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Biocon Ltd
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Ladies and gentlemen, good day, and welcome to the Biocon Limited Q2 FY '21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Saurabh Paliwal from Biocon Investor Relations. Thank you, and over to you, Mr. Paliwal.
Thank you, Stephen. Good morning, ladies and gentlemen. My name is Saurabh Paliwal from the Biocon Investor Relations team, and I welcome you to the second quarter and half year fiscal year '21 earnings conference call.Before we proceed with the call, I would like to remind everyone that a replay of today's discussion will be available for the next few days. About 60 minutes post the conclusion of the conference call, the transcript shall be made available on the website in due course.To discuss this quarter's business performance and future outlook, we have the senior leadership at Biocon comprising Dr. Kiran Mazumdar Shaw, our Chairperson; and other colleagues from the management team.I would also take this opportunity to remind everyone of the safe harbor related to this conference call. Today's discussion may be forward-looking in nature based on management's current beliefs and expectations. It must be viewed in conjunction with the risks that our business faces that could cause our future results, performance or achievements to differ significantly from what is expressed or implied by such forward-looking statements. At the end of this call, if you need any further information or clarifications, please do get in touch with us.With this, I would like to hand over the call to Dr. Kiran Mazumdar. Over to you, Kiran.
Thank you, Saurabh, and good morning, everyone. I welcome you to Biocon's earnings call for the second quarter of the half year of FY '21. Let me start by wishing everyone Shubh Navratri and a very happy Diwali ahead of time. As you know, we are all anxiously awaiting the vaccine, and I do hope that you and your families are keeping safe.Let me start today's earnings call with some key management updates. As you know, Siddharth Mittal, who used to be the CFO of Biocon, was elevated to the post of MD and CEO. And I am now pleased to welcome Mr. Anupam Jindal as the new Chief Financial Officer at Biocon Limited. Anupam will head the finance function at Biocon and be part of the executive leadership team, reporting to Siddharth Mittal. Anupam joins us from the Vedanta Group of companies, where he worked for 22 years and held a position of Group Chief Financial Officer at Sterlite Technologies since 2006. I'm also pleased to announce the appointment of a Group Chief Information Officer, Atanu Roy, who joins us with a vast experience in the pharma and tech sectors, with Sun Pharma, Dr. Reddy's and HP.Now coming to highlights for the quarter. Tata Capital Growth Fund invested USD 30 million, or INR 225 crores, in Biocon Biologics for a minority 0.85% stake, valuing it at an equity valuation of $3.5 billion. Semglee, co-developed by Biocon Biologics and Mylan, has been commercialized in the U.S. It is a third product launch in the U.S. market under the joint collaboration after the successful commercialization of Fulphila, which is pegfilgrastim; and Ogivri, which is trastuzumab, in 2018 and 2019, respectively. Our partner, Mylan, also launched biosimilar etanercept in Europe, in which Biocon Biologics has an economic interest. Equillium, our U.S. partner for our drug, itolizumab, recently received positive feedback from their pre-IND meeting with the U.S. FDA and is advancing along the regulatory pathway in preparation for initiating a global Phase III clinical trial in Q4 of calendar year 2020.We have also initiated Phase IV clinical trials in India following a consent from the Drugs Controller General in September 2020 for our drug, itolizumab. Syngene commenced manufacturing remdesivir in Bangalore as a part of its voluntary license agreement with Gilead. And as you just heard the news this morning, U.S. FDA has given a final approval to remdesivir as an antiviral drug for COVID-19.Moving on, I will now present the key financial highlights for Q2 FY '21. This quarter, we delivered a year-on-year revenue growth of 10%, wherein total revenues increased from INR 1,606 crores last fiscal to INR 1,760 crores in Q2 FY '21.Revenue from operations stood at INR 1,745 crores, up 11% by stable performance in generics, which was up 8%; Biosimilars, which was up 11%; and a return to growth in Research Services, which was up 12% year-on-year.We recorded gross R&D spends of INR 165 crores this quarter, which corresponds to a 13% of revenue ex Syngene. Of this, INR 148 crores is reported in the P&L, while the balance amount has been capitalized. The increase in R&D expenses is primarily due to higher spends to develop our biosimilars pipeline.During the year, we booked a ForEx loss of INR 18 crores compared to a gain of INR 16 crores last year. This amount is reflected in the other expenses line of the P&L statement.EBITDA for the quarter was INR 407 crores, which was down 8% from last year. EBITDA margins, however, stood at -- EBITDA margin stood at 23% against 27% reported in the same period last year. The reduction in the EBITDA margin this quarter is a result of higher R&D spends, higher staff costs, ForEx loss and other expenses.When it comes to core margins in terms of EBITDA margin net of licensing impact of ForEx and R&D, this stood at a healthy 32% compared to 33% last year. Lower EBITDA, coupled with higher depreciation and amortization costs, results in PBT before exceptional item being down to INR 223 crores.Net profit for the quarter was INR 169 crores. Adjusting for impact from discontinuing operations, net profit stood at INR 174 crores, with net profit margin at 10%.Now coming to reviewing business segment's performance for this quarter. The generics segment reported 8% growth over last year with revenues at INR 599 crores, primarily driven by the generic formulations business. Segment PBT margins for the quarter stood at 12%, down 6% over last year due to increase in staff costs, higher R&D and ForEx loss.API business growth was largely driven by the immunosuppressants portfolio, supported by sales of specialty APIs. The generic formulations business reported strong growth with our products maintaining mid- to high teens market share in the U.S. There was no significant impact of COVID on supply or demand of products in the generics segment.Looking forward, we expect generic formulations to continue to drive growth for the generics segment based on new launches in the U.S. for the products that are currently under regulatory review. We have also received licenses from MHRA U.K., to import and distribute products in the U.K. This is in line with our plans to commercialize our formulations directly in the U.K.Novel Molecules. As I mentioned earlier, our partner, Equillium, is making rapid progress in taking itolizumab global. Apart from advancing along the U.S. regulatory pathway, in preparation for initiating a Phase III study for COVID-19, Equillium continues to make good progress on earlier initiated studies with itolizumab. In the EQUATE Phase Ib study, I'm pleased to share with you that complete response to the drug has been observed in a large number of patients by day 29 in the first 2 cohorts, and Equillium has proceeded with dose escalation in the third cohort as planned. Additionally, Equillium continues to advance their 1b EQUIP and EQUALISE studies in uncontrolled asthma and lupus nephritis, respectively.In terms of Research Services, Syngene reported 12% year-on-year growth with revenues of INR 520 crores in Q2 with good performance in the discovery services and dedicated R&D centers. After the impact due to COVID-19 operations, Syngene -- in Q1, Syngene has restored their business to near normalcy.Coming to Biosimilars, I now hand this over to my colleague, Dr. Christiane Hamacher, MD and CEO of Biocon Biologics, to discuss the performance.
