Shilpa Medicare Limited ($530549)

Ladies and gentlemen, good day, and welcome to the Q4 FY '26 Results Conference Call of Shilpa Medicare Limited. [Operator Instructions] I now hand the conference over to Mr. Monish Shah from Shilpa Medicare. Thank you, and over to you, sir.

Thank you, Ria, and welcome to our fourth quarter and full year FY '26 results conference call. Today, we have with us Mr. Keshav Bhutada, Executive Director and CEO of Shilpa Pharma Life Sciences; and Mr. Alpesh Dalal, our CFO. The financial results and the presentation are uploaded on the stock exchanges, and the transcript along with the audio will be available on our website and the stock exchanges as well. Please note that today's discussion might include certain forward-looking statements based on the current expectations and assumptions. These statements are subject to risks and uncertainties that could cause actual results to differ materially. The company undertakes no obligation to publicly update or revise any forward-looking statements. With that, I would now like to hand the call over to Mr. Keshav for his opening remarks. Thank you.

Very good evening, everyone. There are certain years in company's journey where performance improves, and there are certain years where foundation for next decade is built. For Shilpa Medicare, FY '26 has been one such year where we have built our foundation. Today, Shilpa is no longer defined by single vertical. We are building a highly differentiated pharmaceutical platform spanning across complex APIs, specialty formulations, biologics and ADCs with integrated CDMO capabilities. Few companies in India operate with a breadth of technology and capabilities across both small molecule and biologics. Importantly, we believe we are still in early stage of monetizing a few of our platforms. As utilization improves across our manufacturing infrastructure and more differentiated products enter into our commercial phases, we see a clear path towards sustainable growth, stronger margins and increased return ratios in coming years. Let me walk you through our Q4 FY '26 performance and for the full financial year. I'll start with our API business. So in specialty CDMO segment, we have first our U.S. NCE program, which was launched in Q4 by our big pharma company. Our second U.S. NCE program with one of our partners where we are supplying them API for their Phase III program, the Phase III studies are ongoing. The third U.S. NCE program, where we are developing API and formulation for our U.S. customer, Unicycive Therapeutics. The program submissions are already done, and we are expecting approval in this financial year FY '27. The dedicated manufacturing production blocks for OLC was successfully commissioned in Q4 FY '26. And we are planning to do the validation batches in this new block in -- to finish in Q1 FY '27. Two new NCE programs where the client audits were scheduled in Q4 FY '26 were successfully completed in Q4 FY '26, and we are expecting to start initial development revenues in FY '27. Apart from that, on the generic side, we have added more than 15 new oncology very strong pipeline, where there are global top oncology blockbusters, which are expiring -- which are having patent expiry up to 2032 are already taken in the grid. One new non-oncology product, which is completely import substitute product, process validation was successfully completed in Q4 FY '26. Methotrexate, which is again very complex import substitute oncology API, CEP for the product was received in Q4 FY '26. New oncology block capacity, which was a significant capacity, which we are adding in our oncology journey. The block is expected to get commissioned in FY '27. On peptides, we continue to remain optimistic on the growth for peptides, where we are working on multiple generic peptides and CDMO peptides. New dedicated peptide large-scale manufacturing block, the equipment ordering is already completed, and we are expecting to commission the facility in FY '27. We are also working on multiple payloads and linkers, which are going into ADC program. In Q4 FY '26, the payload which we had supplied to one of the big pharma companies, the registration batches were completed at their end using our payload. So subsequently, it will be taken in the filing at the end. Overall API business is likely to have a steady growth in next financial year FY '27. Coming to formulations. Our first new chemical entity, which is Nor Ursodeoxycholic acid. As explained in the previous quarter, the product is really doing good, and we see very good clinical results in the patient. And we continue to see good traction in FY '27. NorUDCA as a product, we are also planning to take globally. We have done scientific advice and submission in U.S. and Europe, and we are planning to start human studies in FY '27. Three commercial 505(b)(2) products are currently approved in U.S.A. and all products are doing really good, and we expect the volumes to grow steadily quarter-on-quarter. Abraxane, which is paclitaxel albumin-bound product, which is a very complex injectable product. Exhibit batches were successfully completed in Q4 FY '26, and we are expecting launch of this product in FY '28. Enzalutamide tablets, which is again a very complex product, we have successfully completed the registration batches for this product, which is fully non-infringing and we are planning to file this product in U.S. and Europe in FY '27. So both Abraxane and Enzalutamide tablets are expected to get commercialized in FY '28. Rotigotine Transdermal Patch Europe launch, as explained in the previous call, will be launched in Europe in FY '27. We have also successfully submitted with U.S. FDA Rotigotine Transdermal Patch in Q4 FY '26. Ondansetron extended release injection, which is one of a very complex injectable product developed by us, we are expecting to launch in FY '27 in India. We are also planning to take this product globally, and we'll be starting human studies in FY '27. Apart from above, we have very good complex differentiated 505(b)(2) product pipeline, for which details are already provided in our investor presentation. Overall, with existing and new product launches, there is likely to be a good growth possibility in FY '27 in the formulation division. Now coming to Biologics. Aflibercept, which is one of our most complex ophthalmic product, our human clinical study is doing good, and we are on track for launch for FY '27. Our second product, which is Nivolumab, our human clinical study approval received for India. And also for EMA, we have submitted our scientific advice. We are expecting response in Q1 FY '27. Four new biosimilars were added in portfolio in Q4 FY '26. Coming to new biological entity pipeline. Our first program with mAbTree Biologics, the program development is successfully completed, and we are planning to enter human Phase I studies in FY '27. Our second program where we have partnered on this product with Alveolus Bio, the program development work has been initiated, and we are expecting the program to enter into human studies in FY '27. Two NBE programs will be entering in the Phase I studies in FY '27. Coming to CDMO business. As mentioned previously, 5 active CDMO and NBE programs are ongoing. And in the Q4 FY '26, the Phase I clinical study batches for one of the innovator program was initiated, and we are planning to finish the supplies in FY '27. Our first ADC biosimilar, which we have developed completely using payload, linker and conjugation was successfully completed. The development work was successfully completed, and we are planning to enter human studies in FY '27. We have also initiated development of second ADC biosimilar product. The main strength, what we are building in the ADC space is we are building our own ADC manufacturing suite, which will have manufacturing of mAb, manufacturing of payload, linker and conjugation. With that integrated manufacturing capability, it will be one of its kind in India. Now coming to our recombinant human albumin program. Global Phase III clinical study approval was received from CDSCO for our Europe study. We are also planning to submit IMPD, which is required to be submitted in Europe when we are planning to start a study in Europe. That submission is planned in first half of FY '27. Overall, our focus remains on monetization of all our investments, and we remain confident that work we are doing today is shaping Shilpa into a global technology-driven health care company in years ahead. Thank you, everyone.

