Orchid Pharma Limited (ORCHPHARMA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Orchid Pharma Limited Q3 FY '24 Investor Conference Call hosted by Systematix Institutional Equities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Manchanda from Systematix Institutional Equities. Thank you. And over to you, sir.

Thank you, Sagar. Good evening, everyone. On behalf of Systematix Institutional Equities, I welcome you to the Q3 FY '24 Earnings Call of Orchid Pharma. We thank the Orchid Pharma management for giving us an opportunity to host the call. Today, we have with us the senior management of Orchid represented by Mr. Manish Dhanuka, Managing Director; Mr. Mridul Dhanuka, whole-time Director; and Mr. Sunil Kumar Gupta, Chief Financial Officer. I now hand over the call to the company management for opening remarks. Over to you, sir.

Thank you. Good evening, ladies and gentlemen. I'm Manish Dhanuka, the Managing Director of the company. It gives me great pleasure to welcome you all to this call on the results of our company for the third quarter of fiscal year '24. Let me begin by sharing some of the key highlights of our financial performance during the Q3 of '24. In this quarter, our sales have shown remarkable growth, increasing from INR 159.8 crores to INR 220 crores. Further, over the span of 9 months, we have witnessed a substantial rise from INR 456 crores to INR 602 crores on a year-on-year basis. Our EBITDA has followed a similar positive trajectory, increasing from INR 22.6 crores to INR 43.3 crores in Q3, and from INR 61.6 crores to INR 99.3 crores in the cumulative 9 months when compared to the same period last year. Additionally, our profit after tax has seen a commendable increase, moving from INR 6.7 crores to INR 30.5 crores in Q3, and from a negative of INR 10.7 crores to INR 61.6 crores in the 9-month period over the corresponding period of the previous fiscal year. I'm particularly proud to highlight our continued focus on efficiency and productivity. Despite the operationalization of an additional facility in the sterile area, which we discussed during the last call, we have managed to keep our expenses ratio in check. Specifically, our employee expenses have moved from 10.7% of sales over the 9 months period to 8.6% this year. Similarly, other expenses as a percentage of sales have gone down from 21.4% to 18.6% over the same period. This showcases our commitment to cost management and operational efficiency. It's worth mentioning that amidst these financial achievements, Orchid Pharma has received a very encouraging news from the regulatory authorities. Enmetazobactam has been recommended for approval by the European medicine agencies, and we anticipate receiving the U.S. FDA approval also within February. In terms of our ongoing projects, progress is underway for the 7ACA projects. We have started registering the land parcels in Jammu. We have commissioned the pilot plant in Chennai this month, and we are now embarking on the detailed engineering study as the basic engineering design nears completion. We have been discussing the subject of antimicrobial resistance. Antimicrobial resistance is one of the biggest issues we are facing in the health care industry at present. Our project of cefiderocol with Shionogi and GARDP is also in the line -- in the same line, which addresses the issue of antimicrobial resistance by providing access to that molecule. Continuing on the same line, we have assembled a team of experts who are devising a strategy to launch a new division coined as Orchid AMS or Orchid antimicrobial solutions. We hope to launch this division in next couple of quarters. This division will be a hospital sales division for the company. In conclusion, I'm optimistic about the future of Orchid Pharma Limited. Our robust financial performance, combined with positive regulatory developments and progress on key projects, instills confidence in our ability to continue this upward trajectory. I would like to express my gratitude to all our stakeholders, employees, investors and partners for their unwavering support. Together, we will navigate the challenges and capitalize on opportunities, ensuring the sustained success and growth for Orchid Pharma Limited. Thank you. We will take the questions now.

[Operator Instructions] The first question is from the line of Jainil Shah from JM Financial.

Congratulations on a good set of numbers. My question is, what is driving our growth in this particular quarter? Is it domestic? Is it exports? And also what has driven our gross margin improvement?

