Thanks, Yusuf, and sorry for the delay in the start of the call. Good evening, everyone, and warm welcome for first quarter FY27 earnings call of Alkem Laboratories.

From management side, we have Mr. Sandeep Singh, Managing Director; Mr.

Nitin Agrawal, CFO; and Ms. Purvi Shah, Head of Investor Relations.

Over to you, Purvi.

Thank you, Tushar. Good evening, everyone.

On behalf of Alkem Laboratories, I welcome you all to our quarter one FY27 earnings call. Earlier today, we announced our financial results along with the press release and investor presentation, all of which are filed with the stock exchanges and are also available on our website.

We hope you have had an opportunity to review them. Before we begin, I would like to remind everyone that this call is being recorded, and the audio recording and the transcript will be made available on the stock exchanges and our website shortly after the conclusion of the call.

Please also note that today's discussion may include certain forward-looking statements, and these statements should be viewed in conjunction with the risks and uncertainties that are associated with our business and the environment in which we operate. With that, I now would like to hand over the call to our MD, Mr.

Sandeep Singh, for his insights. Over to you, sir.

Thank you, Purvi. Good evening, everyone.

Thank you for joining our call. The period under review has been one of continued execution of our strategy.

While the operating environment remains dynamic, we have stayed focused on the fundamentals, strengthening our core business, improving operational efficiency, and investing selectively in areas that can support a sustainable and profitable growth. We are encouraged by the progress we are making across these priorities.

At the same time, we remain conscious of external challenges and are maintaining a disciplined approach to capital allocation, costs, and risk management. I will briefly walk you through the key developments and our outlook, after which we will be happy to take questions and engage.

The key highlights are that the revenue from operation was ₹3,740 crores with a year-on-year growth of close to 11%. India sales were ₹2,497 crores, and year-on-year growth was 10.3%.

International sales was ₹1,222 crores with year-on-year growth of 16%. EBITDA margin was 20.5%, the growth was 3.7% year-on-year.

R&D expenses was 4% of our total revenue. Profit before tax was more or less flattish, technically 1.8% of growth.

The net profit, there was a degrowth of 21.7%. This is purely because of taxation reasons, and I'm sure our CFO will deep dive into this later on.

According to IQVIA data, the company registered a growth of 13.2% year-on-year versus the Indian pharmaceutical market, which grew by 12.2%. This is a 100 basis point outperformance, just as we had guided you earlier.

Acute segment reported a growth of 12.3% versus the IPM, which grew by 10.1%, which is a 220 basis point outperformance. Chronic segment reported a growth of 17.9% versus the IPM, which grew by 15.4%, 250 basis point outperformance.

We have outperformed IPM in seven key focus therapies: anti-infectives grew by 1.1 times of the market, gastro grew by 1.2 times of the market, vitamins and minerals grew by 1.4, pain by 1.8 times, anti-diabetic 1.4, and respiratory 1.6, and last but not the least, derma 1.6. During the quarter for the US market, the company received five ANDAs approval.

One of them was a tentative approval. Recently, our Daman facility has received an OAI status.

We have already initiated comprehensive corrective and preventive actions and remain fully engaged with the regulator to address the observations. While this represents an important regulatory development, approved product supplies from the facility continue to the US market without any interruption.

With this, I open the floor for Q&A. Thank you.

Good evening. Sandeep, you mentioned about growth in India higher than IQVIA market growth, as per IQVIA.

We have seen some improvement in growth rates, but at 10.3% is lower than most of the pharma companies who have reported so far. Can you throw some light around the dynamics here, what do you think is impacting the growth rate in India, and is there something that would ease to improve growth rate in the quarters ahead?

Yeah. I think the India growth rate is kind of dragged down because of the trade generics.

Trade generics growth was flattish to very mild low growth. Trade generics now contribute reasonably to our domestic formulation.

That drags it down, Sayan.

Okay. What was the branded growth this quarter, branded generic?

It was 12%, 12, 1-2.

Okay. Nitin, the costs have gone up.

You had, I think, guided earlier, employee cost and other expenses are on the higher side. If you can indicate how much of the cost is on account of CDMO MedTech, which might not be contributing at this point, or for that matter, if you can talk about the EBITDA loss from these businesses in this quarter?

Sure, Saion. In terms of employee cost, yes, the growth is more than 16% in the quarter.

There are two, three reasons. One is definitely the annual increment.