Yes. Good evening, everyone. This is Alpesh Dalal here. A warm welcome to each one of you to our Q4 results call. Let me briefly take you through the financial performance for Q4 as well as the full year ended in March. I'm pleased to report that we have delivered our highest ever quarterly revenues of INR 439 crores, recording a growth of 30% year-on-year. And for the full year '26, again, we have had historic revenue number, delivering INR 1,549 crores, growing at 18%. Our gross margin continued to remain healthy at 68% for the quarter and 70% for the full year. And along with our highest revenue that we have reported, we continue to report highest ever EBITDA also, both on a quarterly as well as yearly basis. For the quarter, EBITDA was at INR 121 crores, growing at 40% year-on-year with an EBITDA margin of 28%, improving 2% -- around 2% year-on-year, whereas for the full year, EBITDA was at INR 445 crores, reflecting a growth of 30% year-on-year, with yearly EBITDA margin of 29%, again, approximate 3% year-on-year improvement. This improvement in EBITDA was largely driven by increased revenue from key verticals driving positive operating leverage. Moving to our other financial highlights. Our interest outgo for FY '26 has seen reduction on a year-on-year basis, and we believe that it has now stabilized at the current quarter run rate for the near future as we expect to fund our CapEx programs broadly via internal accruals. During the quarter, we also had an exceptional gain amounting to INR 30 crores on account of stake sale in one of our JV company, Sravathi Advance, where we have sold 31% stake and now hold 34% stake. This company no longer remains a JV company. Now -- it is now classified as an associate company. Overall, our adjusted PAT before considering any exceptional gain for the quarter was INR 87 crores. And for the full year, it was INR 232 crores, growing at about 135% year-on-year. On the debt front, our net debt for the year increased to INR 613 crores from INR 550 crores in the previous year, which is in line with the growth in our business operations. And our CapEx of INR 361 crores in FY '26 was primarily funded by internal accruals and deployed in key verticals of API, CDMO and albumin facility. I would also like to draw your attention to our improving ROCE profile, where our adjusted ROCE, excluding investments made in high-growth potential businesses like biologics and albumin, we have seen a significant improvement from 4% in FY '23 to 17.4% in FY '26. And all these have been contributed by all the verticals across the board. And with our -- in the recent past, our formulation business and biologics business showing steady growth. We remain confident that this improving operating leverage will help us achieve better ROCE in the future. Now just getting on to the -- quickly on the segmental performance. Our API business clocked a revenue of INR 259 crores for the quarter and INR 985 crores for the full year, growing at 16%, both on a quarterly as well as yearly basis. The growth was on account of improved uptake of key products from newly expanded capacities, coupled with strong captive demand from our finished formulation vertical. This vertical integration of our formulation products helped improve the overall margin profile of the entire group. Formulation revenue for the quarter were INR 205 crores, growing at 54% year-on-year, and revenue for the full year were INR 618 crores, growing at 30% year-on-year. But importantly, excluding the licensing income, the base business reported robust growth of 64% for the quarter and 75% for the full year. Now to sustain this momentum in our FDF vertical, we continue advancing a pipeline of complex products and our strategy of developing and launching niche products globally through strategic partners is gaining very good traction, as evidenced by our European formulation business, which delivered revenues of over INR 200 crores, growing by more than 100% year-on-year. Our another product, NorUDCA, which was launched in India in the previous quarter, continues to gain traction, and the strong reception has translated directly into a healthy order book for the upcoming quarters. Moving to the Biologics segment. The revenue for the year were INR 150 crores, growing roughly 100% year-on-year. And the strong growth was driven by continued deal momentum that we are witnessing in our CDMO business. With that brief introduction, I would now like to open the session for Q&A.

