...our Chief Executive Officer, and Mr. M.

V. Narasimham, our Chief Financial Officer.

Our quarterly financial results have been published earlier today and are available on our website for your reference. We will start today's call with MVN providing an overview of our financial performance for the quarter as well as the year.

Following that, Erez will share his insights on key business highlights as well as the company's strategic outlook. We will then open the floor for questions.

All commentary and analysis during this call are based on our IFRS consolidated financial statements. Please note that certain non-GAAP financial measures may also be discussed.

Reconciliations to the corresponding GAAP measures are included in our press release. I would like to remind everyone that the safe harbor provisions outlined in today's press release apply to all forward-looking statements made during this call.

Before we proceed, I would like to call out a few housekeeping points. All participants will be in the listen-only mode during the opening remarks.

Should you need any technical assistance during the call, please use the chat function in your Zoom application. The chat, however, will not be monitored for any questions to the management.

This session is being recorded, and both the audio and transcript will be made available on our website. Please note that this call is the proprietary material of Dr.

Reddy's Laboratories Limited and may not be rebroadcast or quoted in any media or public forum without prior written consent from the company. With that, let me hand the call over to MVN to present the financial highlights for the quarter.

Over to you, MVN.

Thank you, Aishwarya. Greetings to everyone on the call.

It is my pleasure to walk you through our financial performance for the fourth quarter and full year FY 2026. FY 2026 reflected a resilient operating performance, delivering highest ever annual revenues amid product-specific headwinds and certain one-time impacts.

The underlying base business continued to deliver double-digit growth for the quarter as well as for the full year FY 2026. At the outset, I would like to highlight a few items impacting the quarter.

Number one, a shelf stock adjustment or SSA related to lenalidomide of ₹453 crores taken as a reduction in revenue. Number two, an additional provision of ₹114 crores related to potential VAT liability in one of our subsidiaries included in SG&A expenses.

Impairment of ₹135 crores, including an R&D charge of ₹6 crores on account of discontinuance of R&D programs related to CAR-T therapy as part of the portfolio prioritization. Impairment of ₹93 crores on account of discontinuance of a trial by our partner, ImmuPharma, of an in-licensed asset following an interim futility analysis.

The full year performance was further impacted by provisions related to potential VAT liability of ₹70 crores as well as the impact of new labor law code in India of ₹117 crores. After factoring these items, the adjusted profit before tax was ₹994 crores for the quarter versus the reported number of ₹199 crores, and for the full year, ₹6,463 crores versus the reported PBT of ₹5,482 crores.

Now I would like to discuss the underlying performance in detail. Margins in this section are expressed as a percentage of the revenues before the impact of SSA unless otherwise stated.

For the reported figures, please refer to the respective earning releases. All financial figures in this section are translated into US dollars using a convenient translation rate of ₹93.83, the exchange rate prevailing as of March 31st, 2026.

Excluding SSA, the adjusted revenues stood at ₹7,969 crores, which is $849 million for the quarter, a decline of 6% year-over-year and 9% on QoQ, and at ₹34,046 crores, which is $3.63 billion for the full year, representing a growth of 4.6%. The decline was primarily on account of lower lenalidomide sales, while the base business excluding lenalidomide delivered double-digit growth on year-over-year basis.

We expect the base business to sustain its growth momentum in the years ahead. The gross margin on the adjusted revenue base after excluding the one-offs for the quarter was at 48%, lower by 760 basis points on year-over-year and 615 basis points sequentially, and at 53.5% for the year, lower by 498 basis points on year-over-year.

The decline in margins was largely on account of lower lenalidomide sales and price erosion in our unbranded generics businesses. The gross margin for global generics was at 51.7% for the quarter and 57.4% for the year as a percentage of its adjusted revenues, while that for PSAI stood at 19.9% for the quarter and 17.2% for the PSAI for the fiscal on its reported revenues.

Given our focus on the cost efficiencies and productivity improvement, we expect the margins to improve and be above 50% in FY 2027. Excluding one-off provisions mentioned earlier, SG&A spends were at ₹2,662 crores for the quarter, an increase of 11% on year-over-year and 1% sequentially, and 33% of the adjusted revenue base, and ₹10,435 crores for the year, an increase of 11% on year-over-year and 31% of the adjusted revenues.

