Sanofi India Limited (500674) Earnings Call Transcript & Summary

[Audio Gap] over to Sanofi management team.

Thank you. Good afternoon, everyone, and a very warm welcome to the investor call of Sanofi. My name is Radhika and I head the Legal and I'm the Company Secretary for Sanofi India Limited. I have with me Mr. Rodolfo Hrosz, Managing Director; Mr. Rachid Ayari, Whole Time Director and CFO; and Mr. Himanshu Bakshi, General Manager Consumer Healthcare Business.

Good afternoon, everyone.

Good afternoon.

Good afternoon.

Thank you. Before we begin this investor call, there are 2 important announcements. Please note that the proceedings of this meeting are recorded. Secondly, please note our standard disclaimer that there are certain statements in this call which may be forward-looking, and the actual results may vary depending on various other factors, which may impact our future performance. Moving on to the agenda. We will cover the performance for the Q1 for 2024 and other highlights. Thereafter, we will have a Q&A session, which will end at exactly sharp 3 p.m. All investors and participants are pleased requested to keep their questions brief and avoid repetition. I now hand over to Rodolfo, Rachid, and Himanshu to take us through the presentation.

Thank you, Radhika. Thank you very much, and thank you again for joining and for taking the time to join us today. Before we get into the quarter update, I will give you a brief update on the -- on our strategic progress or our progress versus our strategic plan, right? I think in the -- if we flip to the next slide. Yes. So as you all remember and have seen -- is it visible to everyone?

Yes.

All right. So, Himanshu click to the next page, please. And the next. Yes. So before we get into the results of the quarter, let's move quickly through our India for India plan, which outlines the strategy that we have in the market and what's the progress we have made along the last several months. In our India for India plan has 4 pillars of you remember, diabetes, consumer health care, end to end innovation and Go-To-Market. In diabetes pillar, we have studied strengthened reach expense spectrum of offering and engage in public disease and therapy awareness campaign. We have done good progress on all fronts. Particularly, we now see with a standard reach also growth in the volume of Lantus, post the price reduction [indiscernible] we begin to see a steady volume growth coming from Lantus. We have made progress also in expanding the offering in the diabetes category with the launches of Insutage, the human insulin, locally produced, Cetapin S and now see improvement. We grow out the market, Soliqua, our best-in-class therapy for patients who today are treated with 3 weeks insulin [indiscernible], where our segment of the market in which we didn't compete and we come in with a strong product, and we're going to come back to that Soliqua launch in a couple of minutes. On the second pillar, you remember, we said we would want to double down our consumer health care. That pillar led to the proposal of the merging [indiscernible] to give you a fully dedicated super specialist management team to be able to unlock all the opportunities in the consumer health care quickly and to their fullest potential in India. And that is -- that initiative is advancing very quickly. And Himanshu is going to give us a couple more points of update on that on the process for the merger of the Consumer Healthcare. On the third pillar, we said that for innovation, we will be fully leveraging local innovation, localizing supply and engaging partnerships for reach. We have a lot of action there, on that third pillar. We've launched Sanoxaban, Carmada, Cetapin S, Frisium suspension, all local innovation. We have localized Insutage replacing [indiscernible], which is our human insulin and you've seen in the last week the announcement of 2 strategic partnerships Emcure and Cipla. Emcure for the cardiovascular portfolio and Cipla for the CNS portfolio. I'm going to come back to those partnerships in a minute. On the fourth pillar on Go-To-Market, we have [indiscernible] extend reach by using customer centric and hybrid models, deploy of trade organization and pilot transformation models for e-commerce, HCP and e-KAM. We've made significant progress there. We see that reflected in our OpEx. The improvement made kept quite consistent and will derive directly from the fourth pillar of our plan, right? So that gives you a little bit of the context in terms of progress was well planned. We outlined this plan back at the end of 2022 and we continue to work that talk. So this is what we