The second is we have added around 1,200 MRs in last few quarters, so that also impacted the employee cost. The CDMO business in Enzene became operational from November '25.

That was the third impact on manpower. In terms of other expenses, yes, there were expenses on account of Enzene CDMO business, plus the conversion rate for dollar has increased, which has also benefited us in terms of top line, but the impact is also on other expenses where all our subsidiaries, foreign subsidiaries expenses got converted at a higher rate.

It's almost 10% higher than the last year rate. These were the reasons.

MedTech, yes, we have completed the acquisition of LuTech, but that was in mid of July. Our quarter one numbers were not impacted because of LuTech.

Yes, the ortho business which we acquired, but I think it's small in scale. At consolidated level, the impact is not that high, but just to share the numbers, yeah, if we exclude the due diligence cost and all of LuTech, then there was a EBITDA loss of around ₹5 to ₹7 crores because we are also investing into this business.

We are filing our products outside India. Definitely, this business will break even maybe in next 12 months, but the scale is small at yearly level, we will do around ₹50 crores of sales from the ortho business other than Ortho Tech.

The US CDMO operation, how much is the drag from there?

US, we incur around ₹60 crores of operational expense. Definitely, it's a new business, we plan to break even in next say four to five quarters.

For the quarter, it was around ₹60 crores from the US.

Okay. Thank you.

Hi. Thank you for taking my question.

The first question is on what is the current status of denosumab biosimilar in the US?

Denosumab biosimilar approval is a little bit off, we did not get the approval on the goal date, so that is pushed off by at least a few months.

Okay. Then my second question is on the EU region.

Following the approval of Oscare, are there any specific markets where they're all just being prioritized, or is full EU-wide availability expected simultaneously?

No, no. Sorry, I didn't get you properly.

You're asking about denosumab Europe plan, right?

Oscare Prolia biosimilar. Is there only specific

regions they're

targeting? Prolia.

Okay. Okay.

Usual suspects. We have a partnership with a company called Theramex, they are our partners.

We are not doing it directly. It's very competitive, there are many, many players even in Europe, just like US.

It's not going to be a very meaningful ramp-up for any one of us for some time. It's not something very significant.

Yeah.

Okay. My last question is on the recent opinion on Xgeva biosimilar.

When can we expect the launch of Xgeva biosimilar in the Europe?

We could be 3 months away.

3 months. Okay.

Thank you. Thank you for taking all my questions.

Thank you.

Thank you.

Hi, sir. My question is regarding the India biosimilars front.

Is it all right now?

Sir, my question is regarding the India biosimilar front. You have some six to seven-odd biosimilars in India launched through the Indian entity.

How has this portfolio done since launch, and what has been its contribution to the India revenues per se? Yeah.

Nitin, you want to take that? Do you know the exact percentage, or

We have already launched seven products as you said, and we do around ₹150 crores of annual sales. I think they have done really well, and because of this backward integration, the margins are also improved for these products at consolidated level.

Sir, this revenue is a part of your India revenues, is it?

Yes, yes.

Okay. Then next on Ortho Tech.

Sir, since now you have closed the deal in July this year, how do you see the growth for this business as a whole going forward, and how do you see the margins spanning up? I remember you guided to reaching 10% margins in the near term.

Does this guidance hold still?

This year see, the original plan was to complete the acquisition and start integration sometime in first quarter, but that got delayed. We just completed the acquisition last in mid of July, and we have started the integration.

This year for around 8 and 1/2 months, our target for Ortho Tech is around ₹400 crores of sales with breakeven EBITDA because of delay in happening in case of integration. It will be bit off from the guidance we gave last time.

Okay. Sir, how should we see these margins going ahead, say in the next 2 to 3 years?

Every year you will see a gradual improvement in margins, and as we discussed during our investor meet that a lot of say integration with India operations will start kicking off from next quarter. Yes, you can see a 7% to 8% improvement in EBITDA year-on-year, and we target to achieve our guidance over 3 to 4 years.

Yes, but it will be a very healthy EBITDA business for us within four to within, say, 3 to 4 years.

Okay. Sir, lastly, if I may squeeze in, from this OAI in the Daman unit, could you share the percentage of revenues from this unit to the US if it's available?

I think 45% of our US revenue comes from this facility.

Sir, all of these revenues or all of these products are still in supply?

Very much. Yes, yes, absolutely.

Thank you. Those are my questions.

Thank you.

Welcome.