So this is in continuation with our strategy in the last 3 years, which is about developing new customers and new markets. I would say the growth is overall in all the different territories and it would be difficult to point out any single territory, as we've always said, quarter-to-quarter comparison of territories is not very meaningful. So I think this is the result of our efforts to develop new customers and also develop new products, a product that we had launched last year once it went off, patent Ceftazidime, Avibactam has also contributed to the sales.

On the gross margin question, Jainil, this is an effect of some low-priced inventory while the prices were increasing in the market. So it's a one-off thing. Our long-term guidance would remain as 40% plus/minus 2%, as we have been always saying.

Sure. And with sterile block coming in last quarter. So how is that capacity filling up? And are we on track to operationalize our overall capacity this quarter?

So the sterile block was commissioned just in November. And in last quarter, there was minimum capacity utilization. This quarter, roughly half -- we plan to reach up the half utilization, and it will take another 6 months to a year to go to 100% utilization. And we stabilize more products and file them. For the overall capacity, the project is online and should adapt as per our expectation by end of H1 next year.

The next question is from the line of [ Anand Jain ] from investor.

Congratulations on a good set of numbers, sir. My first question is, since Dhanuka -- hello, am I audible?

Yes, we can hear.

Can you give some flavor on how Dhanuka Laboratories have done this quarter? Because I think the merger is pretty much done for the company, and we don't have any information shared on that. That's the first question I have. Second question that I have is with cefiderocol, what are the time lines for cefiderocol? When can we expect the launch of cefiderocol in India and the remaining 135 countries? And, b, can this partnership with Shionogi be expanded? Or do we have plans to onboard more such partners? That would be my second question. The third question that I have is in terms of our current capacities, if you could give us some idea as to what are our -- what could be the max revenue from our current capacities? What could be the revenue potential after we have, in some ways, kind of -- current capacities of both Dhanuka and Dhanuka Labs and this? And what could be the capacities after debottlenecking? Because I would assume that if we would be -- there would be some debottlenecking opportunities without doing much of CapEx, if you can just help me with this.

That's a lot of questions, Anand. Thanks. So let me start reverse in terms of capacity. So it's difficult to put a number or a revenue potential on the capacities. As we have explained earlier, Orchid makes almost 40 products and the capacities are fungible. Having said that, we have talked about a 20% to 25% CAGR basis, if you look back 3 years from today, how the business has been growing. And for another couple of years, we don't see any more investment period. So that could be the rough math you could do to say that how much we can do without any capacity additions. On cefiderocol, the product is not yet registered in India, and we have to figure out how the regulatory pathway for that will work before the product can be introduced. At the same time, this is a very complicated product. And the only vial lyophilization cyclosporine to be made in the world today. So we have to set up dedicated facilities, which will also take time. So our estimate is second half of '26 when we can launch this product.

And there was one more question that I asked in terms of like are you looking at more partnerships of this kind with innovators? Are there -- is there anything in pipeline?

So unfortunately, pipeline discussions are confidential and cannot be shared. But we, of course, welcome partnerships. The only point is that in terms of Cephalosporins, there are very few molecules which are still under patent.

Agree with that. And Dhanuka revenues, if you could give some idea there, Dhanuka Labs?

Dhanuka has also done well this year, that the growth is around 20% over there, so they have done about INR 400 crores in 9 months.

INR 400 crore. Because they did INR 275 crores in the first half is what I remember. So they have done another INR 125 crores in Q2?

Right.

[Operator Instructions] The next question is from the line of Rupesh Tatiya from Intelsense Capital.

Hello, sir. Can you hear me? Hello?

Yes.

Yes. Sir, one clarification. This Dhanuka INR 400 crores revenue, would you be able to share EBITDA margin that they've done in 9 months?

Unlisted company, so we don't track that on a quarter-to-quarter basis.

But then maybe you can give a broad range, what would it be?

I think it could be in line with what it has always been. Of course, with the growth, coming days, maybe slightly improvement should be there.

Okay. Okay, sir. Another -- my first question, sir, is this 7ACA CapEx that you're trying to do in Jammu, I read one of the brokerage reports and there are a lot of incentives, GST refunds, PLI benefit, interest subvention, electricity benefits. So can you just list down -- I mean, I haven't heard it from you in this forum. So can you just list down all the incentives that you are looking at?

