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Ajanta Pharma Ltd
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Ladies and gentlemen, good day and welcome to Ajanta Pharma Q1 FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Yogesh Agrawal, Managing Director of Ajanta Pharma Limited. Thank you. And over to you, sir.
Thank you. Good evening, and welcome to all of you. With me, I have Mr. Rajesh Agrawal, our Joint Managing Director, and Mr. Arvind Agrawal, our CFO. I'm sure all of you have received the bonus shares in their accounts.
Coming to the results, they are already there with you, and I'm happy to share that the quarter witnessed a strong growth momentum across all our major markets of branded generic business.
I'll take you through business-wise performance for the Q1, along with the comparison of previous year for the same period. Let's begin with the emerging market branded generic business, which comprises of Asia and Africa. In Asia, during the Q1 2023, our sale was INR 240 crores against INR 165 crores, posting a very healthy growth of 45%. Just to caution, the growth appears a bit elevated, primarily because of the slightly lower base in the Q1 2022, which was impacted because of the second wave of the COVID, which created some disruption at that time.
Coming to Africa. During the Q1, our sale was INR 168 crores against INR 125 crores, again, posting a very healthy growth of 34%. Here also similar caveat. But the like-to-like in the earlier in Q1, that was slightly suppressed because of the COVID disruptions, which make this current Q1 looks bit more elevated.
But overall, the branded generic business of Asia and Africa contributed to 43% of the total revenue during the Q1, and our exposure to these markets were INR 408 crores against INR 291 crores, posting a very healthy growth of 45 -- 41%, sorry, over previous year for the same period. We continue to stay laser sharp in these markets to identify the gap and the opportunities. And we continue to execute very clinically so that we can post superior growth as compared to the markets. During the quarter, we launched 10 new products in Asia and Africa across various countries.
Let's move to the U.S. generic business. U.S. business contributed 19% to the total revenue during the Q1. We registered the sales of INR 179 crores against INR 168 crores, posting a modest growth of 6%. This modest 6%, growth of 6% was despite the previous price erosions, which we have seen in the [ U.S. ] and also in absence of any new product launches.
We continue to have 39 products on the shelf. During the quarter, we filed 1 ANDA and also received 1 tentative approval. At the end of June 2022, we had 20 ANDAs awaiting approval with U.S. FDA. Though our filing for the quarter has started on the little slower side, but we have a number of products at advanced stage of filing. So we will see the accelerated filing in coming quarters, in Q2, Q3, Q4. And with that, we are still aiming to file 10 to 12 ANDAs in the financial year 2023.
Coming to Africa Institution, this business contributed 8% in the total revenue during Q1. We registered the sales of the INR 77 crores against INR 54 growth, posting a growth of 44% over previous year same period. As I've been mentioning earlier, the institution business remains unpredictable. It depends on the funds availability and the requirements of the procuring agencies.
So with this, now I hand over to Mr. Rajesh Agrawal, our Joint Managing Director. He will take you through our India business.
Thank you. And over to you, Rajesh.
Thank you very much. Good evening to all of you. Let me discuss some of the key highlights of India business with you now.
India business contributed 30% in the total revenue during Q1 FY 2023. Sales stood at INR 279 crores as against INR 229 crores, posting a healthy growth of 22% during the quarter. This includes sales from trade generic of INR 33 crores against INR 27 crores in previous year same period. We launched 7 new products in Q1 FY 2023, with 2 products being first to market.
Our performance has been satisfactory, and it has been on the back of new product launches, market share gain, and price increase. As per IQVIA MAT June 2022, we have posted healthy growth in all the therapeutic segments and exceeded industry growth rates across all therapies. We have 3 of our brands appearing in top 500 in the IPM now.
Again, as per IQVIA, we improved 1 rank to rank 28 in June '22 from being 29th rank in March '22. We are glad to inform that we have also improved our ranking within therapeutic segments as well, by 1 rank in cardiology and dermatology and by 2 ranks in the pain management segment over the last year -- last quarter.
With this, I will now hand it over to Mr. Arvind Agrawal, CFO, to take you through the financial performance. Thank you, and over to you, Mr. Arvind.