[Operator Instructions] First question is from the line of Kiran D. from TableTree Capital.

A couple of questions. The first question, especially our U.S. partner has significantly grown its market share in 35% in [indiscernible] and 5% in [indiscernible] based on prescription data. However, our U.S. formulation revenue has grown only from INR 54 crores in FY '25 to INR 80 crores in FY '26, and it's kind of flatlined over the last 2, 3 quarters, right, around INR 28 crores, despite all this An -- sorry, U.S. partner scaling, right, for these two products. So my question after this elaborated introduction is, why aren't we seeing a steep growth in our U.S. revenues in line with our U.S. partner market share gains?

Yes. Thank you, Kiran. So I think on the U.S. revenue front, as you rightly mentioned, right, we have seen an increase in revenue, and that will most likely continue in the FY '27 also. Only against last year, this year, you will see we have stopped selling our generic product, which was azacitidine in U.S. So that supplies to U.S., we don't want to do it because the margin is no longer sustainable for us. So now we are moving for even U.S. market more on to the super specialty products.

Got it. Got it. Got it. So I mean, would [ Azacitidine ] be like INR 8 crore revenue previously in the previous year, for example?

Pardon, can you repeat? Sorry, your question was not clear.

What was the Azacitidine revenue in FY '25, Keshav?

Sorry, I don't remember that off late. Maybe that is something we can send you later. You can coordinate with Mr. Monish, Investor Relations.

Sure, sure. So then the second question, sir, is in terms of our NorUDCA scaling with three of our partners and our own brand and so on and so forth. Are we seeing a steep scale up? Or have we kind of flatlined over the last four months in terms of demand and there are multiple other studies going on or the doctors are still trying to test it. So what I'm trying to understand is, are we going to see a steep scale up in FY '27 of this NorUDCA along with our partners? Or are we kind of saying, okay, last quarter results is what might get repeated for the following year?

No, Kiran, I think one thing I can tell you, if you see NorUDCA, we have launched the product in Q3, right, sometime in November, December. And if you see from there today, we are in Q1. So we have seen -- just on quarter-on-quarter basis itself, we have seen a steep growth. So we have to see how the trajectory will be for the upcoming quarters because the total disease, the curability duration is 6 months. So once the 6 months duration is completed, then we will have more data from doctors, from hospitals.

Got it. Got it. Understood. Understood, sir. So we will probably get a better handle by the end of FY '27?

Sorry to interrupt, sir. Could you please wait for a moment. The management line has been disconnected. The management line is connected back. Yes, sir, please go ahead.

Yes. Sorry for that. Sorry for inconvenience, everyone. So yes, as I mentioned, NorUDCA, we have just launched in November, and it's a 6-month disease duration. So we have to observe how the volumes will further grow. So we will be able to give you a more clear picture in sometimes in second quarter of this year.

Got it. Got it. Got it. Last question, sir, is our EBITDA margin for the year, again, is 29%. Do we expect over the next 1 to 2 years as and when Shilpa scales for our EBITDA margins to go to 35% back -- and second question is service income is around INR 200 crores. Do we expect a similar kind of run rate, I mean, expectation, similar or more in FY '27?

Yes. See, as far as EBITDA margins are concerned, Kiran, the fact is that as the business grows, a bit of operational leverage does kick in, right? But obviously 35% is an ambitious target, which we would be working towards achieving. But we can't really say that it would be achieved immediately because whilst we grow the business, we also have to spend more for growing the business. Yes. And your second question was on INR 200 crores business in...

