Concord Biotech Ltd

NSE:CONCORDBIO

Earnings Call Transcript 2024-Q2

[Operator]

Welcome to the Q2 and H1 FY '24 Earnings Conference Call of Concord Biotech Limited. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and may involve risks and uncertainties that are difficult to predict.

[Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Sagar Shroff from Strategic Growth Advisors. Thank you, and over to you, sir.

[Sagar Shroff]

Thank you, Aman. Good afternoon, everyone, and thank you for joining us on the Q2 FY '24 Earnings Conference Call for Concord Biotech Limited. Today, we are joined by Mr. Sudhir Vaid, Chairman and Managing Director; Mr. Ankur Vaid, Joint Managing Director and CEO; Mr. Lalit Sethi, Chief Financial Officer; and Mr. Prakash Sajnani, Compliance Officer and AVP accounts.

Company has uploaded its financial results and investor presentation on its website and stock exchanges. I hope everybody had an opportunity to go through the same. We will begin the call with opening commentary by the management followed by a Q&A session.

I would like to hand over the call to Mr. Sudhir Vaid, Chairman and Managing Director for Concord Biotech Limited. Thank you, and over to you sir.

[Sudhir Vaid, executive]

Good evening, everyone. Thank you for joining us on our quarter 2 FY '24 Earnings Conference Call. We are happy to report the robust financial and operational performance for quarter ended September '23. Our revenues during this quarter grew from INR 159 crores to INR 262 crores, a growth of 65% over the same quarter last year. EBITDA and tax in this quarter grew to INR 116 crores and INR 81 crores from INR 37 crores and INR 22 crores respectively, in quarter 2 of last year.

Similarly, our half yearly revenue stood at INR 457.2 crores, a growth of 55% with EBITDA margin at 42.4% and PAT margins at 29.6%. concord has cultivated a significant level of expertise in the fermentation process, allowing us to create and bring to market a diverse range of fermentation-based APIs. Fermentation is a complex procedure that demands specialized manufacturing knowledge, working with different type of microorganisms, meticulous control of various process parameters and multiple purification steps. This technical expertise along with years of manufacturing experience and diverse customer base creates a high entry barrier for this business.

Concord has emerged as the dominant player in the field of immunosuppressants, uniquely holding a complete portfolio of fermentation-based APIs for these specific drugs worldwide. Furthermore, we are working on creating leadership position on other specialized fermentation-based APIs in oncology, anti-infectives and antifungal space. In some of the APIs, we are already seeing this play outs, and we are getting good inquiries and orders for these molecules.

In addition to our technical proficiency, we operate extensive manufacturing facilities with a consistent track record of regulatory approvals and compliances. This enables us to supply to both regulated and unregulated international markets. Our robust research and development capabilities, coupled with an in-house R&D team have allowed us to develop these specialized products, including the manufacturing of the key starting materials, giving us the competitive advantages.

As a part of our forward integration, we had also commenced our formulation manufacturing of oral solid doses in 2016 and our -- and are on track to commence our upcoming injectable facility by quarter 1 of financial year '25. This will help us penetrate even deeper in markets across geographies. Over the years, we have nurtured our enduring relationship with key clients, including prominent global generic pharmaceutical companies. Currently, we serve over 200 customers across more than 70 countries providing both API and formulation products.

Going forward, we remain confident of our growth strategies of penetrating deeper for our cold molecule and an increasing wallet share among existing customers, adding new customers across geographies in regulated and emerging markets. Adding new molecules in the niche category to create a large product portfolio and offerings under one roof.

Thank you. And with this, I hand over the call to Mr. Ankur Vaid, Joint Managing Director and CEO, Concord Biotech Limited. Thank you.

[Ankur Vaid, executive]

Thank you, sir. We are delighted to announce a robust performance for quarter 2 FY '24, and our outlook for H2 remains optimistic and in line with our annual guidance.

In quarter 2 FY '24, we achieved revenue of INR 262 crores against INR 159 crores in the same quarter last year, with API revenues increasing by 46%. Our formulation revenue, which stood at INR 35 crores in this quarter is in line with our outlook of FY '23, '24. It is essential to emphasize that our financial results should be evaluated on an annualized basis rather than on quarterly one. This approach accounts for potential fluctuations in quarterly revenues. We are optimistic to surpass our historical 18% CAGR growth in this year.

