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Eris Lifesciences Ltd
Earnings Call Analysis
Q3-2024 Analysis
Eris Lifesciences Ltd
In a significant move to bolster its market position, Eris Lifesciences entered into an agreement to acquire a 51% equity stake in Swiss Parenterals Limited, valued at INR 1,250 crores based on forward EBITDA multiples. This deal is strategically structured, with Eris' Promoter Group acquiring an additional 19% at closing, resulting in a combined 70% stake and limiting additional debt for Eris. With INR 200 crores to be paid upfront and debt financing planned, the aim is to achieve financial closure by March 31st, 2024.
Eris has maintained its coveted status among the top 10 fastest-growing companies, with a stellar growth rate that outpaces the market by 600 basis points. Strong performance across core therapies, like diabetes and cardiovascular, which form 63% of revenue, and exceptional strides in emerging therapies, have propelled a market-exceeding growth of 28%, quadrupling the industry average.
Eris showcased progress on its new product commercialization, launching two first-in-market fixed-dose combinations and a new molecule combination, all from their R&D pipeline. In addition, a dermatology product lineup is poised for release, and commercial production has kicked off in their Gujarat facility, signaling ahead-of-schedule margin improvements.
The injectable anti-diabetes franchise demonstrated significant revenue growth, with a current run rate of nearly INR 5 crores per month. Approvals for Liraglutide and Glargine are set to further enhance this vertical's performance in the coming quarter, contributing to margin improvement.
The expansion of the R&D pipeline to 26 candidates is set to introduce novel fixed-dose combinations and US-approved drugs to the Indian market for the first time. Successful launches have positioned three mother brands—Tayo, Gluxit, and Remylin—on the cusp of surpassing the INR 100 crores revenue milestone, indicating a robust branding strategy and exceptional market acceptance.
Branded Formulations remain the cornerstone of Eris's revenue, registering a 16% year-on-year growth. With quarter 3 gross margins reaching 83% and a notable EBITDA margin increase to 37%, the fiscal health of the company appears robust. These gains are bolstered by consolidated revenue growth and operating cash flows, reflecting the company's return generation capacity and effective capital management.
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Ladies and gentlemen, good day, and welcome to the Q3 FY '24 Earnings Conference Call of Eris Lifesciences Limited. We have with us on the call today Mr. Amit Bakshi, Chairman and Managing Director; and Mr. V. Krishnakumar, Chief Operating Officer and Executive Director. [Operator Instructions] Please note that this call is being recorded.
I now hand the conference over to Mr. V. Krishnakumar, Chief Operating Officer and Executive Director of the company. Thank you, and over to you, sir. Please go ahead.
Am I audible now?
Yes, sir. Please go ahead.
Wonderful. Welcome, everybody, to our quarter 3 conference call. As we get into today's conversation -- yes. So as we start today's conversation, we will start with recapping our journey since the public listing due date. So we had a public listing in financial year 2017. And if we look at where we've traveled over the last 6 years, so our market rank at the time was #29 and now we address a covered market of around INR 35,000 crores. And over a period of 6 years, we have evolved to market rank #21, and now we address a covered market of around INR 90,000 crores.
So over this period, we have generated an operating cash flow of around INR 2,100 crores, and secured external funding at competitive rates. In terms of capital deployment, we have invested around INR 1,900 crores in inorganic growth. We have deployed another INR 400 crores by way of CapEx and another INR 400 crores by way of dividend and buyback. We have expanded our market share in diabetes, which is our core therapy area, from 3.5% to 5%; and in VMN from 1% to 2.5%.
We have successfully diversified into new therapies, which include dermatology, CNS, women's health, nephrology and insulins. And all of this has been achieved while keeping the fundamental strength of our business model intact. Our 6-year average gross margin continues to be more than 80%. EBITDA margin of more than 35% and operating cash flow to EBITDA ratio of more than 75%.
We have achieved significant diversification in our specialty mix over the last 2 years. So our core therapies or diabetes, CVD and VMN, which used to account for 76% of our revenue now accounts for 63%, and our emerging therapies, consisting of derma, CNS, women's health and nephro, now account for nearly 30% of our revenue.
There has been a clear-cut value creation through our dermatology acquisitions. So as you all know, we deployed INR 1,265 crores across 3 deals in financial year '23, primarily to build up our dermatology franchise, and we are happy to share that the expected revenue of this business in the current financial year is to the tune of INR 375 crores, with an EBITDA of INR 130 crores. This marks significant value creation over a period of less than a year, where we have an FY '24 EBITDA margin of 35%, which is up from 24% in FY '23 and 10% in FY '22.
