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Ladies and gentlemen, good day, and welcome to the Q2 FY '22 Earnings Conference Call of Glenmark Pharmaceuticals Limited. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Ravi Agrawal. Thank you, and over to you, sir.
Yes. Thank you, moderator. A warm good morning to everyone, and welcome to the Q2 FY '22 Results Conference Call of Glenmark Pharmaceuticals Limited. Before we start the call, a review of the operations of the company. For the second quarter of FY '21/'22, Glenmark's consolidated revenue was at INR 31,474 million as against INR 29,525 million, recording an increase of 6.6% year-on-year. For the 6 months ending September 30, 2021, Glenmark's consolidated revenue was at INR 61,123 million as against INR 52,973 million, recording an increase of 15.4% year-on-year. On to the businesses. First, the India business. Sales from the formulation business in India in Q2 FY '22 was at INR 9,689 million as against INR 10,507 million in the previous corresponding quarter, recording a de-growth of 7.8%. As per July-September '21 IQVIA data, while the growth has been impacted by lower contribution from COVID products as compared to the last year, the non-COVID base portfolio of the company grew 16.7% as compared to the non-COVID IPM growth of 15.3% during the quarter. The India business continues to outperform the industry growth and has grown consistently over the past several years. Glenmark is the fastest-growing company amongst the top 20 companies on a MAT September 2021 basis. As per IQVIA MAT September '21 data, Glenmark's India business recorded growth of 26.89% as compared to the IPM growth of 16.77%. The company has increased its market share ranking to 13th from 14th with market share of 2.51% as compared to 2.31% in the same period last year. Glenmark is ranked first in antivirals, second in derma, fourth in respiratory and sixth in the cardio market in India. The company launched 10 new products during the quarter. Amongst key launches, the company launched super bioavailable form of Itraconazole under brand Syntran SB and Canditral SB, further building on its antifungal franchise. Suba Itraconazole provides higher bioavailability at lower dosages as compared to traditional Itraconazole. The India formulation business achieved several important milestones. As per IQVIA MAT September '21, FabiFlu was the second largest brand across all brands in India during the period. Telma became the second brand of the company to achieve sales of INR 300 crores as per IQVIA. Ascoril D Plus became the 10th brand of Glenmark to enter the IPM 300 brand league. Glenmark's novel, patent-protected and globally researched sodium glucose cotransporter-2 inhibitor, remogliflozin, continues to do well in India. The company launched Remo MV/Remozen MV, which is the first triple combination of remogliflozin, vildagliptin and metformin for type 2 diabetes in adults at an affordable price in October 2021. This strategy is now showing results with total remogliflozin sales, including brand extensions and combinations, growing in strong double digits during the quarter. Phase III clinical trials for nitric oxide nasal spray to be launched under Glenmark's brand, FabiSpray, are currently ongoing, and the company expects to commercialize the product during the calendar year. Glenmark has an exclusive long-term agreement with Canadian biotech SaNOtize to commercialize FabiSpray for COVID-19 treatment in India and certain other Asian markets. Glenmark's Consumer Care business recorded revenue of INR 496 million in the second quarter. Secondary sales in Candid Cream grew 46% year-on-year, while La Shield recorded its highest secondary sales in the quarter with growth of 130% year-on-year. Candid Powder maintained its dominant market leadership status with a market share of 64.2% for H1. Coming to North America. North America registered revenue from sales of finished dosage formulations of INR 7,543 million, which is USD 102 million, for Q2 FY '22 as against revenues of INR 7,522 million or USD 101 million for the previous corresponding quarter. Glenmark received final approval for Clindamycin Phosphate Foam 1% during the quarter. In addition, Glenmark launched Telmisartan and Hydrochlorothiazide as tablets. The company filed 11 ANDA applications with the U.S. FDA, including 3 filings from Monroe in H1 FY '22, and is on track to file 18 to 20 ANDAs in FY '22, including 4 to 5 filings from Monroe. Glenmark's marketing portfolio in the U.S. as of end September 30, 2021 consists of 175 generic products authorized for distribution. The company currently has 47 applications pending in various stages of the approval process with the U.S. FDA, of which 20 are Para IV applications.Coming to RCIS, Asia and EMEA regions, what we call ROW markets. For Q2 FY '22, revenues from ROW was at INR 6,526 million