said we do, and we've been consistent in progressing against those 4 pillars. Now if I zoom into a little bit about the -- next slide, please. The partnerships that we just announced. There are 2 partnerships. We went through a very careful process to select those strategic partners to expand and reach of our established portfolio, both for cardiovascular with Emcure and central nervous system with Cipla, right? In those 2 partnerships, there are brands from Sanofi India Limited, which are listed on that page. For Emcure -- partnership with Emcure in cardio, it includes Cardace, Clexane, Targocid, Lasix and Lasilactone and other CV brands from Sanofi private. Then on the Cipla side, we have Frisium and other Sanofi brands on the private side. So basically, a significant major step for us, step forward for us. As we want to focus more and more on innovation, we wanted to make sure that we extract maximum potential growth from the established portfolio we have in our hands. And to grow this portfolio, will require more capital and distribution, more capital penetration. This partnership allows us to get net additional capillarity and therefore, extract more growth from our established portfolio with such leading brands. So very encouraging with the partnerships, and they are very promising partnerships in terms of accelerating the growth of established products while we focus on bringing to market new products and launching best in class and [indiscernible]. All right. So in the next slide, a quick update on the innovation. You've seen that slide before. Before we had no green checks when we first showed it to you. Now you see all checked out with Green. Frisium came to the markets, Sanoxaban and Carmada. Soliqua just coming out, Insutage and Cetapin also coming in the next [indiscernible] of that original plan is, of course, Allegra, which is going to [indiscernible] the emerged entity as we go through the merger. So significant progress in renovating the portfolio, and there is more to come, right? Next slide. with going back to the focusing specifically on the Soliqua launch, this is a very relevant launch. This is the best-in-line therapy for a segment of diabetes market where we were not competing. This is the product that enters the premix segment, which is a category that is and large of the category in which we compete today, the basal insulin -- Sanofi today competes in basal insulin with [ diabetes ] and [indiscernible]. And adjacent to the basal insulin category and even a category we've seen similar signs and a similar growth pace which is the Premix category. Now with Soliqua comes into the pre-mix category with significant advantages versus the products that are in that category, it brings an advantage in terms of reduced risk of hypoglycemia. There is an advantage in terms of weight. So there is a light increase in weight and the insulin brings a slight increase in weight, altogether there is a weight advantage benefits for the patient and for the therapy in itself, and it's [indiscernible] while competitive competing products end up [indiscernible] more injections in the field. So those are significant advantages, and that's what we call best in class product in a given category. So very enthusiastic about it. It's the first month. First month did very well. The results in line and driving above the high expectations we have for the product. A very promising launch and we hope to see it really change the way diabetes is managed in patient of diabetes are managed by healthcare in India with a superior solution going forward. And the next slide, I will show you a little bit the repercussion of this launch, right? A lot of the media picked up on -- or in a recent trend of bringing new products to the market, specifically Soliqua picked up a lot of press because of the relevance of the launch, because of the fact that it is the best in class and is the first of the series of best-in-class launches that we intend to bring to the market. Now before I hand over to Rachid to talk about the quarter's results. I would say that it is a quarter that requires attention for -- in terms of analyzing, right? When you look at the underlying performance of the quarter, removing all the exceptionality of the quarter in 2024 and exceptionality in the quarter of 2023, it is a good quarter, right? So strategy is advancing and underlying performance is corresponding, right? But then when you go to the published figures, they do include a number of [indiscernible] that made it more difficult to announce. But I think that's the point you want to explore, Rachid with your -- in your presentation, right?

