Zydus Lifesciences Limited ($ZYDUSLIFE)

Ladies and gentlemen, good day, and welcome to Zydus Life Sciences Earnings Conference Call for the Fourth Quarter FY '26. [Operator Instructions] Please note, this conference is being recorded. I now hand over the conference to Mr. Ganesh Nayak, Director of Zydus Lifesciences. Thank you, and over to you, sir.

Hello?

Yes, sir.

We couldn't hear the last part. What is that?

Please note this conference is being recorded. I now hand over the conference to Mr. Ganesh Nayak, Director of Zydus Lifesciences. Thank you, and over to you, sir.

Good evening, ladies and gentlemen. It's my pleasure to welcome you all to our post results teleconference for the fourth quarter and the financial year ended March 31, 2026. For today's call, we have with us Dr. Sharvil Patel, Managing Director; Mr. Tushar Shroff, CFO; Mr. Arvind Bothra, Head of Investor Relations; and Mr. Alok Garg from the Managing Director's office. To begin with, let me give you an overview of the performance for the year. I'm happy to inform you that we have ended the fiscal 2026 on a strong note. Overall, we delivered healthy double-digit growth during the year, ahead of our expectations. Even after adjusting for acquisitions, the base business grew in double digits. This reflects the underlying strength of our operations. On the profitability front, we surpassed our expectations, achieving the highest ever operating profit as well as margins during the year, a strong product mix combined with operating leverage and ForEx tailwinds propelled profitability. In the pharma space, our U.S. formulations business grew on a higher base of the previous year despite the increased competitive intensity in key products. Base business volume expansion new launches and sustained traction in the specialty portfolio drove growth during the year. Our Branded Formulations business in India outpaced the market with strong double-digit growth supported by healthy volumes and new product introductions. Our international markets business, spanning emerging markets and Europe sustained strong momentum with demand-led growth across geographies. We expanded into the international consumer wellness space by acquiring and integrating U.K.-based comfort Limited. This move establishes our footprint across the U.K. EU and the U.S. It significantly strengthens our presence in the high-growth pediatric wellness and animal health. On the medical devices front, we took significant strategic steps as we establish it as 1 of the 3 business verticals for Zydus. We acquired the French Orthopedic firm Amplitude Surgical and entered the nephrology and cardiovascular devices space. These moves position us well for the next phase of our growth. We are also accelerating our digital transformation, advanced analytics, automation and AI are now embedded into our operations, improving efficiency and the way we serve our stakeholders. With that, let me take you through the financial numbers for the year gone by. We recorded consolidated revenues of INR 271.5 billion, up 17% on a year-on-year basis. Business delivered strong operating performance with an EBITDA margin of 31.2%, which is an improvement of 80 basis points over the high base of the previous year. Consequently, the consolidated EBITDA for the year grew by 20% to INR 84.8 billion. Net profit adjusted for exceptional items for the year was INR 54.6 billion, up 15%. Thanks to our strong financial performance and disciplined financial management we kept our net debt-to-EBITDA ratio comfortably within the benchmark levels even as we pursued several inorganic growth opportunities during the year. Our net debt to EBITDA stood -- ratio stood at 0.5x as on the 31st of March 2026. Coming to our quarterly financial performance. We ended the year on a strong trajectory. Our consolidated revenues for the quarter stood at INR 75.9 billion, 16% on a year-on-year and 11% on a quarter-on-quarter basis. Our operating profitability continued to improve with an EBITDA margin of 33.7%, which is an improvement of 110 basis points on a year-on-year and some 20 basis points on a quarter-on-quarter basis. EBITDA for the quarter stood at INR 25.6 million, up 20% year-on-year and 41% on a sequential basis. Net profit for the quarter, adjusted for the exceptional expense was INR 15.9 billion, up 15% on a year-on-year and 43% on a quarter-on-quarter basis. Now let me take you through the operating highlights for the fourth quarter of FY '26 for our key business segments. In the pharmaceutical space, North American business comprising of the U.S. and Canada, registered revenues of INR 29.5 billion during the quarter, up 5% quarter-on-quarter. Growth during the quarter was driven by volume expansion in the business new product launches and sustained attraction in the specialty and rare disease portfolio. On the U.S. generics front, we filed 3 ANDAs, received 9 approvals and launched 6 new products during the quarter. On the U.S. specialty front, in the month of April 2026, we filed 2 new product dossiers through the 505(b)(2) route, thereby bolstering our pipeline. In the orphan and rare disease space, we launched ZYCUBO, which is copper histidinate for the treatment of Menkes disease, which is an ultra-rare disease. With this launch, we now have 3 rare disease products marketed by Sentynl. In India, our branded business formulations business sustained its growth trajectory with a robust 15% year-on-year growth outperforming the market growth for yet another quarter. Chronic segment continued to grow at a faster pace, driving the overall growth of the business. In terms of therapy performance, business grew faster than the market in key therapies of cardiology, respiratory, dermatology and in the super specialty areas of oncology and nephrology. On the super specialty front, we continue to retain leadership position in the oncology therapy. Contribution of the chronic portfolio has increased consistently over the last several years and stood at [ 26.3% ] as per IQVIA MAT March '26, which is an improvement of 620 basis points over the last 3 years. During the quarter, we launched the world's first biosimilar of [indiscernible] under the brand name [indiscernible], reinforcing our growing capability in advanced biologics and immuno-oncology. This immunotherapy will reduce the treatment burden by making it accessible at approximately 1/4 the cost of the reference drug and it's likely to benefit over 500,000 patients. We also launched the country's first indigenously developed biosimilar of [indiscernible] 2 milligrams under the brand name [indiscernible] for advancing ophthalmic care. During the quarter, we launched semaglutide injection under the brand name [indiscernible]. Licensing and supply agreements with Lupin and Torrent Pharma for co-marketing in India. Our International Markets Formulations business continued to deliver strong double-digit growth with revenues of INR 8 billion, up 4% year-on-year. The growth was broad-based across regions, with strong demand-driven performance in both -- the emerging markets and Europe, supported by focused execution. Our consumer wellness business recorded revenues of INR 14.6 billion, up 61% year-on-year. In the domestic business, we retained leadership position across most product categories that we operate in. Skin and hair care brands and Food & Nutrition brands registered growth of 39.7% and 9.4%, respectively, whereas seasonal brands declined by 9.8%. International business, including the Comfort Click business, delivered a like-to-like growth of 31.4%. In the medical devices space, the business performed in line with expectations and registered revenues of INR 3.3 billion. We expect the business to deliver steady performance in the coming quarters. This will be driven by expanding our geographic presence to capture newer markets unlocking cost synergies over time to improve profitability and leveraging our technology-driven advanced portfolio to deliver superior patient health outcomes. On the operations front, our oncology injectable manufacturing facility located in the [indiscernible] received an EIR establishment inspection report for the pre-approval inspection conducted in the month of November 2025. This concludes the business review. I would now request Dr. Sharvil Patel to take you through the key drivers across businesses as well as initiatives in our innovation program. Thank you.

