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Edited Transcript of ALKEM.NSE earnings conference call or presentation 7-Feb-20 11:30am GMT

Q3 2020 Alkem Laboratories Ltd Earnings Call

MUMBAI Feb 18, 2020 (Thomson StreetEvents) -- Edited Transcript of Alkem Laboratories Ltd earnings conference call or presentation Friday, February 7, 2020 at 11:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Amit Ghare

Alkem Laboratories Limited - President of International Business

* Gagan Borana

Alkem Laboratories Limited - General Manager of IR

* Rajesh Dubey

Alkem Laboratories Limited - President of Finance, President & CFO

* Sandeep Derjit Singh

Alkem Laboratories Limited - MD & Executive Director

* Yogesh Kaushal

Alkem Laboratories Limited - SVP of Chronic Division

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Conference Call Participants

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* Aditya Khemka

DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare

* Amey Chalke

Haitong International Research Limited - Research Analyst

* Ashish Thavkar

Motilal Oswal Asset Management Company Limited - Associate VP

* Charulata Gaidhani

Dalal & Broacha Stock Broking Pvt Ltd., Research Division - Analyst

* Dipan Anil Mehta

Elixir Capital Limited - Chairman of the Board

* Kunal Randeria

Antique Stockbroking Ltd., Research Division - Research Analyst

* Nithya Balasubramanian;AB Bernstein;Director

* Prakash Agarwal

Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals

* Saion Mukherjee

Nomura Securities Co. Ltd., Research Division - Head of India Equity Research

* Saket Bansal

Opulent Investment Adviser Private Limited - Portfolio Manager

* Shrikant Akolkar;Ashika Stock Broking;Research Analyst

* Tushar Manudhane

Motilal Oswal Securities Limited, Research Division - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to Alkem Laboratories Limited Q3 FY '20 Earnings Conference Call, hosted by Motilal Oswal Financial Services Limited.

(Operator Instructions)

Please note that this conference is being recorded.

I now hand the conference over to Mr. Tushar Manudhane from Motilal Oswal Financial Services Limited. Thank you, and over to you, sir.

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Tushar Manudhane, Motilal Oswal Securities Limited, Research Division - Research Analyst [2]

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Thanks, Faizan. Welcome to the 2Q -- 3Q FY '20 Earnings Call of Alkem Lab. From the management participants, we have: Mr. Sandeep Singh, Managing Director; Mr. Rajesh Dubey, Chief Financial Officer; Mr. Amit Ghare, President International Business; Mr. Yogesh Kaushal, Senior Vice President, Chronic Division; and Mr. Gagan Borana, Investor Relations.

Over to you, Gagan.

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Gagan Borana, Alkem Laboratories Limited - General Manager of IR [3]

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Thank you, Tushar. Good evening, everybody, and thank you for taking your time and joining us for Alkem Laboratories Q3 FY '20 Earnings Call.

I'm Gagan from the Alkem IR team. Earlier during the day, we have released our financial results and the same are also posted on our website. Today, in this call, we have the senior management team of Alkem to discuss the business performance and outlook going forward. Before I proceed with this call, I would like to remind everybody that the call is being recorded and the call transcript will be made available on our website as well.

I would also like to add that today's discussion may include forward-looking statements and the same must be viewed in conjunction with the risks that our business faces. After the end of this call, if any of your queries remain unanswered, please feel free to get in touch with me.

With this, I would like to hand over the call to Mr. Sandeep Singh to present the key highlights of the quarter and strategy going forward. Over to you, sir.

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [4]

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Thank you, Gagan. Good evening, everyone. Thank you for taking out time and joining us for our quarter 3 and 9 months FY '20 results conference.

I would briefly touch upon some of the key performance highlights, and would then leave the floor open for questions and answers.

Quarter 3 FY '20 has been a strong quarter for the company with revenue growth of 13.3%; EBITDA margin of 20.8%, which is a significant 50 point -- basis points improvement towards the last year; and net profit growth of close to 89%. Similarly, for the 9 months of this financial year, we delivered a revenue growth of 14.4%; EBITDA margin of 18.6%, which is 260 basis points higher than last year; and a net profit growth of 58.2%.

Touching upon the key performance highlights of the quarter, our India business, which contributed about 2/3 to overall sales, grew by 14.1%. The growth was broad-based with all our 3 segments: Acute, chronic and trade generic, registering a year -- a healthy year-on-year growth. As for IQVIA data, our secondary sales grew at more than 1.5x the IPM growth rate. This was largely driven by significant growth in our anti-infective portfolio, which registered a secondary growth of close to 21% compared to the therapy growth rate of 12%. In Gastrointestinal and Vitamins segment also, we delivered a secondary sales growth, which was higher than the market growth rate, thereby maintaining our leading position in these therapies. In our Chronic segments like neuro, CNS, cardiac, anti-diabetes and derma, we grew significantly ahead of the therapy growth rate, thereby improving our ranks and market share.

We have a comprehensive product portfolio with several market-leading brands, which are well complemented by a large field force and plan in their distribution network. This, along with effective sales and marketing strategies, have been the key reason for our strong performance in India market.

Coming to international business, which contributed about 1/3 to overall sales and grew by 11% during the quarter. This was mainly driven by our U.S. business, which grew at 12.6%. During the quarter, we invested about INR 121 crores in R&D, which is about 5.5% of operating revenue. We filed 4 ANDAs during the quarter and received 4 approvals, which includes one tentative approval. Thus, for the 9 months of this financial year, we have filed a total of 11 ANDAs and average 15 approvals, including 4 tentative approvals.