Thank you, Kiran, and good morning, everyone. For Biocon Biologics, let me dive straight into the factors that influenced our performance in Q2. After a strong recovery in Q1, we have recorded a modest 11% top line growth versus Q2 last year and a 2% decline versus Q1.While in Q2, we continued to see increased demand for our products. We have not been able to fully capitalize on the opportunity on account of some operational challenges, which have been further amplified by COVID-19. This has resulted in some supply constraints, thereby impacting our top line. We are working to mitigate this and be back to maximum operations in the coming quarters. Moreover, on the back of COVID-19, there have also been some challenges in the already-stressed health care systems, impacting regular patient flow, particularly in critical care segments, such as oncology.Moving on to profitability. In Q2 fiscal year '21, Biocon Biologics had an EBITDA margin of 27% versus 30% last year and PBT of INR 81 crores versus INR 107 crore last year. The reduction was primarily on the account of the operational challenges, leading to lower-than-expected sales, ForEx losses and higher R&D costs. Our R&D cost for last quarter was INR 82 crores versus INR 46 crores last year due to investments in our strong pipeline.We have seen growth in revenues from developed markets, including the U.S. Ogivri, our biosimilar trastuzumab, shows a 6% market share with 4% in the 150-milligram segment and 10% in the 420-milligram segment. In Australia and Canada, we continue to be the leading biosimilar for trastuzumab; and in Europe, Ogivri has double-digit share in 3 markets.Fulphila, our biosimilar pegfilgrastim, had 15% of the U.S. prefilled syringe market in Q2 fiscal year '21. Semglee, our biosimilar Glargine in the U.S., has slowly started gaining market share. We are confident that Semglee will have a long revenue stream, addressing a business opportunity of USD 2.1 billion with limited competition. In Europe, we are seeing encouraging market penetration for Semglee in certain parts, such as Slovakia and Croatia. Semglee has also been launched in Spain in Q2, which is the third largest market in Europe by value. Our partner has also launched etanercept in Europe where we have economic interest.Moving on to most of the world markets, where we see a good demand for biosimilars. In Q2 FY '21, we launched biosimilar trastuzumab in Argentina. As a result, we also have started strengthening our commercial infrastructure by building up direct presence in selected countries like Brazil, Malaysia, U.A.E. and Saudi Arabia, which should allow us to further improve our most of the world's business, both from a revenue and profitability perspective.Branded formulation business in India recorded a sequential growth of 13% versus Q1. As a part of our initiatives to make recombinant human insulin available for less than $0.10 in low and middle income countries, we've signed 2 memorandums of understanding with 2 municipal governments in the Philippines for a long-term integrated diabetes management program.On the regulatory front, the BLA and marketing authorization submission for insulin Aspart is under review with the FDA and EMA. Concerning the rest of our pipeline, we continue to make good progress. We are in the process of completing the integration of our recently acquired R&D site in Chennai, which further solidifies our R&D infrastructure.We are also working on ramping up our manufacturing capacity and are also developing a network strategy to further improve our supply chain. The investment in a new antibody manufacturing facility at Bangalore is expected to be ready for commercial operations in fiscal year '23. Additionally, we expect to commission a third monoclonal antibody facility, which should be operational in fiscal year '24. We also continue to invest in improving our productivity and efficiency, including digitization and digital transformation efforts.Finally, to conclude, we expect continued improvement in performance in fiscal year '21, with full year revenue from biosimilar trastuzumab in the U.S. and good contribution from ramp-up of the biosimilar Glargine in the U.S. This will be aided by biosimilar pegfilgrastim and biosimilar trastuzumab in several most of the world markets. We continue to be on track to build Biocon Biologics as a leading global pure-play biosimilar company through the exciting platform built over the last 15 years, reaching our USD 1 billion milestone by the end of fiscal year 2022.With this, I hand over back to Kiran.
Thank you, Christiane. Let me now come to the outlook. While dealing with challenges posed by the COVID-19 pandemic on our operations across different business segments in the first half of the year, we have delivered a 12% revenue growth on a consolidated basis, which is below par. However, we are confident the coming quarters will see stronger performance.COVID-19 has strained health care systems globally. This has brought sharp focus on access and affordability, creating a strong demand for generics and biosimilars. Biocon is in a good position in both these areas, which bodes well for us in the long term.Whilst uncertainties may persist during the rest of the year, we expect the Biosimilars segment to continue to lead overall revenue growth for Biocon. With this, I would like to open the floor to question and answers.
[Operator Instructions] The first question is from the line of Prakash from Axis.
The first question on actually the Biosimilar business. So we have seen Q-on-Q flattish performance despite some market share gains in our peg and trastu and Glargine launch. So just trying to understand, would sales of Glargine would have been a little bit -- would have been booked? Or we would see the bookings from next quarter? And similar commentary on the EBIT margin, which has been lower. So if you could help us understand.
Yes. You're right. This quarter does not reflect the full launch of Glargine in the U.S. market. And we believe that you will see the greater impact of Glargine in the U.S. market in the coming quarters.
Okay. By that statement, I understand there is -- some launch impact should be there, right? So still it is flattish. So what is the other things which have actually muted or declined? If that color would be possible.
Well, as you heard from Christiane's comments, I think the -- many of these segments are still constrained by COVID. A lot of the hospital treatments and hospital services are impacted by COVID. So we are not seeing the kind of growth or uptick that we normally had -- would have expected, but I believe that things are improving now. And as you see, the hospitals now are becoming freer of COVID cases, I think the rest of the disease segments are freeing up and opening up to more patient traffic. I think that's what is now giving us the signals that we are like -- that we will see start -- resumption of business as usual, and thereby, we will start seeing increased traction in all these biosimilars.So whilst on one hand our operations have not been affected by COVID to such an extent, I think our ability to increase market share in these -- in the developed markets has not had the same good fortune because, I think, COVID still does -- has dampened the kind of hospital-based treatment, and thereby, I think that in the coming quarters, you are likely to now see an uptick.