The increase was primarily on account of ongoing targeted investment to support long-term growth of our branded franchise, namely the acquired NRT consumer healthcare business and branded generics. We expect the spends to be around the same level as FY 2026 for the year ahead.

The adjusted R&D spend for the quarter was ₹541 crores, a decrease of 26% on year-over-year and 12% on sequential, and a margin of 6.8% of adjusted revenue. For the year, the spend excluding one-time labor code related provision was ₹2,385 crores for FY 2026, a decrease of 13% and 7% of adjusted revenues.

The decrease reflects reduced biosimilars developmental expenditure as a significant portion of investments related to abatacept has been completed. We expect the spends to be in the range of 7% to 8% in the fiscal ahead.

Other operating income for the quarter was ₹344 crores as against ₹247 crores in the corresponding quarter last year, and ₹763 crores in FY 2026 as against ₹436 crores in FY 2025. The increase during the quarter was largely on account of divestment of non-core brands in India business for net of ₹189 crores.

The underlying EBITDA, including other income, stood at ₹1,554 crores for the quarter, which is $166 million, a decline of 37% on year-over-year basis and 28% sequentially, and reflecting a margin of 19.5% of the adjusted revenues. For FY 2026, the EBITDA adjusted one-offs was at ₹8,419 crores, which is $897 million, that is 24.7% on the adjusted revenue base.

Impairment charge for the quarter was ₹259 crores as compared to ₹77 crores during the same quarter last year. The higher charge this quarter was largely on account of discontinuance of CAR-T assets and partner product efgartigimod alfa as mentioned earlier.

Impairment charge for the year ₹352 crores as compared to ₹169 crores last year. The net finance income for the quarter was ₹62 crores versus ₹235 crores during the same quarter last year, and ₹413 crores for FY 2026 versus ₹472 crores for FY 2025.

The decrease was primarily on account of lower foreign exchange gain in comparison to the corresponding period last year. As a result, the underlying profit before tax was at ₹994 crores, that is $106 million, representing a margin of 12.5%, and for FY 2026, at ₹6,463 crores, that is USD $689 million, a margin of 19%.

Effective tax rate for the quarter was negative of 10.8% compared to 20.8% in the corresponding period last year, while for FY 2026 ETR was at 22.5% versus 25.4% in FY 2025. The ETR for Q4 FY 2026 was lower primarily due to recognition of a deferred tax asset on carry-forward losses in one of our subsidiaries and a favorable jurisdictional mix for the quarter in comparison to the same period in the previous year.

We expect the ETR to be 24% to 25% for fiscal FY 2027. Profit after tax attributable to the equity holders of the parent for the quarter stood at ₹220 crores, which is $23 million, a margin of 2.9% on the reported revenues, and for the year ₹4,285 crores, which is $457 million, a margin of 13% before adjusting for one-off items mentioned earlier.

Based on the company performance, the board recommended payment of dividend ₹8 for equity share of face value ₹1 each. This is equivalent to 800% of the face value for the year ended March 31st, 2026, subject to approval of the shareholder of the company.

Diluted EPS for the quarter ₹2.64 and ₹51.42 for FY 2026. Operating working capital as of 31st March 2026 was ₹14,434 crores, which is $1.54 billion, an increase of ₹2,920 crores, which is $31 million over 31st December 2025.

CapEx cash outflow for the quarter stood at ₹438 crores, which is $47 million, and ₹2,302 crores, which is $245 million for FY. Free cash flow generated during the quarter before acquisitions related payout was ₹600 crores, which is $64 million, and ₹2,004 crores, which is $214 million for FY 2026.

As of March 31st, 2026, we have a net cash surplus of ₹3,271 crores, which is $349 million. Foreign currency cash flow hedges executed through derivative instruments during the period are as follows: USD $462 million hedged using combination of forwards and risk reversal options scheduled to mature by March.

These contracts are hedged at rate of 91.37 to 93.46 per US dollar. Ruble 1.6 billion hedged at a fixed rate of 1.12 for Russian ruble with maturity falling within the next 3 months.

With this, now I request Erez to take us through the key business highlights.

Thank you, MVN, and good day, everyone. We appreciate your participation on this call today and value your continued interest in our company.