On cumulative basis, we have -- we now have a product pipeline of 136 ANDAs, already filed with U.S. FDA, with 70 final approvals. With more than half our filings yet to be commercialized, timely product approvals and the launches would be our key focus to drive growth in the U.S. market.

Talking about cGMP inspections, I'm very happy to share that during the quarter, the U.S. FDA inspected a Biocon center located at Taloja. We cleared the inspection without any Form 483. Also in November 2019, both our formulation facilities in India at Daman and Baddi received an EIR.

To update, we also had a -- we just concluded a St. Louis inspection last night, which we have updated the stock exchange. We got 3 483s, and we would like to highlight that we had got 4 -- 8 483s the last time, and none of them have repeated this time. We are confident that we'll close this in the next few months.

Summing up the performance for the quarter and 9 months gone, I would like to say that we have already made a lot of investments in our people and infrastructure, which we are looking to leverage going forward. Improving the productivity and utilization would be one of the important focus areas for the company. Also, cost optimization and process improvements are the other major areas, which we're continuously working on, in order to compete more effectively in the cost-conscious generic market.

Thank you for listening. With this, I would like to open the floor for questions and answers. Thank you very much.

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Questions and Answers

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Operator [1]

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(Operator Instructions)

The first question is from the line of Kunal Randeria from Antique Stock.

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Kunal Randeria, Antique Stockbroking Ltd., Research Division - Research Analyst [2]

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Sir, first question is related to gross margin. So we have seen the 9-month '20 has seen a very good improvement over FY '19. And the margin remain fairly steady in the last few quarters.

So if we were to break down some of the improvements that have led to maybe the product mix or API prices or procurement efficiencies. I mean some rough estimates of what has led to the improvement?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [3]

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Yes, Kunal. You rightly said, in this quarter, we witnessed 3% improvement in gross margin. It was 59 -- 58.6% in last year's quarter 3. Now it is 61.8%. And you rightly pointed out, there are more than 2, 3 factors, and API is one of them. So you can give equal weightage to API prices as well as good mix also. It's a combination of particularly distorting API -- softening of AP prices and the product having better margin, that mix has got improved.

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Kunal Randeria, Antique Stockbroking Ltd., Research Division - Research Analyst [4]

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Right. So then related to API price again, see, one of the domestic API suppliers today said that they are seeing higher prices for the finished goods. So I just would to like to get your thoughts on it?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [5]

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See, if I see my quarter so definitely, we had advantage of API prices. I think API price, it is going in line with our understanding and cost, what we have in our mind.

So unless recent problem, and that we are not discussing that is coronavirus related supply issue. I think we are very comfortable. We don't see any significant upside in API price unless something happens going forward.

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Operator [6]

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The next question is from the line of Prakash Agarwal from Axis Capital.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [7]

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Congratulations on good set of numbers. The first question on the strategy. Like a couple of years back, we took a strategy of expanding the field force and de-cluttering the bigger brands. I think that's clearly playing out well. What is -- I mean, since we have grown very well, how do we ensure this double-digit growth irrespective of the season continues for the next couple of years?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [8]

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Yes. Prakash, see, you rightly said that one is that we got a good favorable year. So if you see last 3 year's trend, the acute portfolio in the industry has grown by 5% to 6%. And last 2 years, we are witnessing a growth of around 10.5% to 11%. So that has certainly supported us.

Now look at the structure of company, where there is an acute and last time also I said, and there is a semi chronic set of a segment, which is now becoming stronger in the company, okay? And then we have a chronic. So if you split all these 3 then our acute acute, which is anti-infectives and all is just 1/3 of the business. The 1/3 is semi chronic, which doesn't have an impact of the season. And then our evolving chronic business, which has started contributing close to 11% to 12% business. So we have to strengthen semi chronic and chronic in future. And we hope that next year, 2 would be a good year, the way we have been witnessing for the last 2 years. So that should sustain a robust growth for company.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [9]

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Yes. But if you could share some strategies or action plan that you're taking, like in terms of new launches or covering the gaps in new therapy areas or existing therapy areas? That would be great.

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [10]

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Yes. So see, from existing products, except for those 14 brands which are amongst top 300, we have identified certain brands which are in a range of INR 10 crores to INR 20 crores and INR 20 crores to INR 25 crores types. So we intend to at least add 2 to 3 products in this club of top 300. And all those bigger divisions which has a brand range of INR 20 crores to INR 50 crores that we would want to make them big. And in chronic and semi chronic, where we are in the range of INR 10 crores to INR 20 crores, we are identifying 1 or 2 brand per division, which can be in the range of INR 50 crores to INR 100 crores in the next 3 to 4 years' time. So these are clearly identified for each of those therapies, and each of the businesses. And the focus will be to make these brands bigger in the coming time.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [11]

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Okay. And is there a revised guidance for the margins. As last time, it was 100 to 150 basis points on a base of fiscal '19. We are clearly much above that. So if you could help us with the guidance for the closing year and next year?

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Yogesh Kaushal, Alkem Laboratories Limited - SVP of Chronic Division [12]

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Prakash, as you know, and offline or on this call, you always ask about our guidelines as far as margin is concerned. So we remain with our guidelines. And last time also, we said, definitely, we are going to put 100 basis point improvement to our margin, and we stick to it.

