On Germany supply disruption: when do you think things can come back on track? Is it possible to move to an alternative supplier?
So, unfortunately, Damayanthi, I cannot give a timeline because our supplier is caught up in regulatory issues, and I do not have visibility as to when he will start manufacturing again. And these days, it's very complicated in Europe, because they also consider the observations of the U.S. FDA, et cetera. There's a lot of interaction between the EMA and the FDA, so things are taking longer to resolve. So, honestly, cannot give you guidance. On alternative supplier: it is time-consuming, but we are working on it. We have started work on it already last quarter, but it will take at least 3 to 4 quarters to get an alternate supplier on board. So, we are trying to move some of the products to our own facilities, but it's a little time-consuming.
On GLP-1: do you have any fill and finish capacity for it, and is that for Indian market or the emerging market? Who would be your partner? Which geographies would you be launching in?
No, we do not. We only have capacity for the oral. Everything else will be partnered for India and other markets. We can share that once we launch. For the injectable, partnership is across all territories. The first launch is most likely going to be India, followed by other markets. So, we can share an update once the launch is done next quarter. We had already shared about Brazil last time as well. Nothing changes in terms of timeline. It's a bit behind what we would have liked. So, probably sometime in the next financial year. So, even though we would be late to the game, the market opportunity is much larger than the Indian market. So, it should still be an interesting opportunity.
How is U.S. looking? Are you seeing the potential to grow above 20% in the subsequent quarters?
So, we are a very small player. We do $35 - $36 million a quarter. And it's really dependent upon new launches, but also upon the level of competition that we see in the new launches. So, we have a healthy pipeline, and we are augmenting the pipeline for the U.S. But it's hard to give guidance today. It depends really on when the new launches happen and the competitive landscape at that point in time.
Clarification on opening remarks: you said you will continue with the double-digit volume growth for India business in subsequent quarters as well. Is that correct?
What we had said was we will continue the above-market volume growth, double-digit growth of overall inclusive price and new products. And our volume growth is about 5.5% for the quarter.
On Brazil GLP-1 market: in the first wave of launches in March, what's the competitive scenario? What price erosion would you expect?
So, we do not think we will be the first one to launch, right? So, I don't know. It will be somewhere in the range of between 3rd to 5th launch. And we filed Ozempic, which is today a $270 million market. And the rest is, as you know, has been taken over by Wegovy. So, Wegovy will come to us, but it's a little bit down the line. And I cannot really give guidance on Brazilian price erosion, because it depends really on how many players come to the market. But to be safe, you can take like at least a 50% price, 45% price erosion on the Brazilian market. But honestly, it's hard because it's been all over the map. So, I have seen price erosion of 90% on a couple of products. And I have seen price erosion of 20% also.
So is my assumption right - you will be launching Ozempic this year and Wegovy sometime next year? And on India sales force expansion to 7,000 by end of FY '26 - on track?
I cannot give you the exact timing because it's in the hands of the regulator. Our products have been with the regulator for a substantial number of months. And they are giving some priority review for such an important product. So, they have improved our ranking in approval. So, the queue for Semaglutide, you get an opportunity to move up the queue. So, they have moved us up also in terms of prioritization of approval as compared to other molecules. But I cannot give guidance as to when it will get approved and launched. But we have the pieces in place. So, once we get approved, we will be ready to launch. On India sales force: Yes, that's correct. It will be just over 7000. So, maybe close to 7100. And as of now, we see maybe some additional visibility in the next coming year as well, financial year could be around 7500, maybe by end of FY '27.
So FY '27 you can do $200 million in US? And on JB: is there any possibility that the growth of this company can slow down during integration?
Sudhir: I am targeting based on what I see in our launch plans. But again, it is not in Torrent's hands. Aman: So, our view strongly is that the fundamentals of the business are fairly robust. So, the medium-term, long-term prospects are looking pretty much as what we expected pre-acquisition and now. What we do expect is a bit of a course correction in this current Q4, because in any change of control situation, there are changes of business practices, and you have to kind of integrate processes and so on. So, Q4 could be a little bit muted in both India and international, but Q1 onwards, they should be pretty much absolutely back on track.
On Brazil Semaglutide: launch seems delayed and close to next year. Is it taking time to approve filings? Any color on regulators - could market formation get delayed 6 to 12 months?
I can tell you two things. One is the file is solid and the second thing is the regulator is prioritizing this product. That is all. I don't know. I can't give you an exact month and date, but I know that the regulators are prioritizing Semaglutide generics, and I know that the file that we have sent is complete in all ways that we can think of. Other than that, really not much to say.
On purchase price - could we get an understanding of the breakup into goodwill and intangible? How many years should we think about amortizing? And debt repayment - in how many years to get back to net cash?