Yes, it's not unusual what we are seeing. Many other companies have reported the same that we are seeing the challenges, as Kiran has alluded to, in particular, in critical segments, such as oncology. There's a clear interruption in regular patient flow. It is now coming back. There are stressed health care resources. What's important for us to see is that the pressure on the health care system in terms of cost is massive. The need for biosimilars at this moment, from our perspective, is very, very high because of all the cost constraints and the cost pressure. So we are expecting -- and we actually see traction on our molecules in last weekly updates that are published -- that are publicly available for our molecule Fulphila and trastuzumab biosimilars in the U.S., who are further gaining the uptick. So we are seeing this now in the last weekly updates that we further get tractions.
That is very helpful. And second question is on what we are seeing now with Glargine having launched more than a month. So how has been the traction? And when do we see -- do we expect -- you mentioned you expect a slow traction, but just trying to understand, like, how do we see the traction in terms of reaching above 10% plus market share, how is the acceptability at the channel. If you could give some color.
When it comes to Glargine in the United States, so it's very, very early that we have Glargine in the U.S. market. I think it's important to understand that Semglee, like the other biosimilars in the U.S., are going for more than USD 2 billion opportunity in the market alone. There is limited competition so far. And if you now look at the market in the United States and how the biosimilars have ramped up in terms of market share, we are very confident that we will see a steady growth of Semglee in the U.S., and not only in the U.S., but also in Europe. I just referenced the launch in Spain. So we expect Semglee to be a key contributor to our success in the United States with our partner, Mylan.
The next question is from the line of Damayanti Kerai from HSBC.
So continuing on Semglee, just wanted to understand, like, when we go for such critical launches, what kind of inventory we keep ready during the market launch? And related to that, since now Semglee is launched in the U.S. and in other markets also, what kind of utilization level has picked up at the Malaysia plant? If you can provide some update here?
So I'll start on the inventory [indiscernible]. With each and every launch, when you launch in a key market in the U.S., there is sufficient inventory to go for launch to make it successful. That's the basic foundation, and we do that together with Mylan. We have very, very experienced partners to do so.
So any quantitative numbers, say, like, you go with 6 months, 9 months kind of inventory? Or any color on that will be helpful.
So we have sufficient inventory for our launch as required. And inventories, depends on market, depends on the launch plans, are always between 3 to 6 months.
And update on the Malaysia plant utilization?
So the Malaysia plant utilization...
Yes. So just one clarity. Yes. The -- of course, with the launch, we do build up inventory. Today, more inventory is lying at our end, which is not translated to sales. And if you've seen our segment assets, you'll see that increased, reflecting high inventory at our end. We did -- I mean, this applies to both our facilities across. So in Q1, when we ramped down production, and then post that, we have been ramping up. So now we are back to near normal. But overall, during this period, we have lost some production days, and as such, it has impacted our sales despite this very strong demand for the biosimilars.Malaysia, I mean, as we started ramping up, the profitability is near breakeven. And if you take off R&D, that break even. So we're starting to see improved performance from Malaysia, which will improve within the coming quarters -- further improve in the coming quarters.
Okay. So in next quarter, we should be seeing a profitability breakeven for Malaysia plant, as you said, we are almost there.
Yes. That's right. Yes.
Okay. And a broad question. As of second quarter, if you can split your biosimilar sales between developed market and emerging markets, that will be helpful.
Yes. The split is now roughly a 50-50 split. And what we expect to see is that this will move further towards the developed markets over time.
The next question is from the line of Nithya Balasubramanian from Bernstein Research.
I had a couple of questions on Semglee. So I understand that you've launched it at a 65% discount to the list price of the innovator. We do know that rebates are very high in this space to the extent of 80%. So can you throw some color on what would be the discount that you're offering on the net price and not just the list price?
Thank you for your question. I hope you understand, we are not commenting on the specifics for the prices.
If you're not commenting on the specifics, can you throw color on is this -- is there a significant discount or a less -- or a decent discount? Any color on how competitive Biocon's product is in the market?
Certainly very important question, and that would reveal a lot of business and competitive intelligence. So I can't comment further.
Okay. The other related question was on interchangeability. I think the press release noted that you have a file with the FDA, which is under review. So if you can give us some color on -- will this be treated as a new application or a supplemental application? When do you expect to hear back from the FDA on interchangeability?
So -- this is Sundar. The -- as we have discussed with the agency, we have made the submission to the agency for the requirement. And as you know, per the new guidance, if the analytical similarity package is very strong, then that could be sufficient for both biosimilarity and interchangeability. And that's exactly what we have done. We've made the submission. And we are confident of a successful review and approval. Once we get more clarity on the time lines, we'll be happy to communicate them to you.
But to my first question on -- will this be treated as a new application because you are now submitting it in the 351(k) pathway? Or would this be treated as some sort of supplementary approval because you already have an approval?
So we are not commenting on it at this point in time. So we'll communicate that to you at an appropriate time.
All right. I just had one more on R&D expenses. So given that you are continuing to work on newer molecules in your pipeline for the Sandoz partnership as well, will these elevated levels continue? Or are you expecting this to move up further in the future?
Hi. This is -- do you want go ahead, Chinni?
Yes. Nithya, see, the -- as an absolute number, we have seen R&D cost increase, and it's more -- in this quarter, particularly, it's gone up to 12% against normal high single digits. For the year, we expect the R&D cost to continue to increase, but as a percentage of sales, remain in the high single digits for this year. We have not yet given guidance on the coming years, the net R&D spend net of partner's share and capitalization.
Okay. And at a consol level, the R&D ex Syngene revenues would be in the 13% to 15% range.
The next question is from the line of Neha Manpuria from JPMorgan.
My first question is, I think in the opening remarks, you mentioned some sort of a supply [indiscernible] your top line. If you could give more color on that? And if you could quantify what was the impact because of the supply constraints?
Yes. For biologics, there are actually 2 components. And Kiran has already alluded to one in particular. So the challenges we faced were partly also due to COVID, as we have discussed, with challenges in critical care segments like oncology based on patient flow. In addition, we faced some operational challenges. We are a fast-growing company. And what we have seen and experienced is some [ CEOs ] had limited capacity for overall supplies, what impacted us so that we were not able to service the demand. And that was mainly affecting the most of the world market. So internally, we are also further sorting out our operations as a learning and fast-growing company. These are not major topics. While it has impacted us, we will be back on track to our full operations in the coming quarters.
I'm not sure I understand that. When you say limited capacity to meet a higher demand, given our expansion in peg and available capacity for trastuzumab, which I'm assuming are the 2 largest products and insulin, what do you mean by -- if you could just give a little more -- just to understand it better, what gives us the confidence that this will get resolved in the coming quarters?