During the year, we remained focused on advancing our two-prong strategy of strengthening the base business while investing in our future growth drivers across peptides, biosimilars, consumer health, and innovation. Our FY 2026 performance reflected consistent, disciplined execution of our strategic priority, namely scaling the base business, advancing our key pipeline programs, semaglutide and abatacept, and targeted business development efforts to support our gross ambitions while continuing to enhance efficiency across operations.

I'm pleased to report that the first quarter in this first quarter without one of our key products, lenalidomide, the company delivered an EBITDA margins of around 20% after adjusting for certain items indicated by MVN earlier. Launches of products offering meaningful opportunity, BD, and continued cost optimization efforts will take us closer to our aspirational 25%.

For FY 2026, the adjusted EBITDA margin was in the neighborhood of 20%, consistent with our stated aspirations. Further, the underlying base business delivered double-digit growth in Q4 as well as for the full year of FY 2026.

All geographies beside North America recorded double-digit growth, while performance in North America was impacted due to lenalidomide sales and one-time shelf stock adjustment related to this product. Let me now walk you through some of the key highlights of the quarter.

In line of our strategic priorities, we made progress on our key pipeline assets, semaglutide and abatacept, during the quarter. We are pleased to announce that Dr.

Reddy's became the first company to secure regulatory approval of semaglutide injection for type 2 diabetes in Canada, reinforcing our in-house expertise in peptide science and complex product development. Likewise, as the first company to receive approval in India for the same product in November last year, we successfully launched our brand, Probeda, on day one of market formation upon patent expiry in India.

Our oral version of semaglutide has been approved by the CDSCO in India. We continue to engage with ANVISA in Brazil to address its concerns related to our generic semaglutide filing and remain committed to making this important therapy available to patients across several markets, subject to approvals.

Further, in February 2026, the US FDA accepted for review our BLA for the intravenous, IV, presentation of our abatacept biosimilar candidate following its filing in December 2025. Aligned with our strategic focus to bring innovation to patients in India, we forayed in hormone replacement therapy segment with the acquisition of Progynova, Enova, and Cyclo-Progynova in India.

Our partner product, Cosel 302, received fast track review status. In addition, the operational integration of our acquired consumer healthcare business in nicotine replacement therapy is now largely complete.

On the regulatory front, in March 2026, the US provided VAI classification for our formulation facility, FTO SEZ in Srikakulam, Andhra Pradesh, following a GMP and pre-approval inspection, PAI, in December 2025. We continue to build on our leadership in sustainability.

Dr. Reddy's was awarded the gold medal for EcoVadis for FY 2026, achieving its highest ever score of 80, placing us among the top 5% companies assessed globally.

During the quarter, we were named by the Businessworld among India's top 5 sustainable company, ranking first in the Indian healthcare and pharmaceutical industry for 2024 and 2025. We've been recognized in the leadership category of 2025 Indian corporate governance scorecard for the third consecutive year.

Let me now take you through the key business highlights for the quarter and the full year. Please note that all financial figures mentioned are reported in their respective local currencies.

Our North America generic business reported revenue of $199 million for the quarter and $1.3 billion for FY 2026. Excluding one-time shelf stock adjustment, revenue were $251 million for the quarter, a decline of 40% and 26% sequentially, at $1.36 billion, a decline of 21% year-over-year.

The decline was primarily on account lenalidomide. During the quarter, we added 7 new products to our portfolio, taking the annual of total 25 products.

We aim to continue to launch momentum in the fiscal ahead. Our emerging markets reported revenue of ₹1,806 crores in Q4 FY 2026, reflecting a robust growth of 29% year-over-year and a decline of 5% sequentially, and ₹6,761 crores in FY 2026, a growth of 23% year-over-year.

The growth was led by new product launches across markets and higher volume, particularly in rest of the world, further aided by favorable currency movements. During the quarter, we introduced 49 new products across countries, taking FY 2026 total to 129.

Within this segment, our Russia business reported a growth of 8% year-over-year and a decline of 23% sequentially in constant currency terms. Our India business posted revenue of ₹1,566 crores in Q4 2026, delivering a robust double-digit year-over-year growth of 20% and a decline of 2% sequentially, while the full year revenues were at ₹6,219 crores, a year-over-year growth of 16%.

This performance was largely driven by revenues from our innovation franchise, new brand launches, price increase, and volume growth. IQVIA data as of March 31st, 2026 shows that we continue to outperform the Indian pharmaceutical market, IPM, with the moving quarterly total growth of 15.2% compared to IPM growth of 11.6%, and moving annual total, MAT, growth of 12.1% compared to IPM growth of 9.9%.