Hi. Thank you for the opportunity.

Can you throw some color on why the trade generic business is not growing? Is it industry dynamics?

Is it company-specific dynamics?

I think it's a combination of both. It has got very intensive, the competition.

4, 5 years back, you will remember that not many companies wanted to play in this segment, but now a lot of big guys have entered. Also, it's internal because law of large numbers always kicks in.

We are maybe the number one or number two in this segment. We also tightened our market practices slightly, where we are a little strict on the number of days outstanding.

Therefore, it is leading to this.

If you look at our numbers for Jan to June quarter, sorry, Jan to June period, we did well in terms of growth. Yes, from April to June, there were some strategic calls taken on outstanding DSOs and all, and also we have bit increased our prices because of increase in API prices.

I think the inventory levels in market they have also gone down. In coming quarters, the primary sales or the sales from this business should should recover, and the lower growth which we saw in quarter one, I think in upcoming quarters, the growth should be higher than that.

Jan to June, we did well in trade generics if you look at 6-month numbers.

Sir, well means double-digit growth, how to put that into some form of quantification?

It was higher single-digit.

High single-digit. Okay.

Yeah. Okay.

Then we are seeing April to June was flat on a year-on-year basis.

Yes,

yes. Jan to March would have been double-digit, in a way.

Yes, you can say that. Yes.

Okay.

Okay. Secondly, on this CDMO business drag of ₹60 crore, right, that number looks quite big, and so basically, what's the

Yes.

Is this annual or

quarterly?

This is quarterly.

This is expense for CDMO US. Yeah.

Okay. Let's say for us to become breakeven in the next 12 months, what kind of revenue we need to generate?

Then in terms of the pipeline of projects, do we have that visibility now?

No, good question. Next 12 months will not break even, just to be very clear.

For US, you will not break even.

That's

number one. The revenues what we need perhaps will be close to $20 million to break even.

Sir, I didn't get your number. Sorry, $12 million?

No, no, I said $30 million. Sorry, I had said 20, but actually it's 30.

$25 to $30 million will break even over there.

Per quarter?

No, annualized,

annualized. Annualized, okay.

Okay.

Yes, yes. Yeah.

Okay.

Okay. For that, because the CDMO is a pretty big spectrum, right?

Which is the part that we are initially targeting, yeah, that would be helpful to

Enzene is into monoclonal antibodies, precisely that. We are just into mAbs, and we do the development to clinical trial supplies, and hopefully commercials in the future.

Right now, these are most of the time clinical trial batches and development batches.

Sure,

sir.

Let's say for that $30 million run rate, how many projects do we need to be working on?

No, no, so that we know. It depends.

Some projects are pretty large, it's not the number of projects. I think we've got a decent pipeline.

A CDMO has a sales cycle very different from what we traditionally do as branded pharma. I think we'll have to be patient over there, and the cycle time is pretty large.

To work with these companies who could be innovators, not necessarily large pharma, even small biotech, they take their own time, and it's dependent on a lot of things: how well they get funded, how the clinical trial progresses. I think it's a mixed bag where patience will be rewarded, and just like I'm sure you all track a lot of CDMO companies, you all know that.

You cannot measure it with the same tape which we measure the traditional Alkem Pharma or any pharma. We are positive, therefore, we have put the facility.

Sure. Sir, lastly, let's say what type of capacities do we have there?

Is it currently more R&D related, and then eventually would it require for us to put some kind of capital expenditure?

Yes. We have reasonable capacity.

We are not very big. We have small capacity, but our technology is a little different, if I tell you in kL, that will not really do justice to what we can produce over there.

Second part, at some point of time, it will require CapEx to happen over there as we ramp up, because without it, we'll not really get economies of scale, just like any API/CDMO or biotech business.

Sure.

That That would not be this year.

This facility is GMP compliant, like US FDA?

Of course. It is not US FDA approved because that has to get triggered, but it is absolutely in US, and we are working with a lot of good companies, and we'll have to trigger the US FDA.

Which will happen with some of the clients when they file, etc.

Yeah. Absolutely, sir.

Okay.

Yes.

Last question on the US plant, we said the revenue contribution is 45% of US.

Of Daman. Of Daman.

Daman, yes. What's the number of pending ANDAs, and what's the total pending ANDAs right now?

Of Daman, we'll come back. We don't have the exact number, we'll come back to you.

Okay. Okay.

Poorvi maybe can come back.

