '27, September '27.

Okay. And one last question on Tolvaptan. What -- how do you see the competitive scenario panning out? Why hasn't Partex launched till now? And do you expect more approvals?

We're not certain why they haven't launched. We know that IP is certainly a hurdle that we have crossed and the others haven't. So that could be a consideration. It's not the easiest product to manufacture. That could be another consideration. We don't have any intelligence on Teva's approval. And then we know that other competitors have November '26, 30-month stay date and into '27. So we think that if competition comes in, it's likely going to be staggered.

Got it. And one last, if I may add in. Any update on Breo Ellipta in your pipeline?

Yes. We're still making progress with the development. We were hoping to have it filed by now. But I'd say that it's still actively in our respiratory pipeline. We hope to really make material progress this calendar year.

We'll have the next question from Kunal Dhamesha.

First one, just trying to understand the Mirabegron settlement a little more. So, we have this licensing outgo of $75 billion plus we have a per unit licensing fees that we'll pay, right? So are those separate? Are those same thing, how to think about that?

They're separate. Can you still hear us?

[Technical Difficulty] Taken off from the revenue or...

Kunal, can you repeat your question, please?

We can't hear you.

Can you hear me now?

Yes.

Yes. So basically, the prepaid per unit licensing fee, how will we account for that? Will it be offset from the revenue? Or will it be recognized in COGS or how to think about that?

There are two portions as we were just mentioning. There is a smaller portion, which actually has to be knocked off from the overall operating profit. And there's an element which will actually get amortized over a period of time. So both will actually hit the P&L.

Okay. One above EBITDA, one below EBITDA?

Yes.

And then would you say that with this settlement, the profitability of this product changes materially if we just look at from an above EBITDA perspective?

The fact of the matter is, it will impact profits, but we still think it's still going to be attractive enough.

Sure. And second question on the overall profitability outlook, let's say, beyond FY '26. I think earlier, we had suggested for FY '27 EBITDA margin range of around 24% to 25%. So how do we think that is going to play out now with the kind of products that we have in U.S. and India, et cetera?

So clearly, the top line buoyancy would continue. And we just mentioned about the fact that Mirabegron will have a fresh lease of life, so to speak. Tolvaptan, we are not seeing competition. Though, of course, we do expect that to enter at some point of time. And Vinita alluded to a number of new product launches that could potentially happen next year. And there's semaglutide opportunities and the like. And of course, there are opportunities in emerging markets. So clearly, we are very bullish about, in fact, keeping the top line buoyancy going. There is tremendous focus on cost as well. There are a number of initiatives that we have taken up in recent times. All of this would also kind of help us to kind of maintain the gross margins and thereafter the EBITDA margins also. Whilst there would be a dip in terms of margins vis-a-vis the current year because of certain -- because of sheer competition for some of the products, we still believe that we will be good for actually looking at 24% to 25% next year.

Sure. And last one for Nilesh sir, on the semaglutide generic launch. What is your expectation, let's say, from a year 1 market perspective? How much it can grow? And did we allude to potential revenue size in year 1 in one of the media interviews, if I heard it correctly?

Yes, we did. I think, the internal modeling that we have at this point of time seems to suggest that this will be a INR 1,500 crore odd opportunity in the first year. And we talked about maybe doing INR 50 crores, INR 60 crores, something like that in the first year. But we'll see. I think, there's too many variables right now, how much is the pricing going to go down? How much is the pent-up demand? I mean, you've seen how Mounjaro went in the first 5 months since launch, right? So when this happens, the price point, what it means. And we want to be responsible. We want to do this in the right way. We don't want to just sell this for the heck of it. So, I think the intent would be to do it in as responsible manner, but I think it should be a nice opportunity.

And sir, supply wouldn't be an issue, let's say, if we think about equitable market share or whatever we are currently having in cardiodiabetic space. If we want to achieve that kind of market share, we have good enough supply, right, for the market?

Yes, we don't see a concern at this point.

[Operator Instructions] Can we have Neha Manpuria for the next question, please?

