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Good morning, ladies and gentlemen. Welcome to the Q1 FY '24 Earnings Conference Call of Glenmark Pharmaceuticals Limited.
[Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Utkarsh Gandhi, General Manager, Investor Relations, for Glenmark Pharmaceuticals. Thank you.
And over to you, sir.
Thank you, Lizan. Good morning, everyone, and welcome to the Q1 FY '24 Results Conference Call of Glenmark Pharmaceuticals Limited. Let us review the overall performance of the company for the first quarter of FY '24.
Glenmark's consolidated revenue from operations for the first quarter of FY '24 was at INR 34,106 million (sic) [ INR 34,016 million ], as against INR 27,773 million in the corresponding quarter last year, recording an overall year-on-year growth of 22.5%. We'll review each of the businesses of Glenmark Pharmaceuticals Limited, starting off with India.
Sales from the formulation business in India for Q1 FY '24 were at INR 10,643 million, as against INR 10,352 million in Q1 of FY '23, which means recording Y-o-Y growth of 2.8%. The lower growth was mainly on account of the full impact of divestment of few noncore brands last year as well as some impact of the NLEM price revisions. The India business contribution was at 31.3% in Q1 of FY '24 compared to 37% in Q1 last year.
Glenmark's India business continued to significantly outperform industry growth rates. As per IQVIA Q1 FY '24 data, Glenmark's India formulation business recorded a growth of 10.7% compared to the industry growth rate of 8.1%. Furthermore, as per the IQVIA MAT June data, Glenmark's India business grew by 13.1% compared to an industry growth of 10.3%. Glenmark's India business continues to be ranked 14th, with a market share of 2.12%. The company also continues to have 9 brands in the IPM top 300 brands in the country, as per IQVIA MAT June data.
In Q1 and MAT June 2023, contribution from the chronic therapeutic segments for Glenmark was at 47% and 35%, respectively. In terms of key therapeutic segments, Glenmark is ranked second in both respiratory and dermatology segments. In addition, Glenmark is ranked fifth in the cardiac segment and 17th in the diabetes segment. During the quarter, Glenmark's India business also considerably improved its market share in these key therapeutic areas.
As per IQVIA MAT June data, the dermatology market share increased to 7.42%. The -- Glenmark's share in the respiratory market increased to 5.65%, while Glenmark's share in the cardiac market increased to 5.23%. Glenmark's share in the diabetes market was at 2.21%. These market share gains have been led by higher-than-industry growth rates for Glenmark across most of the core therapeutic segments. Glenmark is expecting business growth to remain stable in spite of a recent slowdown in certain acute segments of the industry such as respiratory and anti-infectives sector. The company has launched multiple line extensions during the quarter and continues to gain market share in some of the key launches across the core therapeutic segments. And the company continues to have a healthy pipeline of differentiated products which it will launch in the market going forward.
The Consumer Care business in India. Primary sales for the -- Glenmark's Consumer Care business in Q1 FY '24 were INR 781 million with a growth of 21.3%, which was mirrored by a strong double-digit secondary growth of 17%. The company's flagship brand Candid Powder delivered revenue growth of 29% in Q1. La Shield portfolio delivered 2% growth in Q1, which was low primarily due to a high base last year. And the Scalpe portfolio recorded growth of 58% in the first quarter of FY '24.
Moving on to North America. The North America business registered revenue of INR 8,085 million, which is about USD 98.4 million, for the first quarter of FY '24, as against INR 6,628 million, which is about USD 86.1 million, for Q1 FY '23, which translates into year-on-year growth rate of 22%. The North America business contribution was at 23.8% compared to 23.9% in Q1 last year.
In the first quarter, Glenmark launched clindamycin hydrochloride capsules, which was approved in the previous quarter. Additionally, Glenmark filed 2 ANDAs in the first quarter of FY '24. The company plans to file 2 to 3 applications in the forthcoming quarter and a total of 10 to 12 ANDAs in FY '24. Glenmark's marketing portfolio consists of 183 generic products which are authorized for distribution in the U.S. market, and the company has 50 applications pending at various phases of the approval process.