Okay. Thank you and all the best.

Thank you.

Hello, and good afternoon. First question on the India business.

Last year you made a foray in ortho MedTech by making couple of small acquisitions. Would you still be kind of looking to expand this business, or would you rather wait until maybe a CEO is appointed?

Last year Last year, what did we Orthopedic

in India, did we?

In India. Bombay Ortho.

No, no,

sorry. In orthopedic we have not acquired anything.

This is a MedTech you're talking about, medical tech, medical device.

No, no, that's what I'm saying. MedTech.

You had acquired a couple of small companies, right? Bombay Ortho and

Bombay Ortho is medical device, sir. It's not the orthopedic pharma,

it's

not pharma business. Sorry, yeah.

My bad, apologies. Would you be kind of still expanding into this, or would you be kind of waiting for maybe a new CEO to join and then see how to kind of expand?

Depends. We are not looking to acquire anything in orthopedics or MedTech right now.

That's the first thing, yes. There's no question of waiting or not waiting.

I think it is very early, the ramp-up is happening, and there's no need to acquire anything over there right now. Yes.

All right. Sure.

Sir, but now your ₹5,700 crores cash, any plans that you would like to share?

No, nothing. Everything is the same like before.

Nothing changed from last quarter.

Got it. Just one more, would you be launching tolvaptan in the US, generic Jynarque in the US this quarter?

Yes, sir, we would be.

Perfect, sir. Thank you and all the best.

Thank you.

Hi. Thank you for the opportunity.

Sir, my first question is with regards to the trade generics business. I understand it had got impacted because of your receivable policies or your credit period, but the business has been growing at a slow rate for the last couple of quarters.

Any timeline you would like to share with us by which you expect growth in this particular segment to bounce back?

No, as bounce back, what does bounce back mean? How much do you think we should be doing?

Say at least in line with what your branded pharma business is growing.

No, that's very hard.

That

would be See, also it's a matter of discipline. We'll have to reset it, and we'll have to figure things out, and we'll see how the market also evolves.

I think I personally as the promoter MD, I'll be happy with late single digits, is perfectly all right. We just need execution and discipline in that business more for the next 1 to 2 years.

Because there is no CapEx requirement, and ROCE

is ROCE is good because, yeah, the CFO always reminds me that. We'll have to be careful on that, yes.

Sure, sir, got it. Sir, my second question is with regards to any thoughts on hiring a CEO

Yes. We told you all last time we are looking out.

Thoughts are the same, and hopefully next time when we have the quarterly meeting, he'll be there with you. We are looking out, sir.

As it's a critical hire, we can't hurry up. We are looking out, sir, it's very clear.

Yeah.

Got it, sir. Just a couple of bookkeeping questions.

From the tax rate, I think last quarter we had guided for a 27% to 28%. Are we still kind of maintaining that for the full year?

See, that was for standalone, but at consolidated level, it will be in the range of around 30% to 32% because few of the entities like our say Enzene US and all, which are reporting losses, and currently we are not creating deferred tax asset on those entities, because of which our consolidated tax rate looks bit higher as compared to standalone. At consolidated level, it will be in the range of 30% to 32%.

Understood, sir. Thank you and all the best.

Thanks, Yusuf. Sir, just with respect to the India business, could you share price, volume, new launches growth for the quarter?

You go, Nitin. Yeah.

In terms of price, the growth was around 6%. This we are only talking about other than trade generic business.

New launches was around 3%, and volume was around 2%.

Sir, in general, the industry growth rate have sort of improved over last, I would say, few months. Any change you have seen or experienced which is sort of driving this growth, and how sustainable you think these numbers are in terms of overall IPM growth, may it be chronic, may it be acute?

No, according to us, I think there's nothing dramatically changed. I think we know that semaglutide has gone off-patent, and so those kind of things are driving chronic, I think, by and large.

We think it's quite sustainable, whatever we are doing at least.

Got it. How much benefit would have got from semaglutide for Alkem Lab?

It's very small right now, sir.

15

crores. Small.

We are among the top three in generics, I can share that with you.

Got it. Sir, just secondly on US CDMO, this OpEx, how do you see this over full-year '27?

Will ₹60 crores or first

You can annualize that. OpEx will remain the same.

We'll have to get business, and that's how we can break even and eventually make money. We can't cut OpEx too much because the complexities of a US plant.