Thank you, Mr. Nayak, and good evening, ladies and gentlemen. It is a pleasure to have you all here today on the call. Fiscal 2026 was remarkable with robust double-digit growth and record operating profitability. Even excluding inorganic moves, the base business delivered strong double-digit growth, reflecting the strength of our portfolio, our pipeline of innovation and the resilient supply chain and strong execution capabilities. Over the last couple of years, we undertook several inorganic initiatives to acquire new capabilities to expand our offerings and enable the patients to fulfill their diverse health care needs. These organic moves [indiscernible] various business development initiatives have complemented the existing business will and will be the key pillars for sustained long-term growth going forward. In the U.S. market, we ranked amongst the top 3 players in the generic space, backed by a rich and differentiated products portfolio built in-house as well as through partnerships. As we pivot towards specialty, we are driving growth through multiple levers. Our [indiscernible] pipeline built via in-house development partnerships and [indiscernible] acquisition is expanding steadily. Sentynl pediatric rare disease portfolio is broadening access to innovative therapies. In biosimilars, we have in-licensed 2 large molecules and strengthen capabilities with the newly acquired U.S. manufacturing facilities. We shall maximize the utilization of these facilities through continued bought mal supply to Agenus and onboarding of new partners. Together, these initiatives position us strongly to accelerate our specialty play. We are accelerating our U.S. specialty oncology strategy through the proposed acquisition of Assertio Holdings. This is a pivotal move to provide us with an immediate high-scale commercial platform in the oncology supportive care. At the heart of the deal is [indiscernible], a U.S. FDA-approved long-acting biologic that anchors our portfolio. By leveraging [indiscernible] oncology relationships and the strong share in Medicare Part B accounts, we are now not just expanding our footprint. We're building a highly differentiated, high-margin specialty oncology business in the U.S. as accretive and establishes a strong platform for the [indiscernible]. The India formulation business remains a compelling growth story for us. Our branded portfolio once again outpaced the market with strong double-digit growth, driven by consistent strength of our brand, sharper therapy focus and a pipeline build around differentiation and unmet needs. Years of this delivered strategic interventions have rated a compounding effect, broadening our reach, deepening our customer trust and accelerating our commercial momentum. What makes this especially meaningful is that our engagement extends well beyond the point of prescription. Through patient support programs and value-added services, we remain a dependable partner at every step of a patient's health care journey. Our International Markets Formulations business spanning emerging markets in Europe have consistently delivered strong double-digit growth over the past several quarters. In emerging markets, we are driving performance through a therapy led approach tailoring solutions to local needs and building a more agile market responsive portfolio. In Europe, are focusing on expanding portfolio breadth and strengthening market coverage, positioning us to capture incremental growth and deliver enhanced value to our customers. Our consumer wellness business continues to drive our growth, fueled by category-led leading brands and a shift towards premiumization. We are aggressively expanding into nutrition and vitamins, minerals and supplement [indiscernible] while scaling our digital footprint through Comfort Click acquisition. Our focus remains on innovation and digital first segments, ensuring we build a future-ready portfolio that delivers consistent results for our stakeholders. In our med tech business, we are strategically focused on 3 critical areas: cardiology, nephrology and orthopedics to build strong growth engines for growth. With Amplitude advanced orthopedic portfolio, bringing cutting-edge innovations to patients, surgeons and health care facilities worldwide. In cardiology, we are broadening our offerings to meet evolving clinical needs, while in nephrology, we are establishing a high-end dialyzer membrane facility to address the global rising demand. These initiatives underscore our commitment to deliver superior patient outcomes and build a strong sustainable growth engine for the future. With this, let me share some material developments on the innovation front during the quarter. Our distributed tablets, which were -- which we licensed to China Medical Systems Holdings in 2020 has now received approval from the Chinese regulators for the treatment of renal anemia. This marks a significant milestone for us as an approval has come in China, the second largest pharmaceutical market globally, reinforcing our global potential of our innovation piping. The U.S. FDA has also granted orphan drug designation status to desidustat for the treatment of sickle cell disease during the quarter. Our novel antimalarial candidate [indiscernible] received the approval from the DCGI to conduct 2 Phase III clinical trials in patients with uncomplicated malaria due to both Plasmodium falciparum and plasmodium buybacks in India. In the biotech R&D space, we initiated a Phase III trial of a second biosimilar ADC in India. On the [indiscernible], we initiated a Phase I clinical trial for one new candidate and preclinical studies for another candidate in India during the quarter. On the global development front, the in-licensed pembrolizumab biosimilar candidate, FYB206 successfully completed the clinical development, marking a major step towards U.S. FDA filing. On the [indiscernible] front, we entered into an agreement with prgs&t, a Korean company specializing in the development of medicines for rare genetic diseases to license its investigational molecule, progerin SLC D011 for Hutchinson-Gilford progeria syndrome. We shall acquire full rights to this drug candidate upon achieving certain milestones, making it our second therapy intended for the treatment of HGPS. Thank you, and we now will start with the Q&A session. Over to the coordinator for the Q&A.