Ramesh sir, on the 25% margin that you have mentioned for fiscal '27, given that we have a fair bit of visibility on Mirabegron and also Tolvaptan at least for the next few quarters. How should I think about the cost other than the investment in the field force expansion that you talked about? What should be the R&D increase or investments in other areas that you're looking at?

Yes. Clearly, there is a lot of focus on costs and whilst that will certainly continue. There would also be spends for R&D, which may increase given the fact that we are focusing on a number of things out there. So clearly, combined with the fact that there would be some tapering off of top line products and the fact that you might have to provide for extra expenditure on the R&D, we're just being conservative in saying about 24% to 25% would be part for the course.

So the R&D next year would be in the 7.5%, 8.5% range? Or would it be lower as a percentage of sales?

I think 7.5%, 8.5% is clearly a good number to look at, at this stage.

Okay. Understood. And, Vinita, you called out seasonality as one of the factors for the strong growth that we saw in the U.S. Was that a meaningful contributor to the quarter-on-quarter improvement in the U.S. sales? Or was a large part of that driven by Tolvaptan and Mirabegron?

No, Tolvaptan and Mirabegron certainly were the larger contributors, but even products like albuterol, tiotropium, oseltamivir had grown quarter-on-quarter, because of the seasonality.

So that should normalize a little bit, right, as we go into the next two quarters?

Yes.

[Operator Instructions] Can we have the next question from Shashank Krishnakumar.

Vinita, just wanted to get your thoughts around some of the recent regulations that we've seen around PBMs in the U.S. Now my understanding is a large part of the benefit will probably flow down to the end customers, the payers flow down, and this is largely neutral from a generic manufacturer standpoint. Now is that how you also probably look at it? And -- or could there be any change in terms of the industry dynamics, rebating levels, et cetera, which you probably foresee?

Sorry, I missed your question, the front end of your question. Can you repeat it?

Yes. So I just wanted your thoughts around the recent regulations around in the PBMs which you have seen in the U.S.

Regulations around what?

PBM.

PBMs in the U.S.

PBMs, okay. Yes.

Yes. My understanding is, each part of the benefit will probably flow through to the customers and payers and this is largely neutral from a generic manufacturer standpoint. Now is that how you also probably look at it? Will there be some meaningful changes in terms of industry dynamics or rating levels, which you probably foresee?

Yes. So the new administration has been focusing hard on the PBMs. And also the Trump Rx has gone live in the past couple of days that really nets out the pricing for a number of the brand companies as they've committed the agreements that they have signed with the administration. For the most part, as we understand it, the companies have really given the benefit of the rebates to PBMs to the government so that, that benefit can be offered to the patients and consumers. So we really don't see a material change in pricing.

And just a second one, you typically call out the growth figure for Europe. So if you could just share that for this quarter?

It was 11% growth?

Yes.

Can we have the next question from Nikhil Mathur?

I just wanted to understand the injectable strategy, let's say, from a 2-, 3-year perspective. So I mean, great to have products like glucagon and Risperdal Consta, with those approvals and having been launched. But I suspect, I mean, none of these products would be big enough to kind of move the needle so much as far as the overall injectable sales is concerned. So, how far are we from a big material launch on the injectables side? So can you talk about what products have been filed? What are you looking at? And which sort of products can give you, let's say, $100 million, $200 million kind of a sales base on the injectables? And over what time period can you achieve that?

Yes. So apart from the products I mentioned, we also have dalbavancin that we have filed that both the injectable, the generic version as well as a 505(b)(2) version of the product. We have eribulin, a smaller product, just looking through the major products that iron surcrose will be a material one for us. And yes, and more 505(b)(2)s that we haven't announced. But we really see the injectables portfolio ramping up in the next 3 years to $100 million plus with a multiple, the tens of millions of dollars in individual products. And then biosimilars adding to it.

Understood. And on pegfilgrastim, I mean, it seems like while it's great to have the approval in place, but can it be a meaningful revenue driver because there is competition there. I mean, some of the biosimilars are pretty well established for a number of years now. So, what's kind of -- what's the go-to-market strategy on pegfilgrastim now? And when do we start numbers showing up for Lupin in this product?