Actually, you listed down all that for us. So yes, there is a GST benefit under the scheme, and the PLI benefit is also there, plus the interest subvention is around 6% over there. Electricity prices, I think, as such are lower in Jammu and Kashmir. There's no specific benefit, but the prices are lower.

So would it be -- and I think in the past, you have said that at least we'll make 10% operating margin since 7ACA in one of the older calls. So would it be fair to say that we'll get our money back in 7ACA in 3 years. Would that be a fair statement to make once we're operational and running at optimum capacity?

If I remember correctly, we said that our technology provider and some of the people that we talk to, they have said that it was a 10% EBITDA business when they were running at full capacity. And we hope that the benefits would be over and above that. I don't have the exact numbers what could be the fair estimates.

Okay. Okay, sir. And then my another question is that we have talked about launching some of the new products, 2 of which, I think, you have pointed out in your presentation. One is Ceftaroline and another one is Cefovecin. So if you can talk where are we in terms of DMS filing, validation batches, some update if you can give?

Yes. So we've talked about the products in the last presentation is Ceftibuten, Avibactam and Ceftaroline. So we are on track with respect to the filing of the DMF for Ceftibuten, Avibactam has already been filed and the ANDA should be filed shortly. And Ceftaroline is planned to be targeted towards the end of this year. So we are on track with that as well.

Okay. And how about Cefovecin, sir?

Cefovecin, we have never talked about a target, that's an under development product. So we are talking to several companies for a partnership on that.

It's a veterinary product. So we have the product ready in the laboratory, but we are looking for a partner. And once we have the partner, we can take the validation batches any day. We're discussing some commercial negotiations with people who can market it in the U.S. market, which is the largest. For other market sampling and others, things are in progress.

Okay. Okay. I see, sir. And other, sir, with respect to Enmetazobactam, can you give some time line about India launch? And what would be peak revenue potential in 2, 3 years in Enmetazobactam?

So our file is moving with the DCGI, and we are answering their queries. As people who are tracking the pharmaceutical business, the DCGI has some very, very stringent. And so we are answering their queries. And we have requested for a waiver as well considering the problem of antimicrobial resistance, and this product addresses that issue to a large extent. So we have requested for a waiver of the chemical trial. If we get that, then should be possible in 6 to 8 months' time, otherwise, we are looking at maybe first or second -- first quarter of the next financial year.

Okay. And what would be potential size, sir? I mean, any...

Injectable antibiotic size is about INR 7,000 crores. Now depending on the price elasticity, it could take between 3% to 5% share in 3 to 5 years.

Okay. Okay. That's good to know, sir. And another question, sir, is what would be our export domestic slate for this quarter? And is it fair to assume that domestic business is a higher margin business than company average? Is that -- because generally, I think domestic, we have newer products and things like that, Avibactam is one. So is that a fair assumption to make?

So it would not be fair to generalize the margins specific to the region. It is -- it depends on the specific products and specific regions, like -- yes, Ceftibuten, Avibactam has yielded us good margins. We had almost a monopoly for the last 8 to 9 months. Plus, there are a lot of other products, which we have increased our sales in India because they were being imported from China in 2 products, we have completely stopped the imports from China. So that's where Orchid is developing the more complicated products, which, in fact, no other company in India, which manufactures -- [ sterile have ] manufactures. So those products have definitely yielded better margin in India, but you cannot generalize like that.

Okay. And maybe final question, sir, is -- can we assume that Ceftibuten, Avibactam will continue to grow at 15%, 20% in India for us, for a few years because it's a very new product and like that?

So I can't tell you about that because you see that the antimicrobial resistance, we would not advocate blatant use of the product. It's a very, very special product and probably a last resort until we can launch cefiderocol. So growth is not a criteria for us in India per se. But yes, for Orchid as such, we expect good growth from it because we have now seeded many export markets, and we expect to get good orders from oversea customers.

[Operator Instructions] The next question is from the line of Nihar Shah from Crown Capital.

