Mega Lifesciences Public Company Limited (MEGA) Earnings Call Transcript & Summary

Hello. Good afternoon, and a warm welcome to all of you on behalf of Mega Lifesciences. For today's call, we have with us here, our CEO, Mr. Vivek Dhawan.

[Foreign Language] I'm Vivek here joining from our office. Thank you.

We have our CFO, Mr. Thomas Abraham.

Hello.

Deputy CFO, Mr. Manoj.

Hi, everyone.

Our company Secretary, Mr. Jintana, and myself, Francis Rego. We will be starting today's call with a brief introduction and synopsis of financial performance for 1H '24 and 2Q '24, followed by remarks from the CEO on the financial performance. Then we'll open the forum for Q&A. [Operator Instructions]. Starting first with 1H '24 financial performance. Overall, revenue in 1H '24 was at about THB 7.7 billion, flat on a Y-o-Y basis. Mega We care Pharma and OTC business continued to show healthy growth. Maxxcare Pharma business continued to show growth, while Maxxcare Consumer business revenue in Myanmar declined as we had guided earlier. Brands revenue in 1H '24 was THB 4 billion reflecting a growth of 2.5% on a Y-o-Y basis. Mega We care Pharma and OTC business continued to show healthy growth, while there was some sluggishness in Nutra business, primarily on account of COVID-friendly products. Distribution business revenue in 1H '24 declined by 8% on an adjusted basis. The adjustments were made for dual currency effect in Myanmar. Maxxcare Pharma business continued to show growth as guided. The decline in Maxxcare revenue is fully attributable to the decline of consumer business in Myanmar, which has a very limited impact on profitability as guided. Overall gross profits in 1H '24 improved to 47.7% of operating revenue as compared to 44.7% in 1H '23, mainly due to change in segmental mix. Branded business gross margins remained stable at a healthy level of 65.2% in 1H '24, which was quite similar to 1H '23 gross margins. Distribution business gross margins improved to 25% on an adjusted basis in 1H '24 as against 23.1% in FY '23. Gross margins of distribution business are influenced by principle mix most other factors. SG&A expenses in 1H '24 was higher due to planned spending representing 28.7% of operating revenue as compared to 26.8% of revenue in 1H '23. We expect SG&A to normalize by year-end. Reported net profits in 1H '24 were THB 991 million as against THB 984 million in 1H '23, flat on a Y-o-Y basis. The improved gross margins in 1H '24 were offset by increased planned SG&A, which resulted in flat reported net profits. Adjusted net profits in 1H '24 were THB 1.051 billion as against about THB 1.1 billion in 1H '23. Adjusted net profits declined by 11% Y-o-Y, mainly due to the impact of ForEx loss in Nigeria on account of depreciation of Nigerian Naira against the U.S. dollar in 1H '23. Operating cash flows in 1H '24 were healthy at THB 1.6 billion, representing 162% of net profits. We continue to be a net cash