Our IPM rank stood at 9 for the quarter and 10 for the year. We launched 10 new brands during the quarter and 28 over FY 2026, reflecting our continued focus on strengthening our domestic market presence.

Our European business, which include our acquired consumer health business in nicotine replacement therapy, posted revenue of €136 million for the quarter, a decline of 3% on year-on-year basis as well as sequentially, and €542 million for FY 2026, reflecting an acquisition-led growth of 37% year-over-year. The decline this quarter was primarily on account of price erosion in generics.

During the quarter, we launched 7 new generics products across market, taking the full year total to 38, further expanding our European product portfolio. Our PSAI business reported revenue of $101 million in Q4 FY 2026, resulting in decline of 10% year-over-year and a growth of 10% sequentially.

The decline was primarily on account of lower API volume uptake during the quarter. During the quarter, we filed 48 drug master files globally, taking the total number of filing to 128 for the year.

Looking ahead, we remain focused on delivering on our strategic agenda of strengthening our core business while building future growth driver. Underpinning this strategy is future-ready organization structure aligned to our business model, with dedicated leadership across global generics, biologics, consumer health, and innovation, enabling sharper focus, relevant capabilities, and more effective execution across each growth pillar.

Within this framework, we'll continue to advance our differentiated pipelines program, such as semaglutide and abatacept, drive operational efficiency, and pursue value accretive, inorganic opportunity that support sustainable long-term stakeholder value. With that, I invite your question as we move to into the Q&A sessions.

Thank you very much, Erez. We will now begin the question and answer session.

To join the question queue, please use the raise hand option available on the bar at the bottom of your Zoom application. If you wish to exit the question queue, you may click on the lower hand option.

Participants are requested to not ask more than 2 questions at a time, and to rejoin the queue in case of any incremental queries. I would like to reiterate that the chat will not be monitored for any questions to the management.

However, in case of any technical concerns, please do feel free to use the chat option to reach out to us. The first question is from the line of Neha Manpuria from Bank of America.

Neha, please go ahead.

Thanks for taking my question. Just wondering on the shelf stock adjustment that we had in the quarter, a $50 million number for a product like Revlimid, where we knew that the patent cliff is coming, seems very large.

If you could just give us some color in terms of why the shelf stock adjustment was so large, given that we knew we're expecting competition in Jan?

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 or the customers, but it came from them, I guess, certain planning issues or mistake at their end and that's the outcome of it.

Understood. My second question is on semaglutide.

Now that we have Canada approval, I think we've mentioned a 12 million unit of sales across markets in FY 2027. In your view, what could be the competitive landscape now that Reddy's and the second player have gotten approval?

When do you expect more players? Out of the 12 million, based on your assessment, what could be the rough break-up between, let's say, 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, it's about one-third for what we call public, one-third cash, and one-third what they call private, it's a kind of public-private cash.

What I believe will happen is that the reimbursement price will go over time as expected. The launch quantities at least in a couple of years, which should be very, very healthy.

Obviously, I cannot share price, but it should be very, very healthy.

Given that we have had a setback in Brazil, are we still confident of the 12 million units of sales for Sema in fiscal 2027? Or do you think that will depend on us getting approval in Brazil as well?

Brazil is part of it. I believe it's still in that number, but the number moved by several months.

I'm still with the same number, but probably it will have 12 months that will probably result in somewhere in the beginning of FY 2028 as well. Specifically, let's say, until the end of calendar 2026, I believe that the number is somewhere between 6 to 7 million units.

This is for calendar 2026?

No, this is for the markets that will get approval, and Canada will be obviously a big part of it. This is give or take the numbers.

All right. Thank you so much.

Thanks, Neha. The next question is from the line of Damayanti Kerai from HSBC.

Damayanti, please go ahead.

Hi. Thank you for the opportunity.

Continuing on semaglutide, so, Erez, just to clear, this 6 to 7 million units which you expect to market, it's by end of this calendar year, right, by 2026?

Correct.

Okay. 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 pricing?

Our list price will be give or take about half of what Novo Nordisk will be, so that's 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.

I'm not sure I captured the rest of the question. Sorry, I lost it.

