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Shilpa Medicare Ltd
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Ladies and gentlemen, good day, and welcome to Shilpa Medicare Earnings Call for Q4 and FY '24. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Nachiket Kale from [indiscernible] Investor Relations. Thank you, and over to you, Mr. Kale.
Hi. Good afternoon, everyone, and welcome to the conference call hosted by the management of Shilpa Medicare Limited to discuss the fourth quarter and financial year 2024 performance. The management is being represented by Mr. Omprakash Innani, Chairman of the company; Mr. Keshav Bhutada and Mr. Alpesh Dalal, CFO. The discussion will be led by Mr. Keshav Bhutada with his perspective on the business performance and strategic goal. He will be followed by Mr. Alpesh Dalal, Chief Financial Officer of the company, to give us perspective on the financial performance. After the management's comments, there will be an opportunity for all your queries to be answered.
Before we proceed, I would like to state that some of the statements made on today's call could be forward-looking in nature. A detailed disclaimer in this regard has been mentioned in the conference call invitation, which is available on the stock exchange. We have also published the results presentation prior to the call. I hope everyone had a chance to go through it.
I would now like to hand over the call to Mr. Keshav Bhutada to take this discussion forward. Thank you, and over to you, sir.
No, I think there is a small correction. I'm going to draw this, Vishnukanth Bhutada here. So welcome to our call to discuss on the performance of the Shilpa Medicare during the fourth quarter of the year '24. As always, I shall commence with the highlights of the operating performance and touch upon initiatives, segment-wise and Mr. Alpesh Dalal, CFO, will share perspectives on the financial performance by the company. Following our opening comments, we shall invite queries from the participant in order to [indiscernible] comprehensive.
I'll begin with the updates on the API business, which is the most important division for us. building upon our strength in developing and commercializing products, we're moving up on the value chain in our API business. For non-oncology API segments, we are exploring products which have a high growth potential or can serve as an import substitute API. During the quarter, we have added 3 molecules in our portfolio, methotrexate, liraglutide and teriparatide, which are at the validation stage and are likely to be completed during Q1 FY '25.
We're also enhancing the capacity of 1 of our key molecules, Tranexamic acid from 15 metric tons to 25 metric tons per month, which in the tentative completions, December 24. For another key molecules, UDCA, we are witnessing the significant improvements in volume pickup. And with the filing of our U.S. DMF and EU for the GMP, we feel that this molecule will have a significant improvement in the volume. We are progressing fairly on the polymer initiative as well where our focus is on innovative seeking quality products. And we have already developed 1 product for the U.S.-based clients and supplied them with the pilot and the validation quantities. On oncology APIs, we are developing almost 8 APIs, which will come at the plant level before FY '26. For API CDMO services, which are growing with a great potential, which provides a significant growth opportunities in the coming years.
Moving on to formulations. We launched successfully our first NDA product with our partner in the U.S. market under the J-Code in the U.S. market by Amneal. Another significant products, which will be our innovative products NUD07 Phase III studies have been initiated and the recruitment of NAFLD patients. Fibrotic stage F2 and F3 for Phase III trials have been completed across multiple centers. Phase III clinical study dosing is expected to be completed by end of the Q1 FY '25 and study is likely to be concluded by end of Q2 '25. We also completed the Phase II trials of our another products which is a tropical lotions, SMLTOP09 for the treatment of androgenetic alopecia. We are now starting the -- now planning to initiate the Phase III trial in July, August '24.
Additionally, we have expanded our geographical reach by entering into emerging markets through our marketing partners for launching our approved products portfolio, providing access to the private market and enabling us to participate in the local tenders as well. We have successfully completed the inspection by the AGES Austria in January '24. Our Jadcherla facility has been issued GMP certification, which will facilitate continued supply to various countries of the European Union from this unit. For our Jadcherla facility, which has undergone a USFDA inspection in November 23, I'd like to share that we have submitted all compliance to the -- for the 10 observations that were received. We are closely working with the FDA to meet the expectations of the FDA in the current regulation. We're also [indiscernible] some additional consultant for our [indiscernible] reports, which was [ funded ] out by the FDA during the November '23 inspection. Coming to the ODF post U.S. launches of various ODF products, we're entering into the emerging markets where we have signed licensing and supply deals in the key markets and also exploring further partnerships. And in the U.S. also, we are trying to launch even the Paracetamol film into the U.S. market under the ODF category.