So effectively, we have paid a 1-year forward multiple of 10x EBITDA for this acquisition, which represents the financial discipline that we exercise when we evaluate deals. And this experience has also helped us realize that we might be good at turning around underoptimized businesses.
We expect strong cash generation and significant growth ahead. The projected operating cash flow from our business during the next financial year is -- next 3 financial years is expected to be in excess of INR 1,800 crores, and the projected operating cash flow for the next 4 to 5 years is expected to be in excess of INR 6,000 crores. And as we look ahead in terms of where we want to be over the next 4 to 5 years, we clearly articulate our Vision 2029, which is that we want to be a INR 5,000 crores revenue company in financial year FY '29.
In terms of initiatives to get there, we would like to announce our acquisition of Swiss Parenterals, which is a segue for us into the sterile injectable space. Swiss Parenterals is a dossier-driven business in generic and specialty injectables focused on emerging or RoW markets. What makes Swiss Parenterals attractive to us, to walk you through some of the key points, Swiss currently derives 100% of its business from the export of sterile injectable products to more than 80 RoW markets in Africa, Asia Pacific, Middle East and Latin America.
We find this a very exciting platform to build an India sterile injectables play. With a strong product portfolio and manufacturing capability that Swiss brings to the table, it provides the ideal platform for us to launch an India-focused sterile injectables business. Swiss manufactures the widest range of SVPs in its 2 manufacturing units in Gujarat. These are accredited by more than 50 regulatory agencies, including some of the stringent bodies like EU-GMP, Brazilian Anvisa, Mexican Coferpis and Australian TGA.
We find Swiss' business model very interesting. It's a dossier-driven model, which is ethically an IP-driven business. The existing product range comprises of more than 1,000 active dossiers across nearly 200 molecules, and the growth pipeline consists of another 1,000-plus dossiers across existing and more than 40 new molecules.
Swiss has an R&D team with significant sterile development capability, including complex technologies such as liposomal, microsphere, oil-based and depot injections. Swiss has a strong set of financials, with the FY '23 revenue of INR 280 crores, a 37% EBITDA margin and a 25% profit after tax margin. The business model of Swiss is debt free and cash accretive.
Looking ahead, the combination of Eris and Swiss Parenterals throws up some new and very exciting growth opportunities. To walk you through these opportunities, Eris is presently focused on the Indian market and Swiss is presently focused on the RoW market. So the core competence for us today is that we have a strong platform as a leading domestic pharmaco, and we are present at more than 8,000 midsized hospital OPDs across India.
The platform that is provided by Swiss gives us a direct entry into the small volume parenterals market in India. So we will leverage the Eris platform and Swiss product range to establish an SVP branded formulations business in India. This is an additional addressable market for us of more than $3.5 billion per annum.
Swiss business is predominantly an injectables business now, but the channel presence and the distribution reach of Swiss in the RoW markets gives us the opportunity to build an oral solid dose business in the RoW markets. Towards this, we will leverage the Eris oral solid manufacturing capability, Swiss' RoW channels and distribution presence and the marketing expertise of Eris Lifesciences. And as far as the core business of Swiss continues, small volume parenterals, we will continue investing in expanding Swiss' product rate, dossier portfolio and market coverage. And the addressable market here is a significant opportunity. Because RoW generics, there's a market size of more than USD 120 billion, where steriles account for about $12 billion and orals account of more than $100 billion.
To give you a quick overview of the manufacturing footprint Swiss Parenterals. Swiss has 2 manufacturing units based in Gujarat. Unit 1 is for general and Unit 2 is for betalactams and antibiotics. As you can see, these units are capable of manufacturing the widest range of sterile dosage forms, including liquid vials and ampoules, lyophilized, pre-filled syringes, dry powder injections, inhalation anaesthetics and so on. Unit 2 has dedicated blocks for betalactams, penicillins, cephalosporins and carbapenems. Both these units are presently being run as a single shift operation, providing significant additional capacity for growth.