So, Bansi, the amortization policy for Torrent has been 15 years. You just have to wait for one quarter because that whole purchase price allocation work is going on. And maybe by end of February, we should have the numbers in place. So, I think once that is done, I should be able to guide you. On debt: I think this is something which I had guided earlier. So, I think the way I am looking at is, if I correctly remember the numbers, FY '27 will be the first year of integrated Torrent. FY '28, my net EBITDA should be around 1-1.1x. And FY '29, it should be around 0.6 is what I remember, plus minus here and there, I think this is the broad guidance I can give. Average cost of interest is roughly 7.6%.
Although you are not quantifying JB revenue synergies, is there any possibility of revenue synergies over a period of time? Any qualitative color?
Qualitatively, if we look at some of the past revenue synergies that we have been able to kind of deliver, most recently being in Curatio brands and divisions, it is generally where the Torrent division has had a kind of longer duration of presence in those regions and areas where you then start selling or cross-selling. Overtime, that does really kind of show positive outcomes. So, you would have seen the growth of the Curatio basket of drugs or products has increased every year sequentially as a result of this. So, not saying that this is what we can expect in the case of every acquisition or in JB, but there are certainly pockets where even within the established JB brands, there are areas where Torrent's divisions or field force has had a much longer presence or has a stronger brand equity or corporate equity which can be leveraged. So, this would be across Cardiac and Gastro especially, which are the two largest business contributors for Torrent and JB both. But this is something that we would not want to focus on in the first year. First year would be pretty much in terms of topline business as usual. First year would be probably more on the cost side and second year onwards, this is when we can start really looking at this.
What is the net debt number at the end of 3Q? And quantify the net debt trajectory by FY26/FY27?
So, net debt number as in December is roughly INR 880 crores. So, I think at this point, it is difficult to tell you the numbers, Tushar, but the guidance which I gave you or which I gave earlier, I think that you should be able to work it out.
On JB acquisition: you now have 48.8% stake which will be consolidated as part of your financials. Will it be a line-by-line consolidation or how do you account for it before the complete merger happens?
So, consolidation, Damayanti, is line-by-line only. So, effective from 21st January till 31st March, the Quarter 4 numbers will include JB numbers.
On India segment: can you split the 14% growth across volume, price and new launches?
Yes. So, as per the AIOCD PharmaTrac data, our reflected growth is 14%, which is the same as the reported growth. The breakup of 14% is 5.5% volume versus 1.2% of the market, 5.8% price versus 5.6% of the market, and 2.7% new products versus 2.8% of the market.
Now that we have acquired the stake in JB, how should we think about the synergies? What can you bring to the table now before the merger happens? And what areas - cost or revenue?
I think we are happy to quantify at this stage. I think we are waiting to understand the business a bit more over the last couple of quarters. So, broadly, I would say that our synergy number is looking like INR 400 crores to INR 450 crores over the next 2 to 3 years. Maybe 20% of that could be in the first year, up to 80% of that could be in the second year, and the rest in the third year. So, that's what it currently looks like. This number is only cost. We have not looked at revenue synergies yet. We will wait for first year business top line to stabilize and then we can look at revenue synergies.
Once the JB merger happens, what would be the margin guidance? JB currently has an EBITDA margin of 18% to 19%. You are sitting at 32%. Even considering synergies, is this going to be margin accretive?
No. So, I think, firstly, JB's margin is closer to 28% - 29%, EBITDA margin. I think our margin this year has been in the range of 32.5% to 33%. So, there is definitely a scope to bring JB's margin closer to our base business margin in the next financial year. We have already given the number on the cost synergy target for the next 3 years. So, I guess you can work out the margin potential there. I think it will be a bit too complicated to look at the combined margin at this stage. But standalone JB, certainly, there is a significant scope for margin improvement.
In March, is it only Ozempic generics hitting the market, or are some players also launching Wegovy generics? Could there be substitution as Ozempic becomes cheaper vs Wegovy?
So, generally the Wegovy generics in Brazil are behind. So, the Ozempic was the first one that was launched and Wegovy came much later by the innovator. So, hence the Wegovy generics are all running behind the Ozempic ones. It's hard because the laws are very strict and I think the Brazilian law requires the pharmacist to keep a copy of the prescription, and to make sure the right product is dispensed against the right prescription. So, the Government has been very strict with the Semaglutide usage, and it's hard for a pharmacist to substitute. So, I expect the substitution to be minimal.
On Germany supplier disruption: is it fully there in the numbers or partly reflected? On U.S.: sales are stuck around $33-$35 million. When can you see a meaningful jump up to $45-$50 million?
No, it's fully there. On US: It can only go up from here. That's my hope, actually, because it's already low. So, I would guide towards a higher sales number from where we are. And I would guide towards at least 5 to 7 launches a year. We are looking at a one-directional sales growth in the U.S. from here on, but how fast that happens, we are not happy with this current level of $150 -$160 million. So, the first milestone we are looking to cross is $200 million per year. And hopefully next year we will do that. I am being optimistic and taking a punt on some of the launches that we will have.