company with a strong balance sheet. On the CapEx front, we have spent THB 99.7 million towards CapEx in 1H '24. Majority of the spending was towards maintenance CapEx and capacity expansion for manufacturing operations in Thailand, Indonesia and Australia as per the plan. Going forward, for CapEx plan, besides the regular improvement and maintenance CapEx which is incurred every year in the range of $3 million to $4 million, we have planned an amount of THB 420 million to be spent towards the ESG project which accounts for around THB 20 million, and that is for the ESG in the manufacturing operations and another THB 400 million bar is expected to be spent towards adding new dosage forms, warehouse and land upgradation in the newly acquired Indonesian manufacturing plant. Moving forward towards second quarter '24 performance. Overall revenue in 2Q '24 was at THB 3.95 billion, flat on a Y-o-Y basis. Mega We care Pharma and OTC business continued to show healthy growth in the second quarter as well. Maxxcare Pharma business continued to show growth, while Maxxcare Consumer business revenue in Myanmar declined as we had guided earlier. Brands revenue in 2Q '24 was THB 2.14 billion, reflecting a growth of 6% on Y-o-Y basis. Both Mega We care Pharma and OTC business continued to show healthy growth, while the Nutraceutical business, which was sluggish in first quarter '24 has improved in 2Q '24 and was flat on a Y-o-Y basis. Distribution business revenue in 2Q '24 declined by 10.7% on an adjusted basis. Maxxcare Pharma business continues to show growth as guided and the decline in Myanmar revenue is fully attributable to the decline of consumer business in Myanmar, which has very limited impact on profitability. And this is all as we had guided earlier. Overall gross profits in 2Q '24 improved to 48.5% of operating revenue as compared to 45.7%. This is mainly due to change in the segmental mix. Branded business gross margins remained stable at a healthy level of 66% in 2Q '24, which is quite similar to 2Q '23 gross margins of 65.8%. Distribution business gross margins improved to 24.9% on an adjusted basis in 2Q '24 as against 23.1% in FY '23. SG&A expenses in 2Q '24 were higher due to planned spending, representing 28.8% of the operating revenue as compared to 26% of revenue in 2023. We expect SG&A expenses to normalize by the year-end. Reported net profits in 2Q '24 were THB 513 million as against THB 531 million in Q2 '23, which is flat on a Y-o-Y basis. Improved gross margins were offset by increased planned SG&A, which resulted in flatness in reported net profits. Adjusted net profits in 2Q '24 were THB 557 million, as against THB 641 million in 2Q '23. Adjusted net profits declined by 13.2% Y-o-Y, mainly due to the impact of ForEx loss in Nigeria. We'll do depreciation of Nigerian Naira against the U.S. dollar in 2Q '23. May I now request our CEO, Mr. Vivek Dhawan to share his remarks on the financial.