Yes, exactly.

So then let's move to the next slide, and I hand it over to Rachid.

Thank you, Rodolfo. So just a small introduction, as Rodolfo has mentioned that the 2 quarters in published are not really comparable. So the first point, which is the most, let's say, important one is related to the NMM implementation. So as you know, NBM was implemented in April 2023. So Q1 2024 is still impacted by this price decrease. And for the rest of the year, we will not see this impact in years ago. We have to mention that we've seen last year in Q1 2023, the export was quite significant, plus 30%, and this is mainly due to the volume, but at the same time, for a favorable ethics and it generates a certain gross margin positive impact related to the freight as well, okay? In the other income, in Q1 2023 significant booking of the interest on bank deposits before our dividend distribution and one cost interest on income tax. So if we sum everything it's a kind of INR 19 crores coming from this line. And as mentioned in last investors call in Q1 2023, we had the highest profit for 17 months, quarters, and this is -- it was exceptional, and we can see in the next slide, the level of the operating profit. Exceptional items as well as related to the sales of assets in Q1 2023, which is around INR 18 crores, which is in the partnership P&L. And finally, the strategic partnership with Emcure and Cipla in Q1, which is a value accretive for the shareholders. And bringing an important volume increase for the business is heading as well and the downsizing of the team and at the same time, payment of severance around INR 27 crores. Can you move to the next slide? Yes. So the first graph in the left side is affecting Q1 '24 versus Q1 '23. And in the right side, we see is Q4 '23 versus Q1 '24. So if we focus in the first graph in the left side. So we see -- if we exclude the total domestic retaining sales is around INR 548 crores. And in Q1 '24, we are moving to INR 566 crores. So in domestic sales and retailing business, the growth is 3% and if we exclude the impact of NLEM, the growth will be at 8%, and this is a significant, let's say -- let's say, significant growth for the quarter. So at the end of the day, the results are good, as mentioned by Rodolfo. Now another point, which is very positive related to India for India strategy is related to the expected part where we are maintaining flat expenses and even certain savings. The profit before exceptional items and tax, we see that we are moving from INR 246 crores to INR 215 crores minus 12%. And this is, as explained at the introduction by the different elements related to Q1 2023. Now if we move to the right side of the graph, and you see that it's comparable, largely comparable quarter. So we see a growth of 8% in domestic retaining sales which is almost, let's say, the same as the quarter 1 '23 to quarter 1 '24, excluding the NLEM impact. So this is the trend of the business. And when we look to the profit before exceptional items and tax, we see double-digit growth moving from Q4 2023 at INR 189 crores to INR 215 crores, which is exceptional results if we take it from this angle. Shall we move to the next please? So besides this, it's interesting to show, let's say, the consistency of the profit before exceptional items and tax in terms of percentage and absolute value. So we can see in Q1 moving from INR 208 crores in 2022 to INR 246 crores. And this is -- we can see it was an exceptional quarter for last year. And for this year, we are at INR 215 crores and remains one of the highest profit before tax and exceptional items for the rest of the quarter as well, Q2, Q3 and Q4. In terms of percentage, again, so it's the same trend. So 36% in Q1 2023, which is again -- but is an exception, as we are moving to 31%, which remain in the same level that we have given above the different quarters in [ 2023 ]. Can we move to the next. Yes. So finally, there are a lot of questions related to CHC. The first point that is -- for now, we are still disclosing our financial statement as one segment. And the financial statement are audited by our external auditor PWC. And so we cannot add today, disclose of the business in 2 segments as the data have not audited. So we are putting the disclaimer that this is indicative and not audited data, but is giving a sense and this would be audited once the company will be [ listed and ]. So just to give an idea, in Q1 sales, the sales should be around 30% of the total sales of the company. And in terms of operating profit, we are giving a range so the contribution from CHC is around 37% to 39%. It could be 1 point up, 1 point down. And this is -- once it will be audited officially, then we will disclose as per regulation. I think that's all from my side. So I'm not sure, yes. [indiscernible].

Thank you, Rachid. As Rodolfo also also mentioned, can you move to the next slide, please? So Rodolfo already mentioned that the governance on the demerger is on track. So CHC is transitioning very well towards establishing a very strong FMCH organization. Just a reminder of our key building blocks moving forward as an organization, which was presented a few quarters back. So we are consistent in terms of how building blocks. The first one is really enhancing the portfolio. So if you look at the current portfolio opportunities, there is an opportunity to increase penetration in a big way, really working with the government and the authorities on the modern OTC regulations and the role of innovation, which is really making things better for people out there. The second pillar is on building a consumer centric mindset, which means really becoming closer to consumers, put deep dive into insights and deepen the affinity with the consumer, driving awareness and accelerating the key legacy strong love brands that we have in the portfolio and enhancing our presence in channels like modern trade, which is an area which we were really focused on. The third key pillar on the business is the best-in-class digital and e-commerce capability. And we see a lot of [ good ] here as a business. So stepping up really on the e-commerce and all the key platforms that are out there, building a world-class digital marketing organization to support all our key brands and portfolios, and also leverage our global CHC data and digital edge that we posses and leverage it and use it in the country. Now beyond business as well, there are opportunities, and these are opportunities which we will also actively look at, which is the opportunities to grow inorganically and also scale up and increase our direct-to-consumer brand activation. So this, in a nutshell, is really about the key building blocks for consumer health care business moving forward. Can we move to the next slide, please? In terms of our quarter one performance, it's a very strong performance in the market across all the key brands that we have. So in spite of a challenging market situation and market growth, all key brands continue to gain very strongly on share, very strongly in terms of their presence in the market. So on Allergy, on Physical Wellness and Pain, all 3 areas we've gained share and we've gained share significantly in the first quarter. So moving ahead, it's really about now moving to the next steps. We expect the listing in the next few months. And yes, we will be reaching out to many of you and having discussion in detail about the plans for CHC going forward. Over to you, Radhika.