[Operator Instructions] The first question is from Kunal Dhamesha.

This is Kunal from Macquarie. Congratulations on good set of numbers. First one for you, Sharvil, FY '26 has been exceptionally strong for us. Where do you see FY '27, from the growth perspective as well as the profitability perspective? Any outlook here would be helpful.

Thank you, Kunal. So I think on -- we are very happy with the 2026 performance. I think looking forward, I think on the consolidated revenue, we still continue to see high teens growth for FY '27, we do expect that in spite of a high base of FY '26 for North America, we will still see a growth -- single-digit growth in the North American business, aided by the portfolio. And in India, we have now consistently demonstrated better than market growth, and we are thinking we will outperform the market by 200 to 400 basis points versus the current IPM. On the international markets, we have seen very significant 40-plus percent compound -- I mean, growth for the year and 45% for the quarter, and we see the momentum continuing also in the current year and with the consumer -- on the consumer side also, we see a good momentum on double-digit growth. So I think overall, on the revenue side, we see a strong momentum for the organization. On the margins front, we ended this quarter at around 25 points around close to 26%. I think FY '27, looking at competition, also development competition, [indiscernible] competition expenses related to Saro launch. We are expecting margins in excess of 24%.

EBITDA is [indiscernible]

[indiscernible] R&D expense.

Okay. Perfect. And Sharvil, on the specialty front, now we have almost 3 molecules, especially the rare disease molecule in the market through Sentynl. We also have kind of 505(b)(2) portfolio through [indiscernible], right? So if we put all these together, which are, let's say, high entry barrier kind of molecule. What would be the current contribution of this portfolio? And with our pipeline that we have, [indiscernible] in China. Where do we see this contribution going over the next 3 to 4 years for our overall business?

So currently, see, I think we are building on the 3 legs that you just mentioned. We have Sentynl, which has now 3 approved drugs. And with this, it has become -- it is broken even and is starting to going to make profits going forward. I think with adding more portfolio to that business, we would see that business scale up. But this will not -- this will be high profitable businesses but not high value-driven businesses. On the 505 (b)(2), we have now today, obviously, sitagliptin franchise, the scale-up is more getting along with our oncologic supportive care through the in-licensing that we did on [indiscernible] with also the liquid portfolio scaling up. I think this will become a more faster, scalable business very soon and also very profitable as we are able to launch these products, including [indiscernible] by end of the year. So we would see, I think, '27 onwards good momentum and size for this business. So this is just the beginning, I would say, this year. So FY '28 will be seeing a stronger momentum. But this year also will be quite a good growth for these businesses. And finally, saro, we are still in the early commercialization in the sense of hiring teams and preparing for the prelaunch activity. As we come closer to approval and launch, we can share more details. But overall, yes, our vision is that our nongeneric specialty portfolio will be the meaningful growth driver for the organization over the next 3 to 5 years.