Got it, sir. Sir, some business opportunities got pushed, which is why the breakeven is sort of a little taking time, or this is the way it has been sort of tracking?

I think it's a combination of both. Because sometimes reality comes and delays things.

I think we knew that it's going to be expensive, and business would stick tough, but it's taking more than, let's say, a couple of quarters to reach what numbers we were targeting. Also CDMO is a lumpy business, sir, as so when it rains, it pours kind of things.

Whenever it comes, it will come big, we feel.

Got it. The new contracts probably there, which is where the efforts are.

Some gestation period to sort of get the fruits of that.

Yes, absolutely. Fine.

Thanks a lot for answering my questions, sir.

Welcome.

Thanks for the opportunity. Sir, just on the US part, if we convert into the dollar business, in constant currency terms, we see some softness in the US sales during the quarter.

If you can specify the reasons for that, both on YoY and quarter-on-quarter, I'm seeing that. Earlier, we guided that for the entire year, US will be in high single-digit.

Now after this quarter, what is your outlook, also taking into consideration the Daman plant OAI?

I think the last thing I'll answer first. I think Daman plant OAI is a concern, but we don't see it as impacting our business because nothing is stopping, and tolvaptan has kind of gone through.

We feel confident that this year would not be impacted. Also, we believe that we'll come out of this in 6 to 12 months' time, hopefully.

Daman should not have an impact on business this year. I think price erosion was just close to flattish.

Price erosion has kind of bottomed out, we feel, for us and maybe for the industry, I'm not sure. US is challenging.

We really don't have volume growth. It's more because of currency, and that remains a reality.

New products.

Yeah.

You mean to see that you have not seen any major volume expansion in the products which you all have launched last 12 to 24 months?

I would say so. That's a fair assumption.

Yeah.

Okay. Then what will be the outlook for the whole year?

Still we maintain our guidance of around high single-digit?

Or

you feel it will be flattish?

I think it will be a high single-digit to mid.

Mid to high single-digit.

We'll be helped by currency, for sure.

Okay. This $30 million revenue, which we are expecting from the CDMO business, when can we anticipate that, in which year, by which year we can expect the revenue to kick in?

'27-'28. FY28?

Yes.

Okay. Again on the India business, put together trade generic business and the branded formulation business, what kind of growth can we expect for the entire year?

Round about what we told us last time, but we could better that by, let's say, 100 basis point.

You feel that in the subsequent quarters, we'll be able to cover it, whatever growth we have lost in the trade generic business, and branded formulation will continue to perform? Is that a right assumption?

We could end up close to 12%, yes.

Okay. Thank you, sir.

That's it from my side.

Welcome.

Thank you, sir, for the follow-up. I remember a couple of years ago, you mentioned in your annual report that you were focusing exclusively on the non-US markets in international business.

Has there been any significant development in this double-digit growth that we're seeing, how sustainable do you think this is?

This is quite sustainable, more than sustainable. We are seeing good double-digit growth, and this would continue.

Any key countries

that you would like to highlight?

See, the thing is USA is so big that everything else, even if they grow very high, it will not really move the needle for the next 2 years. There are some countries on a low base, they continue to grow in very, very healthy double digits.

They're on small base. Like Germany grows by 35%, 40%, but so small that I don't feel like talking too much about it.

Might not be a good use of our time right now.

Even in Chile and Australia, we did well.

Yeah.

Chile and Australia both are big markets for us, and we have been doing well

in this. Sir.

My last question is on the gross margins. We see an improvement on the gross margins this quarter.

Sir, any particular reason for this, and how do you see this margin sustaining in the near term in FY27 and '28?

In quarter one, there were three, four reasons. One is that, as we discussed, our trade generic growth was lower, and our acute-chronic business did really well.

Then there was also impact on account of currency because US and other markets, even in Australia also, the currency supported us. Overall, the mix was better for us because of lower trade generic business and also support from the currency side helped us.

For the full year, we maintain the same guidance because there may be some impact on account of API price increases, which we have already seen. Since we had inventories, old inventories at old rates, the impact was not that high in the current quarter, but in subsequent quarters, there will be impact because of API prices.

We maintain the same guidance of 66.5% to 67% of gross margins for balance part of the year.

Got it, sir. Thank you, sir.

Thank you very much.

Thank you, Yusuf, and thank you everyone for joining today's call. Should you have any follow-up questions or require any clarification, please feel free to reach out to us.

Thank you. Have a pleasant weekend ahead.