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Ladies and gentlemen, good day, and welcome to Q4 FY '21 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. Good morning, everyone, and a warm welcome to the Q4 FY '21 Results Conference Call of Glenmark Pharmaceuticals Limited. Before we start the call, a review of the operations of the company. For the fourth quarter of FY 2021, Glenmark's consolidated revenue was at INR 28,599 million, recording an increase of 3.3% year-on-year. For the year ending March 31, 2021, Glenmark's consolidated revenue was at INR 109,439 million, recording an increase of 2.8% year-on-year. Our corporate announcement. Glenmark Life Sciences Limited has filed a DRHP with the Securities and Exchange Board of India for a proposed IPO comprising a fresh issue of up to INR 11,600 million and an offer for sale of up to 7,305,245 equity shares, subject to market conditions, receipt of applicable approvals and other considerations. On the business. First, the India business. Sales from the formulation business in India for the fourth quarter FY '21 was at INR 8,238 million, recording a growth of 7.7% year-on-year. The India business continues to significantly outperform industry growth rates, continuing the trend of the past several years. As per IQVIA data, Glenmark is the fastest-growing company in the industry amongst the top 20 players on a MAT March 2021 basis with a growth of 13.99% as compared to the Indian pharma market growth of 5.86%. On a quarterly basis, as per IQVIA, the business recorded growth of 8.73% as compared to 8.3% for the market. Glenmark's India formulation business is ranked fourth (sic) [ 14th ], and its market share has increased to 2.32% as compared to 2.2% last year as per IQVIA data. In terms of market share, Glenmark's India business further strengthened in its core therapies areas such as cardiac, diabetes and respiratory. Glenmark's novel, patented product and globally researched sodium glucose co-transporter-2, SGLT2, inhibitor, remogliflozin etabonate, indicated for the treatment of type 2 diabetes in adults, continues to do well in India despite launches by multiple companies in the SGLT2 segment but particularly in dapagliflozin during the year. Furthermore, Glenmark has also witnessed positive response to the launch of Remogliflozin + Vildagliptin fixed-dose combination under the brand names Remo V and Remozen V for adults with type 2 diabetes in India. The brands have been able to garner market share of 37.9% of the SGLT/DPP-4 market as per IQVIA Jan-March 2021 data. Glenmark launched SUTIB, the generic version of Sunitinib oral capsules to treat kidney cancer in India during the quarter. Launched at an extremely affordable price to the innovator brand, the launch underlines Glenmark's commitment to bring targeted and effective medicines at affordable cost in its focus area of oncology. The Glenmark Consumer Care business. The Glenmark Consumer Care business continued its strong performance in the fourth quarter, registering healthy growth rates despite the challenging economic environment, especially in discretionary consumption areas. The business recorded value sales of INR 582.4 million in the fourth quarter, registering 26% year-on-year growth, excluding VWash sales. Candid Powder continues to drive growth for this category, recording value sales growth in excess of 30% for the quarter and is the first brand in the Consumer Care business to enter the INR 100 crore club. North America. North America registered revenue from the sale of finished dose formulation of INR 8,012 million, recording a growth of 5.2% year-on-year. On a quarter-on-quarter basis, the business has recorded growth of 3.7% in USD terms. In FY 2021, Glenmark was granted approval of 14 ANDAs, comprising of 10 final approvals and 4 tentative approvals. Additionally, Glenmark was granted approval on a prior approval supplement for the 0.25 mg strength of fingolimod capsule. Notable approvals for the year included Sirolimus tablets, Tacrolimus Capsules, Topiramate ER Capsules, Chlorpromazine Hydrochloride Tablets and Diltiazem Hydrochloride Extended-Release Capsules. The company filed a total of 7 NDAs with the FDA in FY '21 and plans to find at least 18 to 20 ANDAs in FY '22, including 5 to 6 filings which got delayed in FY '21 due to the pandemic. These filings would include 4 to 5 filings from the Monroe facility. Glenmark completed the successful launch of 10 new products during FY '21, consisting of a mix of semi-solid preparations and delayed- and immediate-release oral solids and hormone products. Notable launches included Topiramate ER Capsules, where Glenmark is the first true generic entrant; and Chlorpromazine Hydrochloride Tablets and