We are pleased to share that following the recent regulatory inspection conducted by U.S. FDA, we have received the EIR of our Limbasi site, and no observations were given by them. this approval has unlocked additional capacities for global markets for our existing products, as subsequent to the U.S. FDA inspection, customers have started initiating the process of including the Limbasi facility in their dossier. With this, our customer gets the flexibility to procure API from both sides. This development is expected to fuel revenue growth in both regulated markets and other markets.

For the upcoming year, our company's primary focus will be on consolidation and optimizing the utilization of our capacities at Limbasi and Valthera plants. This strategic move is poised to serve as a primary catalyst for revenue growth. By enhancing operational efficiency and leveraging our operations, we anticipate an improvement in our EBITDA margins.

In quarter 2, our export revenue stood at INR 138 crores as against INR 72 crores in quarter 2 FY '23. This increase can be attributed to our successful expansion into both regulated and emerging markets, driven by our diverse product portfolio spanning across various therapeutic areas.

Let me speak about our growth drivers going forward. Firstly, in our API business, we anticipate growth through our existing product portfolio. This growth will be fueled by industry expansion, steady shift of market from innovators to generic alternatives, and an increased market presence in global markets. This potential is bolstered by our robust manufacturing capabilities, technical expertise and state-of-the-art manufacturing facilities, all complemented by consistent regulatory approvals on a timely basis.

Another growth driver for Concord is the addition of new APIs in the niche category to create a large product portfolio and offerings. On the back of our strong and competent R&D team, having expertise in fermentation and semisynthetic APIs and continuous developments, we are confident of commercializing products across niche fermentation and semisynthetic based APIs across therapies. We have a pipeline of products currently in development stages, which are slated to commercialization over the next 2 to 3 years. This strategic move allows us to expand further and tap into new opportunities.

Some of the indicative products in the pipeline includes voclosporin, which is an immunosuppressant, fidaxomicin, daptomycin, which are anti-infectives, epirubicin, doxorubicin, idarubicin, and pirarubicin, which falls under the oncology. There are several other products which are in the pipeline at various stages.

Speaking of our formulation business, formulation revenues have been steadily increasing. We have close to 77 approved formulation products in India and 4 ANDA approvals for our 6 products from U.S. FDA, and a total capacity of 802 million units. We have also filed dossiers in the emerging markets. In several of these markets, we have got approvals for our products and have started commercial sales. We expect several other markets to open up for us in the coming years. Also, with our new injectable facility commercializing in quarter 1 of FY '25, we are confident of increasing our business from the formulation vertical as well.

Over the years, Concord has diligently cultivated its capabilities and an extensive range of products, positioning itself at the forefront of competition. We have steadily expanded our customer base across global markets. And this strategic approach has solidified our reputation and enabled us to make deeper inroads by attracting additional customers and further penetrating our existing client base.

To conclude, I would like to say that with our strong presence across the fermentation value chain, market leadership in several of the fermentation APIs and focus on complex niche fermentation APIs across therapeutic areas and increasing utilization of our capacities, we are confident of outperforming the industry growth.

With this, I hand over the call to Lalit Sethi for financial highlights for quarter 2 of this financial year. Thank you.

[Lalit Sethi, executive]

Thank you, Ankur. I will take you through the financial performance of this quarter.

On the revenue front, our revenues for quarter 2 financial year '24 stood at INR 262.4 crores as compared to INR 158.9 crores in the same quarter last year, which represents a growth of 65%. Revenues for H1 grew by 35% from the same period last year. Our revenue from API business grew by 46% in this quarter and stood at INR 227.4 crores. In H1 FY '24, API revenue stood at INR 390.3 crores, representing growth of 26% from the same period last year.

Revenue from Formulation business in this quarter stood at INR 34.9 crores and for H1 FY '24, it stood at INR 66.9 crores. Domestic revenue grew by 44% and 38%, respectively, for quarter 2 and H1. Our export revenues for quarter 2 grew from INR 72 crores to INR 138 crores. And for H1, export revenue grew from INR 174 crores to INR 228 crores.

