Sanofi India Ltd

NSE:SANOFI

Earnings Call Analysis

Sanofi's growth strategies and key partnerships drive strong performance

Sanofi India Limited reported a robust performance for Q1 2024, showing an 8% growth in domestic sales, excluding one-time impacts. Significant partnerships with Emcure and Cipla are expected to accelerate revenue and market penetration. The launch of Soliqua, a best-in-class diabetes therapy, positions Sanofi to lead in a segment worth INR 1,000 crores. The company focuses on expanding its diabetes portfolio, leveraging local innovation, and maintaining operating efficiencies. From a strategic perspective, the 'India for India' strategy and enhanced consumer health initiatives promise continued growth and performance improvements.

Quarterly Performance Highlights

In Q1 2024, the company reported domestic sales growth of 3%, reaching INR 566 crores, or 8% when excluding specific impacts. This demonstrates solid momentum in a challenging environment. Additionally, profit before exceptional items and tax improved to INR 215 crores, maintaining a credible profit margin of 31%.

Expectations and Challenges Ahead

Despite the positive growth, the results reflected the ongoing impact of NMM implementation from April 2023, which previously affected pricing strategies. Analysts emphasized the need to stabilize revenue streams while adapting to these changes.

Strategic Partnerships to Enhance Market Reach

During the call, management discussed essential partnerships with Emcure and Cipla, highlighting their role in distribution and marketing. These collaborations aim to expand market penetration in tier-2 to tier-4 cities, which provides a promising avenue for future revenue growth.

Focus on Diabetes Solutions

Investment in the diabetes portfolio is a crucial aspect of growth strategy. The recent launch of Soliqua at approximately INR 1,800 is positioned to capture a segment of a INR 1,000 crore market. Management expressed optimism about achieving market leadership in this category, leveraging Soliqua's advantages over competitors.

Consumer Health Innovations

Efforts are underway to bolster the Consumer Health division with localized products and strategic marketing. The company is optimistic about enhancing its digital marketing capabilities to increase penetration and consumer awareness, particularly in the allergy and physical wellness sectors.

Financial Outlook and Investor Insights

While the management team has refrained from offering specific future guidance due to ongoing market evaluations, their strategic initiatives signal potential for sustained revenue and margin improvements. Investors should keenly watch for execution on these strategies, particularly in partnerships and product launches, which may yield positive long-term results.

Earnings Call Transcript 2024-Q1

[Operator]

[Audio Gap] over to Sanofi management team.

[Radhika Shah, executive]

Thank you. Good afternoon, everyone, and a very warm welcome to the investor call of Sanofi. My name is Radhika and I head the Legal and I'm the Company Secretary for Sanofi India Limited. I have with me Mr. Rodolfo Hrosz, Managing Director; Mr. Rachid Ayari, all time Director and CFO; and Mr. Himanshu Bakshi, General Manager Consumer Healthcare Business.

[Himanshu Bakshi, executive]

Good afternoon, everyone.

[Rachid Ayari, executive]

Good afternoon.

[Rodolfo Hrosz, executive]

Good afternoon.

[Radhika Shah, executive]

Thank you. Before we begin this investor call, there are 2 important announcements. Please note that the proceedings of this meeting are recorded. Secondly, please note our standard disclaimer that there are certain statements in this call which may be forward-looking, and the actual results may vary depending on various other factors, which may impact our future performance.

Moving on to the agenda. We will cover the performance for the Q1 for 2024 and other highlights. Thereafter, we will have a Q&A session, which will end at exactly sharp 3 p.m. All investors and participants are pleased requested to keep their questions brief and avoid repetition. I now hand over to Rodolfo, Rashid, and Himanshu to take us through the presentation.

[Unknown Executive]

Thank you, Radhika. Thank you very much, and thank you again for joining and for taking the time to join us today. Before we get into the quarter update, I will give you a brief update on the -- on our strategic progress or our progress versus our strategic plan, right? I think in the -- if we flip to the next slide. Yes. So as you all remember and have seen -- is it visible to everyone. Yes, all right. So, I'll turn to the next page, please. And the next.

Yes. So before we get into the results of the quarter, let's move quickly through our India for India plant, which outlines the strategy that we have in the market and what's the progress we have made on the last several months. In our India for India [indiscernible] has 4 pillars of you remember, diabetes, consumer health care, [indiscernible] innovation and go to market.

In diabetes pillar, we have sort of strengthened each expense spectrum of offering and engage in public disease and carotene campaign. We have done good progress on all fronts. Particularly, we now see with a standard reach also growth in the volume of [indiscernible], post the price reduction [indiscernible] we begin to see a steady volume growth coming from [indiscernible].

We have made progress also in expanding the offering in the diabetes category with the launches of [indiscernible], the human insulin, locally produced, [indiscernible] and now see improvement [indiscernible] Soliqua, our best-in-class therapy for patients who today are treated with 3 weeks insulin [indiscernible] segment of the market in which we didn't compete and we come in with a strong product, and we're going to come back to that Soliqua launch in a couple of minutes.