Lastly on this [indiscernible], potential acquisition [indiscernible], how that kind of fits into all these 3 growth drivers? The product already on. We have seen it's primarily for the [indiscernible], if I'm correct, right? So how does that -- within that space, that product kind of how is it positioned? I believe [indiscernible] also has a device which kind of lets people administer the therapy at home rather than spending another day in clinic. So how [indiscernible] compares there as well as on somewhat of clinical efficacy and safety side for us to kind of be more positive. And I mean, how are you seeing positioning this molecule?

So we already have a supportive oncology team, which currently markets [indiscernible]. We have also partnered with [indiscernible] for one more future support of [indiscernible], which has been filed and we hope in the next 9 to 12 months, we will see the approval and launch. This again, adds to the portfolio of this team for launch. So we have already a commercial platform to launch today, we believe it has around a 4% volume share. It has many benefits. One, it's still a novel long-acting GCSF and [indiscernible] and it also can be administered the same day versus the other biosimilars or biologics in the market. So there is a benefit to that. And we see the good momentum the business tracking and we are very confident on once the question is closed, how do we integrate it with business and scale it up. So that's the overall plan with -- currently will be a pipeline of 3. We also have ranibizumab launch coming, and we see also that with the current team and certain resources, we can use them also for the scale-up of ranibizumab.

So the commercial resins would be leveraged across many contracts is the way to look at it [indiscernible] And then the 24% plus EBITDA margin guidance makes in that incremental commercial presence that we are going to build for, let's say, [indiscernible] or maybe, let's say, [indiscernible], et cetera.

But Saro is part of our plan, but [indiscernible] will not have a cost I mean we'll see more synergies versus cost rate. .

The next question is from Neha Manpuria.

My first question is on the India business. I think you mentioned 200 to 400 basis points higher growth in India versus the market. I can see that, obviously, there has been an improvement in growth in the last few quarters for Zydus. Could you talk a little bit about what gives you the confidence on maintaining this outperformance incrementally, where would you see more growth coming from in India? And second, just a related question on India. Do you think we need to make more investment in India, either through MR expansion or probably acquiring more products to [indiscernible] or you think the investment in place, and therefore, this growth should drive margin expansion for the business?

Currently, we don't see any further rep investment in the short term. I think the growth -- we are confident on the growth driven by the innovative portfolio, which is scaling up very meaningfully. Our focus on the growth boost or brands that we have been speaking for the last 2 years now, which is delivering better growth now. Also, we are seeing a very strong traction on our key therapies with the launches and monetization of our portfolio on biosimilars and also the new launches that we've done. And continuously, we are improving our chronic share consistently over the last few years. And that is also aiding to weather mix in terms of business. So I would say it's an all-round performance with many things. Obviously, innovation led, but also focus on brand building on our core brand is helping us succeed. .

Understood. And second, you mentioned about the car investment. Could you provide some color on what you think the investment for Saro would be in fiscal '27 to build out [indiscernible] and given that we've also set another unrelated question, given the investments that we've made in different areas, CDMO med tech specialty business now with [indiscernible] could you provide us some milestones that we need to watch to give us confidence on when we should see this business becoming more meaningful to Zydus as a whole.

So on Saro, for this year, we'll have an additional [indiscernible] kind of investment on the commercialization part on Saro. That is what we have factored in. And with respect to...

Sir, I missed that number. What did you see as [indiscernible] number?

[indiscernible] with respect to [indiscernible], I mean, it's still -- we still have to close on the deal. But we see it being an accretive deal to the organization. So that's what we can say now. Post, I think closure, we can talk about more [indiscernible] .

And we've done like CDMO, we have done medtech's, obviously Comfort Click. So for these, what do you think would be a good inflection point for us to start seeing meaningful contribution to diss performance for medtech, [indiscernible] already contribute, but do you think the scale-up in this business in terms of what [indiscernible] would take us a couple of years? Or do you think that could be witnessed in '27,'28?

The Medical Devices business is a platform build that we are going through. So it will take at least 3 to 4 years before we see a strong momentum. But I think we would see improvement of cost and profitability all build more synergies. On the Comfort Click business, it's already a strong growth business for the last 6 months post acquisition, it has delivered on its numbers. and it is already EPS accretive in this fourth quarter and going forward also will be pace accretive. So I think that's on track. It's a steady growing -- fast-growing business and is getting integrated well with the organization. . On the [indiscernible] on the acquisition of the manufacturing on [indiscernible], again, that's beginning, I would say. So we would need the next 2 years to build capabilities. The what it gets is obviously immediate supply for the bot well to Agenus, which will continue, and we are seeing good traction there. But as we add more partnerships and maybe more products, we would see metal utilization of the facility over the next 3 years. But it will take at least next 3 years before we see that facility being well utilized.