Speaking on EBITDA, reported EBITDA on a stand-alone basis for quarter 2 of this financial year stood at INR 119.2 crores, which is 45%. EBITDA for H1 stood at INR 191 crores, which is 42%. EBITDA including the share in profit from the JV stood at INR 115 crores with a margin of 44.1% in quarter 2 of this financial year.

On profit after tax, our profit after tax for quarter 2 of this financial year stood at INR 81 crores, which is 31% and PAT for the H1 stood at INR 135.5 crores, which is 30% of revenue from operations.

So with this, I shall now leave the floor open for question and answer.

[Operator]

[Operator Instructions] The first question is from the line of Alankar Garude from Kotak Institutional Equities.

[Alankar Garude, analyst]

Congrats on a very strong performance. So we're seeing a big surge in this quarter in growth, 65% year-on-year in top line. Now was there any lumpiness with expense this kind of a growth? I'm asking because if you look at our performance in the first quarter, we were at sub 10% year-on-year growth. So I just wanted to check whether there was any postponement or maybe even a preponement of orders in this quarter?

[Ankur Vaid, executive]

Basically, in this quarter, the sales has increased from INR 159 crores to INR 262 crores, the growth of 65%. However, Concord should be viewed from an annualized basis rather than on a quarter-to-quarter basis. So in fact, there could be quarter-to-quarter variations in the procurement pattern of our customers, maybe due to several reasons, such as the upcoming production schedule at the customers' end. So as a result, they may procure more in a specific quarter than the other quarter. So -- however, we do not see any change in the annual demand and that we have forecasted from our customers.

So therefore, on an annualized basis, we expect to do better than our historical CAGR of 18% growth. The same would be for the profitability as there would be certain costs, which are expected to be incur in the second half of the year. So however, we expect the EBITDA margin to grow better than our growth in the sales.

[Alankar Garude, analyst]

Sir, can you help with maybe more details on whether this -- the change in the ordering patterns in this quarter, was it specific to one customer or a set of customers or maybe was it for just one product or maybe a set of products? Any details on that would be helpful, sir.

[Ankur Vaid, executive]

Yes. So this we have seen across several of our customers because as you would have seen that our first quarter growth was close to around 7% to 8%. So we do expect that some of the spillover would have happened to quarter 2 and there could have been some preponement of quarter 3 into the quarter 2 sales. However, we have seen these across all our segments, the growth that has come up. So as a matter of fact, I'm pleased to inform that we saw higher growth in the oncology and anti-infective segment vis-a-vis our immunosuppression. So while all of them grew, the rate of growth was higher in the onco and infective segment.

So I would say that this is primarily based on how some of our customers have picked up material, and there have been some spillovers from previous quarters or from the coming quarters into this specific quarter 2. But as mentioned by Lalit, we are optimistic that we will grow better than our historical CAGR, and we are -- we do not see any changes in terms of -- or any concerns in achieving that number there on an annualized basis.

[Alankar Garude, analyst]

Sure. That's helpful, Ankur. A follow-up to that would be -- you mentioned about being optimistic about the second half as well. Now in our previous call, we had mentioned about 40 to 60 mix broadly between the first half and the second half. Now given the strong performance you've seen in the second quarter and consequently the first half, should we expect a similar 40-60 mix in This time around as well, in this fiscal as well?

[Ankur Vaid, executive]

So I would say that, again, coming to what Lalit said that while we have seen that historically, it does not really mean that going forward also every year, this could be a similar trend because of this lumpiness in the sales that one would observe. So while you are confident that in order to achieve that CAGR growth that we spoke about, our quarter 2 would have to be -- would be better off than what our quarter 1 is. But the percentages could be varying in order to achieve our annualized growth number.

[Alankar Garude, analyst]

Understood. And maybe one final question. See on the annual guidance as well, right? You mentioned about growing at more than 18% year-on-year in FY '24. Now the first half growth itself is around 35%. So I know you mentioned 18-plus percent but are you being a bit conservative in your top line guidance for this fiscal?