Thank you, Francis. [Foreign Language] I'll speak in English, maybe there are a lot of people who are also from English speaking parts of the world. As you have heard from Francis, we have had a healthy first half as far as our brands are concerned. And I think we've been directing you clearly that the distribution business in Myanmar, which is the largest part of our business is affected by the conditions in Myanmar, which are beyond our control and largely the consumer side, Pharma still remains stable. We had a reasonably good first half on the Pharma side and the second half also, let's see how things are. We are hoping that will continue. So the Pharma side is okay and the great thing is that the Branded business is doing well. We have also, in the past, guided you that, you saw an extreme peak in '22 with the COVID products and things then -- and they really grew phenomenally high in terms of value. But when we look at the COVID range of products and compare '19 and now, we are still better than '19. So it's given a bump to those products and many products that were COVID and not in our list now are major contributors today. So that's the good side. The sad side is not the same as COVID. But having said that, all the other products, which are non-COVID, even compared to '22, '23 are growing. So the branded business is looking good in most places. And we are hoping to see as we have promised 5% in that range in this year. And we believe we should get there with the Branded business in the year '24. And with the pipeline that we have, the drug, there are about 170 products as I see here, which are new product registered, applied for under development. In some form or the other, they will come and get approvals over the next 1, 2 years. So there's a whole category of drugs, pure pharmaceutical, which are -- some are in government, some are privately sold, some are unique formulations and we are doing a lot of work in that area. So the Pharma business will definitely become bigger. It's already grown and become a sizable part. I think now it's nearly 40%, approximately around 45%. So OTC, if we put, we also say -- because we put it in the consumer health, so 40-60 and about 58% of it is consumer health, which is part of the consumer health tower. But by law in many countries, it's a medicine, but we treat them as consumer health. So 60-40 already from '20, and we have gone up over the last 4, 5 years to nearly 40%. And it's not that the consumer health is not growing, consumer health is also growing reasonably well. And we have a lot of products in pipeline, and we see growth opportunities, because we have just got a few registrations in Indonesia, Malaysia. So some new products are just getting launched in the consumer health area in these markets as well. So that's a good sign. At the same time, as I said, the Pharma business is also looking up in most markets, new ones. Old ones as well and new ones that are coming off patent. So we have a large pipeline. At the same time, our plan in Indonesia, the plant is now under construction already being built. We have a deadline of quarter 3, 2025 to have it ready and hopefully operational. So they will be -- but at the same time, because we have the old plant ready, the tech transfer, the development work is all going on. We have, over the last 2 years, tripled the capacity production output from the same plant. Already, we are producing at 3x that we were doing 2 years ago. So all that is happening in Indonesia, volume is going up, new products getting registered, new tech transfers being done, over-the-counter products being launched soon. So with that, our combined strategy, we feel very hopeful as per plan to, what was that, 2030, to reach what, $40 million, $50 million. So in next 5 years, we are planning to get to $50 million. I think '27, '28, we are looking at $30 million, that will be original, because when we started at '23, so 5-year, $30 million plan. So I think we are working towards that. We are edging toward that $12 million this year and hopefully moving in that direction -- right direction. So that's Indonesia for you. Vietnam, as we promised to you, we have not yet. We are in the process of finalizing the land deal as approved by the Board. Hopefully, it should be done within this month -- coming month. And then it's a regular process of approval then all it'll take before we start building the plant, that's Vietnam. Other than that, I mean, there's nothing more than that. I think everything else is as normal, but we are pressing the buttons and we are looking at growth. You know that we did open in Congo this year in Africa, which we just started, but all -- these are again smaller market, they are not huge. Population is huge, but the markets will take time. We are registering product. We also opened Zimbabwe. So most of the sub-Saharan East Africa right from Ethiopia down to Zimbabwe, we are covering most of that, very few are left, I think. On the other side, we have only done Nigeria and Ghana, but we are evaluating. We are also looking at Angola and some other markets. But this is work-in-progress. They won't have a major impact on business, but East and West Africa where our focus is, we are working on that. And rest is all Southeast Asia. So that remains our focus with a bigger pipeline and a focus on consumer health and pharma. These 2 remain the main focus areas. The rest is supportive and the Food business we had is merged into the Mega Consumer Health division now. So the baby range and all are being sold for children, growing children, et cetera, as part of another offering under the Mega range. Wellness centers continues to support, educate, provide services to our clients and pharmacists and doctors and consumers to help them live a healthy life, lifestyle change management. That's not a profit-oriented business, that's providing support, knowledge, education as a part of our service to the community. And we continue to do that. That's also going with our We care platform also in most countries, we have launched some of them for baby, mother and child, for diabetes in Myanmar and other countries also. We are looking to provide help to the doctors in the countries where they can manage their patients better or patients can manage their health conditions better with health advice support as well as tracking their own health. So these are not being monetized, but they are part of our brand-building exercise of Mega We care to become a love mark, a brand that people associate with and a brand that actually cares for their wellness. So that's the part of our journey, but it's part of our promise helping people to stay healthy as long as they live and we continue to do that. So from my side, I think that is probably all. Now I would now open up the floor for questions, and I believe there are some that's coming on the chat. And if some things are -- you want to ask, please like always just identify yourself, let us know who you are, where are you from and ask the question, and we are all here to answer your questions, please. We are open for questions now. Thank you so much. Thank you very much. Any questions? I have everybody there. I see a lot of you are there. If you have any questions, please ask.