Until the JB merger concludes, how will the marketing of JB brands work? Does Torrent MRs get to market JB brands? And how do you ensure no disruption in sales from MR attrition?
No, it will be separate. All the divisions of JB will remain within JB till merger. Only post-merger can any such change be possible. The attrition in the last 6 months where the period between the announcement of the deal and till now, the attrition has been pretty much the same as the historical attrition. It hasn't gone up and we don't see any reason why it can go up, especially after the closure of transaction. In fact, we will probably do our best to reduce attrition as much as possible. So, we don't really see that to be an issue post our change of control.
On JB senior level attrition where the CEO and CFO have resigned: are we going to have two different managements or will Torrent team take over? Also: why is other income negative this quarter despite currency benefit?
In certain critical roles like CFO, there will be a separate CFO for JB. Similarly, wherever any such critical role is required, there will be a separate team running at the senior level. And eventually, it should all merge into Torrent. Sudhir on other income: So, there is a hedging loss which we have booked in other income. It is close to INR 45 crores.
On synergy: INR 400-450 crores - is this inclusive of Novartis Ophthal portfolio gross margin synergies by FY '28? On Brazil ex-Sema: any guidance on new launches and growth trajectory?
Aman: No, it does not include that. There are two parts. There is the Novartis business of the Ophthal portfolio and the Asmarda portfolio. So, the synergy number does not include either of these. Sanjay on Brazil: See, we have good visibility on new launches. So, we will be doing about 5-6 launches here. So, the market growth itself has slowed down considerably. So, we are seeing a market growth of 6-7% and I am targeting 10-15% growth for Torrent. So, driven by new products, and pricing increase in Brazil have muted considerably because we have managed to keep inflation under control with crazy high interest rates. So, combining muted pricing increase, some volume increase and new products, I think in the range of 10%-15% is reasonable to expect.
On JB - any therapy in India or segment which is not aligned with Torrent strategy that you would eliminate or reduce? And on international markets?
Sudhir: Not therapy exactly, but certainly the JB trade generics business is not something which we are looking at continuing. It has been practically run at 0 margin and if we keep running, it will keep giving us stock returns. So, we are planning to, if not discontinue, at least shift some of it to our base trade generics business as early as possible. Sanjay on international: International is all fairly complimentary. So, nothing that we see there which doesn't align with our current strategy.
At Torrent group level, what other geographies beyond core India/Brazil/Germany/US would you intend to build?
So, four large markets like India, Brazil, Germany, US and we are preparing future large markets like Russia, then Mexico, then the Philippines. So, these should become in the medium term roughly $50 million markets and that is what we are targeting. And then there is another series of markets below that that are currently in the $10 million range, and we want to take them up to $25 million. So, that is the way we look at our geographical portfolio. So, it will take 3-4 years, but the JB doesn't bring us much in terms of front-end sales in Mexico, neither in the Philippines. And so in Russia they do add, so we have current business of $20 million, and they bring, let us say, another 50% of that. So, it leads to a scale improvement generally in all emerging markets, especially in Africa and Eastern Europe and Russia.
On ANVISA Sema: there are 11-12 filers - has it happened in the past where the regulator has so many filers? How many can it approve in the first wave?
No, it is not like that. It is pretty much like anywhere else in the world. There is no kind of quota system in Brazil. So, they give some flexibility for you to prioritize and indicate to them which are your priority dossiers and then you can kind of push them up the queue. But they can approve as many as you want. I have never seen any limitation from ANVISA in terms of number or approvals. Yes. I am hoping to be in the first 5, but let us see. Because our file is there. So, again, we have Ozempic, which is ahead. Wegovy is behind. And the bigger market is Wegovy.
On supply chain and distribution for GLP-1 in Brazil: do you need large local distributors tied up to get big market share? Would they take more than 3-4 suppliers?
No. It is not a Torrent supply chain on this one, right, because we are not manufacturing. And then it is a device. So, it is slightly different. But otherwise, it will work. We have the systems to make it work. So, these big distributors, they have a refrigerated supply chain. So, we don't anticipate any problems because they are so large. So, Santa Cruz, Abra Pharma that you mentioned, they all have capabilities to distribute refrigerated products, temperature controlled products. So, not an issue. You can't lock in distributors so easily because basically Brazil is a prescription market, right. So, you have to convince the physician that your product is a viable product. So, pretty much like India, right. So, if the physician is writing and they are seeing the RXs coming in, they would stock your product.
Oral pill is already filed by Novo in Brazil. Would you file oral in Brazil as well?
So, we are looking at that because Aman has that product in India and potentially we can extend it to Brazil. But we haven't filed it as yet.