Europe business. Glenmark's Europe operations for Q1 FY '24 were at INR 5,732 million, as against INR 3,300 million in Q1 last year, recording a year-on-year growth of 73.7%. The Europe business contributed 16.9% to the total revenues in the first quarter of FY '24. The strong growth in the region was driven by an uptick in the base business as well as new product launches during the first quarter. The Western European business recorded high double-digit growth for Q1, with markets like the U.K. and Spain growing significantly. Amongst the key markets, the U.K. recorded strong growth on the back of key launches, particularly in the generics business. And key markets in Central and Eastern Europe such as Czech and Poland also recorded strong secondary sales growth.
Glenmark's respiratory portfolio in Europe has also been a key factor for the strong performance in Q1. The company has seen a strong uptake across all 4 respiratory brands that it has launched, particularly brands like Ryaltris and Soprobec. Ryaltris continues to exhibit strong growth across markets in which both Glenmark and partner Menarini have launched the product. And Salmex and Asthmex also continued to sustain its market share across the CEE markets both in terms of value and volume. In addition, the company mentioned in last earnings call that it has signed 4 additional respiratory products for the EU markets and which would be launched over the next 2 to 3 years. And Glenmark has also entered the Italian market and will be expanding across the country in the forthcoming quarters.
ROW region, which consists of Asia, Middle East, Africa, Russia, CIS and Latin America. For the first quarter of FY '24, revenue from ROW region was INR 5,512 million, as against INR 4,226 million for Q1 last year, recording a year-on-year growth of 30.4%. For Q1 FY '24, the ROW business contribution was at 16.2% compared to 15.2% last year. The company witnessed healthy growth in the base business across all subregions of the ROW markets.
Starting off with Russia. As per IQVIA YTD June and MAT June data, Glenmark's Russia business recorded growth of 34% and 17%, respectively, in value. This has been driven by all key brands, including Ryaltris, Ascoril and Montlezir. Amongst the dermatology companies, Glenmark ranks 10th, as per MAT June 223 data. And amongst the companies present in the expectorants market in Russia, Glenmark continues to maintain its strong second rank, as per the MAT June data. In June, Glenmark also launched Ascoril LS, which is a combination to further consolidate its leadership position in the expectorants market.
The Asia region recorded 14% secondary sales growth which is driven by markets like Philippines and Vietnam. Dermatology and respiratory are the key therapeutic areas in which Glenmark is present in Asia and contribute significantly to the overall sales. In addition, Ryaltris was launched by Glenmark in the Malaysian market in Q1 FY '24. We've seen good demand, so far, post launch. And Ryaltris continues to hold 18-plus-percent value market share in Australia across the top allergic rhinitis products. The product has also received strong response in South Korea post launch in Q3 of last year by partner Yuhan Corporation.
Middle East Africa region recorded 20%-plus growth in sales during the first quarter. Glenmark continues to be ranked third in the overall Kenya market. Further, the company continued to achieve strong secondary sales growth in South Africa and UAE. Ryaltris, again, was a key product [ that we launched ] in Saudi Arabia in Q1; and is expected to drive further growth in the respiratory segment, as the product will get launched across other EMEA (sic) [ MEA ] markets in FY '24.
Latin America region witnessed strong growth in Q1. The respiratory portfolio was a key contributor for Glenmark in the Latin American markets. The Brazil business for Glenmark achieved 25%-plus growth in this covered market. The company maintains its rank amongst the top companies in the covered market for chronic respiratory segments in Brazil, as per IQVIA MAT June data. And secondary sales growth also remained strong in Glenmark's other key market which is Mexico. Glenmark's business in Mexico grew by 25% and 15% in -- 25% in value and 15% in units, as per IQVIA MAT June data.
Let me cover some key highlights for Ryaltris. As of the first -- as of the end of Q1 FY '24, marketing applications for Ryaltris have been submitted in more than 70 countries across the world. The product has been commercialized in 29 markets, including major markets like the U.S.A.; Canada; markets in Europe, like the U.K.; Australia; Russia; south Africa; South Korea; and Saudi Arabia. Menarini, Glenmark's partner in the EU, intends to launch the product in additional European markets in FY '24 and consolidate its position in the markets where the product has already been launched. In addition, as we mentioned, Glenmark's -- markets in which Glenmark is selling, we continue to do well in Ryaltris in Europe.