And this broadband contribution isn't very meaningful at the moment, right? Sir, it's just incremental, but it's not like a big revenue contributor. That would be a fair assumption?

Yes. So yes, we are -- it's not going to be significant, but it's around INR 10 million to INR 15 million revenue.

The next question is from Harith Ahamed.

So we have guided for a 4Q '26 filing in previous indications. So can you give an update on the status of that? And if it's filed, do we have a good date from the [indiscernible]

So in a new NDA filing, once the acceptance of the NDA happens, we can give you the goal date. So I think we will update you once we have acceptance of the NDA.

So it's final, but we are awaiting the acceptance?

Yes, we have to await the acceptance of the NDA, which is the more important milestone.

Okay. Got it, sir. Semaglutide in India, can you give us a sense of the rationale for licensing strategy here to look and [indiscernible] given we have a very differentiated reusable pen device. What was the thought process behind going along with our own launch licensing it out to partners. And then from a realization standpoint, per device, how different is our own sales versus sales through partners.

So I think we have launched a normal formulation on sema. I think it is -- obviously, as Zydus alone, we don't cover each and every doctor and specialty. Also this being a highly competitive product with the multiple launches. We believe that the best strategy would be to launch with more players to create more share of voice and more impact for the new formulation with the customers. I think that strategy has worked very well. I think we are now #2 in terms of share. and closely followed by Lupin and Torrent also has gained strong share. So I think there's a good choice on partners. Together, we control a very meaningful part of the market share on semaglutide which is also very important. And I think it will only grow from strength to strength there. What we have been able to demonstrate is a very reliable supply, very strong product with a highly reliable pain, which has been the challenge in the market. First to market was also the big success for us and the companies that launched with us. So we do see that this strategy of co-partnering has helped in terms of gaining strong market share and share of voice, and we hope this momentum will continue.

And lastly, on [indiscernible], just to clarify, did you mention that the dosing schedule for this product is different versus [indiscernible] or is it the same?

It's not -- the main thing is it can be administered on the same day, which is one of the benefits versus [indiscernible]

The next question is from Saion Mukherjee.

Congratulations on another good quarter. I have a question on R&D expenses, which have ramped up quite rapidly it appears that almost INR 700 crores of quarterly run rate, you have, which is probably one of the highest in the industry here. Is it all organically driven? Because if I look at the employee expense within R&D that seemed to have increased at a much more moderate pace. And how should we think about the INR 700 crores -- like what are the key investments? And if you can just split it up into generics, biologics, vaccines and innovation.

Sure. So I think, yes, we believe our R&D is a very critical part for our future growth and profitability, and we have been consistently investing in that. Obviously, we have a little bit of lumpiness during different quarters. As we are guiding forward, we are seeing around 8% of FY '27 is our current expectation on R&D. The breakup is around -- for the last year is around 50% was on generics and value-added generics. And the rest, 43% 40-plus percent was on NCE biologics and vaccines. So that has been generally the breakup of R&D. As we move forward, we would probably see a little bit higher uptick on the NCS and biologics and probably a similar to a similar kind of number on -- in terms of absolute number on the generic side.

Okay, sir. The other one is on sema, where if you can give some color based on your initial experience in India, how large you think it can be for Zydus over the next 2, 3 years. And the device and trend that you have, is there something you would like to do even in other emerging markets with this product? Or is this largely going to be India-specific opportunity?

So I think good beginning to the launch in multiple ways. One is we do combine have one of the strongest market shares in the in this new device. So there has been good acceptance to the product. We are seeing a better forecast than earlier forecasted for all our partners and bodies. So we are seeing a higher uptick and more confidence, I would say, going forward in terms of growth. So internally, I think we are well poised to sort of do well in the Indian market with both the -- how it has gone and what the orders we have and for the future to manufacture. We have a plan to make sure that this new formulation is available across different markets. We already have a partnership /registration plan for more than 20-plus markets, which is already ongoing. We are not in the first wave in many of this, but we believe with this differentiation and which will offer a significant cost benefit to the government and the patients. We would see a good momentum for the differentiated formulation in all of these markets and we are going ahead with the filing and obviously, partnerships in many multiple markets as we speak.

Okay. And any time line in terms of launches, like is it expected in this year or next year?

Depending on the cycle of approval, we could have -- I mean, see some in this year or probably some in early next year? .

Okay. And just one last question from my side. If you can guide for your CapEx number for next year, FY '27. And also depreciation number is high in the quarter. Is this the number we should take in on an annual basis going forward?

So yes, we have had an uptick on our capital investment because of multiple initiatives that we've taken on expansion. So we are thinking in FY '27 around INR 1,500 crores CapEx number. And the quarterly depreciation is around INR 550 crores.

