On the shelf stock adjustment that we had in the quarter - a US$50 million number for a product like Revlimid where we knew the patent cliff is coming - seems very large. Could you give us some colour in terms of why the shelf stock adjustment was so large, given that we knew they were expecting competition in January?
We were also surprised by that. It was not part of any arrangement or anything like that. I cannot speak on the details on the relationship of the customers, but it came from them. I guess, certain planning issues or mistakes at their end, and that's the outcome of it.
On semaglutide - now that we have Canada approval, we've mentioned 12 million unit sales across markets in FY27. What could be the competitive landscape now that Reddy's and the second player have gotten approval? When do you expect more players? And out of the 12 million, what would be the rough breakup between Canada and EMs?
I believe that the current landscape of basically Novo Nordisk as well as the two of us will stay there probably for several months, and then likely that others will come. I believe that the market in Canada is give or take about one-third in what we call public, one-third cash, and one-third what they call private. So what I believe will happen is that the reimbursement price will go over time, as expected. The quantity, at least for a couple of years, should be very, very healthy.
On SG&A spend - this year FY27 could be similar to what we had in FY26. In NRT or some of the initiatives which you had started a few years back, you have been spending for last few years. Where are you looking for investing more? And this number, do we have any room to take a cut or see any reduction there?
We will have absolutely places that will have less, and we'll have places that will have more. NRT is a place in which we will have more. At the same time, the growth will well more than finance it, so the level of profitability of the asset will stay the same. We are also launching innovative products in India and in certain emerging markets, and naturally we are investing in the marketing of those new products. At the same time, we are putting a lot of productivity activities, salesforce excellence, as well as additional marketing excellence programs. So in terms of nominal value should be the same level. As sales will go higher, in percentage-wise it will go down.
So the IV is on track for potential launch this calendar year? And do you expect denosumab in the US before that?
IV will be likely at the beginning of calendar '27, hopefully this fiscal, that's the plan. But of course we need to see the approval for that. But right now, that's the plan. On denosumab in the US - I don't know. It depends on the ability of Alvotech to get approval.
You said that you have wound down your CAR-T related investments and have taken a write down. Could you just tell us a bit about what your investment was and why it failed in that area? Is it something wrong with the specific product you used, or with the technology itself?
The investment, give or take, is what MVN guided - ₹135 crores, that's what we took down. We saw that we have issues with the clinical, and we decided to kind of deprioritize it at this stage, and we just impaired it as per appropriate accounting. The product is the CAR-T.
What is your experience about the semaglutide penetration here in India? Because generally it is understood that the penetration is very low, around 2%. So what is the trend that you are witnessing here in India?
I don't recall exactly the market share, but so far it's a great launch. Aishwarya added: I think our market share is around 10% on a standalone basis. Erez continued: I believe that it will grow. Plus in the next coming days, we will launch also the oral product, so the combination of both should give us a very healthy growth.
Out of this 3-4 million pens per quarter, how much of this capacity that you are going to sell directly, and how much of the sales you are expecting through partners?
If I need to guess, and I must admit I did not do any kind of calculations, so top of my head, I would say 50:50, give or take, in the neighbourhood.
Any thoughts on the number of pens that you can possibly sell in FY28?
In FY28, potentially we will have a lot of capacity, because in addition to the current cartridge suppliers that we have today, we will be able to qualify also the capacity of FTO11. So it can be any number. Let's say it can be 40 million also, but right now I don't see a demand for that.
On semaglutide in Canada - has the innovator Novo already introduced an authorised generic (AG) in the market?
I know that they are offering, I don't know if it was already sold, I don't know, personally I don't have knowledge of that. But we are assuming that they will have. That's my assumption.
In that scenario, will it be a 3-player market and lead to 75% discount to the innovator product? Is that the way to think?
I don't think so in that way, because the market is divided into public, cash and private. And what you're discussing is absolutely public, so yeah, likely that this will happen to the public market eventually, but I do see it as a mix of markets. So we are not planning right now our assumption based on the number that you mentioned.
Given that we have had a setback in Brazil, are we still confident of the 12 million units of sale for semaglutide in fiscal '27, or do you think that would depend on us getting approval in Brazil as well?
Brazil will be part of it. I believe it's still that number, but the number moved by several months. I'm still with the same number, but probably it will be 12 months that will probably end somewhere in the beginning of FY28 as well. Specifically for the next, let's say, until the end of calendar '26, I believe that the number is somewhere between 6 to 7 million units.
Continuing on semaglutide - can you talk a little bit about your pricing strategy in the market where you'll be coming in say another 12 months? And specifically in Canada, after entry of second generic, how do you position yourself versus Novo Nordisk's pricing?