Can you remind me?

Yes, I was asking about the pricing strategy in all the market where you intend to come in say another 12 months or so, 12 to 15 months.

Sure. We believe that all the prices will be let's say at the neighborhood of, let's say, $30 plus.

Why I'm saying that number also is because in some markets we are going to work with a partner, and that's reflect the net price that we'll have for them. Obviously, they will have their margins.

These numbers may go down if the competition will intensify, but I don't envisage it to at any case to be below $25.

Somewhere $25 to $30 per unit is the price you're working with?

There will be market obviously that it will be much more than that,

but

I just wanted to share with you the kind of the neighborhood of the floor area. Obviously, we are planning to have in markets also prices that are much higher than that.

That's helpful. My second question is on SG&A spend.

You mentioned next year sorry, this year, FY 2027, it could be similar to what we what we had in FY 2026. Just wanted to understand in NRT or some of the initiative which had which you had started few years back, you have been spending for last few years, if I may say.

Where you are looking for investing more? This number, do we have any room to take a cut or see any deduction there?

If you can just talk a bit on that part. Thank you.

Sure. We will have absolutely places that we'll have less and we'll have places that we'll have more.

Just to address, the NRT is a place in which we will have more. At the same time, the growth will well more than finance it, the level of profitability of the asset will stay the same and even maybe grow, but in terms of SG&A percent, we will have more.

We are also launching innovative products in India and in certain emerging market, and naturally, we are investing in the marketing of those new products. At the same time, we are putting a lot of productivity activity, sales force excellence as well as additional marketing excellence program, and this will go up.

That's why we said that give or take in terms of nominal value, it should be the same level. As sales will go by, in percentage wise, it will go down.

In terms of to understand the range of the spend, it will be about, give or take, the same range that we have now.

In nominal terms, right?

Yeah. While, of course, the sales will go double-digit up.

Okay. Thank you, and all the best.

I'll get back in the queue.

Thanks, Damayanti. The next question is from the line of Tushar Manudhane from Motilal Oswal.

Tushar, please go ahead.

Thanks for the opportunity. Am I audible?

Yes. Sir,

firstly, on gross margins, even if 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 you have 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 range is in the range of 50% to 55%.

What will drive this in the subsequent quarters? Are you including semaglutide sales for this gross margin?

Semaglutide sales of course, and then there is a product cost improvement programs also are on. Considering what the new products we are going to launch in FY 2027, including semaglutide, plus product mix, considering all these things, I think certainly our gross margin would be 50% or above.

I want to make sure that we are planning to launch also product like sugammadex, bosutinib, sitagliptin,

brimonidine,

sorry for my reading, and Sorry? Pomalidomide.

In addition to that, there are additional key products to do. The mix of the product, the mix of the market, as well activities that we are taking now on API, we are very confident about our ability to manage the gross margins.

Just on these products which you mentioned, sir, currently US revenue even after including the shelf stock adjustment, it is $236 million. Effectively, maybe $944 million if I normalize that.

Will we sort of grow over and above this ex-semaglutide in FY 2027?

We will absolutely grow in North America, ex-lenalidomide, in double-digit.

Got it, sir. Just lastly, for India market, if you could just share what has been organic and inorganic growth for the quarter?

It's organic. What do you mean inorganic?

Licensing you consider organic or inorganic?

Brands what we acquired is not a significant impact in this quarter.

The

Progynova is a just recently acquired brands.

No, just to clarify, we consider if we license a product from China and we are launching it in India is organic. In this terminology, it's mostly organic.

It's let's say inorganic is neglectable.

Got it, sir. Thanks.

Thanks a lot.

Thanks, Tushar. The next question is from the line of Dr.

Bino Pathiparampil from Elara Capital. Bino, please go ahead.

Hi. Good evening.

Could you give an update on the status of denosumab and Orencia, abatacept?

Denosumab we launched in Europe, and we are awaiting for approval in the United States. Our partner has a deficiency letter that they need to address for the United States.

Abatacept, the IV was approved for review, it was accepted. It's going after the timelines, and now we are also awaiting an FDA inspection in Bachupally, Hyderabad for the same.

The abatacept so far in the right direction, and then, of course, we are working on the subcu that will be submitted later and also will be launched later, as we discussed in the past.

Got it. The IV is on line for potential launch this calendar year?