Yes, Lynn, please go ahead.

Maybe I'll just get the ball rolling a bit. I know you mentioned on sales quantum, the growth. It was partly due to a high base last year. But could you comment on maybe if we exclude any sort of COVID-related products, how growth has been? And what kind of, I guess, a bit of a guidance, but what kind of stable sales growth do you expect over the next year?

I think 5% is what we are saying. And next year also, we are as per our plans, it will be a little bit higher because a lot of products are getting launched. So I'm hoping -- our hope is that next year it will be a little bit more higher than this 5%, 6% this year. And 5%, 6% is after COVID because COVID-products are not growing. So COVID if you look at, only there is decline. So if you look at non-COVID, it will be much higher. The growth rate will be probably in the range of 7%, 8%.

Yes. Even pharma...

Pharma is even much higher because it's coming at a smaller 40% base. So Pharma is higher and non-COVID will be higher also, right, because COVID was 46%, 48% for 2 years and would come down and back to the -- it's still higher than the '19 number, but it's come down. So that means we are growing the other products at much faster rate. To be able to over -- total base, we are still showing, what did we show, 4.5%.

Probably we grew by 6%?

[indiscernible].

First half is around 2.5%.

2.5%. The first half is 2.5%. They were all carry forwards also, the second quarter is what, 6%. So we are hoping that on an average to the year this year, we could probably end up at 5-plus -- around 5% to 6% through Branded business only, not the Distribution build. But next year can be a little bit higher. It should be -- will be in the 6%,7%, 8% range. But we have to -- I mean, we're doing our LDs and we are doing our budgets again by October, November, we can give you a better idea. But that's the plan actually. If you look at the plan, it's probably in that range. But more detailed meaning internal evaluation had been what we plan can be provided in the November call might be.

Yes. And just quickly follow up on that. Do you think something about the 10%, is that a bit too difficult to achieve given your scale? And does this 6%, 7%, do you think it represents a slowdown versus historical trends?

I think -- see, if you really get into the sales of Branded business, Nigeria has declined significantly, because there has been a huge increase in prices because of the devaluation in the currency. So the huge depreciate -- I mean, huge decline in Nigeria, plus the decline that's happening in the COVID-products, if you negate all that, I think we are very close to 8%, 9% growth in Branded business, which gives us a lot of confidence going ahead, because this year, we are planning to launch around 40 products. Now that 40 products -- because of COVID, we couldn't launch many products in the last 2, 3 years. So that's where we had a gap. Now with all these new products going in, they will all add to 2%, 3% of growth. So with all this in place, I think going ahead, we probably feel more confident that our Branded business should be more stable and growing in a very stable pace, provided there are no more COVIDs and stuff like that. So I hope that gives you a better perspective on the branded side. On the distribution side, unfortunately, as we had guided, the Consumer side of the business has declined almost 50%. But if you look at the Pharma side of the business, it's still stable. So this is exactly what we had guided. Yes, we have said that Pharma business won't disappear, but Consumer business will. But despite the fact that Consumer business has declined by 50%, our bottom line has held. Again, we had guided that the impact on the bottom line of the consumer business is very limited. So all what we had actually kind of guided you is going to plan. That's what we could say as of now.

Also Nigeria, in the currency is more stable after the -- that means that negativity will go away and then now we will start to see unit growth. We are already seeing in some unit changes and growth happening, local terms and units. So we'll see some unit growth also coming back. So that is one on Nigeria, which the big currency change, 3x or something like twice. So what is looking -- it's coming back, yes, I think there's something that's good. So with all that happening, maybe if we believe, if we take that out, then we are probably growing at 8%, 9% and with more products that opportunity, the chance of that 8% to 10% happening next year is higher. That's where we are coming from. We're not saying that we do magic. But it is the logic behind it that -- now that COVID being out and then the new products coming in and the old ones also growing. Some are going slower, but the other new ones are growing faster. If we put that together, we can see we have a very good chance to grow that 8% to 10% range next year.

We hear some noise in the background. Could you please mute yourself?

Yes, may I have 2 questions for you. I just want to know about business in Myanmar. I mean, do you expect any further decline in consumer product sales like from the level you have like [shared] in the second quarter?

I can't -- see [Burma] predictions are as good as you and me. We both live here, we have people on the ground. Conditions are not getting better. Pharma can remain stable. That's what we really think about. We don't very much make -- want to make predictions on consumer. We don't want to be forecasting anything, but we think that if the Pharma remains, our bottom line can remain intact. And let's see what happens in the next 6 months in Myanmar. This is not political discussions, I won't talk about it at all, but if something changes in Myanmar, things might turn around, but at the moment, it is focusing on Pharma for Mega. We are focused on Pharma, get products in, make it available, sell where there is demand for product because we are in that country with those products for more than 25, 30 years and our products are well established. So we think that if we can do that, we'll be able to at least achieve, if not the revenue, but the bottom line goals and be able to continue overall growth rates as we are talking about, including that situation in Myanmar, unless something drastically changes there.