I think you should not take this quarter 3 margin absolutely for annual. But definitely, for -- in annual terms also, we are going to do better. And definitely, there will be 100, 150 basis points more.

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [13]

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Yes. Compared to last 2 years.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [14]

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No, no. So my question was more towards next financial year. If there is any color that we can give on the margin side, given the cost initiative also we last mentioned in the last call, that we are taking. So what are the margin levers for next year?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [15]

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So Prakash, first, if you remember last call or the one before that, we've maintained that every year. We'll increase it by 100 basis points EBITDA margin. Obviously, not infinity. It's not possible, but our long-term objective was that -- short-term objective to medium term was a very -- 20 percentage EBITDA margins. I think we are in sync with that, in a couple of years' time. So that's the color we can give right now, nothing more than that.

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Operator [16]

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The next question is from the line of Saket Bansal from Opulent Investment Advisers.

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Saket Bansal, Opulent Investment Adviser Private Limited - Portfolio Manager [17]

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Yes, sir. Sir, I have a few questions. You said you -- there was a good mix because of which we see a gross margin increase. So do you mean chronic growth rate was higher compared to the actual growth rate? And if you can say, 9 months, what was the chronic growth rate? And what was the actual growth rate?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [18]

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Yes. When I say improvement in product mix, it is all of -- it is not any therapeutic area specific. So it's for our overall business. We're having better margin. It goes well with acute as well as chronic and even for our international business also. So it is not -- nothing specific to any particular segment.

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Saket Bansal, Opulent Investment Adviser Private Limited - Portfolio Manager [19]

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Sir, still if you can say, what kind of a growth rate we saw in last -- this quarter in chronic?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [20]

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See, Overall organization growth is 14% and our acute has grown by 13% and chronic has grown by 21%.

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Saket Bansal, Opulent Investment Adviser Private Limited - Portfolio Manager [21]

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21%. For this quarter, right?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [22]

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Yes, for this quarter. This is I'm talking about annual. This is I'm talking about for 9 months.

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Saket Bansal, Opulent Investment Adviser Private Limited - Portfolio Manager [23]

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9 months?

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [24]

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Yes, yes.

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Saket Bansal, Opulent Investment Adviser Private Limited - Portfolio Manager [25]

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Okay, okay. And sir, your tax, if you can just tell me what kind of tax rate we'll be closing this year?

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [26]

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We'll be somewhere close to 10%, in some case.

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Saket Bansal, Opulent Investment Adviser Private Limited - Portfolio Manager [27]

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Okay, okay. And FY '21 and '22, if you can guide me over there.

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [28]

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It is going to be in this range really, 50, 60 basis points here and there.

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Saket Bansal, Opulent Investment Adviser Private Limited - Portfolio Manager [29]

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Okay, okay. Great. And sir, one more thing. About this inventory, you say that there can be a problem because of the coronavirus. So do you have any kind of inventory of API? Just you procure it from China.

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [30]

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Generally, any pharma company of our size, they ensure or they take care of a month API requirement of 1.5 months.

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Saket Bansal, Opulent Investment Adviser Private Limited - Portfolio Manager [31]

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1.5 month?

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [32]

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Yes. And our dependency directly on Chinese imported material is not very great. It's below 5%. But indirectly, of course, it is that. But we are comfortable at least for 1.5 or 2 months.

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Saket Bansal, Opulent Investment Adviser Private Limited - Portfolio Manager [33]

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You don't think so there can be any impact going forward in this quarter.

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [34]

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That I can't say because it depends how quickly this (inaudible). So we have our back-up plan for 1.5 months. And let's see how things goes well ahead.

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Saket Bansal, Opulent Investment Adviser Private Limited - Portfolio Manager [35]

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Okay. And sir, if you can throw some colors on U.S., like how is it going and what's your view there, going forward?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [36]

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Well, the growth in this quarter probably was on the lower side, as you guys have seen. But certainly, we are growing and the business is healthy. We've had some introductions in the quarter. And the product mix also benefited from overall sales growth as well as from margin perspective. So last quarter, I had very clearly said that we are expecting good growth, double-digit growth, lower double digit, but double-digit growth, and we're very much on track there.

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Saket Bansal, Opulent Investment Adviser Private Limited - Portfolio Manager [37]

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Okay. Sir, in terms of margin, if we see, you will -- chronic, let's say, if chronic -- have you moved to double-digit EBITDA margin?

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Amit Ghare, Alkem Laboratories Limited - President of International Business [38]

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We don't break our margins segment-wise, but I'll let CFO answer that question.

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [39]

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You rightly said, Amit. We don't talk margins on our therapeutic or any specific business segment as well.

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Operator [40]

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(Operator Instructions)

The next question is from the line of Charulata Gaidhani from Dalal & Broacha.

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Charulata Gaidhani, Dalal & Broacha Stock Broking Pvt Ltd., Research Division - Analyst [41]

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Sir, congrats on the good set of numbers. I wanted to check if you could give a split between volumes and prices in domestic as well as exports?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [42]

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Yes. Our volume growth, it was somewhere close to 8%, 8.5%. Whereas our NRV, that is price growth, it was in the range of 4.5% to 5%.

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Charulata Gaidhani, Dalal & Broacha Stock Broking Pvt Ltd., Research Division - Analyst [43]

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Okay. And any new launches?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [44]

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Yes, of course. Rest of the growth is on account of new launches. That's somewhere close to 3% kind of.

