Thank you, Renju. Good afternoon, and a very warm welcome to Cipla's Q3 FY '26 earnings call.

I'm Diksha Maheshwari from the investor relations team at Cipla. Let me draw your attention to the fact that on this call our discussion will include certain forward-looking statements, which are predictions, projections, or other estimates about future events.

These estimates reflect management's current expectations of the future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied.

Cipla does not undertake any obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. I hope you have received the investor presentation that we have posted on our website.

I would like to request Umang to take forward.

Thank you, Diksha. Good afternoon to all of you, and we appreciate you joining us for our quarter three FY '26 earnings call.

Over the last five years, we've delivered strong performance, strengthening our market position and significantly enhancing our profitability. Together, we built a strong leadership bench and sharpened our execution focus, consistently creating value for the company.

As I prepare to hand over my responsibilities, it is my privilege to invite Achin to take charge and lead the next phase of our growth and journey. I would now like to invite Achin to give a commentary on the business and, subsequent to that, Ashish Bhai for his commentary on finance.

Thank you very much, Umang Bhai. Thank you for your steady leadership and for strengthening the foundation on which the company continues to grow.

I look forward to carrying the momentum ahead. Turning to this quarter's performance, we have focused our efforts in growing our base business, and we continue to invest for the future.

Our diversified portfolio enabled us to deliver revenues of over 7,000 crores this quarter despite the known drop in generic Revlimid sales. Our One India business delivered a strong quarter, 10% year-on-year growth, reinforcing its momentum and commitment to sustainable, long-term growth.

In our branded prescription business, we delivered a double-digit growth of 10%. Our key therapies continue to outperform the market with robust growth: respiratory grew 11%, while anti-diabetic and cardiac grew 13% each, and urology grew 15%.

Cipla Respiratory crossed the threshold of 5,000 crores for the first time in IPM as per IQVIA MAT December '25. Respiratory also outperformed the therapy IPM growth by 400 basis points as per IQVIA quarter ended December '25.

Our overall chronic mix further strengthened to 62.3% YoY. Foracort continued its leadership as the number one brand in IPM.

We added four new brands to the INR 1000—sorry, 100-plus crore club, taking our total to 30 such brands. Our presence in IPM's top 300 brands remains strong with 22 brands, reinforcing the depth and resilience of our portfolio.

Cipla continues to be the largest pharma company in terms of volume and [holds?] [unclear] billion-plus unit sales in IPM as per IQVIA MAT December '25.

During the quarter, we entered into a strategic agreement with Pfizer for exclusive marketing and distribution rights of four well-established Pfizer brands in India. We also signed a definitive agreement to acquire Inzpera Healthsciences, a strategic move that brings together Inzpera's portfolio of pediatric pharmaceutical and wellness products within Cipla's robust distribution network.

We further strengthened our diabetes portfolio with the launch of Afrezza, India's first and only inhaled, rapid-acting insulin, marking a significant milestone in transforming insulin therapy. In addition, through our partnership with Eli Lilly, we launched Yutiq, a modern, once-weekly tirzepatide therapy for obesity and type 2 diabetes, bringing a convenient and advanced treatment option to millions of patients across India.

Our trade generic business delivered a healthy growth during the quarter on the back of rigorous execution and distribution, new product launches, and technology led enhancement. Spanning our portfolio remains the key growth driver, with eight new launches this quarter, which address specific patient needs.

Our consumer health business continued its upward trajectory with Nicotex, Omnigel, and Cipla [Health?] consolidating number one positions in their respective segments.

The business is driving healthy secondary growth and actively exploring opportunities to invest in products and channels to further expand our distribution network. Operating profitability improved, reflecting the strength and scalability of our consumer health strategy.

In North America, we delivered quarterly revenue of $167 million, which included a small contribution from lenalidomide. We faced certain supply challenges in some of our key products and increased competition in new launches.

Yet, our base business, ex-Len, delivered a double-digit growth YoY. We expect upcoming launches to help cushion the decline in Len revenue and provide long-term growth.

Cipla continues to hold number one position in the overall US albuterol MDI market this quarter, with our market share at 22% as per IQVIA data for the week ending December 26, 2025. Lanreotide remains one of our key strategic assets.

Recently, however, our partner, Pharmathen, underwent a US FDA inspection at their manufacturing facility, which resulted in nine 483 observations. As part of their remediation efforts, production has been temporarily paused.