Diltiazem Hydrochloride Extended-Release Capsules, both of which we secured competitive generic therapy exclusivity periods for the company. Glenmark's marketing portfolio through March 31, 2021, consists of 171 generic products authorized for distribution in the U.S. market. The company currently has 41 applications pending in various stages of the approval process with the FDA, of which 21 are Para IV applications. Africa, Asia and CIS. For the fourth quarter of FY 2021, revenue from Africa, Asia and CIS region was at INR 3,342 million, recording a decline of 0.7% year-on-year. The challenging conditions continued to persist in Russia and CIS, primarily due to the pandemic. As per IQVIA MAT March '21 data, Glenmark Russia recorded value degrowth of 7.7% and degrowth of 12.8% in terms of units. However, we are seeing signs of recovery on a sequential basis. Glenmark Russia ranked overall 52nd in the market with 11th ranking in the derma segment and third in the expectorants segment. During the quarter, we successfully launched Ryaltris, our global anti-allergy brand in Ukraine and Uzbekistan. Furthermore, we have received regulatory approval to market Ryaltris in Russia with indications of seasonal and perennial allergic rhinitis in patients over 12 years of age. The product will be commercialized in Russia in Q1 FY '22. We have also received approval of Ascoril brand extension in Russia, and we look forward to strengthening our respiratory franchise in Russia/CIS region over the coming periods. The Asian markets continued to remain under pressure due to the lockdown on account of the pandemic, which has affected the sales in these key markets. The Middle East and Africa region recorded growth as number of markets witnessed signs of recovery due to the easing of lockdown measures. The region recorded primary sales growth of 16% year-on-year during the quarter with positive growth across major EMEA markets like Kenya and Saudi Arabia. Europe. Glenmark's Europe operations for the fourth quarter of FY 2021 was at INR 4,223 million, recording a growth of 2.6% year-on-year. The European business was impacted in the fourth quarter mainly due to the enhanced lockdown measures from the heightened pandemic concerns in most key markets. In Western Europe, while Glenmark continues to increase penetration across major markets, the pandemic measures in key markets like Germany affected overall performance for this business. For the financial year, the European region signed 21 major contracts for in-licensing products in the region. The region is expected to benefit from significant product launches, including products like Tiotropium Bromide dry powder inhaler and Ryaltris in FY '22. The company has a strategic, exclusive in-licensing agreement to market Tiotropium DPI in Western Europe. Glenmark expects to be one of the first generics for the product in the key markets starting Q1 FY '22. In Ryaltris, during Q4, Glenmark submitted response to European agency queries, which enabled Glenmark to conclude a decentralized procedure, paving the way for potential approval of the product and expected launch of Ryaltris in the EU in FY '22. Latin America. Glenmark's revenue from Latin America and Caribbean operations was at INR 1,299 million, recording degrowth of 26.6%. The pandemic continues to impact the Brazilian business, and the unit once again reported decline in sales for the quarter as compared to the previous corresponding quarter. The Mexico subsidiary performed relatively better, recording sales growth for the quarter. However, the entire region continues to witness a challenging environment on account of the pandemic. GPL specialty and innovative R&D pipeline, Ryaltris. Ryaltris nasal spray is the company's respiratory pipeline asset and 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 is targeted to be submitted to the U.S. FDA shortly. Ryaltris sales continue to progress well in Australia and South Africa. Glenmark also initiated the commercial launch in Ukraine and Uzbekistan during the quarter. Glenmark and Bausch Health entered into an exclusive licensing agreement for the commercialization of Ryaltris in Canada. Ryaltris is currently under review by Health Canada. Glenmark completed several regulatory filings for Ryaltris in Q4, notably in Egypt, Singapore, Jamaica, Kazakhstan and Maldives. The company is awaiting regulatory approvals for its filings in various markets across Canada, Brazil, Malaysia, Saudi Arabia and several other emerging markets. In Q4 FY '21, Glenmark's partner in China, Grand Pharma Ltd., submitted a revised development and registration strategy for Ryaltris in China through a pre-IND application. CDE has since provided positive feedback, which will enable