On the second pillar, you remember, we said we would want to double down our consumer health care. That pillar will led to the proposal of the merging [indiscernible] to give you a fully dedicated super specialist management team to be able to unlock all the opportunities in the consumer health care quickly and to their fullest potential in India. And that that is -- that initiative is advancing very quickly. And [indiscernible] going to give us a couple more points of update on that on the process for the merger of the consumer health care.

On the third pillar, we said that for innovation, we will be fully leveraging local innovation, localizing supply and engaging partnerships for [indiscernible]. We have a lot of action there on that third pillar. We've launched Sanoxaban and Carmada [indiscernible] suspension, all local innovation. We have localized into [indiscernible] replacing [indiscernible], which is our human insulin and you've seen in the last week the announcement of 2 strategic partnerships in [indiscernible] for the cardiovascular portfolio and [indiscernible] for the CNS portfolio. I'm going to come back to those partnerships in a minute.

On the fourth pillar on go-to-market, we have set with extend reach by using customer centric and hybrid models, deploy a [indiscernible] and pilot transformation models for e-commerce, ACP and [indiscernible]. We've made significant progress there. We see that reflected in our OpEx. The improvement may [indiscernible] quite consistent and will derive directly from the fourth pillar of our plan, right? So that gives you a little bit of the context in terms of progress as well planned. We outlined this plan back at the end of 2022 and we continue to work that talk. So this is what we said we do, and we've been consistent in progressing against those 4 pillars.

Now if I go into a little bit about the next one, please. The partnerships that we just announced. There are 2 partnerships. We went through a very careful process to select those strategic partners to expand and reach of our established portfolio, both for cardiovascular with [indiscernible] and central neuro system with Cipla, right? In those 2 partnerships, there are brands from Sanofi India Limited, which are listed on that page. For [indiscernible] partnership with Emcure in cardio, it includes [indiscernible] and other CV brands from [indiscernible].

Then on the Cipla side, we have Frisium and other Sanofi brands on the private side. So basically, a significant major step for us, step forward for us. As we want to focus more and more on innovation, we wanted to make sure that we extract maximum potential growth from the established portfolio we have in our hands. And to grow this portfolio, will require more capital and distribution, more capital penetration. This partnership allows us to get net additional capillarity and therefore, extract more growth than our established portfolio with such leading brands. So very encouraging with the partnerships, and they are very promising partnerships in terms of accelerating the growth of established products while we focus on bringing to market new products and launching best in class and [indiscernible].

All right. So in the next slide, a quick update on the innovation. You've seen that slide before. Before we had no green checks when we first show it for now you see all checked out with Green freezing came markets, Sanoxaban and Carmada, Soliqua just coming out, [indiscernible] also coming in the next [indiscernible] of that original plan is, of course, Allegra, which is going to [indiscernible] entity as we go through the merger. So significant progress in renovating the portfolio, and there is more to come, right?

Next slide. with going back to the focusing specifically on the Soliqua launch, this is a very relevant launch in [indiscernible]. This is the best-in-line therapy for a segment of diabetes market where we were not competing. This is the product that enters the premix segment, which is a category that is and large of the category in which we compete today, the basal insulin -- some of you today [indiscernible] basal insulin with [indiscernible].

And adjacent to the basal insulin category and even a category we've seen similar signs and a similar growth pace which is the premix category. Now with Soliqua comes into the pre-mix category with significant advantages versus the products that are in that category, it brings an advantage in terms of reduced risk of hypoglycemia. There is an advantage in terms of weight. So we there is a light increase in weight and the insulin increases bring a slight increasing weight, altogether there is a [indiscernible] advantage and benefits for the patient and for the therapy in itself, and it's [indiscernible] while competitive competing products end up [indiscernible] more injections in the field. So those are significant advantages, and that's what we call best in call product in a given category.

So very enthusiastic about it. It's the first month. First month did very well. The results in line and driving above the high expectations we have for the product. Very promising launch and we hope to see it really change the way diabetes is managed in patient of diabetes are managed by [indiscernible] with a superior solution going forward.

And the next slide, I will show you a little bit the repercussion of this launch, right. A lot of the media picked up on or in a recent trend of bringing new products to the market, specifically Soliqua picked up a lot of press because of the relevance of the launch, because of the fact that it is the best in class and is the first of the cities of best-in-planches that we intend to make to the market. Now before I hand over to Rachid to talk about the quarter's results. I would say that it is a quarter that requires attention for -- in terms of analyzing, right? When you look at the underlying performance of the quarter, removing all the exceptionality of the quarter in 2024 and exceptionality in the quarter of 2023, it is a good quarter, right?

So strategy is advancing and underlying performance is corresponding, right? But then when you go to the published figures, they do include a number of [indiscernible] that made it more difficult to announce. But I think that's the point you want to explore, Rachid with your presentation, right?

[Rachid Ayari, executive]

Yes, exactly.

[Rodolfo Hrosz, executive]

So then let's move to the next slide, and I hand it over to Rachid.