We currently expect lanreotide resupply to resume in H1 FY '27. Until this manufacturing restarts, the product will remain in limited supply, subject to quality clearance of existing stock.

While this may cause some short-term disruption, we're working closely with Pharmathen and all the relevant stakeholders to explore every viable option to restore normal supply levels as quickly as possible. In parallel, we are evaluating alternate sites for this product.

A quick update on our US pipeline. By this time, our pipeline includes four significant respiratory launches, including generic Advair.

During the quarter, we will be launching generic Victoza, and we further expect to launch three more peptide assets in FY '27. Notably, three of the four respiratory assets are filed from our US facilities.

These strategic introductions will not only strengthen our portfolio, but will also serve as key drivers of sustainable, longer-term growth. Moving to South Africa, in the private market, we achieved strong secondary growth of 6.3%, outperforming market of 5.7% as per IQVIA MAT November '25.

The business faced weakness in primary revenues this quarter due to in-country channel destocking. However, we expect normalization by next quarter.

In EMU, we delivered our fourth successive quarterly revenue above $100 million, recording a 7% YoY growth in USD terms. This was fueled by exceptional execution across both B2M as well as B2B segment.

Our continued focus on deep market penetration has provided a strong foundation for sustained growth. Notably, we maintained margin stability while effectively leveraging internal pipeline assets, which demonstrates the strength and agility of our operating model.

On regulatory front, we are expecting the re-inspection of our Indore facility to take place anytime soon. With that, I would like to invite Ashish to present the financial and operating performance.

Thank you. Thank you, Achin Ji.

Thank you, Umang Ji, as well. Thanks for your leadership.

Now I would like to present the key financial highlights for the quarter. We reported revenue of 7,074 crore, which is flat YoY.

The EBITDA margin, excluding other income, stood at 17.7% to be precise for the quarter. The decline in EBITDA margin was primarily driven by lower generic Revlimid revenues.

The reported gross margin after material cost stood at 62.8%, again, largely driven by decline in lenalidomide as well as partly because of product mix. Also, notably, the gross margin or material cost also has your R&D material cost of APIs or RNDs that we purchased sitting out there.

The total expenses for the quarter stood at 3,187 crore, reflecting a 13% increase over the previous year. This was primarily due to planned investment in R&D, manufacturing, and talent to support our new launches and build readiness for upcoming products in the pipeline.

We remain focused on innovation and future readiness. R&D investment for the quarter was 494 crore and about 7% of revenue.

This was a growth of 37.4% YoY, directed largely towards product filing and key development program. As noted earlier, R&D spend is trending higher this year, driven by select opportunities that strengthen the depth and vibrancy of our pipeline.

The profit after tax for the quarter stood at 676 crore, representing 9.6% of sales. This includes one-time impact of 276 crore from new labor code, which is sitting in the exceptional item rather than above EBITDA.

The ETR for the quarter stood at 24.5%. Free cash flow generation and operating efficiency continues to drive healthy net cash position.

As of 31st December 2025, debt on our balance sheet includes lease liabilities, stood at 489 crore, with net cash equivalent balance at 10,229 crore. This is after adjusting for dividend that we've paid in the previous quarter, and this quarter, we paid for Galvus as well.

This quarter, our EBITDA internal expectation by about 1.5% to 2%, which will affect the overall guidance for the year. This was primarily a reflection of lower than anticipated lanreotide performance and the completion of generic Revlimid billing cycle, with most of the shipment concluding in September quarter and small portion in December quarter.

In parallel, we stepped up growth priorities, including spends towards the commercialization of our new launches and readiness activities at our US manufacturing facilities ahead of near-term and imminent regulatory approvals. In line with the last quarter's guidance, we continued to prioritize targeted R&D investments in select opportunities within our US-focused oligonucleotide portfolio, where we see potential to secure an attractive and competitive market entry position.

Now these are deliberate, strategic choices and will lead to FY '26 EBITDA margin guidance to land at around 21%. Going back to our strategic priorities for the market: for One India, the aim is to focus on execution to sustain the growth momentum and outperform the market in both branded generic and trade generic.

We'll further strengthen our presence in chronic therapies, including diabetes, cardiology, urology, and dermatology, while maintaining the robust trajectory we've built in respiratory. In North America, we'll concentrate on enhancing commercial execution and accelerating the new product introduction that we're expecting.