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Charulata Gaidhani, Dalal & Broacha Stock Broking Pvt Ltd., Research Division - Analyst [45]

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Okay. And exports?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [46]

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See, as I said, we talk on growth in margins, basically on overall basis. But export, again, both these combination, volume growth as well as NRV growth, it is there. And more or less, it's in the same range really. Our NRV is -- new launches, I mean to say, not NRV. NRV, in fact, for existing products is downward, but it's basically volume growth and new launches.

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Charulata Gaidhani, Dalal & Broacha Stock Broking Pvt Ltd., Research Division - Analyst [47]

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Okay. Right. And why is your tax rate at 10%?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [48]

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We have some fiscal benefit. And for our domestic business, particularly. And then we have R&D expenditure on which we get the benefit. That's the reason why tax rate is on (inaudible).

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Operator [49]

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The next question is from the line of [Ranvir Singh] from Sunidhi Securities.

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Unidentified Analyst, [50]

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The first one. Can you help me match this segment-wise breakup. So you're seeing international sales is INR 752 crore, out of which 583 -- INR 584 crore is from U.S. and INR 146 crore is from other international sales. That total is lesser than INR 725 crore. The total is only INR 730 crore. So where this INR 22 crore is coming from actually? From international business?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [51]

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I think you are talking for our quarterly sales.

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Unidentified Analyst, [52]

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Q3, Q3 number, yes.

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [53]

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Yes. So -- so some components we have from our subsidiaries also. So that's around INR 20 crores, we have from our subsidiaries. That's basically 2 RoW market.

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Unidentified Analyst, [54]

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Okay, okay. And even adding up for this India Business and International Business, it's also not matching up with your total revenue. So is there any element of some other operating income, which is not given in a different split?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [55]

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Yes, of course, other operating income is there. And that is always there. In case of mainly when we are -- any company is exporting because you have your export benefits. And then since we are having fiscal beneficial plans. So we have, as you speak, different also. And besides that, there are a few other items in other operating. So differential portion is other operating income.

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Gagan Borana, Alkem Laboratories Limited - General Manager of IR [56]

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So if you want other operating income number for the quarter, it's [INR 326 million.]

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Unidentified Analyst, [57]

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Okay, okay. Yes -- similar, in Q2 also, there is a huge difference. That's why -- in Q2, I think some INR 45 crore difference I think from segmental, yes.

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [58]

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So the split which we have given in the presentation is the sales split, okay? Not the total income split, okay? So difference is basically the other operating income. So the other operating income in Q3 FY '20 was [INR 326 million]. Q2 FY '20 was [INR 446 million]. So if you put that, I think the sales will match with the breakup.

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Unidentified Analyst, [59]

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Okay, okay. Understood, understood. And in U.S. business, of the total approvals we have, how many products currently we are selling in...

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [60]

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About 80% are commercialized.

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Unidentified Analyst, [61]

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So some 60, 65?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [62]

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No, less than that. Our total approvals, 81 include tentative approvals. So that will bring us down to 70, within that 70 also, there are -- we've got final approval, but we are still waiting for launching those. And my 80% was with respect to 70. So it's about 50 products that are commercialized, and the balance are -- either some of them are not very attractive to launch and many of them are in the process of being launched. Some of the recent approvals are still under the pace of launch.

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Unidentified Analyst, [63]

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Fine. And any target for product launches in the U.S. next year? How many NDA we are the -- expecting or planning to launch?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [64]

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Yes. So our filing plan is 12 to 15 every year. And earlier guidance for launches was higher single digits, which we increased last year -- last quarter and last year and since last quarter to lower double digits for new launches in a year.

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Operator [65]

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The next question is from the line of Saion Mukherjee from Nomura.

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Saion Mukherjee, Nomura Securities Co. Ltd., Research Division - Head of India Equity Research [66]

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Just one question on the cost front. Is this material cost or gross margin improvement? Has it completely played out? Assuming, there are no disruption because China. Do you think the benefit is already there now in the third quarter? Or there is something which is still left over?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [67]

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I think it's already there, Saion, yes. I think we're doing a good job.

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Saion Mukherjee, Nomura Securities Co. Ltd., Research Division - Head of India Equity Research [68]

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Okay, great. And on the overheads and employee cost. How should we think? I mean I understand there is not much addition happening there.

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [69]

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Correct.

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Saion Mukherjee, Nomura Securities Co. Ltd., Research Division - Head of India Equity Research [70]

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So the overhead growth would be below the topline growth, right? Is that a fair assumption to make?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [71]

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Yes, fair assumption to make.

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Saion Mukherjee, Nomura Securities Co. Ltd., Research Division - Head of India Equity Research [72]

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And only one question on this -- your margin guidance, where you talked about 100 basis points. I'm getting to '20 over a period, let's say, couple of years.

Given your business mix today, the way you see the business, do you think '20 is the kind of peakish number? Or you think, there is room to go beyond '20? Do you have anything that you can share?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [73]

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There is certainly room, Saion. But honestly, to -- like, wait for certainty that will hit, let's say, 20-plus in the short time frame. That is something which I don't want to kind of commit to.

So obviously, '20 is not the peak. The business would also evolve, Saion, as you know. It's hard to predict. Product mix would change. We have certain plans. So it depends on many factors. But in the possible future, I think, '20 is something, we are comfortably aiming at it. But that's not the [speak] to answer you, obviously. But above that, it doesn't happen automatically. We also have to undergo some changes and get into more complex products, for example. You like that. That's slightly longer term.