So let me try and answer that. What we are saying is that the supply/demand that we need to cater to, I think one of the big challenges we have is that there are a lot of logistics disruptions at this time. And very often, when we are -- we find it difficult to basically get it off -- to ship it off in time. So that is the kind of issues we are trying to tackle at this point in time. It is not to do with the inventory, it is not to do with the demand, but it is to do with a lot of logistics kind of operational issues. So that is what we are trying to fix at this point in time.
Understood. And Chinni, could you quantify what in your assessment would be the impact because of this? And by when do we expect this to normalize?
I was reflecting on your question. To quantify it is difficult, but we'll see a pickup from Q3 onwards.
Understood. My second question is, while I understand that COVID has impacted patient flow into hospitals, if I were to look at data for some of our competitor products in both peg and trastuzumab, they seem to be showing a positive momentum in terms of market share. While we have seen it in Fulphila and Ogivri, is there any reason -- or just wanted some color on what's making the ramp-up slower despite having additional capacity, despite our competitors still seeing greater market share.
Yes. As you have noticed, we have picked up market shares in both trastu and peg in the U.S. It is -- when we talk about lower footfalls, it is largely the whole MoW markets, the India business, et cetera. It's not particularly targeted at the U.S.
Okay. And any reason why our market share ramp-up in the U.S. has been gradual? Or to rephrase the question, how is it tracking versus our expectation after the additional capacity approval?
I mean it's picked up. I mean the last one that has just come out October 9th weekly data shows that peg is -- overall market is 8% and [ after ] PFS, it's close to 18%, 17.5%. I mean, of course, you can't rely just on one week's data, but definitely on an upward trend.
Next question is from the line of Shyam Srinivasan from Goldman Sachs.
Just the data point in the opening remarks on the EBITDA margins for Biocon Biologics. If you could give us the numbers again, last year, maybe Q1 and Q2.
So Biocon Biologics, we had an EBITDA margin of 27% versus 30% last year and PBT of INR 81 crores versus INR 107 crores last year. And as explained, the reduction was primarily on the account of operational challenges that led to the lower sales, ForEx losses and higher R&D costs, while we are investing in our strong pipeline.
Yes. Dr. Christiane, what is Q1 number? I'm curious about that.
So Q1 was 28%, Shyam. It's dropped to 27%. In this 27%, as we already indicated that we have had higher R&D cost. That's taken off 5%. Last year, Q2 was at 7%, net R&D spend. This year, it's at 12%. And then we had a 2% impact of FX, the INR 13 crore loss versus INR 5 crores profit in Q2 last year. That together comes to 3%. This year, it's hit us by 2%.
Chinni, just trying to understand from a profit share with our partner. I know this could be volatile across quarters, but have you seen anything shared during the first half? Or it's an ongoing process and, from an outside analyst perspective, you think we can never find it out?
In terms of the absolute number?
No, no. In terms of what -- if the -- if you recollect, in the past, we have had EBITDA margins close to 37%, which clearly were not normal, right? So we knew that there is some element of profit share coming through. But do you think that will now -- as the portfolio becomes larger, will that be more streamlined in terms of what the margin that is being reported?
Yes. See, today, it's still -- it's a bit lumpy. It's not flowing through on a steady state as we -- but moment -- inventory levels at our end, inventory levels at our partners' end and inventory levels and market with the wholesalers steady, then you will see this thing play out in a steady manner. Of course, new launches, et cetera, will keep moving things up and down. But it will start to normalize at a higher level than where we are today.
Got it. My second question is on the Novel Biologics. I thought we would start booking some revenues starting 2Q, maybe itolizumab, maybe some of the other portfolio. Just curious on -- we have seen, like, 0 revenue. So is it subsequent now? Is it going to be coming in the upcoming quarters?
So Shyam, the revenues for itolizumab in India is booked under Biocon Biologics since it's commercialized by Biocon Biologics. So exports for itolizumab has not started. We expect to start exports in this fiscal year. Obviously, it's subject to registration in the emerging markets. So once those revenues start, we will see revenues in Novel Biologics.
Got it. And my last question is on the generics piece. Siddharth, maybe just in terms of the trends that you're seeing, what is the formulation absolute number as well? I used to remember INR 100 crore quarterly run rate. What is that formulation number in the generics piece? That's one. And two, in terms of general API, anything that you've been picking up? Because our number, if I back out, like, a INR 100 crore number, I'm just assuming, has been flat. So are we seeing any pickup in APIs, especially our immunosuppressant portfolio?
Yes. So the generic formulations number is roughly INR 120 crores. And we've had a growth in our API business as well, mainly on account of immunosuppressant and specialty API, which is primarily Fidaxomicin. So in terms of trend, we -- I mean, obviously, the growth is now dependent on new launches in the U.S. because our current capacities on APIs maxed out, and we await the commissioning of the new greenfield site in Vizag, which would happen in '22 and the commercialization would start sometime in '23. Till then, we'll only get few incremental capacities and new launches for API. But the biggest growth driver would be the formulations in the U.S., and we have a couple of launches over the next 12 months in the U.S.
The next question is from the line of Sameer Baisiwala from Morgan Stanley.
Is there any update on bevacizumab regulatory pipeline, that is, regulatory update? I understand that I think our target action date was somewhere in December, if I'm not wrong.
Yes. So we remain confident about the target action date, and we will continue to give you update as we get more information.
A little bit more specifically. Has FDA been able to come down to audit manufacturing for that? And is the COVID-related travel restrictions going to impact our approval time lines?
Yes. So we are in discussions with the agency, and it could have an impact. At this point in time, we continue to remain confident about the previous communication.
Okay. Excellent. And second question is on U.S. Glargine. When you say it's $2.1 billion or thereabouts target market, is this indexed to your pricing? Or at what pricing is this indexed to?
Peter, do you want to take that question?
Yes. Okay. This is indexed at the prices that are available, the net prices we know from -- in the U.S. from the reports that are issued by the relative companies.
There are only 2 companies, one is innovator and the other is Basaglar. So what are you suggesting...
That is correct. That is correct. Basically, the reports that you can read from, in this case, Sanofi.
Okay. Understood. So it's on an innovative pricing basis, right? That's what you're trying to say?
It's an innovative net pricing update based on their annual reports.
Okay. Excellent. Very helpful. And the third question is on itolizumab. Just if you can give us some time lines for COVID-related trials that a partner is going to do? What would be the sort of patient size? And when do you expect the -- what are key milestones? And also, why are we doing Phase IV in India? I assume this is for COVID and not II and III.