IND submission in China by mid-FY '22. Glenmark is also working with its partner in South Korea, Yuhan Corporation, to submit the pediatric efficacy supplement in FY '22. GBR 310. Glenmark has 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. GRC 39815 is the company's respiratory pipeline asset being developed as an inhaled therapy for treatment of mild to moderate COPD. It's 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 is the company's pain pipeline asset being developed as an orally administered treatment for pain in patients with painful diabetic peripheral neuropathy. The formulation PK study was completed during the quarter. And the company is evaluating further options, including out-licensing for the molecule. Glenmark Life Sciences, GLS. For the fourth quarter of FY 2021, external sales for GLS was at INR 3,311 million, recording growth of 26.7% over the correspond period last year. For the entire year, external sales of GLS recorded a revenue of INR 12,074 million, recording growth of 17.9% over the corresponding period last year. Ichnos Sciences. Glenmark has invested INR 1,880 million, which is $26 million, in the fourth quarter of the financial year. Thus, for the entire financial year, Glenmark invested INR 7,570 million, which is USD 102 million, in Ichnos as compared to INR 8,190 million, which is $115 million, in FY '20, which is a decline of 7.6% year-on-year. For further updates on the pipeline and the organization, please log on to www.ichnossciences.com. Some notes before we open for Q&A. ForEx loss for the quarter was at INR 5.8 crores, which is recorded in other expenditure. Thus, EBITDA for the operating business was at INR 529 crores after adding back the ForEx loss. The net ForEx loss for the financial year FY '21 was at INR 75 crores and is present in other expenditure. The gross debt for the period ending 31st March 2021 was at INR 4,687 crores as compared to INR 4,868 crores as of 31st March 2020, lower by INR 181 crores during the year. Net debt for the period ending 31st March 2021 was at INR 3,549 crores as compared to INR 3,758 crores as of 31st March 2020, lower by INR 92 crores in the quarter and INR 209 crores for the full year. Inventory for the period ending 31st March 2021 were at INR 2,277 crores as compared to INR 2,136 crores as of 31st March 2020. Receivables for the period ending 31st March 2021 was at INR 2,572 crores as compared to INR 2,409 crores as of 31st March 2020. Payable for the period ending 31st March 2021 was at INR 2,238 crores as compared to INR 2,126 crores as of 31st March 2020. The total asset addition was at INR 239 crores in the fourth quarter. For the full year, the total asset addition was at INR 767 crores as against INR 930 crores in FY '20. Of these total asset additions, the tangible asset addition for the quarter was at INR 116 crores for the quarter and INR 201 crores for FY '21. R&D expenditure for the fourth quarter was at INR 304 crores, which was 10.6% in net sales for the quarter. For FY '21, the R&D expenditure is at INR 1,221 crores, which was 11.2% to net sales as compared to INR 1,352 crores in FY '20, which was 12.7% to net sales in the corresponding period. R&D expenditure for Ichnos Sciences for the fourth quarter was at INR 188 crores and for FY '21 was INR 757 crores. Before we open the floor for Q&A, I would like to introduce the management of Glenmark Pharmaceuticals on the call. We have Mr. Glenn Saldanha, Chairman and Managing Director; Mr. V. S. Mani, Executive Director and Global Chief Financial Officer; and Mr. Robert Crockart, Chief Commercial Officer. And 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 on Ichnos. Can you provide us update on the capital raise plan? Also, we have seen that there has been some changes in the company, including departure of Founder CEO. So any update on Ichnos' fund raise plan?
So Ichnos, [indiscernible] pretty well and progressing their pipeline forward, right? I think the 2 main assets, 1342, we should get a readout very shortly on the PoC on 1342. And we have 1442 entering the clinics this year. So those are 2 main assets for Ichnos, which are moving forward and which should create significant value for GPL once you get proof of concept with these 2 clinical assets. We also have various ongoing partnering discussions on 2 of the immunology assets, which should close during the year, so ISB 880 and 830. And then on the equity side, we continue to look at a capital raise sometime during the course of this year. With regards to the management change, you're right, Alessandro is leading the organization. However, Ichnos has a very strong management team and leadership team. And we have Dr. Cyril Konto, who will take over as the interim CEO.