as against INR 3,806 million for the previous corresponding quarter, recording growth of 71.5% year-on-year. The company witnessed healthy growth in the region, aided by strong traction in the COVID portfolio and also strong growth in the base business. Secondary sales in Russia grew 14% and 49% year-on-year in value terms in Russia and Ukraine, respectively. As per IQVIA, Russia segment grew 22.8% in value terms as compared to retail market growth of 14.6% in Q2. In Q1 FY '22, the company had successfully commercialized Ryaltris in Russia with indications of seasonal and perennial allergic rhinitis in patients over 12 years of age. The company has expanded its respiratory franchise with the launch of Ryaltris Mono during the quarter. The company also witnessed signs of recovery in Asia with strong secondary growth -- sales growth led by positive momentum in key markets like Thailand and Philippines. The growth across all the major EMEA markets, including Kenya, South Africa and Saudi Arabia, was positive. Europe. Glenmark Europe's operations for Q2 FY '22 was at INR 3,383 million as against INR 3,181 million, recording growth of 6.3% year-on-year. The company witnessed a mixed performance in the Western European region. While growth was affected by continued COVID restrictions in some countries, key markets like U.K. and Netherlands witnessed positive growth. The Central Eastern European region witnessed healthy growth across most key markets. For H1 FY '22, the European region signed 7 contracts for in-licensing products. In line with the company's global focus on the respiratory segment, the company launched Tiotropium Dry Powder Inhaler, the bioequivalent version of Spiriva Handihaler in Netherlands, Spain and Norway during the quarter. Further, the company launched Ryaltris in U.K., Poland and in the Czech Republic in October 2021. The company has detailed plans to launch both these products in multiple other markets in Europe, both with our front end and with our partners. Latin America. Glenmark's revenue from its Latin America and Caribbean operations was INR 960 million for the second quarter of FY '22 as against INR 984 million. Revenue growth was impacted by Brazil, where the market remained challenging due to the pandemic. However, we have begun to witness recovery in this region with most of the other markets recording positive growth momentum during the quarter, including Mexico, which grew 27% year-on-year during the quarter. Glenmark's Specialty and Innovative R&D pipeline. Ryaltris is currently under review with the U.S. FDA as a treatment for seasonal allergic rhinitis in the U.S.A. Glenmark's response to the agency's CRL was submitted to the FDA in July 21 with the PDUFA goal date in Jan 2022. During the second quarter, Glenmark received regulatory approval for Ryaltris in Philippines and Botswana. Glenmark also received MA grants for Ryaltris in several EU markets subsequent to the conclusion of the DCP procedure in the first quarter. Sales continue to progress well in Australia, South Africa, Ukraine and Uzbekistan and is gaining traction in Russia post-launch. The company launched Ryaltris in U.K., Poland and in the Czech Republic in October '21. Glenmark is targeting launch in other key European markets as well as Philippines, Peru and Ecuador in the coming quarters. GBR 310. Glenmark had announced successful Phase I results for GBR 310 that suggest similarity in pharmacokinetic, pharmacodynamic, safety and immunogenicity profiles between GBR 310 and the reference product omalizumab, marketed in the U.S. under the brand name Xolair. The company is in discussions with potential partners and is targeting to conclude a deal before initiating Phase III studies. GRC 39815 is currently under Phase I clinical development with a single ascending dose study in the U.S. The Phase I study is expected to be completed in the next few quarters. GRC 17536. Phase IIb study was initiated in Q2 FY '22 and is currently ongoing in India with 80 patients randomized till date. The company is evaluating further options, including out-licensing for the molecule. GRC 54276. Preclinical in vitro and in vivo profiling was completed in Q1 FY '22. And preclinical DMPK, non-GLP and GLP toxicity studies are currently underway. IND-enabling studies are planned to be initiated shortly with Phase I submission to DCGI planned in Q4 FY '22. Glenmark Life Sciences. For the second quarter of the financial year, revenues from operations, including captive sales, was at INR 5,618 million as against INR 5,208 million, growing at 7.9% year-on-year. The EBITDA margin stood at 30.2% for Q2 FY '22. External sales for GLS was at INR 3,354 million as against INR 3,213 million, recording growth of 4.4% year-on-year. The growth was impacted due to higher base of COVID products in the previous year. GLS is in the process of executing brownfield and