Thank you very much. Good evening to all of you, and a warm welcome to this earning call. For ease of discussion, we will look at the consolidated financials and provide year-on-year comparison. Let me take you through key financial highlights for the quarter. It was an excellent quarter with 27% growth in revenue, spreading across all the market. Total revenue stood at INR 951 crores against INR 748 crores. Against the guided material cost of 25% to 26% Q1 FY '23 raw material costs [ saw at ] 29%. The reasons for the same are, one-time inventory write-off of 2% due to expiry, increase in raw material and packing material cost due to global inflation impacting about 1%, U.S. price erosion is about 1%. From the above impact, we will be able to recover 1% from the price increase we have taken across market and INR depreciation against USD.
So going forward, we estimate the cost of goods sold to be close to 26% in that range. Coming to other expenses, we saw significant driving in the export freight cost, pre-COVID, our freight costs have been around 6% to the sales, which got escalated to 8%, translating to almost INR 14 crores adverse impact for the quarter. This external factor, beyond our control, have adversely impacted the profitability to that extent.
R&D expenses was at INR 54 crores against INR 45 crores for the quarter. R&D expenses stood at 6% of revenue, which will continue to be at this level. EBITDA for the quarter stood at INR 222 crores against INR 220 crores EBITDA was -- INR 220 crores last year. EBITDA was lower in the quarter at 23% mainly due to the above factors mentioned by me earlier.
Other income stood at INR 33 crores in Q1 FY '23, mainly contributed by ForEx gain of INR 28 crores. Income tax stood at 21% for Q1 FY '23 and expected to remain at similar level during FY '23. During the quarter, PAT was at INR 175 crores against INR 174 crores, up 1% due to reasons mentioned earlier. PAT for the quarter was at 18%.
We incurred CapEx of rupees INR 43 crores in the first quarter of FY '23. CapEx, including maintenance CapEx for this year, is estimated to be around rupees INR 200 crores.
With these highlights, I open the floor for the question-and-answer. Thank you very much.
[Operator Instructions] The first question is from the line of Tushar M from Motilal Oswal.
Sir, on this Africa branded generics, there has been a very robust growth for now past 4 quarters at least. So if you could just elaborate? And this has been much higher than the industry growth per se. So what is driving this? And how sustainable is this growth over next 12 to 18 months?
So no doubt we have executed well in Africa. The combination of increasing our market share from the existing product, existing people, launching of new products and successfully taking the market share from there, also expanding our sales price there. The combination of that, we've seen the -- a healthy growth last year and the current quarter also. But as I mentioned in my opening remarks, this quarter growth looks bit more elevated than otherwise would have been because of the low Q1 of last year. Without that also we would have posted, I think, 20%, 25% growth or higher than that. But going forward, I think we can expect the growth to remain in the mid-teens is what we are looking to give the guidance.
Next, a number of [ advances we have ] increased in the [ beginning ] and to what level they are now?
Sorry, I did not hear you increase in what?
Number of [indiscernible] on the field in applicant?
So being a proprietary kind of information, we are not giving out the regional level field size. But in general, we have seen the growth of about 8% cost in the field size compared to last year.
And sir, if you could just repeat the raw material-related one-time inventory write-off. If you could just repeat that statement, please.
Sure. Yes.
Yes. So Tushar, one-time inventory write-off had an impact of about 2% on the inventory costs, which is due to basically expiry in the different market.
Okay. And then we have the raw material price increase due to global inflation, that is about 1% and U.S. price erosion is about 1%. So total about 4% impact is there compared to what we have indicated earlier, 25%, 26% indication, which was given earlier, I think there is an increase of about 4%. And out of the onetime inventory write-off is 2%. So that will not be there. And other 2 which are there. Out of that, I had mentioned, we should be able to recur about 1% from the price increase, which we have taken, where we will get the full impact during the year.
And dollar?
Yes, as per the dollar effect.
Got it. So just as a clarification, you highlighted 26% to be the EBITDA margin to look for FY '23 full year?
Yes, you can say so. I think 26%, 27%. That is the range, yes.
[Operator Instructions] The next question is from the line of [ Harsh Beria ], a professional investor. [Operator Instructions] Due to no response, we'll move to the next question, which is from the line of Bino Pathiparampil from InCred Capital.
Just a question on the U.S. business. The price erosion, how are you looking at it, say, the last quarter versus the quarter before that? And what is the latest? That is what are you seeing right now versus what you saw in last quarter? How is it progressing?