Okay. And on other things, could you please like elaborate a little bit more on what is your net spending that you have -- that it is mentioned on the MD&A that has caused higher SG&A expenses?

Yes. But what happens is, you also know in business. We don't -- quarterly, we don't equate and say equal spending. So I think in the beginning of this year, we had a plan and we have invested money from a marketing perspective on advertising above the line this year. And that's part of the plan, to build a Mega We care brand. In the country in Thailand, you must have seen us on TV, on billboards, et cetera. So this is an additional spend which doesn't show automatically growth in bottom line, immediately, turnover top line growing, multiplying at that rate. But it will taper down in the next half, right? So over the end of the year, it will probably become average out. So you will see some uptick here now, but you will probably not see it in the fourth quarter. So that's how it works. And also, we are now -- over the next 5 years, we'll have a new strategic plan. As our brand becomes bigger and we want to multiply, we'll be spending more money on ATL, less somewhere else. So the mix will change, and you will have some quarters having higher because you don't spend it all through the time, sometimes there's holiday, no point spending during this season, nobody is there, you don't spend money in July, August, people don't watch. They're on school holidays. In some countries during EID days, there is no spending. In some countries, there is no spending during Chinese New Year and Songkran. So I think the timing varies when you start going on ATL, you select periods to put money on TV and all that. But overall, you will probably end up in that 27%, 28%, 27.2% range. I think that's what we've been hovering around for a long time, plus/minus should not be very far very unless one year, if we decide that we are going aggressively to build our brand for 1 or 2 years, then we'll inform you that our plan this year is to spend 2 years to go above the line because a lot of our business is not above the line, right? So that's the situation at the moment.

Is it typical that your second half expense -- SG&A expenses like typically lower and...

Yes, the sales are higher and sales related, most of it is to do with sales related. Its promotion expense based on sell-in. So it's related to sales, it's not ATL base. It's not unrelated. When you go on TV, sometimes we are proportionally much higher on the sales. But we also have the -- second half is mostly promotion, sales related. When you sell, you have commission, you have travel, you have all the other things that we pay. So it's to do with the sale, units sold, value sold. So you will find that it's quite standard, it's lower. And sales also is higher. Average if you, I don't know, historically, we are 55, 45, 52, 48, 50, 47, 53, something like that, right? Every year is -- generally, except one year or something, we were a bit more equal. And the COVID time it was more because that time COVID went up in December or February, the NBR sales went up a lot, people bought a lot. But generally, if you look at history, 10 years and we take out the COVID, you will find 45, 46, 47. So you will have a higher sales -- I mean everybody had, it's not us. It's also designed that you close the books and people buy whatever is the agreed quantities to meet their targets, et cetera. So 3%, 5% is [indiscernible] not very much, 2%, 3% is [indiscernible] towards the end. Also season, also more holidays and Chinese New Year and all this in April, Thai New Year, end-of-the-year less holidays. So all these things makes a difference.

This is Peter [Holme] from Sparks. Can you hear me? Yes. Is it clear?

Yes, Peter.

Yes. Yes. I'm just wondering for our Branded business. Is there any change between the pharma product mix versus the nutritional product mix? We are seeing the pharma product mix now increasing.

Yes, you're right. You're right. I think we just mentioned that pharma is 40% and is growing at a faster rate. It's got a much higher growth rate in the first half compared to the consumer health. In the consumer health we have both. We have supplements, vitamins, herbals, nutritional, medical nutrition, probiotics, plus we have over-the-counter as depend on the definition, but we call it self-medication, like Gofen, Loreze, GOGAZ, all the -- they are registered drugs and they are for an indication, but they can be self-medicated. So that had a slower growth. But excluding COVID product, that's also growing 7%, 8%. But Pharma is definitely growing faster in the first-half. And also going forward, we see because the number of products coming out in Pharma are much larger in the pipeline and the market size also is much bigger in the countries we operate, so Pharma will grow probably at a faster, and how the ratio will change, we'll find out. But it could be in 1, 2 years’ time; 2, 3 years' time, it could be 50-50. It's possible and very likely, because the number of products they are coming up and growing, and this is also growing. But in spite of that, it may end up at 50-50 in 2, 3 years' time. We haven't looked at those numbers, but I think we'll get there. We haven't seen -- we're going to see our target and plan, but I think we'll probably get there.