In South Africa, focus will be on improving the private sector mix while being selective in tenders. EMU, top priority is to drive top-line growth by deepening penetration in core markets while maintaining a strong margin trajectory.

Lastly, on FY '27 guidance, we will further provide that as we finalize our annual operating plan for FY '27 in due course. That's it from my side.

Thank you for your attention. Over to moderator for Q&A.

Thanks for the opportunity, sir. Sir, firstly, on the Q3 gross profit and gross profit margin, even if the Revlimid-related impact is there, is there further anything in the raw material, maybe related to lanreotide, which is driving the gross profit much lower compared to earlier quarter outside Revlimid?

Sure, Tushar. See, Revlimid is a significant impact sitting out there in the gross margin that you see.

I think apart from that, in case of R&D, this quarter was a quarter where we purchased certain RNDs and APIs as well for our R&D expenditure. All that led to a significant explanation for the difference that you see out there.

Other than that, there's a product mix that led to small dilution as well, but that is not a significant amount.

Okay. Did lanreotide have any impact on the raw material side while sales would have got impacted, but more so on the raw materials as well as in certain inventories related expenses?

No. There has been no adjustment in the inventory that we've had on account of lanreotide.

Whatever we have sold in this quarter of lanreotide, a normal material cost against that is what is booked.

Extending this, given that there is now disruption, effectively the US sales will then get further lower, at least with respect to lanreotide reduction in the upcoming quarters? Is that a fair assessment?

On account of lanreotide, depending on how that situation evolves, the lanreotide sales can get further impacted. We're not commenting on the other part of US as of now.

Sir. That's it from my side.

I'll join back the queue.

Hi. Thank you for the opportunity.

Of the $66 million rough decline in the US sales on a sequential basis, how much directionally we can attribute to Revlimid versus lanreotide?

Significant portion of that comes from Revlimid, major portion of that. There is a small portion that comes on account of lanreotide as well.

Important to note is that, as against what we had planned in lanreotide, is a lower than that we have achieved because of this disruption.

Then if I remove just both lenalidomide, because there's still some residual Revlimid there, and lanreotide is also there, is it fair to say that we are at more like a pre-Revlimid era where we were doing more like $125 million, $130 million quarterly run rate for US? Is that a fair understanding?

Without lanreotide, we should be there?

No. That your assessment is not entirely correct in arriving at the base, because we can't share the numbers of lenalidomide, unfortunately.

Difficult for us to explain the entire gap. Directionally, Umang or Achin, you want to just have a— I think directionally, just to say, we have minimal lenalidomide now in that base, and we're looking at very significant launches which are coming up.

I think that the direction of travel of the business will be to grow on the back of all of the products, including some of the launches which have already happened this year.

Sure. We know one which is generic Advair, but beyond that, the three respiratory assets, if you could provide some color in terms of what is the total addressable market?

How is the competitive landscape there?

Yeah. We have mentioned four respiratory assets, one of them is generic Advair.

There are two other fairly large material opportunities where we believe we have a sole generic opportunity, which could stay like that for certain period of time. We're very excited about those and awaiting the approvals, which will materially create a revenue as well as profitability impact for us.

Large means like hundreds of millions or the total addressable market size, how to look at those? One is definitely Symbicort, right, of the four?

One is Advair, one is Symbicort. The remaining two, the large opportunity which you are suggesting where we could be sole one, can you give us the TAM?

I think, see, for competitive reasons, it's hard to comment on that, but these are fairly large.

Sure, sir. Thank you, and all the best.

Yeah. Thanks for taking my question.

My first question is on the peptide monetization that we have talked about in '27. None of these are from the partner facility that's been impacted, right?

Would that be a fair assumption, or some of this is linked to Pharmathen's facility getting cleared?

No, none of them is coming from Pharmathen.

Understood. That's helpful.

Second, on the gross margin impact that you said, Ashish, from the APIs for R&D, could you quantify how much would that be? Should we assume that that was just restricted to this quarter and should normalize from next quarter onwards?

Yeah. Without necessarily giving the break, see, it's that your R&D expense is about 7% of revenue.

Part of that 7% sits as material that you purchase, procure as well, which is both R&D as well as API. We did that for certain molecules, including oligonucleotides.