[Ankur Vaid, executive]

No, we would continue to stick with our guidance that we have and one should go with that guidance going forward as well.

[Operator]

[Operator Instructions] The next question is from the line of Jigar Valia from Ohm Group.

[Jigar Valia, analyst]

Congratulations on the great set of numbers and thanks for the opportunity. If you can help us understand the update on the various plans and in terms of utilization as well, it would be great. So maybe your perspective around time lines for the FDA and the utilization at the various plants.

[Ankur Vaid, executive]

In fact, as far as the capacity utilization of these 3 plants are concerned, in Unit 1, we had been operating at a capacity of around 78%. And in Limbasi, we had been operating on around 35% to 36%. And in Unit 2, we have operated at around 14% to 15% capacity utilization in the H1 of 2024.

[Jigar Valia, analyst]

In terms of broader time lines, in terms of the FDA approvals for this, and will the injectable plant, which will come up at Valthera that also would be clubbed in the final approval come only after that or [ less? ]

[Ankur Vaid, executive]

So the injectable plant, as we mentioned, will be ready by quarter 1 of FY '25. And the next financial year will be more towards getting the validation batches and doing the filings. And this facility is primarily targeted towards India and emerging markets. So there could be a possibility that by the end of next financial year, we could get some regulatory inspections from some of the emerging market authorities but it will all depend in terms of how the filing of the dossier go from the injectable site.

[Jigar Valia, analyst]

Got it. So as of now, Limbasi, Valthera continue to be towards either domestic or ROW markets and Dholka would be towards both regulated as well as the other markets?

[Ankur Vaid, executive]

So Dholka is for global markets because it is approved by -- inspected by U.S., Europe, Japan, Korea and several other authorities. The Limbasi facility, which is the new API facility built in '21, that facility is also U.S. FDA inspected. So it happened -- the inspection happened in June '23 and -- which was concluded with 0 quality observations. So with that, we have now continued -- we have started our supplies to several of our customers in the regulated markets as well from that Limbasi facility. So Limbasi facility caters to several regulated markets as well as India and emerging markets.

And Valthera facility, which is the formulation facility is approved by U.S. FDA and several other emerging markets from where we are supplying our finish formulations to global markets.

[Jigar Valia, analyst]

What would be the mix for regulated markets for Q1, Q2? And a follow-up is that, would the ROW margins be similar to the domestic business?

[Ankur Vaid, executive]

As far as the U.S. and the ROW markets are concerned, it's around 17% and 33% of the total sales in quarter 2 and H1 numbers. With respect to the margins, our margins, which has been regulated as well as emerging markets are more or less the same.

[Operator]

[Operator Instructions] The next question is from the line of Vivek Agarwal from Citigroup.

[Vivek Agarwal, analyst]

Congrats for a good set of numbers. Ankur, if you can talk about how the pricing trends further in some of the top products that would be really helpful. And basically, how is the growth contributed as far as the pricing is concerned as well as the volumes are concerned? So if you can throw some light.

[Ankur Vaid, executive]

So for the half year numbers, all the growth that had come has come through volume only. Our pricing has been relatively stable. And as we mentioned that in case we have added newer customers, there could have been a differential pricing to those customers. But otherwise, our pricing has been fairly stable for all the products, and the growth has been primarily volume driven for us.

[Vivek Agarwal, analyst]

Perfect. That's super helpful. And in terms of new customers, basically, how that is tracking in? In the first half, we have grown 35% Y-o-Y, right? So would you like to attribute the part of a specific number that has been driven by the new customer addition in your existing portfolio.

[Ankur Vaid, executive]

So we have added new customers in this 6 months. And I believe that the number Lalit quoted around 5 customers have been added in Formulation and API business.

[Vivek Agarwal, analyst]

Okay. And in terms of margin side, we have seen around 200 basis point kind of expansion in the gross margin. So is it largely due to higher sales operating leverage? Or is there any change in cost of materials, et cetera?

