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Natco Pharma Ltd
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Ladies and gentlemen, good day, and welcome to the NATCO Pharma Q4 FY 2021 Earnings Conference Call hosted by Investec Capital Services Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anshuman Gupta from Investec Securities Limited. Thank you, and over to you, sir.
Thank you, moderator, and good morning, everyone. On behalf of Investec Capital, I welcome you all for the NATCO Pharma Q4 FY '21 and full year earnings call. Today, we have senior management represented by Mr. Rajeev, Vice Chairman and CEO; and Mr. Rajesh, Vice President, Investor Relations and Corporate Communications. Over to you, Rajesh, sir. Thank you.
Yes. Thank you, Anshuman. Good morning, and welcome, everyone, to NATCO's conference call, discussing our earnings results for the full year of FY '21, which ended March 31, 2021. During this call, we may be making certain forward-looking statements, which are predictions, projections or statements about future events. And anything said on this call which reflects our outlook for the future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces. I'd like to state that the material of the call, except for participant questions, is the property of NATCO, cannot be recorded or rebroadcast without NATCO's expressed written permission. We'll begin with results highlights, followed by an interactive Q&A session. We hope you have received the financials and the press release that was sent out yesterday. These are also available on our website. Just to summarize, NATCO has recorded consolidated total revenue of INR 2,155.7 crores for the year ended March 31, 2021, as against INR 2,022.4 crores for the last year, reflecting a revenue growth of 6.6% year-over-year. Net profit for the period on a consolidated basis was INR 442.4 crores as against INR 458.1 crore last year, showing a slight decline of about 3.4%.For the fourth quarter ended March 31, 2021, the company recorded a net revenue of INR 359.7 crores on a consolidated basis, as against INR 477.2 crores during Q4 of FY '20. Profit after tax on a consolidated basis was recorded as INR 53 crores for the fourth quarter as against INR 93.2 crores same quarter last year. As we mentioned in our note, in spite of the significant negative impact of the pandemic on our base business, company was able to sustain its revenue during the year. The company expects strong growth during the current year due to multiple high-value product launches in the U.S., rebound in the domestic India business with new product launches and contribution from the crop health division as well. We've also given the split on the revenues. And from this quarter, we have started tracking crop health sciences as a separate line item. I'll pause here, and we'll take your questions, please. Thank you.
[Operator Instructions] The first question is from the line of Sriraam Rathi from ICICI Securities.
Yes. So firstly, on the domestic business, I mean, this year, we have seen, of course the impact of pandemic and all. Our revenue is down by around 24%. How are we seeing the recovery in our oncology business in the last 2, 2.5 months? And how should we look at this business in FY '22 overall? I mean, will we be able to recover back to the FY '20 levels? Or I mean, we will still see some kind of impact in there?
Question about domestic. As you know, pandemic has hit --- see, pandemic has hit our domestic business very hard. And as you know, a lot of the profitability of our business comes from the domestic oncology business. And there was a lot of reluctance to go to hospitals for treatment. And the unusualty of this business is, it is strongly driven by the big metros. And if you look at COVID, it has hit the big metro is very hard. And I think that's one of the reasons why we've been more affected. And especially the chemo drugs, which are extremely profitable in our portfolio have been badly affected. So a lot of the therapy has gone to the orals, so I think that's what the impact is. See, Sriraam, I will tell you a few things about the business. Okay. One is, today, the pivot of the business is driven by COVID drugs. I mean that's the elephant in the room, and you need to deal with it right away. I mean, if you look at the growth, even if you look at even this quarter, I mean, you look at all the databases, it's completely driven by COVID. You talk about vaccine, you talk about COVID treatment and you talk about all therapies are linked with COVID like anticoagulant, it could be antibiotics, but all related with COVID. If you're not in that portfolio, you're not going to see growth. I think that's one of the biggest challenges in our business today. So what we have done is we have pivoted the portfolio towards COVID now. I think a lot of the new launches we have activated. As you've seen, I think this quarter, we had the benefit of -- we had a couple of antifungal drugs in our portfolio Amphotericin and Posaconazole so that would -- I mean, has given us reasonable benefit. We have baricitinib. We are the only generic for baricitinib right now. So that has done reasonably well. And we have a couple -- one good coagulant in our product, so -- anticoagulant. So that has done reasonably well. So but again, this revenue is one time. Yes. So when there's a big second wave or third wave time, you see a huge spike of revenue. So that way, this quarter looks good. But do I see the numbers getting repeated again? No. Again, unless we see another wave, we don't see it. So again, we're working on drugs like Molnupiravir. So hopefully, depending on how the clinical trial goes, that -- and the other issues linked with that. So something like that happens, and they will see a little bouncy in revenue. But as -- with vaccinations and all settling down, we'll see the base business also improve, because I think people will be coming back to hospitals. So I think that's how I see it. But I -- will I -- do I feel the business will do better? Yes, absolutely, it will do much better than what we did last year. How well will we do? I don't know. Again, it will yo-yo based on how the pandemic plays out. I can't -- I'm unable to give a prediction. Okay? Thank you.
Okay. Sure. Got it. So just a follow-up to that, I mean, in terms of Molnupiravir I mean, what are the time lines that we are looking at in terms of trials getting completed? And what will be the competitive scenario in your side?
I think, again, we have to see how that plays out. There's a lot of issue if a clinical trial is ongoing. So let's see how the data comes. I think next quarter, I probably will give a brief on how things are. At this time, I wouldn't want to say anything. So let's -- I'll come back to you, maybe I'll give you more color on this maybe next quarter. At this time, I don't want to say anything.
Okay. Okay. Got it, got it. And secondly, I mean, in terms of agro chemical, any update that you would like to share as of now, I mean, in terms of court litigation and the launch plan?