What happens is that it is not a quarter regular consistent quarter phenomenon. In this quarter, we purchased, therefore it can be lumpy as well.

You may not have it coming back in quarter four.

Understood. How should we think about defending the 21% margin that we've guided to this year into next year when Revlimid fully goes away?

Initially, we have the lanreotide disruption, but then we also have the launch pipeline. Meaning, if you could just give us some sense on how we should look at margins for '27?

So '27 margin, we're not currently guiding towards for a reason that we've not completed our annual operating plan for the year, which needs to go to the board and then we can give that guidance next quarter. FY '26 is for which we've given guidance of that we could land the year at about 21%.

That is just one quarter left, and we of course have to do better YoY to achieve that, if you do the math. We don't have any Revlimid now in quarter four, which is what you are all aware of.

I'm done. Yes, I'm done with my questions.

Thank you.

Okay.

Hi. Thank you for the opportunity.

I have two questions. First, on your peptide launch for FY '27 in the US, you mentioned four peptides and four respiratory assets.

Just want to understand what kind of comfort and visibility you have on these assets, whether you have got CAD dates from the FDA, on basis of which you are confident that you should be able to launch these products. Also want to understand in any of these, are there any CRLs or unresolved blocks which you are yet to resolve?

Yeah. Thank you for that question.

These respiratory assets that we have are progressing well through their assessments, and we've been preparing for the launch as well in terms of operations-related activities that need to happen to prepare for the launch. We are quite confident about those upcoming launches.

Likewise for the peptide assets as well, because these are not from the site which is having the issue currently with the partner, Pharmathen. We don't have any reasons to suspect any issues on the launch.

Generic Victoza approval is already received, so that we will be able to launch soon.

Sure. For the respiratory, just to understand, all the peptide assets are from CMO sites, and respiratory, as you mentioned, three out of four will come from the US and one maybe from the India plant.

Is that the status?

Yeah. That's right.

The peptide assets are from partner sites, and respiratory are from US sites as well as India.

Okay. My second question is on your note to the consolidated financials, where you mentioned you have paid around 1,100 CR for acquiring perpetual rights to manufacture Galvus and combination products.

Can you help us understand where these expenses or costs are fitting in the financials?

That's sitting in intangibles in your capital advance in your financial statement, the 1,100 that we've paid.

That's sitting in balance sheet, in intangibles, right? Nothing on P&L side?

Nothing in P&L.

I'll get back in the queue. Thank you.

Thanks for the opportunity, sir. First question is on the lanreotide.

This is just as clarification first. Whether we have seen any impact of supply disruption in this quarter?

Because the inspection and all that would have happened in the current quarter, but I think the development what we have seen, it is in the fourth quarter.

In case of lanreotide, the inspection took place in November end, and that's when soon after that they stopped the production. December, we had no production out there, okay?

There was some impact in comparison to the previous quarter. As part of our plan, the impact is much much larger.

Okay. Sir, then my first question is on the margin side.

See, now we are guiding kind of a 21% margin for the full year FY '26, wherein the fourth quarter obviously we know that it is a relatively weaker quarter for us, and hence the impact also would be there alongside the impact of the lanreotide that would also be visible. Going ahead, how should one see what are the kind of swinging factors for our margin?

Because obviously the lenalidomide would not be there next year, and there would be possibly in the first half the lanreotide disruption also would be there, and the spends on the R&D side that is likely to continue. In that case, the overall margin if we see, it looks like below 20%.

Am I thinking whether directionally I'm thinking right or how is it? How should one think if you can just talk about the moving factors for the margin for next year?

Surya, let me just try and give you some color. The Len is a planned dip in phase, which was known for quite some time, so that's happening as we speak.

In preparation for that, we've been working on the pipeline. As we already mentioned, that pipeline is now looking closer.

As we go along, and as we start getting those approvals, we'll be able to obviously share that. That will be the way to offset whatever is going off on lenalidomide.

In addition, our other markets continue to grow strongly, India, which is a large presence for us, continues to grow; EMU continues to grow; South Africa continues to grow. We'll provide some more visibility on how we're looking at R&D and the other expenses to invest in the business.

I think the broad guidance is that lanreotide is a temporary issue and lenalidomide was a planned going away, for which the pipeline comes into play. That's how we would look at it.

Until the time this lanreotide disruption is there as more as a temporary aberration than a longer-term phenomena.

