After GST implementation, now operations in India are back to normal level, right?
Yes, after the GST impact, this month has been pretty much in-line and we would rather wait for this month to get over and then December because the seasonality impact of Diwali and all would play a bit of a role. But I think it's pretty much in line with our H1 performance.
Your plan for filing for semaglutide in Brazil market. Have you filed the application?
I can confirm that our application is with ANVISA. We are waiting for approval. I really cannot comment as to when we will expect the approval to come.
When do you see supply disruption in Germany getting normalized, which impacted recent quarter performance?
So, we are obviously working and pushing our supplier towards ending it quickly. Right now, all indications are that to some extent will continue in Q3. Hopefully, Q4 onwards, it will not be the case.
In Germany, what kind of growth are we looking at this year? And how should we look at it from an FY27 perspective?
I would refrain from giving a guidance because what we are facing is kind of an out-of-the-box situation with one of our major suppliers facing disruption. So, like I told the previous caller that I would expect this to be over by Q3. But if it is, by any chance, doesn't get over, then we will be impacted going forward. So, I would refrain from giving guidance on Germany going forward until the issue is resolved.
On the Semaglutide opportunity in Brazil, how critical is this launch for you and any color on how do you see the market shaping up?
So, the market is huge. It's like a billion-dollar market by the time it goes generic. Essentially, the market is shifting towards Wegovy and Ozempic is coming down as can be expected. What we are expecting is approval in wave-1. I don't know exactly how ANVISA is going to treat these because we hear different stories that they're going to process by batches or they're going to process in order of application. So, right now, there's a bit of uncertainty as to how ANVISA is looking at all the companies who have filed. It is a major opportunity. It's probably a very important opportunity no matter the number of competitors. So, beyond that, I don't know what you expect me to comment. Usually, we target 15% market share for our products. So, I think 10% to 15% of Sema would be a material opportunity and would move the needle for Torrent.
How are you looking at the semaglutide opportunity for the domestic market?
Yes, the endeavor continues to be in the first wave on market formation. When that could be is still uncertain, we'd rather wait before commenting on that. But it certainly seems based on the Mounjaro launch that the market potential may be higher than what was expected even a couple of months ago because Mounjaro has just taken off very rapidly. The dynamics would be obviously very different at generic pricing. So, yet to see what exactly the opportunity is. But again, our market share targets have been fairly aggressive in the recent launches. We will have the same targets for semaglutide as and when it launches. And if we are in the first wave and if we do launch well, I think it would be a pretty meaningful growth accelerator in the next year.
On Brazil, typically the product approval timeline is pretty long. From that perspective, what is your thought on semaglutide market formation?
So, you are right. So, traditionally, in fact, in Brazil the approval delays are getting longer. It used to be 24 months and today if you file a new dossier, it is going to be 36 months. But ANVISA is treating semaglutide in a different manner because of the importance of the drug. So, I am not very clear as to, they have given out statements which have evolved over time. So, we would expect them to treat this kind of as a priority filing in the interest of patients and in the interest of healthcare economics in Brazil. So, hence, I do not think this is a typical filing.
On the same product for India market, the patent expires in March. So, market formation likelihood in March itself or is there a risk for the market formation itself getting bit delayed?
No, there is litigation ongoing right now. So, hard to comment. So, we will have to wait for some time to understand exactly when the market can form.
On the optimism around the US business, how do you see this business scale up from a slightly longer-term perspective? What are the kinds of filings you would be chasing, any differentiated assets, big plans for injectables, biosimilars, etc.?
I think optimism is to the degree that we want to return back to profitability, right? So I don't think we are intending to make any large investments in the US Gx space in terms of CAPEX or anything of that sort. We believe the current infrastructure that we have would allow us reasonable opportunities to launch a few good products in the next, say, three-year period, five-year period. And we're also looking at partnering with for certain products in which capabilities we don't have today. So the idea is that we need to get back to a reasonable level of sustainable profitability, which because the last few years has not been achieved. So I would say the optimism is essentially directed towards that and nothing beyond that that we're looking at investing.