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Saion Mukherjee, Nomura Securities Co. Ltd., Research Division - Head of India Equity Research [74]

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Okay. And anything on India Business? Anything on M&A acquisition, that you're seeing, that you're interested, or it makes sense for you at this stage?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [75]

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No. So Saion, as we always maintained, we are not really looking at to acquire large companies or large brands. We have grown our business organically. It's worked well for us. That doesn't mean that it's a taboo. We will look at small brands, niche things, which help us fill our portfolio, but nothing large, Saion, nothing large, or even medium sized for that matter.

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Operator [76]

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The next question is from the line of [Anubhav Agarwal] from Lucky Investment.

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Unidentified Analyst, [77]

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Yes, congratulations on great set of numbers, sir. I have certain questions. If you can just give a number to how many products that are not attractive for launch anymore in the U.S.?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [78]

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I would say that number would be in single digits for us.

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Unidentified Analyst, [79]

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Okay. Okay, that's fine. Can you just share a field force count and the productivity, as on Q3 or 9 months?

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [80]

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So see, we -- overall, we have close to around -- including Alkem and Cachet, we are on 11,000 field force. So this is -- the split is between generic, acute and chronic, okay? So we have close to around -- out of that, around 7,000 works for acute and 2,000 for chronic and 500-odd for generic. Now equity, we have huge range. So those are -- those acute divisions, which are settled for quite some time, our productivity ranges from division of around -- average overall for Alkem would be INR 4.8 lacs, average. It includes the bigger divisions and the smaller divisions or the evolving divisions.

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Unidentified Analyst, [81]

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Right. And how much room do we see for this acute segment of IPM to grow from where we are today?

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [82]

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Since they have a large productivity, we would actually intend to grow at least 1.25%, 1.5% more than the market growth.

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Unidentified Analyst, [83]

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Okay, okay. Sir, last question. Given the fact that we had an extended monsoon this season, would have gained up to about 40, 45 days in this quarter also. So if one were to adjust this, and see the growth rate, can you just throw some light there?

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [84]

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See, your colleague just -- 2, 3 people before you, they ask the similar questions. So growth, we will have to adjust strategy. And I said that, what dependency now is just not on acute, which means anti-infectives. We have chronic, semi chronic and acute, all 3 mix. So we will adjust those brands accordingly, and see that we drive the growth. But yes, we will certainly want the good luck to continue, the way we had last 2 years. Difficult to now project that what kind of monsoon we'll have for future, but yes, the year will be little work out to sustain the growth.

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Unidentified Analyst, [85]

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Right. And last, sir, if I may. Can you just guide us on our R&D rate for the -- for FY '21 and '22?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [86]

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Yes. So I think we have always maintained around 5.5% to 5% -- between 6%, not beyond that.

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Operator [87]

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The next question is from the line of Shrikant Akolkar from Ashika Stock Broking.

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Shrikant Akolkar;Ashika Stock Broking;Research Analyst, [88]

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I would like to know the top 5 products in the U.S. and their contribution in the revenue?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [89]

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We don't give product-wise revenues. But if you look at IMS, while the revenues may not match dollar to dollar, their contribution to our overall U.S. number will probably match. So that's public information.

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Shrikant Akolkar;Ashika Stock Broking;Research Analyst, [90]

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All right. So now that you are closing almost $300 million per year kind of U.S. based. So incrementally, are you seeing any improvement in your profitability? I mean EBITDA margin or gross margin, something like that?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [91]

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On the gross margin front, I don't want to make any predictions because the business is always subject to deflation. And therefore, product mix and new launches will always contribute, and their contribution will result into overall margin improvement or going down.

But when it comes to EBITDA, certainly, the operating leverage will play. And any revenue growth will certainly result into higher EBITDA for us.

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Shrikant Akolkar;Ashika Stock Broking;Research Analyst, [92]

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But compared to last year, are we saying any significant improvement in your profitability in U.S. business?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [93]

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Yes. So to answer your question, since we grew 12.5% this quarter, certainly, our EBITDA for U.S. business would go up.

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Shrikant Akolkar;Ashika Stock Broking;Research Analyst, [94]

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Okay. And sir, you also have guided of biosimilars in India, in FY '21. So can you please share your plan, or which are the potential biosimilars that would come in India?

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Gagan Borana, Alkem Laboratories Limited - General Manager of IR [95]

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Yes. So for FY '21. So in terms of giving plans, in terms of revenue, this is the first year. So there is nothing significant, but we would have couple of products in the year '21. And as you come closer to it, we'll tell you more, but there is still some time left.

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Shrikant Akolkar;Ashika Stock Broking;Research Analyst, [96]

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Okay. And one last question, if I may. What will be the CapEx next year?

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [97]

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Next year, CapEx is going to be in the range of 350 to 400, yes.

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Operator [98]

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The next question is from the line of Ashish Thavkar from Motilal Oswal.

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Ashish Thavkar, Motilal Oswal Asset Management Company Limited - Associate VP [99]

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Just asking for those recent commission, which was formed in New Delhi, and they were planning to take out some of the antibiotic classes on top price cuts. So if you could help us understand if you have also heard the same thing.

(technical difficulty)

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [100]

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So can we go to next person in line?