Yes. Thank you, Himanshu. Thanks Rodolfo. And I think now we move on to the Q&A session. Just a quick reminder, in this session, we will respond to your queries within the boundaries of our internal policy. As required by law, we will restrict our responses to clarify on all matters which are available only in the public domain. So kindly ask your questions accordingly. There could be granular aspects of our financials like product-wise, therapy-wise, margin, profitability, which are strictly confidential, and we will not be able to comment on those. We also do not provide any future guidance. I have mentioned in the registration, we will be taking questions from you in the sequence of your registration. In case multiple registrations are received from the same participant, we will take questions first from the first registered participants and give the other's opportunity at the end of the session. I request in the interest of time and for giving equal opportunity to all please keep the number of questions limited to one or two. Handing over to the agency for the Q & A.

[Operator Instructions] We take the first question from the line of [indiscernible] from JM Financial.

Also thank you for keeping this call for the investors and analysts. So first question I have on the localization strategy, which was mentioned initially. So what I want to understand, is it a gross market from the Sanofi parent? Or is it only towards the India market? What I want to understand how sustainable it is, the initiative which has been taken about the localized innovation, et cetera, and autonomy given to the local management over here.

Thank you very much for the question. The India for India plan is strategy and a plan for in India -- for Sanofi India. Of course, it aligns with global strategies of Sanofi and is fully in sync with the global leadership of the group. But in that particular point that you, I think you brought up, which is the localization and supply that is a particular point relevant for India, of course, not many other markets that makes sense for the [indiscernible]. It doesn't make sense for Sanofi in India. India is the pharmacy of the world, that is a very strong industrial footprint in the pharma industry in India. And we intend to continue to leverage it even more. And we already have our own facility, a large and very important and very cost-effective, high-quality plant in Goa, which provides a significant part of what we sell in India. In addition to that, we operate in India with a good number of contract manufacturing organization that provide not only to India, but also to other markets of Sanofi in the world. Similarly to what happens in the Goa production for Sanofi India and also is exported to more markets. So we continue to leverage that strategy and we have emphasized that strategy with the intention to localize more production and launch local innovation as we do. You've seen the Carmada, Sanoxaban, Frisium suspension Cetapin S, all came out. They are all locally produced and the unfolding of our strategy of localizing production and leveraging the local production capabilities in India to do some local innovation. Now that makes sense for India. It doesn't make sense for Sanofi [indiscernible] markets. I think that was your question, whether It's a global setting? We're not a global setting. [indiscernible] it made sense for India.

Sure. And the second question I have is the partnership which we have taken for the PVS and CNS product portfolio with Emcure and Cipla, so we said -- we have written on one of the slides that we are -- we will be downsizing our teams for the PVS and CNS portfolio. So what would be the impact of this? And I believe we also have our own brand, so we will stop marketing them on our own or we will reduce our marketing on our own for those brands internally?

Okay. I have a little difficulty with sound, but your sound is coming through a little muffled. So I'm going to ask my colleague, [ Rachid ] to answer, prefer to pinch it together. So the partnership in the question is specifically.

Are we going to do everything [indiscernible] in other parts.

So thank you for the question, yes. The partnerships that we have established with both Cipla and Emcure of partnership towards extension of our reach and expansion and the acceleration of our growth. In those partnerships, both companies will be doing distribution and promotion of these Sanofi brand. The company continues to own the brand, produce the brand, book the sales and we eventually -- It is our brands with even more brands being promoted and distributed by these 2 large pharmaceutical companies. The reasoning behind that, as we discussed before is that these companies have much more capital network and presence, allowing these brands now to reach Tier 2, Tier 3, Tier 4, while Sanofi by itself is mostly concentrated in Tier 1 and sometimes Tier 2. So with a strong brand with a leading position, strong equities that were not made available in all periods of India, through these partnerships we expect an acceleration of growth by taking these brands to more tiers of the market and therefore enjoying an additional growth coming from it, but it is a [indiscernible] marketing and then distribution with the promotion and distribution. The brands continue to be Sanofi, [ their own were finances to give to Sanofi and to achieve a big and better opportunity. ]

So my question was, will we stop marketing through our distribution because we are downsizing our team, that's what I had asked. [Technical Difficulty]

I think the question was that the marketing that we have [indiscernible] the marketing might have begun by the [indiscernible] partnership with an exception.

[ Radhi ] can you repeat the question? Because I don't think I could hear you clearly. Your connection is not very clear.

Mr. [indiscernible] are you connected on your earphone sir? If yes, please switch to your handset.

Is it audible now?

Yes.