To take you through some of the details around R&D capabilities and regulatory accreditations. Swiss operates an R&D lab which includes state-of-the-art formulation development, analytical development and pilot plant infrastructure. It has a team of 15 R&D professionals, with a track record of having developed complex dosage forms. Swiss facilities are accredited by more than 50 agencies worldwide. Some of the illustrative ones being EU-GMP, Brazilian Anvisa, Mexican Cofepris and Australia TGA.
And Swiss brings an impressive collection of intellectual property, with a product portfolio of more than 1,000 active dossiers across nearly 200 unique molecules in 80 plus countries, at a pipeline compassing another 1,000 dossiers across existing and 40 plus new molecules. So all in all, we believe this is an ideal platform for Eris to leapfrog into sterile injectables and the RoW markets.
To also remind ourselves of Eris' oral solid manufacturing capability. We have 2 manufacturing units at Guwahati and Ahmedabad, which are capable of a wide range of oral solid dosage forms, including tablets, capsules and soft gels. The Ahmedabad unit also has the ability to do ointments. All these units are WHO GMP compliant. Going forward, we propose to secure fixed approvals for these facilities and jump start RoW exports by leveraging Swiss' channel relationships.
To give you an overview of the deal contours, Swiss Parenterals has been valued at INR 1,250 crores, which implies 11 to 12x EBITDA multiple of FY '24 expected. Eris has signed a definitive agreement for acquisition of 51% equity stake in Swiss Parenterals Limited for a consideration of INR 637.50 crores. Out of this INR 200 crores will be paid at closing and the remaining INR 437.50 crores will be paid after 12 months from closing.
An additional 19% stake in Swiss Parenterals will be acquired at closing by the Eris Promoter Group for INR 237.50 crores. Hence, collectively, 70% equity stake will be acquired by Eris and its Promoter Group, thereby minimizing the additional debt on Eris' balance sheet. The remaining 30% stake will be held by Naishadh Shah, Director of Swiss Parenterals, who will be a long-term equity partner in the business and in charge of day-to-day operations and growth. The purchase consideration payable by Eris at closing, which is INR 200 crores, will be funded through debt financing. This transaction is expected to achieve financial closure before 31st March 2024.
Now we move to the quarter 3 performance highlights. I'm happy to share with you that Eris continues to be ranked among the top 10 fastest-growing companies as of December MAT 2023. The IPM growth during this period was 6.8%, and Eris has registered a growth of 12.8%, which is 600 basis points ahead of the market.
This has been driven by market-leading growth in both our core therapies as well as emerging therapies. Our core therapies, which constitute 63% of our revenue consists of diabetes, cardiovascular and VMN. The market growth in this segment was 4% and Eris clocked a growth of 7%, which is 300 bps ahead of the market. Our emerging therapies, which constitute nearly 30% of our revenue consists of dermatology, CNS, women's health and nephrology. Here, the market growth was around 7%, and Eris portfolio clocked a growth of 28%, thereby outperforming the market by a factor of 4x.
Coming to the strategic priorities for FY '24 and where we stand at the end of quarter 3. So we had articulated 4 key priorities at the start of the year, the first of them being successful commercialization of our new product pipeline. I'm happy to inform you that the first 2 FDCs from our own R&D pipeline, Sitagliptin+Gliclazide and Dapagliflozin-Gliclazide have been launched in December '23, and we have also undertaken a strategic launch of a new molecule, which is Empagliflozin + Linagliptin combination.
We have also continued to launch new products in dermatology, and we have more launches planned for quarter 4. Margin improvement through derma in-sourcing was a key objective we had outlined, and I'm happy to share that we have initiated commercial production in our Gujarat facility in the month of December, ahead of target, and this is expected to ramp up in the coming months. Last but not the least, our injectable anti-diabetes franchise has scaled up, with a quarter 3 revenue of more than INR 12 crores and YTD revenue of more than INR 31 crores. The current revenue run rate is nearly INR 5 crores per month.
This business has registered an impressive YPM gain in the span of 1 year. Quarter 3 YPM is trending at nearly INR 3.5 lakh, and this represents a YPM gain of nearly INR 1.8 lakhs during this year. We have secured approvals for Liraglutide and Glargine from MJ's pipeline and these are lined up for a Q4 launch, with consequent margin improvement.
We continue to be focused on building our own R&D program. Since the last time we spoke to you on this, we have expanded our R&D pipeline to 26 candidates, which includes 2 categories of products, fixed dose combinations, which are first in Indian market, and drugs which are commercially approved in the U.S., which will be launched for the first time in the Indian market. So we have an active pipeline of 26 candidates, which are targeted to be commercialized over the course of the next financial year.