Okay. Otherwise, our profitability going ahead, excluding the impact of the lanreotide, should be better than the profitability what we would be having prior to the lenalidomide scenario, sir?

Surya,

I think best for us to answer this question will be when we've rolled out our annual plan. We'll give you much better visibility after that.

Sure, sir. Okay.

Just last one question then from my side, sir, about your Yutiq, the tirzepatide launch. What is the kind of progress and whether you have any assessment about the kind of adoption levels in the areas beyond cities where the focus would also be there for you?

What scenario that you are anticipating post the commercialization of semaglutide for tirzepatide?

Okay. We are the full all-over-India marketing rights for Yutiq, we are covering pretty much all of the country, with obviously more focus on outside of metros.

This is a very fast-growing space, we're seeing good traction coming through in all of the places: those which had been exposed to the drug earlier by the partner, as well as the cities and new prescribers where we are able to bring in the treatment as for the first time, right? I think there's good amount of traction there, and it's a very large medical need across the country.

Patient pool is very vast and widespread across the country, which we are looking to serve. Now with respect to semaglutide generic, as and when that happens, we believe it will open up a new segment in the market, because the molecules are different.

Tirzepatide has dual action, GLP and GIP, which we believe makes it a preferred option. However, from pricing perspective and genericization of sema happens, it might open up options at a different price point to certain segments of the market, which effectively will grow the market as opposed to eating into each other.

Okay. Sure, sir.

Thank you. Wish you all the best.

Thank you.

Hi. Good afternoon.

First question on Abraxane, any updates on how it's doing in the market?

No. Sorry, you said filgrastim or

Abraxane? Abraxane which you have launched, right?

Yes,

I think our launch coincided with other launches as well, it's become a competitive market. As of now, we are inching up our market share.

Currently, it's mid single digit. We hope to increase that.

Understood. Looking at your FY '22 margins before lenalidomide, you were around 21%.

How has that fallen to 17.5%, 18% now and that too with a little bit Revlimid?

Sure, see, I think we explained some of the reasons, right? There was R&D, which is elevated.

We used to be at about, I think, 5%, 5.5% in the past and which has now come to about 7% of sales. Straightaway about 1.5%, 2% kind of a dilution on what we used to be.

That explains one of the big reasons. Then in the last almost about one, two years, we've been investing on organic growth for new launches, for de-risking our facilities.

All that cost has also come into the P&L. I think as they start to yield revenue for us, both R&D pipeline as well as all the de-risking benefits, etc., that we are likely to get, we should normalize back to higher number.

This 17.7%, we already mentioned that it's 1.5%, 2% off from our expectation for the similar reasons that we mentioned.

Got it. This 1,100 crore payment to Novartis, is this related to the deal that you entered in April 2023?

That's right. This is a follow-up, it was earlier just a in-licensing kind of a deal, and now it's a perpetual license that we've got for the trademark, and we can also manufacture it in-house.

Was it publicly disclosed earlier that such a payment is due under this deal?

Yes, when we announced the in-licensing, then this was disclosed.

Okay. I'm sorry, I looked up your public statement.

I couldn't find it. Maybe I missed it.

Is any such payment in future involved with the current deal with Pfizer or the Lilly deal for tirzepatide?

No. When we shared about the Galvus deal, it was an in-licensing followed by this perpetual license, it's kind of an acquisition with a slightly delayed, right?

Couple of years of marketing exclusivity followed by the purchase. The other deals don't have this kind of provision.

Okay. Thank you.

Yeah. Hi.

Thanks for the opportunity. My first question is pertaining to your earlier guidance on US revenues, where we saw US revenues touching around close to a billion dollar by FY '27.

Sir, post-lanreotide, are we revising that guidance?

I think we'll have to revise that guidance. The guidance will have to be revised, because if we don't have Lanreo in one quarter, the numbers will be lower, right?

I think that guidance will have to go down, because lanreotide if we forecast quarter four not coming in, it will have an impact on the overall guidance for the US business. Now what we had also directionally guided was for the US business to continue at that trajectory, supported by new launches.

I think based on what some of the questions earlier, it's pretty clear that the launch trajectory of the business is at least, if not almost at the stage of launch, but at a very advanced stage of launch for three products. I think that would also add to the overall guidance, but the directional guidance we gave for the business in the US.