greenfield capacity expansion projects to support strategic growth levers. GLS declared an interim dividend of INR 10.5 per share on a face value of INR 2 in the quarter. For further updates on the organization, please log on to www.glenmarklifesciences.com. Ichnos Sciences. For the second quarter of the financial year, Glenmark invested INR 1,850 million, which is $25 million, as compared to INR 2,250 million, which is $30.09 million, invested in the corresponding quarter of the previous financial year. For the first 6 months of the current financial year, Glenmark has invested INR 3,467 million, which is USD 47 million, as compared to INR 3,980 million, which is USD 53.23 million, invested in the corresponding period of the previous financial year. For further updates on the pipeline and the organization, please log on to www.ichnossciences.com. The pipeline update for the latest quarter of this financial year is published on this site. The key objectives for FY '22. We expect the revenue growth to be around 10% to 15% during FY '22. We expect to sustain EBITDA margin performance at similar levels of FY '21. We expect to reduce debt by at least INR 16 billion in FY '22 through a combination of free cash generation and IPO proceeds. Post FY '22, the strategic priority is to enhance the free cash generation for further debt reduction. We prioritize this over R&D investments and capital expenditure. We also expect to close 1 to 2 out-licensing deal agreements in Ichnos during the current financial year. Some notes before we open for Q&A. ForEx loss for the quarter was at INR 25.9 crores, which is recorded in other income. Gross debt for the period ending 30th September 2021 was at INR 3,587 crores as compared to INR 4,687 crores as on 31st March 2021, which is a reduction of INR 1,100 crores. Net debt for the period ending 30th September 2021 was at INR 2,159 crores as compared to INR 3,549 crores as on 31st March 2021. The total net debt reduction in H1 was at INR 1,390 crores from a combination of IPO proceeds and internal cash generated. The company further incurred cash expenditures of INR 40 crores in ABCD Technologies, $7.5 million premium on prepayment of FCCBs and a dividend payout of INR 70 crores in first half FY '22. Inventory for the period ending 30th September 2021 was at INR 2,531 crores as compared to INR 2,277 crores as on 31st March 2021. Receivables for the period ending 30th September 2021 was at INR 2,810 crores as compared to INR 2,572 crores as on 31st March 2021. Payables for the period ending 30th September 2021 was at INR 2,379 crores as compared to INR 2,238 crores as on 31st March 2021. Thus, the net working capital for the company has increased by INR 351 crores in H1 FY '22. The total asset addition was at INR 171 crores in the quarter as compared to INR 260 crores in Q2 FY '21. Of this, the tangible asset addition was -- for the quarter was at INR 132 crores. R&D expenditure for Q2 was at INR 329 crores, which was 10.5% to net sales for the quarter. Before we open the floor for Q&A, I would like to introduce the management of Glenmark on the call. We have Mr. Glenn Saldanha, Chairman and Managing Director; Mr. V. S. Mani, Executive Director and Global CFO; and Mr. Robert Crockart, Chief Commercial Officer. With that, we'd like to open the floor for Q&A. Over to you, moderator.
[Operator Instructions] The first question is from the line of Damayanti Kerai from HSBC Securities.
My first question is a clarification on IPO proceeds. So did you receive around INR 10 billion of proceeds during the quarter, which was utilized for debt reduction, out of the INR 12 billion which you earlier indicated?
So Damayanti, this is Mani here. So for the IPO, we received about INR 1,513 crores, of which we have -- I mean, most of it has -- I mean, all of it has gone in debt reduction only. I mean -- and out of which about INR 160-plus crores we have spent on actually the issue expenses plus there were some taxes on the offer for sale. So net, we received about something like INR 1,350 crores or so. So all that has gone in debt reduction.
Okay. And the remaining amount, we should be receiving in the second half.
So there's nothing to receive. We have not received everything. What I'm saying INR 1,500-plus crores, we received as IPO proceeds. Of this, INR 1,060 crores was primary. INR 460-odd crores was for -- was the offer for sale. I've received both the monies. And order book, the money is also -- when you do an issue, you have to spend some money on the expenses, plus on an offer for sale because it's like a secondary sale, you have to pay some taxes on that. Net of all that, we received about INR 1,350 crores. That has all gone to reduce the debt, okay? As you can see, my net debt has gone down by almost INR 1,400 crores. So this has gone a big way in reducing net debt. Plus, we got some internal accruals as well.