Our new launches consisting of line extensions and combinations have done exceedingly well in the first 9 months of this financial year, with the extent that 3 mother brands, Tayo, Gluxit and Remylin, where we have launched several line extensions and combinations, are all set to join the INR 100 crores club very soon. Tayo is currently at a MAT value of INR 80 crores in sales and has registered a Q3 growth of 45%. Gluxit is at a MAT value of INR 75 crores, with a Q3 growth of 21%. And Remylin this at a MAT value of nearly INR 70 crores, with a Q3 growth of 51%. So by the end of financial year '25, we are set to have 7 mother brands in our INR 100 crores club.
Now coming to the key numbers for the quarter and the 9-month period. Our Branded Formulations segment continues to account for 97% of our total revenue and we registered a 16% growth in our Branded Formulations revenue in quarter 3 as well as for the 9-month period. We registered a growth of 13% in the Branded Formulations YPM. Q3 gross margins stood at 83%, which were up by nearly 200 basis points and represents a growth of nearly 20% year-on-year. Our Q3 EBITDA margin stood at 37% which represents a growth of more than 300 basis points and a year-on-year growth of 27%. 9-month insulin sales stood at INR 31 crores, with the latest monthly run rate of nearly INR 5 crores.
In terms of the consolidated picture, quarter 3 consolidated revenue was up by 15% to INR 486 crores, and YTD operating revenue grew by 14% to INR 1,458 crores. Gross margin was up by 270 bps in quarter 3 and nearly 400 bps for the 9-month period, demonstrating a year-on-year growth of 20%. EBITDA for the quarter stood at INR 175 crores, representing a 36% margin. The year-on-year growth for EBITDA was 28% in quarter 3 and 26% YTD.
Operating cash flows continue to be robust, with around 70% of EBITDA in quarter 3 and at 73% of EBITDA for the 9-month period. Profit after tax for the quarter at INR 101 crores and INR 317 crores for the 9-month period. Cash EPS for the 9-month period stood at INR 30, which represents a year-on-year growth of 9%. And net debt the end of the quarter stood at INR 887 crores.
This brings me to the end of this presentation.
[Operator Instructions] We'll take our first question from Kunal Dhamesha from Macquarie.
Can you hear me?
Yes, please go ahead.
So the first one on the financing of the Swiss Parenterals deal. I think I missed some part as to how the deal would be financed. So if you can just help me with that.
So Kunal just a moment, I want to introduce Naishadh who is with me. Naishadh, if you can come close to mic.
Yes. Thank you.
Naishadh has been responsible for pivoting the entire export business, parenteral business from Swiss. And he's the person which motivated us basically beyond numbers and go beyond the character of the business. And Naishadh is the -- we are committed to help each other to make sure that all that what we said in the presentation comes to light. So if there's any question to Naishadh, I mean, he's there with us. I welcome you from your side also to the team Eris. Thank you, Kunal.
KK, you take this out.
Kunal, am I audible?
Yes, yes.
Okay. So the consideration payable at closing is INR 200 crores to Eris Lifesciences, which will be funded through debt financing.
Okay. Okay. And the INR 475 crores which will be...
Please go ahead with your question.
So the INR 475 crores NCD will be sitting on the Swiss Parenterals balance sheet?
No, no, INR 437.5 crores of NCD is being issued by Eris Lifesciences to the sellers in lieu of the shares that we are acquiring. So INR 200 crores is cash and INR 437.5 crores is 1 year NCD with a coupon rate of 8%, redeemable after 1 year.
Okay. Perfect. Perfect. The second question is on our stand-alone performance. When I look at our stand-alone performance, there has been a drop on a Q-o-Q basis, a meaningful drop, but the consolidated seems kind of okay. So what's the disparity on the stand-alone versus consolidate?
Yes. So Kunal, one important thing to realize ever since we commenced the Gujarat facility, the Gujarat facility doesn't sit on a standalone basis, right, it sits in a wholly-owned subsidiary called Eris Therapeutics, which doesn't reflect the standalone. So a lot of the incremental growth, a lot of the new products, which is very much part of the core Eris Lifesciences base business, but it is actually sitting in Eris Therapeutics. So that is the reason why you see that it has not been completely reflected in stand-alone. So which is why, going forward, stand-alone would not be an adequate reflection of our base business. I would encourage you to look at the domestic Branded Formulations segment reporting that we do, because that is really reflective of our Branded Formulations business.