Hikma, Glenmark's commercial partners in the U.S., continues to see strong prescription -- new prescriptions and repeat prescription growth as the allergy season progresses in the country. Grand Pharmaceutical China, Glenmark's partner in mainland China, they aim to complete the ongoing Phase III study in the country and submit the marketing authorization application in the second half of FY '24.
And we mentioned some key market shares for Ryaltris, value market shares across a few markets where Glenmark have -- where Glenmark and their partners have already launched Ryaltris. So Australia, we have 18-plus-percent market share; South Africa, 15%; Czech Republic, 25%; Poland, 8%; and Italy, 10%. In terms of other key respiratory products, clinical trial is ongoing for the generic FLOVENT pMDI filing; and we expect to file the product in FY '24. And as mentioned before, we plan to file at least one more generic respiratory pMDI in the U.S. in FY '24 and then continue our momentum beyond that.
Covering some highlights on Glenmark's innovative R&D pipeline; starting off with GRC 54276. GRC 54276 is a novel HPK1 inhibitor being developed as an orally administered immunotherapeutic agent for patients with solid tumors. GRC 54276 is currently being evaluated in a first-in-human study, Phase I clinical study. Part Ia monotherapy phase of the study is ongoing in India since July 2022; and no dose-limiting toxicities have been observed, so far. Based on the Phase I IND approvals which were received from DCGI as well as the U.S. FDA in Q4 of FY '23, the Phase I part Ib combination study of GRC 54276 with pembrolizumab and atelizumab (sic) [ atezolizumab ] was initiated in India in the first quarter of FY '24. And initiation of the study in the U.S. is planned in the second quarter of FY '24.
GRC 39815. GRC 39815 is an ROR gamma t inhibitor and company's respiratory pipeline asset being developed as an inhaled therapy for mild-to-moderate COPD. It is currently in Phase I development.
Moving on to Glenmark Life Sciences. Revenue from operations including captive sales was INR 5,785 million, as against INR 4,899 million for Glenmark Life Sciences, recording a Y-o-Y growth of 18.1%. Generic API revenues for GLS in Q1 increased by 13.3%, and the business also witnessed strong growth in the CDMO revenue. Detailed engineering work has also started in the new manufacturing site for GLS in Solapur. External sales for GLS in Q1 of FY '24 were at INR 3,769 million, as against INR 3,251 million, recording a growth of 16%.
Moving on to Ichnos Sciences. Glenmark has invested INR 1,417 million, which is about USD 17.2 million, in the first quarter of FY '24 compared to INR 1,682 million, which is USD 21.8 million, in Q1 last year; and INR 1,906 million, which is USD 24 million in Q4 of FY '23. For further updates on the pipeline of Ichnos, please log on to their website. The pipeline update for the first quarter has been uploaded.
We want to reiterate our key objectives for FY '24 which we stated earlier: consolidated revenue growth of 10% to 11%, consolidated R&D investment of 8% to 8.5%, consolidated EBITDA margin of 19% to 20%-plus, consolidated CapEx 600 crore to INR 700 crore. And we prioritize free cash generation as well as closing out one outlicensing deal.
Before we open the call for Q&A, we just want to highlight some notes to the results. EBITDA for the first quarter of FY '24 was INR 631.2 crores with an EBITDA margin of 18.6%. ForEx loss for the quarter was at INR 16 crores, which is recorded in other expenses. Excluding this, the EBITDA margin for Q1 was at 19%. Total R&D expenditure in Q1 FY '24 was around INR 284 crores, which is 8.3% of revenue for the first quarter. As mentioned before, Ichnos investment in Q1 was at USD 17.2 million.
Inventory for the period ended June 30 was at INR 3,319.8 crores, as against INR 2,977.8 crores as of March. Receivables as of June 30, 2023, was at INR 4,183.7 crores, as against INR 4,098.6 crores as of March. And payables as of June 30 was at INR 2,508.1 crores as of -- as compared to INR 2,391.9 crores as of March. Total asset addition in the quarter was at INR 127.5 crores, of which tangible assets addition was about INR 108 crores and intangible additions was about INR 19.5 crores.
Gross debt for the period ended June 30, 2023, was at INR 4,443 crores, as against INR 4,348 crores in March. And net debt for the period ended June 30 was at [ INR 2,947 ] crores, as against INR 2,905 crores in March.