Yes. So Saion, this also includes the licensing fees that we have capitalized on the settlement of Mirabegron, which will be charged up to 2027 -- September 2027. So it is a limited period charge-off that we'll have. Thereafter, there won't be any kind of a cost that will be associated with this utilization.

The next question is from Surya Patra.

And congratulations for the great set of numbers. I'll start with a couple of clarifications that I wanted. First is that whether -- what really led to this kind of sequential growth in the U.S. business despite every [indiscernible] not being there or if it is there, then you can qualify that? And also, what is the kind of like-to-like growth in the U.S. business that we would have seen for the full year FY '26? That is one. And another clarification that if you can give that. So about this $75 million, which is still likely to be seen as a kind of amortization. So beyond that, there is no reality you charge or anything, right, in case of [indiscernible]

There is a royalty charge.

Okay. In regards to -- so are you quantifying the royalty charge? That is one. And secondly, about the U.S. business, the sequential growth, what we have seen, there is a positive surprise considering the no relevant sales sequence. So what has driven that? And what is the like-to-like growth in the base business of the U.S. for FY '26?

Yes, I think as we had stated in the last quarter also that we had very little Revlimid contribution. And I think this -- and I would say there are 2, 3 factors. One is definitely December end, obviously, there is destocking and you will see -- we see a higher uptick during the Jan,Feb,March quarter. So there is a small incremental benefit that comes out of that. And also, I think multiple levers of new product launches, the specialty portfolio scaling up, there have been many levers to good growth. Also, we have said that our base business continues to do [indiscernible] consolidated share. So all of those things have helped us, including some more share on mirabegron. So overall, we are around the 300-plus million days right now.

Okay. Okay. So that means this is a kind of sustainable base even going ahead since you were talking about single-digit kind of growth for the next year despite no evaluable revenue in the subsequent year.

Yes.

Okay, sir. My second question is about the approach towards the biologics or biosimilar or the CDMO. So it is a comprehensive approach, it looks like from the initiatives that you have taken either by creating capability in the biosimilar in the initial states and building the BLEs also and simultaneously to build kind of a CDMO capability in the biologics space. So given or putting all this together, when this vertical is likely to be a kind of a meaningful contributor to ciders, whether -- if you can give some sense on that front, then it would be helpful, sir.

So today, the biologics part of our business is a very scaled and meaningful contributor to our India business. And it continues to do extremely well, and we see that meaningful continued scale up. With our partnerships and filings that we have done in the EM markets, we would see over the next 3 years, a meaningful scale-up of our out-licensing and launch of biosimilars in many of these markets, which will add to the overall non-U.S. sort of growth for the biosimilars business. I think in U.S., we have [indiscernible] through well. We have been waiting for a regulatory framework to change to make it more beneficial to do R&D development and -- having seen that happen, I think, in a very short period, we've been able to license and codevelop and plan our biologics business in the U.S. And we would see, I would say, on the next 3 years, a important milestone for biologics, but more importantly, by 2029, FY '29, FY '20 -- FY '30, we would see the real scale up on the global biosimilars business.

Okay. Next question is about the overall growth. So in fact, FY '26 was obviously a kind of a great year supported by Mirabegron, Revlimid than inorganic activities also. So for next year, what would be your kind of capital allocation priorities or the investment priorities whether the momentum on the inorganic growth side that will continue the way that we have seen it was a kind of very heavy inorganic activity that was for FY '28 -- during FY '26. So going ahead, for FY '27, your thought process about it.

So yes, I think what we have been always talking about is building new capabilities when we look at our capital allocation strategy with new platform capabilities or new portfolio. And if you see many of the inorganic opportunities that we have looked at, we have seen where we can really build up capabilities and platform. So that has been good. And going forward also scaling up our specialty business, including would be obviously one of the important areas that will continue to add portfolio to 2. And I think beyond that, I think we are, I think, have a good R&D pipeline of products to come through which we are betting on, and we are looking -- it looks exciting for us. So we are building towards that. So mostly, it will be bolt-on expositions that we could look at from the specialty point of view. Also potentially, our international business is doing extremely well, as I said, growing at 40-plus percent. We are seeing opportunities to also create a strong leg of growth for the international market. So we would continue to look for opportunities there.

Okay. Just last one point from my [indiscernible]. See, this -- about this amplitude, we have possibly acquired something else also that BC Medical, which is a kind of a distribution kind of setup for those business and it is supposed to reduce the cost for the aptitude. So can you give some more clarity to that, like what is the current profitability of Amplitude as for FY '26? And with the initiative, what is the kind of margin profile that you are thinking about that operation for next year?

So Amplitude is a profitable business, upwards of 20-plus percent. The acquisition we did, there are agents and distributors that you can acquire. So it's a normal course of business that one does it. And it's not really -- I mean, in [indiscernible] terms is an M&A, but it's more about sales and distribution kind of consolidation that we do. And as I said, this business over the next few years, we will look to improve our profitability and growth.

