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Edited Transcript of APLLTD.NSE earnings conference call or presentation 29-Jul-19 11:00am GMT

Q1 2020 Alembic Pharmaceuticals Ltd Earnings Call

VADODARA Aug 2, 2019 (Thomson StreetEvents) -- Edited Transcript of Alembic Pharmaceuticals Ltd earnings conference call or presentation Monday, July 29, 2019 at 11:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Pranav Chirayu Amin

Alembic Pharmaceuticals Limited - MD & Executive Director

* Raj Kumar Shreeram Baheti

Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director

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Conference Call Participants

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* Aditya Khemka

DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare

* Anmol Ganjoo

JM Financial Institutional Securities Limited, Research Division - Director

* Bharat Celly

Equirus Securities Private Limited, Research Division - Associate

* Chirag Dagli

HDFC Asset Management Company Limited - Senior Equity Analyst

* Damayanti Kerai

HSBC, Research Division - Analyst, Healthcare and Hospitals

* Dheeresh Pathak

Goldman Sachs Asset Management (India) Private Limited - Executive Director

* Kunal Randeria

Antique Stockbroking Ltd., Research Division - Research Analyst

* Nimish Nagindas Mehta

Research Delta Advisors, Research Division - Research Analyst

* Nirmal Ambattuparambil Gopi

IDFC Securities Limited, Research Division - Research Analyst

* Prakash Agarwal

Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals

* T. Ranvir Singh

IDBI Capital Markets & Securities Ltd., Research Division - Pharma Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Q1 FY '20 Earnings Conference Call of Alembic Pharmaceuticals Limited.

We have with us today from the management Mr. Pranav Amin, Managing Director; Mr. R.K. Baheti, Director, Finance and CFO; Mr. Mitanshu Shah, Head of Finance; Mr. Jesal Shah, Head Strategy; and Mr. Ajay Kumar Desai, Senior VP Finance. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. R.K. Baheti. Thank you, and over to you, sir.

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [2]

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Thank you, and thank you all participants for joining the Q1 conference call. I will straightaway go to the numbers.

During the quarter, our total revenue grew by 10% to INR 949 crores. EBITDA at INR 233 crore is 25% of sales.

Pre R&D EBITDA is 38% of sales. Profit before exceptional items and tax went up by 58% to INR 192 crores while post exceptional item and tax, it went up by 37% to INR 124 crores --

the exceptional item being onetime provision for impairment of investment in Algerian JV.

EPS for the quarter -- this is for the quarter and not annualized -- EPS for the quarter is INR 6.56 per share, it was just INR 4.80 in the corresponding previous year's quarter.

CapEx for the quarter, including the capital advances, are INR 174 crores.

In addition, financial [assistance, through annual giving] is around INR 48 crores. The gross borrowing at consolidated level is down around INR 57 crores, that is INR 1,157 crores, and the company has INR 156 crores of cash in hand so the net borrowing was just over INR 1,000 crores.

I will now hand over the discussion to Pranav for a presentation on the business.

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [3]

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Thank you, Mr. Baheti. We had a good quarter for the international business, driven primarily by sales growth in the U.S.

Our Oncology oral dosage facility was successfully audited with no 483 observations.

Our R&D expense was INR 140 crores in the quarter, approximately 15 percentage of sales.

We filed 4 ANDAs as well during the quarter and cumulative ANDAs stand at 165.

We received 9 approvals in the quarter. We cumulatively have 98 ANDA approvals, including 12 tentative approvals.

We launched 3 products and we plan to launch around 7 to 10 in the second quarter.

Coming to our projects. Exhibit batches were taken during the quarter at the general injectable facility.

Exhibit batches are planned at our oral-injectable facility during the second quarter.

The new oral solid dosage facility at Jarod will be ready for validation batches in the second quarter as well.

The international formulation business grew by 29% to INR 453 crores for the quarter.

The U.S. generics grew 53% to INR 344.5 crores for the quarter and ex USA generics degrew by 14% to INR 108 crores for the quarter.

The India formulation business was flat during the quarter at INR 324 crores.

Now I would open the floor for any question and answers.

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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 Nimish Mehta from Research Delta.

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Nimish Nagindas Mehta, Research Delta Advisors, Research Division - Research Analyst [2]

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Congrats for the big set of numbers. Two questions. One, what was the U.S. sales in local currency, in U.S. dollars? And how much has that grown Y-o-Y [Q-on-Q in the current period]?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [3]

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Yes. So U.S. generics in absolute currency in dollars grew 45% to [$47.32] million.

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Nimish Nagindas Mehta, Research Delta Advisors, Research Division - Research Analyst [4]

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[$47.32] million? Okay. Okay. And so there has been significant growth, I think Q-o-Q it has grown by about [$6] million. So is it largely because of the new product introduction? Or is it because of (inaudible)?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [5]

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I think it's a combination of new products and picking up shares in some other products as well.