No. First and foremost, let me first answer your last question. As you know, itolizumab is an approved product in India. So in India, it is a repurposed approved drug. This has already gone through Phase I, II and III for approval for psoriasis. So from that point of view, what we have done is a proof-of-concept study for another indication, on which we have got emergency use approval for COVID. The regulator has asked us to do a post -- a Phase IV study because of this accelerated approval that they've given us for a short study to basically capture the safety and efficacy data on 300 patients. So this is what is required in terms of the regulatory requirement. There is no regulatory requirement to do a Phase I, II and III for COVID the way you are suggesting.The U.S., on the other hand, does not have an approved drug in the U.S. This is under trials right now. They are actually doing Phase Ib studies in GVHD and in lupus nephritis and in acute asthma. So I think from that point of view, they are required to then do a Phase III study. In fact, they have been given a very unique opportunity to jump into a Phase III study, which is -- under the present circumstances, it is actually a very good opportunity for Equillium to do a Phase III study and get approval for this drug. So I think that is what augers well for Equillium. And they have actually had a very good pre-IND meeting with U.S. FDA. They have submitted their IND, and they expect to commence the trial fairly soon. And it all depends on the recruitment of the patients, which will then determine how quickly they can complete the studies.
Yes. I'm not trying to compare U.S. and the India studies. They were 2 separate questions. But just coming back to India studies. So once approved, would it be only for emergency use? Or could you then -- could you then sell it on a broader basis to everyone?
No, right now please -- Sameer, please understand that we are already selling it for psoriasis. It's an approved drug for psoriasis.
No, no, Kiran, the question is for COVID indication. Question is not for psoriasis.
Yes. So for COVID, basically, you are allowed to sell it to anyone. I mean, basically, by -- with consent, you can actually sell it to any patient. And we have sold -- we have already -- initially, we were -- because of the capacity constraints, we've already marketed this product or sold this product to over 2,000 patients in the country.
Yes. Got it. One final question from my side. Is it possible for you to break your developed market Biosimilar revenues by U.S. and non-U.S.? Some qualitative color is fine.
Yes. As a split, we are giving it as a split between developed market and emerging markets, and that's currently at 50-50. The U.S. market is certainly also, when it comes to our USD 1 billion revenue target, as the biggest component. And the split between developed and the emerging markets will move from 50-50 more towards the developed markets and more when molecules in those markets are getting traction.
The next question is from the line of Surya Patra from PhillipCapital.
Yes. I'm just starting with a couple of bookkeeping questions. Like, what is the ForEx loss that you have mentioned? Could you please repeat and quantify that? And also about the R&D spend, particularly for the biologics -- Biocon Biologics what you have mentioned in the current quarter and the corresponding previous quarter, if you can also mention for the first quarter.
Surya, this is Chinni here. I'll take the question around biosimilars first and then we will give you the overall company numbers. For the quarter, we've booked a INR 13 crore FX loss that's reflected in that -- in our segment margins of 27%. From R&D, it's 12% for the quarter. Last quarter, it was at 9%. And last year, that's sequential Q1, it was 9%; and last year, it was 7%.
Okay. And this ForEx loss is just on Biocon Biologics front? Or is -- on the consolidated number front, is there any separate number? Or how is it, sir?
I think it was there in Kiran's opening remarks that for the quarter, there was INR 18 crores of loss at a group level. So INR 13 crores for Biocon Biologics, there was INR 13 crores for Biocon generics, and there was a gain in Syngene, which offset some of these losses. So the net at the group was INR 18 crores loss.
Sure, sir. Sorry, I missed that. And on the biologic progress front, see, in fact -- could you give some idea about the contracting cycle for biosimilars in the U.S.? What is the time line? Why because -- I'm trying to ask this question because I think during last December or so for pegfilgrastim, we contracted for -- or we tied for this 340B program and all that, but the contracting cycle was supposed to -- or generally, is somewhere June, July, like that. So obviously, the benefit of that contract -- contracting would not -- I mean, the tie-up would not have really helped us so far on the pegfilgrastim front. So same was the case for other biosimilar also, like, the recent launches of trastuzumab and all that. So if you can give some idea about the contracting cycle. And how can that progressively benefit us?
Paul, do you want to take that question? Or Peter?
Sure, I can -- this is Paul Thomas. I can comment. So I think -- Surya, thanks for the question. I think it is product-by-product. It will make a difference. And I would say, it's a customer-by-customer process. I think pegfilgrastim and trastuzumab, the oncology products, operate in a different space than Glargine on the pharmacy benefit, PBM-driven side. So those are 2 different animals. And so as you talked about pegfilgrastim, where that kind of contracting is more on a customer-by-customer basis and less on an annual formulary cycle, whereas I think the -- you would say, the pharmacy benefit side where Glargine operates more on an annual [ cycle ] as complexities relate to that, which have been referred to.
Okay. Understood. At least for 340B program for pegfilgrastim, so if you can give some idea when should we start getting the benefit of this tie-up?
Sure. I guess I wouldn't tie that to a specific July cycle or something like that and rather it's a process that will play out with customers over time.
Okay. My next question would be on the -- sir, if you can provide some sense about the key CapEx project, say, like that -- we know that, okay, this immunosuppression project is on the generic side that is likely to be commissioning soon. Then the greenfield API plant that is there to be commissioned next year. We have also talked about the third monoclonal biologic -- monoclonal antibodies biologic plant separately and also something on the Biocon Biologics side. So if you can -- the key projects that is there to be either commissioned or in the process of construction, if you can give some sense, that would be useful.
Surya, let me start with the generics CapEx. So we have already stated that the greenfield plant in Vizag, the Phase 1 of that plant is already commissioned, which is a much smaller unit, but we have a much larger immunosuppressant facility under construction that will be commissioned physically by calendar '22. And then the work on regulatory approvals will commence after that. For this plant, we are investing almost INR 600 crores.The second is we have a peptide facility -- peptide API facility, which is going to start commissioning in Bangalore. This will take almost 2 years to commission. And we have a large synthetic block coming up in Hyderabad, which, again, the construction would start early next calendar year. And then we have a couple of other facilities, including expansion of our R&D infrastructure and quality infrastructure in Bangalore, which again, the work will all start in the coming [ days ].Apart from this, one CapEx that we are looking at is on our injectable facility, which again we are in the final stages of determining the location and the sizing and the specifications for the plant, and work would start in calendar '21.