[Ankur Vaid, executive]

No. So the margin primarily has been on account of operational efficiencies that have come in, which have helped in higher EBITDA margins from -- for us as compared to the sales growth that has happened. So it is primarily because of the operational efficiency that the EBITDA margin has expanded relatively significantly higher than what the growth in the sales number.

[Operator]

The next question is from the line of Chintan Sheth from Girik Capital.

[Chintan Sheth, analyst]

Congrats for a very great set of numbers. A couple of questions on -- again, on the revenue aspect. If you look at last year [ base ] at least for Q2, the Formulation revenue has kind of sequentially declined. Is there any lumpiness in the previous year in FY '23, which led to 40-60 split between first half and second half? And that kind of -- getting kind of corrected this year as we can see some shift from second half to first half. Is -- that can be influence because even seem to be -- 1Q to Q2 last year has seen a 12% revenue decline. So is there any -- and because of that, the first half revenue share is 40% for the annual year. So if you can explain what has happened last year and whether this year will be slightly different from that.

[Ankur Vaid, executive]

So in quarter 2 last year, there was some return from one of our customers, from our U.S. partner because of which it had a negative impact on the formulations sales, which was a onetime impact. And the reason for the lower number in the last year quarter.

[Chintan Sheth, analyst]

Okay. Okay. And the utilization seems to be picking up and from last year's closer the Limbasi has improved from 75% to 78%. How soon -- any indication in terms of what will be year-end utilization levels we are targeting based on the orders we have?

[Lalit Sethi, executive]

In fact, utilization for Dholka plant is around 78%, which was 75% in the last year. Limbasi, it is 32% in H1. And...

[Chintan Sheth, analyst]

For Limbasi, is it 32% or 35%? You mentioned 32% to 35%.

[Lalit Sethi, executive]

32% is there. Last year, I think it was 30% -- around 30%. And Valthera, it is around 15%, which was 12% last year.

[Ankur Vaid, executive]

So just to add to what Lalit mentioned that the oncology segment saw good growth for us and the oncology facility is only there in Dholka and not in Limbasi. So this also kind of correlates with that, that the higher utilization number beyond a certain point is getting attributed to quite a lot extent towards the oncology, which kind of contributed to this half year number of growth.

And at the Limbasi facility, we continue to see higher capacity utilizations on account of deeper penetration into market and engaging more with our customers. And the Valthera facility, we are seeing good traction in the emerging markets as well as in India market, which is leading to higher capacity utilization for the formulation facilities.

[Chintan Sheth, analyst]

Great. Okay. And just last on -- last bit on the oncology part. This is the new business, which we are getting and as it kind of getting ramped up or this was new customers? Any color on the oncology part, if you can? And how sustainable is this ongoing business, which will continue for upcoming quarters?

[Ankur Vaid, executive]

So I think it's a blend of both. So our existing customers, we are -- there is an increase in the wallet share and we are also reaching out to newer customers for our products. So I would say it's a good blend between of the two, because of which we are seeing this increase in the oncology segment as well. And going forward, as I mentioned that with API manufacturers, once we start engaging with our formulation customers, there is a lot of stickiness to the business. So we expect this to continue over the years. And as Concord is known for creating a leadership position for its APIs, we expect to create similar leadership position on the other segments such as onco and infectives and antifungal as we have done it for the immunosuppression segments over the years.

[Operator]

[Operator Instructions] The next question is from the line of [indiscernible] from Equentis Wealth Advisory.

[Unknown Analyst]

Wanted to check on a couple of things. The first one being the CDMO opportunity. So while last we spoke, we did mention that the current year would not include any opportunity in the estimate. So my -- when do we -- I mean, from the past conversations, if it would be good if we can have some update there given Limbasi is also now doing well on utilization. So any update on further conversations and when we should start building in numbers from that opportunity?

[Ankur Vaid, executive]

So CDMO is a segment that we have we have considered it to be from a medium term to a long-term perspective only because while we have free capacity at our Limbasi facility, and are also getting regulatory approvals for that side, opportunities like CDMO does take its own set of time and hence we have put it from a medium- to a long-term strategy.

That being said, we are engaging with potential customers. We are discussing with them and showcasing our strength and capabilities so that there is a potential opportunity for us to kind of work with these clients. But one should consider this from a medium- to a long-term perspective only.