What is happening with Agro is that what you're saying? Okay. So I think we have 2 very interesting products that we intend to launch. Let me speak about the first one first. The -- we have licensed the product from ATGC. We're launching something for pink bollworm in cotton. So it's a pheromone. So for the benefit of the other participants on the call. So pheromone, what it does is it interferes with the matting of the pest and pink bollworm is one of the most serious pests that affects cotton. So we're launching a pheromone, so this is relatively a greener product, and first-time in India with that particular formulation that we have, we have a paste formulation. So we have -- I think we're going to launch in earnest now with the cotton plantation starting shortly. So that is an interesting product that will go well. And the second product, I think we spoke about this in the past is just Chlorantraniliprole. So I have a couple of updates on that. So one is that the court judgment has been reserved, so end of last month. So we're expecting a judgment in July. So based on the outcome of that judgment in July, I think we can come back to you and speak about what's next. But I think those are the major developments that I see in the agro at this time. Thank you.
Okay. Sure, sir. And lastly, just, I mean, anything on the guidance that you'd like to share with this...
Let someone else with -- we will get somebody else. Yes, okay? Thank you.
The next question is from the line of Ravi Dharamshi from Valuequest.
Yes. I just wanted to check what is the patent status of Molnupiravir? How will the -- means we are not one of the licenses for Merck. So how will this work? And if you can just -- I understand I mean, trials are ongoing, and we don't know how the drug is going to pan out. But if you can give some sense of how we'll get a play in this market, that would be great.
See that you asked me about patents. So there's no granted patent on Molnupiravir at this time from what I understand. Okay. That's the first part of your question. In terms of the licensee and being a non-licensee, we are not a licensee, you're absolutely correct. But I think we're open to any alliance. I mean, I'm not saying that we will launch -- we're willing to work with innovators. We have done voluntary licenses in the past. As you know, we've done it with Baricitinib we've done it on the hep C portfolio. Everything is open. I think we are not averse to any alliance with the innovator. So I think when the market formation happens, I think we'll have more clarity on what to do. I think it's a little premature, Ravi. I don't want to speak about it at this time. But to answer your question, we are open to any option at this time.
Right. No issues. On Revlimid front, now there is no uncertainty in terms of launch, right? We are very -- I mean, just 1 step away from launching.
Absolutely correct. I think we're -- we have the approval for most the stents. The 2 stents we have tentative because somebody has filed before us, is what my understanding is. We're good to go. I think we have already said that the launch will happen in the March quarter of this financial year. So I think that's very good news for us, and it looks good, and there's no other challenges at all. I think we have resolved everything. And I think we're good to go, Ravi. Absolutely.
Just 1 follow-up on Revlimid. What is the probability of somebody still going all the way and invalidating the patent and the whole market going generic, generic instead of the way it is going? One is that. And second, what is the like-hood of some regulator in U.S. taking an objection to this kind of a settled launch of generic?
Regarding the court cases of the other generics who are not settled, I'm not -- I don't have an up to date status on that, so I don't want to comment about this. I don't know where they are. So I can't comment about it. Regarding your second question, I think we have -- this settlement was entered many years ago, and I think we have taken guidance. I think -- and I think we're good to go. I think that's my understanding that I got from my -- our partner Teva.
Right. Okay. Regarding -- just last question for my end. Regarding the crop protection, the court case that is going on, if the -- I mean, are we likely to miss this particular season if the court case final verdict doesn't come very soon?
If the court case -- our expectation is that the court case verdict will come in July. Again, that's our expectation. But let's see. I think yes. As you know, Delhi High Court is under holiday -- at June is holiday. So I think July is when the court opens. So we'll see, Ravi I -- but this is what my -- from what I understand from our lawyer. I think it has been reserved for judgment, and I think we're expecting a verdict in July. I think we'll have clarity in July. I think we'll -- I think when the appropriate -- I think we will inform the investors, I think, as the events unfold. Okay. Thank you.
[Operator Instructions] The next question is from the line of Sudarshan Padmanabhan from Sundaram Mutual Fund.
Yes. Sir, my question is on the export side, which has also seen a decline on a year-on-year basis and also marginally, sequential. I clearly understand that you have seen a very poor flu season and therefore, Tamiflu would be substantially lower to 0. But outside Tamiflu, I mean if you can give some color about how Copaxone is doing and how other products are doing? Of course, we are also seeing some impact of COVID there as well. So are we seeing some kind of growth coming in? Apart -- I'm just talking about the base business, not the new launches that we have stated to launch in the next few quarters.
I think our base business is doing reasonably well. I think Copaxone has been steady. I think we're getting steady income from Copaxone. There's not been any decline in Copaxone income, so to answer that part of your question. Lanthanum has been a little stable. It's been fairly stable. Doxil, there's been dryness which has come, it's in public domain, so there's a slight drop in the profitability. And overall, it has done well, but I think we see a disproportionate amount of profit out of Tamiflu, and that has completely vanished. And I was saying initially. I mean, the challenge is our business is twofold, Sudarshan. I think one is our domestic onco, which has been -- it's one of our best profitable portfolio. That has declined dramatically. And Tamiflu has declined. So -- and that has affected the base business badly. But it is what it is. I mean that's how generics work. So you need to plan for the future. So in terms of like the way I see '22 panning out, I think we have got very good approvals. And I think everolimus is probably one of our best approvals for the base business. I think that's an extremely good approval. But the immunosuppressant stent is only us and HIPRA and the addressable stents, it's $130 million, $140 million market and us and HIPRA are the only generics. So that's a very good product. Epicor again, it has multiple generics, but it's a very high value product. So I think based on the marketing estimate that has been given, I think it will definitely strengthen our base business. So that is one great outcome that we've got. So I think that it will improve. And of course, we have the 180 days Revlimid and others coming in. So overall, I'm fairly bullish about the year. I'm not -- but we are able to -- I can very confidently say that we're able to fill the gap of what we have lost in Tamiflu.