What I was asking, we have said that we will be downsizing CVS and CNS teams. So will we be stopped -- I mean how marketing these products through our own teams? That was my question.

The marketing will be done by the partner.

We've already answered that.

Yes. The partner is doing the distribution and the marketing, both.

Got it. And let's say, if these products pick up really well for us. On the margins, what would be the impact? How would be the profitability of these products for us?

So, we don't disclose figures by brand and not by the brands and margins. That we can't answer. In the spirit of your question, these partnerships, we expect accelerated growth for the reason that I mentioned because of the expanded capability and therefore the extended reach with iconic [ releasing ].

Our next question is from the line of Varun Bang from Bandhan Life.

Congratulations for Soliqua launch. And also thanks for the details that are shared in the presentation, they're very helpful. So the first question is, can you share some perspective on the revenue model in the marketing and distribution partnerships that we have signed with Emcure and Cipla. And how should this impact our revenue and operating profits initially and how should it evolve over a period of time?

So yes, the model is mainly a gross to net model where the partner is taking in charge of the distribution and the marketing. So we are billing to the partner, and this is what we are booking in our book. So that's -- but in nutshell, let's say, the summary of the partnership.

Any perspective on the revenue model? How should it impact our revenue and operating profits.

I don't know if you are talking about -- if there's any impact in the operating profit, that's the question, right?

Yes, overall revenue model, if we can just briefly give some perspective.

Yes. So [indiscernible] said, the see gross sales to the partner gross to net deduction. And booking of the net sales in our books. So then the impact, as we said at the beginning is that it's accretive value for the shareholders. Then the impact, if there is any impact is already absorbed in the operating profit. So it's already improving, let's say, as we said accretive value that the analysis in giving positive on the financial statement based on the net present value that was evaluated to take the decision on this project.

Got it. Got it. And what is our MR strength at present? I mean after signing these partnerships? And how is it structured now? And would we look at strengthening our MR count going forward? Or we will look at optimizing the existing ones.

Sorry, Varun, could you repeat your last question? There seems to be a little bit of a [indiscernible].

So the question is on the MR strength. Yes, the question is on the MR strength. If you can. What is the MR strength after signing these partnerships? And what is the structure of the MR team. And would we look at strengthening our MR count going forward or we'll look at optimizing the existing?

No, you're asking about the field force, right?

Yes.

He's asking about the field force. So our...

In this category, the field force that will be pushing and promoting -- distributing and promoting the brand. The field force are of the partners which are large field forces in both cases, larger than we were able to do it by ourselves. Now the numbers we don't disclose and they don't disclose either, the whole reasoning behind the partnership is because we set into the larger sales force capable of more capital promotion and distribution in booking. So it is an increased number of people working with this product, taking into health care professionals in more cities going down to Tier 2, 3, 4 through Cipla and through Emcure. Now we don't usually disclose the number by [indiscernible] -- but I can tell you...

No, the question is actually on the Sanofi's MR count. Post signing this partnership, what is the MR count in Sanofi? And how is the team structured now? And would we look at strengthening the MR team?

I think you're saying MR. I don't know what is MR.

Medical rep.

We don't disclose our typicially our MR. It's the total employee strength that you could probably write to us and we will give it to you, we don't publish those numbers on a quarter-on-quarter basis.

MR, you are referring to medical reps. Because it is not our language, we don't refer to them as medical reps. We refer them as [indiscernible]. So MR, we don't disclose by blends, and we will not disclose also in the case of the partner, how many of them. There is more -- all I can tell you is more. Because otherwise, we wouldn't be able to get more capital distribution from it.

And if you want to know the total employee strength, you could write to us and we will get back to you.

No, that is there in the annual report. So just one last thing on the Consumer Healthcare business. what would be our focus areas within our Consumer Healthcare business, especially from new products perspective? And where would we look to source them. So the question is on the Consumer Healthcare business. What would be our focus areas within Consumer Healthcare business, especially from the new product's perspective? And where would we look to source them?

Thank you for the question. As I mentioned, we operate to base in key categories like Allergies, Physical Wellness and Pain. And if you look at our market share and our presence today, there is still a lot to achieve in those categories. So most of our launches, most of our focus will continue to remain in the course for the new launches as well.

Before the next question, just to the people working with it. Are we sure that the issue with the sound is not on our end. The second question, we have difficulty understanding the question. So can we make sure that we fine-tune and adjust for volume or properly. So it is getting very distorted here.

Chorus team, please check the sound from your end. Thank you.