Our list price will be give or take about half of what Novo Nordisk will be. So that can be shared because it will be listed. Obviously the rest is arrangement that we have with the customer that I will not be able to disclose, but let's say it will be the normal arrangement that you normally have. We believe that all the prices will be in the neighbourhood of US$30 plus. Why I'm saying that number also is because in some markets we are going to work with the partner, and this reflects the net price that we have for them. Obviously, they will have their margins. And these numbers may go down if the competition intensified, but I don't envision it to at any case to be below US$25.
On gross margins, even after adjusting the shelf stock, for the quarter it is 48%. While ex-lenalidomide also we have talked in the past that the gross margin has been 50% plus. Is there anything which I've missed as far as gross margin for the fourth quarter is concerned?
This quarter there is a product mix impact. That's why it is at 48%. We believe our gross margin is in the range of 50 to 55%.
What will drive this in the subsequent quarters, and are you including semaglutide sales for this gross margin?
Yeah, semaglutide sales of course, and then product cost improvement programs also are on. And considering the new products we are going to launch in FY27, including semaglutide, plus product mix - considering all these things, I think certainly our gross margin would be 50% or above. Erez added: We are planning to launch also products like sugammadex, bosutinib, sitagliptin, brimonidine, and pomalidomide. So the mix of the products, the mix of the markets, as well as the activities that we are taking now on our APIs - we are very confident about our ability to manage the gross margins.
On these products which you mentioned - currently the US revenues even after including the shelf stock investment is $236 million. So effectively maybe $944 million if I normalize that. Will we sort of grow over and above this, ex-semaglutide in FY26?
We will absolutely grow in North America ex-lenalidomide in double digits.
For the India market, if you could just share what has been organic and inorganic growth for the quarter.
It's organic. We consider, if we license-in a product from China and we are launching it in India, as organic. In this terminology, it's mostly organic. The inorganic is negligible. MVN added: Brands what we acquired did not have a significant impact in this quarter. Stugeron, Progynova are recently acquired brands.
Could you give an update on the status of denosumab and Orencia (abatacept)?
Denosumab, we launched in Europe and we are awaiting approval in the United States. Our partner has a deficiency letter that they need to address for the United States. Abatacept, the intravenous (IV) was approved for review, so it was accepted. And so it's going as per the timelines. We are also awaiting an FDA inspection in Bachupally, Hyderabad for the same. So abatacept so far is in the right direction. And then of course we are working on the sub-cutaneous (SC) that will be submitted later, and also will be launched later, as we discussed in the past.
On the biosimilar business - since it's the fourth quarter of the year and full year data is there, just wanted to have a sense of what is the size of the biosimilar business right now, and whether it has already broken even or it is loss making. If not, then what is the timeline for break-even for this business?
Overall our global biologics sales is not very high. It is about US$100 million in sales. So at this sales, whatever investments we are doing for the development of abatacept and other products like pembrolizumab, also we are with Alvotech, definitely it's not at break-even. Once we launch abatacept, certainly I think post that we can see break-even. Like Erez said, if everything goes well including our inspection, we'll be launching abatacept in calendar year 2027. That would be like FY28.
On the NRT - since last two quarters we have been seeing a strong growth. Last quarter it was 25% YoY growth. This quarter it is around 16%. So what is driving this growth, and whether this is a sustainable one? And in fourth quarter, is there any seasonality?
The NRT business is indeed growing more than we expected it to be. So we expect it to be kind of mid-single digits, it's certainly more than that. Specifically for the 16%, so there is some impact of the fact that in the transition, some customers take more stock. So it's not fully, let's say, in that respect, sustainable. But I believe that the right place for it is either high single digit or even low double digit - we will be somewhere in this neighbourhood.
Even after adjusting for SSA in US sales, sequential decline of 25% QoQ, despite having limited drug limit in Q3, seems quite high. Is there anything else which is one off here? And so the one adjusted for SSA in Q4, can one consider this as base sales for US from here on?
We don't see a pattern of a loss of market share or price erosion or anything like that. There could be that there were certain buying patterns by some customers, but overall it's very consistent the way we see it. So the primary difference between the quarters is lenalidomide (SSA). I don't know exactly the origin of the SSA specifically, but let's say that there might be some customers that bought a little bit more as per their patterns of acquiring products in terms of dates and stuff like that. But overall, if you look at market share, prices, this kind of stuff, it should be about the same. MVN added: And also there is going to be new launches. Today this is from the existing products, and then going forward we'll be launching like 27 new products overall for the full year.
On semaglutide - when do you expect approval in Brazil and what are the key market approvals that you're looking at? You mentioned I think 6 or 7 million units for this calendar year. What's your expectation for the full fiscal year FY27?