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Nimish Nagindas Mehta, Research Delta Advisors, Research Division - Research Analyst [6]

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Understood. Okay. The other thing I wanted to know is the gross margin which looks pretty high, you know, potentially on a Y-o-Y basis, it was about [78%] which was, I think [8.5%], it was significantly higher on significantly Q-o-Q, almost a little bit higher on Y-o-Y. So what is the reason? Is there -- has there been one-offs there or what is the sustainable [rate] there?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [7]

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So I don't know whether I call it one-off, but yes, this quarter, as I said, the U.S. was exceptionally good and so the products have sold at pretty good margins.

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Nimish Nagindas Mehta, Research Delta Advisors, Research Division - Research Analyst [8]

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I'm sorry, the products were sold at very high margin, which is why -- so is this sustainable, that's what I'm trying to understand.

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [9]

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No, all of it cannot be sustainable at margin level.

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Nimish Nagindas Mehta, Research Delta Advisors, Research Division - Research Analyst [10]

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We should consider 78% as a base rate margin [going forward]?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [11]

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No, it won't, I said it won't be sustainable at these levels.

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Nimish Nagindas Mehta, Research Delta Advisors, Research Division - Research Analyst [12]

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Oh, it won't, okay, sorry, I missed that.

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [13]

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70% plus/minus is a decent number to track.

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Nimish Nagindas Mehta, Research Delta Advisors, Research Division - Research Analyst [14]

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So if you can give more color to what was that except -- or now I won't call it one-off or exceptional, but [there is a decent profit] because of some...

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [15]

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You know, Nimish, that we don't discuss product-wise and we don't discuss [products to detail], I mean we said it as much as we could and I think we'll stop right there.

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Nimish Nagindas Mehta, Research Delta Advisors, Research Division - Research Analyst [16]

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Last thing I just wanted to know, are we -- have we started booking the preoperative [centers] from the facilities in terms of commercial, in which we were waiting for the commercialization, I mean INR 40, 45 crores last quarter?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [17]

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So far none of this is (inaudible) started commercial production. So it still continues to be in [pre-op]. Nothing has been capitalized and nothing has been charged to P&L from new [negics].

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Nimish Nagindas Mehta, Research Delta Advisors, Research Division - Research Analyst [18]

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What could that number be this quarter that we have [patented]?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [19]

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So that's about -- last thing we discussed that's INR 60 crores, INR 65 crores for the quarter.

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Nimish Nagindas Mehta, Research Delta Advisors, Research Division - Research Analyst [20]

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INR 60 crores, INR 65 crores, okay. Are we likely to commercialize anything -- I mean start charging in the P&L in this year or what is the expectation?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [21]

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So (inaudible) for how that as you which having depends -- now it will be dependent on filings and the approvals we get. So once I get the approval and then launch the product in the market, I think we'll start charging to P&L.

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Operator [22]

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The next question is from the line of Bharat Celly from Equirus Securities.

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Bharat Celly, Equirus Securities Private Limited, Research Division - Associate [23]

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Actually, we wanted to understand why other expenses have drastically reduced quarter-on-quarter?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [24]

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So other expenses have an [preceding] quarter. So preceding quarter. So March quarter, June quarter is generally low. Are you referring to March or just June or June or..?

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Bharat Celly, Equirus Securities Private Limited, Research Division - Associate [25]

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I'm referring to March, March.

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [26]

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So I think there will be always some expenses, including R&D expenses, which could get, which are not -- [actually so evenly] spread. Same is the case with the sales and promotion expenditures, particularly in the domestic market. So these two are higher in March and will be lower in this quarter. Not in the R&D part but again [the R&D part] that will be a charge to employee cost and expenses, with charge to other expenses. So there is -- you can't really do an every quarter comparing.

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Bharat Celly, Equirus Securities Private Limited, Research Division - Associate [27]

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Right. But even if I look from year-on-year perspective, then also other expenses are down [by 3.6].

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [28]

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No, not really, see I think...

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Bharat Celly, Equirus Securities Private Limited, Research Division - Associate [29]

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I'm referring ex of R&D.

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [30]

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Two things, which are impacting here. First one is that you will recall that in last quarter, we had many filings actually. So filing was a major cost, which is not there. We have been filing less products in this. So there goes one of the biggest differentiators and as Mr. Baheti said, some of these publicity expenses, which as you know, are marketing costs.

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [31]

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[So what he is talking about], the last current quarter, ex that. So he is talking about June of '18 versus June '19.

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [32]

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And we are flat actually.

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [33]

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Minus (inaudible) is pretty nominal.

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [34]

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It was INR 290 odd and this is INR 300. So it is.

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Bharat Celly, Equirus Securities Private Limited, Research Division - Associate [35]

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Okay. So what should be the rate we should consider going forward?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [36]

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[So the current base] looks to be a good base.

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Bharat Celly, Equirus Securities Private Limited, Research Division - Associate [37]

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So one should take around this INR 300 crores as a recurring number, then.

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [38]

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Yes.

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Bharat Celly, Equirus Securities Private Limited, Research Division - Associate [39]

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Okay. And sir, second question we wanted to understand is, how many products we have filed from onco order [to facility] so far? And how many we are planning for the future? That's in [money].