I would like to introduce the management of Glenmark Pharmaceuticals on the call today. We have with us Mr. Glenn Saldanha, Chairman and Managing Director; Mr. V.S. Mani, Executive Director and Global Chief Financial Officer; and Mr. Brendan O'Grady, Chief Executive Officer, global formulation business.
With that, we'd like to open the floor up for Q&A. Over to you, Lizan.
[Operator Instructions] The first question is from the line of Damayanti Kerai from HSBC.
My first question is you have booked exceptional item for remediation costs related to India and Monroe sites, so with it, are you broadly done with the costs which you'll be incurring for remediation? Or you expect like substantial costs to come in ahead also.
So I think we are broadly done with most of the remediation costs. And going forward, what we expect is very minimal cost, okay, not very significant, both at U.S. and India sites.
And what will be time line for, say, completion of remediation work at both the sites?
So I think, Damayanti, a little bit of remediation will continue, right, but from a cost perspective, it will not reflect in the numbers.
Okay, so costs broadly done. And maybe once you complete, then you can ask the FDA to come in and expect the plant.
That's correct.
Okay. And my second question is can you update on your stake sale for the Glenmark life science business, which is -- obviously which will be coming in, say -- coming for you. So any time line for it?
So right now all we can say is we have a 7%, 8% sell-down required by law, right, and we are working on it, right? I think there is a deadline of...
The time -- yes. We can do it till next August because we did in August of '21. So 3-year time frame is given, so we have time till next August, yes.
So till August 2024, you have 7% to 8% sell-down...
Yes, yes, yes.
Okay. And my last question is on your spend on Ichnos, which is down to $17 million for the quarter. So is this the new spend base which we are looking for in this business? Or -- and like it came down from 21 million, 22 million earlier, so how should we look at spend for Ichnos in coming quarters? And if you can also update on some of the key pipeline assets for Ichnos where we are expecting data readouts, et cetera.
Okay, I'll take the first part of the question, Damayanti. So as far as the spend base is concerned, this is a new basically territory in which we are working, as we had guided even during our investor call that we are pruning down our spends from -- to about $60 million or so in a year. So broadly, this is where we'll spend on a quarterly basis.
In terms of the pipeline, as we've said, right, there are 3 active oncology programs which are underway, right? So 1342, 1442 and 2001. We think all of them will read out or will reach some inflection point this year, right, in terms of possible POC for 1342 and 1442 and some evidence on 2001 this year, so I think this year is a critical year in terms of the oncology portfolio of Ichnos. I think in parallel, as you know, Almirall continues to progress well on 880 in their Phase I clinical trial. And on 830, we are actively in discussions for potential partnerships on the portfolio. So I think these are the 5 assets in Ichnos which are of relevance, which I think this year is an important year for Ichnos.
Okay. And for [ any ] partnering, et cetera, most likely, we will first release data, right, [ any ] data readout. And then there is more likelihood of getting into any partnership.
Not necessary, actually. So 830, we've already -- Phase II data, Phase IIb data, is already out in the public domain. On the oncology assets, we have a bunch of presentations at ASH for both 1342 and 1442 this year. So we have at least 3 different poster presentations at ASH. We constantly keep releasing data at medical conferences, so some of that is in the public domain.
The next question is from the line of Shyam Srinivasan from Goldman Sachs.
Just the first one, on the run rate for the North America business, right? We saw like sequential improvement in fourth quarter, but again, in quarter 1, it's come off. Is there some seasonality-linked issue here? Or how should we look at the growth going forward? And your comments on the pricing environment there as well.
Shyam, this is Brendan O'Grady. Thank you for your question. I think, if you look at the North American business, typically Q3 and Q4 are stronger quarters than quarter 1 and quarter 2. So as we've said in the past, we see the U.S. as basically a -- around $100 million business a quarter, give or take. A lot of that depends on new product launches. Again, quarter 1, we had some launches that slid out a little bit later into the year, so that's the reason that it was slightly under $100 million, but in general we see good, sustained growth in the U.S. in the mid-single digits, as we've said before. So I think, as we go through the year, you'll see the numbers come up closer to $100 million; even in some quarters, be over $100 million; in some quarters, maybe be a little under $100 million, but overall continued good growth in the U.S. as we launch the new products this year.