Indonesia Pharma will also be there, sir?

Indonesia also, yes.

I see. Understood. And what's the GP margin difference between the pharma versus the consumer health?

What is that, sorry? Gross profit margins?

I mean, it's actually very similar over a period of time. See, I think one other thing that you probably want to also look at is, we have always said that if our growth in Branded business is 5%, your bottom line can grow at a faster pace. Now if you look at this first half as well, if our SG&A was within that 26.5% mark, our bottom line on a reported basis would have still grown at 10% lower, despite the fact that our Branded business has only grown at 3%. Just to reinforce our guidance that we have always guiding you, Branded business is very critical. And if we can grow the Branded business, the company will steadily move on the track that we expect it to move. Thank you.

I see. Understood. And maybe my last question is on the Maxxcare, the distribution side. Because we are seeing -- actually, our GP margin has improved quite a lot. So yes, can you maybe elaborate more about like why is that so?

Abraham, I think you can elaborate.

I mean, it's basically because the Branded business has grown at a faster pace. The gross margin of Branded business is 65%, while distribution is only 25%. So it's purely because of the growth in Branded business is faster than the distribution base.

He's talking about Maxxcare.

Sorry, sorry. Maxxcare business is basically because -- the Consumer business is less contributing. So the decline is happening in the Consumer business. So the gross margins of Pharma business is higher. So that's why the gross margin of distribution business is looking up on an overall basis.

I see. So that's also the mix for the pharma. I guess, we are like pharma makes more. So that's why on the - okay, yes, understood. Yes.

[Foreign Language] you can please ask your question.

I have couple of questions. [Foreign Language]. I have couple of questions. First, it's about on marketing expenses. I didn't -- actually, I'm sorry, I didn't hear well. You said that the margin expenses is around 2% to 3% of sales. Is this budget equal to the historical? I mean, during the pre-COVID level for this level? And I'm just wondering how can you review your efficiency on the marketing expenses translating to your sales? I mean, your top line? It would be great if you elaborate on these expenses and how can you review this or what is the result for what you pay?

I don't know we said 2%, 3%. SG&A is 28%, right?

28.7%.

28.7% is our SG&A for our business, that includes everything, it's also Maxxcare and other things. And we don't declare separately how much money we spend on ATL or BTL. One is above the line and one is below the line. Our Branded business -- not all 28% is not Branded business. We also have other things, delivery expenses, other administrative expenses. But marketing expenses in that is a part of that SG&A, right? And how efficient we are -- I'm sorry, I don't know how I can explain this to you, but it shows in our results. We are delivering a profit every year on our Branded business whatever at rate. And if you compare industry peers, we are doing equally or a better job compared to. If you look at -- there are many Kalbe, Blackmores, other people, and you can see how is our outcome versus -- Maxxcare is not a good Branded business, take Maxxcare out because it's a margin business. But if you take the Branded business and see our gross profit and our profitability, I think we are equally or better than our peers in marketing using money and making a profit on our business. So that's all I can say. How do we decide where to spend? It's a branded strategy. Some we go off and very few we go out of the line, most of it we go below the line. And a lot of -- some of it medical products that cannot be advertised anywhere, they go to their doctor, they go to the hospital, they do conferences. So there are different types of spend on each type of product. And the spend is decided by the product category and the stage, the life of the product, life cycle, where they are new, old, existing. So I think it's a long thing to discuss marketing here, but you should compare as we clear in our category in the area and how well we are delivering as a company on return, on investment, and the money we are spending to create and grow the brand. So sometimes we are in growth rate, you will have to spend some more money, right? So that's all I can say.