Okay. These are all -- cumulatively, the CapEx would be something like -- what's the cumulative CapEx for the generics?
It would be around INR 2,000 crores over the next 3 years.
Okay. And separately for the Biocon Biologics, as you have mentioned, I think, already.
Yes. Surya, I'll give you a color. So far, the gross fixed assets is about $450 million, and our net block would be closer to $200 million. As we scale up, I mean, for $1 billion and beyond, we are investing quite heavily into CapEx, as we have already covered in the opening statements. We have a large monoclonal antibody facility coming on stream, which will go commercial in FY '23. The second plant is expected to go commercial in FY '24. We are expected to trigger an investment of expansion of our insulin capacities. And altogether, we would look to take the asset block to just above to above $1 billion. That would be the total thing now. Of that, net of partners' spend and spends that have already been made because we've already invested $200 million towards the new upcoming projects, we look at it -- net-net, we're looking at about $400 million of cash flows over the next 4 years starting FY '21 to FY '24.
Okay. Okay. Just last one question on the insulin Aspart front. Is there any goal date that is available with us?
The application is under review with both the U.S. FDA and EMA. And once we get further information, we'll share them with you. We remain confident about the successful review.
The next question is from the line of Vinayak Mohta from Augmenta Research.
I just had a question more towards the financial end since you are looking to have some heavy CapEx going for the next 2 to 3 years in expanding your capacities, and currently, also, I can see that you have taken a new borrowings to the tune of INR 700 crores. So out here, how are you looking to use the funds? Are you going to be more leveraged? Or is it going to be a mix of accruals and leverage or totally accruals? If you could just throw some light about what is your comfortability level with the borrowings out here?
So at a group level, our net debt is INR 1,000 crores and the -- all the CapEx will be funded through a combination of internal accruals. I mean, as both our businesses, biosimilars and generics, are obviously going to generate cash this year and going forward, we will also take on more debt, but the most important source would be the private equity fund raise that is currently in works in Biocon Biologics and eventually an IPO for Biocon Biologics.
The next question is from the line of [ Rajamohan V ], an individual investor.
My first question is on Semglee. You did mention about the difficulty to mention pricing strategy on Semglee. With the original pricing discounts feeling alarming, I wanted to understand, are the discounts at the net level in line with other biologics, like, Fulphila and Ogivri? Also, if you could -- by when do you anticipate double-digit kind of market share based on your initial assessment?
So again, when it comes to pricing of Semglee, we don't give details. The whole business model of Biocon Biologics is built on global scale, high quality and cost competitiveness. And we are able to either work price, volume or value maximization. So with Semglee, we will be in a position to be very, very competitive.
Okay. And to the second part of my question...
To answer your question -- no, to answer your question, Rajamohan, I think what you should understand is that, obviously, these are 2 segments, okay? The insulin segment is very different to the other biologics segment -- the biosimilar antibody segment. So these are slightly different segments. So obviously, they have very different discounting kind of norms for each segment. So I don't think you can compare one with the other.
Understand. So to the second part of my question, by when do you anticipate -- if you could tell us, by when do you anticipate double digit kind of market shares based on your initial assessment of the market in Semglee?
I think we are quite confident that it will happen in the coming future because I think Mylan is very confident that it will garner good market share by the end of this fiscal and beyond. So that's -- and obviously, the aim is to garner maximum market share. So when will we get the 10% market share is a question of many factors, whether there is any impediments caused by the market dynamics right now in terms of COVID, is it going to be easy for us to garner market share because of COVID? These are questions and answers that Mylan is trying to address, and then I'm sure you will see the performance of Semglee in the next 2 quarters.
Okay. Fine. Next, coming to Ogivri, though you have indicated to 6% market share in the market from 5% last quarter, Mylan in a recent presentation has indicated to gaining 3% to 4% market share in the months of August and September of 2020. Specifically they mentioned this. So are you now closer to the double-digit market share in Ogivri? And is this trend accentuating? Could you mention similar latest weekly market share data as you did for Fulphila?
So actually, if you look at the 2 presentations of Ogivri, you can see that in the 420 mg presentation, we are at 10% market share. And the last week's market share performance overall is 7.8%. So you can see we've already made some tractions over the previously reported 6% to 7.8%. So there is a good traction and uptick of trastuzumab. And as I said, in one of the presentations, which is the dominant presentation, we are already at 10%.
Understand. That's quite helpful. And finally, Kiran ma'am, this question comes back to the subject of Biologics listing. I wanted to understand as a shareholder, is there also a thought process within to have a preferential offer at issue price for existing Biocon shareholders so that it becomes mutually beneficial? The existing shareholders get fixed shares without being diluted by oversubscription and the company also doesn't dilute its receipts in the process.
So all we can say is that we will definitely be very sensitive to all these comments that our shareholders of Biocon are making, and we will try and see how fair and equitable we can be to Biocon shareholders when the time comes.
The next question is from the line of Harith Ahamed from Spark Capital Advisors.
My first question is on your insulin Aspart filing in the U.S. Are we seeking interchangeability designation for this filing at this point?
Yes. We are seeking interchangeability, and we remain confident. Yes.
Okay. And is there any time lines that you could share on your rh-insulin filing plan?
The development is progressing very well. And as we get closer and we get firmer dates, we'll be happy to share them with you as appropriate.
Okay. My next question is on the capacity front. If I heard you right, the new [ manufacturing ] facility in Bangalore is going to start commercial production from FY '23. And -- so from the perspective of our $1 billion sales guidance for Biocon Biologics in FY '22, are we -- do we have sufficient capacities from our existing units at Bangalore and Malaysia?
Yes, we believe we largely have the capacities. Some networking strategies to fill small gaps here and there, but yes, broadly, the answer is yes.
And last one on itolizumab. I believe there was a comment that we've -- the drug has been administered to over 2,000 patients in the COVID indication. So is that a contributor -- a major contributor to our Biocon Biologics revenues for the quarter?
No, no, no. As you know, we are -- this is not a major contributor. I think the 2,000 patients is being offered at a very affordable price point. So you can understand that this cannot be such a major contributor. Even if you just look at the price of the product, you can calculate for yourself that this cannot be a major contributor. But it will be a major contributor going forward once we get the U.S. in a successful place.
The next question is from the line of Nitin Agarwal from IDFC Securities.
Christiane, as the biosimilar market is now beginning to open up with more sort of follow-on approvals coming through across different products, I just wanted to -- what's your sense in terms of how important is the first-mover advantage in your assessment in these products? Or given the nature of these products, that's not going to be a relevant force from a market share sort of structuring perspective in the coming quarters, I mean, as we go forward with it?