And we should also be launching Nexavar this year, right? I mean is that right?
We will not -- I can't speak about the date. We will speak about it closer to the launch, Sudarshan. Yes.
Sir, right, sir, my next question is on the working capital. I see that we have seen a sharp increase in the inventory days. I mean is it primarily because of certain stated launches? Or is it because the China is facing such a big issue that we prefer to have some inventory being built up because the costs are rising, et cetera?
No, no, no. There are only 2 reasons why the inventory has gone. They are very straightforward reasons. I'll state them clearly. One is we have built up a lot of pandemic inventory. So we have the pandemic portfolio that we have and we have significant inventory on that. But unless you carry inventory, you cannot service this business, okay? So that is one of the big challenges that pops up. You can have a spike in 1 particular month and then suddenly the sale drops. The fundamental way of working with pandemic products you need to have inventory. So that's -- and we've been active in this pandemic portfolio. So that's why like we started with Chloroquin, and we have Oseltamivir. Now we have all the newer drugs that we have antifungal drugs. So we've built up a significant amount of inventory. So that's one of the reason why the inventory has gone. Another thing is agro peculiar. Yes. So basically, what happens is you need to build inventory before March because all of it, the sale happens in Kharif which is June, July, August. And if you want to produce, let's say, a product, you need to have significant of inventory that you build up before March so that you'll be ready to launch in the May, June, July time line. So these are 2 major reasons why we built up inventory, but that's how it's going to be because your inventory will be overstated in March, but it will get liquidated in June, July, August, September. I mean again, we will stress inventory at the end of the financial year so that you can plan for the next year. And the way agro works is, you need to build large inventory ahead of the season, so that you are able to service the same. So those are 2 major changes that we there's a dramatic increase in the inventory. Okay?
Sir, and the agri portfolio that we have would be for both Kharif and Rabi. I mean, it should have a -- it should not be very lopsided towards Kharif, should it be more towards Kharif and probably lesser towards Rabi?
The 2 major products that we spoke about, again, the cotton is in June, July, August. That's it. If you don't get July -- June, July, August, you pretty much don't get any sale. Because cotton is planted in these 3 months. I would -- from what I understand, 90% of sale happens in that particular time. So if either you do it then or you completely miss the season. In terms of the Chlorantraniliprole, I mean, again, we're not -- it's all subject to core decision, let me say that upfront. It's subject to favorable core decision. The season for Chlorantraniliprole is the Kharif is stronger, but there's also a reasonable business in Rabi as well. I think that's what my understanding is. But I think the ratio is from what I understand about 70-30, I think. 70 -- 65% to 70% in Kharif and then 30%, 35% in Rabi season. Okay?
[Operator Instructions] The next question is from the line of Prakash Agarwal from Axis Capital.
Yes. Congratulations on the approval for Revlimid. Question, sir, in terms of modeling it around, like you have in the press release mentioned you have high single-digit market share starting March, so that market share is for the calendar year. So how should we build the second half of the years? I mean, would the supply start from December quarter and the profit share should be picked in March quarter? How should we think about modeling '23 and '24?
I think we have said this in the earlier press release, I think we have 1 fixed market in year 1 and then increases every year. How will book income and all, I don't want to say anything, Prakash. It all depends on Teva because Teva is the marketing partner. It all -- I think when -- we'll speak closer to the market formation, I think I'll speak about that. I think at this time, it's premature. Yes.
Okay. But in the past, you have given like scenarios, like if somebody comes, then market opens up. So at least, if you could comment on what is the single player generic, at least for 6 months, 12 months, how do you think this opportunity or 3 months opportunity with 1 player, only you being there? Any idea there?
Prakash, you're asking me things that I don't know. I'll only answer what I can speak for NATCO. I will -- I think what I understand we will launch the product in March. And I think from whatever I understand will be the first generic, and the other generics will come and it's going by what is there in the public domain. The other seculars have said that they'll come a few months after us. When they're coming, I'm not aware, but they'll come after us, I think that's our understanding. I think at this time, that's all I know. And that's what I can say.
Okay, sir. And second one, on your guidance. So every year, you come up with the guidance. And how do we see fiscal '22? Any guidance for '22?
Prakash this time, I don't want to do any guidance, Prakash, because I'm not able to predict myself with what is going on. And because I tried to do it last year, and I was not able to do it properly because what we were completely caught off gourd with the pandemic, and it is -- so we'll go by -- I will speak by quarter-by-quarter. So I think I prefer -- I think next quarter is better than what we had done in March quarter because of the domestic upside. I think that's what I can say. I think I'll take it by quarter-by-quarter, Prakash. I don't want to take it by the year. I'm not able to do it. So I don't want to do something that I'm not able to do well with. Yes, okay? Thank you.
[Operator Instructions] The next question is from the line of Nimish Mehta from Research Delta Advisors.
Yes. My question is related to Revlimid. Now that you mentioned that we have been [Technical Difficulty].
[Operator Instructions]
Nimish, I am not able to hear you, Nimish. Can you -- distorted in your background.
Is this better?
Yes, that's a little better. Yes. Speak loudly, Nimish if you could, yes? Thank you.
Yes, sure, sure, I'll speak loudly. Okay. Yes this is about Revlimid. The 2 dosage forms where we don't have exclusivity 2.5 and 20 mg, does that mean that we will launch only in September and somebody else will launch before us in that particular dosage stents?
I just get the feeling, yes. I think that's a feeling I have, all right? That's what I understand. I think that's what I was told. But again [ I subject myself ] to correction in the future, but this is what my understanding is, yes.
