Sun Pharmaceutical Industries (NSE:SUNPHARMA) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to SUNPHARMA's Q1 FY 'twenty seven Financial Results Conference Call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Doctor. Abhishek Sharma, Vice President and Head of Investor Relations and Strategic Projects. Thank you, and over to you, sir. Thank you. Good evening, and a warm welcome to our first quarter FY 'twenty seven earnings call. I'm Abhishek from the Sun Pharma Investor Relations team. We hope you have received the Q1 financials, the press release and the earnings presentation that was sent out earlier in the day. These are also available on our website.

0:56 We have with us Mr. Dilip Shanghvi, Chairman Mr. Kirti Ganodkar, Managing Director Mr. Anoop Shanghvi, Chief Operating Officer Ms. Jaishri Satugopan, CFO and Mr. Richard Ashcroft, CEO, North America. Today, the team will provide an update on financial performance and business highlights for the quarter, pipeline updates and respond to any queries that you may have. We will refer to the consolidated financials during management comments. The call recording and call transcript will also be put up on our website shortly. We have recently noted that Aurigon has received a shareholder approval for acquisition by Sun. The acquisition is subject to the satisfaction of remaining customary closing conditions and is on track to close by early twenty twenty seven.

1:42 Since Aurinon remains a public listed company, we will not be taking any questions today regarding Orkinon's business performance. The discussion today might include certain forward looking statements, and these must be viewed in conjunction with the risks that our business faces. You are requested to ask two questions in the initial round. I also request all of you to kindly send in your questions that may remain unanswered today. I will now hand over the call to our CFO, Ms. Jairshi Sathagar. Welcome and thank you for joining us for the earnings call after the announcement of financial results for the first quarter of FY twenty twenty seven. The financials are already with you. As usual, we will look at the key consolidated financials now.

2:29 During the first quarter of FY twenty twenty seven, sales were at 151,836 million, registering a growth of 10.1% versus Q1 financial year FY twenty twenty six. Gross margin was at 80.5% for the quarter, higher than the same period last year, mainly on account of better product mix. EBITDA for the quarter was INR4477 million, an increase of 2.7% over Q1 last year. EBITDA margins came in at 28.9%, while EBITDA margins were slightly lower. Please note that Q1 FY twenty twenty six had some benefit from lenalidomide sales.

3:19 Adjusted for that, EBITDA margins were higher year on year. ForEx gain for the quarter was million lower than Q1 last year. Reported net profit after tax for quarter one FY 'twenty seven was INR28948 million, while adjusted net profit for the quarter was INR3894 million. EPS for the quarter was Rs. 12.10 per share. Exceptional items for Q1 FY twenty twenty seven include a charge of Rs. $1,617,000,000 towards Organon's acquisition related costs.

4:07 There would be additional charges on this account in the subsequent quarters. Since some of the costs are not yet fully crystallized, we are not in a position to guide to a full estimate at this point in time. However, these charges are somewhat back ended with a substantial part being accrued at closing. Effective tax rate for the quarter was at 27.8% versus 24.3% in Q1 FY twenty twenty six. Sun had a significantly lower tax rate in India, which is now getting exhausted and with varying tax rates in our different jurisdictions, our ETR has moved up. Going forward and until Organon's closing, we expect the tax rate to be in a similar range as in Q1.

4:59 Balance sheet of SUNPHARMA to be strong with a net cash of billion at the consolidated level. With this, I hand over the call to Kirti, who will share the performance of our Global Innovative Medicines business and India business. Thank you, Jayshree. I shall first provide you an update on Global Innovative Medicines. In Q1 FY twenty twenty seven, our Innovative Medicines sales were up 12.8% to reach US351 million dollars This business accounted for 21.9% of Sun sales for the quarter. The performance in Innovative Medicines business continues to be driven by growth across U. S.

5:45 And Ex U. S. Markets and across product notably ILUMYA, ODOMZO and CEQUAR. During the quarter, the company shared the updated results from locally advanced cutaneous squamous cell carcinoma expansion cohort from the pivotal trial of ONOXIT at twenty twenty six ASCO Annual Meeting. The updated data showed a durable benefit for patient with more than one in four achieving complete tumor response and generally manageable safety profile. Now coming to India business, sales of India formulations were INR 54,749 million for the quarter, recording a growth of 16%. India sale accounted for 36.1% of our total consolidated sales for the quarter.