Sure, sure. And the third question on the Swiss Parenterals acquisition, while you have highlighted that you will be utilizing the platforms both ways, right, Swiss Parenterals products in India, have you put any numbers around as to how much you can, let's say, achieve because the acquisition would probably close very soon? So let's say, in year 1, year 2 or year 3 targets of how much you can build in India and then how much overall solid franchise you can build in RoW. If you can provide some color, would be great.
KK.
So Kunal, the oral solid piece, which we need to build from the Swiss channel, will take some time. So I don't really have a color. Naishadh has to told that it will be INR 30 crores, 40 crores for this year will have [ new ]. But on the Indian side, on the Indian business, we are interested in a very, very large market in India. We just showed you $3.5 billion, but these data are not reflective of the company's future, because a lot of it is supply also. So we have taken a target of around INR 100 crores for the first year on the domestic injectable side.
Okay. Perfect. And then, let's say, aspirationally, 3 years, medium-term targets, where do we see -- let's say, the INR 9,000 crores -- or INR 5,000 crores revenue target that we have given for FY '29, where do you see the contribution of the RoW or India? So FY '19 -- FY '29, what would be the mix of RoW versus India business? How should we look at it?
So Kunal, we haven't really taken a lot of growth in the RoW business as of now because we have to still go through the dossier. And we and Naishadh will now sit and plan the entire 5-year thing. It is a lot of products and dossier. So we haven't really kind of taken those upsides. Like say, for example, starting our own marketing in one of the RoW -- a couple of RoW countries, with some of our peers have really pulled up very well. So we haven't taken those into accounts. The larger -- the most of the growth which you see here has been on the domestic piece.
Now look, I don't feel that a 2% to 3% market share in injectable is a very difficult thing. Also, Kunal, understand that at least, in my view, around INR 10,000 crores to INR 15,000 crores of market, which actually needs to be actually backward integrated. Now whether it is complex injectables or it is PFS or some kind of liposomal. So -- and that is where the competition has always been limited in the Indian market also. So right now, we are thinking that if it is like INR 40,000 crores, we feel that we can pull out a 2% market share over a period of time. So that's a broad thinking. But INR 100 crores number, which I'm telling you to the next year.
And Kunal, these are not businesses to scale a prescription-on-prescription. So when I say INR 100 crores, won't be taken back as if you know its too much. So you see the only insulin piece we would be kind of consolidating by INR 35 crores, INR 36 crores in this year, which is very niche compared to the overall market. So that's how the overall thinking is going on. INR 100 crores, we have done our numbers, and we have a broader understanding that we will aim 2% the -- large part of it will come from products which are a little difficult to enter.
Okay. And let's say, I think just one more with your permission. We had kind of a target of doing a revenue of around INR 2,600 crores by FY '26. Would that target include the Swiss Parenterals number? Or we still stick with our -- whatever we had at that point in time, we can achieve INR 2,600 crores, and the Swiss number would be additional?
Krishna.
Kunal, I've not given -- I don't have that thought in my mind. Our INR 2,600 crores is coming where from. So that's kind of the estimate, okay. So I don't have a handle, but I can tell you, Kunal, that if everything goes well, we should be in the range of INR 2,700 crores plus in the next year.
[Operator Instructions] We'll take the next question from Sumit Gupta from Motilal Oswal.
Hello?
Yes, we can hear you now. Please go ahead.
I just want to know what is the gross block addition for this deal in FY '25.
Sorry, we couldn't hear you very clearly, Sumit.
What will be the gross block addition for this deal?
Gross block addition.
I think tangibles and intangibles in total will be around INR 600 crores. INR 600 crores to INR 625 crores.
Okay. And what was the depreciation line about the -- so it is including both tangible and intangible lines?
Both. So they have tangibles also because all the dossiers will be intangibles as IPs, and the factory and everything will be tangible. So yes, approximately, averaged out it will be 20 years.
Okay. And what was the likely depreciation rate overall -- for the next 2 years, FY '25, '26 going forward?
It's a straight line method. So everything is equal for 20 years.
We'll take our next question from Harith Ahmed from Avendus Spark.
Hi.
We can't hear you clearly, sir.
Am I audible now? I'll try to be louder.
Yes, please go ahead.