Okay. Thanks for that.

Just among the eight products here, you mentioned three you have are of pipeline. How about the balance five?

Are these kind of an early FY '27 opportunities or late FY '27? Any directional idea there?

Yeah. No, effectively I think what is immediate, let's say from zero to six months, right?

We are calling for from zero to six months, two big respiratory launches and one smaller launch, right, on respiratory. Let's say two big respiratory launches and one Advair, that's what we're calling for in this year in the next six months.

Between the six months to one year, there could be another big launch in respiratory that we are calling out, right? That could be another one and that is likely to be around the Symbicort and more towards the end of the year.

Then we have peptide launches, which the team has called out. I think the peptide launches there will be a smaller one in the zero to six months period.

Then, hopefully if things work out the way we are thinking, there will also be a larger launch, which again could be a pretty exclusive sort of a scenario for one of the peptide products in the six months to 12 months trajectory. That's how the launch calendar looks like.

Now for whatever is between the zero to six months category, there is a fair amount of belief that this has gone through multiple rounds of review, etc., and therefore the launches are more likely than not to happen soon.

Got it, sir. Thanks for that.

Hi. Thanks for taking my question.

The first one was on the respiratory assets, the four which we are guiding to over the next year. Three, I think, are filed from the US.

The fourth one will be filed from Goa and not Indore, is that right? I think you have said that in the past.

The partner asset is from Goa, so that is from Goa, right? That is not contingent on Indore getting reinspected and cleared?

That is correct. That is correct.

That's right.

Got it. The second one, on the opening remarks which you had made, that the US base ex of Revlimid grew in double digits, right?

That base when we are referring to that obviously includes lanreotide. Is that the right understanding?

That's right. Your understanding is correct.

Okay. Thank you.

That's it from me.

Thank you. A question related to India business.

What is the share of in-licensing portfolio in India Rx business, and how that has grown?

At the moment, it is less than 10%, and now Galvus was appearing as the in-licensing, which now we will have the benefit of own manufacturing and therefore full supply chain margin. That will come out of the bucket, and Yutiq will grow.

That's the evolution of it.

Thank you. That's all from my side.

Yeah. Thanks for the follow-up.

Just on lanreotide, while when we had launched, at that time also there were certain regulatory issues. If you could clarify, it was to do with the same site and now with this US FDA thing.

Over a period of time, have we thought of having any alternate site filing for this product? That's my first question.

Yeah. From de-risking perspective, we're looking at a second site not in the same market, and those discussions are advanced with the partner, because we need the partner to be able to tech transfer the product to the new site.

Which means effectively, if at all then the thinking of relaunching in first of FY '27, it has to be subject to the US FDA clearance for this [facility?] ?

The earlier resumption will come from the existing site. For future, the de-risking can happen from the second site as well.

Okay. Sorry if I would be dragging on this, but when there's a zero to six months two big respiratory launches, while you might not call out individual market size of products, if you could just combine the two and just give us an idea in terms of when you say big, how big is the market size?

Is there generics already there in this product or not there?

No, in the zero to six months— Go ahead, Achin. Go ahead.

I think so we have guided that two of those opportunities are quite large, and we expect to be the sole generic in those for a substantial period of time. The third one in that same bucket is generic Advair, which already has competition.

I get this. Sorry, but just to reduce the subjectivity, I am just trying to understand when you say big, what would be the market size?

If not individual product, combined, if you could highlight?

Like we've said that collectively our new launches will make up for the lanreotide and [inaudible] revenue drop. I think that should give you some indication of—

Relatively less as compared to Revlimid, while it would be help to make up for the sales, would it be at a relatively similar profitability or lower profitability?

Yeah. See, no, it will be lower profitability than Revlimid, and it also depends, by the way, on timing, when new launches hit, but collectively, I'm saying they will make up.

It'll be lower profitability, but important to note is that our respiratory assets are all in-house, okay? They will come at a very good gross margin.

Only when you go outside with partners, then you have to share some profits or pay some milestones, etc. In this case, all of them are in-house.

Maybe we can give you color. Let's put some color in this manner, right?

If you take away Revlimid, right, the next set of products are a certain size for the business, right? Including lanreotide, I think the two products we're talking about ballpark as an average, they would come at that size, as being leading products for the market outside of Revlimid.

Got it, sir. This is very helpful.