Okay, sir. And in the second half, whatever like our debt reduction target, it will be mostly done through the internal cash generation.
Yes. Absolutely. Yes. So whatever we have said, INR 200-plus crores, will happen in the second half, yes, to reach our target of at least INR 1,600 crores [ we have put out ].
Okay. And my second question is on ROW market, very strong performance during the quarter. So obviously, COVID could have some contribution. But can you clarify like how much sales we have received on part of COVID product? And how is the base business going? And how should we look at this part of the business?
It's Robert here. I'll take that. So just in short, if you look at the base business, excluding our Fabi products, we've been looking at around about 20-plus percent growth. But we've seen across our COVID products very positive results across multiple markets. So -- and we continue to believe that the base business will continue to grow in this basis.
Okay. Sure. And my last question is on U.S. I see like steady performance in a difficult environment. So what is the price erosion which you are witnessing in your portfolio? And when do you see some normalcy to settle in the market?
Okay. So look, I think -- yes, you're right. I mean, it's been a very tough environment out there, and pricing has been the #1 reason for us finding it extremely difficult. We find that the pricing is up to as high as 15%, around in that region, 10% to 15%, the price erosion.
I'm sorry. Around 15%, you mentioned.
No. No. It's -- so the price erosion on the entire portfolio is around 6%, 7%, somewhere thereabouts.
And when do you expect some normalcy to settle here?
So I think on the price erosion, on a consistent basis, for us, given that we have a lower base, we think, overall, the U.S. will continue to grow Y-o-Y in the second half, right, and continue to grow Q-o-Q, right? Price erosion is going to continue to sustain. It's going to be high. So I don't think you can expect a significant improvement in the price erosion environment.
[Operator Instructions] The next question is from the line of Saion Mukherjee from Nomura.
Yes. Glenn, on the India business, given that there have been some generic competition in flozins and gliptins, is that impacting your growth? Because if I look at a 2-year phase, it's sort of in single digits. So is the growth in India slowing down? And can you just talk through what are the positives and negatives that we can think of for the India business? And what sort of growth you are expecting going forward?
I think India continues to do very well for us, right? I mean, we continue to remain the fastest-growing company. We are consistently outperforming with Fabi. Without Fabi, the growth numbers also remain very strong, right? I mean, that remains consistent. To answer your question about the diabetes franchise, there has been a slowdown, obviously, because of Dapagliflozin and some of the other ones. But we're still growing Y-o-Y, right, in the diabetes space. And Q2 was a good quarter because the launch of the triple combination that really helped the overall diabetes franchise. So I mean, we remain very confident of India, right? If you see IMS also, you're talking of -- IQVIA puts us at 15-plus percent growth. So it's a strong franchise, and we see those growth trends to continue.
And Glenn, just Remo, tell how long you have patent protection here? And is that -- will that be an issue whenever it goes off patent?
So I can't comment on the specific patent expiry. But as far as Remo goes, as you know, you've already witnessed Dapa erosion in the same class, right? So there are lots of players who are in the Dapa space, right, in the SGLT2 space. And I think we don't anticipate that there will be a significant dent in the franchise, right, beyond the point. Obviously, growth -- the extraordinary growth that we were seeing in Remo, there is a slowdown there, right, because of the Dapa generic launches. And soon, it will be empa and some of the others also, right? But the franchise is still growing for us Y-o-Y and on a consistent basis.
Okay. My second question is on the U.S. market. There is a fair bit of a decline sequentially. Now what I also noticed is that there has been a lot of product recalls, particularly injectables from the Monroe facility. Is there any challenge that you're facing on the manufacturing side? And how much of an impact those had on your revenues, products like BROVANA and all sorts of not -- failed to sort of pick up? If you have any comments on what's happening on the manufacturing side and product reports?
So we had a voluntary recall that was done out of some of the products that we were manufacturing from Monroe. Clearly, this was not initiated by any regulatory actions, but it was a voluntary recall because of some quality issues that we faced. So I think as far as the recall goes, the impact has been minimal so far, right? And I think second half, H2, you should see some of these products coming back and our market shares coming back, right, on these products.