Okay. And the other thing I wanted to understand on Revlimid is that in the approval letter for NATCO, it is mentioned there are some 5 patents, which is covering some 3 or 4 method of use, that will not be a part of our label. And as I understand, there are about 6 method of use for brand Revlimid. So almost half of them, we will not be able to write on the label. Is that a right understanding? I mean, will that be a restrictive label, which -- for our generic launch?
I don't think so. Now you're putting me in a spot and asking something and you're putting me in a spot. But from what I understand, I think we get a full label. I think that's what my understanding is. I'll check and I will come back to you. I think that's my understanding. The settlement allows us to -- for a full level is what I understand. But again, I will -- let me just verify, but this is my understanding. Yes.
Okay. I mean the approval letter reads that these are the method of use that we have not applied for while filing our ANDA. That is what it tells. So that is the reason I...
I -- honestly, I don't have an answer to your question. Let me just check and come back. I don't have an answer to your question.
Okay. Lastly, if you can just tell us the sales of 2.5 and 20 mg, that will be very helpful.
Top of my head I don't know, my friend. I don't know. But I think majority of the sale is the core stent that we have filed. I think that's what my understanding is, which is a very small amount of sale. Most of the sale is covered and the stents that we are in.
The next question is from the line of [ Kartik Mehta from Klay Securities ].
Yes. I just have 1 question. Sure, Revlimid ex of U.S. outside the U.S., how do you see the opportunity? I don't want you to quantify in terms of Canada, in terms of other regulated markets, ex of U.S. How should we expect that to play out over the next 2 to 3 years?
I think for us, I think U.S. obviously is going to be huge. Canada will be reasonable. I think the launch date of Canada, we are not supposed to disclose because of our settlement, I think, but it will be reasonable. We'll speak about it, I think, closer to the launch. I believe these 2 countries out, we are not very bullish. I think it will not be anything meaningful. We filed in Australia also with a partner. We'll see how that plays out. But these are the 3 major markets that I can top of my head, I think, would contribute to reasonable amount of revenue. But outside these 3 markets, then we have some smaller filings in smaller countries like South Africa, a little bit in Southeast Asia and all. But nothing meaningful will come -- I mean, in terms of -- I mean, obviously, for us to move the needle, I think, in a larger market. But I think for us, I think these 3 markets will be the biggest I suspect I think that's the feeling I have. Europe, I'm not -- we don't have a good position in Europe. Yes.
Yes. If I may, just if -- yes, if I may just squeeze in 1 more, with the cash that you expect to receive from these 2 launches. I know you in the past, you have said that you looked at opportunities to acquire some products but valuations were a concern, et cetera. Just trying to understand from you, do you believe in the U.S. or in India opportunities like Sovaldi, not in the same size maybe exist for you? How would you allocate the cash over the next 2, 3 years that you had expected to receive from this large opportunity?
Sure. [ Kartik ], a couple of things. One is I think we like to keep cash in the books, which allows us to take a good amount of risk. I'm a big fan of keeping money on the books. So that's -- let me start off saying that. But obviously, as you said, we're going to have a reasonable number of surplus. So I think typically, we give away about 20% to 25% in a dividend. That's what we have done with our profit that we're getting at this time. So maybe we can assess some increase of dividend based on it. I think we'll make that call closer once we have the [indiscernible]. Second, in terms of acquisitions, see there are 2 gaps in our business having to fix. One is that we don't have a front end in the U.S., for which we need to do something about. So we're looking at different options. And another weakness in our business is that we don't have a very broad-based business, meaning we don't cover multiple therapies. They are limited to only niche therapies in the domestic business. So these are the 2 gap areas in our business that we need to address. And hoping that a good acquisition can address it. In terms of valuations wise, I think U.S. valuations are more reasonable now. If you want to buy a front end in the U.S. India's domestic valuations are lack of better way saying, crazy. So we're always looking for an opportunity. But as of now, I'm not -- we're not close to closing anything at this time. So I think these are 2 gap areas that I would address through acquisition as and when the right opportunity we will take.
The next question is from the line of Nitin Agarwal from DAM Capital.
Rajeev, just taking up from what you mentioned about the U.S. front end and your thoughts around it, bulk of our near-term -- near to medium portfolio is already partnered out. So at what stage a front-end like this would make an impact for your business?
It will take 3, 4 years, Nitin, because all of them are partnered out. So all the good ones are partnered out in the near term. So I think pipeline we're getting in '26, '27, '28, '29, that's where the impact of the front end is. But we got to start somewhere. It's a chicken and egg. So you got to start somewhere. So I see my -- 1 decision I made for sure is that we want our front end in the U.S. clearly. I think at least for the simpler tablet product. Complex generic we can always partner out with someone else because of the cost and the investment involved in doing these in generics. But for the typical chemical, tablet-type of products, we need to do our own front end. I think that's a feeling that we have. So I think we want to do it. So -- but the benefit of that, as you rightly said, will not play out now. But you got to start somewhere, right? We can't run away from it. So my view is this is the most simplest way to increase profit, right? Instead of giving away 50% or something just own 100% of something of a smart filing, and you get that extra bump in your inventory. So I think that's where we are. Okay?
And secondly now on the U.S., Revlimid, obviously will take care of our earnings for the next 2, 3 years, depending on how the landscape really plays itself out. How should we look at U.S. subsequent to say FY '24, '25? And I mean, how was your -- and 2, how have your filings essentially been this year in terms of newer filings? And how do you see that for the next 2, 3 years?