6:37 During the quarter, the company became number two generic semaglutide injectable player. SUNPHARMA is the only company in India offering semaglutide auto injector and the device has received a positive feedback from healthcare professionals for enabling smooth initiation and significantly reducing needle phobia. Sun Pharma is ranked number one and holds 8.5% market share in the over INR 2,527 billion market as per Farmer Mac, June 2026. Corresponding market share for the previous period was 8.2%. For the quarter ending June 26, we grew higher than IPM, and we have done well across all major represented therapy areas.

7:28 SUNPHARMA 30.4% pharma track growth was driven primarily by strong volume expansion and new product launches. SUNS volume growth of 5.4% for the quarter compares favorably to IPM volume growth of 2%. As per SMSRC March June twenty twenty six report, we continue to be number one company based prescription volumes. Sun Pharma is also ranked number one by prescription with 12 different doctor categories. For Q1 FY twenty twenty seven, the company launched five new products in India. Now, I hand over the call to Rick for the update on the U. S. Business. Thank you, Kirti. Let me share the performance highlights for our U. S. Business.

8:16 Overall, the U. S. Business reported sales of $427,000,000 for the quarter, declining by 9.7%. Our Innovative Medicines portfolio continued to grow, and this was offset by lower sales in the generic business, largely due to lenalidomide erosion, but also due to additional competition in certain products. QO quarter over quarter decline in The U. S. Is due to a decline in generics and also some seasonality in Levulan. U. S. Accounted for 26.6% of consolidated sales for the quarter. We also launched five generic products in The U. S. Now let me provide some updates on the Lexalvy and Eloxxa launches. We're seeing good momentum in Lexalvy with prescription and the number of prescribers expanding each month.

9:05 In the month of June, we surpassed 1,000 prescribers, and we also delivered our strongest month since launch, demonstrating increased adoption and growing confidence in the brand. Unlocked it was launched earlier this year. The early feedback from health care professionals, including oncologists and dermatologists, continues to be positive, really highlighting the balance of durable efficacy and safety resonating exceptionally well, largely due to unlocks a differentiated mechanism of action. Similar to Lexapi, we continue to see month over month growth as more cancer centers and integrated health systems add unlocks it to their formularies. I now hand the call over to Alok for updates on our other businesses.

9:56 Thank you, Rick. I will provide an update on the performance highlights of our other businesses. Our formulations revenues in emerging markets were $311,000,000, up by 4.2% over quarter one last year. Emerging markets accounted for 19.4% of the total consolidated revenue for the first quarter. While branded generics have continued to grow, innovative medicines has been an important driver for growth in emerging markets, with ILUVIO well across several markets such as Romania and Brazil.

10:47 Formulation revenues in Rest of the World for the quarter were US218 million dollars marginally lower than quarter one last year. Rest of the world markets accounted for approximately 13.6% of consolidated revenue. Recently, we have received approvals to manufacture and market the generic version of semaglutide injection in both Brazil and South Africa for the treatment of adults with type two diabetes. We have already launched the product in South Africa and launched in Brazil through our partner is expected shortly.

11:33 I will now hand over to Mr. Philip Sangwee for updates on R and D. Thank you, Anup. Let me take you through our R and D initiatives. We continue to invest in building an R and D pipeline for both global generics and innovative medicine businesses. Consolidated investments towards R and D for Q1 FY twenty twenty seven stands at INR8264 million or 5.4% of sales. Innovative R and D accounted for 30% of our total R and D spend. Recently, our partner, Filogen, has resubmitted Nidlegy for marketing authorization in Europe.

12:24 The updated data for resubmission is due to be published soon in a major journal. Coming to Organon transaction, the process of filing for regulatory approvals in various markets have been completed. We've already received approvals in certain countries. Shareholders of Organon have also approved the transaction recently. We expect the acquisition to be completed in Q4 of financial year twenty seven and an integration management office has been working on day one preparedness. That's the end of our prepared remarks. Operator, you can ask for question and answer.

13:20 Thank you very much. We will now begin with the question and answer session. You may press star and then two. Participants are requested to use handsets while asking your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Your first question comes from the line of Amit Shaltej with JMJ.