[Rachid Ayari, executive]

Thank you, Rodolfo. So just a small introduction, as Rodolfo has mentioned that the 2 quarters in published are not really comparable. So the first point, which is the most, let's say, important one is related to the NMM implementation. So as you know, NBM was implemented in April 2023. So Q1 2024 is still impacted by this price decrease. And for the rest of the year, we will not see this impact in years ago. We have to mention that we've seen last year in Q1 [indiscernible], the export was quite significant, plus 30%, and this is mainly due to the volume, but at the same time, for a favorable ethics and it generates a certain gross margin positive impact related to the freight as well, okay?

In the other income in Q1 2023 significant booking of the interest on bank deposits before our dividend distribution and one cost interest on income tax. So if we sum everything it's a kind of INR 19 crores coming from this line. And as mentioned in last investors call in Q1 2023, we had the highest profit for 17 months, quarters, and this is -- it was exceptional, and we can see in the next slide, the level of the operating profit. Exceptional items as well as related to the sales of assets in Q1 2023, which is around INR 18 crores, which is in the partnership P&L.

And finally, the strategic partnership with Emcure and Cipla in Q1, which is a value accretive for the shareholders. And bringing an important volume increase for the business is heading as well and the downsizing of the team and at the same time, payment of [indiscernible] around INR 27 crores. Can you move to the next slide?

Yes. So the first graph in the left side is affecting Q1 '24 versus Q1 '23. And in the right side, we see is Q4 '23 versus Q1 '24. So if we focus in the first graph in the left side. So we see -- if we exclude the total domestic retaining sales is around INR 548 crores. And in Q1 '24, we are moving to INR 566 crores. So in domestic sales and retailing business, the growth is 3% and if we exclude the impact of [indiscernible], the growth will be at 8%, and this is a significant, let's say, let's say, significant growth for the quarter. So at the end of the day, the results are good, as mentioned by Rodolfo.

Now another point, which is very positive related to India for India strategy is related to the expected part where we are maintaining flat expenses and even certain savings. The profit before exceptional items and tax, we see that we are moving from INR 246 crores to INR [indiscernible] 5crores minus [indiscernible]. And this is, as explained at the [indiscernible] by the different elements related to Q1 2023.

Now if we move to the right side of the graph, and you see that it's comparable, largely comparable quarter. So we see a growth of 8% in domestic retaining sales which is almost, let's say, the same as the quarter 1 '23 to quarter 1 '24, excluding the [indiscernible] impact. So this is the trend of the business.

And when we look to the profit before exceptional items and tax, we see double-digit growth moving from Q4 2023 at INR 189 crores to INR [indiscernible] crores, which is exceptional results if we take it from this angle.

Shall we move to the next please. So besides this, it's interesting to show, let's say, the consistency of the profit before exceptional items and tax in terms of percentage and absolute value. So we can see in Q1 moving from 208 in 2022 to 246. And this is -- we can see it was an exceptional quarter last year. And for this year, we are at INR 215 crores and remains one of the highest profit before tax and exceptional items for the rest of the quarter as well, Q2, Q3 and Q4.

In terms of percentage, again, so it's the same trend. So 36% in Q1 2023, which is again, [indiscernible] we are moving to 31%, which remain in the same level that we [indiscernible] and even above the different quarters in [indiscernible]. Can we move to the next. Yes. So finally, there are a lot of questions related to CFC. The first point that is -- for now, we are still disclosing our financial statement as one segment. And the financial statement are audited by our external auditor PWC. And so we cannot have today, disclose of the business in 2 segments as the data have not audited. So we are putting the disclaimer that this is indicated and not audited data, but is giving a sense and this would be audited once the company will be [indiscernible].

So just to give an idea, in Q1 sales [indiscernible] should be around 30% of the total sales of the company. And in terms of operating profit, we are giving a range so the contribution from [indiscernible] is around 37% to 39%. It could be 1 point up, 1 point down. And this is -- once it will be audited officially, then we will disclose as per regulation. I think that's all from my side. So I'm not sure, yes.

[Unknown Executive]

Thank you, Rachid. As Rodolfo also also mentioned, can you move to the next slide, please. So Rodolfo already mentioned that the governance on the demerger is on track. So [indiscernible] is transitioning very well towards establishing a very strong FMCH organization. Just a reminder of our key building blocks moving forward as an organization, which was presented a few quarters back. So we are consistent in terms of how building blocks. The first one is really enhancing the portfolio. So if you look at the current portfolio opportunities, there is an opportunity to increase penetration in a big way, really working with the government and the authorities on the model 43 regulations and the role of innovation, which is really making things better for people out there.

The second pillar is on building a consumer centric mindset, which means really becoming closer to consumers, put the side into insights and deepen the activity with the consumer, driving awareness and accelerating the key legacy strong love brands that we have in the portfolio and enhancing our presence in channels like modern trade, which is an area which we are really focused on.