Yes, licensing income.

Yes. See, again, licensing income is something which is -- which at times could be a bit lopsided. But you can see in our presentation also that we have a very robust pipeline of molecules coming in. So there is certain visibility that we have got for our existing deals that we have signed. And then there are a lot of other things which are in the pipeline. So it will depend on some of those aspects. But generally, we do expect our licensing revenue to remain in similar range at least.

Next question is from the line of Ankit Gupta from Bamboo Capital.

Congratulations for a good set of numbers and for the full year as well as for the quarter. So the first question is on the European formulation business. So if you see Rotigotine doing well and we have scaled up pretty well during FY '26. So given when do you expect the first -- the second generic launch for Nilotinib happening? And secondly, we know about the Rotigotine launch in this financial year. Apart from this, you have mentioned 7 more -- 7 products. So which will be the remaining 6 products that we are planning to launch? What can be the scale of these products? If you can elaborate on that? And how should we see the Europe formulation scaling for us in FY '27?

So Ankit, there are two questions here. So first part on Nilotinib, right? As I mentioned in the previous calls also, we are expecting some generic competition to come in current financial year. But as Europe is a very typical market where usually the tender contracts and all are for more than one year or even two years for many of the markets. So we don't see that for the current financial year, there will be a significant change in the Nilotinib volumes with respect to value. But we have to observe it. The more impact will be there for the FY '28. So to answer you, that is what is the answer for Nilotinib. And on second question on the launches for Europe, apart from Rotigotine, there are many other generic products also like I mentioned previously, we have Tadalafil oral disintegrating film that will be launched in Europe in this financial year. And apart from that, there are some generic products like Axitinib and many other products, which we will be launching and further market share will be improving in FY '27.

Sure, sure. So we should be assuming decent 40%, 50% growth in Europe in FY '27 as well given the base of FY '26?

Yes. So Ankit, we may not be in a position to provide any guidance, but we do expect the European business to have a healthy growth.

Sure, sure. And the second question was on the biologics business. So if we look at it, like this year, we had INR 150 crores sales, we would have gone -- got some milestone payment from Orion also for albumin. So like how should we look at the growth for FY '27 and FY '28? FY '27, what will be the key triggers -- because Adali has a molecule in India is growing at a decent pace, but it's still a small molecule. So how should we look at this number for FY '27 and FY '28, especially given Afli will be launched towards the later half of FY '27 and the remaining Nivo, Pembro launches will happen only in late FY '28. And like the other -- the CDMO business on the biologics side is something if you can elaborate more, how should we see the growth? So if you can broadly talk about the biologics business, the key drivers for the business for FY '27? And what kind of growth should we expect in FY '27 and FY '28?

So Ankit, I think in biologics, as I mentioned in my speech also, the most important part in biologics is if you see till last year, right, we were still a product and partnering everything we have done more for India. We just started in Q4 where we have partnered our first product, Nivolumab, that also for LatAm market with a company called SteinCares, right? So for the current year, you will see mainly in biologics, the main growth drivers will be CDMO. We have existing CDMO like 5 programs, which are going on and some more programs which are in discussion. We'll surely convert some programs. So there will be good revenue contribution from our CDMO business. And also, we will be doing licensing for this biologics, whatever we have biosimilar products and ADC products, right? Both we will be partnering for the current year in Europe and ROW markets. So there will be a good amount of licensing income also what we would achieve in FY '27.

Sure. So in this, can we expect the growth rate for last year to continue this year, given our base is small -- still small currently, but last year also had the Orion milestone payment. So despite that, what kind of growth rate should we expect for FY '27? And FY '28, I can clearly see the triggers, but for FY '27, how should we look at it? And even in FY '28, can this segment ex of albumin become a INR 400 crores, INR 500 crores revenue generator for us?

So Kiran, I think on future numbers, we don't give any accurate data on that. But what I can tell you is there are a lot of growth figures which are possible in biologics. And we are seriously working towards monetizing of each of these assets. So yes, there is a good growth possibility. What would be that percentage? How much we will grow? I think we have to observe that. More details you will get to know in upcoming quarters.

Sure, sure. And last question on OLC. The PDUFA date is approaching. And in your presentation, you still mentioned that we are hopeful for launch in FY '27. So like how should we look at this because it becomes a very key growth driver for us for the current financial year, given we'll receive milestone as well as our formulation supplies for the product. So like how sure are we on getting clearance for the product and going ahead with the manufacturing here?