14:09 Congrats on good set of numbers. I have first question on the Specialty Medicine. There's some there seems to be some deceleration of growth in this segment. Is it possible for the management to give color on reasons for slower growth in 1Q? I think our focus is on innovative business and here we would like the innovative business to continue to grow at a healthy rate.

14:56 So we're expecting healthy growth to continue for innovative business in U. S. Driven by new launches, as you know, unlocks it. And Illumina is also doing well. But we don't provide any product wise revenue and growth at this moment. Sir, any product in this quarter particularly where you saw some impact which could have affected the growth this quarter? That's what I said in Yes, the go ahead. Sure. Kierke, I can comment on The U. S. As I shared in my comments. We do see seasonality with Levulan, product Brexin and Keratosis. So as I had shared previously, we did see that seasonality this past quarter.

15:46 We would expect to see similar next question I have on semaglutide. It is quite visible that SEMA could become a meaningful revenue driver for us both in India and ROW. In light of this, I just wanted to understand our preparedness of the supply chain, how much supply we have been able to secure in terms of plans for the full year of FY 2027? Thank you so much. I will join. Yes, semaglutide now, as we are selling in India from March 26 onwards. South Africa, we got approval last week and as Alok said, we already commercialized the product. And now we are preparing for the launch in Brazil through our partners.

16:33 And I'm hopeful that we will meet the market demand. So we are well prepared for this launch. We have API manufactured in house formulation also we do in house and we are tied up with all the people who are supplying the components for device. So I think we are well prepared to commercialize this opportunity in South Africa and Brazil. And India, as I said already, we are number two players among the all generic players. Thank you. Your next question comes from the line of Damayanthi Thirai with HSBC. Please go ahead. Hi. Thank you for the opportunity. My first question is on gross margin. So very strong trends, and this is despite loss of the revenue mix sale.

17:28 So in your opening remarks, you indicated product mix is the main factor to drive gross margin. So if you can elaborate a bit, like, which regions or which segments are really driving the growth? And are these levels sustainable? Thank you. Okay. As I was mentioning, we have seen growth mainly driven by product mix. We've seen good growth in our Branded Generics business as well as our Innovative Medicines business. Both of these have resulted in a healthier margin profile for the quarter. So on a year on year basis, does contribution went up from both branded generics and Innovative Medicine at the gross profit level?

18:18 Yes. The share of business to the overall revenues have gone up. And therefore, you would see the reflection also coming in the gross margins. Okay. My second question is on your R and D spend. So we understand there is variability quarter on quarter, but how should we look at the spend on a full year basis? And you have given the pipeline as well and indicated 30% is for Innovative Medicines. So where is the rest 70% spend happening? Yeah. That's my second question. No. I think it's a time gap between what you call stopping some of the trials and starting some of the new indication trials.

19:23 So I think don't look at the R and D spend this quarter. We have already guided for the annual number, and I think we should be able to meet those numbers. Okay. And the remaining 70% spend is towards? That would be generics as well as products for India. Okay. I have more question. I'll get back in the queue. Thank you. Thank you. Thank you. The next question comes from the line of Kunal Damesha with Macquarie. Please go ahead. Hi. Thank you for the opportunity. First one for rate con on Lexalvy and unlock it.

20:11 While it has received good response from the prescriber, how is the access aspect of these two molecules moving on? Let's say, where would you want to be versus where you are currently and how long this journey would take from improving the formulary access? Yes, great question. Maybe I'll start with Lexalvy because the access is different given the different kinds of products that we have. So from a payer access, which is what's most important for Lexalvy, we continue to grow. In fact, we added an important plan just this past quarter and improved the overall access. We do already for Lexalvy now have the majority of the covered lives available to us. Unlocked is a bit different because it's primarily administered in the health care setting. So there, we're very focused on formulary access at the cancer centers as well as the large integrated delivery networks within The U. S. And similarly, we have progressed quite rapidly actually in terms of getting the product added on those formularies.

21:17 I think really in recognition of the differentiation that the clinician see, it's a different mechanism of action. And so you have this durable efficacy, but what's quite interesting about Unlocksit is you don't see the typical immune mediated adverse events, particularly the grade four and five, which is why the product is being added to formularies. Rick, just for the understanding for enoxate, who is the decision maker amino? Is it doctor who makes the decision or is it the cancer center which will have amino few PD-one or PDL-1s on their formularies and then doctor needs to prescribe from that list? How does it work?