Thank you.

Hi. Ashish, on the business, what do you think is the normalized gross margin for a business on a more secular basis?

No. See, I think we've been averaging about 65% or so, range of about 60%, 65%, depending on the mix.

Some quarters will have more acute, so that will be more towards the lower side. When it is respiratory, etc., then typically it would be higher side.

Then, of course, US, it all depends on small portfolio that you have, they can be product skewed that can be there.

On these fixed costs, per se, we've had obviously some pick-up in the business fixed cost overhead which have happened, obviously there's been a Revlimid cushion over the years which has been there. Now with Revlimid not being there, is there an opportunity for us to prune some of the operating overhead costs?

No, absolutely. I think we constantly look at opportunities to reduce cost and optimize it.

There are opportunities. We've run a program as well this year.

Part of that program, some benefit may come towards the end of this year, but more fuller benefits will start kicking in in the next year. There are definitely constant, continuous improvement programs that we run on the cost side.

Please, again, for the sake of repetition, the R&D cost that you see out there, 7% of revenue, sits in material cost, other cost, and people cost as well. All the three line items will have those, if you see increase in those line items, that's also because of R&D.

Not so much in people, because we've not really invested big time in people on the R&D side, but on material and other expenses increase, you can see is on account of R&D. R&D also has litigation costs that you do for the product in the US or any other country, those costs also take it.

Thank you so much, and wishing best of luck for your term going forward.

Thanks.

Sir. Thank you for the opportunity.

Ashish, on your comment of the increase in R&D, some bit of that being led by the R&D purchases that you've done, the absolute quantum seems like 150-odd crores. Is this in the ballpark or is this way off in terms of if you were to estimate?

Because you are not calling it out separately, but that 150 crore kind of an increase versus the run rate that you've been having, is this broadly right?

See, that's the guidance, Chirag, that we've given in the last quarter as well, where we said that our R&D expenses and estimate has gone up by about 50 basis points. Your 50 basis points would translate to somewhere around 150 crore.

From that sense, yes, your number is in the right zone.

That sits in the RM cost is what I'm trying to—

RM as well as other expenses also. Yes, and some bit of capital expense, but that would be very small.

Like if you're buying lab equipment, but that's a small number. That won't be a—

Ashish, the incremental versus the average run rate that we've been having largely sits in the RM cost line item?

RM and other expenses, yes.

Understood. Fair point.

The other bit is in terms of the quarter-on-quarter dip in the US business, roughly about $65 million, you said largely this is lenalidomide. Should we extrapolate this to an annualized number to get the sense of what our annual lenalidomide sales would be in the base, or would it be lower, higher?

Just how should we think about?

Chirag, there unfortunately, we can't guide yet because of the agreement surviving.

Is the run rate going to be materially different in the coming quarters on the US?

No, I think the future guidance on US, let lanreotide stabilize, I think there'll be good opportunity for us to give you that guidance.

Understood. Thank you for that color.

Just in terms of clarification, Umang, you said, the two assets, the big respiratory products that we are expecting in the next six months, in terms of the opportunity size, Did I get this right, that the size could be as big as lanreotide potential, or what were you trying to indicate in terms of—

Yes. Yes, what I was trying to say is that it's quite likely that one, if not both, could be one of the largest products for the company.

That's what I was trying to say. If you take out lenalidomide, right, and if you take the next top two or three products of the company that we sell, including lanreotide, this is ballpark in that top two or top three product type of a profile for revenue.

Understood. Thank you so much.

Thank you for that color.

Hi. Thanks for the opportunity.

Just wanted to understand if you are seeing greater traction in trade generics or branded generics within the India business. If you could get some color on that.

In context of the Schedule M implementation, how are you seeing the actual implementation on ground? Do you expect either the branded or the trade generics business to gain share because of that?

That's question one. Question two was in line with the peptide launches that you mentioned in the developed markets in the US, if you could get some color in terms of launches in the emerging markets for some of these peptides where we're seeing lots of excitement.

These are my two questions.

Okay. I'll start with the trade generic and branded generic question first.

We see opportunities on both sides, and I think slightly different drivers for each: one has an element of scientific doctor promotion, the other is more channel-led. Given the breadth of the market, we see equal opportunities on both sides, and our growth rates have also been similar in this year.