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [40]

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[5 filings.]

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Bharat Celly, Equirus Securities Private Limited, Research Division - Associate [41]

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Sorry, your voice is breaking.

(technical difficulty)

(technical difficulty)

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Operator [42]

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We have Mr. Bharat Celly in the question queue.

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Bharat Celly, Equirus Securities Private Limited, Research Division - Associate [43]

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Actually, we couldn't understand what was the number you gave for filings on the [common] onco facility so far?

(technical difficulty)

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Operator [44]

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I'm sorry, ladies and gentlemen, we have lost the line of the management. Just give me some time while I reconnect, thank you.

Sir, we have Bharat Celly in the question queue. Please go ahead.

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [45]

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Yes, but -- sorry, so what I was saying is we have disclosed our filings for the review [items].

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Bharat Celly, Equirus Securities Private Limited, Research Division - Associate [46]

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Okay. Last one, you mentioned about the gross margin. So what was the sustainable number you were referring to? We missed that one.

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [47]

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Which was the number?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [48]

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Gross margins.

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [49]

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What are your questions?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [50]

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What is the number you think is sustainable?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [51]

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70% plus/minus.

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Operator [52]

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The next question is from the line of Ranvir Singh from IDBI Capital.

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T. Ranvir Singh, IDBI Capital Markets & Securities Ltd., Research Division - Pharma Analyst [53]

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Question again on gross margin. And I understand if segment wise it's not possible to be, but I still wanted to understand because you are guiding a lower gross margin going forward versus very high margin this quarter. So I assume some one-off there, but just wanted to understand, this one-off has an India side or outside India?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [54]

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Yes, so we are not, we don't give guidance, you know, and somebody asked me whether it's a sustainable number. I think it may not be, the whole of it may not be sustainable and it is not lower than what we did last year. So I think let's just put an end to this [issue] on margins. And yes, it's just -- it's driven by the product mix and the territory mix. U.S. had an exceptional quarter and we had better margins. I've said that.

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T. Ranvir Singh, IDBI Capital Markets & Securities Ltd., Research Division - Pharma Analyst [55]

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Okay. Okay. Secondly, on India business, I see [both] the speciality or acute, but growth has not been picking up. The overall market also you see there has been some tapping volume. So can you give some color going forward how things are looking right now for your [business]?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [56]

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So going forward, we expect to grow better than the industry. Little or in line with industry or a little better than industry. So you are right and we are also disappointed with the first quarter results as far as domestic business is concerned.

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T. Ranvir Singh, IDBI Capital Markets & Securities Ltd., Research Division - Pharma Analyst [57]

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But I wanted to understand the reason, if you could just give some reason behind this slowdown, because we have been focused on a specialty. Most of the products, I think 90%, more than 90% products are in specialty. So either new product introduction has gone slow or despite this new product introduction, sales have not picked for any other reason. If you could give some more light on it?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [58]

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So a, there is a general slowdown, being request. B, the monsoon has been deficient and delayed, at least in the Q1 though it doesn't affect our facility but it affects my acute business which is also affecting prices of the business. And see we've also done some -- this is not something which we wish to publicize a lot, but we have also done some, I'll say, cleaning up as far as the [trade] practices were concerned. So that has impacted the first quarter. Going forward, I think we should be back to the (inaudible).

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T. Ranvir Singh, IDBI Capital Markets & Securities Ltd., Research Division - Pharma Analyst [59]

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Okay, fine, fine. On depreciation side, we expected a higher depreciation. Just we want to know when the new facility is going to commerce -- capitalize?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [60]

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As for the new facilities, there are two injectable ones, we will start doing the filings of both these facilities by the end of this year, by the end of FY '20. That means we should -- you might see commercial sales from it by end of FY '21, probably FY '22.

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T. Ranvir Singh, IDBI Capital Markets & Securities Ltd., Research Division - Pharma Analyst [61]

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Okay. Okay. Okay. And this exceptional item, I see that the joint venture has been making losses. So this is towards after this impairment, are we going to put more money into this joint venture or what exactly is the state of affairs here?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [62]

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Yes, so what happened in Algeria, as we had said last year, there was a fire in the facility in Algeria, and of course Algeria is someplace where we have a JV with somebody else as we can't own more than 49% in Algeria. So when the facility was burned down, we were reevaluating the business and at present, we've decided not to rebuild the facility and we will start work more gradually depending on how comfortable we get with the area. Hence we thought it was prudent to take a financial impact.

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Operator [63]

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The next question is from the line of [Shashan Krishna Kumar] from JM Financial.

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Anmol Ganjoo, JM Financial Institutional Securities Limited, Research Division - Director [64]

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This is Anmol Ganjoo. Couple of questions. So of the 9 approvals we had in the U.S. this quarter, how many did we actually launch?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [65]

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Anmol, we launched 3 products during the quarter.