Okay. If I can ask one more question, Glenn, on the -- if you can update on anything incremental on Ichnos as far as out-licensing or fundraising is concerned? And also, you have the biosimilar, Xolair which you have mentioned for some time now. Is there an issue with the product as such that we haven't seen a licensing deal there? So if you can give any insight on that product as well.
Sure. So on Ichnos, I mean, there are 2 things, right? One is the products, right? I mean, both -- 1342 continues to do well in clinical trials. And now 1442, we are preparing for it to enter the clinics this year. So we'll have 2 very strong bispecific antibodies in the clinics in this year. And then we have a trispecific, which will come in next year. So I think the platform and the technology is doing really well for us. As we guided this year, we will close 1 or 2 licensing deals. So we are very close to doing 1 deal. And we still remain on course to doing 1, maybe even 2 deals yet this year, right, which will bring in some upfront payments into Ichnos and some cash flows this year. Next year, of course, with 3 assets in -- being in the clinics, 2 to 3 assets being in the clinics, right, that franchise becomes exceedingly valuable, right, at that point. And with 1342 PoC hopefully coming through, right, closer to the end of this year, we think there's a strong possibility at that point, we will -- this company will get valued appropriately, and we'll be able to do a capital raise.
Okay. So Glenn, are you saying that the capital raise efforts are not being pursued at this point? You're waiting for more of this to play out over the next 12 months before you again restart the process.
I mean, all I can say is for this year till we see PoC for 1342, right, we will not go in for a capital raise.
Okay. Okay. And any comment on Xolair, Glenn?
On Xolair, we still continue to pursue partnerships for the asset.
Yes. But any hurdle if you want to kind of call out or anything you want to share on that?
I mean, we are Phase III ready with Xolair. Obviously, the investment has to be made. We've clearly decided we will not invest in the Phase III. And hence, we want to partner it out. Otherwise, it remains a good opportunity overall.
[Operator Instructions] The next question is from the line of Shyam Srinivasan from Goldman Sachs.
Just the first one is on the margin dynamics. So I think we saw gross margins go up, but I think the other operating expenses have increased to kind of keep the margins where they are at, about 19%. So just want to understand some of the dynamics behind that.
So Shyam, Mani here. So 2 things. Obviously, our gross margins on a historical basis or whatever we are seeing, the trend, normally, we've been at about 66%, 67%. So when there is no COVID products, it will obviously go very close to that. And as far as the other expenses are concerned, obviously, we have controlled it better in the past couple of years. And I believe that while it may be a little higher in the second half, it may go up to maybe 25%, 26%, but only in the second half mainly. So I think broadly, you can see our EBITDA margins, I mean, staying at about 19%, yes.
Yes. So Mani, you're saying in the second half and just correlating to your guidance, so we go to 65%, 66%, but the 26%, other expenses. So does the math goes to -- what about?
Broadly -- so broadly, we take care of our -- and that's working well as for the way markets are there and how it is. So I think around 19% EBITDA is pretty much on.
Got it. Helpful. Second question, just to the earlier participant, you had mentioned for the U.S. price erosion at about 10% to 15%. It's one of the higher numbers we have heard during this earnings season. So is it a function of our portfolio? Is it because we are the challengers and we are taking those price cuts to gain share? If you can help us understand the -- Bob or Glenn, if you can help us understand what's happening on the pricing environment. And are we the ones that are reducing prices?
So I think, Shyam, Robert was referring to prices on a specific portfolio. I think overall, it's in the range of 6%, 7%, right, what we are seeing right now.
Okay. So it's not a double-digit plus -- if you see, I think, Glenn, I think some of the commentary has also been inventory destock from the channel. Are you experiencing that as well during the quarter, U.S.?
I mean, I think the U.S. environment continues to remain challenging, right, in terms of the number of competitors, the new product approvals and the pricing, right? So it's a very tough environment, right? It's more -- it's rapidly commoditizing.
Sure. Got it. And this is how it's going to remain at least in the foreseeable future at this point?
That's what we think.
Okay. Got it. Second question is on Ryaltris. You've got approvals and maybe launch in the U.K. and Europe. So how -- any early indications or color that you've got? And how should we look at the overall opportunity for this?