[Operator Instructions] The next question is from [indiscernible]. .

My question is on saroglitazar. Firstly, on PBC, given the trial data is out in our hands, is company planning to present or publish the PBC clinical trial data at EASL 2026?

Yes.

And secondly, on MASH, according to clinicaltrial.gov, the Phase III clinical trial was completed in October 2025, could you please share the expected time line for publishing or presenting the top line results? Additionally, is company evaluating any out-licensing or co-development opportunity with large pharmaceutical company for saroglitazar in the U.S. mass market?

Currently, we have -- in the India large Phase I trial with the 52-week follow-up [indiscernible] is continuing with its recruitment. And maybe in the next couple of quarters, we will close on the recruitment. And then as we get data, we'll obviously publish the data on that. With respect to U.S. on PBC, the company has decided to launch the product on its own. And so we are preparing for a commercialization strategy in U.S. post a favorable approval in the U.S., we would look to see how do we partner or license for Europe and other countries.

And sir, thirdly, when do expect [indiscernible] start launch in China, what is company revenue expectation from this product from Chinese market?

We will hope to see launch in second quarter of the FY '27 in China. As we get more information on the commercial launch and readiness with the partner, we can talk about it as we get more information.

And lastly, any progress on specialty or acquisition for synergizing saro launch?

No.

The next question is from Kunal Dhamesha.

Just one on the debt side. We are already at more around INR 4,500 crores debt and with the buyback and [indiscernible], we would be almost close to around INR 7,000 crores net debt, not consider the cash generation by '27. But -- so what is our plan from here? Do we deleverage from here? Or are we comfortable at this kind of debt level, which would be more like slightly less than 1x net debt to EBITDA. I would like to get your thoughts.

So we are comfortable around 1x net debt to EBITDA. So right now on an ongoing basis. So we don't see that as a major concern. We continue to look for bolt-on acquisition opportunities for our specialty 505(b) (2) franchise. So that's what we'll continue to look at. And -- so yes, from that point of view, we are currently comfortable with our current financial metrics. .

And this bolt-on would be on the same strategy of [indiscernible] rare disease [indiscernible]

Yes.

Okay. And lastly, on the working capital side, that has also kind of inched up quite a bit from quarter 1 of FY '26 through quarter 4. So where do we see that? Do we see working capital coming back to the order levels?

I think on the overall receivables as will be, I think we are very healthy and probably amongst the best-in-class when it comes to working capital management in terms of number of days. So I don't see that being a major challenge. We continue to always look at ways of improving our health, both on receivables and on inventory. So we are comfortable where we are. And obviously, with acquisitions, you would have additional rent capital that would have got added. But on the overall health parameters, we are probably amongst the top in terms of an industry.

Sure. And lastly, on the current geopolitical environment and its impact on the supply chain. What kind of disruption are we witnessing? Are we not on the, let's say, fuel availability to container availability, API prices or raw material prices and how has that been factored into FY '27 outlook along with the currency benefit, which I believe would be also a good positive driver. But on the adverse side, the other factor, what are we seeing there? And how is it factored into our guidance?

So it's very difficult to predict in the next 3 months and 6 months, but we are every day obviously solving for challenges or opportunities that we see. Obviously, costs do go up on both freight on lines, logistics as well as on other things, which we have to manage through a better sourcing and better rationalization and cost optimization. But we are sort of taking it as it comes as we see new challenges. We're trying to respond to them. And I think the teams are quite efficient to make sure that they continue to improve on that. Wherever we see opportunity to improve our margins, we look at that, and that's what we continuously work towards cost efficiencies but it's difficult to predict what will happen in the next 3 to 6 months. So we are taking it as it comes.

But at this point, the rupee depreciation, would you say depreciation is enough to cover all the disruption in terms of increased cost by line item?

Yes, we have a good export base. So obviously, rupee depreciation gives us a good cash flow.

The next question is from [indiscernible]

My first question is regarding your domestic business. We observed that Onco IPM growth is also very strong. In fiscal '26, the volume growth was pretty strong. Fiscal '25 was very muted. And also the pricing growth in both areas is also very strong. Can you just explain what happened in '26 versus '25 in which this happened? And do you is the same phenomena in your Onco division as well?

So I think the IPM doesn't truly capture the full business specific to oncology source is probably a better [indiscernible] to look at. I would say the growth has been there in the oncology market which -- with more government schemes getting implemented, executed and used and as well as -- obviously, we have seen a higher incidence of cancers in the last growth on that summary. So we are seeing a good momentum on that. For [indiscernible], we have captured a strong share on our launches, pertuzumab, nivolumab, some of the oral oncology drugs where we were first to market. So all of that has led to, obviously, a very strong patient we have been able to serve a significant number of patients are doing so. And with the strong medical support and patient support programs that we are running, we are seeing a very strong traction on the brand, which has led to a bit of growth. And now we are the largest Indian oncology player in the market.