Can you split the India growth across the drivers, volume, price and new launches? And can you talk about the GST impact on the business during the quarter?
Yes, sure. So, as per the AIOCD data set, our growth for the quarter was 12% versus 8% of the market. Breakup of volume is 3.7% versus 0% of the market. Price at 5.5% versus 5.5% of the market and new products at nearly 3% versus 2.5% of the market. GST impact was minimal. I think probably due to additional discounts and some one-off costs, I think it's probably about a 0.5% impact I would say, so not too much.
Can you comment briefly on how your key brands have done in India? Specifically Shelcal, Unienzyme and acquired brands like Tedibar?
All brands have done pretty well this quarter. Just to give a sense of the therapeutic growth breakup, Cardiac has grown 14% in the quarter. Cardiac is our largest contributor and Gastro has grown 15%. And the overall Derma piece, including Curatio has grown about 29%. So, overall, it's been a broad based kind of growth that we have seen. We think the chronic business should continue the high volume growth as well, given the expansion that's happened over the last couple of quarters. So, upcoming quarter, we believe the same momentum should hopefully continue.
Given that now we have received approval from CCI for the JB Pharma acquisition, can you talk about when do you plan to have operational control of the asset? And what kind of synergy number are we looking at from next 2 to 3 year perspective?
So, Rahul, as I said in the opening briefing, that we have got SEBI approval for MTO, which will kind of get over in the third week of December. And then probably January, we should see the closing of transaction. And once that is happening, I think we should be able to start giving you indications on what kind of synergy value we are looking at.
This quarter we saw very healthy volume growth of around 3.7% versus market volume growth being very tepid. What is allowing us to outperform volume growth?
Yes, we are. Mainly driven by chronic performance in most of the chronic divisions. So, if you recall, most of the expansion since the last two years has been in this segment, cardiac, diabetes, and CNS. And we're seeing the bulk of the outperformance happening there. Some of the new launches from last year and two years ago have now become pretty sizable contributors to the overall India business. So, they're also continuing to grow reasonably well. That's also adding to the growth. And the overall volume growth, I think, six months into the year, I believe, now is giving us a pretty good signal of comfort that the expansion probably has given us that desired outcome. So, hopefully that continues for the rest of the year, and our expansion also is on track. We will be almost at 7,000 MRs by the end of the year. We plan to enter into one new therapeutic area this quarter as well, which hopefully we should share by Q4 on the status of that.
When the semaglutide market opens up, would we launch both the injectable and the oral version? Or do you think that the oral launch could be a few years away?
No, not a few years away, maybe slightly after the injectable, but certainly both are planned within the next financial year.
The price growth has been getting a little moderate. We used to have 7%-8% price growth, now down to 5.5%. Can you throw some light on the pricing aspect?
No, I think this is pretty much in line as to what we had planned from say a couple of years ago that expansion has to deliver volume growth, pricing growth has to be in line with the market growth and some years it may be higher, some years it may be lower. This year we felt this was the appropriate kind of price growth that maybe that the market may allow, and I think within this range plus minus 1% or 2% should continue for the next couple of years.
With respect to GST, few peers were concerned and had an impact. Interestingly, we did not have much impact. Does it mean that we would have had decent market share, probably at a higher discount?
No, I would not think so. Our impact was minimal; our discounts were minimal. So, I cannot comment on what industry has seen as an impact, but we have certainly not seen beyond half a percent of growth impact.
Can you take us through some changes in the working capital? Saw some little deterioration in terms of receivables and payables.
So, when the GST implementation was rolled out, I think most of the industry players have extended the credit period for one month. So, that is something which has impacted the cash flow as at 30th September, which will come back in October.
What has happened to payables?