I have 2 to 3 questions. First is on the U.S. revenue, which we were expecting to climb up. So what's the update on that? And how is the European market recovering?

So for U.S. customers, basically, we talked about it on the earlier call. We had a large U.S. order with a good revenue potential. But unfortunately, that site got a U.S. FDA warning letter in April of '23. So right now, we are back to square one for the U.S. market. And the European market is doing well for us, especially this quarter.

Okay. And do we have any updates on the backward integration for the 7ACA plan?

Yes. Like Mr. Manish Dhanuka talked about in his speech. So our land acquisition registry process has started. We are ready with the pilot plant and they're taking trial that is in the pilot plant. And for the commercial scale production, basic engineering stage is complete and the detailed engineering will start soon.

The most important thing for a fermentation-based product is the strain. So happy to announce that we have got the strain from our technology providers, and we've started the trials in our own pilot plant. So that's the key factor in fermentation and we've got that under control.

Okay, sir. And we said that H2 is generally better in case of revenue. So how are we seeing revenue growth for quarter-on-quarter basis in Q4 and, let's say, FY '25 as well?

Yes. So we have always talked about Orchid not to be looked, in fact as a quarter-on-quarter growth, always look at Orchid as cumulative number. So 9-month cumulative, and now when we talk on the next call, we will have the full financial year. And our guidance will always remain. When you look back up 2, 3 years from today, you should see a 20% to 25% CAGR. Year-on-year, quarter-on-quarter number [indiscernible].

Okay. And what about the EBITDA margin? Are we sticking to the gross margin guidance of 40% in the long term?

Yes, 40% plus/minus 2%, that's our long term guidance. And EBITDA margins should be like -- we have said, should be highly teens in the long term.

The next question is from the line of Aashita Jain from Nuvama Institutional Equities.

Congrats for a very good set of numbers. My first question is from Enmetazobactam. So what is the update on China -- launch in China? And could you also help us since the product is now approved in Europe and you're anticipating approval in U.S., how do you expect this product to ramp up?

Can you just repeat what you're saying? Could not understand?

Yes, I'll repeat that. Is this better?

Yes.

Okay. So my first question is on Enmetazobactam. So I just wanted to know update -- is there any update on the China launch? And also now since the product is now approved in Europe and you are anticipating approval in U.S., how do you expect this product to ramp up?

Yes. So on China, we don't have any news as of now. U.S. and Europe, we expect the sales to start in Q1 of next financial year. So the growth of a new product is typically exponential. So it should start slow, but percentage growth month-on-month, year-on-year would be very high for the first few years.

Understood. Just second question on the PLI thing. Just wanted to understand, have you received any extension from the government in terms of your plant commercialization and the PLI benefit?

No.

So we are having quarterly discussions with them. I don't think we need any extension from them as long as we file the quarterly report for that.

What will be first year of PLI benefit, if you can just clarify?

Sorry?

First year of PLI benefit, if you can just clarify?

No, I still did not understand, what clarification...

I mean the plant is ideally should start from FY '26. Is that the right understanding, in order to not lose out on the first year of PLI benefits?

I don't know, can somebody repeat? Aashita, sorry, your voice is either echoing, your speaking on speaker, I cannot understand what you're saying.

Okay. Is this better?

Yes, better I could understand, yes.

Okay. Okay. I'll try to repeat my question. Actually, I just wanted to understand because there were several delays in terms of a plant commercialization. So are we losing out on any first or second year of PLI benefit? Just wanted to check on that.

Okay. Now I got it. Right now -- so if you go by the strict sense of the scheme, it can be interpreted as that. At the same time, like Mr. Manish said, we are constantly in touch with the government and they do their quarterly reviews. And over there, we have, you can say, assurances that once we are commissioned, they will look at it. Like the earlier PLI plants of even Orchid has not yet commissioned, and that's the same discussion they are having with the other partners as well. But yes, strict sense on paper right now. If this commission as per our plan, we might lose out on those 2 years.

The next question is from the line of Anand Jain from investor.