I think we are -- I think the way I'm looking at this Nitin is obviously, right. I mean, if everything goes well there I mean it will hold up earnings for 3 years or so in subject, of course, how the market formation is, but we'll see how it plays out. So I think see, there are 2, 3 kinds of filings, that I would characterize -- I have 3 categories of U.S. filings. We have the typical need to filings where you have base revenue. So those won't move the needle, but you just have to build a basket there. And then you have the medium-sized upside, see the $30 million, $20 million, $50 million type of upside. I mean those -- in those categories, like carfilizomib that -- for which we have got approval recently, that's a good one. As I said Nexavar is another good one. So -- and then we have Bosentan what you call ODT I think, I guess the suspension product, I think. So these are like niche filings that we have. Then you have the jackpot filings and you have products which give you more than $50 million, $100 million type of upside. So those, as of now, after this, we have -- Imbruvica has that potential, but Imbruvica is probably a few years away from there. So you need to have a filing, which will -- you need to have like let's say, 5 or 6 of these filings, which give you about $20 million to $30 million -- $10 million to $15 million that type of filing, and then you need to have like a couple of at least 3 or 4 filings, which give you about $100 million. I think that's what your ANDA portfolio should look like. And you got to make smart choices, and hopefully, the filing goes well and then you get your opportunity. So you need like 3 of these in a decade. I mean, we get 3 of them right, I think your decade is set. So that's how I look at this. So we have something for this early part of the decade. We have something at the end of the decade. So we need something to fill in the gap. Hopefully, I'll pull up something else. I think that's the idea. I think we're looking at different opportunities, but there are interesting opportunities. I'm very bullish. I think something should work. Okay?
The next question is from the line of [ Venkat from 3Sigma Financials ].
What I wanted to know is, are we seeing a lot of competition in oncology, particularly in the Indian market because from Jan to March, we didn't have so many COVID cases? So I just wanted to understand how is the landscape -- oncology landscape shaping up in India?
It is fairly competitive. I think -- see, our base business got loss for 2 reasons. I think, see, COVID is something I'm talking about, but COVID is not the only reason why the base business got affected. We have seen price competition. We have seen price control by the government. So there are multiple factors affecting. And you're absolutely right. It is just not COVID. There are other issues as well. But we are trying to overcome that with an increased set of launches and newer portfolio. And that's how we are looking to address it. Okay?
The next question is from the line of Abdulkader Puranwala from Anand Rathi.
Sir, could you throw some light on the performance of subsidiaries, especially Brazil and Canada? If you could say check the stand-alone versus the consol numbers, it still feels that the subsidiary performance was not healthy in the quarter as well as for the full year?
I think the subsidies have done. Canada has done reasonably well. So that's one of the reasons why our consol numbers look better than our stand-alone. So that is very clear. Brazil, we are operationally -- we lost -- we are losing money, but I think at an EBITDA level, I think we're doing okay. And if you remove the R&D expense and we're doing reasonably well. So overall, I think I'm happy with how the subs are doing. As I said in the past, I think Canada and Brazil are the key markets, in addition to the U.S. and India, which are driving our earnings. So I think these markets are representing significant part of our turnover now. So I think they're doing well. And I think the subs have represented nearly 25% to 30% of our profit this year. So I think we're happy where we are. I think we're doing well. Thank you.
The next question is from the line of Kunal Randeria from Edelweiss.
Rajeev, for relatively new filings like Imbruvica or KAPROLYS is the profit should higher than for your legacy products like Copaxone more like a 50-50? Is that a fair understanding?
Yes, that's correct. The new ones are 50-50, that's correct.
Right. Okay. That's helpful. And secondly, if you would share some your plans for new launches in onco in India, are you holding back some launches until things stabilize? And then maybe we could see a huge number of launches coming back to that?
No. I think we've done good launches. I -- we don't speak of about every launch because it just becomes tedious to give even the smaller launches based on those launches. We have had plans and we're doing about 10 to 12 launches a year. So we're doing well. I think the -- I think we're very happy with how the portfolio is going. So -- in specifically, onco also has 30% to 40% of portfolio is in onco. So we have had good launches. If you want an example of a product, I mean, for example, we were the first generic of Eltrombopag that we launched this quarter. So I think that has done reasonably well. Again, that we got sued by Novartis on -- for patent. We have a patent against Novartis on this case. And that also the judgment has been reserved. So we'll see how that plays out. So that way, we are launching interesting products. So I think we'll see how it plays out.
The next question is from the line of Charulata Gaidhani from Dalal & Broacha Stock Broking.
Yes. My question pertains to, in the second wave, how much of a financial benefit could that give for FY '22?
Second wave. I think the earnings of June quarter will show some benefit of second wave over the portfolio that we have had. So what we can say clearly is that the domestic has done much better this quarter because of the second wave. And so we'll see the benefit of that in June quarter. How '22 will pan out, I don't know. I have no idea. I mean, we have to see how the pandemic plays out in the next 9 months. So that I can't predict. So let's -- but we have an interesting pipeline in this -- for this portfolio. So we'll see how it plays out. I think at this time, it's premature to comment for the whole year. I can only comment on this particular quarter.
Yes. And my other question is on Nexavar. Zydus by our JV. They also have this product in their portfolio. So, how will it pan out?
They have a portfolio for India from what I understand. Now that's been a lot for many years. And that has -- what is your question? You're talking about the domestic ban in India? You're talking about the U.S.?
No, I'm talking about U.S.
U.S., I'm not aware. I can't speak about what they're doing. I don't know. Honestly I don't know. I'm aware that they have a JV in India. That's all I know. But beyond that, I don't know what you're asking. From what I understand, we have a settlement with the innovator until we got approved within 30 months. So we may get 180 days. I think that's -- what sort of we know about the product. The launch date, as I said, we can't speak about it. But closer to the launch, we will speak about it. Yes. And that's all I can say on that product.
The next question is from the line of [ Kashyap Kartik from TripleTree Capital ].
Sir, a couple of things. 1 agro and 1 pharma. On the agro side, the interim judgment or the interim observation on [indiscernible] from Delhi High Court has been adverse for us. So in terms of final judgment, do you expect some changes? Or 1 and 2 because of the adverse judgment, would we take a lot of write-offs in the CTPR portfolio?