The third key pillar on the business is the best-in-class digital and e-commerce capability, and we see a lot of good here as a business. So stepping up really on the e-commerce and all the key platforms that are out there, building a world-class digital marketing organization to support all our key brands and portfolios, and also leverage our global POC data and digital edge that we posses and leverage it and use it in the country.

Now beyond business as well, there are opportunities, and these are opportunities which we will also actively look at, which is the opportunities to grow inorganically and also scale up and increase our direct-to-consumer brand activation. So this, in a nutshell, is really about the key building blocks for consumer health care business moving forward.

Can we move to the next slide, please. In terms of our quarter one performance, it's a very strong performance in the market across all the 3 brands that we have. So in spite of a challenging market situation and market growth, all key brands continue to gain very strongly on share, very strongly in terms of their presence in the market. So on allergy, on physical wellness and pain all 3 areas we've gained share and we've gained share significantly in the first quarter.

So moving ahead, it's really about now moving to the next steps. We expect the listing in the next few months. And yes, we will be reaching out to many of you and having discussion in detail about the plans for [indiscernible] going forward. Over to Radhika.

[Radhika Shah, executive]

Thank you, Himanshu. Thanks Rodolfo. And I think now we move on to the Q&A session. Just a quick reminder, in this session, we will respond to your queries within the boundaries of our internal policy. As required by law, we will restrict our responses to clarify on all matters which are available only in the public domain. So kindly ask your questions accordingly. There could be granular aspects of our financials like product-wise, therapy-wise, margin, profitability, which are strictly confidential, and we will not be able to comment on those.

We also do not provide any future guidance. As mentioned in the registration, we will be taking questions from you in the sequence of your registration. In case multiple registrations are received from the same participant, we will take questions first from the first registered participants and give the other opportunity at the end of the session. I request in the interest of time and for giving equal opportunity to all please keep the number of questions limited to one or two. Handing over to the agency [indiscernible].

[Operator]

[Operator Instructions] We take the first question from the line of [indiscernible] from JM Financial.

[Unknown Analyst]

So first question I have on the localization strategy, which was mentioned initially. So what I want to understand, is it a gross market from the [indiscernible] parent? Or is it only towards the India market? What I want to understand how sustainable it is the initiative, which has been taken about the innovation, et cetera, and autonomy given to the local management over here.

[Unknown Executive]

Thank you very much for the question. The India for India plan is strategy and a plan for India for Sanofi India. Of course, it aligns with global strategies of Sanofi and is fully in sync with the global leadership of the group. But in that particular point, I think you brought up, which is the localization and supply that is a particular point relevant for India, of course, not many other markets that makes sense for the [indiscernible]. It doesn't make sense for Sanofi India. India is the pharmacy of the world, that is a very strong industrial footprint in the pharma industry in India. And we intend to continue to leverage it even more.

We already have our own facility, a large and very important and very cost-effective, high-quality plant [indiscernible] which provides a significant part of what we sell in India. In addition to that, we operate in India with a good number of contract manufacturing organization that provide not only to India, but also to other markets of Sanofi in the world. Similarly to what happens in the [indiscernible] production for Sanofi India and also is exported to more market. So we continue to leverage that strategy and we have emphasized that strategy with the intention to localize more production and launch local renovation as we do.

You've seen the Carmada and Sanoxaban [indiscernible] suspension [indiscernible] all came out. They are all locally produced and the unfolding of our strategy of localizing production and leveraging the local production capabilities in India to do some local innovation. Now that makes sense for India. It doesn't make sense [indiscernible] markets. I think that was your question, whether it said global setting, not a global setting [indiscernible] it made sense for India.

[Unknown Analyst]

Sure. And the second question I have is the partnership which we have taken for the PVS and CNS product portfolio with Emcure and Cipla, so we said -- we have written on one of the slides that we are -- we will be downsizing our teams for the [indiscernible]. So what would be the impact of this? And I believe we also have our own brand, so we will stop marketing them on our own or we will reduce our marketing on our own for those brands internally?

[Unknown Executive]

Okay. I have a little difficulty with sound, but your sound is coming through a little muffled. So I'm going to ask my colleague, [indiscernible] to try to pinch it together. So the [indiscernible] in the question is specifically.

So thank you for the question, yes. The partnerships that we have established with both Cipla and Emcure of partnership extension of our reach and expansion and the acceleration of our growth. In those partnerships, both companies will be doing distribution and promotion of these brands. The company continues to own the brand, produce the brand, book the [indiscernible]. It is our brands with more brands being promoted and distributed by these 2 large local pharmaceutical company. The reasoning behind that, as we discussed before, that these companies have much more capital network and presence, allowing these brands now to reach Tier 2, Tier 3, Tier 4, while Sanofi by itself is mostly concentrated in Tier 1 and sometimes Tier 2.

So with a strong brand with a leading position, strong equities that were not made available in all periods of India through these partnerships we expect an acceleration of growth by taking these brands to more tiers of the market and therefore enjoying an additional growth coming from it, but it is a [indiscernible] and distribution with the promotion and distribution. The brands continue to be Sanofi, [indiscernible] Sanofi to.