One question from my side, sir. For cefiderocol, we will be needing a separate block. Is there a similar requirement for Enmetazobactam?

No, there is no specific requirement.

And in case of cefiderocol, is there a possibility for us for doing contract manufacturing for the innovator?

We are strictly bound by the contract, yes, but the possibility always exists. That's why we are setting up the plant, which would be capable of clearing U.S. and Europe or even Japan approvals. And if we are able to manufacture at a reasonable cost, we do expect some benefits from the innovator because they're already running short of the product.

Okay. The same thing for Enmetazobactam because I'm assuming that right now the sourcing for API for Enmetazobactam is from China. So once we have our facility ready -- our production ready, do you think that Enmetazobactam API sourcing could happen from our side?

Yes, there is a possibility once they start sourcing it commercially, there is a possibility.

That's nice to hear. Last question is you have repeated multiple times that the royalty, the sales royalty is 6% to 8% on Enmetazobactam sales. Does that stand for China as well?

Yes, it does. But the agreement sales, worldwide sales. So...

Like irrespective of the change of ownerships of the molecule, 6% to 8% of our royalty stands irrespective of the location of sales?

Right.

The next question is from the line of Rupesh Tatiya from Intelsense Capital.

One question is, sir, we were looking at reconfiguring our capacity in oral side to get rid of low-margin products, move that capacity to a higher-margin product. So can you maybe talk about that? Where are we on that update?

So that is a continuous process. I mean we keep doing that. We are developing products which are having higher margins than feeding with the samples to the customers for those products. That's a continuous process any API manufacturer follows.

So that's on the product development side. On the capacity side, that overall capacity we did see and talked about earlier, which should be completed by end of H1 next financial year.

And what -- I mean how do we measure this, sir? I mean, can we say that margins will go up...

Again, repeating the answer to an earlier question by somebody on the call. After this, we won't need any large CapEx for our general growth besides the projects that we've already announced, like cefiderocol and 7ACA.

Okay. But how about margins, sir? I mean can we assume that the margins will go up by 1, 2...

No. We are not guiding anything on increasing the margins. So they will remain at 40% plus/minus 2% on long-term base.

Even after the reconfiguration, sir?

Yes, yes. The reconfiguration is part of that.

Okay. Okay. I see, sir. And another thing, sir, is that Dhanuka also has an NPNC business. I mean if you know for 9 months, what contribution came from that business. And then after merger, I mean what are your thoughts on scaling up this business because this will be a good diversification probably a better margin business? So maybe if you can talk about that.

Right now, we are not ready to talk about that on this call, Rupesh. Also, unlisted company, sharing that data is difficult. So -- but right now, the focus of the company will be stabilizing the new projects that we have talked about. And if you look at the merged entity, where the turnover would be upwards of INR 1,000 crores that will have a very small contribution in the total sales, although that -- CAGR for that would be higher than Orchid's overall CAGR significantly. But still, that would not make much of dent if we change that by 5% or 10% here or there.

Okay. Okay. And can you provide an update on our hospital business, sir -- hospital vertical, we were looking at it, what -- I mean how is progress there? And can we expect some commercial revenue from this in FY '25?

Yes, FY '25 definitely. We hope we can launch it in first quarter, if not then definitely second quarter of next financial year. And we are devising strategy, which should be different from the current trends and we hope to do well there. And hopefully, the establishment of network will help us in selling both cefiderocol and cefepime/enmetazobactam.

[Operator Instructions] The next question is from the line of Nihar Shah from Crown Capital.

I missed the export and domestic revenue mix, sir, can you just state it again for me?

Yes. So domestic and export is normally between -- domestic is around 15% to 18% for Orchid. And again, these numbers we normally show annually because quarter-on-quarter, one shipment here or there could be INR 10 crores, INR 20 crores and can sway the numbers. So on annual basis, the number should be around 18%.

And are we aiming to increase the domestic market or this share should be good enough going ahead?

I think, at our CAGR, both domestic and export market should grow healthily.

Okay. And are we taking some steps to optimize our cost in order to increase our margins?