Ankit, I think even in current financial year FY '27, right, in our business plan, there is no like major contribution from OLC because what we anticipate is this year, they will get approval, but major revenues, what we feel will get started in FY -- next financial year. So -- but it's a program which is of our partner. When they will get approval, how is their filing strategy, many of these details, they don't share with us. So we have to observe. It's completely dependent on our partner.

[Operator Instructions] Next question is from the line of Krisha Kansara from Molecule Ventures.

So first of all, congratulations on a very good set of numbers. The first question is quickly on the P&L side. The share of profit of INR 18 crores from associates and JVs, which we have reported in this quarter. So from which entity or rather from which joint venture or which associate entity has this profit come? Was there any one-off in both companies because we have never reported this kind of profit from our JVs? That is my first question.

Yes. So Krisha, this particular entity is our associate entity. It is not a joint venture. It's an associate entity by the name of Maya, where we hold 35% stake. It has been a research-driven company, which over a period of time has been investing in a lot of programs. And hence, we were taking our share of their accumulated losses that were coming up, which made our investments in consolidated results come to zero, right? Obviously, the business in the company was good. So we have never impaired those assets in our stand-alone books of accounts. But in our consolidated results, we -- as per accounting standards, we had to take impact of our share of loss. This year, when we have received their financials, they have shown a very significant improvement in the performance based on which the entire value has been reinstated. Also, the profit part of our -- or profit share of our portion has also been accounted for. So this is something that the company has started generating revenues and all and which is showing up. Whether it can continue with the same set of performance or not is very difficult for us to comment because that's not an entity that we control. But we are in touch with them. We closely monitor their operations and all. But at this stage, we will not be in a position to comment whether this is something that can continue as a regular feature.

Okay. Understood. And sir, my second question is on biologics segment on Aflibercept. So we had out-licensed this molecule for India and Russia markets. So have we received some part of the licensing income from these two partners or it is expected after the Phase III completion? And will the licensing income in case of Aflibercept be higher than that of Adalimumab?

Yes, Krisha. So for the first question, right, we have received only a few milestones in last few financial years. But a major part of milestone will be received in the current financial year on launch and then on one year completion and all, okay? And I think second question was...

Yes. So it was that will the licensing...

The licensing income Is higher than Adalimumab. That is right.

Okay. Okay. And sir, the INR 150 crores of biologics revenue, which we see in FY '26, would it be possible for you to break it up in terms of how much was from CDMO, how much was from our own biosimilar revenue? And what kind of revenue was from licensing income?

Yes. I think it would be -- you can reach out to Monish to get those details later on.

Next question is from the line of Parth Mehta from Vallum Capital. The line of Mr. Parth has been disconnected. Next question is from the line of Raghav.

Sir, my question is on the biologics side. So when do we see our biologics portfolio entering Europe and U.S. developed markets?

So Raghav, I think in the current financial year, right, as I mentioned, I'll repeat again, Nivolumab and our ADC product and also the NBE products, which we are doing, so two of them. So totally four products will be entering human global studies in current financial year. So once we enter that in FY '27, so we expect sometime in FY '29, the commercial revenues to start in from U.S. and Europe, not from U.S., from Europe and ROW.

Okay. But Adali and Aflibercept, we don't expect that to be launched...

Adalimumab already we are getting India revenue. And Europe and ROW market revenues will come again in FY [ '29. ] And for Aflibercept, currently, there is no plan of going into Europe market because it's a very long study and very costly study, and we are -- we feel that we are late for Europe market. So we are not planning to go for this product until and unless there is some partner who is ready to invest in the clinical study.

Understood, sir. And sir, what would be the time line for same for NorUDCA? When do we see that reach larger parts in the developed markets?

Even NorUDCA would be in FY '29. In Europe, but if I tell you about ROW market, we will start seeing revenues in FY '28 in ROW markets.

Any color, sir, on what would be the opportunity size for this in ROW market?

See, I think that can only be told maybe in this financial year in the second half of this year, right, because now we have started discussing with some ROW partners also. And we will have a lot of Indian study data also. I think we are also generating Phase IV data. So I think once with that, when we start working with our ROW partners, we will be able to throw more insight. But there is a decent potential, what I can tell you.

Next question is from the line of Shek Mohamad, an individual investor.

Congratulations for the excellent set of numbers. I'm not having that much knowledge about company products because it is very in detail products. I just want to know regarding the FY '27 guidance and top line and bottom line, if any, if you can provide?

Yes. So thank you for your question, Shek Mohamad. I think as we have been explaining that we do not provide any guidance per se. But I think we have been growing since past 2, 3 years at a very healthy rate, and we expect that trajectory to continue.

Okay. Sir, Tranexamic Acid spray product has been launched in India or it is exclusively for any particular country?