IV will be likely in the beginning of calendar 2027, hopefully this fiscal, only hopefully in this fiscal. That's the plan, but, of course, we need to see the approval for that.

Right now, that's the plan.

Got it. Do you expect denosumab in the US before that?

I don't know. It's depends on the ability of Alvotech to get approval.

Got it. Second, you said that you have wound down your CAR-T related investments and taken a write-down.

Could you just tell us a bit about what your investment was and why it failed in that area?

No, the investment, give or take, is what MVN added, it's 150

₹135

crores. ₹135 cr 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. We just impair it as per appropriate accounting.

This is, give or take, what we invested.

Sorry, I got the figures, but my question was more technical. Is it something wrong with the specific product you used or with the technology itself?

I'm not sure I understand the question. It's what we invested in clinical trials and getting the product, yeah.

The products. Okay.

Your product doesn't work, but CAR-T technology as such is still okay.

The product is the CAR-T, sorry. Yeah.

Understood. No problem.

Thank you. I'll join back the queue.

Okay.

Thank you, Bino. The next question is from the line of Surya Patra from PhillipCapital.

Surya, please go ahead.

Thank you for this opportunity. My first question is on the biosimilar business.

Since it is a closure of the fourth quarter of the year and full year data is there, just wanted to have a sense, what is the size of the biosimilar right now? Whether it is already broken even or it is a loss-making?

If not, then what is the timeline for the break-even for this business?

Overall our global biologics sales is not very high. This is about 100 $100 million sales.

At this sales, certainly whatever investments we are doing for the development of abatacept, other products, pegfilgrastim also, we are with Alvotech. Definitely it's not a break-even.

Once we launch abatacept, certainly I think post that, I think certainly we can see the break-even.

FY 2029,

sir? Certainly it could be in like Erez said, if abatacept everything goes well, our inspection everything, and we'll be launching in calendar year 2027.

That would be like FY 2028.

Okay. Okay.

Second question was on the NRT. See, two things here observation wise.

Last two quarters since last two quarters, we have been seeing a strong growth. Last quarter, it was 25% YoY growth.

This quarter, it is around 16%. What is driving this growth?

Whether this is sustainable one? Secondly, fourth quarter, is there any seasonality?

Because last year also, there was a kind of a sequential decline that we had witnessed for NRT.

The NRT business is indeed growing more than we expected it to be. We expected it to be kind of mid-single digit.

It's certainly more than that. Specifically for the 16%, there is some impact of the fact that in the transition, some customer take more stock.

It's not fully, let's say, in that respect sustainable. I believe that the right place for it is either high single digit or even low double digit.

We will be somewhere in this neighborhood.

Okay. Just last one point, sir.

What is your experience about the semaglutide penetration here in India? Because generally, it is understood that of the target patient population for weight loss application, let's say, the penetration is very low.

It is around 2% or even less than 2%. What is the trend that you are witnessing here in India in terms of the penetration of semaglutide?

Yeah. I don't recall exactly the market share, but so far, it's a great launch.

Okay.

I think our market share is about 10%, more than 10% on a standalone basis.

Okay. In that light, are we talking anything about the growth for the domestic business?

I believe that it will grow, plus in the next coming days, we will launch also the oral product. The combination of both should give us a very healthy growth.

Sure, sir. Okay.

Yeah. Thank you.

Thanks, Surya. The next question is from the line of Lavanya Tottala from UBS.

Lavanya, please go ahead.

Hello. Hope I'm audible.

Thanks for the opportunity. Just one question from my side.

Even after adjusting for SSA in US sales, sequential decline of 25% QoQ despite having limited Revlimid in Q3 seems quite high. Am I missing something?

Is there anything other which is one-off here?

No, in Q3, we had a lenalidomide sales, right? This lenalidomide sales.

Yeah. Hence, I think definitely from Q3 to Q4, there would be a natural decline.

We don't see a pattern of loss of market share or price erosion or anything like that. There could be that there were certain buying patterns by some customer, but overall, it's very consistent, the way we see it.

The primary difference between the quarters is Lena.

Yeah.

Okay. The one which is adjusted for SSA in Q4, one can consider this as base sales for US from here on?

Is that right way to look at it?

I will not come because I don't know exactly the origin of the SSA specifically, but let's say that if you look, 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. Overall, if you look at market share, prices, this kind of stuff, it should be about the same.