So I think big price erosion happened in the earlier quarter, and thereafter, it has stabilized. So we have not seen price disruptions in the current quarter. But whatever price erosions has occurred in the previous quarter, that effect will continue, and which is what CFO has mentioned, I mean that 1% impact we are saving in the costs, which has got elevated. But for now, the price erosions are kind of tapered down significantly. They have quietened, We are estimating that probably the price erosion should come back to the level of 5% to 8%, which was a normal rate also for the price deflation, which will happen.
Got it. Just one more question on the U.S. market. You have this product filing generic version of Chantix. Any update on when you expect the approval for the product and launch?
Unfortunately no, I don't have a date I can share with you. We are still working with FDA to seek the approval for that product. So there are some technicalities, which are involved. Let us see, I mean, we are at it. We believe that it's a good decent opportunity. Still I don't have a date, which I can share with you that how close we are for the approval on that.
The next question is from the line of Nimish Mehta from Research Delta Advisors.
Aside from...
Sorry to interrupt you, Nimish. [Operator Instructions] The audio is not very clear.
Is it better now?
Yes, it is.
Yes. So my question is actually related to another U.S. product filings, Vimovo, which is naproxen-esomeprazole magnesium. Any idea, again, when can you launch? Because I understand this could also be a decent launch. And if I'm not wrong, you can launch upon approval. So any idea about the timeline would be helpful, yes.
Yes, so for that, I can share with you. By and large, the feedback we have from the FDA is that the ANDA review is complete for that. We are just awaiting for the facility inspection. They have said that the approval can happen after the facility. So now we are waiting for U.S. FDA to announce when the inspection will happen.
I see. So it will be in this year itself, the launch?
We hope so. We hope so. I think it's just linked with the FDA. Now we have seen number of pre-inspection approval happening in the industry. You must have also seen number of companies are getting the inspection. We have number -- a few times written to FDA saying that we are awaiting and we are ready for the inspection. So as they have started with other companies, I'm sure we must be somewhere on the roster there. So hopefully, sooner than later, they are announced. It's primarily just waiting for the inspection now. Once the inspection is through, we are hopeful that we should be able to secure the approval for the product then.
Understood. And lastly, if I may on Trokendi XR, which is topiramate, I understand the FDA would be launching in January next year. Are we likely to launch soon after that as and after [ today ] exclusivity?
We have a tentative approval on that. I don't have top of the mind the launch date on that. I think maybe our team can circle back on that.
Okay. But do you think it is an interesting opportunity?
Yes, yes, of course. Of course, I think it's still a good product to have. Agreed. At least we are glad to have the TA for that. Otherwise, some other products, they got linked with the facility inspection. So...
Right, right, which is why the question.
I just don't have a date on when the -- we have the date for the launch, but we are very close to launching it.
The case is still ongoing, right? It is still not settled, if I'm not wrong.
I am really not -- I don't have the answers tip of my tongue to give you on that. But the fact is that we have done a TA, so there's no holding back I think the date, when the exclusivity, other back-end inquiry will happen, we'll seek on the approval and probably we'll be able to get the product. But having said that, I think, let me just reconfirm with my IR team and then we'll circle back to you on the details of that.
Okay. So overall, with these kind of opportunities at -- can we say that the U.S. generic business can see significant growth in next 2 years or so? Because these are all important and low-competition opportunities.
Yes. So that has been our outlook traditionally, also our current product portfolio. So if you see, we've been selective in identifying the products which are complex as some other barriers, maybe the bioequivalence barriers, whatever it could be. So we have some good products. Unfortunately, the approval got locked. Now hopefully, the inspection starts. So yes, we have some good products which we have already filed, and there are some good product which are at advanced stage of filing during the current year also. So they all can bring good value to the company.
The next question is from the line of Abdulkader Puranwala from Elara Capital.
So would it be possible to break the India's growth into volume price and new launches?
Growth, I think we have that breakup. We have taken the possible price increases. I will share the breakup with you.
Price increase we have taken is about 7%.
That is the contribution to the growth.
Yes. So 7% is the contribution to the growth. Then out of the total growth, 7% is price increase.
And 6% is the volume growth, and rest of it is the 3%, is from product launch.
Okay. So sir, for next year and FY '23, so what are we targeting in terms of new launches? And which are the therapies where these products would be launched or the brands would be launched?
For the rest of the coming year?
Yes, sir.
So coming to anti-diabetic and cardiology, that's where the cluster of launches are taking place across the industry because there are multiple new product opportunities, including our fixed-dose combinations. So we are also in the race to launch those products. So mostly, it will be tilted towards that -- those 2 segments.