[Unknown Analyst]

So my question was, will we stop marketing through our distribution because we are downsizing our team, that's what I had.

[Technical Difficulty]

What I was asking, we have said that we will be downsizing CVS and CNS teams. So will we be stop any marketing these products to our own teams? That was my question.

[Unknown Executive]

The marketing will be done by the partner. So that's. The partner is doing the distribution and the marketing, both.

[Unknown Analyst]

Got it. And let's say, if these products pick up really well for us. On the margins, what would be the impact? How would be the profitability of these products for us?

[Unknown Executive]

We don't disclose figures by brand and [indiscernible] brands and margins that we can't answer.

[indiscernible] in the spirit of your question, these partnerships, we expect accelerated growth for the reason that I mentioned because of the expanded capability and therefore the extended reach with iconic [indiscernible].

[Operator]

Our next question is from the line of Varun Bang from [indiscernible].

[Unknown Analyst]

Congratulations for Soliqua launch. And also thanks for the details that are shared in the presentation, they're very helpful. So the first question is, can you share some perspective on the revenue model in the marketing and distribution partnerships that we have signed with Emcure and Cipla. And how should this impact our revenue and operating profits initially and -- how should it evolve over a period of time?

[Unknown Executive]

So yes, the model is mainly a gross to net model where the partner is taking in charge of the distribution and the marketing. So we are billing to the partner, and this is what we are booking in our book. So that's -- but in nutshell, let's say, the summary of the partnership.

[Unknown Analyst]

Any perspective on the revenue model? How should it impact our revenue and operating profits.

[Unknown Executive]

I don't know if you are talking about -- if there's any impact in the operating profit, that's the question, right?

[Unknown Analyst]

Yes, overall revenue model, if we can just briefly give some perspective.

[Unknown Executive]

Yes. So as I said, so see gross sales to the partner gross to net deduction. And booking of the net sales in our books. So then the impact, as we said at the beginning is that it's [indiscernible] value for the shareholders. Then the impact, if there is any impact is already absorbed in the operating profit. So it's already improving, let's say, as we said [indiscernible] value that the analysis is giving positive on the financial statement based on the net present valve that was evaluated to take the decision on this project.

[Unknown Analyst]

Got it. Got it. And what is our [indiscernible] strength at present? I mean after signing these partnerships? And how is it structured now? And would we look at strengthening our MR count going forward? Or we will look at optimizing the existing ones.

[Radhika Shah, executive]

[indiscernible], could you repeat your last question? There seems to be a little bit of a [indiscernible].

[Unknown Analyst]

So the question is on the MR strength. Yes, the question is on the MR strength. If you can. What is the MR strength after signing these partnerships? And what is the structure of the MR team. And would we look at strengthening our MR count going forward or we'll look at optimizing the existing?

[Unknown Executive]

No, you're asking about the [indiscernible], right?

[Unknown Analyst]

Yes.

[Unknown Executive]

In this category, the field force that will be pushing and promoting -- distributing and promoting the brand. The field force [indiscernible] which are large field forces in both cases, larger than we were able to do it by ourselves. Now the numbers we don't disclose and they don't disclose either, the whole reasoning behind the partnership is because we set into the larger sales force capable of more capital promotion and distribution in booking. So it is an increased number of people working with this product, taking into health care professionals in more cities going down Tier 2, 3, 4 through Cipla and Emcure. Now we don't usually disclose the number by [indiscernible] -- but I can tell you.

[Unknown Analyst]

No, the question is actually on the Sanofi MR count. Post signing this partnership, what is the MR count in Sanofi? And how is the team structured now? And would we look at strengthening the MR team.

[Unknown Executive]

I think you're saying MR. I don't know what is MR.

[Unknown Analyst]

Medical rep.

[Radhika Shah, executive]

We don't disclose our [indiscernible] employee strength that you could probably write to us and we will give it to you, we don't publish those numbers on a quarter-on-quarter basis.

[Unknown Executive]

MR, you are referring to medical reps. Because it is not our language, we don't refer to them as medical reps. We refer them as [indiscernible]. So MR, we don't disclose by brands, and we will not disclose also in the case of the partner, how many of them. There is more -- all I can tell you more. Because otherwise, we wouldn't be able to get more capital distribution [indiscernible].

[Radhika Shah, executive]

And if you want to know the total employee strength, you could write us and we will get back to you.

[Unknown Analyst]

No, that is there in the annual report. So just one last thing on the Consumer Healthcare business. what would be our focus areas within our Consumer Healthcare business, especially from new product perspective? And where would we look to source them.

So the question is on the Consumer Healthcare business. What would be our focus areas within Consumer Healthcare business, especially from the new product perspective? And where would we look to source them?

[Unknown Executive]

Thank you for the question. As I mentioned, we operate to base in key categories like allergies, physical wellness and pay. And if you look at our market share and our presence today, there is still a lot to achieve in those categories. So most of our launches, most of our focus will continue to remain in the course for the new launches as well.