Yes. So I think Ryaltris, in general, we've had very positive momentum. When you look at our launches in Australia, South Africa, Ukraine, Uzbekistan more recently, also in Russia, the momentum has been very good. And we have multiple countries that we're launching as we speak. So just in October, we've launched in the U.K., Poland, Czech and so on. So yes, I think we're ahead of the game, and we expect it to continue in this way.
The next question is from the line of Sameer Baisiwala from Morgan Stanley.
Glenn, once you out-license 1 or 2 from Ichnos, then what does it mean for Glenmark's R&D investment into Ichnos on a quarterly basis? Does it bring down the rate meaningfully?
So Sameer, if you see this year itself, the R&D spend have come down overall, right? They're at about 10.5%. And also, Ichnos' burn rate has come down and is constantly on the decline because the big spender was ISB 830, which we were running the Phase IIb. And since that's over now, we're running -- we have 1 asset in the clinics and another 1 entering. So the overall spend rate has come down for Ichnos, and it will stay lower, right? So that will be the P&L impact, Sameer, right, in terms of -- when you consolidate. Obviously, the deals will bring in cash, right? So our cash investment in Ichnos will come down on a consistent basis, right, starting this year. So if this year, we are investing -- we were -- on a regular basis, if we were to invest $90 million, that will come down by $10 million or $20 million or $30 million, depending on what the upfront looks like. And the subsequent years also with the capital raise and further licensing revenues, the cash investments will keep coming down.
Okay. Okay. That's great. And one lead candidate that's very likely to get out-licensed, that's 830?
I think both 830 and 880, right, are the 2 assets, right, that we are hoping to out-license this year. So we are pretty comfortable that at least 1 of the 2 will get done pretty quickly.
Okay. Okay. That's great. And Glenn, any thoughts on Spiriva or tiotropium for the U.S. market?
So we are working on it, Sameer. All we can say is our respiratory launches in the U.S. will start from FY '24 onwards, right? So if I look at the next few years, next year, Ryaltris will be a big driver to our revenues globally, right? Basically, pan-Europe along with Menarini, U.S. along with Hikma and in the rest of the world, we'll be commercializing in multiple markets on our own. So FY '23 and FY '24 will be big years for Ryaltris in terms of the revenue scale-up. And the way the product is doing, as Robert mentioned, right, since it's doing really well, we're able to get share. That should be a good contributor to us. From '24 onwards, we will start launching -- we hope to start bringing some of the respiratory products to the U.S. market, FY '24 onwards.
I guess, how many of your inhaler products are presently in Phase III clinical?
So Sameer, we can't comment. We have one which is initiating Phase III or is in Phase III. But on the rest, we can't comment. I mean, we have 3 products in Europe, right? I mean, we have Salmex, right? We have Tio DPI commercial. We have Ryaltris commercial, right? These 3 are commercial. We have one more product, which is -- we are hoping to commercialize next year, which is a big product. So I think we'll have 4, 5 products in Europe by next year and FY '23 on the respiratory side. And in the U.S., we will start commercializing from FY '24 onwards, either on our own or through a partnership.
Okay. And sorry, just a follow-up on this. So have you disclosed the name of this big inhaler launch in Europe next year, you just mentioned?
No. We haven't spoken about it.
Okay. Okay. That's great. And one final question, if I may. How are you seeing the input cost pressures, Glenn? It could be raw material, on energy side or freight or anything, any thoughts on that?
Sameer, this is Mani here. So on the raw material side, obviously, on and off, we see some uptick trend in some of the supply chain issues. But on an overall basis, the firm, we have always taken some strategic calls to actually increase our inventories, et cetera, to take care of ourselves. So I think broadly, with the initiatives we do on the raw material side, we see margins very close to where we always were. So as of now, at least we don't see a big tent or anything on that. On the other side, if you ask me on the logistics side, yes, there have been increases on the freight cost. But people have been a little smarter. We increased more of CE than hired. So a lot of efficiency improvements are there to take care of some of these headwinds, okay? So I think all in all, I mean, as I alluded to one of the earlier questions, that we will try -- and I mean, we are definitely there on the EBITDA margins at about 19%, okay?
[Operator Instructions] The next question is from the line of Krish Mehta from Enam Holdings.