First of all, we are expecting to get approval also in Brazil. We have a partner in Brazil that is also there, and he got also our comments, so we hope to get approval to our clone product. So we will be in Brazil. Probably I don't know if it will be 3 months delay or 4 months delay, but that's still the expectation. In addition to that, you have markets like Turkey. And then you have a bunch of relatively high number of smaller markets where we have a partner that will probably serve. Because all together we are planning in this calendar to launch in more than 50, and in 12 months in more than 80. So between what we call the B2B in which we are selling to the partners or selling ourselves directly, we probably will be in a pace of 3 or 4 million pens per quarter. So if you add that, it will come to around 10 or 11, close to the 12 that we discussed last time, give or take one month.
On US generics - if I heard you right, are you expecting 27 launches? It looks like most of them are very competitive. Are there any chunky, large product opportunity in the US, outside of abatacept, that you expect in fiscal '27?
I believe that bosutinib can be a nice product. And I agree with you about that most of them will be competitive, I fully agree with that. But overall it should give us a double-digit growth, without lenalidomide.
On North America - if you look at this quarter we have done close to US$250 million kind of revenues, and it is again close to pre-Revlimid levels. So in the last 3 years we have launched many products but the US revenues haven't moved up much. Is it fair to assume that there's a price erosion in some of the major baseline products in the US? And the double-digit growth you are highlighting includes semaglutide in Canada, right?
Yeah, so firstly obviously in this period of time there was price erosion. And what it tells is that market share and new products give or take covered it. I see it as a kind of very low single-digit growth, not flat. But I'm in agreement with you that market is not growing as the other markets that we have, that are all growing in double digit. Moving forward, this year, again, without lenalidomide, we will see double-digit growth. And going forward, the main growth in the United States will come from biosimilars, consumer health, as well as certain 505(b)(2)s. On the double-digit growth this year - it's ex-semaglutide. Semaglutide is on top.
When you look at the next year, given that the base business right now is at 19-20% margin, where do you see the overall margin for the business with semaglutide etc. in the next year and the year after, versus our target of 25%?
We are planning to maintain the base without semaglutide at around 20%. So this is the plan. And then semaglutide is supposed to help us to get more than that. Now it obviously depends how much we will be able to sell, at what price, and what will be the mix, because I shared already that it will be a range of price that can go let's say from US$25 to US$30, all the way to US$70 though. Obviously there will be a range of prices, but let's say with semaglutide it should be close to the 25%, but maybe a bit less, depends on how much semaglutide we will sell.
Could you outline how much would you expect in annual biosimilar sales by FY29?
Hopefully it will be in the range of US$ half a billion, 600 million, 700 million. It very much depends of course of how abatacept will perform. It will be the lion's share of those sales.
Would this have margins above company margins? Can the entire biosimilar portfolio give you 25% plus margins? And are we on track to file the subcutaneous version this year in Europe and US?
In the case that there will be no competition or low competition, absolutely it will be above the average margin that we have. On SC filing - Yes, we are. In the US, for sure. In the Europe, there might be some delay.
If you could give the split of sales between IV and subcutaneous SC in the US by value? And your capex plans for the next two years - annual capex plan? Would this largely be on biosimilars?
It is 50:50 in US, whereas in Europe IV is very less and SC is high. On capex - next year would be around ₹2,000 crores. So biosimilars, certain product-specific investments I think are there, and then general capex.
On biosimilars - you had mentioned that your R&D spends would reduce given that the spends towards abatacept have been completed. Going forward, given the draft USFDA guidelines, how do you expect your cost per molecule to behave? How do you see competitive intensity playing out? Is the lower R&D guide because of those draft FDA guidelines, or because the new set of launches post-abatacept and denosumab will be much later?
In the R&D, naturally for abatacept we paid for a Phase III trial, and going forward we don't anticipate Phase III. So obviously the level of R&D in this area will not be the same. In addition to that, the products that will come in the next coming years in biologics for us will come primarily with partners, unless something that will come in-house. So obviously then we share the R&D cost as part of that. And number three, we are becoming more productive. One day we'll discuss it, but we love Artificial Intelligence (AI), and we love this kind of stuff, and the overall the R&D will have less cost and more output.
On semaglutide, just wanted to get your perspective on how you see dosage forms playing out, given that you're also launching oral in India. Do you see oral being unique to India, or do you see that having a play in other emerging markets too? Between the three dosage forms, how do you see the likely salience say 2-3 years out, and salience between pens, vials and orals in emerging markets?
Definitely we believe that the oral will grow, not just in India, for sure in India, but also in other places. Depends of course on how people appreciate the compliance of the oral product. And as time will go by, also the oral will have probably additional forms, because that's what the innovator is doing. In the emerging markets, you have countries in which there is a full use of the pens, and the innovator fully launched the product, in places that it was done partially, and also markets that not at all. And obviously the price point for each one of the markets is a bit different. In the places with the lower prices, we believe that the oral will be more successful than in the lucrative markets, at least the way we look at it now.