And sir, my final question on the U.S. business. So when we mentioned about [ Chantix ] and couple of other products, sir, U.S. export price erosion, so if you could provide some color on how the margin profile would look like and just kind of growth visibility you would have into this business?
[Technical Difficulty]
Yes. So what was the question on the U.S.?
Yes. So my question was basically, as we have to look at the current juncture, how would EBITDA margins on the U.S. front look as compared to what they were a 2 to 3 years ago? And if you could also provide some color on growth on the U.S. front for '23 and '24 keeping in mind a couple of new product launches would also be -- on in the line for second half would be...
Yes. So we don't give out the region-wise EBITDA margins there, but naturally, you can very well assume, because of the severe price erosion, which last year was the -- it's been 15% to 18%, it has adversely impacted EBITDA margin on the U.S. business. So that is one part. And second, for the going forward, currently, we have some good product, which are awaiting approval only for the FDA inspection. 2 of them we already discussed earlier on the call. And there are some more products which we have filed. So now it's difficult to predict, but if we get the inspection and approvals, we could be launching some products in Q3.
If that inspection get delayed by a quarter or so, it could be in Q4. On the current business, current product, we are looking at the flattish kind of growth for the current year. Even if the growth is there, it could be in the low-single-digit, maybe 5%, 6%, without the new products. As and when the new product will come, it will add to the growth as well as to the EBITDA margin.
The next question is from the line of Rashmi Sancheti from Dolat Capital.
So just to follow up on U.S. business, what are the present -- this quarter we have not launched any product, but any pain oral product or any number of launches that we have planned for the next 9 months in FY '23?
No, as I said, I think currently whatever -- by tentative approval for advanced stage of review, they are all awaiting inspection. We have 4 products. FDA has told that the review is complete, they are awaiting the approval. So right now we don't have any visibility. So as I guided you, I think we are waiting for the inspection to happen to unlock the new product approvals. Without that, we are expecting to post a 4% to 5%, probably 5% growth in that vicinity. As and when the new products get launched, then that will add to the growth and the profitability.
Okay. And on basically India business, what is the guidance now for FY '23 and for FY '25? I mean, earlier we used to say that we would be doing around 12% to 15% sort of growth in India. But considering that this quarter was pretty high growth, what is your guidance for that part?
We continue with the original guidance that we have given, which is the mid-teens for the India business. Even though quarter 1 is exceptional growth that you see, high double-digit growth, but the -- let's not forget that Q1 last year was the -- base was quite low because of the second wave of and deadly wave of Delta. So some part of this growth is going to come off as we go along in quarter 2, quarter 3, which were quite robust last year also. So at this point, we would rather be a little bit more careful in giving a forecast. So we are expecting mid-teens.
And similar is for Asia and Africa branded business also, right?
Yes, you are right.
Okay. And coming to the EBITDA margin, as you said that the raw material cost, whatever 300 basis point more which we have seen in this first quarter, at least 100 basis point to 150 basis point is something which can come off in the subsequent quarters. And considering that quarter 1 was a low EBITDA margin quarter, you still expect in FY '23 we would do around 25% to 26% after resuming that quarter 4 is normally a very soft quarter for the company?
You are right, I think quarter 4 is always tough. And I think we should be able to take the EBITDA in that level.
So basically you are saying that the EBITDA margin would be in the range of 25% to 20% for this entire year?
Should be in that range, yes. 1% here and there is okay, but then that should be the range.
Okay. And what about FY '24? Are we expecting any normalization of next year?
Too far ahead to discuss. Right now we're focused on the current year, but we are seeing -- we're seeing the unprecedented times. So if the inflation cools down, as we have aforesaid in the opening, the freight has adversely impacted INR 14 crores in the quarter, so I think if all those comes down, then naturally it will get added to the EBITDA and the PAT.
Is there any focus on cost efficiency or anything which can lead to at least 100 basis point, 150 basis point improvement in FY '24? That is what I wanted to understand.
That is always the focus, and that is what we always try to do. The only thing is, there are certain external factors which are beyond our control, like the freight cost or the inflations, et cetera. That is where we don't have the control. But otherwise, whatever is in our control, I think we are 100% sure that we would like to ensure that the savings are brought to the business.