So just to add to that, if you look at our history, you can see that this used to be -- SG&A used to be at 33%, 34%. It has continuously improved to what it is now, which is around 28% -- 27.5%. So that is if you want to have a measure of efficiency, you can look at that. No, just to add to Vivek's point, do you have [indiscernible] Manoj?

Yes. On the Branded business front after deducting our SG&A cost, our Branded business yields EBITDA of 28%. Historically, also, if you see, we have been at that level. EBITDA of 28%.

I think the best way is to compare peers, if you want. That's called benchmarking, but we don't do it. We are in a different category. We have a generic truck business that we have a consumer and branded business. So then sometimes you want to compare Blackmore, they only have vitamin supplements. The other companies are MNCs who have few products. So you have to compare some peers who have similar categories and then see how well we perform.

Okay. I understand. So is it fair to say that we should see growth on the branded sales after you spend on marketing in the second quarter? I mean, in the second half outlook or probably next year, you could see some growth for the Branded?

I think we are already saying that we are growing the Branded business in the range of 8% if we exclude the COVID product. If you heard us a while ago, we explained, take out the COVID which is anyway declined from its peak. In spite of that decline, we made up about, I think last time we said about 16% or 18% of our business is COVID product. That's decline. So we have a reduction of 6%, 7% there. But we are still growing the Branded business by 6%. So that means the Pharma business is growing and the Branded business, which is the consumer health is also growing, excluding COVID products. So all our business is growing. So we are hoping and we believe based on this logic because we have a lot of products in pipeline being registered, that we have a good chance to see 2025 in a higher than the 5%, 6% we are saying this year to go up to maybe in the range of 8% or more next year. That is what we are saying. But we will come back with more details in November when we talk to you closer to date when we have done our budget. But looking at the facts today, looking at today's growth of both Pharma business and Consumer business, excluding COVID, we are already doing that. We're already doing it. So there's a very good likelihood it will happen. That we will do with spending money. Spending money sometime we do to build brand, build credibility, build a lot of things. So it's not an automatic, you spend $1, you get so much return. They are not all marketing money, you spend some time on advertising, it generates immediate results. And anyway, you will see by the end of the year, maybe our SG&A will drop from the 28-point-something to 27.2% or 27.4% or 27.5% in the normal range like last year.

On the -- regarding 8% to 10% growth of the branded product sales, what is the contribution from new product launch?

New product launch is always very small. It's 2%, 3%. We don't have very large -- new product when they get launched, they get timely registered, but 2%, 1% coming out of these 20 new products is also large overall. If we are talking about 8% growth, 1%, 2% come from new -- already 1% or 2% coming from new products. And when we have many and some are already launched this year, so that will show results next year.

So how many products you plan to launch for 1.5 years?

Many, many. I think if you read the SG&A, there are 38 products already planned to be launched, right? There are...

Last 3 years, we have launched 30 products.

Last 2 years, around 30 already launched. And we have 117 in pipeline, so 38 unique products in year '24 and 67 new products, unique products were launched from '22 to '24, last 2 years. 67 has been launched in between these 3 years. So you will see some result in '25 of the 67 products launched already and then some new ones will be launched again in '25 which you will give you the detail. I don't have the '25 detail of launch plan yet, but 67 has been launched from '22, '23, '24, 3 years. From '22 to '24, 67.

Just more on the SG&A line again. I just want to -- when you say the SG&A spend for the year will be 27%. Is that 27% in the second half or the full average for the full year?

It is still in reviews, correction will happen, 27-plus something. It won't be exactly 27%. 1% plus/minus is in the range generally.

Sorry, that's for the full year, the average will be about -- around, let's say, 27%?

Yes.