Yes. So I'm looking at Eris' history over the years, and I see that, so far, we focused on the domestic market exclusively. So what prompted this change in strategy to acquire an asset which is...
Yes. So if I hear you right, you're saying looking at history, you always wanted to be a domestic focused and what prompted is to get into this asset. Am I right?
Yes, yes.
So look at a broader term, fairly it's about growth. There is -- there will be a point of time in the growth trajectory where you will have to move into other geographies, and this is a path which has been taken by everybody, I think, in the industry, if you count all of us who have moved up the value chain. So number one, we were now looking at a INR 5,000 crores, and this was in our head for quite some time, that what will be the time when we will look for opportunities, which are other than the Indian opportunity.
And in my view, and RoW is the best fit after the Branded Formulations business. And even in RoW, having a business which is parenteral, with 1,000 dossiers and at this kind of a EBITDA level, is something which we found very, very difficult to get. So we might have taken 1 more year to really get very intensive in terms of looking out. But because this asset we like so much. Because if you see the parallels, it is difficult to find a parallel of a INR 300 crores business, all export and all parenteral and so many dossiers. So number one, it had to happen 1 day. That's the general way, natural progression of a bank who's company based out of India.
And second, we just fell in love with both the business and when Naishadh, when we spoke about everything. So I think put together, we found this is a good time for us to get in.
Okay. And my second question is on the business mix of Swiss Parenterals. Can you throw some light in terms of key markets of the company. And also revenue mix in terms of antibiotics versus other injectable products. Also some color on B2B versus any front-end presence that you have in your current market. So some color on the overall quality of the business.
Mr. Harith, can you please mute your line when you're not speaking, there's some background noise coming from your line.
Yes. So I'll pass this to Naishadh. I think he's the most qualified among us to talk about this. Yes, Naishadh.
Thanks for speaking out. To answer your questions, Swiss has a mix of various products in the basket. Out of which the most biggest mix is of the antibiotics, what we do. In terms of -- I think the next question, I could not hear because of the noise, but if you can just...
What about the geography.
Oh, geography. So geographies, we are predominantly -- sorry. Yes, so we are predominantly present in very strong presence in -- up till now, we have very strong presence in the South Asia and the Africa, which are growing markets and which are expected to grow much more in the near future. Although our focus is also right now on the European markets because that gives us an access to the reg markets, registrations with the non-reg country presence.
And to answer your last question, which was regarding the -- I think regarding the front end. Swiss currently operates on a distributed led model, where we are trying to be sure that if we have to go front-end through teams, that's where the domestic expertise of Eris will be taken. And that's where I think Eris' partnership or JV with us will help us pivot our growth also, help us to change the trajectory of the growth.
And last but not least, although we are focusing on injectables, the same sales channels and the distributors can be used to also leverage or front-end the products what Eris has on its own basket. And not to tell you that -- I mean, to add on to that, the brand recognition of Eris products which are there in the market right now will play a very important role for us to also catapult that growth towards expanding the portfolio in these countries.
Correct.
Okay. And the next one is on the acquired Biocon portfolio. So was there a contribution in the quarter, in 3Q, from the acquired business? And can you share some guidance on the expected growth from this portfolio for FY '25?
So I think we acquired in November now, in mid-November, right. Yes. So generally, there's nothing significant in this quarter, which is expected. But because we traced the secondary sales, right, I can give you a secondary field which we have got. So we have this business, which was roughly around INR 7 crores, INR 8 crores a month. And -- so I'll tell you 2 things. The first and the important thing is when we took this business, our gross margins were in the range of 50s, right? Now when we have done the math and the new orders have been placed and we have negotiated and changed the product mix, we think that, we can tell you clearly, but in quarter 4 or the first quarter next year, it would be close to 70% gross margin.
And with the price rise kicking in, which will happen in the next year, it might move a little further. So one of the targets which we had was to correct the gross margins. It's in line, and we are not there for any surprise. Now because we had people coming in with this purchase, that is the reason we have seen a strong ramp-up happening. So while primary, the sales expression is quite little, but the secondary has started to come in. We think in FY -- in the last quarter, we will be completely in line with what we had thought. So at least INR 24 crores to INR 28 crores of revenue will come from there. And we are expecting this to go to -- more on INR 10 crores to INR 12 crores next year. So that's what we could have figured out until this point of time.