Okay. I don't agree with you, my friend. I don't think it was an adverse judgment. What we have said is, the judge said that he doesn't want to give an order until the full order -- the full hearing is completed. That's what the judge said. So I don't necessarily agree with you. That's the first part -- to answer your first part of your question. Let's wait for the judgment. I mean why -- good news or bad news we'll hear in July. Then we can make a call. I'm optimistic based on how the argument said that we will win -- we have a good chance of winning. But again, as I said, I will wait for the judgment to make -- let's wait for the judgment in July. Okay. That's the first part of your question. Regarding the inventory, yes, you're absolutely right. We've built up a large inventory for the launch of this product. Absolutely correct. We're preparing for the launch. If the judgment goes against us, then we will make an assessment. I think we'll make that call, I think once that judgment comes. But at this time, I don't want to comment.
Got it. Got it. Got it. And the second piece, Rajeev, is essentially from a Revlimid perspective, we've done a launch. So between Revlimid and Imbruvica, is there any other big molecule that we are expecting to file? Or is it just going to be the Nexavar, Bosentan and everolimus over the next 2, 3 years? I mean, not an exact date, but other than the smaller molecules, there's Revlimid, there's Imbruvica in '26 and Carfil in '27, is that the kind of sequence of blockbuster molecules?
I think those are there. I mean, see your question is specifically from what I'm understanding is, do you have a super blockbuster-type of product, which will give you more than $50 million, $100 million type of upsell, right? I mean, is that what you trying to get at? That's what -- so that's what -- I mean, see, these are -- see compared -- see you can't be it a Revlimid and Imbruvica 180 days because these are for sole FTFs. So everything else will look like a poor cousin. So I think it's unfair to compare to products like that. But see, you need to have a pipeline that churns out these interesting products. Do we have -- we are always working for ideas like this. I think let's hope we'll get another breakthrough, but I think that's all I can say. I think once we get such a breakthrough, we'll definitely speak about it.
Got it. And Imbruvica, is like a yearly product? Or is it like a Tamiflu that 6 months we will get tremendous amount of cash flows and then it becomes generic, Rajeev? Or is it -- I mean is it like Tamiflu or is it like Revlimid/everolimus is what I'm trying to get at.
It's a cancer product. No, it is like -- it will be -- so if you have the 180 days, then the period of 180 days, obviously, we'll make -- we'll do well. But post 180 days, let us assume other generics were to come, yes, of course, it will fall apart. So it will be -- when it happens, obviously, we will be very happy. But again, we have -- let's see, I think the market formation is part of it. So like I think once we have clarity on the core judgment and settlements, I think we can speak about that. But as of now, we have nothing so. But I think -- but what I'm only saying is that we have a filing on this, and there's a possibility that we could get 180 days. I think that's what we have articulated in the past. Let's hope something good happens. That's all I can say.
But it's not seasonal. To your point, it's not a seasonal target.
Yes, I think his question was that it will be 1 time. It depends on how the market formation happens. So it's a little premature to judge here I think. Okay? Thank you.
The next question is from the line of [ Ankush Agarwal from DPI Research ].
Yes. So apart from Revlimid, you had mentioned in last con call that this year, we are looking at another product that you have not disclosed publicly. It was some immunosuppressive. If you can highlight something on that, if there is an update on that?
Immuno what, I'm sorry? I didn't catch what you said. Can you repeat that one?
On the last con call, you have said that we have another interesting product that you have not publicly gave. You mentioned it's some immunosuppressant. If you can highlight something on that?
That's the one, everolimus. Everolimus.
Okay, that's everolimus.
Everolimus has 2 formulations, my friend. So one is the oncology stent and one is the immunosuppressant stent, right? The oncology stent is called Afinitor and the immunosuppressant product is called [indiscernible] if I remember, so our -- Zortress in the U.S. Yes. So Zortress -- what I said was Zortress is a good product because it has lesser competition. And Afinitor, even though is a bigger product has more competition. So I think what I've said many times in interactions with analysts and all this is a better product, even though it is a smaller product because there's only one other generic in there. That's what we have said.
So Afinitor, we've already launched a few of the stents right, I think 2.55 and 7.5?
That's correct. We launched a lower stent. The 10-milligram is going to go generic soon. I think we'll speak about that closer to the launch. But it's from my understanding that we have launched 3 and the other one is going to happen soon.
So is it expected in the same year, the calendar year '21?
Sorry, say that again?
It's expected in the same year like calendar '21 or it's...
We can't say about the date because of confidentiality. We will speak about it in closer to the launch time. Okay?
The next question is from the line of [ Jay Shah ], individual investor.
Rajeev, just 1 question on the Revlimid side. So do we have a sharing of 65/35 for Revlimid? Or is it 50/50 since it's an old settlement?
I think it's 30%. I think 30%, 1/3, I think, is what I remember I think.
Okay. All right. And just 1 more question. Do you think that pricing pressure would come in after the other come in -- other generic players coming in FY '22? Or would it come in after '26?
Let the market formation happen. I think we'll speak about that, I think, once the market formation happens. At this time, I don't want to say anything.
The next question is from the line of Nikhil Upadhyay from Security Investment Managers.
2 questions. One is on agro chem, the product which we are launching, I -- if you can just repeat the name? And secondly, is this a patented product? So can it add something like a stable annuity kind of a profile for -- to our agro chem business?
The products that we are launching -- you're talking about the cotton product, no?
Yes.
It is a pheromone, my friend. It is a pheromone. The chemical name, I'm not able to recollect on top of my head. But it is a pheromone, which treats pink bollworm. I think it's the best that it treats. So to benefit of the participants, so what I said is pheromone is something a insect emits to attract the opposite pests to mate. So what this does is the pheromone interferes with the mating. So it causes mating confusion and because it doesn't mate. It don't lay eggs because they don't lay eggs they don't damage to the plant. I think that's what the technology is. More details and all, I think we can take it off-line and you can have a word with the IR person. He'll speak about it. Yes. Thank you.