Sure. And just the pricing environment...
I'm sorry. What was that?
Pricing, U.S. generic pricing environment. How does it look for you on your base business?
Yes. I mean I think the U.S. pricing environment is we're generally in line with the market. It -- right now it's mid-single digits, as far as price erosion. It can change a little bit, depending upon your portfolio and the products you launch, but we're relatively in line with the market.
Got it. Helpful. Just a second question, on the India business. Is -- the like-for-like growth, like, indicated in your press, is that 13%? How should we look at the India business growth and maybe outlook for the remainder of the year?
I think we'll see India business growth in single digits for the rest of the year. I mean I think we have a good, solid business across India. As you know, we're ranked #2 in [ derma and respi ] and #5 in cardiovascular, so we're seeing continued good growth in the India business, but I would put it in the single digits.
And also, Shyam, if you -- for Q1, right, if you correct for some of the divestments and all that, that we did, it's about 8%.
Yes, it's 8%...
8% growth.
Yes.
And then -- yes. So Glenn, just then on the outlook: And we did much better growth. I know it's on a low base of last year, but reasons to just hold onto our guidance rather than change or upgrade our guidance, anything that's stopping us?
So look. The business overall continues to do exceedingly well, right, across all the geographies. I mean, India, as Brendan mentioned, we are looking at a single digit this year, right, because we are witnessing some slowdowns, particularly in the acute segment, right? And Glenmark has some big brands in acute, but outside of India, I mean, I think Europe is clearly doing exceedingly well for us. Rest of the world markets are doing well. The U.S., we'll definitely do our guidance for the U.S., right? So mid-single digit could be ahead of that also. So I think, all in all, the business is doing well, and given where we see things, we should be able to meet our guidance or even exceed our guidance this year.
The next question is from the line of Saion Mukherjee from Nomura.
Just on India. You mentioned 8% growth. This is excluding the divestment and NLEM. Or it's just the impact of divestments, yes.
Yes -- no, Saion. So excluding both divestments as well as NLEM, the growth was 8%.
Okay. And then we are seeing -- are you seeing any headwinds in the sector in India? The volume growth are quite low. And we are sort of hearing about the policy moves to ask doctors to prescribe using generic names. We are seeing companies getting into trade generics, so are you seeing these headwinds building up for the industry is -- bringing down the volume growth? And for this 8% growth that you mentioned, if you can break it down between the volume and price increases.
So I think, Saion, on the policy side, it's all very new, right? It's just come out a few days ago. We're still trying to understand what are the implications of that, but outside of that, I think the sector in India will continue to do well, right? I mean just given the growth that you're witnessing across the board, right, between branded products, generics, OTC, as a platform and institution. So -- and I mean there is enough of opportunity for companies to take advantage of the India platform, right, if they're able to look deep for deep growth. I think -- so all in all, India should continue to do well, but there could be some ups and downs here and there, right? I mean like we are facing some short-term seasonality issues, right, in the acute segment. So those kind of things will keep happening, but I think -- on an ongoing basis, I think there should be a solid business, right, in the years to come.
Right. And so again, for Glenmark, what's the kind of initiatives we are taking in India to sort of help grow ahead of the market? Are you -- I'm just thinking from an OTC perspective or, let's say, trade generics which many of the companies have entered, if you can throw some light. Why would sort of Glenmark be able to grow ahead of the market?
So look. I mean we've had a stellar India business, Saion, over the last decade, right? We've consistently grown. We've had great brands. We've always been among the fastest 2, 3 players in terms of growth, so it's been a great buildout, right? I think, from here on, from an opportunity set, there are multiple areas which could drive our India growth, right? We have a good OTC platform that we launched maybe about 5, 7 years ago. And some of the brands, whether it's Candid Powder, or Scalpe, last year, right, continued to do exceedingly well, right? We -- so I think I am pretty optimistic that the OTC platform will do well. We have a small Gx business which is very insignificant, but I think overall for Glenmark, our franchises in dermatology, we rank #1, #2. Respiratory, we are now #2, so very strong franchises, right? Cardiovascular, with brands like Telma, we are among -- we rank #4. Diabetes is an area which continues to be challenging, but I think, across all the therapeutic areas that we operate in, we have built a strong franchise, right. So India remains a strong business for us and will continue to do well. That's the only visibility I can give you at this point, Saion.