22:04 It's a bit of a combination. In most of the centers, there is a formulary, but that formulary is heavily influenced by the clinicians and what products they want to use on the formulary. So we're working directly with the administrators of those institutions as well as oncologists so they can ensure they have access to the product. And and, again, this would be Medicare Part b heavy. Right? Because this is a... Like, this is generally seen in aged individuals? It is. It's a Medicare Part b product. Sure. And so we have we have recent understanding I should add, though. We also have good commercial coverage as well. So but yes, due to the age of the population, they tend to be Medicare beneficiaries and because the product is infused, it is a Part B as in boy product.

23:00 Sure. Second question is for Matt on other expenses. I think we had suggested that other expenses would come down and it has come down on sequential basis. But from here on, how should we look at for the rest of the year, especially with the lens of now unlocks it and XLV, probably the launch costs are behind us. So yes, how should the progression happen in the other expenses? So the other expenses have two, three components in it. One obviously is the launch costs that we had indicated early on last year for these two products, which is Lexalvy and Unlocksit. But during the year as we mentioned, the products in the initial years as they go through the commercialization, there would still be certain costs and we need to continue to incur that.

23:56 The second one we should also be aware is that there is ForEx element that is also contributing to the expenses last year to this year when we translate. I think that's something that we need to bear in mind. And in the current quarter, just as you would have heard us a little while ago, the R and D expenses have tracked a bit lower. That will get normalized in the coming quarters. I think we'll need to look into all these key aspects as we analyze other expenditure. Ma'am. I might just add a bit from The U. S. Perspective since we're in the middle of launches. I think it's a bit of a misnomer to think there's a onetime expense on launch and then that expense goes away. It's a sustained investment to ensure you have a successful launch.

24:51 So, I think the understanding was like some part of the launch expense would continue, which is what you are referring to, right? Correct. That's correct. Okay. Okay. Perfect. And lastly, the overall top line growth guidance, we have suggested for high single digit growth versus this quarter. We have done almost 11% kind of a growth. So do you see an upside here from the full year perspective? Or we will stick to the high single digit growth guidance as of now? I think we should stick on to the high single digit growth for the full year. Also, we should be little mindful of the exchange related impact that will come across all the line items in the P and That should be overall positive, right? The translation effect would be positive on the revenue growth?

25:49 Right. It would be positive. Then is it conservative? Obviously, it is positive, but we have to see how it translates for the rest of the year. Therefore, I would suggest that we should look at holding on to the overall guideline that we have shared with you earlier on. Sure. I have more questions. I'll run back the team. Thank you. Thank you. Thank you. Your next question comes from the line of Neha Mankuria with Bank of America Securities. Please go ahead. Neha, ma'am, we are not able to hear you. Neha, ma'am, we are not getting any audio from your line.

26:48 Ma'am, we could hear you now, but the line was breaking a lot. Okay. Let me dial back. Ma'am, we can hear you now. Good now. Okay. Thank you so much. Rick, on The US generic business, there seem to be a very sharp step down in revenues. Just, you know, roughly, if I look at the numbers, I know you did mention some additional competition in certain products. Is that the only reason for the sharp decline in The U. S? Is this the new base for The U. S. Business U. S. Generic business? Yes. The largest part of the decline is lenalidomide. No. I mean, quarter on quarter? Slight decline based on the base business due to competition on a few products. But, I mean, year over year, it's definitely levonilamide.

27:43 All right. How do you estimate this from here? I mean, I know we've been launching products, but, you know, we really haven't seen too much traction there. So when do you think we start seeing the U. S. Business turn the corner and actually contribute more meaningfully to growth? Well, I think we do continue to see both Lexapia and Unloxac contributing to our results. As you know, we don't give product wise specific targets. But as I said before, I think if you look at the inputs of number of prescribers, if you look at the market research and what we're hearing back from clinicians, all of this gives us very strong confidence in both of those two products.