So we would launch this quarter, but you'll start seeing numbers really in the next fiscal year. And we are very encouraged with what we are hearing from the marketplace. We have tied up with this company with strong experts across the biosimilars market. From the McKesson and another -- AmerisourceBergen, another specialty distribution groups. And we see a real place for a new pegfilgrastim in the marketplace. So I'd say a couple of years ago, we were not very gungo on biosimilars. But today, we see significant potential with pegfilgrastim to start with, but also the other biosimilars that we have in our pipeline.

But just curious, I mean, with so many biosimilars in this product being already there, why would ABC or a McKesson tie up with Lupin? I mean, is the cost going to be the proposition here? But if the cost comes off, would the margins be lucrative enough for you to make money on this product?

Yes. Typically, a new product is attractive from a reimbursement standpoint to the payers. So that itself will drive the initial uptake. And beyond that, you've seen a number of companies that have driven the price down actually get out of the market. And potentially, they will relaunch with a different pricing strategy into the marketplace. So we really see the market for biosimilars and for pegfilgrastim shifting. Also, we are the only truly integrated player with the India cost advantage, having our own API, our own finished product. The other companies don't have the advantage that we do.

Can we have the next question from Kunal Randeria?

So my question is on R&D spends. In the last couple of years, your R&D budget has gone from around INR 1,400 crores, INR 1,500 crores, around almost INR 2,100 crores now. So if you would like to share which areas are you spending in, how much of this would be on biosimilars that you have budgeted? Because some of these spends, I think, would come off also in the years ahead. So is there a chance that maybe after FY '26 or '27, your R&D starts going down also?

No, I wouldn't think so. Clearly, we are spending on the more complex stuff, which includes the injectables piece, the inhalation piece. Any drug device combination always costs a lot of money with clinical trials and the like. And of course, we have our biosimilars. We've also always spoken about specialty ambitions and the like. So clearly, the spends would keep going up. But if our turnover keeps going up also, as a percentage of sales, it might actually languish at a particular point. But in absolute value terms, it will certainly keep going up.

Sure, sir. If I understand correctly, so you're not adding more projects. It's just that you're expanding into a bit more high-value, high-cost projects?

So just adding more projects overall.

You're pivoting to more complex stuff, right?

Right. But -- okay, let me put it this way. Is your budget on genetics, the usual Para III and the Para IVs, I mean, the oral solids and all, is that the same or even that is going up?

Actually, in absolute terms and percentage terms, it will be going down.

Okay. That's good to know. Second question, again, you have now a healthy cash balance. You are generating cash. So is specialty on your radar? And exactly which therapies, in which markets would you be targeting?

Mean, so it has been on our radar, as we have shared in the past. And the therapy areas, also, we've been pretty vocal with the respiratory being an area that we would like to build given our current position as well as neurology, where we have Namuscla to start with. We are planning to bring Namuscla into the U.S. and would like to get other products in the therapy area. And third now is ophthalmology, where we have a start in Europe with VISUfarma. But we would like to get additional assets both in Europe as well as ideally U.S., Europe and other developed markets.

So would you be more comfortable buying assets which have been approved or the ones where you perhaps have to do a Phase III trial, file it and then commercialize it?

Yes. So we've been looking across the board. I mean, of course, commercialized assets would be very lucrative, but they are far and few. Because companies don't part with them easily. So we're also looking at assets that are in Phase III or have completed Phase II successfully and are ready to go into Phase III.

Sure. And just one more, if I can, please. Last year, you had announced that for tiotropium, you had tied up with someone -- a company in China. Do you think that's a meaningful opportunity for you?

Or you mean -- for the Chinese market? Yes, I think it continues, not very meaningful.

I mean, it's not meaningful now or you don't expect it to be meaningful in future too.

It's not in the market right now.

It's not approved.

We'll take the next question from Bansi Desai.