The next question is from the line of Abdulkader Puranwala from ICICI Securities.

Sir, a couple of questions here. So I think with the Soliqua launch. So could you please throw some light that how well it complements to the portfolio, what you already have? And in terms of your -- the target market, what is the kind of population this brand could address? And so that could be pretty helpful to start with.

Yes excellent question. This is an extremely complementary launch. As I mentioned before, you could envision the insulin market with 2 main subcategories. That Basal insulin and premix insulin, up until the Soliqua launch, Sanofi has only played in the basal insulin [ which that is going to change ], right? With the launch of Soliqua now tapping into the other segment of premixed insulin where we were not competing. So it's extremely complemental to our portfolio. Because it will tap into a different need that to date we were not catering to. And we get into that different new with a best-in-class product with a clear superiority to many of the [ opponents ] that exist today for the healthcare professionals when dealing with patient that require today premix insulin. So going forward, we have a superior option with Soliqua. And then we anticipate Soliqua to be able to quickly gain a significant share as HCPs upgrade their patients to the [indiscernible] of premix to the Soliqua insulin. Now we also asked about the source in Soliqua [indiscernible]. So Soliqua comes to failing oral antidiabetes patients and patients that also migrate from [indiscernible] they will use the insulin premix. In those 2 cases, we were not capturing those patients with anything in our portfolio because we didn't have anything relevant on that segment. Now we have Soliqua in that premix segment capturing that opportunity and offering a HCP [ penetration, ] a superior solution. So It's a win-win-win. Good for patients. Good for the HCPs and good for Sanofi too and extremely complemented because it's a very distinct segment of the market where we didn't play at all.

Got it. And sir, just second question is with reference to what was asked previously as well. So sir, If I see your overall employee count in -- towards end of fiscal '22, it was close to 2,600-odd employees, and that number as per the latest annual report has come down to 2,100 employees. So would it be fair to assume that this rationalization of 500 to 550 odd employees would be mainly because of this out license indeed.

Yes. Again, we've got a difficulty with the sound. I think we really need to check what's going on because every question is becoming difficult to understand, but you asked about the head count by the end of the year 2022 and the end of the year 2023. That is -- and what are the explanations of the difference. This is basically what your question was, right? So there is one important difference in the way we manage the head count in '22 and the way we measure the head count in '23. In '22, we measured head count by with a number of people that have worked with Sanofi in the year -- throughout the year. So if an employee works for 6 months, it would count in 2022. From 2023 onwards, it is the actual count of employee working in the company by the end of the year by December 31, right? For the last year in that period of the count. So there's different methodology.

Okay. Okay. Fair enough. And sir, just last one on the consumer business, which and the [indiscernible] whether is on process. So the strategy well informed about. But in terms of your new brands, so I mean how do we look at this portfolio from a 5- to 10-year perspective, whether there would be a similar strategy as what you're calling for your Rx business or India for India, where there will be new molecules, which may or may not be a part of the parent's portfolio would still be launched. And it will -- be made an entire consumer kind of a business to focus upon.

Strategy going forward in term of the products, which are owned by the parent [indiscernible] the country.

Yes, of course. So the vision of CHC is bringing health [ into peoples end ] and becoming the best FMCH company in inside the world. So there are definitely a lot of good global portfolios, which we will be evaluating for the future launches in India. Having said that, again reiterate [ that now current ] portfolio itself, there are still a lot of opportunities that we need to leverage. But going forward, new brands, new products will definitely be evaluated from the global portfolio.

Before we move to the next question, I'm going to ask the moderator to repeat the question because in the room, it is getting very distorted. So if you're getting a better, more clarity, I ask you to help us repeating the question that is asked.

[Operator Instructions] The next question is from the line of Gagan Thareja from ASK Investment Managers.

So the first question pertains to the out-licensing deals. Could you clarify whether the deal is signed between Sanofi India and these companies or between Sanofi Global and these companies.

Deal was signed between Sanofi India and these companies.

And there was no out licensing. So...

It's not licensing due -- the duration and promotion due and is an agreement of distribution and promotion signed by Sanofi India with those companies. As I mentioned before, I want to just to reinforce, Sanofi continues to own, manufacture and look to see a normal brand.

Are all of these brands manufactured by Sanofi India in their facilities?

No. Some are manufactured in India, some are imported as well.