Also,

Erez, this is one we'll be also going to new launches. Today is from the existing products, and then going for rest of the year, we'll be launching like 27 new launches overall for the full year.

Got it. Got it.

Thank you. Thank you so much for the opportunity.

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

Shyam, please go ahead.

Yeah. Hi.

Thanks for taking my question. Just one question on Sema.

If you can indicate when you expect approval in Brazil, and what are the key market approvals that you are looking at? You mentioned I think 6 or 7 million units for this calendar year.

What's your expectation for the full fiscal year, FY 2027?

Yeah. We are expecting to get approval also in Brazil.

We have a partner in Brazil that is also there and he got also outcome. We hope to get approval to our cloned product that is there.

In parallel to that, of course, we are seeing approval for our initial submissions. 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 expectations. In addition to that, you have markets like Turkey.

Then you have a bunch of relatively high number of smaller markets that we have a partner that will probably serve like in Latin America or in Southeast Asia, because all together, we are planning in this calendar to launch in more than 50 and in 12 months in more than 80. In terms of number of markets, but in many of them, we will do it with a partner that will do it for us.

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. If you add to that, it will come to around 10 or 11, close to the 12 that we discussed last time, give or take 1 month.

We are still in the same neighborhood, but with a delay of the few months that took those approvals.

Understood. Just one question on US generics.

I think if I heard you right, are you expecting 27 launches, and you actually mentioned a few of those products. 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 2027?

I believe that bosutinib can be nice product. I agree with you about that most of them will be competitive.

I fully agree with that. Overall, it should give us a double-digit growth without Lena.

Okay. Yeah.

Thank you, sir.

Thanks, Shyam. The next question is from the line of Abdul Puranwala from ICICI Securities.

Abdul, please go ahead. Abdul, you are unmuted now.

Okay. In the interest of time, we will move on to our next participant, and we'll come back to Abdul once he's able to unmute.

The next question is from the line of Vivek Agrawal from Citi. Vivek, please go ahead.

Yeah. Thanks.

Thanks for the opportunity. Just want to understand 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 partner structure?

If you can help us understand. Thank you.

If I need to guess, and I must admit that I did not do any kind of calculations, top of my head, I would say 50-50, give or take, in the neighborhood.

Understood, sir. Thanks.

One question on North America. If you look at in this quarter, we have done close to $250 million kind of revenues, and it is again close to pre-Revlimid levels, right?

In the last 3 years, we have launched many products, but our US revenues haven't moved up much. Is it fair to assume that there is a price erosion in some of the major baseline products in the US, and how to look at overall profitability of the US business?

Is it still lower than pre-Revlimid levels or is it basically almost similar? Thank you.

Yes. First, obviously, there was in this period of time, there was price erosion.

What it tells is that market share and new products, give or take, covered. I see it as a kind of very low single-digit growth and not flat.

I'm in agreement with you that that market is not going as the other markets that we have that are all going in double digit. Moving forward this year, again without Lena, we will see double-digit growth.

Going forward, the main growth in the United States will come from biosimilars, consumer health, as well as certain 505(b)(2). Over time, the business will diversify itself, but right now, it's a mostly generic products.

Understood, Erez. The double-digit growth that you are highlighting for this year, that includes Sema in Canada, right?

I'm just trying to understand how to look at only the US sales. What kind of the growth you are expecting in the US business ex-Lena this year?

It's ex-Sema. It's not with Sema.

Sema is on top.

Perfect. This is helpful.

Thank you.

Thanks, Vivek. The next question is from the line of Ashutosh Jha from Balyasny.

Ashutosh, please go ahead.

Hi. Thank you for taking my question.

I had two questions. Number one, sir, when you look at the next year, I think you have given the breakup of the cost by line items, but given that the base business right now is at call it 19%, 20% margin, where do you see the overall margin for the business with Sema, etc.

in the next year and the year after versus our target of 25%? Yeah.

We are planning to maintain the base without Sema at around 20%. This is the plan.

Then the Sema is supposed to help us to get more than that. Now it's obviously depends how much we will be able to sell and what price and what will be the mix, because I shared already that it will be a range of prices that can go let's say between let's say 30 or 25 to 30 all the way to 70.

Obviously, there will be a range of prices. Let's say with Sema, it should be close to the 25%, but maybe a bit less, depends of how much Sema we will sell.