[Unknown Analyst]

Okay. So when you say engaging with customers, is it primarily our existing customers? Or are we speaking with some new clients as well within the state?

[Ankur Vaid, executive]

So most of the discussions that are happening or where we are reaching out or with respect to new customers, who are because these set of customers would either be people having very, very large presence within the API segment and they want to contract it out rather than formulation players with whom we typically engage in. So the customer base is slightly different from the ones that we engage.

[Unknown Analyst]

Okay. One question on Limbasi. So presently, as we stand at around, say, 32% utilization and on the last call, we did speak of about the utilization of 75% to 80% in the next 2 years. So over the at least next 2 years, I mean, how do we look at the utilization, say, from 32%, 34% now, so full year where it would be, say 35 -- I mean, '25 and '26 next couple of years tentatively?

[Ankur Vaid, executive]

So I won't be able to give you guidance on how the capacity utilizations would work out. But as I mentioned in our previous discussions as well that we expect to have a CAGR growth of around 25% over the next 5 to 6 years on the top line wherein much of growth coming from the Limbasi facility. And given our asset turnover, given how the growth that we are looking on a 5- to 6-year period, one can look at from how the capacity utilizations could be. But reaching to 70% to 78% is going to be a 4- to 5-year process and not a 2-year process. Because we have created almost twice the capacity that we have at Unit 1, which is 800 meters cube.

So with that -- and considering our growth guidance for the next 5 to 6 years, it will be at least 4 to 5 years before we start reaching to that level of the utilization that you spoke about.

[Operator]

The next question is from the line of Alok Dalal from Jefferies India Private Limited.

[Alok Dalal, analyst]

So first one on contribution of top 5 APIs for the quarter and first half, please?

[Ankur Vaid, executive]

So we are not having and sharing details on a product from product or our top 5 molecule basis. But yes, I think what we can share is that products from the oncology segment has contributed -- has seen a lot of traction. And we see that the segments such as the oncology are picking up quite a lot what we've seen this year. And we're also seeing good traction from the other segments such as the anti-infective segment as well. So going -- seeing good contribution from across the therapies.

[Alok Dalal, analyst]

Okay. And Ankur these -- the traction that you see are from new customers or business wallet share gains from existing ones?

[Ankur Vaid, executive]

It's a blend of both, Alok. So we are primarily driven by increase in the wallet share because new customer addition, while it is contributing, it is not contributing that significantly to the overall onco growth but it is a blend of both. But I think our engagement with customers have now started to increase within the other segments as well, wherein -- which is resulting in this.

[Alok Dalal, analyst]

Okay. Second one is on the Japan JV. So can you provide more color on what type of JV arrangement is this? Is there some technology involved in this JV?

[Ankur Vaid, executive]

No, basically, it's the sale and purchase of the transaction, which happens with the JV. Concord India sends the material to Concord Japan for onward selling in the Japanese market. This is a kind of an arrangement over there. But as for the Japanese law, it is a requirement that there should be one caretaker, therefore, there is a separate entity, which has been created in Japan for that purpose.

[Alok Dalal, analyst]

Okay. Okay. And Ankur, you mentioned about some new costs, which will come in second half. Can you provide some more color on what these costs are?

[Ankur Vaid, executive]

It is expected to be on injectable units. For example, we are expecting to get it commercialized in the month of December. And for the first quarter, there could be some expenses, which will be spend on the validation batches and it would be on the stability. So those kind of expenses are expected to be there in quarter 4.

[Operator]

The next question is from the line of Monish Shah from Antique Stockbroking.

[Monish Shah, analyst]

Sir, just a question on the existing products. Amongst our key products like tacrolimus, cyclosporine and everolimus, there are different dosage forms like an extended release or a gel or a solution, which is going off patent next year and a couple of years after. So just wanted to check, does that give us a sizable opportunity from generic entry standpoint?

[Ankur Vaid, executive]

Yes, that does. And we are working with several customers for such kind of new formulations as well.

[Monish Shah, analyst]

Okay. And does it drives your revenue guidance? I mean that is a sizable part of the revenue guidance?