Okay, sure, no problem. And also on the U.S. market, if you can give some color on, let's say, how many launches we should expect. Or what kind of -- what's the number of filings and launches. And any key products that you want that you can call out which can sort of have a material impact? Or do you think we should sort of remain at around $100 million mark a quarter, more or less -- or for some time now? How should we sort of think about it?
Well, I think, if you think about the U.S. market in addition to the comments that I said: We'll continue to launch new products as we go through the year, probably in the range of 8 to 10 new products. We've already launched clindamycin in the first quarter. We're in the middle of the sitagliptin launch right now. We just started shipping. So I think we're 1 of 3 or 4 on the market right now, so we'll see how that launch turns out. We have a couple others this quarter that we'll launch. And as far as filings, we'll file 8, 10, 12 products this year. So as I said, I think continued buildup of the U.S. market. We should see it grow in mid-single digits. I think price erosion has come off a little bit and it stabilized in the mid-single digit range, so I'm optimistic that we'll continue to see the U.S. business grow. As Glenn said, I think we'll achieve our guidance and our numbers for the U.S. market this year, so...
I think also to add to what Brendan just said, right, Saion. I think the key is for us it's important to get past Monroe so we get those injectable products which will further accelerate the growth in the U.S., right? And if you go back to our investor deck, right, we clearly mentioned 3, 4 areas where we are heavily focused. One of them is respiratory. The other is injectables, some complex injectables. So these are some of the areas where we see some good opportunities which we continue to strive forward. More -- near term, I think we are doing some good things. You'll see some exciting launches coming through in this quarter and probably next quarter which will help fuel the growth for the U.S., right, near term. And if I look out longer term, it's all about some of these pipeline products and respiratory, complex injectables and other areas, right, that we're continuing to work on, but a critical event for us obviously is to get past Monroe and get that going, right?
That's not really [ growth into ] this year.
Exactly.
Okay, okay. And one last question. On Ryaltris, you have mentioned market share data in various markets. Is it possible to share what in your estimate will be the sort of in-market sales [ or brand sales ] if you add up all the markets where you have currently launched the products?
So that's a tough one, Saion. We don't have the in-market sales across all markets, but I think we guided to 40 million, 45 million for the year. We are clearly well ahead of that on Ryaltris sales for this year, right? And I think, given the fact that this is still in the launch phase, right, this could be a very big product for us. I mean we still haven't launched the product in major markets like Brazil, Mexico, China. Some of the major European markets are yet to launch the product, right? I mean in the other markets it's still in the early phases of launch. So it's a good launch for us. And that is -- that will be a big driver for us both in terms of contributions across both margins as well as top line growth in -- across the board. So that's a good buildout for us.
Okay. Just one clarification then: This 40 million, 45 million for fiscal '24, this is revenues to Glenmark. Or are you mentioning in-market sales?
I mean this is revenues to Glenmark.
Okay. And it would have been how much last year, in FY '23?
[indiscernible]...
20 million maybe.
Okay, okay. And this is what I think you've guided would sort of go to 150 million over time, right?
That's right.
Correct. That's correct.
The next question is from the line of Nitin Agarwal from DAM Capital.
Glenn, on the European business, you've seen very dramatic, sharp growth in the last few quarters. I mean if you can just highlight what is really working. And how should we look at now Europe from this base to -- when you look to the next 2, 3 years?
So clearly, Nitin, Europe will be a big driver for us, right? I mean we've done very well. We still see at least a 25%, 30% growth coming on a full year basis on Europe, so it will almost be a $300 million business for us this year. So that's pretty substantial given the fact that our U.S. business is about 400 million, 450 -- 420 million and we've taken so long to build it out. So it's a great buildout for us. I think Europe on a sustained basis, given all the different things that we are working on, right, will continue to grow 15% -- around 15%, 20%, right, on a sustained basis going forward. So that's the kind of buildout that we are working on.
And Glenn, on the profitability front, how different is it from our corporate profitability right now?
So obviously the margin profile has improved dramatically, right, as we're gaining more scale, right? It continues to improve, but Mani...