Okay. And my last one with your permission. KK, you mentioned that the Derma business is now tracking around INR 375 crores of annualized sales. So what would be the like-to-like basis growth that we have seen in this business? Obviously, you talked about some disruptions in the acquired clients from Glenmark and Dr. Reddy's. I was just trying to understand if both brands have addressed at least...
Mr. Ahmed, we can't hear you clearly. Can you be a bit louder, please?
Yes, I'll try that again. So the INR 375-odd crores of derma sales that we talked about, trying to understand if the acquired brands from Glenmark and Dr. Reddy's, we had some disruption in the initial quarters post the acquisition, so are we seeing some stability there?
Yes, okay. So if I get you right, you're trying to ask me what is happening to the acquisition in the dermatology...
Mr. Ahmed, I'm sorry to interrupt. Can you please mute your line? Please go ahead, sir.
I was not very clear. There was a lot of disturbance in the line. But what I could have laid out is he's trying to ask what has happened to the dermatology and how is it shaping up. So we acquired both these assets in the last quarter of last financial year, if I'm not wrong, one was in Jan and one, the other was in March. So Mr. Ahmed, we are quite happy with the progress it has done. You have seen the margins -- the way the margins have panned out.
Now on the growth side, what has happened on the growth side. So there are a couple of things which I would like to point out. These products were selling on some 3,000 stockists, and we actually got 400 stockists out of them. So this is not a 12-month to a 12-month kind of comparison. Because we got it late in the quarter, it took us some time to get the sales back. But on the run rate, we are doing quite well. The good news is that we have got some beating in the tail brands.
But when I talk to you about the major brands, the major thing was Onabet, Demelan, Halovate and Sorvate. These were the 4 large brands which we bought. All of these growths are -- all of the brands are growing very well. A special mention to Demelan, we think which is going ahead -- 60% ahead of what we have thought. There are 2, 3 brands which we have missed out. There is one, [indiscernible], which we also, which opted, also had. So we have lost around INR 3 crores, INR 4 crores there. They have taken around INR 15 crores to INR 18 crores of stock back this financial year, which was strong, which has changed from 1 set of stockists to the other set of stockists. So when I put everything together, the Derma business is doing quite well. And we have got a good grip on Derma business. You see this Derma business next year doing pretty well.
We'll take our next question from Abhishek Chauhan from Eklavya Capital Advisors.
So my question is in over next 2 to 3 years, what is your guidance on your mergers and acquisition strategy? Is it going to go at the same pace or you're trying to consolidate whatever you have acquired so far?
So look, this answer is always a difficult answer. I am not in a position to say that we are done with everything. That's the reason we actually put out slides telling you how do we think about the cash flows, how it has been in the last 5 years and how may they pan out in the next 5, 6 years. So I will answer you a more controllable question, then what will happen to the debt. We are -- as of now, we want to have a hard stop at anything which is in the zone of 2, 2.2, 2.3. We would not like to exceed that. And you see we are building that kind of a capability. That was one of the reasons you've seen the promoters also kind of putting up the cash, and the way we have structured the deal.
So whether we do one more deal, we are not sure at this point or you know how these things are. Yes, the intent is there that if we get something good, we might as well get it. But the discipline on the EBITDA versus debt is something which we want to abide by.
Yes. Other than the debt, my other concern is that merger and acquisition, Eris has so far succeeded so well, it's because of the discipline. I like so many things -- for example, you mostly do brand on the acquisition, not people-related acquisitions. But if you go at the same fast rate, as an investor, my fear always is whether that discipline will be there or you will flow along with the speed.
No. No, don't fear boss. It is limited fuel, you can't run on it -- you can't run beyond that. There's a limited fuel. And again, I don't want to go to the past few orders that we have done this and that. We know that some things have to fall in place. But look at our history for so many years now. We have been quite prudent. We will -- there are a lot of guardrails within the system which will make us take prudent calls. And I can assure you that this is not -- there's no excitement and there's no adrenaline, which comes in from acquisition. It's only when we think it's a prudent capital allocation policy, we think this is something which we can drive, that's the only time we get into it. And I must also tell you boss, we have said no more often than we have said yes.
[Operator Instructions] The next question is from Prashant Nair from Ambit Capital.
A couple of questions on Swiss Parenterals. So firstly, would you need to invest anything more into the business to achieve what you want over the next, say, 3 to 4 years? Or is the business by itself, as it stands, is currently capable of taking it forward? So I'm talking about capital investment in the business.