As far as Schedule M is concerned, that's a good initiative from the government side to raise the quality bar on all the manufacturing that is happening in the country. It is more of an impact for smaller players who will need to ramp up to meet those quality standards.

From Cipla's perspective, we do not have much or any impact, because we're already at or better than the standards that are asked for. In terms of EM launches on peptides, you know that liraglutide we'd already launched, and then we have some other products in the pipeline.

It would be difficult to call out individual assets, because the quantum would not be as large as it is in the US. We are looking at having same level of complexity and differentiation on our EM portfolio as we have in the US portfolio.

Sometimes there are assets which are more differentiated, which are registered in branded markets, which are not available as opportunities for the generic market in the US. We are focusing on building out these EM front ends as well as EU and South Africa front ends.

Thank you so much for taking my question. I have two questions.

Firstly, since we have launched tirzepatide, can you say that we still will be able to launch semaglutide in the month of March?

At the moment, we're focusing on tirzepatide. That's a fairly large opportunity with our Yutiq partnership with Eli Lilly.

As you see from IQVIA data last month, the molecule was clocking upwards of 130 crores a month. Our efforts are primarily focused on that.

On sema, we will wait and watch as to how the market evolves, and then if we see an opportunity at a lower price point to cover some of the market, we can take that call, but not immediately.

Okay. Just follow-up on that.

Because we have an agreement with Eli Lilly, does that agreement stop us from stopped us from entering into semaglutide?

We cannot share the specifics of that. As I said, we can see how the market shapes up, and if we see an opportunity to play in that market, we can take that call over time.

Okay. Second question, I just missed a part on whether we have generic Spiriva in the development at the moment or where do we stand?

Can you please repeat the question?

Sure. I was asking if we have generic Spiriva in the development at the moment or where do we stand?

Shrikant, your voice is not clear.

It depends on which market. No, no, I think I got his question.

His question is on Spiriva, right?

Yes, sir.

Yeah. That depends on which market you're talking about.

I think for some parts of the world, we have it, and for some parts of the world, we can't disclose, because it's competitive.

Okay. Fair enough.

Thank you so much, and thank you, Umang, for the last 10 years for your service, and all the best to Achin and Ashish. Thank you.

Thank you, everyone.

Thank you.

Hi. Thank you for the follow-up.

Just one question on the 275 crore exceptional item this quarter. Ashish, do we see any prospective impact which would happen in the future quarter as well, that of this 275 some amount continues to remain?

No. In our assessment, we have the data with us.

Based on the new code as per guidance and FAQ given till now, we've taken the impact. We don't anticipate any material adjustments to this amount.

Except, of course, your accruals now because of the new code it will be higher than the accruals every year that you are making. For the past, whatever the accruals has to be made is all sitting there in this 275.

No material adjustments we see after this.

There could be some lingering or residual other structural increase in employee cost because of this, right? Because we will now have to provide for gratuity

for— Yes, yes. Your accrual every year now we need to be slightly higher, unless you change the structure of the salary.

Sure.

Okay. Perfect.

On R&D side, this year has been higher, but given that we would have timelines about the projects that we are currently doing, do we expect that R&D can cool off, let's say, in FY '27?

I think the normal range which we've been operating in is around 5% to 6% of R&D spend. It gets lumpy at times, depending on certain programs where the R&D and API costs might get lumpy, but I think we'll try and keep it more around that 6%, but quarter-on-quarter, depending on the timing of projects, some of it goes up and down during the year.

Sure. Thank you, and all the best.

Hi. Thanks for the follow-up.

Just on the Schedule M, what I wanted to understand is given the challenges that the smaller guys will have on implementation, are you envisaging your trade generics or branded generic business seeing any short-term blip or benefits from this? That's the question I actually had.

I think it is more towards benefiting the patient in terms of quality and preventing unnecessary adverse events. Given the number of manufacturers which exist in India, we don't see much material difference on our business on either of trade generics or branded generics because of this Schedule M implementation.

Got it. Thanks.

No, thanks everyone for joining the call. If any questions are left, we're happy to address that.

Just that one comment that was asked on Galvus, that 1,100, that sits in the capital commitment in our balance sheet in Note 38. That clarifies the amount that is sitting there for the capital commitment that we made.

It was not there in the initial press release, I checked that. Thank you.

Thank you, everyone, for joining in, and if you have any further questions, please write it to [email protected].