[Ankur Vaid, executive]

So it will all depend in terms of how the generic players kind of get into the products once it becomes generic. So when we talk about the overall guidance over the next 4 to 5 years, such kind of opportunities have been building to that.

[Operator]

The next question is from the line of Huseain from Carnelian Capital.

[Huseain Bharuchwala, analyst]

Am I audible?

[Ankur Vaid, executive]

Yes.

[Huseain Bharuchwala, analyst]

I just wanted to understand, sir. Sir, we were in discussion about looking at some of the CDMO opportunities. Is there any opportunity if this comes into or is there any discussion with some of the clients also CDMO part?

[Ankur Vaid, executive]

So we are in discussion with the customers but these customers, again, are evaluating multiple vendors. They may have there are different time lines to kind of look at in terms of when they want to initiate such kind of CDMO opportunities. So while there are engagements that do happen, it may take time for it to rectify. So discussions do happen, but that's why we have put it into slightly on the medium term because which of those kind of really reach out to a level of contract manufacturing level is something to look at.

So I would say that there has been -- compared to previous year, there have been a lot more discussions happening. Both from customers and because they're seeing Concord having the capacities, having approvals. And we also are reaching out to our customers because of the capacities and approvals in place. So we are evaluating and are hopeful that we should see some opportunities getting built in, in the coming years on the CDMO front.

[Huseain Bharuchwala, analyst]

Got it. Got it. And second, sir, since you said that we will -- I think, sir you said that we will grow at 18%. So this year we'll grow at 18% plus 1% or 2% additional. And sir, you said 25% plus growth over the next 4 years. So I think there's some understanding on my end. So what should be the growth guidance that we should expect from the company going forward?

[Ankur Vaid, executive]

So what Lalit mentioned is that historically, we have grown at a CAGR of 18%. And we have different growth levers both at the API as well as the finished formulation, which will help us grow at a CAGR of 25% over the next 5 to 6 years. Because -- and this is -- again, this is going to be a gradual process from going from 18% to 25% CAGR because we are -- like in this year, we have got the approval from the U.S. FDA. Customers are including our Limbasi facility into their dossier. So we will see some growth happening on that end. There will be some growth coming in from the formulation as well.

Subsequent year, we would also see that there will be more consolidation at these two fronts but also the injectable business will start kicking in. And then, of course, new R&D products as they keep getting commercialized maybe one to two products every year, they will also slowly and steadily start contributing. So that's why all these three, four opportunities went clubbed together will result into a 25% CAGR growth over the next 5 to 6 years. And one has to see it on a gradual move in terms of how we go from 18% to 25%.

[Huseain Bharuchwala, analyst]

Got it. Got it. Got it. And secondly, sir, when you said that there was one customer whose product got returned in Q2 of FY '23. So as a result, we are seeing some sort of year-on-year comparison, there is some lumpiness. Was it a sizable return? So should we consider this as a lumpy quarter for this year, wherein the numbers are higher than year-on-year basis? How do we see that? Because I understand you said that we should look at the whole year basis. But still, we are not able to contemplate because when we do build into our model, I am unable to understand exactly how the year will shape up for the company and how -- was it -- is this comparable year [Technical Difficulty]

[Ankur Vaid, executive]

Sorry, we lost you.

[Huseain Bharuchwala, analyst]

So I'm just trying to understand, in Q2 of FY '23, you said there were some product returns from -- on the formulation side.

[Ankur Vaid, executive]

Correct.

[Huseain Bharuchwala, analyst]

So there was -- so there must be some lumpiness in this quarter. Should we consider that there was some lumpiness or no, it wasn't in that case?

[Ankur Vaid, executive]

So I would say the lumpiness would have been probably in the last quarter -- in the quarter of the last year because of this onetime effect that came in because of the formulation return. But this year, I think we have seen steady growth in our formulation sales because newer markets have opened up and also our domestic Formulation business is growing. So that's how I would look at this year versus the last year. So the lumpiness would be more correlated with last year rather than looking at it from this year perspective.

[Operator]

The next question is from the line of Vivek Agarwal from Citigroup.