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Anmol Ganjoo, JM Financial Institutional Securities Limited, Research Division - Director [66]

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Okay. Okay. And just referring to one comment during the previous call, where you said that you know 20% of our product portfolio contributes to 80% of our revenue. If we look at this quarter, I know you won't distinguish between products, but has that concentration increased or gone down, in your view?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [67]

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No, concentration has not increased actually. What has happened is certain categories of product, I mean you are aware this story has been from Q2 of last year actually. So we see some traction there but the new product introduction also does bring in a decent amount of business. So it's not been a concentration.

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Anmol Ganjoo, JM Financial Institutional Securities Limited, Research Division - Director [68]

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So just trying to understand what is at play as far as the U.S. is concerned, because if I also kind of try to reconcile our strong gross margin performance given the strong U.S. queue, what is the -- what is at play in terms of base portfolio pricing and some of these opportunities where -- whether it's new filings or some of the exceptionals you refer to, are they coming at significantly better pricing? Any kind of commentary, it would help.

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [69]

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And also, as you know, and we've been saying consistently, how we do business is we try looking for opportunities, whenever one for long-term dropping prices and going forward. So these opportunities do arise. In terms of the concentration of the portfolio, what has happened over a period of the last 3 years, 4 years, as you know [theophylline] was a big product for us. Today, that has become, it is getting smaller and smaller as we have more products coming in. And on an annual basis, on a quarter-on-quarter, there may be variances, but on an annual basis, we have more products are making up the 80% of our revenue and profit in the U.S. on an annual basis. And your question about the margin, and I know some people ask, see basically in the U.S. as you know I wouldn't call them one-offs but we do get supply opportunities from time to time. They're not as big as they are, but a combination of those sometimes in a quarter can be a little remunerative.

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Anmol Ganjoo, JM Financial Institutional Securities Limited, Research Division - Director [70]

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So just to kind of sum up your thoughts, in the U.S., the way we look at the business is that the worst from our portfolio standpoint is behind and given the stability of the portfolio base, when we see an opportunity coming every odd quarter where we could be beneficiaries and the end market landscape lends itself to that. Would that be a fair summation of your comments, Pranav?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [71]

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Possibly, yes. I mean I can't -- I'm not a soothsayer but we've seen that historically there is always opportunities that arise in the U.S. and as -- and now we keep launching new products, and if we're going to launch 15, 20 products in the year, you will have more opportunities as well.

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [72]

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I wish that dynamic would have been so simple.

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Anmol Ganjoo, JM Financial Institutional Securities Limited, Research Division - Director [73]

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Yes, but I know there is this volatility but we also are concerned by having to model stuff, so...

My second question is on the domestic performance. Earlier you said that next quarter we should start tracking industry growth rate. This quarter, we having underperformed a bit, but is your assessment also that the industry growth rate [left troughed out] sometime this year given what you've been hearing from the channel, et cetera, or you think that it's a couple of quarters more before it stabilizes?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [74]

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So honestly, we are too small a player to make a comment on this. What we hear from market is that growth across is slow, and this is not only in pharma, this is across many other sectors also. Pharma used to be like a little [ERC] but now Pharma is also going getting impacted. We know that the growth rate in the industry in general anyway, honestly, I have no answer.

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Operator [75]

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The next question is from the line of [Ayush Mehta] from [Mehta Analytics].

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Unidentified Analyst, [76]

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My questions have been answered.

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Operator [77]

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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 [78]

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So on the India business, so understand there is a weak acute season that happened during the Q1, but even in specialty, we have seen a muted performance and what I see from your [ICDs] is a big drop in volumes, not only for you but across the industry. So in specialty -- if you can -- so specialty is largely due to the volume drop, is that the correct inference?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [79]

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Yes.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [80]

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Okay. And when you say coming back to industry average growth or -- so have you started or have you seen July month the acute season coming back?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [81]

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So we won't know unless we start getting the market data, which will come only towards 1st week of August or so. But I think other families are okay, (inaudible), they should be back in growth numbers.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [82]

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And would it be fair to link the other operating costs of promotions? I mean in the past we have said that once the growth is back, and the cost is more or less linked, so is that the right way, to link up the operating costs on the domestic side also?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [83]

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Nothing which I can ascribe during Q1.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [84]

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Because Q1 is where you do a lot of promotions, right? I mean acute season and...

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [85]

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Q1 is not one when we do a lot of promotions, maximum promotion happens in Q2 and Q3.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [86]

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Okay. And that remains on track?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [87]

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That remains on track, yes.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [88]

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Okay. And I said on the sartan side, if you could help us understand. So we had some opportunity. Does the opportunity continues? Or as you last mentioned that the market itself has shrunk and shifted to other sartans, would that still hold good?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [89]

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So I think the opportunity that we saw last year in Q2 was in valsartans. If you see the valsartan market shares in the last few months, they've been pretty steady. So when the market share is steady, that means there's been no disruption and prices would have settled down.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [90]

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Okay. So because I see some market share gains for you in Benicar and on the new launches like [Rhizen moxinal], would that be the prime reason of uptick or there could be some companies like [Oddem] that talk about NBOs, new business opportunities, which range from 1 quarter to 2, 3 quarters. Would that be the prime reason?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [91]