That is a continuous process any API company has to do. It's absolutely essential for us.

Yes. And as we talked about in our speech, if you look at our -- all our cost ratios with respect to sales have been improving, and that's where we believe our leverage strategy of leveraging the assets and higher cost base of Orchid comes into play. [ Efforts ] going to continuously work on improving the EBITDA margin for the company.

However, I'd just like to add that there are some businesses that we are now trying to develop, for example, the antimicrobial solutions. So we are assembling a team of people who would be working on the strategy. So maybe next 1 or 2 quarters, those expenses would be loaded without any revenue. Similarly, the new sterile block that we have commissioned, which has not yet come to the optimal utilization. So obviously, the cost increase, and the revenue increases maybe after 2 quarters. So that could -- that much of a lag on expenses would be there.

[Operator Instructions] The next question is from the line of Sanjay Kumar from ithoughtpms.

First on cefiderocol, what would be the number of patients that we can achieve for LMIC? And if I assume 2 weeks of treatment and 3 vials per day, so total 40 vials per patient is a reasonable assumption?

Yes. So per patient treatment is 60 vials because it's 3 times a day, but 2 grams, so 6 vials. So that means on an average of 7 to 14 days, if you take, that's an average of 10 days, so 60 vials per patients. And in terms of LMIC patients, you can count roughly, I think, 40% to 50% of the deaths which are happening due to AMR as reported by the Global Burden of Disease data, which is about 5 million people, 50% of those deaths reported are from LMIC, maybe even more. So the current projections that we are discussing with Shionogi and GARDP imagines that initial market out of the total 135 countries applied, the first wave of 14 countries should have roughly 70% to 80% share from India.

70% to 80% share from?

India.

Okay. So 5 million, 50% will be 2.5 million is the target market?

Yes. In terms of count, you can say that.

Okay. And per vial costs will be roughly, say, $10?

No, it's difficult to put a number to that. Current cost for per vial is roughly $200 in the U.S. market.

Until the process...

In the process development, annual costing is not done. It's difficult to comment.

Okay. And so GARDP lacks experience in marketing, will that impact our distribution, our sales in LMIC or will they appoint another entity to do that for them?

So there would be a partnership model. There would be offering commercial sublicensing like they've offered to Orchid here in India. If they -- let's say, the next country is Pakistan, so they will find a partner over there. So what GARDP has is basically access to the molecule. They have -- they are the licensee from Shionogi, they will further issue sublicense.

GARDP's charter does not talk about selling the product. They are not a profit for profit company. So they will never have a sales experience. Their idea is how do they marry the product to the market and facilitate that is easy access, so that it's affordable for low and middle income countries. That's their charter. So every country, they will have to go and find a partner.

Okay. And our agreement with them is public, and I was going through. It says, up to 25% PBT margins is allowed. So will it be 20%, or can it even be the full 25% PBT margins for us? Or is it too early, sir?

Yes, that's correct.

Yes. So the number is all decided. The costing will be decided once the process development is completed.

Second, on Enmetazobactam, in India, you said INR 7,000 crores market, we may get single-digit market share. And in a media interview, you had said cumulative sales globally for the next 10 years could be $2 billion. If you could share number of patients? Or how did you arrive at this $2 billion figures, that would be very helpful.

Sorry, on Enmetazobactam, you're talking about?

Yes, yes.

Yes. So actually, it's a very difficult exercise. We have used several secondary indicators who try and estimate some numbers. And for example, Piperacillin, Tazobactam when it was patented, was $1 billion product just for the U.S. market. Ceftazidime, Avibactam currently is a $500 million product group. So this $2 billion number is over 10 years, cumulative sales. So looking at some of these indicators, the price point, the need, requirement, we hired some experts, and we have come up with this estimate.

Okay. And finally, both your products, Enmetazobactam seems to be a narrow spectrum antibiotic, which covers only ESBL, extended-spectrum beta lactamase. And cefiderocol also seems to be in the sector against certain strains like New Delhi metallo beta-lactamase and few more also. So is there any threats from other drugs in the pipeline, say, sulbactam-durlobactam, or WCK 5222. Are we talking to those innovators as well to manufacture, to mitigate the risk from our side?