[indiscernible] question. There was a call on the talk on the topiramate also. Just wanted to highlight. So the matter is still under litigation and we don't have visibility on the launch of topiramate. I just wanted to share that across with all on the call.
The next question is from the line of Ayush Mittal from Mittal Analytics.
First of all, congratulations on a very good performance. Sir, I've missed the trade generic number. I'm not sure if that was shared in the call today. Can you please share that number for the quarter?
Quarter is INR 33 crores against last year. Previous year for the same quarter is INR 27 crores.
Okay. Okay. Sir, can you talk a bit about -- more about the segment? What exactly are we doing in this trade generic? And what has been driving the growth and what is the strategy going forward?
In trade generic, we are doing pretty much exactly the same as what some of the other companies are doing. We have -- these are all -- it's a push strategy that is used where it's being sold by the pharmacies. And the differentiator is, we are focusing more on the chronic segment in the trade generic. And we have been able to grow pretty well in the last years. We hope to continue the growth in the coming 2 or 3 quarters also.
Okay. Okay. And these products are in-house manufactured or are these outsourced?
It's a mix of both.
The next question is from the line of Kunal Randeria from Edelweiss.
Sir, on the Asia and Africa branded business, is there an element of channel selling here, so that there might be some lumpiness in revenue in the coming quarters?
Element of what?
Channel selling, stocking and the inventory, are they at the dealer level?
No, not really. Not really.
Okay.
We've guided for the remaining quarters also, we are guiding towards or mid-teens growth, so.
Sure.
I think what you are really trying to understand is that these higher growth is something, which may be because of the channel selling, but it is not so. Actually, in the earlier quarter, last quarter, as we mentioned earlier also, that it was the Delta variant quarter, where everything came to standstill. So because of that, we were very low. If you see our 4 quarters, that was the lowest quarter which was there. Afterwards, we picked up the numbers in these markets. So I think it is absolutely normal.
Got it, sir. That's helpful. Yogesh, you also mentioned that you expect the price erosion to sort of avert back to historical levels. It's very similar to what Teva also said in their call. So I'm just wondering what is it that is changing on the ground? Have the pharma companies said, enough is enough, now we can't sell below a certain point? Or what is changing on the ground?
What is changing is, I think the fact that during the COVID, when approvals were not coming, companies were under pressure to increase the business. So I think they were overstepping in trying to get the market share of each other competitors very aggressively, which is what we thought leading to the price erosion. So I think the industry has understood that this is not helping, in fact, it is hurting all the companies. I think that kind of awareness and sense has prevailed. So we've seen that undue hypercompetitive activity is a kind of normalized. And now hopefully, with that the assumption is that, it should come back to historical level price erosion. And hopefully, now the new products approval also have started too. We see the approval inspections coming for a number of companies. So that also, new approach will start to come in. So the pressure to increase the business on the existing products will also kind of produce a little more.
Okay. And just one more if I can squeeze in, Mr. Arvind. Arvind, from your annual report, I saw that your freight cost has gone up by around 30% annually in the last couple of years. So any other line items you would like to point out maybe, some of them which may not be in our control that have been sort of leading to higher OpEx?
I think, apart from freight, there is no other element, which is there. Normal inflations are definitely there in the costs, but not too much. Mainly, it is the conscious this year which we are taking in terms of enhancing our location to the branded generic business, so that may increase. Otherwise, I think it is absolutely normal.
[Operator Instructions] The next question is from the line of Ritika Agarwal from ValueQuest.
My first question is on -- sorry, what is the cash utilization of the venues or deployment that we think about going ahead?
See, it's very simple, because I think this is the thing which is going on for last 2, 3 years. We are looking for acquisitions. We are scouting for acquisitions. We are always looking at all the opportunities, which are currently in the market. So certainly, that is one area where we can deploy this cash. But other than that, I think our major CapEx is already completed. So there is no need there and there is no other major utilization of cash, which is going to be there in the near future.
Right. An acquisition in the domestic front is what we are scouting for?
Yes. Basically it is only in domestic market that India market, we are looking at the brand.
Right, okay. And just to confirm, you have mentioned your branded markets in Asia and Africa growth to be around 15% for the next 2 years?
Mid-teens I said.
[Operator Instructions] The next question is from the line of Tushar M from Motilal Oswal.
Sir, on the domestic formulation side, the increasing prices on the NLEM portfolio, will that get reflected 2Q onwards? Or there is some inventory still left in the system?