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So I think it's a good question, it's a combination, you're right, on Vigamox we did have some bump up in sales, I think the internal market share gain went down. There was a bump up in sales because there was some shortage in the market. So as I said, we have portfolio products where it keeps happening. Some of the older ones, we do pick on more businesses once we are more confident and that's what's happened as well in Benicar is one where we might have picked up some share.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [92]

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Okay. And lastly, you've seen FDA issues increasing across companies. Would that also be a -- since we have been compliant and getting some extra business. Would that also be a reason from your channel partners?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [93]

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So I think FDA becomes an issue only if other companies are not able to supply and that has only happened if they have an import alert, if they have a warning letter their commercial supplies do continue, and I think buyers, I don't know if they look at that. I think what's more important for them is the supply chain reliability and what sort of partner you are and that's what we've been trying to do.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [94]

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Okay. And lastly, international business, there seems to be some dip, is it like a one-time dip, or we are -- we could continue to see the 15%, 20% growth that we have been seeing in the past?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [95]

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Yes so what we saw is, this quarter as well as in Q4, there was a dip in Europe sales. That's the predominant reason for the dip is, as I mentioned in the last call, Europe moved to serialization and we've been struggling a bit with that, with the window that we selected and we got a little delayed in that. Hopefully, Q2 is where we should start seeing a gradual uptick in that as well.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [96]

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Okay. And other than Europe, it's all good?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [97]

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Yes, I think we saw a little bit of a dip in the other ROW markets as well because of serialization but hopefully Q2 onwards that should start picking up.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [98]

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Okay. And is there a guidance to -- I mean not guidance, but color, in terms of we can still do double-digit, mid-teens?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [99]

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I think let's wait for quarter 2. Let me just see how confident we are of getting over this issue and then we'll get a much better flavor by the end of Q2.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [100]

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Okay. And are we calling about number of filings and launches for the year?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [101]

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In terms of launches, that's at about 10, 15 launches. It depends on our growth. So we already are at 9 approvals, so it's at least 15 to 20 launches is something that we look at in this year. And in terms of filings, last year we did about 20, 25; it'll be similar to that, 25 or so.

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Prakash Agarwal, Axis Capital Limited, Research Division - Executive Director of Pharmaceuticals [102]

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20, 25.

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [103]

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Yes.

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [104]

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29 we did last year.

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Operator [105]

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The next question is from the line of Kunal Randeria from Antique Stockbroking.

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Kunal Randeria, Antique Stockbroking Ltd., Research Division - Research Analyst [106]

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I have a follow-up on sartans. So it seems that some of the players in losartan have been facing some issues. Do you see a shift happening from losartan to some other sartans?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [107]

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So the whole sartans market has been quite topsy-turvy because what happened initially, the issue started with valsartan, and then when it started with valsartan, people moved to other sartans and then the same recurrent issue we have seen in the other sartans as well. So I really don't know as a market which way the usage is going, but there's been disruption in every sartan and as you know, we're not a huge massive [API] or sartan player, so we can't pick up massive market shares in any of them. So we try catching whatever market opportunities we can.

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Kunal Randeria, Antique Stockbroking Ltd., Research Division - Research Analyst [108]

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See but if I'm not mistaken, you have taken some price hikes in the last few months in some of the other sartans. So does it mean that the next couple of quarters, we could really see again a bump up in U.S. sales from your one-off opportunities?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [109]

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I don't think so. You know what, the sartans -- one thing about the sartans is there's many, many suppliers and many suppliers with large supply chains and capacities. So these blips are normally quite short term and you can get (inaudible) in the market quite soon.

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Kunal Randeria, Antique Stockbroking Ltd., Research Division - Research Analyst [110]

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Okay. Right. And lastly, how many of our products are backward-integrated?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [111]

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[I don't have this] number off the top of my head, but I'm assuming from what's in the market currently, I would assume about 80% will be backward-integrated. As we move forward, it will become less so, because a lot of our newer filings are injectables and ophthalmics and they will not be backward-integrated.

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Operator [112]

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The next question is from the line of [Kusta Guvna] from [Bear Enterprises].

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Unidentified Analyst, [113]

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I was wondering, could you just give us a sense of the pricing environment for the [meds] in the U.S.? And how the price erosion situation is upholding, just in general?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [114]

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Yes. So it is very tough to give a one number but what I am seeing is there is opportunities for price increases as well as there's erosion. I think just erosion, generally, has come down a little bit but it really depends where -- which baseline you take. But the simple thing is that there are more entrants coming in and you will see price erosion. Some of the new launches, the [DR] launches like Cialis tadalafil was a [slight bit] of an erosion. [somulsostat] is a little bit more attractive, there is only 2, 3 of us in the market. So it really depends. But I think it's very tough to give one number [percent].

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Operator [115]

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The next question is from the line of Chirag Dagli from HDFC Asset Management.

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Chirag Dagli, HDFC Asset Management Company Limited - Senior Equity Analyst [116]

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So what part of our U.S. sales is own label versus partnered products?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [117]

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So in terms of -- I don't have the data, so yes...