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Operator [101]

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The next question is from the line of Amey Chalke from Haitong Securities.

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Amey Chalke, Haitong International Research Limited - Research Analyst [102]

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I just had one question on the chronic part of the business. At this point of time, even the chronic is only contributing 10%, it is still a sizable portfolio of, like if you take the number, we are generating around INR 600 crore or more than INR 600 crore kind of revenue. So at what point you would see this business will become like 30-plus EBITDA margin business, which typically the chronic set of companies are delivering.

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [103]

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Amey, see, it's difficult to predict. Because today, the kind of molecules we are launching, initial years, you have very low GCs. So currently, I think we have to really work on building volumes. And around 5% to 7-odd percent is what we are looking at currently. 5 years, yes. So what -- let me give you a clarity here, that, 30% will take some time. At least, we are -- reach around 11% to 12% now. We should be reaching next year. But to reach 30% will take at least 4 to 5 years' time.

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Amey Chalke, Haitong International Research Limited - Research Analyst [104]

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Would we say, like, at least when we reach around INR 1,000 crore kind of a portfolio in the chronic, that will be the time when we would see the EBITDA margin to cross 30%.

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [105]

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See, I won't make any comment on this because we have to make a lot of investments in chronic. But yes, we should be certainly aspirational to achieve that.

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Gagan Borana, Alkem Laboratories Limited - General Manager of IR [106]

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[INR 1,000 crore plus. INR 1,500 crore, INR 1,200] ,we don't know.

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [107]

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Yes, yes, yes. We are very (inaudible) INR 1,000 crore on topline, but on EBITDA, it's unpredictable because we don't know the kind of challenges we may face from regulatory environment and plus the new products, which come. So difficult to predict that.

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Amey Chalke, Haitong International Research Limited - Research Analyst [108]

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Okay. And secondly, it's a repeat question. If you can again give the split for our MR for different segments.

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [109]

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Okay. So see, we have total around 11,400. This includes our subsidiaries. And in acute, we have close to around 7,000. These are all approximate numbers, 2%, 3% here and there can be. Chronic is around 2,100 and generic is 550.

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Operator [110]

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The next question is from the line of Aditya Khemka from DSP Mutual Fund.

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [111]

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Just on the question of the previous participants. So the government had spoken about some antibiotic classes dropping out of price control. Any thoughts on that?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [112]

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So Aditya, no thoughts on that because [we can] talk about a lot of things, but there is no timing commitment. Something might come out. They might put something else. So honestly, I'm not speculating on that. And it's very hard to make business decisions based on what would happen. So Aditya, no comments on that. Because as you know, even if they take out something out, they might put something back in there. So...

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [113]

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Yes, that's fair enough. And what has been our free cash flow for the first 9 months of FY '20?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [114]

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Dubey, maybe you can comment.

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [115]

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Free...

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [116]

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Free cash flow.

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [117]

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Cash flow. You mean to say -- or are you asking our cash position?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [118]

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No. No. Free cash flow.

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Gagan Borana, Alkem Laboratories Limited - General Manager of IR [119]

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Free cash flow. Very clear.

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [120]

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Sorry. So from business, y-t-d, we have cash to the extent of INR 100 crores, after paying off our CapEx requirement. So it's a INR 100 crore surplus cash generated from business.

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [121]

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So first 9 months. Free cash flow after CapEx is around INR 100 crore?

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [122]

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Correct.

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [123]

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And what was the CapEx number, sir, for the first 9 months?

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [124]

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Somewhere close to INR 300 crores.

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [125]

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Okay. And so the full year for CapEx, again, would be about INR 400 crores odd, right? For this year?

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [126]

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Absolutely. Somewhere between INR 400 crores to INR 450 crores.

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [127]

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Understood. And just I'd like to sort of ask again the question, Saion asked on the margin profile. So 20% is a good target, yes. But companies with the size of India Business that Alkem has, generally, do far better than 20% on their domestic business. I understand you are investing more. I understand the chronic business. But I'm -- but I sort of don't agree or understand the comment that was made that chronic business has low GC right now. I mean GC is a variable...

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [128]

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No, Aditya, nobody said that. We said, we're in investment mode. Gross margins, obviously, are higher than acute. So I don't think so -- even Yogesh did not say that, to be honest. He just said, we are in an investment phase of it. So chronic business reached 30% would take time. That's all he said, Aditya.

So I'm coming to your first part of it. So again, I'm repeating, 20% I said for the next 2 years. Does it mean that, that's a peak or that's a nirvana state, the answer is no. It -- We would go higher than that.

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [129]

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So Sandeep, by what is a nirvana state then?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [130]

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Nirvana state is always continuation. We never reached the nirvana, Right? So...

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [131]

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That's fair enough. No, I -- so see, I think what all of us are trying to gauge is, not for the next 2 years. So what I was trying to gauge is, let's say, 5 years out. And I know it's guess work. I know there are variables. You keep saying that, but I agree, there are. But what is the target? What are you looking at?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [132]

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So I don't think through that target. We'd like to keep getting better than what we are. We are internally focused. That could be good and bad, depends how you look at it. But every year, if I keep improving our business, keep improving my ratios, I think I'm happy. So if you're trying to push me to give you a number, 5 years down the line, I still refrain from that. I think once we cross the hurdle, where we reached 20% EBITDA margins. My U.S. business is doing what we aspire to do. People push your gauge to give an answer for chronic business. That goes to, let's say, if not 30%, but close to 20%, then we could revise it and say, yes, fine, and now we want to aspire to hit 25%. But that's some time left for that, Aditya.