Our efforts to be introduced transdermal patch base offering on track. We have partnered for the Rotigotine, which is the most complex product in Europe and the emerging markets. Clinical studies completed for the EU market and skin irritation studies completed on the Indian subjects and ongoing at abroad, plan to complete in Q2 FY '25, followed by the filing in EU and emerging markets. Apart from this, we have partnered another 2 products for EU and emerging markets. Rotigotine, we are planning to take to the U.S. market also, which is used in the Parkinson's diseases.
Speaking now about the Shilpa Biologics. We are monitoring the volume growth in high concentration product. [indiscernible] on the India approvals and launch was strategy extended to tap into the various international markets with this product. Also additional indications approval submitted to the Indian therapy. For our Recombinant Albumin, the Phase I studies have been completed, and we are working for the substituting the data, submitting the data to the CDSCO for pathway -- further Phase III pathway. For Aflibercept, CDSCO approval for the Phase III has been received and manufacturing of exhibit batches will be done in the Q2. Additionally, our first biologics CDMO projects for microbial fermentation has been moved to the second level, and we have signed a further 1 more CDMO projects in the biologics.
To conclude, we are working towards being into the various markets and also having innovative products, along with the regular generics. I just drawn my opinion and remarks to close and Alpesh, our CFO, to continue this discussion with his comments on the financial performance. Thank you. Thank you all.
Yes. Thank you very much, sir, and good afternoon, everybody. I'll now provide the financial highlights for the fourth quarter and full year ended 31st March 2024. From a revenue perspective, we reported a steady quarter with consolidated revenues of INR 294 crores, registering a growth of 11% year-on-year and with an EBITDA of INR 72.5 crores as compared to INR 68 crores in the last quarter and INR 40 crores during the same quarter in the last year. So this is the sixth consecutive quarter where we have seen improvement in our sequential EBITDA.
Alpesh, your voice is low.
Hello, Am I audible now?
Alpesh, increase your voice a little.
Am I audible, [ Nina ]?
Yes, sir, this is better.
Okay. So I was saying that this is the sixth consecutive quarter where we have seen improvement in our sequential EBITDA, thus reflecting improved business mix and continuous endeavor to rationalize our costs and increase our operational efficiency, right? And this enhanced EBITDA has also translated into an improved profit after tax, this quarterly PAT of INR 24.5 crores as compared to INR 4 crores during the previous quarter, and that's against a loss of INR 8.1 crores during Q4 of last year. right?
Now I'll quickly take you through some financial highlights for the full year of -- for FY '24, where our revenues for the period stood at INR 1,160 crores, reflecting an increase of compared to FY '23. And EBITDA was at INR 252.5 crores, registering a growth of 111% over the previous year. So previous year, our EBITDA was at about INR 119 crores, INR 120 crores, and this is more than doubling of EBITDA there. And on the other financial parameters, our net debt as at 31st March was INR 912 crores. And our CapEx -- net CapEx that we have incurred has been INR 172 crores. majority of which has been in our upcoming assuming [indiscernible] facility to the tune of roughly about INR 150 crores.
During the year, we also generated operating cash flow of INR 172 crores. So we have been moving in the right direction as far as controlled financial performance is also concerned. In another important development, I'm very happy to report that we have recently in the month of April, raised equity funding of INR 500 crores through QIP issue and this has been subscribed to by some marquee investors. And this QIP issue has helped us in deleveraging our balance sheet and also provide us the requisite growth funding to enable our future growth in the further journey ahead.
With those closing remarks, I would like to now open up the session for Q&A. Over to you.
[Operator Instructions] The first question is from the line of Rahil Dasani from Mittal Analytics.
I need to understand a few things on the balance sheet. First is, goodwill. Second, the intangibles, specifically the line item under the other intangibles and largely the intangibles under development. Now these are very significant, approximately INR 500 crores. So last few years, the overall P&L has been hit. But now that it is getting better, do we have any plans to write down the goodwill and take a hit. And if I'm not wrong, the other intangible and the intangible under development are related to R&D. So why have we not expend this, what sort of judgment has been taken here from the management to include it in the balance sheet.
Sorry to interrupt. Sir, your audio is not clear. I think you have connected 2 lines from the same place.
Not at all clear. What you are speaking is 50%, we are hearing, 50%, we are not hearing 50% you.
Sir, please mute your other line. You have connected 2 lines from the same place.
Okay. So first of all, I need to understand the balance sheet. That is the goodwill, the intangibles and the intangibles under development. These are very significant, approximately INR 500 crores -- so last 2 years, the overall P&L has been hit, but now that it is getting better. Any plans to write down the goodwill and take a hit in any 1 year? And if I'm not wrong, the intangible under development and the intangibles are related to the R&D. So why have we not expensed this, what sort of judgment has been taken on the management to include it in the balance sheet. That's the first question.