28:29 No, sorry. I was talking about The U. S. Generic business here. Sorry. Oh, I'm sorry. Yes, we did we just launched five new products, which, of course, will contribute to growth this past quarter towards the end of the quarter, and we have new launches this quarter as well. Neha, we are not guiding to the growth for specifically growth. Understood. Understood. That... That's clear, Abhishek. And my second question is on the emerging market business. I think in the last two quarters, you know, if I were to look at the USD growth, they were pretty strong, like high teens, 20%. This quarter seems to be 4%. Is there any timing issue in supplies or anything that I need to be cognizant of in the quarter? So I think emerging markets, I would characterize the impact as a combination of both the geopolitical issues and difficult macroeconomic conditions in certain countries.

29:44 Sorry to interrupt. Neha, ma'am, your audio is breaking once again. Yes.. Ma'am, still the audio is not coming clearly. If you can repeat the question once again. Thank you. Alright. Thank you. Ma'am, you can rejoin the queue once again. Thank you. The next question comes from the line of Shashank Krishnakumar with MK Global. My first question is again on The U.

30:34 S. Generic piece more from a strategy standpoint. Most of our global generic players as well, when they've made this transition from some part of their specialty R and D has also been funded by The U. S. Centric piece. I think in our case, it's the strong domestic franchise, which is doing a bit of that heavy lifting. But given that we're still continuing to invest in generic R and D, we have 100 plus ANDAs. Can this business again go back to a stage where we can start generating cash flows and potentially this business could also contribute to some of our future growth drivers? Just trying to understand how you are looking at it. I understand we're in the middle of an adverse regulatory cycle, but how are you looking at a sustainable turnaround in this business? When can we sort of expect that?

31:26 I think what you're seeing, because we split the businesses into different geographies, but many of the products that we also registered for The U. S. Are also sold in other geographies, like approval of semaglutide in all the geographies. It's because that's being developed for The U. S. So I don't think that when I look at our overall investment in R and D, we're not able to leverage this currently in The U. S. For many products. But otherwise, I think we are creating a basket of products, which will help us continue to grow globally. Got it, sir. And second one on Lexelvy.

32:17 I think we've mentioned in the past that we could potentially look at other indications which other JAK inhibitors are also targeting. I think incrementally, we're also seeing data. I think one of our competitors has seen positive data in Vitiligo as well. So when are we planning to sort of also try and target some of these other indications? And is the addressable market size also within these indications as meaningful as alopecia is, for instance? How are you looking at attacking some of those indications, like I said? I think Lexelvi is a very, what I would call, good product in terms of its ability to significantly down regulate some of the important cytokines, which are net what you call involved in multiple autoimmune conditions.

33:17 So we have to prioritize and identify areas where we can differentiate and register the product where when we come to the market, it's not very competitive. So if we whenever we initiate any study, I think we will keep that updated and we will keep people updated about the progress of the disease. So both Lexalvy as well as Anoxic are potentially important opportunities for us to expand the current indications. I might just add, we do we are conducting in The United States investigator initiated trials, and those, of course, can inform what Mr. Shingway just said.

34:18 Our next question comes from the line of Vinod Patti Parampal with Ilara Capital. I'll start with specialty business. The revenues, we launched two big products in the last six to nine months. But if I look at the global specialty revenue over the last three quarters, it has been flat or even slightly coming down. These two are pretty big products, big product launches. So what am I missing here? Or is that the kind of ramp up you expect?

35:07 So Rick, you're responding or? Yes, I'm happy to respond. So both of these products are still pretty early in their growth curve, including an oncology product that just launched a few months ago. So I think give it time to be able to see the larger contribution. But we do continue to see good growth across the rest of our portfolio. I think for this quarter, as we mentioned, at least with one of our products, we do have seasonality, which is having a bit of an impact on the growth rates. But other than that, I think we have seen generally pretty strong growth out of the rest of the portfolio. Understood. And just a repetition question on the generic part of the business.

35:54 To one participant, I believe you mentioned that there is some cyclicality in the business, which led to a down quarter compared to the March quarter. At the same time, you also mentioned to somebody else that there were competitors, extra competition in some products. So do are both these reasons? Or is one more important reason? Let me take that, Rick. I think we know there are two different things we're talking about. The seasonality was on Q o Q basis for Levulan, not to do with generics. And Y o Y comparison of was basically the additional competition factor that we gave. Understood. So there is no cyclicality in the generic side of the business?