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [118]

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So 95% is...

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [119]

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Own label.

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Chirag Dagli, HDFC Asset Management Company Limited - Senior Equity Analyst [120]

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And are you -- through the call, the sense I'm getting is that this $47 million that we've done in the first quarter is not the -- we shouldn't sort of extrapolate this into an annual number. Is there a fair assessment of what the business looks like over the next 4 quarters?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [121]

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It's tough to say, Chirag. The U.S. market is a very dynamic market, right? Now what is happening is, our portfolio, there are 2 things which will happen, on one side you have erosion. Second side, you have opportunities. And as we have just sort of mentioned also is that we have new product launches. So we want to continue growing, as I said, over 2, 3, years we will keep growing. Quarter-on-quarter it's tough to say, but with the new launches and opportunities, we'll try growing the business wherever as we can.

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Chirag Dagli, HDFC Asset Management Company Limited - Senior Equity Analyst [122]

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On some of the older products that you would have been selling for 5, 6, 7 years now, how is pricing behaving in some of those older products?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [123]

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It generally is stable. I say generally because again I can't generalize on every product.

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Chirag Dagli, HDFC Asset Management Company Limited - Senior Equity Analyst [124]

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Your portfolio.

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [125]

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Once in a while, someone comes and starts dropping prices, then we [indiscernible] in some old ones as well. But by and large, they've been little stable; some places have been price increases, some places down. So it's tough to say.

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Chirag Dagli, HDFC Asset Management Company Limited - Senior Equity Analyst [126]

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Can't generalize yet, I guess.

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [127]

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Can not, yes.

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Chirag Dagli, HDFC Asset Management Company Limited - Senior Equity Analyst [128]

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And in the Indian business, your internal evaluation of descriptions [and vision], et cetera, is it showing any slowdown, any cause of worry at all, or do you think this is just a passing issue?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [129]

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So if this continues for a few quarters, then I think definitely it will be a cause of worry. If it is a temporary phenomenon, it should be more in the next 1 or 2 quarters.

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Chirag Dagli, HDFC Asset Management Company Limited - Senior Equity Analyst [130]

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No sir, my question is that for the last 2 quarters if you've seen an actual dip in sales. Has -- have prescription generation data also shown a dip, if at all you track it?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [131]

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So both the number of prescribers we are adding to our [kitty] and the number of prescriptions we are generating, [I assume it's summing to increased intake].

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Chirag Dagli, HDFC Asset Management Company Limited - Senior Equity Analyst [132]

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Okay. Okay. Fair point. And the INR 65 crores per quarter that you said is being capitalized, does this include deprecation as well?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [133]

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No, there's not a depreciation portion in this. Depreciation would come in only when we commercialize the [classification] and we put to use.

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Chirag Dagli, HDFC Asset Management Company Limited - Senior Equity Analyst [134]

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Okay. So the INR 65 crores is just the OpEx above the EBITDA running cost essentially?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [135]

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That's true.

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Chirag Dagli, HDFC Asset Management Company Limited - Senior Equity Analyst [136]

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And then the last question is around working capital. How different is India versus the U.S. as far as working capital days or net working capital is concerned? Just a ballpark range for [capital].

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [137]

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So I think to give a range in terms of number of days, it's far lower both in terms of receivable and in terms of inventory. In U.S. and international is far higher, both in terms of receivables and in terms of inventory. Having said that, on the overall business, I think we are in excellent -- we have an excellent receivables record both in the international and in the U.S. and we have a decent amount of inventory. So I'm not off of the mark.

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Chirag Dagli, HDFC Asset Management Company Limited - Senior Equity Analyst [138]

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But as the U.S. business sort of keeps growing, do you think there is a view that the net working capital as a percentage of sales will go up dramatically?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [139]

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Not in percentage of sales, no.

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Chirag Dagli, HDFC Asset Management Company Limited - Senior Equity Analyst [140]

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Not dramatically. Would it be fair...

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [141]

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[in terms of capital] it will grow [as we just]...

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Chirag Dagli, HDFC Asset Management Company Limited - Senior Equity Analyst [142]

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And just the last bit, is India less than 45 days net working capital for us?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [143]

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India net working capital, both added together, I think so, yes.

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Operator [144]

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The next question is from the line of Dheeresh Pathak from Goldman Sachs Asset Management.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [145]

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Sir, from the new filing -- new facilities, filings have been done only from the Aleor facility, right?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [146]

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Yes, that is correct. And the [oral onco one also].

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [147]

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Oral onco is also. And inspection from an FDA point of view has only been done for the Aleor facility, right?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [148]

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Aleor and oral oncology.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [149]

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What is the status of the oral onco inspection?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [150]

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Zero observations.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [151]

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Okay. And the F4 facility which we had seen at that time, that was complete, right? So why are there no filings and...