Got you. Perfect. And then just on sort of, I suppose, the operational leverage of this business. Obviously, you talk about the Mega We care business, the Branded business is growing 6% this year and hopefully 8% to 10% plus next year. Obviously, we're trying to get an idea of how much of it is -- how much you spend on marketing and how much is G&A? And I just want to understand the operational leverage in the business. Is the marketing spend likely as a percentage of sales, did they remain static? I don't know what the number is. But I want to assume, as you're launching more products, that number won't really fall and it's the G&A part as a percentage of sales that is coming down, that's giving you the operational leverage. Can you just give us a bit more color on that?

Generally, G&A is the expense of manpower and all this, which doesn't grow at the same exponential rate as sales growth. Though we do add in new markets people, we are a growing company in new markets. So we don't fold our hands and tighten our hands for growth. Our objective in the next 5 years will be to grow and try and double this business. That's what we are looking at. We want to double our branded business. So we're going to invest money to grow it, and look at what the bottom line is of the outcome. So this will be done. And I think for that, we'll have to spend on people, all kinds of things that we are doing. But having said that, G&A, you are right, generally as a percentage reduces the growth because we don't need as many. Once you have the base office, manpower, regular med reps, sales rep, it doesn't multiply at the same rate. What goes up, that is marketing expense. Selling is directly related. You have a promotion, you have a plan, you have a display. So you -- as you open more outlets, it's related to sales, you put in there and then you have schemes, annual targets and you have -- because if your sales, then only you get it. So one is sales related. If the sales goes up, you get more. But advertising in some cases, because as we become bigger in certain brands, and we have come to a point where we can start advertising its working, then we have an ATL expense which is sometimes, not exactly cannot be related to sale. You won't get 1 to 1 result. You put $100, you will get result today. That's where the challenge happens. But that's for a very small part of our business. That's why we don't see that changing, 28 become 32 because if we don't do it, we can't do advertising for 40% of our business anyway, which is drug, right? And the other 60% also, there's another 40%, you can't advertise because you're not allowed to say anything, FD doesn't allow, this doesn't allow, there's a lot of restriction. I mean, we can't advertise Gofen in this country. So there's no advertising for ibuprofen here. So the law restricts you. So you have very limited areas where you put ATL money. So when I say that even if it goes up in one quarter or one year, you plan it and then it will not affect the SG&A or the selling expense by more than 1%, 2%, I think, overall. But that's what variation you're talking about. It doesn't work, you spend money and see it in sale, they'll be a 1%, 2%, but you taper that down over the whole year. Again, it flattens out to 27.2%, 27.5%, 27.6% not very far. So we do generally, by design, by plan or whatever you call it, by the type of products we have, we end up with that range. And if you look at it consistently for 10 years, whatever we have done is customer ended up there. When you were smaller or grown, the percentage hasn't moved very far, though the sales have grown. If you look at...

Sorry, would you ever consider splitting out for disclosure purposes, how much you're selling is and how much your G&A is as a percentage of sales? How much do you separate it out?

It's very difficult at the moment because a lot of it -- also, you have to understand our business is people. Sales is also related to salespeople, services, training, expenses, commission. So it's very hard to separate it out, right? We are paying them also as med reps or sales reps and doing a lot of activities on the ground. So there's so many heads, ATL, BTL below the line, there are 100 items. Now to separate them out is a lot of -- and 33 countries to bring that out, it's a very difficult job at the bottom. But maybe one day, I don't know today, it looks very cumbersome, but the idea we can definitely discuss if you want to talk about it. Okay. I think we are close to time now, it's 3:49. And if there are no other questions, we would like to thank all of you for attending the call and all your questions. And if you still have any more queries, I'm sure [indiscernible] for our Thai explanation, she is very well aware. She can give you all the answers in Thai [Foreign Language]. We have Francis, we have Manoj, Thomas, we are all here at your service to give you facts as much as we can, honestly. And we are doing our best. We promise you to grow the business, and we are hoping to continue this journey to make it stable, stronger as the years go by. Inspite of all the difficulties around the world, I think we are still hanging in there and doing a job, making it work, building brands in difficult markets where we believe over the years, we can have a very strong, stable business. So once again, thank you so much. I look forward to talking to you again next quarter. Thank you.