[Rodolfo Hrosz, executive]

Before the next question, just to the people working with it. Are we sure that the issue with the sound is not on our end. Second question, we have difficulty understanding the question. So can we make sure that we fine-tune and adjust for volume or properly. So it is getting very distorted here.

[Operator]

The next question is from the line of Abdulkader Puranwala from ICICI Securities.

[Abdulkader Puranwala, analyst]

Sir, a couple of questions here. So I think with the Soliqua launch. So could you please throw some light that how well it complements to the portfolio, what you already have? And in terms of your -- the target market, what is the kind of population this brand could address? And so that could be pretty helpful to start with.

[Unknown Executive]

Excellent question. This is an extremely complementary launch. As I mentioned before, you could envision the insulin market with 2 main subcategories. That [indiscernible] insulin and premix insulin, up until the Soliqua launch, Sanofi has only played in the basal insulin [indiscernible], right? With the launch of Soliqua now tapping into the other segment of premixed insulin where we will not competing. So it's extremely complemental to our portfolio. Because it will tap into different need that to date we were not catering to. And we get into that different new with a best-in-class product with a clear superiority to many of the operates that we devised today for the health care professional when dealing with patient that require today premix insulin. So going forward, we have a superior option with Soliqua. And then we anticipate Soliqua to be able to quickly gain a significant share as [indiscernible] upgrade their patients to the Soliqua.

Now we also asked at the moment source [indiscernible]. So Soliqua comes to failing oral antidiabetes patients and patients that also migrate from [indiscernible]. In those 2 cases, we were not capturing those patients with anything in our portfolio because we didn't have anything relevant on that segment. Now we have Soliqua in that segment capturing that opportunity and offering patient a superior solution. It's a win-win-win. Good for patients. Good for the ACPs and good for Sanofi too and extremely complemented because it's a very distinct segment of the market where we didn't play at all.

[Abdulkader Puranwala, analyst]

Got it. And sir, just second question is with refers to what was asked previously as well. So sir, I see your overall employee count in -- towards end of fiscal '22, it was close to 2,600-odd employees, and that number as per the latest annual report has come down to 2,100 employees. So would it be fair to assume that this rationalization of 500 to 550 odd employees would be mainly because of this out license indeed.

[Unknown Executive]

Yes. Again, we've got a difficulty with the sound. I think we really need to check what's going on [indiscernible]. Every question is becoming difficult [indiscernible], but you asked about the head count by the end of the year 2022 and the end of the year 2023. That is -- and what are the explanations of the difference. This is what your question was, right? So there is one important difference in the way we manage the head count in '22 and the way we measure the head count in '23. In '22, we measured head count by with a number of people that have worked with Sanofi in the year, throughout the year. So if an employee works for 6 months, it was count in 2022. From 2023 onwards, it is the actual count of employee working in the company by the end of the year by December 31, right? For the last year [indiscernible] of the count. So there's different methodology.

[Abdulkader Puranwala, analyst]

Okay. Okay. Fair enough. And sir, just last one on the consumer business, which the [indiscernible] is on process the strategy well informed about. But in terms of your new brands, so I mean how do we look at this portfolio from a 5- to 10-year perspective, whether there would be a similar strategy as what you're calling for your Rx business or India for India, where there will be new molecules, which may or may not be a part of the [indiscernible] portfolio would still be launched.

And it will be made an entire consumer kind of a business to focus upon.

[Radhika Shah, executive]

Strategy going forward in term of the products, which are owned by the parent [indiscernible] the country.

[Unknown Executive]

Yes, of course. So the vision of [indiscernible] is bringing health [indiscernible] and becoming the best FMCH company [indiscernible] world. So there are definitely a lot of good global portfolios, which we will be evaluating for the future launches in India. Having said that, agagin reiterate in our current portfolio itself, there are still a lot of opportunities that we need to leverage. But going forward, new brands, new products will definitely be evaluated from the [indiscernible] portfolio.

[Unknown Executive]

Before we move to the next question, I'm going to ask the moderator to repeat the question because in the room, it is getting very distorted. So if you're getting a better, more clarity, I ask you to help us repeating the question that is asked.

[Operator]

[Operator Instructions] The next question is from the line of Gagan Thareja from [indiscernible] Investment Management.

[Gagan Thareja, analyst]

So the first question pertains to the out-licensing deals. Could you clarify whether the deal is signed between Sanofi India and these companies or between Sanofi Global and these companies.

[Unknown Executive]

Deal was signed between Sanofi [indiscernible].

[Radhika Shah, executive]

And there was no out licensing. So.

[Unknown Executive]

It's not licensing [indiscernible] promotion vehicle and is an agreement of distribution and promotion signed by Sanofi India with those companies.

As I mentioned before, I want to just to reinforce, Sanofi continues to own, manufacture and [indiscernible].

[Gagan Thareja, analyst]

Are all of these brands manufactured by Sanofi India in their facilities?