Okay. And secondly, on the domestic onco business, I understand that what you mentioned is that the patients are like skeptical of coming to the hospitals and all, but just -- this could be a pretty basic question. But if I understand, like a cancer patient would need his medicine on a regular basis. And the chemo and all cannot be like postponed for a longer period of time. So would -- do you mean to say there are no new diagnostics, which are happening. As a result, our portfolio is getting impacted because I would have thought that 3 months, 4 months, they would wait. But then eventually, they will have to come to the hospital to get the treatment, get the medicines or got the chemo or whatever. So just a pretty basic question, sorry.
Sure, sure. Absolutely, what you asked is absolutely correct. I mean, see what they're doing is they're not going for -- see, people take medicines, not that they're not taking medicines. They're not taking aggressive forms of therapy. Because they're concerned about COVID. So in hospitals, what has happened is, a lot of the resources have gone for COVID. So other therapeutic segments have -- the service levels have dropped dramatically. So what patients are doing is they're taking oral drugs, other drugs which don't require hospitalization. They're not taking the chemo portfolio as aggressively the way it used to. It's like just, my friend. I'll give an example why it impacts earnings. Let's say, you're doing, let's say, for example, you're doing INR 10 crores a month on this particular portfolio. Let's say, there's a 30% drop in the chemo usage, okay? So that you remain INR 3 crores out of the business. So it's 3x3 months, it's about INR 10 crore impact which you're having. So -- but this is high-impact because the profitability is very high, right? So then it straightaway knocks off INR 10 crores or INR 15 crores of your EBITDA. So that is -- it is not the -- see how would I say this? Even though the impact is 30% because it's such a profitable piece of business, that if you lose even 30%, then whatever sale you're negating is you're negating your EBITDA straight away. I think that's why exiting is hard compared to like a business where, let's say, the raw material cost is much higher. I think that's the challenge of this. I think that's why the earnings drop is more pronounced compared to, let's say -- that's why the earnings drop is very pronounced even in the Tamiflu business because one, you're getting a profit share of, let's say, INR 50 crores, INR 60 crores, INR 50 crores becomes INR 5 crores. Then straight, it takes INR 45 crores of your EBITDA, isn't it? So I think that's where we're getting hit hard. And I think that's what we're trying to communicate and that's what is affecting our business. Okay. Makes sense?
Rajeev, just to continue on this now. So would it be right to say that our portfolio has a greater mixture of hospitalization-led products than overall dosage which a patient can take directly? I'm not talking on the profitability side. I'm coming from the top line side because we were doing a run rate of INR 120 crores, INR 130 crores, which has come down to INR 80 crores. I would have thought, which means like from a INR 500 crores, we've come down to INR 320 crores, INR 300 crores kind of a top line. So...
Yes. I will tell you. Now let me answer that question. See, that is an aberration because of that particular quarter. See, again, we had new COVID launches that have happened. So that number, by selling to read it as in isolation. We can't say that this is an annualized strength because it has multiple factors weighing on it. It has a COVID weighing on it. It has less hospitalization weighing on it. And it doesn't take into account the new launches that we have had. So it's not, I think an apples-to-apples comparison, I think that has a feeling I have. But yes, if that makes sense or? So I strongly believe domestic will rebound. And I think you'll see the benefit of that in the coming quarter. And I think we have good launches lined up during the year. And I think once the vaccination improves, I think even the domestic therapy will improve. And even on like, for example, we're trying to promote a diabetes and a cardiac product, we are unable to promote because a lot of doctors are not meeting. So these are very unusual challenges that we're facing. And I think as I said at the beginning of the conversation, if you're doing COVID treatment products, or drugs, which are indirectly using COVID, which are re-purposed, you're doing extremely well. But the moment you're trying to meet doctors which are outside the realm of these products, the sale has dropped dramatically. And because, like, for example, the derma sales dropped very dramatically because there's not people coming out or like ICU drugs have dropped dramatically, especially with head trauma injuries or the inhalation products have dropped, unless the inhalation products are used for COVID like Budesonide, otherwise, the portfolio has dropped dramatically because people are not going out and they're not picking up respiratory issues. So this is a very unusual time. So it's not when you say that this is a trend, this is what is happening and all. I -- you have to put things in a larger perspective because what is happening is -- are very unusual set of events. And just to summarize I mean, if you look at the month of May, 35% of the whole domestic market, in my view, was driven by COVID. So it's like I think to make a general statement about our business, you need to have more settled scenarios, which we don't have at this time. Okay?
The next question is from the line of Sameer Shah from Valuequest.
One is how many filings -- I mean, for U.S., what will be the filing run rate for the next 2, 3 years?
I think we're targeting this year, about 7 to 8, Sameer. I think that's what we're targeting, about 3, 4 FTF type of opportunities we are trying and about 3,4 regular products, but about 7 to 8 is usually what we target the year. And we look like we're going to meet them on the target.
Understood. And second, we are ahead in terms of Molnupiravir trials. What we understand is Reddy's is doing it for the other licensees. So like you said, there are multiple options and all are open. Would we -- I mean, if we have inventory and we are unable to crack the license who -- we will be able to supply it to these other licenses or something? Or like what -- so when got there is -- so when got the manufacturing without having the license from Merck. So would we -- should we be concerned about the license or only the product approval?
Let's take 1 step at a time, Sameer. Let the clinical trial do well, then I can speak about the other things, yes. Well, once the market formation happens, I think we'll -- we can make those judgments on what to do on each of these issues that you have raised. At this time, I have no clue.
The next question is from the line of [ Naitik Modi from OHM Portfolio ].
Yes. Sir, my question is pertaining to Revlimid, in terms of how do you see the price erosion for this drug and your market share trajectory for this drug?