36:45 No. Sorry, if I can add one bookkeeping question. You know, like, the other expenses that comes down to the depreciation and optimization cost that comes down. So I'm trying to have... The last portion of your question was not clear, Vinod, sir. If you can repeat it once again. Yeah. Is is my voice clear now? Yes, sir. This is much better. Thank you. Okay. Like, the other expenses have come down q o q compared to March quarter, the depreciation and amortization cost have also come down compared to March quarter. Is there any particular reason? And what can we expect going forward? There is no specific reason for this.

37:35 Okay. Thank you. Thank you. Your next question comes from the line of Saiyan Mukherjee with Nomura. Please go ahead. Yes. Thanks for taking my question. So from the domestic market, we have seen good growth in the recent past. If you can explain what's driving that? And also on semaglutide, various reasons being forwarded for some sort of a slowdown after the initial spot that we have seen. How are you seeing that market and opportunity? And the dynamics in India versus some of the other emerging markets that you are launching, how do you read that? Is that very different? And you can give any comments based on the experience so far?

38:29 Sure. I think I will answer the first question. You're talking about the growth of India business. So I cannot pinpoint only to one thing which is driving the growth. It's like all the business units are doing good. And we are also focusing on generating on new prescription and brand building. So the entire part of the business and all the therapy areas are doing well. We also you also know we did a field force expansion in the past, and that is also helping us to grow the business in Tier two, Tier three tiers. So all put together, I think all of these things are helping us to grow better than the market currently. Coming to your second question on semaglutide, and as we said in our readout also, we have become number two among the generic companies.

39:20 And here also, our idea is to continuously grow above the market and gain market share. I don't know what you are referring to slowdown. I think there were some article about semi gloated generics inventory being increased in the market. But as far as SUN is concerned, I think we are doing well both on a prescription side and also on the value side and the unit growth also. So we see this is a very exciting and important opportunity. And also we have a novel treat, which is available in a format, which is auto injector, which is also very unique format in terms of use by the patients. And there are a lot of doctors and patients, are finding it quite user friendly.

40:07 Right, sir. And any comment on the emerging market opportunity, any dynamics there? Yes. The question was on the semaglutide because you got approval in Brazil, South Africa. So how are you seeing the opportunity in emerging markets? I think to be honest, I think a little premature to be able to comment because in this scenario, there are there's other companies other generic companies don't get approval, the opportunity is certainly much more attractive, but I highly doubt that to be the case.

41:05 So our focus will be in ensuring and getting the product to the market and doing the best launch possible. Okay. Just one other question on enloxacitinib and Lexilevy launches. It appears from your comment that initial traction is good. You're getting formulary access as per expectations. But in terms of the revenue contribution, it might not be very significant. So for both these products, what's the time line for we've seen traction in revenues? What the two these are two different products. If you can guide us in terms of how long you think it takes for really the traction on revenues to come through?

41:55 Yes. We don't provide product wise guidance that way. I would just say we expect to continue to see growth based on all of the indicators that we have today, whether that's increasing access, whether that's increasing the prescriber base, whether that's increasing repeat prescriptions. So we do anticipate we'll continue to grow. But in terms of giving you a specific timeline, we're not in a position to do that at this time. And is it like, like, one product like Lexilvy or Onloxate, is the dynamics different in terms of how quickly the traction can evolve? Or both of them is kind of more or less takes would take equal amount of time to get the traction? I think they're quite different products, and they are for quite specific patients as well, right?

42:43 So there is a training component, there is a patient identification component, and then there's adding two new treatment protocols component. But I would say they're similar in terms of the level differentiation and what we've seen from the market research. So for instance, on Lexalvy, when we do market research positions, they clearly see the benefit of the speed and the overall efficacy versus our competitors from a market research perspective and similar with enloxacin, particularly in terms of both the durable efficacy. We mentioned that we had shared new data just at ASCO this past June as well as the safety profile.

43:29 So all of those give us good reason to believe that the growth will continue. You may press star and then one to ask a question. Your next question comes from the line of with Goldman Sachs. Please go ahead. Yeah. Good evening. Thank you for taking my question. Just the first one on the domestic piece again, 16% growth. If you could kind of disaggregate that into just the split of the growth in volume and new price new product and price as well, please?