Yes. Very good question. I would say that first-mover advantage is very important, but at the same time, depending on the presence of companies like ours who are already in the market, where we have had a so-called first-mover advantage, it obviously helps with the products that we are bringing to the market. And what we have seen is that certainly companies like Mylan and Biocon are very competitive in the marketplace. So that also helps a lot. But as far as the first-mover advantage is concerned, you can see that it has helped many, many companies with market share. And we've had an unfortunate pipping to the post, as they call it, with trastuzumab because we had the first approval. But unfortunately, we had Amgen basically launching at-risk, and they had the first-mover advantage as a result of that, which got them a lot of market share. But I think we are now in a position to basically slowly catch up in whatever way we can.
Okay. That's helpful. And secondly, on the emerging market biologics business, I mean, have you seen any different dynamics in terms of [ versus regulated ] markets? Is it easy to scale up products in these markets versus what U.S. and Europe have sort of experienced over the last few years of their initial biologics experience?
[ Sim ], do you want to take that question?
Sure. Thank you, Christiane. So as you know, our past performance, which has really witnessed sustained business in line with our strategy, and we've had accelerating success adding on new launches. Specifically, we refer to the new launch in trastuzumab in Argentina. And we expect to launch many more products over the coming quarters and quarters. So the rest of the world market is an extremely important of our goals. Our vision is affordable care with an [ ability ] to grow the market size in these [ high-value ] markets. Biosimilars have gained excellent traction in these regions, and our base and emerging market for trastuzumab, insulin and Glargine continues to be an important contributor for our business.In addition, we are presently [ the most ] of the top 20 rest of the world or MoW markets. Geographic expansion, introduction of new products and increased volumes and products already being marketed should really help with the continued growth in this very important pillar of growth for Biocon Biologics.As you know, we have gained additional approvals across Latin America, AFMET and CIS, and we expect to drive further growth in the coming quarters, in addition to our historically strong regions in Brazil, North Africa and Southeast Asia. And as you may remember Christiane referred to, we have opened up commercial offices in key strategic markets, such as Brazil, Malaysia, U.A.E. and Saudi Arabia, and we do plan to expand further. So thank you for your question. I hope that addresses it.
That's helpful. Quickly, if I can add on to that, in the developed markets, is there a way -- is bulk of the business, which comes from biologics, tender-driven? Or is it essentially a lot of distribution or B2B, B2C-driven business?
So it's -- sorry, go ahead.
Thank you, Kiran. So it's actually a mix. So we have a lot of tender business and -- but what we're also actively doing is we're also addressing the non-tender or retail business because it's very consistent and also there's differentials in pricing opportunities. So we are addressing both tender and non-tender, but the tender business is a significant part of our business, and we're having more success in that area. Kiran, perhaps you wanted to comment further.
No, no, that's exactly what I wanted to say that, yes, there is a large element of a tender business, but there is also a non-tender business, which is obviously at a higher price point. So we, as a company, want to address both opportunities.
The next question is from the line of Pankit Bhupesh Shah from StockAxis.
Hello, am I audible?
Yes.
Yes. So my question is that in the past that we have seen, whenever there is a new launch in biosimilar space, we have seen good ramp-up in the initial month itself. But the similar stuff we haven't seen with Semglee. So I think what went wrong or how should this be looked at?
So when it comes to Semglee, Semglee is very, very early in the U.S. market. And Semglee has limited competition. So as next quarters are important, and we have already expressed that we are confident that Semglee will gain traction in the United States, there is a high need for low-cost insulins and insulin and [ analogs ]. So Semglee, the numbers will emerge over time, over the weeks and months to come. And in the next 2 quarters, as also Kiran has already mentioned, we expect to see the market penetration ramping up. Nothing that went wrong in the market in terms of any operations or strategic approaches.
All right. So one more thing I know is that you can't disclose more on competition, but I wanted to understand that how has been the reaction of the other 2 players. And have they been aggressive on pricing front? Any color would be helpful?
So when you look at the biosimilar market, it's not only about pricing. Pricing is one element to enter the market. There are many other operational tactics that are important. The biosimilar market is a market where we still -- where we see some segments with steeper price decreases, but overall, the pricing decrease discipline is much, much higher than in the generic segment. And so far, we are well positioned to compete on price. As I mentioned before, price volume or value maximization, both is possible.
Right. Right. Yes, I know that we are very competitive on pricing front, but I wanted to cover on the competition that how has their reaction been and whether they have also slashed their prices. Is there anything -- some sort of...
I think when you have less competition, you are not likely to see sort of a price destroying kind of tactic at the moment. But when you get more and more players coming into biosimilars, price is going to be important. So right now we are not seeing aggressive responses to our entry in the market. But as you know, if you look at what happened to us in, say, trastuzumab, I think the aggression comes from launching at-risk and those kind of methodologies. But certainly, yes, we have seen sort of a price aggression -- an aggressive price response in many markets in Europe, for instance.
Yes. Okay. And I just wanted some color on margins. So is it fair to assume that margins on biosimilar will remain impacted, at least for this fiscal, as we are doing the initial supply there where the margins would be lower as compared to when the second [ leg ] scale happens and the second leg comes in?
We'll see margins trending upwards. Like I said, the moment it normalizes between inventory at our end, at partners' end and with the wholesalers. The profit share or overall business profitability will probably get distributed. Right now there's a bit lumpy here and there.
Okay. And the last question that -- I wanted to understand that how important is interchangeability status for our $1 billion revenue target?
So when it comes to interchangeability and the USD 1 billion target, we have to look at the different therapeutic segments. Interchangeability in oncology will not play a major role. When it comes to, say, insulins, what we are seeing is that interchangeability is being discussed and we are discussing as Mylan with the FDA. It is not a major success factor. What is happening in the market? We see that -- at pharmacy benefit manager level that products are being switched from one product to another without interchangeability. It is a factor good to have, but it's not a critical success factor for success and market penetration for the insulin.
So is it fair to assume that we are confident of $1 billion even without the interchangeability in Semglee?
As it is not a critical success factor, the answer is yes.
The next question is from the line of Ankush Agrawal from Stallion Asset.
My question was regarding the margins on the overall business. I mean we have been talking that biosimilar business as a whole has been more profitable compared to other business segments of generics or, say, Research Services. But till now the margins have been quite volatile for Biosimilars business. That I understood would be because of the lower scale of business compared to what kind of opportunities we are chasing. But given that over the next 1, 2 years, we are chasing a target of $1 billion, so do you think that at that scale, there would be some kind of stable scale margins that you're looking at? Or at that scale also, it would be a little difficult for us to achieve a stable scale margins?