[Unknown Executive]

No. Some are manufactured in India, some are imported as well.

[Gagan Thareja, analyst]

The reason I asked this question is that the brands, while they are marketed by Sanofi India are owned by Sanofi Global. And if they are going to be distributed and marketed by another entity, what is the -- and perhaps not even manufactured by Sanofi India? And what is the rationale of routing the transaction through Sanofi India, the entire arrangement could be a pure out-licensing arrangement with these products being marketed by Cipla and by Emcure with Sanofi India having nothing to do with it at all. I'm just trying to understand, in the future, could something of this sort happen.

[Unknown Executive]

It's not in the plan today. I understand your question. It could be one way to a [indiscernible]. It's not the way we decided go forward with the local initiative between Sanofi India and those companies, and they were structured in a way that I just described, and [indiscernible] also discuss it. We sell products to them [indiscernible] distributor of our, a strategic distributor. There also -- there is the promotion of the brand in the market, but that's the way they're structured. You're in a potentially different model, which is the model that we have [indiscernible] in this partnerships.

And there I think there is no plan to do in a different way going forward, which will be that we couldn't one day change the model that we operate. But today, we don't intend to change the model. The model [indiscernible].

[Gagan Thareja, analyst]

Right. So when you report sales pertaining to these brands in your books, you will net out the distribution margin that will be given to these companies. And then you report the sales and adjusted for the cost, you'll report the margins on your books. Is that how it is?

[Unknown Executive]

Yes, it's a [indiscernible] model. So we -- the invoice is growing in gross minus the gross to net -- and this is what -- the only booking that we have in our books, okay? On the expenses is not related to Sanofi India. It's what it will be booked in other partner members. It's not that our level. So it's a different model as well. So we are not outsourcing the promotion here. So it's total [indiscernible] model without keeping any expenses at our level.

[Gagan Thareja, analyst]

Okay. Emcure in one of their calls indicated that they might eventually possibly be manufacturing these brands in-house as well. And that is the reason why I'm asking this question. I'm sorry if I'm repeating it. But if the counterparty seems to indicate that at some point in time, there's a possibility that they'll manufacture it, then real manufacturer they will market, what is Sanofi India will be doing. And therefore, what will accrue on your P&L?

[Unknown Executive]

At the moment, it's not part of the agreement that we have. This is not the intention of the agreement. You're right in a way in which everything is possible in the future, but this is not part of the plan today. So today, the agreement and what we're working on is the expansion of reach, and acceleration of growth of our established products that currently [indiscernible] through these partnerships with Cipla and Emcure in the Indian market.

So if a new extension of one of these brands in introduced in the market in the future. And if it happens to be produced by one of them, we have to have to treat that topic [indiscernible], but it is [indiscernible] part of the initial plan, and we don't have that base into the initial plan.

[Gagan Thareja, analyst]

Okay. A final question, if I can take one more. And that for the Consumer Healthcare business. Is it possible to help us understand what the new OTC regulations bring to the table for companies. I mean, does it give you the opportunity to to expand your distribution through general trade, whereas it might not be the case now? And have the OTC regulations new ones being notified already?

[Unknown Executive]

So the regulations are still in the draft stage. And all OTC companies are partnering with the government to have the right regulations come [indiscernible]. So to your point, and all the things like you mentioned are definitely getting discussed at the right level and the moment it gets notified and regularized we will come back to you with the data.

[Rodolfo Hrosz, executive]

If I may add to that, [indiscernible]. I think that when we look at the regulation of OTC in India and compare it to the regulation of OTC in most other markets, we see significant opportunity for evolution, right, both in terms of distribution, but also in terms of consumer engagement, right.

Around the world, regulation for OTC [indiscernible] that allows companies to more directly [indiscernible] consumer, [indiscernible] consumers and therefore, drive the business in that way. Now [indiscernible], we are a few steps behind [indiscernible] and with a big opportunity for modernizing those regulations and then unlocking the growth driver into distribution, but also in terms of communication [indiscernible].

[Gagan Thareja, analyst]

On the OTC piece, I mean if you have facilitated to market through the general trade channel, I mean, the 3 categories that you showed on your side, 2 of them are already growing at a healthy double-digit number and 1 is growing at high single-digit number. If the distribution can ramp up very substantially post the regulations being notified, does it give you headroom to accelerate your sales growth from the existing brand in a very substantial or sizable way?

And over and above that, you obviously have new brands which you can sort of bring in. So are we looking at an accelerated growth phase for the consumer piece subject to the OTC regulations coming through as you see them or as you intend for them to come.

[Unknown Executive]

You're absolutely right. In terms of one of the key [indiscernible], as I mentioned, penetration is key for us, which means definitely in terms of expansion. In terms of your general trade, in terms of pharmacies, in terms of all the key outlet classes that we have, including modern trade e-commerce, we still need to accelerate and put in the right inputs there. So the idea, again, is to go behind it, invest behind it and make the penetration bigger on the branch, which definitely means a promising growth for the business moving forward.