44:18 Sure. I think as I already told in the readout and also here, I mean, we are growing higher than the market in terms of volume and new products. So if you bisect the growth into price growth, volume led growth and new product growth, so 50% of our growth is coming from volume and new products. So it is quite simply which also indicates that we are generating prescription in the marketplace, which is way ahead of the IPM growth in terms of volume. Perfect, sir. So just want to also get your view on what is happening to the industry or your theory we have seen a step up in growth for the industry as well, right? And it's not only on new product side, but we're also seeing the base business kind of volume growth also improve.

45:10 Any theory that you have? I know it's probably just maybe one or two quarters now, but your sense of what is driving higher industry growth as well? I mean, I saw the particularly in the month of June, the industry growth was much higher than what it used to be usually, but very difficult to point out where this growth is coming from and whether it's sustainable going forward. Got it. Helpful, sir. Just a second question on the comment about the tax rate, the ETR being higher. Ma'am, is it now like stand alone SUN 28, 29% is what we are assuming? Sorry, I missed the absolute percentage.

45:56 So we don't give stand alone numbers. What I discussed about was primarily the control number for Sun. And given that we have presence in various geographies and the tax rates in each of these geographies could be different, the overall ETR for this quarter was about 27.8%. And we expect this range to sort of continue for some time until we have the Organon transaction completed. Our endeavor, obviously, would be to look for areas to optimize the ATR, but we should look at this as a range.

46:46 Helpful. Thank you and all the best. Sure. Thank you. Thank you. Your next question comes from the line of Surya Narayan Patra with Philip Capital India Private Limited. Please go ahead. Yes. Thanks for the opportunity. My first question is on the global development business. If you can talk about the progress that you are replacing on the global industry business outside of The U. S. What is it? What is the current share in the overall mix currently? And what is likely to be given your aggressive activities that is visible by launching the specialty products outside of The U. Yes. We don't provide the breakup, Surya, for the innovative business by geography. Okay.

47:41 But the point that I was trying to drive is we have seen some moderation in the growth. So I was thinking that with the newest contribution or newer revenue stream contributing from the non U. S. Market, the growth should have been better. So that is why. Both U. S. As well as international markets continue to grow for us. We are not seeing a challenge in terms of overall Innovative Medicine growth. So yes, I think Okay. My second point is about, let's say, our pipeline, the innovative medicine pipeline. The IMM2, as we are talking about part looking for partnership.

48:30 So any thought process here? Just curious about is that, okay, if we are having a portfolio successful in the various market, Any reason that we are thinking it for the MM2 or partnership? As you know MM2 is a potential product which can be used for orthopedic pain, knee joints basically. And these are the products which will be prescribed by orthopedicians and maybe rheumatologists, I mean that's the kind of segment of doctors who can prescribe the product. Today, if you see our U. S. Business, we don't have any commercial presence to cover these doctors. And that's why we thought that it is good for us to apply this to a partner who has a good presence in this therapeutic area.

49:23 Okay. Sure. Just one observation from my side, In the last few quarters, what we have observed that the people cost is rising ahead of the revenue growth what we have been reporting. So and in recent past also, we had mentioned that we have no major plan of pitfalls expansion or something like that. So what is leading to this kind of growth in case for employee cost versus our revenue growth? So let me put it in a slightly different way. There are two or three elements that actually impact the people cost or the salaries and comp and then, right? One is the year on year increment that you get to see in the first quarter of every financial year.

50:13 So if you do it year on year, there is an annual increment that normally comes in an impact. Second one is also committing to additional field force that we have to employ, especially for our two new launches, which was not there last year, but it is there in current year. Similarly, we've also seen some field force increase that has happened in some of the other markets other than U. S. As well, where we are promoting our innovative medicine products. The third one is also a bit of the ForEx impact that would also show as a higher cost this year. So if one were to look at it, the reality is there is going to be a merit increase that happens.

51:07 The additional field force especially for innovative medicines, which is necessary for growing the new products and ForEx is not in our hands, depends on all the market needs. Sure. Yes, that was helpful, ma'am. Thank you. Thank you all the best. Thank you. Your next question comes from the line of Foram Parekh with BOB Capital Markets. Please go ahead. Thank you for the opportunity. My first question is on ROW market.