There is an acceleration of insurance discounts, which we see happening in Germany. So, that is the reason why payables have gone down. You will see these things normalizing in Quarter 3.
You usually book the FOREX gain in the other income. Can you elaborate what is the number there?
We have a FOREX loss of Rs. 39 crores, which is sitting in other income. So, if you look at the other income, it is negative, right?
On the field force expansion, you mentioned 7,000 by year end, which is adding like 600 people over the course of FY26. If you could just give us some color where we are adding this field force. Is there any specific therapies? Is this for market coverage?
About half would be for the existing divisional expansion within chronic and subchronic and about half would be for a new therapy entry, which should be probably by early Q4. So that is the broad breakup.
In Brazil, if you look at Brazil's growth in the last two quarters, there has been very strong growth. Has this been driven by product launches coming through or is that yet to reflect in growth going forward?
No. The product launches have been going on since two years. So these numbers incorporate the new launches. Plus, we launched a couple of big products. We launched Rozucor Ezetimibe which is a BRL 600 million market. And then we launched Lisdexamfetamine, which is ADHD drug, which again is a BRL 600 million market. So we have a few products in very large markets. So even with like market shares and single digits, still it has a material impact on our topline. So new products are contributing and we are seeing also very good volume pickup on our existing mega brands. So we have eight products, which are existing mega brands, which are doing well in volume terms. And price increases continue in single digits. So overall, the business is healthy.
In Brazil, what would be our focus therapy areas for product launches?
Right now we are operating in CNS. We are operating in Cardio. And we have some old legacy diabetes products, and we are also preparing to launch all the new wave of diabetic products. Those are the areas where we currently operate. In the branded generic segment. But we have another generic, which is generic-generic. What we reduced, we discontinued actually what was called the tender business, which was the government tender business. So what we have is a pure generic-generic segment, which accounts for about 15% of our sales.
Just wanted to know the number of ANDAs filed, approved, launched for the 2nd Quarter in the US?
So in the US, we would have during the course of this fiscal year, about 4 to 5 ANDAs filed. We are ramping up this number. And we expect this number to reach maybe close to 10 next year, and subsequently about closer to 15. So that is the ramp up in US investments, which is happening, or which has started since about six to nine months. But this year would be mid-single digit, next year close to 10, and the year after closer to 15.
Accordingly, what R&D spend as a percentage of sales to be considered?
Yes, it should be around between 5 to 5.5 in Quarter 3, Quarter 4 put together.
Strategically, given the US segment, from a return ratios or profitability perspective there is relatively limited investment. Is there any way to exit and allocate that capital for more branded business in India and Brazil, perhaps sale of ANDAs and the plant?
No, that is not what we have been considering at all. We think that because of this slightly prolonged period of no launches, we are in this position right now. And given the nature of the business in the US and filing duration and approval uncertainty, your investments generally would take minimum 3 years, 5 years to show reasonable kind of movement in profitability. So we are aware that obviously this is not the greatest position to be in right now. But it should improve from here if the filings are done right and the products are launched and essentially the launch engine has to be back working again. But I do not see any reason why one should exit this market at all.
Can you share your CAPEX number for this year and next year? What is the planned CAPEX?
I think H1, the total CAPEX is roughly 200 plus. For the full year, it should be maybe around Rs. 300 crores. And over the next three years, on an average, I think the CAPEX should be between 250 to 300 per annum.
In the last 1.5 years, you have added around 1200 reps. Do you mind sharing which divisions you have added these?
Across almost all cardiac, gastro, including diabetes, derma, pain management, VMN, it is pretty much all. So it's been, I would say, majority in the chronic divisions and maybe say 30% to 40% in the sub-chronic divisions.
For the upcoming GLP-1 launches both in India and Brazil, will you need to form a separate team and add more personnel, or have you already recruited those?
So for Brazil, it will be part of our existing diabetes team, cardio and diabetes team. At some point in the future, we will expand the team. But right now, we don't plan to do it in the next 18 months.