So I take that question. See, as far as goodwill is concerned, Google, basically it's acquired goodwill when we have acquired certain entities. And as a matter of process under [indiscernible], there has got be an impairment testing done of the goodwill. So on the impairment testing of goodwill we do have -- we do not have any charge that is required or that comes up. And hence, it continues. If any impairment testing, if we are required to write-on or write-down the goodwill, we'll do the same.
As far as intangibles are concerned, we have a very clearly defined -- as far as intangibles are concerned, we have a very clearly defined policy where any product -- any development, which is still at development stage and has a risk of development involved in it is charged off to P&L, once the product development has been completed, and we see commercially viable path for the product, all the expenses, in fact, after that till the time the product is commercialized or capitalize. And this is what we have been doing consistently. We have not had any situation where we have followed a different accounting policy because we had difficult years. We have been following consistent accounting policies, which have been very clearly laid down and laid out in each of our annual reports. Also you can check out all those accounting policies in relation to R&D, what gets capitalized and what doesn't -- what gets charged to P&L. So we are following that consistently. It is not based on whether we are having a good year or a bad year that we keep changing our own policy.
Okay. Got it. The second question is around the Pemetrexed injection. So first of all, [indiscernible] to you with the ability to [ sold ] that good at the room temperature, it's a huge feed -- so what is the update for this product, it was launched in Q1 FY '23 in Europe since the and...
Can you please proceed with your question. Can you repeat?
Yes. So the next question around the Pemetrexed injection, what is the update for this product. It was launched in Q1 FY '20 in Europe. Since then, how have the numbers going from there? Also, we were to launch it in April in the U.S. So what has been our offtake to Amneal in March and how are the sales grown from April and May.
[Technical Difficulty]
Yes, sir, we can hear you now. The question was on Pemetrexed...
Yes. Pemetrexed, we -- as expected, we have already mentioned that it has been launched in the month of April. And the numbers yet to come. So currently commenting on numbers may not be possible. But yes, successfully, we have launched in the month of April. So once the [indiscernible] is over, probably we'll be doing the number on this.
Yes, sir, but that is for the U.S., right? And we launched this product in Europe in Q1 FY '20, if I'm not wrong.
No, no, no, we are not launching FY'20.
No, no.We had launched this product in Europe in Q1 FY '23.
Yes. Yes. That is there.
So that's what I'm asking, how have the numbers grown from there?
In the Europe and U.S., this is a totally different approach. In U.S., it is a 505(b)(2) J-Code. In Europe, it is against generic -- that is not 505(b)2 or something is there in that or there is no J-Code specifications. It is normally, we're competing against generic.
Yes. And we generally do not provide product-level sales detail and all, right? So this is like any other normal product that we have booked, it is, as Vishnu was mentioning, it is not a differentiated product as it would get classified in the U.S., it doesn't get classified as a differentiated product in the EU market. So -- and for all the generic, we don't provide product level takeup of sales.
Okay. Got it. My next question is on Albumin. If you can go in a bit of detail from a scientific perspective and explain by a form of -- now we are sized of able to track it and considering the huge market potential and shortage by other MNCs who are a lot more liquid with a larger R&D workforce not pursuing you?
No, I cannot comment on why other MNCs are not pursuing. I can comment on my reason that we're pursuing this. We completed the Phase I and the Phase I study will be submitted to CDSCO, and probably we will submit for the Phase III approval also. And the -- as you mentioned, that the size is huge, the demand is huge. -- why others are not pursuing and all, I think it's not possible for me to comment. But yes, it's a complex product, not easy to be developed, not easy to see that as the cost competitive against the Plasma product, that is why we are putting up the huge facility of the fermentations also into the near to the Raichur, where we want to manufacture this particular product once we get Phase III approval. We have a commercial manufacturing capacity also for manufacturing this Albumin.
Okay. Got it. Secondly, we have to register the DMF for the excipient grade and start selling it this year. So what's the capacity we have for the excipient grade. And since the plan is to start by July or August, can we expect increased excipient grade sales? Or will we only utilize the plant once the pharma grade is approved?
No, I think the -- on excipient grade, we are submitting the DMF for sure, but submitting the DM doesn't mean that immediately the sales will start. People will use our excipient grade Albumin in their formulation, put it for the stability because Albumin itself is not a [indiscernible]. It will not be used in excipient. They will use in various formulations. That formulation, then in that also Phase I, Phase III. So it's long-term process. It is not that the -- immediately, the sales revenue will come on that. But yes, the people will at least start using our excipient grade and we'll start giving them the development and the some pilot quantities.