Right. The second question I had was the trade generic proposition to your Indian formulation business. How do you see that as either long-term opportunity around long-term threat? Like if you can just explain how are they taking market share within your line of businesses?

I would say it's neutral to us and our own trade generics is a very small part of our business. So it's more of a cash flow.

Okay. But do you see the other pregeneric taking away share over time because the government pushes towards that I don't know how the customer acceptance or any other factors which would limit this market share erosion over long term.

So it does always -- yes, it is a channel, and we have to look at the channel, how it progresses, and we do look at that. But I think with our innovation pipeline differentiation that we have, and a core focus on key brands, I think we can sort of continue to sort of do better than market from our perspective.

Just to capture on the first point, is the pricing growth also strong in Onco liner business or other chronic line business compared to overall Indian formulation business you have?

I'm sorry, could you repeat the question? .

The pricing growth, the year-over-year pricing gains you see...

[indiscernible] in generally deflates. Prices goes down, doesn't go up. [indiscernible]

Ladies and gentlemen, [indiscernible]

I think -- if there are people in queue, you can still take a few more questions, please.

The next question is from Saion Mukherjee.

Two specific questions. Dr. Sharvil, if you can answer. One is the biosimilar business size today in India, primarily, how large is that? If you can share that? And the second one, I was wondering if you can talk about out of the $1.2 billion U.S. revenues, if you add all the specialty rare disease plus 505(b) (2), how large is the portfolio currently?

So as I said, on the specialty still in early stages. So it's not meaningfully very large. We see that scaling up over the next 3 years. On the oncology, it's obviously become a very large integral part of our business, has crossed INR 800-plus crores now. .

The next question is from Harith Ahamed.

Just following up on the previous question on the working capital increase this year. So when I look at the operating cash flows for FY '26, there's a sharp decline. And at around INR 2,000-odd crores. It's a lower number compared to our EBITDA for the year being around INR 7,000 crores. So are there any one-offs? I understand there's a Mirabegron settlement-related payout. But anything else that can explain this relatively lower operating cash flow for the year.

So I think, obviously, one is the settlement of the [indiscernible] CapEx. The operating cash flow, I think if you really look at it from that perspective, I think whatever the acquisitions that we have done to that extent, whatever the incremental working capital which has happened, it is also impacting us in terms of operational cash flow. So the acquisition related working capital changes will have [indiscernible].

Okay. Okay. And last one, was your position on international markets. I mean, through the year, we've seen very strong growth in FY '26, it's around 40%. So I think you had talked about this in the last call as well, but just trying to get some more color on what exactly is driving this 40% growth we haven't seen such a strong growth historically for these segments. So -- and then if you can also guide us on what to expect for the segment going forward.

So I think it actually has been an all-around growth across the regions. So it's not a one-off reason. So I think we are very happy with how most of the clusters are growing. Europe, which was obviously not doing so well for us a couple of years ago in the last 2 years has also got a good trajectory. I think our new countries that we have launched have scaled up faster than we expected and done meaningfully well for us. And I think all of that is led by the portfolio that they have been able to launch in these markets. So I would say, again, a good execution, branded focus, keep therapy focus and also the aided by a very strong pipeline has led to this growth, which we believe will continue in the coming years.

The next question is from Nitin Agarwal.

Sir, on the U.S., when you look through the next year guidance, should we expect like a pickup more in the second half of the year? Or is it going to be a well sort of balanced growth help they laid out numbers through the year?

So obviously, product specific, we will see some traction later part of the year, but we would still see will not see any major changes in these next 2 quarters.

And is there any part of the portfolio right now that you sort of [indiscernible] did in this quarter which is probably subject to some faster erosion than average in general? Or there is [indiscernible] now a $320-odd million, which is going to just go off -- keep growing as in a typical generic manner?

So we are around the 300 plus to 310 range. We had, as I said, maybe we'll have Mira competition, which we have factored in, so we would see some erosion from the current base. So that's what we are expecting.

And lastly, if you were to look at the 505 (b) (2) that you've done for this year and some of the other specialty launches, how -- what proportion of the [indiscernible] $1.3 billion you've done for the year would be on that portfolio?

So as I said, it's still very small, the specialty business. So it will probably require at least this year, we would see some scale up. So from FY '28, you would see the scale up on the specialty business. So we are not calling it out separately because it's not very large now.

The next question is from [indiscernible] I think he dropped out of the call. Shall we close the call, sir?

Yes, thank you.

Thank you very much, and look forward to interacting with you during the next quarter results. Have a good night.

Ladies and gentlemen, on behalf of Zydus Life Sciences. That concludes today's conference. Thank you for joining us, and you may now disconnect your line and exit the webinar.