Yes. So I'll ask Naishadh to do the final stuff. But till this point of time, we might have to put in one more plant, which should happen in the next 2 years, with the CapEx of some INR 40 crores. How much?
Between INR 40 crores to INR 60 crores.
INR 40 crores and INR 60 crores. Naishadh, you take it from there.
Yes. So thanks, Prashant, for bringing up this question. And well, the question has an answer as well. The whole idea to join hands and to do this JV or partnership was that we get a -- Eris gets a strong domestic injectable presence where they were not predominantly present and, to utilize Swiss' IP or manufacturing facilities to the best of the available -- to the best available extent. Well, although Swiss will continue doing its export business, there's no restriction on that. In fact, the idea is to grow that, but also help Eris to establish a domestic injectable play or brands in this case. And I think for that, if there is a CapEx requirement, it will be somewhere within a bracket of INR 40 crores to INR 60-odd crores, which will be -- should only used on capacity building and maybe front-end.
But Prashant, to answer your question, only when we have planned for our capital resources for the next 4 years, we have consistently put a INR 50 crores to INR 100 crores kind of number in front-end to back-end, which is not necessarily going in Swiss. There are a couple of things which we are looking forward in women's health and all those things. So side by side, keeping our back-end strong is something which we think is going to be very important in the coming times. So we do keep that money. How much of that could be used, we don't have an answer now. But there's one plant which Naishadh is putting up just behind the present one, which should be over in 2 years' time.
Yes.
Yes. And also, all the revenues, investment, et cetera, that accrue from Swiss Parenterals, whether it is in India or RoW, would be in the 51% held entity as in Swiss Parenterals? Or would there -- the India business be run through the Eris P&L? How do you see that being structured?
Very interesting question actually. So 2 things on this -- 2 parts of the answer. Whatever general specialty will all be done through the Swiss. And if there is anything which is in the speciality side, that will be done by the Eris. The simple reason is we need field force. We can't put unlimited field force in Swiss. So Swiss will do the large part of the business, which is like the hospital business, and Eris might do the speciality piece. For example, women's health, some amount of biotech here and there. So that will be done by Eris. And rest -- everything, which is the largest churn, would be done in Swiss.
Okay. And just one last question. Naishadh, if you could just once again elaborate on the product portfolio. I just heard that you mentioned it's largely antibiotics, but I probably missed the rest of your answer at that time.
No, happy to answer that. So if I have to bifurcate the portfolios, the portfolio we have probably 11 lines of sterile products which we manufacture. The larger chunk of sales is coming from antibiotics. But as you know, they have -- they're pretty price competitive. The other chunk would be coming from the general injectables, where we do have speciality products, but only export focused. Now with this JV coming into picture, we will be utilizing Eris' strength in the domestic market, in a dom form market, to focus those trends on these high-value molecules, with very high margins on them to go with the domestic formulation. So it will be a basket of value versus volumes.
So Prashant, we'll send you the list across. We have the list of what all we are doing? And we also have the list of the geographies. So we'll send it along. But it's a good mix of speciality and lyophilized, vial, liposomal, everything. So as Naishadh told 11 lines, there's a PFS, there is oral -- sorry, inhale anesthesia also there. So it's a very good mixture of speciality and high-end antibiotics -- difficult to make antibiotics. And that is the reason you see the margins being there from the last 4, 5 years since we have been kind of looking at numbers.
[Operator Instructions] We have a question from Gagan Thareja from ASK Investment Managers. There is no response from Mr. Gagan Thareja's line.
I'll now hand the conference over to Mr. V. Krishnakumar for closing comments. Over to you, sir.
Thank you. With a 14% consolidated revenue growth and 26% consolidated EBITDA growth for the first 9 months of this financial year, we are on track to meet our guidance of INR 2,000 crores revenue, INR 700 crores EBITDA and INR 410 crores of profit after tax for the year. On the back of our established speciality presence and strong cash generation, we look forward to achieving INR 5,000 crores in revenue by the financial year FY '29.
Towards this objective, we have several exciting initiatives underway. We also look forward to harness the growth opportunities that are available to us on account of our acquisition of 51% stake in Swiss Parenterals. We look forward to your support in this journey. Thank you very much, and have a good evening.
Thank you.
Thank you. Thank you, members of the management. Ladies and gentlemen, on behalf of Eris Lifesciences Limited, that concludes this conference. Thank you for joining us, and you may now exit the meeting.