No, I think it has started to reflect in Q1 itself, and I remember we discussed this I think a couple of quarters ago. I had mentioned that we will take the full increase. So we have done the same. And it has started to reflect by the end of Q1 itself. Of course, we will see a more reflection going forward.
And there has been also talk about some, again, price cap, price regain in the Independence Day, some media news flow. Any comment on that?
I am only aware of it as much as you have information on only a media report that I have also read.
And just one last clarification, while you have already explained it, but just -- so the margins which you're guiding for doesn't include the opportunities like Chantix or Vimovo, right?
No, no, they are including those ones.
And any query pending for Chantix which we're working on and accordingly the product approval will come?
Yes, as I said, we are still in dialog with the FDA on the requirement they have given us, which we are furnishing them. So it is work-in-progress.
Okay. So any time you would like to do in terms of [indiscernible] to U.S. approval?
No, unfortunately, I don't have. But maybe not a quarter or 2, I think that is what I have visibility. But after that, how quickly it can come through, let's wait and see.
[Operator Instructions] The next question is from the line of [ Gagan Thareja from ASK Investment Managers ].
I hope I'm audible.
Absolutely, yes. Go ahead.
Sir, first question is around the Africa piece. If you could delineate the Africa branded business growth between the Franco-Africa and the Anglo-Africa segments and also give us a flavor of what's the growth in Anglo-Africa looking like, and what's the salience in sales of Anglo-Africa overall?
No, unfortunately, we are not sharing the data split at Anglo and Franco. But as you are aware that our bigger presence within the Franco-Africa, but both the markets, they are performing well for us, Anglo as well as the Franco, both are showing positive growth.
Okay. Likewise, could it also be possible for you to give us some flavor, if not quantitative, at least directionally, of the Asian branded generic markets, Philippines, Iraq, Jordan, and the CIS markets separately? Some idea of how you see them evolving for you over the coming 2, 3 years?
Unfortunately, I think we are giving this guidance on the continent basis. But again I can repeat the same thing. I think all the markets are performing well. So it's so blended. It's not that only one market is good. Maybe one may have slightly higher percentage than others, but all the geographies are performing well for us, all the markets.
As I have said in my opening remarks, we are staying very laser sharp focus in all these markets to identify the opportunity, to increase our market share, to bring new products, identify the gap, increase our productivity, increase the manpower. It's a constant battle every day. And that is what we are seeing the result. So we continue to remain optimistic about posting the higher than the industry growth in all these countries.
And is your sales in all of these markets driven by your own sales force? Or is there partially a distributor-led model and partially your own sales force? If you could give some idea about that?
So that's the good part about our business. All our branded generic in the exports also, they are all driven by us. So we decide the product. We decide the price. We decide the promotion. Distribution just does a part of distributing the product for a cost. So we are the -- we are able to decide all course of growth. So that is where the beauty is.
Okay. And on tax rate, if you could give us some guidance for this year and next year?
I think, this year, we have given guidance of about 21%, and that is what we should have -- even in this quarter also we have this almost similar percentage. For the next year, I think, will be difficult at this point of time, but I think we should see in this range only. It should be around 20%, 21%.
Okay. Sir, just one final question. In U.S., the FTC is investigating the trade practices of pharmacy benefit managers and the inspection is fairly comprehensive. Do you foresee this sort of changing the U.S. landscape from a pricing perspective in the years to come if the outcomes are adverse for pharmacy benefit managers?
It's a complex matter. Unfortunately, I do not have a view on that. But let us see. It's a big industry shift which we are talking about there. So how far -- and the changes are not easy to make, a lot of structural changes which are being talked about. So I think it's going to be interesting to see how this evolves and which way it settles. If there anything just happens, significant changes happen. But I don't have any view on that to share with you.
So if in the eventuality that PBM practices are sort of brought more in line with the customer needs because PBMs tend to keep the discounts that they get from innovator companies for themselves without passing it on. Do you see this in any way helping the cause of generic companies in U.S.?
I don't know from generic point of view, I would assume it would be neutral because ultimately we are competing with other generic companies. So how the channel hits the margin is a separate matter. So it would probably for the generic company would not have such a huge impact. Maybe for the brand companies, there could be some changes which may occur.
Yes, because some of the litigations which are ongoing in this regard also point out that generic medicine access to certain classes of patients was denied by the PBMs. And I think that's the risk what the whistleblower suit seems to indicate. So I was just wondering if there is any significant possibility that this might help to bring a generic penetration in a bigger way there.