So for this year, we should be hearing something on that equity raise plan for the Ichnos Sciences as well as some product-specific or FX-specific monetization plan.
Absolutely. Absolutely. You should see partnering, for sure. And the capital raise, we continue to work on it. So I think from that, our likely investment in Ichnos will also be lower net of the upfront payments that we will receive on account of some of the partnerships.
Okay. And my second question is on U.S. business. So can you update us on what kind of price erosion now we are having on our portfolio, especially on the derm side? And how we should look the scenario in coming quarters?
This is Robert here [indiscernible]. So on the pricing erosion, we -- it kind of bottomed out. So we see it around the 5% to 6%. And then in the coming quarter, we have 3 new launches, and we see a good recovery at the course of [indiscernible].
Okay. So with pricing bottoming out in derm portfolio also, our overall portfolio price erosion is somewhere in mid-single-digit, right?
Exactly. Mid-single-digit, that's correct.
Okay. And with pickup in launches ahead -- pickup in launches will be key driver ahead. And we should broadly assume price erosion in similar single-digit range ahead also.
That's correct. Exactly.
[Operator Instructions] The next question is from the line of Neha Manpuria from JPMorgan.
Yes. My first question is on the India business. Obviously, April, May would see the increase in volumes because of the COVID second wave. But if you were to look through the rest of the year, given the high base, so just some color on what was the contribution from the COVID portfolio in FY '21. And therefore, what could be the growth in the base business as we go ahead?
So I think, first of all, just on your first statement, we've, of course, had a very good April, right, from -- due to the COVID product. But just to be clear that from May onwards, we've seen a dramatic drop, right? So with the pandemic really resurgence in May, we see -- we had a massive drop. And in June, we anticipate it to be almost insignificant when you look at the COVID products. Looking forward, even last year and looking at this year, we anticipate still for our business to operate at least in line or ahead of the market. So really seeing some good, strong performance on our base business.
And what would be the contribution of the COVID portfolio lastly, rough estimate?
It's very difficult for us to split it out, but I think it made a considerable good contribution.
Understood. Understood. And my second question is on the other expenses. The other expenses line seems to have increased quite dramatically, even if I were to adjust it for the FX loss in the quarter. Is this a normalized base? Is there any lumpy expense that is there in the number?
Yes. This is Mani here. So actually, there is a one-off in the sense during the quarter especially, we have put more inventory to meet the increased businesses in some of the front-end markets. So we had an increase in our freight cost, about INR 30 crores. Also, the CSR expenses are a bit higher. With the changing regulations, et cetera, we had to put about INR 10 crores, INR 15 crores. Also, historically, if you look at it, our Q4 other expenses are on the higher side. So if -- I mean, if you look at the full year, our other expenses are about 25.7%. And historically, we were about 27%, 28%. So I think we'll trend closer to 27% or so in the current year. So I don't think you can just take a particular quarter and take it as -- annualize it and do that. It's more appropriate to take the number that I gave you, yes.
But is it fair to assume that our SG&A spend in most of our branded market was close to normal in the fourth quarter even after adjusting for the one-off?
Yes. Most of the markets, yes. But then as I told you, there are a couple of one-offs. And also, you titrate during the year how you spend. It's not like you look at every quarter and do it that way. So depending on how we want to promote products, how we want to do ahead of time, quarter-to-quarter, there can be some changes. But the best thing is to take on a yearly basis. The year is about 27%. That's what we should take.
Understood. And on -- lastly, on the R&D spend. Glenn, you mentioned that Ichnos spend would likely trend lower net of any inflows from partnership. Now since you don't know the inflows, on an absolute basis, the amount that the parent would spend on Ichnos, would that also go down year-on-year? Or that should remain at this $100 million level that we spent during the year?
Our view is it should range between $90 million to $100 million, somewhere thereabouts, for next year -- I'm sorry, for the current year. And then you net out some partnering income. So it will -- should be significantly lower.
Okay. And in terms of the generic cost, how would -- how do you see that changing?
I think overall, our R&D spend should be pretty much -- on an absolute basis, should be pretty much in the same ballpark as what we spent in FY '21, right, over -- on an absolute basis. So I think higher sales -- obviously, as a percent of sales, we expect some improvements coming out of the -- at the total EBITDA level because of the lower expense.