So I have 2 questions, the first being on CapEx. If you could give like some outlook or guidance on how we see CapEx for the second half of this year as well as in the FY '23. And my second question is on Ryaltris for the U.S. FDA approval time line. So is there a broad time line that we're expecting them to respond to our response for the Ryaltris launch?
So Krish, I'll take the first question. So on the CapEx, as we had guided earlier to about INR 650 crores -- between INR 650 crores to INR 700 crores, I think the first half clearly indicates we are very much on the same trajectory. So whatever number we had, INR 337 crores or something, so broadly, we should be in -- around INR 650 plus crores. Next year also, we see ourselves around those levels only. As we had guided earlier, in the past, we used to have a lot more. But over the years, some other expansions, et cetera, have been taken care of. So at least for the next 1 to 2 years, we see these numbers being therein.
Yes. And on Ryaltris, with the PDUFA date being Jan, so we are hoping to get approval around that time frame.
[Operator Instructions] The next question is from the line of Vishal from Nirmal Bang.
On Ryaltris, can you explain how does it -- how is it differentiated versus other anti-allergy nasal sprays like Dymista and other such nasal sprays?
I mean, we have a big Phase III study, which has actually shown superiority of mometasone and olopatadine to the monotherapies, right, of plain mometasone and other ICS products, right, in the Phase III. So there is clear evidence of better efficacy, right? And that's the biggest driver for the product.
Okay. And any color on how the product is doing wherever it is launched?
The product is doing well across all the markets, right? So I mean it's...
I can repeat that. I mean, I think as I said earlier, we've launched it in multiple countries. And with all the countries where we've launched, we're ahead of the game. We're expecting multiple -- we've just launched in 4 more countries just in October. So in the coming months, we expect a similar trend.
Would you also look to launch this in India? Or you've already launched it here?
We haven't launched Ryaltris in India. We have a product, Ryaltris-AZ, which is mometasone azelastine in India. But we don't have Ryaltris in India yet.
Okay. And just on the SaNOtize nasal spray, when should we expect the Phase III data on it?
We are hoping to complete the trial. As you know, the number of COVID cases have come down in India significantly. So we are struggling to -- from a recruitment perspective. But we are hoping to try and finish the trial around the December, Jan time frame.
Okay. So the approval will take longer...
Approval should be around Q4 is the worst case for us.
Okay. Okay. And is there enough manufacturing capacities here on SaNOtize nasal sprays?
Yes. We do have capacities.
Okay. And on molecule [indiscernible], are you working on that molecule?
We can't comment on our pipeline, right, for India.
Okay. In the previous quarter, you had highlighted 2 large launches that you expect to make, 2 meaningful launches probably in India, I think. So have those happened or they are yet to happen?
So we launched Suba Itraconazole, which is a huge launch, first time in India. We launched VILOR F, which is will vilanterol/fluticasone, again, first time in India. These are the 2 big ones, and we launched a triple combination of remogliflozin, right? So we had 3 big launches in Q2.
Okay. Okay. And then one final one. In the U.S., you had launched Theophylline and BROVANA, but I think the market share ramp-up is not good in Theophylline. My sense is you have low teens market share despite being the only player. So is there an issue ramping this product up?
So I think as regards Theophylline, we are still working on driving our market shares, okay, as we go forward. As regards BROVANA, because of the recall that we had, we need to go back and again start driving our shares.
Okay. So Theophylline ramp-up, any time lines on where we should be and in terms of market share and by what time?
We can't guide to any specific time line, but we still continue to drive our market shares for Theophylline.
[Operator Instructions] The next question is from the line of Nitin Agarwal from DAM Capital.
Glenn, on the Monroe asset, it's one of our largest CapEx investments so far. From a return on this asset perspective, I mean, how do you -- how should we think about returns on this asset incrementally going forward?
I think, Nitin, given that we have 3 lines there, right, we have injectables, prefilled syringes, we have nebulizers and oral solids, right, we feel pretty comfortable. I think, starting next year, right, you'll see a host of launches coming out of that asset, right, in that facility, which should justify the -- drive the payback, right, for our investment. Go ahead.
So Nitin, basically, obviously, we did invest some amount of money, but the OpEx should be about $30 million, $35 million. So broadly, you see -- when the production ramps up and products start coming out, it should more or less take care of it fairly well easily and pretty strategic in nature.