[Vivek Agarwal, analyst]

So as the company has highlighted like that in the recent quarter or in the first half if the oncology and the anti-infectives have picked up. So is it possible for you to share the wallet share of immunosuppressants [indiscernible] in this quarter or the first half and for the share of oncology and anti-infectives?

[Ankur Vaid, executive]

Sorry, we did not get you clearly. Could you repeat that, please?

[Vivek Agarwal, analyst]

So if you can help us understand the share of revenues from immunosuppressants and oncology and anti-infective or antifungal the first half revenues.

[Ankur Vaid, executive]

In the first half of the year, the contribution from immunosuppressants has been to the extent of around 74% to 75% of the total API sales. And oncology has been in the range of around 13% vis-a-vis 9% in the same period last year.

[Vivek Agarwal, analyst]

Is it fair to assume that in oncology, is the everolimus that is picking up?

[Ankur Vaid, executive]

So yes, our oncology segment, products in that segment such as everolimus, midostaurin, and other products, which are there in that segment are seeing good traction. So it is not only just one product but we have close to seven to eight products in that segment. And we are seeing good traction in these molecules.

[Vivek Agarwal, analyst]

That's perfect. And in terms of margins, would you like to give any ballpark numbers for fiscal '24, given that you already charged close to 42% in the first half. Any range that will end up for the full year FY '24.

[Ankur Vaid, executive]

So I think what we discussed earlier was that if we the growth in the EBITDA should be better than the growth that one would see in the top line because of the operational efficiency that gets built in.

[Operator]

The next question is from the line of Chintan Sheth from Girik Capital.

[Chintan Sheth, analyst]

One thing on the new product development side, we mentioned couple of molecules in infectives -- anti-infective, couple of in oncology, and on in immunosuppressant. Any ballpark market size, which we are looking at in those product categories will be how much related to what we are currently targeting the addressable market from the existing 20 portfolio versus this new 5, how much it will add to that, if you can -- just a ballpark number would be help.

[Ankur Vaid, executive]

So the addressable market for the new products is close to around $2.5 billion at the formulation level. So while we don't have data on the API level but if one would consider around 30% to 40%, we're talking somewhere around $750 million is the opportunity that one could look at. However, these products once they become commercial, it will be a slow and steady process for us to reach to a leadership position on these molecules. However, we are confident that given our R&D expertise. We have full confidence that there is a path and we will be able to go through that in order to have that leadership position on these molecules. So these are sizable markets for these APIs but it will be some time before we start having a sizable contribution in the overall revenue with respect to these new [ molecules. ]

[Chintan Sheth, analyst]

Right, right. And in terms of gross margin, I can see that for past 2 quarters, we have been delivering very -- kind of -- almost 80% kind of gross margin right now. So any risk in terms of enterprise pressure you are witnessing or any -- you mentioned the pricing set is not there. It's largely driven by volume growth. But any input price pressure, which we are foreseeing right now or we can expect this 80% gross margin to continue going forward?

[Lalit Sethi, executive]

So basically, in the fermentation business, the feed, which is required to be given to the microbes is primarily agro-based products. So these products are easily available and no pricing pressure has been seen in the last 1 -- more than 5 to 7 years. So the stress on margins is very -- not very significant, which can be seen. The reason being we have about 200, 300 products of agro-based products. So in case of any prices, which is increasing on one or two products may not have a significant impact on the gross margin. So we don't see any threat on the gross margins.

[Chintan Sheth, analyst]

And no pressure on the pricing side as well. The pricing remains pretty steady so far, right?

[Lalit Sethi, executive]

Yes, this has been quite steady.

[Operator]

Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference back to the management for their closing remarks. Thank you, and over to you.

[Ankur Vaid, executive]

So thank you, everyone, for joining on our quarter 2 FY '24 earnings call. We hope we have been able to address all your queries. For any further information, please get in touch with us or SGA, our Investor Relations Advisers. Thank you once again. Have a good evening.

[Operator]

Thank you very much. Ladies and gentlemen, on behalf of Concord Biotech, we concludes this conference. Thank you all for joining us, and you may now disconnect your lines.