Just to add to what Glenn just said, it was about 11% in the current year. We expect it to trend between 10% and 11% for the next year with the higher sales.
[Operator Instructions] The next question is from the line of Krish Mehta from Enam Holdings.
I just wanted to ask on the tax guidance for FY '22.
Yes. So basically, our tax has been trending at about 20% and 30%. I mean, I think that's where we'll stay around. So I mean -- also, we -- and also, the more important part is to look at the cash tax. So I think as far as India is concerned, we continue to play -- pay about MAT 17%, 18%. We have a large MAT credit. So I think all in all, we see trend about maximum 29%, 30%, not more than that.
The next question is from the line of Harith Ahamed from Spark Capital.
First one is on the tangible CWIP on your balance sheet at around INR 1,200 crores. It's been at similar levels for the last few years. So how much of this is related to the new Monroe facility? And if you could give some color around the time lines for commissioning this facility.
Sure. So one is, obviously, we have about $120 million still to be capitalized in Monroe. There -- basically, there were 3 lines. So the OSD had already been capitalized, about $30-odd million. So the injectable and the nebulizers will get capitalized over the current year and probably sometime in the next year. So I think after that is done in a year or so, you would find a drop by about INR 700-odd crores, INR 700 crores to INR 800 crores.
Okay. And then looking at Ichnos' pipeline of clinical assets, I think we had, until last update, this candidate, ISB 1302, which I believe is missing from our current presentation. So any updates there?
Well, 1302, we've decided to put it on the back burner for now, right? And we prioritized 1342 and 1442, right, as the key assets.
Okay. So it wasn't based on any Phase I data that we analyzed recently? Or any particular reasons for putting this in the back burner?
It's just to prioritize the candidates, right? Because I mean, we are controlling spend. We're doing multiple things, right, in Ichnos. So I think given that we're just prioritizing 1342 as the lead, right, to validate the bispecific platform technology and because we feel -- just given the likelihood of success is higher, right? So that's the reason. The thinking is first to move 1342 forward, get 1442 in the clinics this year and then come back to some of the other bispecifics, including 1302.
Okay. And last one is on the Consumer Care franchise. We've had a 26% growth this quarter. So how important an area is this for us going forward, the overall Consumer Care portfolio? Because we've had a couple of, I think, divestment as well here of the VWash brand. So trying to understand how this fits into our overall domestic program and how important this is.
Well, I think the way to think about it is if it's part of the therapeutic areas where we are present in, right, we will continue to grow our Consumer Care business in those areas, right, which is mainly in dermatology, respiratory, these 2 areas. And that's the way we look at it. I mean, the VWash divestment is because it was noncore to our TAs which we operate in India.
[Operator Instructions] The next question is from the line of Alankar Garude from Macquarie.
Glenn, how big a setback would Dr. Riva's departure be to Ichnos' pipeline development? I know you talked about the strong management team in place and also the interim CEO. But are we looking to make another high-profile hire for this role now?
So I think, Alankar, the -- so Ichnos is built around the platform technology and the assets in Ichnos, right, that have been developed over, I don't know, half a decade at least, right? So it's not -- I don't think any individual is solely responsible for Ichnos, the success of Ichnos. That's the first point. As of now, Cyril -- Dr. Cyril Konto will take over as the interim CEO. He comes with a great background. He's worked with Bristol Myers Squibb, Pfizer, Allogene and had a lot of success there. And we're pretty confident Cyril will continue the Ichnos journey.
Okay. Fair enough. My second question is on the API business. What have been the key drivers for this 18% growth in FY '21? And how important has [indiscernible] been in driving this growth? So both on top line as well as in terms of margins, can you comment on the sustainability of the FY '21 performance?
So just to put it, I mean, obviously, the full year was about -- the external business grew at about 17% -- I mean, almost 18%, and the quarter grew at about 26%. Across all geographies, indeed, that has done quite well, okay? And the margins also have been good. But beyond that, since -- however, I mean, they filed a DRHP and they have a regulatory constraint. So it will be not so easy to comment more on.
Fair enough. And also, possible to share any time lines on the IPO?