So the first question is on the overall biosimilar landscape in the U.S. We see recent developments, which are all aimed at improving affordability and accessibility, which is good, structurally positive for us as well. But at the same time, it is also going to make market more competitive. So how should we think about what will be those key factors which will determine our success? You mentioned about having that cost advantage, but I'm assuming a lot of Indian companies would have that. So that's number one. And the second is we also see PBMs having their own brands or bringing their own labels in the space. So that adds to the competition, right? How do you think about that relationship?

So I'll maybe take the second question first. When it comes to the private labels, that's actually an avenue for us as well to gain share. When we see the Cordavis label, for example, for Humira that really drove significant share for Sandoz, we certainly see that as a positive for a biosimilar. So what we are starting to see is the block of the PBMs is actually going down. PBMs are partnering now with biosimilars to gain -- to really bring access to biosimilars in the marketplace. So that is one. Second, I mean, we are very mindful of the fact that with the market opening up, the regulatory requirements or becoming less burdensome, competition can increase. So we are very selective in our portfolio shortlist in our selection process of our pipeline. We are selectively going after programs that we believe we can be in the first wave, we believe we can be one of few based on technology advantage or otherwise. And third, we also have a lens of the three therapy areas that we want to build on the specialty front, because we also are building commercial front end for the three areas that we can leverage across biosimilars as well as branded specialty products. So we're kind of carving our own therapeutic area strategy as well on the biosimilars front. So all of those give us the confidence that we have -- we are not going after everything under the sun from a portfolio standpoint. We are being very selective around areas where we can truly make a difference. The other thing I will say is while you hear about the cost advantage of India across the generic drug companies, just look at how many biosimilars companies are out there. I mean there are a handful of biosimilar companies at scale across the world between India, Europe as well as Korea. So it's not the same level of competition as you see in the generic -- small molecule generic industry, which also makes biosimilars a more attractive area overall.

That's very helpful, ma'am. And also just a second question, which is a clarification on Mirabegron. If I think about $90 million of payment, is it more or less what we have earned so far on this product or much lower than what would have made? That's number one. And second, with the settlement until September '27, does it mean that we should not anticipate any generic players to come in this period or they could come and settle with similar terms that is paying royalty, et cetera, on the sale that it could do?

It's hard to predict what other generics will do. For us, it's given a certainty, right? I mean, we have no litigation, burden anymore, no risk and no impediment to sell the product in the marketplace. And we still look at it as a very attractive contributor to our P&L.

We'll take the next question from Vivek Agrawal.

A couple of years back, you have highlighted that you are developing a product, it's a drug device combination called Nexplanon. So just want to understand where the product is. Is it still in the development? Or have you filed this product? Any status regarding this product?

Yes, it is in clinical development right now.

Okay. But don't you think that's quite long that is there still in the clinical development and all. So when do you expect to file this product?

I believe it is planned to be filed in fiscal year '28.

Fiscal year '28.

Yes, it is a long development cycle, also pretty complex development.

Understood. And second question is related to India business where I think you have done the business quite well in the last couple of years and Rx business is doing phenomenally well, right? And the confidence is also there. So just to understand like in the next 3 to 4 years, how to look at the growth trends of India Rx business? And if you can outline, for example, the kind of initiatives that you are taking in terms of product launches, in terms of market penetration, on sales force, et cetera. So that what gives you the confidence that you can continue to grow this business?

So our aspiration would be to continue to grow double digit. We believe that the market will grow 7%, 8%, and therefore, we will grow double digit in this segment. That is linked with the fact that our focus is on chronic therapy areas. As you know, 65% of our revenues come from chronic side. We're doubling down. We added 900 people to our sales force in the last 6 months. So we're doubling down on the market. We have expanded into newer divisions, into newer therapy areas as well. And we haven't even done the innovation pipeline yet. I think that's something which has just started. In the next 3, 4 years, you'll start seeing more innovative products coming from our portfolio as well. So I think a combination of the need for the market, expanding our reach, expanding the breadth of our offering as well. All of these together will drive it. And we've talked in the past about other things like patient support and the like. I think all of these together will help deliver this growth.