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [133]

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Okay. That's fair enough, Sandeep. And just one last question. So we have spoken in the past about some cost initiatives, and it's reflecting in your numbers. So if you had -- originally [if this adds] INR 100 of savings, how much of the savings is already there in your P&L in this quarter? Is it...

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [134]

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I think 90.

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [135]

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Okay. 90 is already there. So the incremental savings you're looking at is only INR 10 now, from that initiative?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [136]

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Yes, savings. Well, our operating leverage will kick in. I'm sure you know that. I just want to reiterate that, yes.

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Operator [137]

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The next question is from the line of Prakash Agarwal from Axis Capital.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [138]

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Just trying to understand MR addition that we planned to do for next year. And the addition this year done?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [139]

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So for next year, we plan not much, maybe 300 people next year.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [140]

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Okay. And has there been any MR Addition this year?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [141]

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Sorry, what do you ask? Sorry.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [142]

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Fiscal '20, have we added any MRs?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [143]

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Yes, we have added. We have added close to 650 people this year.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [144]

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Okay, okay. So the operating leverage that you just spoke about, with the level of sales you have in domestic, even if it grows by 10% plus. And the statement you made, that the cost will be lower than the sales growth. So there are margin levers, A, because of this only, right?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [145]

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Yes, mainly because of that. Correct.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [146]

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Okay, okay. Understood. And did you mention about the generic's growth that we have seen for the quarter?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [147]

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I don't think so we mentioned, but -- sorry, what is your question, Aditya? Prakash, sorry.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [148]

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This is Prakash. So I just wanted to know the generics growth. And there was also talk about this trade -- the trade generic margin caps. Is there any update -- I mean, if you heard anything, what's happening.

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [149]

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So our generic growth is in line with the India -- overall India business growth, round about that. Slightly more than that, but not insignificant -- not significant, sorry. And on trade margins, we have not heard anything fresh, but we think whenever they implemented, if at all, it will be implemented therapy wise. It's not going to be done overnight on all therapy areas.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [150]

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Okay. Fair enough. And on the balance sheet side. So what's the cash position, A? And B, there were some investments line -- noncurrent investments line. Is there an update on that?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [151]

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So Dubey?

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [152]

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So even though we have not shared balance sheet for December quarter, Prakhash, but I was expecting this question from you. So as I said, we have added INR 100 crore after CapEx in this 9 months, that I wanted to inform you. As far as net cash position on -- as of December 31, more or less, it is neutral kind of. So there is no significant borrowing as such, a small quantum of insignificant amount, INR 25 crore, INR 30 crore or something in that range. That is one thing.

And your second question was what?

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [153]

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Net current investments, that the real estate investment that we have?

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [154]

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What we did on noncurrent investments. So that's basically in real estate investment. So even we have in our accounts, real estate investment at fair value. But on cost basis, it is somewhere close to INR 125 crore. And we are receiving money against that. So we are hopeful we'll be coming out as per our plan.

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Operator [155]

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The next question is from the line of Nithya Balasubramanian from Bernstein Research.

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Nithya Balasubramanian;AB Bernstein;Director, [156]

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So I had 2 questions. One on your U.S. business and the other one on India. So in the U.S., given that you've now reached a run rate of around $300 million per year, you're probably reaching the scale, where it gets tougher and tougher to keep growing on a deflationary business. So what are your thoughts around those? Do you think the pipeline is strong enough to keep replenishing the depleting base?

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Yogesh Kaushal, Alkem Laboratories Limited - SVP of Chronic Division [157]

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To answer your question straight away, yes, absolutely. We still have pipeline coming through. Sandeep, in his opening statements, talked about how much portfolio is commercialized, which is approximately 50%. 50% of the 5 portfolio is yet to be commercialized. So we certainly have growth prospects going forward, simply on that account. And Sandeep also mentioned that as we go forward, we will look at value-added products or niche products or complex products, and that would be another lever for growth.

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Nithya Balasubramanian;AB Bernstein;Director, [158]

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Is there a time frame on when you're likely to start looking at complex and differentiated generics?

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Yogesh Kaushal, Alkem Laboratories Limited - SVP of Chronic Division [159]

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In our own way, we are already doing it. Some of them are maybe already filed. But in real sense for them to contribute anything noticeable and significant, I think, we are at least 3 years away, maybe longer, maybe 5 years away.

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Nithya Balasubramanian;AB Bernstein;Director, [160]

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My other question was on your India Business. You have actually added a significant number of people in the last couple of years.

How long does it normally take for your medical reps to reach average productivity? Are they already there yet? Or do you see that taking a bit more time?

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [161]

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I think this takes time. So if you ask me, on an average, a new medical rep will add a business of close to around INR 60,000 to INR 70,000 in the first year, if he starts from 0 base. So we have very high productivity. We currently operate at a productivity of INR 4.8 lacs. So from that count, you can assume that around -- or around 4 to 5 years to reach the productivity at a national level for a new rep.

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Nithya Balasubramanian;AB Bernstein;Director, [162]

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But I think in one of the earlier calls, you had mentioned that not all of these people are being deployed in new territories. It's more like you're splitting a division because your divisions become large enough for this. There are too many brands to handle.