[Gagan Thareja, analyst]

I have one more question. Can I take it? Or would you -- would you rather [indiscernible].

[Radhika Shah, executive]

Sorry, Gagan we are close to 3 p.m., and I think we need to move to the next one and next one will be the last one, please.

[Operator]

We take the next question from the line of [indiscernible] from Parma Financial Services.

[Unknown Analyst]

My question is on the type 2 diabetes, which you have recently launched Soliqua in the month of April. I believe the price point is around INR 1,800. So can you just share what will the market size of this opportunity of this drug in India could be like? And second question would be what is the diabetes portfolio, new launch going forward for the company would be?

[Unknown Executive]

Could you [indiscernible] second question?

[Unknown Analyst]

The diabetes portfolio of Sanofi looks like in next 2, 3 years, what are the new launches happening?

[Unknown Executive]

All right. So first on Soliqua, Soliqua is relevant. We don't give forward-looking estimates, right, on much [indiscernible] particular brand. But I can speak about the size of the market, which is what you asked. So the kind of the market is around [indiscernible] trying to convert it to [indiscernible] INR 1,000 crores, which is the same size of the market where we compete with [indiscernible]. That's a very large market where we don't compete. And we believe Soliqua has strength to achieve leadership in that segment of mix, that segment of INR 1,000 crores [indiscernible]. So then you can make your own projections, if you will. But we think that the advantage of Soliqua will give the credentials over time, achieve leadership in [indiscernible]. I can go beyond that. I mean -- but it is a relevant market with [indiscernible] launch with a product with potential to achieve leadership in that revenue market, right?

So that's the question one. And then I think that if you want to get to numbers you have to do your own projections. But then your second question about the future of the portfolio. We have just introduced a number of products and we need to leverage them, make the most of this portfolio. We're going to be focusing on bringing Soliqua up to its full potential in the market in the coming months and year that will be a priority for us. Parallel to that, we continue to work on the expansion of [indiscernible] volumes in India, coming out of the NLEM with the price reduction on [indiscernible], we see an opportunity for [indiscernible] to expand its penetration and grow [indiscernible].

As I mentioned before, we already see the volume expansion. We believe that the volume expansion is [indiscernible] can be sustained for a prolonged period of time. We're generating more growth for the movement and penetration for insulin or [indiscernible] the market. But -- in addition to that, we still have the recently launched [indiscernible], which is growing in various aspects and gaining more and more the preference of [indiscernible] for segment of the patient [indiscernible]. So right now, we have a relatively ample portfolio in terms of insulin [indiscernible] catering to each specific segment, each of the key segments in the market.

In addition to moving [indiscernible] I mentioned, [indiscernible] and Soliqua, you will remember that we mentioned [indiscernible], which is the human insulin [indiscernible] coming to the market [indiscernible]. So we have clearly strengthened the portfolio already. And then it's going to be a lot of our focus on work in making the coming months and years, is to bring this product to their full potential in our market.

Beyond that, you may have [indiscernible], and we have seen that the Sanofi Group has acquired a company called Provention Bio, which has developed a product called TZIELD is a first-in-class product for diabetes type 1. Now we are also evaluating that and bringing that product to the Indian market as well as there is a high prevalence of diabetes type 1 in the Indian market, as you know. So a lot in the portfolio right now in terms of leasing, we have also strengthened the anti-diabetes portfolio with the launch of [indiscernible]. And we mainly bring soon our first [indiscernible] therapy for diabetes type 1 as well. So a very rich portfolio and very rich pipeline at the same time.

I hope that answers your question, your 3 questions.

[Unknown Analyst]

Yes, and if you can just share what will be your market share in the insulin market in India. Can you -- if you have some data, what would be your market share in insulin market in India?

[Unknown Executive]

In total insulin [indiscernible] basal insulin [indiscernible] what is the market share in basal insulin. In basal insullin it is about 38%. Today is 38. I mean put it that way because that's a more important thing for [indiscernible]. Imagine to this segment, basal and premix, Basal we have 38%, premix we have zero. Now [indiscernible], which we believe can achieve leadership that's it. So -- and those things are in roughly since [indiscernible]. So -- that's the market share figure you gave in mind.

[Radhika Shah, executive]

Thank you. So I think we are almost passed 3 p.m. Thank you very much to all the participants for attending this investor call.

[Rodolfo Hrosz, executive]

Thank you very much. Actually, I want to thank you also for the quality of the question. Very good question, very thoughtful questions. which have obviously to address some of the key points with you, which is all the pleasure. I apologize on our side for the distorted sound. We work to make sure that next time we did have that one, but it was a little difficult for us to capture when you were asking except for [indiscernible] able to get the question very clearly despite the distortion [indiscernible] difficulty and I apologize for that issue on our end. Thank you very much.

[Radhika Shah, executive]

Thank you. Thanks for [indiscernible].

[Rachid Ayari, executive]

Thank you.

[Himanshu Bakshi, executive]

Thank you.

[Operator]

Ladies and gentlemen, on behalf of Sanofi India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.