No, it is currently not launched in India because we are working on some government regulations. So currently, it's not launched in any of the market in India.

Sir, previously, we have launched Green T Film, right? So is that product continue or we have discontinued that product?

We have discontinued.

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

First set of questions on dutasteride. Correct me if I'm wrong, it seems to be a blockbuster product based on the Phase II trials. Yet -- despite completing Phase II in late 2022, you didn't file for Phase III until April '24, you didn't start Phase III till Jan 2026. Now that we are going global for most of our products, we should speed up our clinical trials processes, right? And on that note, do you feel this is not a good product? Can you talk about this product and the potential for topical dutasteride?

Yes. So Sanjay, on the -- I don't understand the product name, but what I can tell you that SMLTOP09, right, the product, what we are doing in that product is that's a product where -- why we did not start in last year human studies because there were additional preclinical study data, which were requested by the regulatory bodies that we were generating, okay? So all that data generation is completed. And now we are entering into global studies. So that is what we will be starting in the current financial year.

Okay. Can you talk about the potential of this product and it is better to sell it? And do we have any out-licensing conversations for India at least for this product?

No, currently, we don't have any out-licensing discussion, Sanjay. Currently, because the product is still in clinic and especially androgenic alopecia is a very big market, but there is a lot of data generation on safety, which is a very important requirement. So the data what we will be generating in the Phase III study, I think after that, we will discuss more on the partnering.

Okay. Okay. Got it. And you have three novel products in India in FY '27 or early FY [ '28, ] which is NorUDCA, Ondansetron and the one that you just discussed dutasteride. Can these three products do like cumulative -- all three put together, INR 500 crores, INR 600 crores in two, three years because all three are very niche novel and huge potential.

Yes, Sanjay, I think that will depend on our partners also, right? Because you will see for many of the products, we partner and our partner performance is very important for us. You will see that for all these products like in NorUDCA case, you have seen we have partnered with a very good three companies, right? So even for the other products, we would love to partner with the best companies in India. I think if we get a good partner and the product is performing well, we feel it's a very good possibility.

Okay. Just last question before I come back. On the patent and the FTO question for Ondansetron and NorUDCA because NorUDCA, I think Falk has a polymer patent in EU and I think globally. So do we have a different crystalline form that's on NorUDCA? And then on Ondansetron, do we have a Freedom to Operate versus Heron, the innovator. I know Ondansetron is not polymer-based. It's insoluble salt, but do we -- will our patent be at risk when we go global for both these products?

See, what I can tell you, Sanjay, these are very confidential strategies. But what I can tell you, we are having our own IP strategy on this, okay? And we are starting human studies for global markets. Obviously, all this work we would have done.

Next question is from the line of Girish Bakhru from OrbiMed.

Yes. Just wanted to actually talk on albumin. Why is the IMPD submission delayed? I think last quarter, we mentioned it would be Q4 and now we are saying first half?

So Girish, I think as I mentioned previously also, on IMPD submission, what we are planning to do is we are planning to do it from our new facility, right? So in the new facility, the execution of exhibit -- sorry, the batches for IMPD submission is ongoing. So once that is complete, then we will be submitting. That is the reason I mentioned it will be in first half of FY '27.

And typically, after submission, how much time does the regulator take for giving you trial approval?

It takes usually 3 to 4 months.

Okay.

To give clarity, right? So the Europe study is divided into two parts, the Indian patients and Europe patients, okay? So in Indian patients, the study approval already we have received. So once the batches are completed, we will be starting our India study, which is for Europe submission. Is it clear?

Can you again explain these two patients studies, what individual differences are there in between two studies?

So there is no individual difference. Only there is a requirement in Europe when you submit such complex products. They want some patient data also on European patients.

Understood. Okay. And Phase III, let's say, does it -- I mean, addresses again more data on -- whether this can be therapeutic grade or immunogenicity. What exactly would the outcome be focused on here?

So in Phase III, right, we will be evaluating both safety and efficacy of the product on more number of patients, and that is the data we will be submitting to the agency.

And because -- I mean, I'm just asking because it's a new technology, right? And there are very few products out there, recombinant ones. So would you say this would not require any further investments or additional studies before you see some revenues from FY '29?

So Girish, I think if you have followed our previous conference calls, we have successfully completed with European agency scientific advice. So scientific advice is like a written document, which you submit to the agency and take their approval on our clinical study. So that approval is already taken. So we don't expect after this any other additional studies.

Understood. Understood. And just lastly, I mean, so how big would you say would be the market size in India, particularly? And because it's a largely import-dependent product, right? So would there be, let's say, some sort of incentives that we can see even if the product is approved?