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [152]

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So the whole filing process takes a while because you do filing and then stability. So that the [by design] in progress, so the filing should happen by the end of the (inaudible) stability.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [153]

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Okay, and just I wanted to understand the accounting for your JV. That is a full consolidation we do, right? We have 60%?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [154]

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It's a line-by-line consolidation in the quarter, then we take out the minority interest from the net profit and loss.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [155]

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Okay. And R&D spent on this is being capitalized instead of being expensed?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [156]

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Yes.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [157]

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How much is that per year?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [158]

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On an annualized basis, that runs about [$20 million, $25 million].

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Operator [159]

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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 [160]

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On the India business, how much of our sales is under [iridian] for this year?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [161]

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So up [16%] as of now.

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [162]

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16%, so the average price increase in the [iridian] would have been about [4%] and...

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [163]

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[4%] where it's linked to [the rupee] that is [3%].

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [164]

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Yes, so the rupee A about 4% this year, wasn't it?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [165]

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No, no, no, I think it was about 3%, 2.8% or some. It's not just -- it was less than 3% [almost].

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [166]

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So the blended price hike that would have taken over the entire portfolio would also have been around 3% or less than that?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [167]

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That would have been around 5%, 6%.

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [168]

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Then that would've been 5%, 6%. So the question is that despite prices [this price hike] if there is a [2%] year-over-year dip, it implies a 7% to 8% volume [degrowth] in the portfolio and this couldn't possibly have happened other than your large brands also stagnating or declining in low single digits. And there is clearly something which is not right here because despite a slower [intake] that we see in the pharma companies that have reported so far, have actually reported growth in India business that [are higher than] at lower levels.

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [169]

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There are many companies which have reported numbers so far. I mean I think except us, Reddy's, [Karnataka] gave sometime back, Biocon is not a big player in the domestic market. So I think we'll have a better trend going forward. But I would say my dilemma and my problems, I can't speak of others.

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [170]

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Sir, I understand. The question I was going to ask was exactly the point that you made to [company like Torrent] already they are significantly higher in terms of sales in India as compared to you, and yet they're able to grow in a high single-digit and low double-digit, versus us not being able to do so. So if the market is a weighted average of the players size, if the market clearly seems to be growing, there is a specific issue at our end which seems to be stopping the growth for the past few quarters now. So if you could maybe get back to us with what the leading brands are doing in terms of market share and growth that the JV has [full]. Because it doesn't tally with the other companies are doing in terms of numbers.

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [171]

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[Many] leading brands have not lost market share. Market share for all my leading brands but I think some of the (inaudible) on my [gynaec] and probably gastro portfolio is not doing as well. We're trying to bring it back to raise.

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [172]

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Understood. And are you are also dropping a few [tailing brands] to focus on profitability or productivity of (inaudible) or are we not rationalizing any brands?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [173]

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What is happening is the process in any pharmas company. You keep adding new products. You keep refocusing. Actually, we don't discontinue; we do defocus. Now whatever you don't promote, they don't get -- they have a natural risk, but I never take any product out of my portfolio. If I stop promoting it, it will continue for a while and then it will taper out. It is a regular process. Nothing unusual happened in the last 2 quarters.

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [174]

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Understood. How many MRs do we have today on the street?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [175]

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So we have all three total [1,900] who go as medical representatives. You have another 1,000-odd people in the supervisory managerial capacities.

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [176]

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So [2,900-odd] MRs. And how has that number changed over the last 12 months? What was it the last year, same time?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [177]

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It is not probably changed in the last couple of years because we have been saying that I have not been investing in further enlargement of my field force, unless I can (inaudible).

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [178]

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One last question, what is the attrition in our field force right now?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [179]

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[Attrition] at this moment is in our company, a little higher than our usual number. I don't know whether I have that -- a good number, but I think it is in line with our peers around the industry. I mean generally, it's -- it follows [intervals]. So if your growth settles down, you lose more people. If [people are impacted], growth also gets impacted.

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Aditya Khemka, DSP Investment Managers Pvt. Ltd. - Assistant VP Healthcare [180]

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Exactly. So that was my question, sir, that many of us would not give you. So many MRs would not be meeting their incentive targets. So therefore the attrition would've been higher. Okay. Okay. Understood.

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Operator [181]

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The next question is from the line of Nirmal Gopi from IDFC Securities.

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Nirmal Ambattuparambil Gopi, IDFC Securities Limited, Research Division - Research Analyst [182]

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Quickly on this U.S. market opportunity that you talked about. (inaudible) opportunity which typically we've been cashed in this quarter and I guess presumably they've been there for the last several quarters now during the market dynamics, the profitability on these opportunities are almost similar in most instances or what are the nature of these -- these are like one-time supplies that you do with very high margins? Just broadly trying to understand the nature of these opportunities which come through.

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [183]

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This is very tough to say. I can't really comment on it because it's a -- part of it is picking up orders for a little longer term we get more market share. Some is going to be much shorter term, just a combination, there's no one -- so last year, second quarter's [rate here was one better than we could speak about]. This year is nothing -- it's across the board, a few price increases, a few market share gains, just a combination, so I can't really give you a breakup.