Yes, but still, Nitin, to the point, it will be a little lower than the overall profitability but much, much better; also with the kind of products that were launched and [ respi ], Ryaltris, all that. All that should take the margin [indiscernible].
[ If I may add a point ]. Over a period of time, as a business, at what scale does it starts to become in line with the corporate profitability? Or does it get there actually, in the first place?
See obviously there are some markets which are clear outliers, like India, et cetera, which are way ahead of all others, but to be fair: These businesses, as they grow higher and higher and the benefit of margin comes in, it comes as close to it as possible.
Yes.
But it's grown substantially, okay? It used to be single digits at one time. It's well -- very well much higher now.
Right. And then on the working capital front, sir, what -- how -- I mean, how are we seeing Q1? And how do we see the remaining part of the year? Any pressure easing on receivables and regulatory front?
Yes. I mean I'll brief you. So like Utkarsh shared out the numbers. So if you look at inventory, it's more or less a number of -- let's look at because the business grew 22% and we're seeing a good year this year. So if you look at the number of days inventory, which was like more or less there, it's [indiscernible] days. Receivable in the last year, March, it was 115 days. It's come down to 107. So broadly I see, while overall inventory went up by about 300-odd crores -- but also you have to factor in the fact that we're looking at a big -- good growth in many of the businesses. So I think -- all in all, the number of days of working capital, which was about [ 132 last year-end and 128 ], I think it will improve, as it goes along, [ one day ]. We'll [ keep aware ] [indiscernible].
Do you have any numbers that we're probably aspiring to get towards by the end of the year?
I'm hoping it will come to lower. I mean it will come to closer to 120 or so, which is where we were at some time back.
The next question is from the line of Kunal Randeria from Nuvama.
Glenn, I just want to get your thoughts around this ISB 830. See, this is the most advanced product in your Ichnos pipelines in Phase IIb -- if it is [ not partnered ]. So just can you run your thoughts around it?
Well, I think -- I mean we put out our Phase IIb data, right? So with some of the recent activity on the OX40 antagonist, right, which has recently come in the global environment, has brought about renewed excitement around 830. So we are hoping that we will be able to partner this asset at some point, all right?
[ Sure ]. So is this maybe one of the candidates that you are looking to partner this year? Is that the one that you have factored in your guidance?
I mean I'm not giving any specifics, right? I mean we have partnering discussions across the various assets, right, between 54276 under the GPL side, the oncology assets on Ichnos and 830, right, so we have multiple discussions ongoing. It's hard to predict what will close out.
Okay, okay. Secondly, on Flovent, you maintain that we'll be filing it this year, so can you run us through what the competitive scenario could be? I believe [ there's an AG ] in the market, but what's the kind of competition we expect maybe by the time we launch, let's say, late next year?
So we believe there's one other filer right now, right, on Flovent. And other than that, we have no visibility to any additional filings. I mean keep in mind this is a large development, okay? I mean you're talking of clinical trials which runs into thousands and thousands of patients, right? So it's not an easy development and so we are hoping this will be a limited-competition launch for us.
Got it. And just one more, if I can. In this quarter, in the EU, was there any benefit from better-than-expected season? Or was it a normal quarter...
I think it was a normal quarter overall.
The next question is from the line of Sameer Deshpande from Fair Deal Investments.
[ So ] quarter 1 was very good for us in terms of the financial performance. I would like to know: Last quarter, we had a big settlement of around 800 crores, which was provided, so what is the time line for the payment of that during the year?
So Sameer, this will be paid over 2 years, okay, broadly. We had a 87.5 million settlement which will be paid over the next -- I mean, current year and next year.
Sir, but -- so that will add to our debt, which is currently at around 3,000 crores net, so will you offset it by selling this Glenmark Life Sciences stake?
No. I think our internal generation of cash over the current year should also help us take care, so therefore, we should be able to broadly take care of it from our internal funds, yes.
Okay, so the -- but is there any target to reduce the gross and net debt for the current year?
So we'll -- I mean, as we've said, one of our key things, endeavor is to bring it down. Obviously, 2 years back, we brought it down substantially, but over the last 2 years, because of currency, et cetera, those are the reasons why it went up, but I'm hoping that this money will definitely get paid out by our internal generation of funds. And as our business continues to grow and do better, we should definitely see the debt also come down.