No. We are still awaiting the regulatory approval. So we'll -- I mean, therefore, [indiscernible] we'll have to wait the -- I mean, we'd probably be in a better position to answer that when all that is done.
Understood. And one final question from my side. Now we have given a guidance -- EBITDA margin guidance of 19%, 20% in the last quarter for FY '22. And in context of a strong April and some benefit in May as well in the domestic business, how should we look at margins in FY '22?
See, we would like to continue to guide at 19% to 20%. That is what we at least feel we'll definitely do easily. So I mean, if we do something better, the upside is there. But we would not -- we would like to continue to guide at 19% to 20%.
The next question is from the line of Sameer Baisiwala from Morgan Stanley.
So just your outlook on the overall sales for fiscal '22. And second is, what sort of debt reduction -- rather, net debt reduction that you're targeting for this year?
Sameer, top line sales, we still believe will grow in excess of 10% -- around 10% to 12% top line in '22. So we are expecting a strong year ahead of us. And Q1 has been strong on the back of FabiFlu sales and multiple other products. As regards the debt reductions in the operating business overall consolidated, we will generate free cash of somewhere in the range of INR 400-plus crores, right? And then with the GLS IPO likely, that will further delever to the extent of capital that flows to GPL. So I think these are the 2 aspects that -- I don't know if I answered your question.
Yes. Sure. Absolutely, Glenn. So about roughly INR 1,000 crores, INR 1,200 crores is something that you are probably looking at.
I mean, the GLS IPO numbers were put out, yes. So...
Yes. There is an [ end use ] in that, so about INR 900 crores or so. So all that will add up to re-delever the balance sheet.
Okay. Got it. And I know you're constrained to talk too much on the API and upcoming IP. But any qualitative color you can share on the investor interest based on the premarketing that you must have done?
No. As of now, because of the regulatory constraints, I cannot say on the investor interest or what is the -- so I prefer to wait for that event to happen, and then we can.
The next question is from the line of Vikas Sharda from NTAsset.
Yes. Could you just recap on what is the plan for CapEx for FY '22? And to get on the net debt, clearly, you said that INR 400 crores would be free cash flow. So besides any corporate actions, that should be the net debt reduction.
Yes. Definitely. That should be the net debt reduction. And also, in terms of the CapEx, we'll guide to about INR 650 crores, at best INR 700 crores. As you can see last year also, we came off substantially compared to the previous years. And as we know, most of the investment that we planned outside of Monroe or any other CapEx facilities are almost done. So we don't see too much. So we look at it as booking CapExes and stuff like that, about INR 650 crores to INR 700 crores.
The next question is from the line of Shyam Srinivasan from Goldman Sachs.
Just the first one on the Ryaltris launch that we have actually done. So just any early indications of how this launch has gone. And if you could also share the outlook for this particular drug for fiscal '22, given that we are going to see launches in several parts, right? So can you help us?
Yes. So far, we've had quite a few launches across multiple markets, particularly in Australia and in South Africa. And the initial results has been very promising. So the take-up and the interest has been very good. Furthermore, we have -- we had launches in the Ukraine and Uzbekistan, which has also gone well. And as for the rest of the year, of course, we've got multiple markets where we're looking at commercializing. So it's a product that we're keeping a close eye on, and we're pretty optimistic about.
Yes. Any market shares or anything to share? Like we have seen Australia and South Africa for some time now at least, is it? And how is it tracking versus the management expectations?
So yes, of course, we have some share on the product. I mean, what I can say is at this point, we have come up ahead of expectations. So in general, we are quite optimistic in terms of the initial results.
Got it. Second question is again on the Tiotropium product. Again, in fiscal '22, I've seen the kind of TAM that you have indicated. But just how large can this product be for us?
So, Shyam, of course -- sorry.
So Shyam, this could be a big launch for Europe, right? I mean, $450 million product, first generic, and we should be launching anytime soon. So this could be quite substantial for Europe.
So again, the approval has come through, is it? Or are we just waiting for -- and just getting things ready from a commercialization perspective?
It should come through any day. So we are preparing for commercialization.
[Operator Instructions] The next question is from the line of Prakash Agarwal from Axis Capital.