So I mean, like I said, right now the margins are impacted because we have lower sales than what we planned for. That's really the one that's biggest play. And then as a result, R&D costs are looking higher as a percentage of revenues. And then there's that impact of FX losses. As we scale up on our business, we will expect to see improved margins. And as business stabilizes, it will also remain steady and won't be as lumpy as we've seen in the last few quarters.
Okay. So just understanding would be at $1 billion kind of sales, you expect the Biosimilars business to have a stable scale margins because one comment that you recently made is you expect normalization when the business as a whole has inventory level normalized at the Mylan level, at the market level, at your level. So at $1 billion kind of business scale, do you expect that thing to happen?
That's right. Yes. Because you -- $1 billion is for the FY '22 -- is FY '22 guidance. I just want to caution that look at margins pre-R&D. We have not yet given guidance around the R&D spends.
The next question is from the line of Nithya Balasubramanian from Bernstein Research.
Just a quick one on Copaxone. So any color you can give us on when you expect to file back? What could be revenue time lines?
We expect to file back in the next few months. Since it's a major CRM, we expect the FDA to take anywhere between 8 months to a year to review. But we expect to respond back within this fiscal.
As in the next quarter, right, you would be able to...
Yes.
The next question is from the line of Charul Gupta (sic) [ Charulata Gaidhani ] from Dalal & Broacha.
Yes. My question pertains to -- for Aspart, have you got a target date?
The review, as I mentioned earlier, we are confident, and we will share the target date at an appropriate time later time.
Okay. Yes. Then secondly, in terms of the CapEx over the next 2 years, could you give me the segment-wise breakup in terms of biologics how much, generics and Syngene?
I think we have said in the past, give or take, $100 million per year per segment is what you should consider.
Okay. Yes. And last question on remdesivir, are we looking at exports to the...
Yes, yes, we will look at all opportunities.
Okay. But the current agreement is only for LMIC, right?
Yes, that's what I mean. So LMIC are over 100 countries. So I think that's a large market to look at.
Okay. Yes. So U.S. doesn't look likely?
No, we don't have.
No, we don't have. I mean Gilead has given the license based on a certain number of countries, and, of course, it excludes U.S., Europe and many other of the...
LatAm as well.
And LatAm as well. Yes.
The next question is from the line of Vrijesh Kasera from Mirae Asset.
Yes. Just a clarification. On the drop quarter-on-quarter on the biosimilar sales, you did mention much of it was because of external issues, be it COVID related or logistical issues. But I [indiscernible] quarter or if I see Q1 versus Q2, across the globe, there has been a substantial opening up of economies and month-on-month across businesses, we are seeing normalization happening. So it is kind of difficult to understand why in Q1 we reported a better quarter with INR 690-odd crores and this quarter, there has been a drop because of these external issues that you alluded to. So if you could just help me understand what exactly -- was it some internal issues as well that we faced which led to a drop?
So I mentioned earlier that it was basically an operational logistics issue, which prevented us from getting product out of our -- out of Biocon. So I think there was a demand, but we were not able to cater to that demand. So I think that is what we are fixing now and we have fixed it. And we hope it will reflect in the coming quarter.
So it was nothing related to any, like, earlier last year or -- which -- when we faced pegfilgrastim capacity constraint. Now we don't have those kind of constraints, probably some technical issues in getting the product manufactured or delayed [ distribution ]...
It wasn't the manufacturing, but let Shreehas explain.
This is Shreehas here. So let me just quickly explain that topic. I think if we just look at what we've done in Q1, we voluntarily ramped down certain aspects of our activities, which, given the long biologics manufacturing cycle, some of it flowed through into quarter 2. And as we look to ramp up our output into Q2, we have seen restrictions, particularly in personal travel, which has affected us from ramping up our operations in this particular quarter. So you're seeing us build the inventory, you're seeing us having the product, but you're not necessarily having that product leave our site in this particular quarter. So yes, you'll see that settle down and see more improvements in the coming quarters.
So if I have to just take this forward, so can we see some lost sales that we had this quarter coming back to us, say, next quarter or quarter going forward?
Yes. Yes. Your understanding is right.
And we are not quantifying that number as of yet?
It's basically a timing issue. And it's a lag issue. So I think if you look at that, then I think you will make up in the coming quarters. It is not a loss of sales in that sense. You haven't lost business.
Sure. Sure. Just a second question is on the market dynamics. Of late, there has been a lot of changes in [ regulations ] in the developed markets regarding clinical trials because -- by companies, which are expected to [indiscernible].
I can't hear you. You're breaking up. You're breaking up.
Mr. Kasera, you are requested to move to a better reception area, please. Your voice is breaking up.
Is it better? Sorry. Yes. So just a clarification regarding the regulatory landscape. Just of late, we have been witnessing that a lot of these developed markets, specifically U.S. and Europe, have -- are trying to reduce the clinical requirements and the development time lines required for developing a biosimilar. So basically, the newer entrants would kind of spend less on the biosimilar development compared to what we have done. So how do you, going forward, say, 2, 3 years down the line, see this landscape changing in terms of competition and incremental competition coming through in biosimilars because the return requirement for these companies would be much lower? So how do you think that would impact our business per se in these markets where the products we have already launched?
So that's an excellent question. Let me answer it by saying that this is how any new segment will open up. If you remember, when generics started, this was the same kind of challenge that the early movers had, the early companies had. They, obviously, were at a disadvantage when it came to these kind of abbreviated pathways, but they opened the path. So we have to -- we have done that. And now I think we will also benefit from the abbreviated pathways because, obviously, developing a biosimilar is fairly complex even before getting to the clinical path.So I think from that point of view, it allows us to get to the market even faster than others. So whilst others do have an opportunity and advantage of developing biosimilars cheaper and faster, I think it will also basically allow us to develop many more products, many more biosimilars faster and cheaper and, hopefully, keep us ahead of the curve.
The next question is from the line of [ Shreyan Jain ] from Apex Capital. It seems like we lost the connection for the current participant. I now hand the conference over to Mr. Saurabh Paliwal for closing comments.
Thank you, Steve. Ladies and gentlemen, thank you for being on the call today. If you have any further questions or need any clarifications, please do get in touch with us. Have a wonderful day.
Thank you. Ladies and gentlemen, on behalf of Biocon Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.