The reason I asked this question is that the brands, while they are marketed by Sanofi India are owned by Sanofi Global. And if they are going to be distributed and marketed by another entity, what is the -- and perhaps not even manufactured by Sanofi India, then what is the rationale of routing the transaction through Sanofi India, the entire arrangement could be a pure out-licensing arrangement with these products being marketed by Cipla and by Emcure with Sanofi India having nothing to do with it at all. I'm just trying to understand, in the future, could something of this sort happen?

It's not in the plan today. I understand your question. It could be one way to arrange it. It's not the way we decided go forward with the local initiative between Sanofi India and those companies, and they were structured in the way that I just described, and Rachid also discuss it. We sell products to them. There is another distributor of ours, a strategic distributor. There also -- there is the promotion of the new brand in the market, but that's the way they're structured. You're alluding to a potentially different model, which will mean the model that we have in rise in these partnerships. And then I think there is no plan to do in a different way going forward, which will mean that we could one day change the model that we operate. But today, we don't intend to change the model. The model will remain in the [indiscernible].

Right. So when you report sales pertaining to these brands in your books, you will net out the distribution margin that will be given to these companies. And then you report the sales and adjusted for the cost, you'll report the margins on your books. Is that how it is?

Yes, it's a gross to net model. So we -- the invoice is growing in gross minus the gross to net -- and this is what -- the only booking that we have in our books, okay? On the expenses is not related to Sanofi India. It's what it will be booked in other partners members. It's not that our level. So it's a different model as well. So we are not outsourcing the promotion here. So it's total gross to net model without keeping any expenses at our level.

Okay. Emcure in one of their calls indicated that they might eventually possibly be manufacturing these brands in-house as well. And that is the reason why I'm asking this question. I'm sorry if I'm repeating it. But if the counterparty seems to indicate that at some point in time, there's a possibility that they'll manufacture it, then they will manufacturer, they will market, what will Sanofi India be doing? And therefore, what will accrue on your P&L?

At the moment, it's not part of the agreement that we have. This is not the intention of the agreement. You're right in a way in which everything is possible in the future, but this is not part of the plan today. So today, the agreement and what we're working on is the expansion of the reach, and acceleration of growth of our established products that currently deliver, through these partnerships with Cipla and Emcure in the Indian market. So if a new extension of one of these brands in introduced in the market in the future. And if it happens to be produced by one of them, we have to have to treat that topic [indiscernible], but it is not part of the initial plan, and we don't have that base into the initial plan.

Okay. A final question, if I can take one more. And that is for the Consumer Healthcare business. Is it possible to help us understand what the new OTC regulations bring to the table for companies. I mean, does it give you the opportunity to expand your distribution through general trade, whereas it might not be the case now? And have the OTC regulations new ones being notified already?

So the regulations are still in the draft stage. And all OTC companies are partnering with the government to have the right regulations come into [indiscernible]. So to your point, and all the things like you mentioned are definitely getting discussed at the right level and the moment it gets notified and regularized we will come back to you with the data.

If I may add to that, Himanshu. I think that when we look at the regulation of OTC in India and compare it to the regulation of OTC in most other markets, we see significant opportunity for evolution, right? Both in terms of distribution, but also in terms of consumer engagement, right. Around the world, regulation for OTC such that allows companies to more directly engage with consumer, educate consumers and therefore, drive the business in that way. Now we need always -- we are a few steps behind [ space ] and with a big opportunity for modernizing those regulations and then unlocking the growth driver both in terms of distribution, but also in terms of communication [indiscernible]. Does that make sense Himanshu?

Absolutely.

On the OTC piece, I mean if you are facilitated to market through the general trade channel, I mean, the 3 categories that you showed on your side, 2 of them are already growing at a healthy double-digit number and 1 is growing at high single-digit number. If the distribution can ramp up very substantially post the regulations being notified, does it give you headroom to accelerate your sales growth from the existing brand in a very substantial or sizable way? And over and above that, you obviously have new brands which you can sort of bring in. So are we looking at an accelerated growth phase for the consumer piece subject to the OTC regulations coming through as you see them or as you intend for them to come.

You're absolutely right. In terms of one of the key leaders, as I mentioned, penetration is key for us, which means definitely in terms of expansion. In terms of your general trade, in terms of pharmacies, in terms of all the key outlet classes that we have, including modern trade e-commerce, we still need to accelerate and put in the right inputs there. So the idea, again, is to go behind it, invest behind it and make the penetration bigger on the branch, which definitely means a promising growth for the business moving forward.

I have one more question. Can I take it? Or would you -- would you rather that I get back to the queue?