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [163]

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Yes, yes. But the end of the day, he acquires new 100 customers. So even if he gets into a settled territory, he has to acquire new 100 customers. So does he add INR 4.5 lacs even if he enters a stable headquarter, the answer is no. Because he has to produce absolutely new business. So if you see a productivity increase in most of the cases, the productivity increase ranges around 8% to 10% of your deals. So that's what INR 60,000 to INR 70,000, on a very high side, on a very optimistic side.

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [164]

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More importantly, when we split that, when you do that, his productivity is half, more or less.

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Rajesh Dubey, Alkem Laboratories Limited - President of Finance, President & CFO [165]

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Yes, its...

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [166]

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Obviously, it takes a lot of time for him to get it back.

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Operator [167]

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The next question is from the line of Dipan Mehta from Elixir Equities.

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Dipan Anil Mehta, Elixir Capital Limited - Chairman of the Board [168]

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Yes. So my question -- first, congratulations on very good set of numbers. My question is regarding price controls. Could you please disclose, what percentage of our Indian domestic revenues from products under price control.

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [169]

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26%.

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Dipan Anil Mehta, Elixir Capital Limited - Chairman of the Board [170]

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And how is that moved over the last 12 months? Or so if you can give us some idea?

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Sandeep Derjit Singh, Alkem Laboratories Limited - MD & Executive Director [171]

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Last 12 months, I think it's the same, sir. I mean marginal, but it's the same last 12 months.

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Dipan Anil Mehta, Elixir Capital Limited - Chairman of the Board [172]

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Okay. And second question is regarding your overall strategy for the U.S. market. I mean every pharma company say that, they're being selective in terms of product launches. But if you could explain that into the competitive market, where you are in a way a late entrant? What will differentiating strategy which you're following to make the U.S. business a success?

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Yogesh Kaushal, Alkem Laboratories Limited - SVP of Chronic Division [173]

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Too much to describe on a call like this, in terms of a differentiated strategy. And what I'm going to tell you is a very generic answer, but customer is always the focus for us. Customer service is always an important element for us, having stock is an important element. And I think we recognize all of that. And our track record proves that in spite of being late in the market, we have always been able to get our market share -- our expected market share. Our excellent infrastructure helps us, especially, our regulatory track record. We have not had any surprises. And that has given confidence to us, and of course, to our customers to continue to have faith in us.

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Operator [174]

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The next question is from the line of [Harri Balawat] from Tax and Consultants.

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Unidentified Analyst, [175]

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Congratulations for the good results and the share market also has shown response to that. It is nearing almost 52 weeks high one. Secondly sir, this is regarding this -- recently, you had acquired Marinol from AbbVie at cost of around USD 10 million. What is the market for that in U.S.?

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Yogesh Kaushal, Alkem Laboratories Limited - SVP of Chronic Division [176]

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It's about a $35 million product total. And we were already selling the authorized generic for Marinol.

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Unidentified Analyst, [177]

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Okay. And sir, this product will be only for U.S.? Or you will be supplying from U.S. back to India or back to some other countries?

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Yogesh Kaushal, Alkem Laboratories Limited - SVP of Chronic Division [178]

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At the moment, it is only for U.S. Future, we may think, but at the moment, it is only for U.S.

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Unidentified Analyst, [179]

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Okay. One -- second thing is, this is equivalent to Marijuana. See, we have seen the problem with opioid cases. So though, it was approved through FDA and other things, but later on, different problems have come and either production -- either sales is stopped or it is legally put under problem. I -- do you think any problem could come because it is marijuana equivalent product?

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Yogesh Kaushal, Alkem Laboratories Limited - SVP of Chronic Division [180]

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No, no. This product is not as potent as some of the other opioids, number one. Number two, the approved indication for product is appetite simulation, nausea, vomiting, for chemotherapy-induced patients -- terminally ill patients. So that is what this product is used for.

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Unidentified Analyst, [181]

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Okay, okay. So when do you plan to launch it, sir?

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Yogesh Kaushal, Alkem Laboratories Limited - SVP of Chronic Division [182]

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It's already in the market. The authorized generic has always been in the market by us for last 2 years. The brand will now come to us, and we will continue to sell authorized generic. And we will, in addition, sell the brand as well.

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Unidentified Analyst, [183]

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Okay, okay. Sir, just one more query. This field staff is almost 11,000 out of your total manpower of 15,000. Do you think for entering to any contract with e-pharmacies because now it's a digital age, digital world, whatever is there. Manpower is very high numbers for field staff.

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Yogesh Kaushal, Alkem Laboratories Limited - SVP of Chronic Division [184]

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The prescriptions are generated by doctors and chemist, have to honor it, I think, business model has to be the same what we are doing so. Not like the U.S. yet. So if pharmacists can keep doing what they are doing, we'll -- our business model is intact, sir.

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Unidentified Analyst, [185]

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No. That I understand, but manpower require is very high, 11,000 out of your 15,000 or so.

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Yogesh Kaushal, Alkem Laboratories Limited - SVP of Chronic Division [186]

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But yes, they are productive, sir. It's not a liability, it's an asset. You keep asking us why we keep growing. So obviously, we're doing well.

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Operator [187]

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Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments.

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Gagan Borana, Alkem Laboratories Limited - General Manager of IR [188]

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Thank you, everyone, for attending this call. If any of your queries have remain answered, please feel free to get in touch with me. Thank you.

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Operator [189]

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Thank you. On behalf of Motilal Oswal Financial Services Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.