So I think Girish, Albumin, everyone knows it's a very good and decent opportunity, and there is always scarcity in the market. So incentive and all, I don't think there is any other incentive we are expecting on the product. The product itself will have a differentiation, the recombinant highly pure product. So I think that should drive the volumes.

Next question is from the line of Pratik Shrivastava from Nivesh Wisdom.

First of all, congratulations for great set of numbers. My first question is on the API, oncology side of things, sir. So we have this new oncology block expansion, which is underway and is about to be completed by FY '27 for around like 15-plus new oncology APIs, right? Sir, how does that translate into contribution to the revenues per quarter? Because most of the time, I think our contribution has been like lower than INR 130 crores per quarter for the last several quarters. I know that some of this has been translated to formulations. But can you share some more color on this -- on the contribution to the revenue from this side?

So Pratik, I think in API, oncology side, you will always see that even in future, right, a lot of our sales will be to our captive formulation because our main strength in oncology API is we are very strong in developing non-infringing APIs. And we usually try to backward -- forward integrate with our formulation and then go to the market that will have maximum realization. So even going forward, it's not that these products are something which will be launched once the batches are done like next day, the launch will happen. Once the batches are done, the formulation, people have to do the batches and then launch it. So oncology as a business for us in API will further grow, but it is not a steep growth. It will be a steady growth.

Got it. And you're saying it will continue to contribute more towards the formulation business. This is more of a backward integration story? Or this will have its own sales cycle, sales channel, different commercial DMF filings, things like that, sir?

So it will be both, but major contribution will be to formulation, our own captive formulation.

Got it. Got it, sir. And my second question is on the semaglutide GLP-1 side of things, sir. We completed the validation in Q4. Congratulations for that, sir. And what I read is DMF is to be ready by first half of '27. Sir, there are -- I see in the market now, there are lots of different players. A lot of Indian -- several Indian players are also developing semaglutide story. So what will be our differentiation?

So I think I mentioned in the previous call also, semaglutide as a product, our main strength is we are doing both synthetic and semisynthetic API. And also, we are forward integrating with our own formulation. So semaglutide itself is a very big opportunity. And because our facility has the global accreditations, we still feel in such a big opportunity if we get even small pie of that market share, right? That is a decent revenue which is possible with the product.

Got it. And are we targeting India first and then the regulated market, ROW?

No, our main focus will be on the export market. India will be our second priority in this product.

Okay. Got it. For that, have we identified any partner for commercialization, sir?

Yes. As I mentioned, right, we are also doing our own formulation. So our biggest partner is our own formulation business.

Next question is from the line of Amish Kanani from Knowise Investment Managers.

Sir, one thing which is noted is API is now 50% of the business and formulation and biologics is 50%. So congratulations on kind of going in that direction where we are value adding. The question, sir, is, as we grow at a high rate and given our gross margins are high, our EBITDA margins also are reaching at a very healthy level. But given the programs that we have and the R&D needs that we have, we'll also have reinvestment that will be done. So how do you think, sir, about EBITDA margins given that otherwise, if we restrict our investment, it can go really very high. And obviously, as a businessman, we would like to reinvest back. So how do you think about investment versus increasing the EBITDA margin at some level, you will reinvest back. So any thoughts there, sir, it will be helpful. And on the API side, sir, any challenges on the [ incipients ] or key starting material that because of the supply chain disruptions globally, if any -- are there any issues that you need to worry about?

See, I think on your first question, Amish, as we previously mentioned also, Shilpa as a company, principally, what we are doing is we are not investing into anything which is long term. So whatever investments we are doing, which are near term and midterm, right? Only on those we are investing. And all these are like decent sizable opportunities, which are possible for the group. So yes, we don't want to -- like we are not investing anything, which is long term. So if we continue this investment in our existing near-term and long-term opportunities, then only there will be a decent growth, which is possible. So we will continue to do that. That's the answer. And on second question on the raw material and solvent availability, yes, we don't see any major challenges on that, but only the prices have gone up significantly. So that is the only thing, but availability is there, no problem.

Okay. And sir, quickly, can you recap the CapEx for this year and next year, if possible?

Like for the current year already, it's available. So we don't see any significant CapEx growth than last year. It will continue to sustain.

Next question is from the line of Abhishek from Padmaja Investments.

On the Jadcherla USFDA audit, it should not come by now, right? Is there any issue with this as such?

So Abhishek, I think as previously mentioned in our quarterly calls also for majority of products which are required for U.S., right, we are now doing it from our third-party CMO sites. And we don't have a pipeline of like 10, 20 products launched every year. So we have very complex differentiated products, which we want to launch. So our major focus on U.S. will be from third-party CMOs. That is what we have as a company. There is no issue with the FDA. It's just that the facility when the audit happened, the FDA has given some observations. We have done the compliance. And now we are again waiting for the reaudit of that. So we can come out in some time. It's not that we will never come out, but it will not have any impact on our revenues.