Okay. Because currently, if you see the quarterly interest run rate, it has gone up substantially. And it almost doubled, if you take it by year-on-year, so 112 crores versus 60 crores, so...
Yes, yes. [indiscernible] -- [ I can respond to that ], Sameer. So last 2, 3 quarters, you see it's gone up. Because as you can see, LIBOR, [ which was, 1 year, were 0.5% ]. Today, it's [ 5.5% ], okay? So obviously, if you are dollar denominated -- so it has gone up. That's the reason mainly. It has nothing to do with the quantum of that. It has got to do -- more to do with the interest rate scenario that changed dramatically over the last [ 2.5 years ].
Yes, yes, but so there is no plan to sell a big stake in Glenmark Life Sciences to clear off the debt.
No. I think what we explained earlier also, that we would have -- we have to do 7% to 8%. We'll do that. And as far as the debt is concerned, I think, with our EBITDA being where it is and overall business doing better, we are hopeful that we should be able to take care of it.
Got you, but actually the perception of the market always continues to be better for the companies which are having very low debt or [ having ] cash. It's because -- in our case, our -- we have managed the debt well. There is no issue on that front, but if a -- so pharmaceutical company or any, we are in a position to reduce our debt because we have good cash flows...
[indiscernible], Sameer. We are working towards that. Leave it to us, yes. We'll do that.
The next question is from the line of [ Sharadh Ratnakumar from Eila Consulting Private Limited ].
So my first question was again regarding the stake sale in Glenmark Life Sciences, so can you address in terms of twofold: one, the cash flow requirements, as the previous participant asked? And second, can you give some comfort to the minority shareholders in terms of what percentage we're looking to sell? Because it looks like Glen life is a very good cash-generating company at the moment, right?
Okay, [ Sharadh ], I'll respond to that. So basically, as per now, we have to bring it down to -- we have to bring it down by to -- public shareholding overall by close to 25%. So there is a 7% to 8%, so that's what we are working on today, okay? And as far as the cash flow requirements are there, we are broadly managing everything we are generating. Our funds business is doing well, so I think that will take care of it.
Okay. And so I think in the previous quarter call you had mentioned that we'd spent about 200-plus crores in consultancy charges for the remediation. And despite that, we've received a warning letter from U.S. FDA, so can you throw some light on what possibly went wrong? Is it the choice of consultants? Is it that [ we would not hit the ] requirements of the consultants sufficiently? What went wrong there?
So I think what will be helpful -- probably we need to understand it a little better, how it works, okay? So the -- obviously the U.S. FDA had come. And they give us observations, et cetera, and they work with us. Obviously we had to start working on the remediation cost -- I mean, on the remediation, and that will cost money, okay? And as far as -- they take their time in giving the letter. So it's not that they -- I mean, in spite of doing this, there is a warning letter. The warning letter happened because of the -- [ earlier this, it's ] also we have done the remediation. And that is why now they help us to get back in business, okay? That's what I'm saying -- and from that plant.
Okay, so we are saying that we are going to probably continue a little bit more of the remediation without incurring any major costs...
Minimal costs. That's what we said, minimal costs, yes, because obviously it will have its -- I mean, while we are -- they are doing work, a lot of it is already done. We are hoping. And this is across the pharma industry, okay, so there are other peers also who spend similar money whenever they have any kind of this. So this is the way it is.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Utkarsh Gandhi for his closing comments.
Thanks, Lizan. We'll just read the disclaimer before we end the call.
This document has been prepared by Glenmark Pharmaceuticals Limited. And the information statements and analyses made in these documents and during the call describing company; or its affiliates, objectives, projections and estimates are forward-looking statements. These statements are based on current expectations, forecasts and assumptions that are subject to risks and uncertainties which could cause actual outcomes and results to differ materially from these statements, depending upon economic conditions, government policies and other factors. No representation of warranty, either expressed or implied, is provided in relation to these documents. And these documents should not be regarded by recipients as a substitute for the exercise of their judgment. The company undertakes no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
With this, we can end the call. Thank you all for joining us today.
Thank you, members of the management team. Ladies and gentlemen, on behalf of Glenmark Pharmaceuticals Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.