Glenn, one question for you on the out-licensing environment. In the past, we have heard, due to COVID, environment is not that great. And we heard you that this year, you are expecting 1 or 2 at least. So has the environment changed dramatically on the ground and we are in discussion stage, active discussion stage with a couple of molecules you spoke about?
So Prakash, we wouldn't guide if we didn't have a certain level of confidence, right? I think the environment -- it's more the assets than the environment. So both ISB 880 and 830, right, there is quite a lot of interest from a partnering perspective. So hopefully, we should be able to conclude at least one deal yet this year, right, on the out-licensing side, right? And I think more than the macro environment, it's the individual assets, right, and the data around that which is exciting partners.
So if something, let's say, out-license it -- out-license, do you think your R&D spend should start going up, given that it will see more color and you need to invest more?
So on the contrary, Prakash, it will go down, right, because the investment on those assets will go off to a partner, right? And we would not be spending on that. So I think our R&D spend, if we do these partnerships deals, will further go down. Plus, of course, we will get the upfront payment, right?
Yes. So this 10% to 11% is not factoring in any -- it going down. So if you conclude a deal, it will go down from 10% to 11% as per guidance.
Yes. I mean, the expense will be 10% to 11%. We will have an income on the other side, okay? So that's it.
Yes. But as Glenn said, if that happens...
Well, the net will be lower, yes. The net will be lower, yes.
My question is on the trend side. This will start going lower as the other partner picks up the expense or you are saying it's just netting off?
No. So Prakash, 880 is an early-stage asset, okay, right? It's an early-stage asset. So while the expense will be -- will go off to a partner, it may not be that substantial, right? And likewise, 830, we are currently not running any further clinical trials, right? So your overall expense will be lower, but it will be marginally lower, right? But as Mani said, net -- if you net out the upfront, it will be significantly lower.
That's obvious, yes.
Okay. And to your 10% to 12% overall growth guidance, how much you're tagging in for U.S.?
So U.S...
For the U.S. -- sorry, go for it, Glenn.
No. Go ahead.
No. No. I was just going to say, for the U.S., we're looking in around the double-digit, around 10%.
Yes. Because the base last year was a little softer, given the competition that you saw on the particular products. So around 10% is what you're guiding?
Absolutely, yes. And for quarter 1, we are on that track.
Perfect. Great. And last one on other expenses. So you called out a couple of things. One was ForEx expense, INR 30 crores, higher freight cost. And there was one more, INR 75 crores.
Yes. It's on the CSR front there, yes, so -- because there are some regulatory changes now. So we have to spend a little more on...
That was INR 10 crores to INR 15 crores, sir. I'm talking about the INR 75 crores you said something. I missed that.
No. No. I said both -- these are the 2 things that I told. I also told that we are guiding to about a 27% other expenses. It was a little higher this quarter. Also, Q4 has -- normally, when you look at it, is on the higher side for us. But the year is a better way to look at it. That's what I said. This year was substantially lower. It was about 25.5%, but I'm just guiding it to you to say it will be about 27%, yes.
Yes. So because the first 9 months, we saw substantial cost savings, and this was a spike. So overall, you maintain it's 27%.
That's right. That's what I'm saying.
[Operator Instructions] The next question is from the line of Kunal Randeria from Edelweiss.
Sir, my first question is a follow-up on Spiriva. Can you tell us what kind of competition you expect as the year progresses in Europe? And secondly is given the fact there are some in-licensed products, would it be fair to assume that the margins could be lower than the company average?
So on the first point, it's hard to predict who are the other competitors. But we are first generic, right, as of now, right? And our view is this will be a good product for the company. On the margin front, it won't be lower than the company average, for sure. So the margins are significantly better than that. So it will add to both the European business as well as the overall margins of the company.
Right. Sure. That's helpful. Okay. My second question is around the U.S. So while you have given a growth guidance, I'm just wondering about -- if you can just talk a bit more on the kind of launches you expect in either your markets. Is it -- I mean, maybe a bit more around -- so for example, you launched a [ generic ] kind of product. So any kind of 3 or 4 launches, you can expect around those kind of lines, similar competition launches? Or just a bit more color on that.
Glenn, do you want to take that?