51:52 In USD terms, we see it constant around $218,000,000 for the second quarter in a row. So I assume this could be because of the Middle East war. So until the sustainance of this war can be, expect this kind of run rate to continue for the upcoming quarter? Yes. Foram, ROW is flat in dollar terms, but we do not give forward guidance for any particular. You should look at our overall revenue growth guidance that we have given for the year for the company. Okay.

52:38 My second question is on the emerging market. So yours... In the opening remarks, it was said that innovative products are doing good globally. However, our growth rate has come down to 4%. So can we assume pricing pressure in the generic business? If you can give some color on the generic business of the emerging market. Yes. So I think I would say a large majority of the emerging markets business is branded generics.

53:31 And while there is a bit some element of pricing pressure, I would not say that would be the driving force. Sure. And last question, if I may add. So the last one is on the domestic side. I see that the diabetes therapy growth rate in the IPM has increased to about 15% post the GLP launches. So any color here would be helpful that how should we see the diabetes therapy growth or, you know, once the GLP sales is in the base for the next year, how should we see the diabetes therapy growing in the IPM?

54:22 I think how it will grow in IPM is difficult to comment, but what I can say, there are a lot of new products being launched in last two, three years, other than GLP-one. I am saying like GLP-two inhibitors. So the diabetes as an area, there are good number of new products being launched and as an individual product and also in the combination. And as you know, the incidence of diabetes also in India is increasing. So all of these factors are helping the market to grow. But how much it will continue to grow in IPM in coming quarters? It is very difficult to comment. Sure. No problem. Thank you. That's helpful. Those were my questions. Thank you. The next question comes from the line of Abdul Pajev Gurrenwala with ICICI Securities. Please go ahead.

55:12 Yes. Hi, sir. Thank you for the opportunity. Just one question from my end. In terms of the outlay, what we had previously talked about on the two innovative medicines for The U. S. Market in terms of the marketing costs. So when we are planning that kind of an outlay, typically, what is the kind of payback or the breakeven when we are kind of budgeting when we kind of outlay that kind of a spending in our numbers? So we specifically don't comment on this. However, as we look into any asset when we want to do in licensing, all these costs are factored in part of the overall business case.

56:06 Okay, sure. Thank you. Thank you. Your next question comes from the line of Vishal Manchanda with Systematics. Please go ahead. Yes. Good evening, everyone. One, I have a question on unlock set. So can you provide what share unlock set would have in terms of the various PDL-one inhibitors among the new patients that get into the therapy? I'm not in a position to do that right now, partially because from a claims data perspective, the claims data is lagged. So it's always going to be a few months behind what is reality.

56:55 Okay. And second, on Aurumzo, do we are we seeing any supply issues? Because what we see is a decline in the prescription on a Q o Q and Y o Y basis. So any supply issues there? No. And I don't believe that's accurate in terms of year over year as well as Q over Q performance for Odomo. Got it. Okay. Thank you. Thank you. The next follow-up question comes from Kunal Damesha with Macquarie. Please go ahead. Hi. Thank you for the opportunity again. One for Kirtipai on domestic market.

57:44 Would you internally be tracking prescription data for some of the key therapies? Of of course. We'll have prescription data. That's what we said in MSRC. We are number one in 12 therapy areas. So we track both IQVIA, IVACs and the prescription data from various agencies yes. And based on that prescription data and the value growth you would have in some of the key therapies, are those kind of aligning very closely in recent months? No, I can talk on SUNPHARMA. That's what I would say, like I just alluded to the volume growth. So the way you should look at it is if there is a volume growth, then there is a prescription growth which is coming.

58:34 So our volume growth and the new prescription coming from new product, it's 60% of our total growth. 40% from volume, 20% from new products. So that clearly indicates that we are growing in a prescription. Kunal, we look at this variance what you're suggesting and for the last few months it's been within the normal bounds. Okay, perfect. Thank you so much. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Doctor. Rupeshik Sharma for closing comments. Thank you everyone for joining us at this late hour. If you have any questions which remain unanswered, you can reach out to the Investor Relations team. We'll be happy to take your questions.

59:27 Thank you once again and good night to all of you. Thank you, members of the management. On behalf of SUNPHARMA, that concludes this conference. Thank you, everyone, for joining us, and you may now disconnect your lines. Thank you. Thank you. Thank you.