So right now, just to sort of take from there, the plant is losing about $30-odd million because there's not much revenue from there right now.
No. Not all of it gets spent every year, no. See, as and when we launch -- I'm just trying to tell you the OpEx, what could happen in a year. So a decent amount does get spent, but we do make some products -- in the first half or so, we did put some products in the market. So I think as and when it ramps up fully, it will take care of its stuff very well.
And Mani, on -- from a timing perspective, when are you expensioning these assets to begin -- start covering its OpEx and delivering for profitability, the assets?
I think there is a good -- I mean, next year, we see it more or less taking care of itself well.
Secondly, just sort of taking off from there, on the margins, we've been about -- this could scale up to 19-odd percent margins now. Where do we grow from here over the next 2, 3 years? And in your assessment, what has been the driver of the margin expansion from here on?
Yes. I'll take this. So Nitin, if you look at it, see, I mean, obviously, we've grown it well and reached it to about 19%. Hereon, we'll try and add on to it, but we wouldn't like to commit to a number. I mean, the way -- and also, you see some headwinds here and there in terms of costs, et cetera. But on a very broad way, when we do our workings and look at our plant, we see 19% to be very comfortable.
I think, Nitin, to add to what Mani is saying, right, the key for us is our spends in Ichnos, right? So while at the -- on the P&L level, we'll remain at around 19-odd percent, the cash -- at the cash level, right, because of our lower investments in Ichnos, the overall -- the cash margins will be significantly higher. That's the way to think about us.
Okay. And Glenn, from a business perspective, how do you see the various parts of the business in terms of where they stand? I mean, I guess with the IPO fundraise and with CapEx sort of coming off, hopefully, that the cash flow picture clearly seems to be a lot clearer than it was earlier. Now from a business perspective, how are you looking at the business in -- the core business in the next 3 years from a scalability perspective?
So I think, I mean, our view, Nitin, is this business can grow 10%, 15% CAGR, right, over the next 5 years, very comfortably. And that's a good enough trajectory for us, right? And as I said, for next year, because of the high base of COVID product sales in this year, right, next year, our growth could be challenging. But I think from the following year, of course, Ryaltris will be a big contributor next year, right, to the top line. But I think from the following year, very comfortably with all the respiratory launches we have in the U.S. and some complex generics coming to market from FY '24 onwards, we see this business scaling up quite nicely at a 10%, 15% CAGR over the next 3 to 5 years.
And squeezing the last one. Glenn, our big asset sort of allocation for us -- the capital allocation for us in the last several years has been the European business, where we bought a bunch of brands over the years. In your assessment, where has the business reached from a profitability perspective? And where does it go from here?
I think it's doing very well for us. And I mean, even this year, I think we're anticipating around 15%, 20% in H2 growth numbers. I think next year also will be strong. So Europe is doing well for us. With the launch of Ryaltris, that will further accelerate things. It's about a $200 million, $250 million business for us. So it should continue to keep scaling at a pace which is faster than some of our other geographies.
And Glenn, in terms of your investment requirements by way of further brand acquisition, is that still an imperative for the business? Or are you reasonably sufficed where you don't really need to do that anymore that aggressively?
Yes. I think, Nitin, we have reached definitely a critical size. As you can see in the first half of this year also, we -- spend on some of these in-licensing has substantially come down. So I think we have ramped up well. I mean, people can take various routes to reach an end. Somebody would acquire a company. Somebody would in-license. So I think we have done well to put up a good business of $200 million, close to that. So I think overall, Nitin, it has reached a critical stage. So I think it works well for us.
[Operator Instructions] Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Ravi Agrawal for closing comments. Over to you.
Yes. Thank you, moderator. We will read the disclaimer before we end. The information, statements and analysis made in this presentation describing the 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 those statements, depending upon economic conditions, government policies and other incidental factors. No representation or warranty, either expressed or implied, is provided in relation to this presentation. This presentation should not be regarded by recipients as a substitute for the exercise of their own 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 end the call today. A very big thank you to all of you for joining us on the call.
Thank you very much. On behalf of Glenmark Pharmaceuticals Limited, that concludes this conference. Thank you all for joining. You may now disconnect your lines.