Okay. But the audit already happened and the decision is still pending, if I understand it. Is that the case as of now...

Yes, correct. So we are working closely with FDA on the next steps with U.S. FDA audit.

Okay. And the plant utilization, even though it is not actually being used for U.S.A. is being used for other geographies?

Yes, because our facility, right, has all the global accreditation starting from Europe, LatAm, Saudi, all the markets, right? So the plant occupancy is not at all an issue. And because we have such a strong pipeline of differentiated products. So we don't see any capacity crunch issues currently in our formulation facility.

But there are certain tentative approvals pending because of this audit issue, how many products are in that current...

See, whatever products which are in tentative approval space, right, they are not -- there are -- many of them are already like very much genericized, and we don't see even if we get the approval for these products, we'll have significant launch opportunities. So only there are a few products which are having tentative approval, but the patent expiry and the launch for those products are late.

Next question is from the line of Vishal Manchanda from Systematix.

On Rotigotine patch Europe launch, can you share like what time can we take to reach full potential? And any sense on the peak potential that you expect from the product?

So Vishal, Rotigotine transdermal patch, as you know, is very complex product, and we have approval for this product. So in the current year, it will be more like initial launch and ramp up. And in subsequent year, in FY '28, we will see like full potential for the product.

So you can reach full potential by next year. Substitution will not take long once you are approved across markets?

Yes, you're right.

Okay. And on Nilotinib, do we expect approvals in other markets? Or we are kind of fully in terms of geographic reach, we are there...

No, you are right. Actually, Nilotinib in our rest of the world market is also expected to do pretty well. And we will be launching in some of the rest of the world markets also in next financial year.

Okay. And Europe, you are fully entrenched in terms of the potential opportunity?

Yes, you're right.

Okay. And if you could share what -- on our CDMO business, like what was the total CDMO business across all domains, API, formulations and biologics?

So if you see for the full financial year, right, just on the API side of the business also, we have clocked approximately around INR 110 crores of CDMO business, right? And we are also doing similarly our CDMO business in biologics side also. So majorly, our CDMO revenues are in API and biologics. So what is that number and more details, you can work with our person, Monish Shah, our Investor Relations person. He'll be able to provide you.

Got it. And on the licensing fee number, do we have any contribution of the CDMO business or that licensing fee doesn't have any CDMO contribution?

That doesn't have any CDMO. That's pure product licensing.

Okay. And just one final one. The oncology breakthrough molecule that you are servicing to an innovator, any color there? Can that be meaningful this year or next year?

Yes, we expect it should be meaningful in FY '28.

Okay. And so would that be larger than the numbers you would have attained in the past? Can...

No.

The last question is from the line of Kiran D. from TableTree Capital.

So a couple of questions. One, sir, the polymer business, I mean, we had a contract -- I mean, [ $4 million ] contract, I think, was mentioned in the annual report last year. So this year, what is the kind of revenue? And more importantly, more than the polymer revenue this year, how do you see the potential of our polymer business in the next one to two years? Has it a potential to reach a [ $20 million ] kind of run rate? If you could just elaborate, that would be great.

So Kiran, I think I will not be able to give you exact numbers, but polymer as a business, right, it's a business which will have good growth possibility, but it takes some time. So like currently, we already have one commercial product in the polymer space. So that is adding -- that has added decent revenue in FY '26. So we will see how the opportunities are scaling up in FY '27. But yes, going forward, like in very -- like few of years, it has a good potential, what I can tell.

Got it, sir. Okay. Cool. And one question for Alpesh. Alpesh, you mentioned ROCE 17.4% in FY '26, excluding investments made in potential high-growth biologics and NBE business, it's in the investor presentation as well. So our gross block is INR 2,281 crores. So when you say excluding investments made in potential high-growth biologics and NBE, how much is that? Is it like approximate INR 700 crores, INR 800 crores? Is that the right number?

Yes. I think some of those numbers, you should reach out to Monish to get those details, right? He should be able to provide you the exact details over there.

Due to time constraints, that was the last question of the day. I now hand the conference over to Mr. Alpesh Dalal for closing comments. Over to you, sir.

Thank you. Thank you, everyone, for your time and your thoughtful questions. Each year, we remain committed to growing and scaling the company to new heights and your continued interest and support mean a great deal to us. Should you have any questions that have remained unanswered, please reach out to Monish, and we'll be happy to provide those answers to you. Thank you.

Thank you. On behalf of the Shilpa Medicare Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.