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Nirmal Ambattuparambil Gopi, IDFC Securities Limited, Research Division - Research Analyst [184]

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And in your own sense, your own assessment, have these kind of opportunities to win cash, have you been increasing in frequency over the last few quarters?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [185]

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I think the U.S. industry per se is such that these shortages keep occurring in the market and it's not just the last few quarters, I think it's been going on for the last 3, 4 years and is always there to pick up. It just depends how nimble your supply chain is that you can pick up some of these market shares.

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Nirmal Ambattuparambil Gopi, IDFC Securities Limited, Research Division - Research Analyst [186]

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Okay. And so really on the 10 product launches you talked about in the current quarter, do we have approvals for all of these products that you're talking about, or this is expected approvals?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [187]

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Yes, so I said that we launched 3 products in the quarter, in Q1. While there were 9 approvals, we just had a couple of new launches which were early part of July so they were not in that quarter. But most of them, we do have approvals. I think out of the 10 that we launched in this quarter, most of them we do have, about 7, 8, we already have approvals.

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Nirmal Ambattuparambil Gopi, IDFC Securities Limited, Research Division - Research Analyst [188]

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And lastly, on this [sivostastat] how do you see this market playing out? Is there some complexity associated with the product which will probably keep (inaudible)[account] becoming a very competitive market or this is -- how should we see...

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [189]

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So see, (inaudible), they're one launch. There were actually quite a few tentative approvals, but I think from what we've seen, Mylan is there, (inaudible) is there in the market. Some others are more tentative, so they may take any time [so the launch is in testing] right now.

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Operator [190]

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(Operator Instructions) The next question is from the line of Damayanti Kerai from HSBC.

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Damayanti Kerai, HSBC, Research Division - Analyst, Healthcare and Hospitals [191]

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Coming back to U.S. You mentioned there is always some variability in terms of quarterly sales or the kind of one-off supply opportunities which we may get. But if we look at the base business growth, is it prudent to assume that now we're comfortably at $40 million-plus kind of quarterly run rate which should place us in a comfortable position for achieving $200 million kind of annualized sales in the U.S. with respect to some variability in opportunities or prices or others?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [192]

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So I think last year in the U.S., we did [$158 million]. So if you look at that, $40 million should be a baseline. We're not giving any guidance because as you know, it's in it's -- the U.S. is very dynamic; there may be some products where our bigger products where everyone knows if there is price erosion drastic then that could have a fall. But yes, if you stick to what we did last year, we're keeping up the average there.

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Damayanti Kerai, HSBC, Research Division - Analyst, Healthcare and Hospitals [193]

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Okay. But on the base side, we are confident about this 20, 25 filings per year and around 15 to 20 launches in the fiscal year.

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [194]

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Yes, absolutely.

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Damayanti Kerai, HSBC, Research Division - Analyst, Healthcare and Hospitals [195]

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And sir, what kind of R&D we're allocating for the current fiscal? R&D spend?

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [196]

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I think R&D for this quarter was INR 140 crores which was, what, 14 odd percent.

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Damayanti Kerai, HSBC, Research Division - Analyst, Healthcare and Hospitals [197]

--------------------------------------------------------------------------------

Good, so we should assume similar run rate to continue for the [current year]...

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Pranav Chirayu Amin, Alembic Pharmaceuticals Limited - MD & Executive Director [198]

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Yes, based on absolute terms, yes.

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Damayanti Kerai, HSBC, Research Division - Analyst, Healthcare and Hospitals [199]

--------------------------------------------------------------------------------

Okay, and final question, on India side, we obviously are not yet clear when we will get back on industry level of better growth. But in your observation, if you look at the stocking in the channels and all, how many days of stocking [are you at] right now? Any color on that?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [200]

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So I think -- I don't think that there are single number for this. Product specific, division specific or channel specific, they would be different. But if I had to do (inaudible), it'll probably be 40, 45 days of stocking, about 45 days.

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Damayanti Kerai, HSBC, Research Division - Analyst, Healthcare and Hospitals [201]

--------------------------------------------------------------------------------

Still around 45 days, right? And any like comparative, 1 year back or 2?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [202]

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So at the peak, in the [pre-GST] period, it used to be 60-plus. And then I think from there I noticed it has continued coming down, barring the GST period when it did completely.

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Damayanti Kerai, HSBC, Research Division - Analyst, Healthcare and Hospitals [203]

--------------------------------------------------------------------------------

So you are saying, right now, you have 45 days of stock in the channel from your perspective?

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [204]

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Yes, I think broadly (inaudible) level with this, but I think [more or less].

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Operator [205]

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As there are no further questions in the participants, I now hand the conference over to Mr. R.K. Baheti for closing comments.

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Raj Kumar Shreeram Baheti, Alembic Pharmaceuticals Limited - Director of Finance, CFO & Executive Director [206]

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Thank you, everyone, once again for joining the call. And if you have any further questions, Mitanshu and [Yeng] will be happy to respond to you. And look forward to be with you again next quarter. Thank you very much.

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Operator [207]

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