Understood. And just last question, if I can squeeze in, in terms of capital allocation, right? Apart from R&D investments that you are making and you are generating significant cash. So if you can prioritize, let's say, a couple of, I think, top three areas where you want to spend money, let's say, in the next 3 to 4 years?

So clearly, we have the ability to borrow about $1.5 billion, $1.6 billion, so to speak, apart from, of course, what we have on our balance sheet in terms of cash already. So from this perspective, we would be looking at specialty assets. So hitherto, we have been looking at, in fact, a critical -- something in the range of sweet spot being about $250 million to $300 million. We might up it a little more based again on the proposition on the table. So that's the most important part for us. We have also clearly defined the threshold limits when it comes to, in fact, the adjacencies and so on. So we would invest only as much as the initial estimates were. So clearly, that's again a threshold limit. And of course, we'll be interested in actually looking at assets in India. The sweet spot here, again being about $250 million to $300 million.

Understood. So when you talk about specialty assets, right, is it mainly related to U.S.? Or are you also comfortable buying some assets, for example, which might be making losses initially and profitable over a period of time?

Yes. So we are looking at U.S., Europe, developed markets like the VISUfarma, was Europe, right, and U.S. as well. And as we mentioned earlier, we are looking at clinical stage assets, too, that will require investment before we bring it to the market.

We'll take the next question from Shyam Srinivasan.

Just one on VISUfarma, again. Sorry, I missed maybe the opening remarks. Has it now closed the transaction? When are we starting to consolidate it? I remember 57 or 60 products, EUR 50 million, EUR 55 million was the annual expectation. So if you could just refresh those numbers, please?

Yes. So we expect to close it in the next few weeks of this quarter, basically. So we'll start consolidating next quarter onwards. And the revenues very much stay on track, EUR 60 billion plus.

Yes, a little more for the next fiscal, but really for the numbers that you spoke about for this year.

Sorry, Ramesh, euros or dollar, sorry.

Euros. All of this is in euros.

Euro million, right. Got it. And margin, I remember was also high, 25% or 30%, if I remember.

Eventually, based on our cost synergies and all of that will actually get to that level. It will actually more.

But 21% historic.

Yes.

Yes.

Got it. Very helpful. Second question on emerging markets. Is there a base effect we had like 40% plus growth. Any geographies to call out? Is it...

I mean, Brazil, that we called out. Brazil had almost doubled in the quarter.

Thanks to Dapagliflozin that we actually introduced out there. And of course, the lineup that we have for the future, that will kind of continue for some time.

Sorry, Ramesh, maybe constant currency growth, like 40% seems odd. So is it like local currencies, what are these growing at?

It actually nearly doubled in terms of turnover, given the fact that this product is a big hit out there.

Got it. Got it. And lastly, on India growth, I know the 5.6% volume growth is 9 months. So what's the 11%...

No, no, no. 5.6% is actually taking into account the fact that we actually had a 9-month volume growth.

9-month volume growth.

9-month volume growth, but I'm just looking at, say, Q3 in this 11% prescription growth, what is the price volume split? And how is chronic done? I think that's my last question.

Chronic has done extremely well.

Chronic has done well. I want to say it's similar on the volume in Q3 as well.

Actually, the share of chronic has gone up to 6% or 7%.

Volume growth was 6. 5%. And new products gave us 1.5%.

Sorry, Nilesh, your voice is cutting. Can you repeat?

Volume growth was 6.5% for Q3 and it was 5.6% for 9 months.

Thank you very much for all your participation. I now hand the conference over to the management for the closing comments.

Thank you all. Sorry for the technical glitches, but hopefully, we were able to respond to all your questions. We are very optimistic at this point to close the year on a very strong note. And equally, the year ahead looks pretty strong. We continue to work around our strategic growth drivers to build specialty and complex platforms to enable us to grow sustainably over the next few years. So thank you again for joining us, and we look forward to interacting with you in the next couple of months.

Thank you, ma'am. On behalf of Lupin Limited, that concludes this conference. Thank you for joining us, and you may now exit the webinar. Thank you.