I think the market share has been -- I think it's already in public domain. I think we're entering with a single-digit market share, high single-digit market share. So that answers your first part of your question. Erosion and all, I don't want to say anything because this is all -- I think this marketing is driven by Teva. I think we'll get more clarity on, I think, closer to market formation. So I think I'll speak about it closer to the launch. At this time, I don't want to say anything.
And the profit sharing, you said was 30%, which is your share or the partner's share?
NATCO's share.
The next question is from the line of [ Rajat Setiya from iThought Financial Consulting ].
Sir, I just want to -- this question pertains to Revlimid. The question is that when we know that there is volume-limited settlement in Revlimid, but still you are a lot of questions regarding how many players will enter in this and how many generics may come. The question to you, sir, you have never answered on the aspect that since it was a volume-limited and then doesn't matter. It doesn't really matter how many players come or not. So is it really the case that it doesn't matter how many players come in this market since it's volume-limited settlement it is not going to affect the volumes granted to a supplier?
I didn't understand your question. I think can I -- can you -- see if I understood you correct, just tell me, I didn't understand your question, my friend. Your voice is very muffled I -- if -- can you paraphrase and ask that question 1 more time, please. I'm so sorry, if you could, please.
So see, a lot of people have asked you in the past that how many players are entering in the Revlimid market or may enter in Revlimid. So the question is that since it is a volume limited settlement for everyone. Then -- and when volumes are guaranteed, then why is this a worry? Why should this be a worry that how many people really enter?
My friend, you're asking me something that I don't have an answer to. See, how a market plays out, it all depends on how the market formation happens. I -- if you ask me to say something that, honestly, I don't have an answer to that question. So the best answer I can give you is that how much money we'll make and all, only time will tell. And it's all completely depend on market formation. So I think we'll reserve that judgment. I think once closer to launch and then we will speak about it. Once we have clarity on how many people are coming we can speak about it. But at this time, I can't answer that question. I am so sorry. Okay? Thank you.
Can I ask the...
Yes, sure. Please ask another question. Go ahead, yes.
Okay. So you had -- in the past, you have guided for a PAT of INR 1,200 crores to almost INR 1,400 crores in FY '22 which was dependent on Revlimid and all. Now that we have gotten the approval, why are we not in a position to guide for the patent this year?
See, one is, I don't want to guide anything because I don't know how much Teva is going to stock in the market. So at this time, I don't want to guide. Let me -- let's get clarify from Teva and then we will decide. So it all depends on how much -- Revlimid is going to drive the earnings this year. I mean, let's -- that is going to be the big one that drives the earnings. And let us see how the taxi plays out. And we know that we're going to launch in March. So it all depends on -- I also said that it depends on how much Revlimid we build in this year and how much Revlimid we build in the next financial year. It's linked with that. So I think that's the most important thing that you need to keep in mind. I think when I said that, I've also said that as well. So see, I don't want to say how much we are going to build in March, and how we are going to build in June and so on and so forth because I don't have an answer to that question. If I was marketing the product myself, I can control my destiny. I can tell you, yes this is what we are planning and so on and so forth. I hear I'm dependent on someone else. So that's why I want to be a little conservative and not say. What I can say is that we're launching, and we are going to be the first generic, that much I can tell you, and it should be a good product. That's also I can tell you. But how much we will book and how much profit share will get in which quarter and all? I don't want to say it, my friend. I'm so sorry. I can't do it because I don't have an answer to that question. Because Teva drives this. So they -- I think you can ask Teva this question, if you -- you'll have clarity from Teva. And I think once market formation happens, I think we can speak about it. Yes? Thank you.Last question this time. Last question, please.
The next question is from the line of Vishal Manchanda from Nirmal Bang Institutional Equities.
Sir, 1 clarification on domestic banned sale. Is the HCV business now completely out of the base?
Could you say that again, I didn't catch what you said the business completely out of what, I'm sorry?
The HCV business. [indiscernible].
We didn't catch your question, Vishal. Can you say that again? Slowly can you speak, if you don't mind? Yes.
Yes. Sir, I wanted to check if there were any sales for HCV during the quarter, hepatitis C products?
There's some more moderate amount of sale my friend. I -- if you -- it is not material enough to even talk about. I think it's not a large amount. It will be a number below INR 10 crores that I know, but I don't want to say about a particular number because I don't know that number, but it is so small that I don't even remember the number. I think it is not material enough.
Okay. And sir, just 1 final one. On the pheromone product in agrochemicals, is there a ready market for it? Or you would have to build the market? And how easy would that be if you are to build the market?
Good question. We have to build the market. ITGC has done good amount of trials. So there's some at the feed level, there is some knowledge about this product. But we have to build a product. Yes, you're absolutely correct. So we have set up a separate field force of it. And we're doing it where in the cotton growing state. And I think what are the major territories, Rajesh, can you just speak a little bit about which territories you're launching?
Yes, Vishal, the initial focus we are targeting on 4 major states, which is Andhra, Telangana, MP and Gujarat. The cotton itself is quite predominant in Maharashtra, Karnataka and few other states as well. But we are going in a phased manner. As you rightly said, we have to build the market. It's a very innovative technology. Let's see how it goes.
So it will be a gradual ramp up, but it would be -- it can be a very large opportunity over time?
Absolutely, absolutely. If you take the total cotton market itself, it's a very significant opportunity, but it's important how well we do it commercially this year. We've been running trials on this for last 2 years.
Ladies and gentlemen, that was the last question. I would now like to hand the conference over to Mr. Anshuman Gupta for closing comments.
Thank you, everybody, for joining on this call. Thank you to the NATCO management as well. Bye, everybody.
Thank you. Thank you, all. Have a good day.
Thank you. Ladies and gentlemen, on behalf of Investec Capital Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.