It's a complex subject. I think it's difficult to discuss that on a call -- investor call.
The next question is from the line of Alisha Mahawla from Envision Capital.
Am I audible?
Yes, you are.
Sir, firstly, how much percentage of a portfolio is under NLEM?
About 12%.
12%, okay sure.
Of the India business.
Yes, yes, yes, sure. And the step-up in revenue that we've seen in the Africa business, is this sustainable because this is a kind of quarterly run rate that maybe we can currently work with?
As I mentioned earlier, we are looking at mid-teens growth going forward. For the quarter, the growth was slightly higher because of the last year corresponding quarter slightly low due to the COVID disruption. But we are optimistic to outgrow the industry. That's for sure.
Just to clarify, we're talking about the Africa institutional business doing mid-teens kind of...
No, no, I'm talking of Africa branded generic business. The institution business is very unpredictable. That depends on the fund availability, the requirement of the AL products, malaria products in that country. So there are number of factors which are beyond our control. So we have no this thing. It's a lumpy business, so it can go very high in one quarter, it can drop in the second quarter. So for institution business, we are not giving out any guidances.
Understood. And just one last clarification. I believe you were mentioning earlier in the call that there are 4 products for which we are awaiting U.S. FDA inspection, which could be launched in H2, assuming the inspections are on time. Is that correct?
Yes, for that, yes, we are waiting for the approval and inspection. And once the inspection happens, whatever time FDA takes to give the approval for the ANDA, we will be ready to launch the product.
And these 4 is including Chantix?
Chantix has 1 more element. Chantix is not linked with the FDA inspection. That has -- we are still in the litigation.
Okay. So the 4 is excluding?
I'm sorry. I'm getting mixed up. Topiramate is linked with the inspection. Chantix is still under approval. That is still under the review with FDA. That is not linked with the FDA inspection.
The next question is from the line of [indiscernible].
Am I audible?
Yes, please.
I just have one question on the Africa branded generic business. And this is sort of a more generic question. Given that, as an investor, our understanding of the branded generic space in Africa is limited, could you help us with a little bit more color on what is going on in this business? And currently, how are you seeing traction? And I'm asking this question more from the point of view, again, generally, we have been guiding towards mid-teens sort of growth, but if you look like even at a 10-year history, growth seems to have happened in a more lumpy manner even in the branded generic space. '13 was a great year, '15 was a great year, and so on and so forth. Could you just help us understand, is it sort of field force deployment that becomes a little lumpy? Or is it related to some other sort of a little bit of a technical factor? What is it that, that drives that business? Could you just talk about it for a little bit more? That's all I wanted to ask.
No, if you see our Africa business, or for that matter any branded generic business, whether it was Asia or Africa, it has been very consistent. You see our track record of just 5 years, 8 years, 10 years, the growth percentages may have varied. Maybe some year we may have grown at 8%, some at 18%, some at 25%, but there has been a consistent growth. It has been never a lumpy for us that we de-grew 10%, and next year we grew 25% [indiscernible]. So it wasn't a very -- and that is a outcome of very fundamental things. We believe in getting the -- identifying the product, launching the -- identifying the gap, good product selection. If you see our investor presentation also, we are talking about the smart and beautiful product portfolio. So that is where it begins. And then after that, bringing the product to the life, promoting it well, taking it to the doctor to our own field is what gives us the sustainability and the scalability, both.
So it's a consistent effort of continuously adding more products every year, working for the product for next year and next year and thereafter year. So there's a lot of work in progress. Even in the countries, we have a lot of products under approval across our markets. As and when we get the approval in coming years, they'll be coming to the market. So it's a combination of a lot of things, very similar to what we do in India. Increase the market share from the existing brands, add more products, add more people. So yes, I think that's the fundamental of any branded generic business, whether it is India, Africa or Asia.
Any other question [indiscernible]?
That was all from my side.
As there are no further questions from the participants, I now hand the conference over to Mr. Yogesh Agrawal for closing comments.
Yes. Thank you, everyone for joining this call. In case there are any further questions that remain unanswered today, please reach out to our Investor Relations team. Thank you so much.
Thank you, everyone.
Thank you.
Thank you. On behalf of Ajanta Pharma, that concludes this. Thank you for joining us. And you may now disconnect your lines.