You're very well informed, Sanjay. So the thing is, today, the drugs have to be narrow spectrum so that we don't sensitize the bacteria to every drug and they can remain -- the drug can remain effective. I think all of these drugs must be used complementarily after identification of which is the best drug for the bacteria with which the patient is infected. The bacteria has a defense mechanism with which it mutates and evolve, like in COVID, you were hearing, right, Omicron strain, this strain that strain and continuously evolve. The bacteria do the same thing. And all the organizations who are inventing molecules in the world will need to make sure they are managed responsibly so that there are enough antibiotics available for the patients to be treated globally.

Okay. And are we talking to any of these innovators as well? Just in case...

As of now, no.

[Operator Instructions] The next follow-up question is from the line of Rupesh Tatiya from Intelsense Capital.

I think I got cut off last time. So one clarification, sir, hospital business, can we pencil in 5% to 10% revenue for FY '25?

5% to 10% of Orchid total? That will be a really large number.

That would be, sorry?

Yes, that would be a large number for first year. But yes, in a few years' time, yes.

Okay. I see, sir. And then another, sir, is numbers question. Can you tell the capital outlay for 7ACA and cefiderocol projects?

Yes. So 7ACA, we have talked about INR 600 crores of investment and for 7ACA project between $10 million to $15 million.

So this INR 600 crores for 7ACA, does that include working capital as well or that's just the fixed assets?

No, it includes the -- that's the entire project outlay.

So I mean, can you split it between fixed assets and working capital? I think that in the previous -- one of the previous presentations, you have given a number of INR 400 crores fixed assets, I think?

No. I think there is some mistake. We are right now not in a position to predict numbers for you. Once the detailed engineering stage is complete, that's where probably we might have more details.

I think number, we have already talked about INR 600 crores.

Okay, sir. Okay. And then this cefiderocol $15 million investment, I mean, what kind of asset turns would that investment have?

Again, it's difficult to say. The problem with cefiderocol is, rather, let me say, the advantage, the idea is not to actually sell the molecule. It should only be given in case everything else fails to work. And I just stated the Global Burden of Disease data that what are the possible number of patients. So theoretically, the asset has to be very high. But unfortunately, right now, we don't have the technology. We don't have a target price. We don't have the prices elasticity study. So it would be too soon. That is the only reason our license, which is public, is talked about PBT margin rather than a cost plus -- typical target price for CMO patients.

Okay, sir. The other way to ask this question is, this would be something like once in 10-year kind of investment. Is that good enough assumption?

Sorry? Sorry?

So this would be once in a 10-year, once in a decade kind of investment, there would not be any follow-on investments?

It would depend. Like another person asked on the call, what is the total potential of the product? Who need these medicines? So right now, without having an idea about how much we can reduce the price, it's difficult to say. Current capacity that we are setting up is for 1 million vials. And if the demand goes to 5 million, obviously, we might have to set up more. But all of this is too early.

To give you the perspective, the objective of GARDP and Shionogi is that the product does not sell, but the reality is antimicrobial resistance is growing every day. So considering that they have asked us to keep a scope in such a way, we are designing a plant in such a way that with minimal investment, we can increase the capacity 3x. So while the ideal situation would be that not so much of this product is required. But we do anticipate that there will be a significant growth in demand if we look at 135 countries. But to be honest, to give a number in financial terms would not be correct because the marketing strategy is not decided by us, it's decided by GARDP and Shionogi, and the pricing strategy is not decided by us. So it would not be correct to give numbers to you.

As there are no further questions from the participants. I now hand the conference to the management for closing comments.

Thank you. So dear investors, thank you once again for showing confidence in Orchid Pharma. We assure you we will try and work as hard as possible to take this company to the level that it deserves, the infrastructure that Orchid has, the kind of projects that we have taken up, we really hope that this company have some bright future ahead of us in the next few years. Thank you.

Thank you. On behalf of Systematix Institutional Equities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.