Understood. Sir, any thoughts on the number of pens that you can possibly sell in FY 2028?

FY 2028, potentially we will have a lot of capacity because we will be able to qualify, in addition to the current cartridge suppliers that we have today, we will be able to qualify also capacity of FTO 11. It can be any number.

Let's say, it can be north of 40 million also, but right now I don't see a demand for that. Hopefully, we will.

Understood, sir. Thank you so much.

Those were my questions.

Thank you, Ashutosh. The next question is from the line of Alok Dalal from Jefferies.

Alok, please go ahead.

Yeah. Thank you.

One quick clarification. Erez, on semaglutide in Canada, has the innovator, Novo, already introduced an AG in the market?

Sorry, can you repeat?

In Canada, has Novo already introduced an AG in the market?

I know that they are offering. I don't know if it was already sold.

Personally, I don't have a knowledge for that.

We are

assuming that they will have. That's my assumption.

All right. In that scenario, will it be a three-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 to public, cash, and private. What you're discussing is absolutely public.

Likely that this will happen to the public eventually. I do see it as a mix of market.

We are not planning right now our assumptions based on the numbers that you mentioned.

Understood. Thank you so much.

Thanks, Alok. The next question is from the line of Vishal Manchanda from Systematix.

Please go ahead, Vishal.

Hi. Good evening, and thanks for the opportunity.

Could you outline how much would you expect in annual biosimilar sales by FY 2029?

I wish I could.

A broad number, a broad guidance?

Broad, hopefully it will be in the range of half a billion, 600 million, 700 million. Sorry that it's so that, but it's 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, at a entire biosimilar portfolio, can it give you 25% plus margins?

In the case that there will be no competition or low competition, absolutely it will be above the average margin that we have.

Right. Are we on track to file the subcutaneous version this year in Europe and US?

Yes, we are. In the US for sure, in the Europe, there might be some delay.

Okay. Just if you could give the split of sales between IV and subcutaneous in the US by value?

It is 50-50 in US is, but whereas in Europe, IV is very less and SC is high.

Got it. Your CapEx plans for the next 2 years, annual CapEx plan?

Next year would be in the range of ₹2,000 crores, around ₹2,000 crores.

Got it. Would this largely be on biosimilars, or you have other areas?

Biosimilar, certain product-specific investments I think are there, and then general CapEx.

Got it. Thank you very much.

In the interest of time, we'll take one last question from Sidharth Nigandhi from CWC. Sidharth, please go ahead.

Hi.

Thank you for the opportunity. On biosimilars, you had mentioned that your R&D spends would reduce given that the spends toward abatacept have been completed.

Going forward, given the draft US FDA guidelines, how do you expect your costs per molecule to behave? How do you see competitive intensity playing out?

Given that you're guiding for a lower R&D spend, should we assume this is because of those draft FDA guidelines or is it because the new set of launches post abatacept and denosumab will be much later, and therefore, the spends will be lower? That's one question.

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? Those were my two questions.

Sure. On the R&D, naturally, abatacept, we paid for a Phase 3 trial, and going forward, we don't anticipate Phase 3.

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 and less that something that will come in-house.

Obviously, then we share the R&D cost as part of that. Number three, we are becoming more productive.

One day we'll discuss it, but we love AI and we love this kind of stuff, and overall, the R&D will have less cost and more output. This is on the R&D question.

On the semaglutide question, 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 products.

As time will go by, also the oral will have probably additional, because that's what the innovator is doing, additional forms, and we will have all of them. There is a life cycle management that we are looking, and obviously, we are following as well, and we will launch the same as IP will allow us to do that.

Sure. Any thoughts around how do you see the salience between pens, vials, and orals in emerging markets for semaglutide?

I believe that in emerging market, you have countries in which there is a full use of the pens and the innovator fully launched the product, in a place that it was done partially, and also markets that not at all. Obviously, the price point for each one of the market is a bit different.

In a places with a lower prices, we believe that the oral will be more successful than in the lucrative market, at least the way we look at it now.

Thank you.

Thanks, Sidharth. That was the last question.

Thank you for joining us today. We value your time and participation on the call.

If you have any further questions or need additional information, please feel free to reach out to me. With that, we conclude today's earnings call.

Thank you, everyone. Have a good evening.