Yes. Sure. So I think, look, we have 3 launches in this quarter. All of them -- 1, actually, likely any one of these days and 2 more coming up. They're all first generic kind of launches, so exciting products overall in this quarter. And then subsequent to that, in the full year, we expect about, I would say, about 8 to 10 launches in the year, somewhere thereabouts. And at Glenmark, our philosophy has always been the products that we launch. First of all, we don't file products for the sake of filing numbers. So whatever we file, we make sure it counts. And whatever we get approved, we launch. And so I think it's -- the U.S. business seems to be looking up. Like last year -- in the second quarter of last year, we had a challenging environment because of the price erosions around the derma assets from third quarter. You would have seen consistently quarter-over-quarter, the business is improving. And this quarter also with 3 launches, should look better than the last.
Sure. Sure. And sir, just to clarify, 8 to 10 total launches or 8 to 10 for June?
Total launches.
[Operator Instructions] The next question is from the line of Saion Mukherjee from Nomura.
Yes. Glenn, on European operations, can you just update on what's happening to the Advair generic? You had some issues earlier on trademarks, et cetera. How is that product doing? Can you just update on that?
Sure. So we settled with the innovators, and we are currently selling the product in the market. It's doing quite well for us as we speak. But I think in addition to that, with the Tiotropium launch and the Ryaltris launch, we have a [ metro ] product in the market in Europe. So we have quite a slew of respiratory products in the European market, and you will continue to see additional launches coming out of the respiratory franchise.
And is it possible to share any market share, any key markets for generic Advair?
We can come back to you on the precise market share because it will vary from market to market, Saion. I mean, we are selling it. Like from Germany to various markets across Europe, we are selling this product. And it's doing well for us. We're also now expanding it to possibly other parts of the world.
Okay. And Glenn, a question on Ichnos. See, I mean, what we have observed in the last many years is that we had limited success in terms of licensing or in terms of clinical trials. And also, it seems that the dependence on the bispecific platform is a lot high. I mean, I hope we succeed in what we're trying to do. In case you find certain difficulties going ahead, because we are spending almost $100 million every year on these programs, do you have some sort of a -- what are your views in case, let's say, you face some challenges with reaching the kind of clinical end points that you want to achieve or you are expecting to achieve? If you're not able to monetize it, what is the second option?
Yes. So Saion, 2 things, right? This year is very crucial for Ichnos from 2 perspectives. One is from the partnering perspective, right, for 880 and/or 830. And the second is 1342 and the BEAT platform, right, validating 1342 and the BEAT platform technology, right? So it's very, very crucial, right? Of course, 1442 is the BEAT 2.0 version, which is the next generation of technology which we've developed in Ichnos. So I think these 2 assets will determine a lot of what happens to Ichnos in the future. So the clinical data on 1342, which is likely to come up in the next 6 to 8 months, is very crucial. And of course, the partnering aspect is very important for Ichnos, right, to determine the next steps for Ichnos.
[Operator Instructions] The next question is from the line of Nitin Agarwal from DAM Capital.
Mani, just one for you. On the other expense, you've guided to 27% of revenues, while it used to be 29%, 30% a couple of years back. Since then, it significantly reduced. We've been -- we are guiding to a reduction in R&D spend. And when you look across the peer group, we've seen a significant reduction in other expenses, optimization of the expenses by most of the other peers. So why are we being very conservative on this account in terms of -- are there no cost savings that you've been able to achieve with the digitalization around the other measures that everyone has been able to achieve on costs?
Yes. So Nitin, just to put it in a perspective, about 3, 4 years ago, we were at almost 29%, 30%. Then 2 years back, we came down to 28%. Last year is a bit of an aberration because the first quarter was pretty down. So it is about 25.5%. I've guided to 27% fully baking in the fact that we're going to do a lot of work on the -- we'll continue to do some work on the cost reduction, including digitalization. All these are on our radar. I would like to guide to 27% because I feel that's pretty doable, okay?
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.
Yes. Thank you, moderator. We will read disclaimer before we end. The information, statements and analysis made in this presentation describing the company's 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 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 big thank you to all of you for joining us on the call today. Thank you.
Thank you. On behalf of Glenmark Pharmaceuticals Limited, we conclude today's conference. Thank you all for joining. You may now disconnect your lines.