No, I would give -- Sorry, Gagan we are close to 3 p.m., and I think we need to move to the next one and next one will be the last one, please.

We take the next question from the line of [indiscernible] from [ BMA ] Financial Services.

My question is on the type 2 diabetes, which you have recently launched Soliqua in the month of April. I believe the price point is around INR 1,800. So can you just share what will the market size of this opportunity of this drug in India could be like? And second question would be what is the diabetes portfolio, new launch going forward for the company would be?

Could you repeat your second question?

The diabetes portfolio of Sanofi looks like in next 2, 3 years, what are the new launches happening?

All right. So first on Soliqua. Soliqua is relevant. We don't give forward-looking estimates, right? On a much rather than a particular brand. But I can speak about the size of the market, which is what you asked. So the kind of the market is around 1,000 crores. Just trying to convert it to euros and -- but it's INR 1,000 crores, which is the same size of the market where we compete with [indiscernible]. That's a very large market where we don't compete. And we believe Soliqua has strength to achieve leadership in that segment of premix, that segment of INR 1,000 crores [indiscernible]. So then you can make your own projections, if you will. But we think that the advantage of Soliqua will give the credentials over time, achieve leadership in that segment. I can go beyond that. I mean -- but it is a relevant market with [indiscernible] launch with a product with potential to achieve leadership in that revenue market, right? So that's the question one. And then I think that if you want to get to numbers you have to do your own projections. But then your second question about the future of the portfolio. We have just introduced a number of products and we need to leverage them, make the most of this portfolio. We're going to be focusing on bringing Soliqua up to its full potential in the market in the coming months and year that will be a priority for us. Parallel to that, we continue to work on the expansion of Lantus volumes in India, coming out of the NLEM with the price reduction on Lantus, we see an opportunity for Lantus to expand its penetration and grow forward. As I mentioned before, we already see the volume expansion. We believe that the volume expansion is [indiscernible] can be sustained for a prolonged period of time. We're generating more growth for the movement and penetration for insulin or [indiscernible] to bring in the market. But -- in addition to that, we still have the recently launched [ Clexane ], which is growing in various aspects and gaining more and more the preference of [indiscernible] for a segment of the patient [indiscernible]. So right now, we have a relatively ample portfolio in terms of insulin [indiscernible] catering to each specific segment, each of the key segments in the market. In addition to the insulin that I mentioned, Lantus, [indiscernible] and Soliqua, you will remember that we mentioned Insutage, which is the human insulin locally produced coming to the market [indiscernible]. So we have clearly strengthened the portfolio already. And then it's going to be -- a lot of our focus on work in the coming months and years, for us to bring this product to their full potential in our market. Beyond that, you may have read, and you may have seen that the Sanofi Group has acquired a company called Provention Bio, which has developed a product called TZIELD. TZIELD is a first-in-class product for diabetes type 1. Now we are also evaluating that and bringing that product to the Indian market as well as there is a high prevalence of diabetes type 1 in the Indian market, as you know. So a lot in the portfolio right now in terms of insulin, we have also strengthened overall the anti-diabetes portfolio with the launch of 30Cetaphin S. And we may bring soon our first [ Insutage ] therapy for diabetes type 1 as well. So a very rich portfolio and very rich pipeline at the same time. I hope that answers your question, your 3 questions.

Yes, and if you can just share what will be your market share in the insulin market in India? Can you -- if you have some data, what would be your market share in insulin market in India?

In total insulin? I know in basal insulin what is the market share in basal insulin.

In basal insullin it will be about 38%.

38% Today has 38%. I mean put it that way because that's a more important thing for [ installation ]. Imagine to this segment, basal and premix, basal we have 38%, premix we have zero. Now actually, which we believe can achieve leadership that's it. So -- and those things are in roughly since basal and premix. So -- that's the market structure you can put that in mind.

Thank you. So I think we are almost -- we crossed 3 p.m. but thank you very much to all the participants for attending this investor call.

Thank you very much. Actually, I want to thank you also for the quality of the questions. Very good question, very thoughtful questions which have obviously to address some of the key points with you, which is all the pleasure. I apologize on our side for the distorted sound. We work to make sure that next time we don't have that problem, but it was a little difficult for us to capture when you were asking except for Radhika, a few should able to get the question very clearly despite the distortion we all -- the 3 of us had a little difficulty and I apologize for that issue on our end. Thank you very much.

Thank you. Thanks for [indiscernible].

Thank you.

Thank you.

Ladies and gentlemen, on behalf of Sanofi India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.