The next question is on Adalimumab. This year they wanted to...
I'm sorry but we Will have to allow others to come and...
We will Move on to the next question, which is from the line of Vishal Manchanda from Systematix.
Sir, on Albumin, could you kind of share some color on what could be the price differential between a recombinant 1 and a blood derived one?
The price difference currently setting is difficult because in a various market, the excipient grade and the therapeutic grade has a various pricing. Of course, excipient grade has a more -- much more value than the therapeutic grade. But in U.S., Europe, even therapeutic grids in India, therapeutic grades in ROW market, therapeutic grades, has a different pricing -- that is the reason why we feel that we have to complete, including the India pricing. This is the reason why we have put the largest capacity on that. So that once we are competitive in India market also on a therapeutic grade, definitely will be competitive in other markets. This is what our goal. So you would definitely be lower than the blood derived Albumin in terms of the pricing? Would that Yes, our intention is that [indiscernible].
And it should be significantly lower, I mean to get kind of -- get into better market share here?
First of all, definition of significantly lower itself is questionable. But I can tell you that this is a shortage of product, once you have this quality of the product with the 99% purity -- plus purity and consistency of not having any impurities from the other blood derived products definitely, our product will be little premium, not the more premium on this in the therapeutic grade also. So we are working all aspects keeping that into the mind only this product development has been taken and the facility is started building up.
Okay. So you'll initially target India and then go global with this product?
I think India and ROW for sure, immediately, parallelly, because we are using the EU RLD against this even in our India trials that will allow us to penetrate into the Indian ROW market. Of course, Europe and U.S. also parallel, it is there. But once we are seeing this India, now Phase I is completed. Now with this, can we go with the parallelly into the U.S. and Europe, that's still it is not decided, but Indian ROW for sure.
And are there other companies globally who have either tried this recombinant Albumin or successfully done that?
No, excipient grade, yes, 1 or 2 companies are there. On therapeutics, I think we have not heard any one. No, we have not heard.
Okay. And sir, a second 1 on the U.S. You have a para IV filing on a product called Lenvima, and probably you are the first to file or Sun Pharma, and you have it along with Sun Pharma. Could you share time lines on when this -- when Potentially could be the launch of this product?
This is lenvatinib. The -- we and the Sun are the only 2 filers for the first 2 files. I think I don't know more on this, but I think publicly probably it is known that the Sun has settled with them on this. But still, we are litigating -- the litigation is not settled so commenting on that will be a...
Shilpa Medicare has not settled yet?
No, no. No, we are not settled. So I think we are still continuing our -- and we fairly feel that we're not [indiscernible]. So that still litigations are going on, going on. And commenting on that on a litigation will be very difficult for me today on this. But yes, answering your specific questions, -- the litigation is ongoing. So what time the launch or when it will happen Still, it is very difficult to comment on that.
Understood. Understood. And just 1 final one. Would you be able to share what would be your total investment on the gross block on the biologics front, excluding Albumin just on the other biosimilars like adalimumab and others.
Alpesh.
Yes. On biologics front, our total gross block for our biologics is I will tell you the exact number, about INR 450 crores.
[Operator Instructions] The next question is from the line of Aditya Sen from Robo Capital.
So we have got a few products such as the Aflibercept, Albumin and Adalimumab in the line, and we believe they are of huge market size. So once we decide the products, do we have any aspirational market share in our mind while proceeding with the product that we want to achieve?
Normally, we are not doing direct marketing by ourselves, except on Adalimumab were done in India. But there is all markets, we'll partner with the strongest partner in that particular division in the various regions. So this is what we do in India, it is known that we are partnering this Adalimumab with Sun pharma. So yes, and they are known for taking the bigger market share?
All right. So just to understand -- I'm new to this company, so just to understand how do we anticipate the incremental growth from the new products of Aflibercept, Albumin and -- Adalimumab I understood but specifically about Aflibercept and Albumin?
Yes, of course. That is the reason why we've selected such a complex product.
All right. All right. And about the margins of our 3 segments: Formulations, API and Biologics. Can you please let us know how much margin we did in each segment? And any guidance going forward on 3 segments?
So basically, we generally don't provide segment level margin per se. But if you look at our stand-alone business, which is our Formulation business, right, you can get an idea about the margins over there, right, for our API business, we are typically operating at an EBITDA margin of about 25% to 27%. I cannot give you the exact numbers over there. But that's the range in which we operate.
All right. And for biologics, it is...
I think guidance we are not providing.
Guidance we are not providing but this is the general thing.
Yes. And the last one, the biologics margin, if you can.
Yes, biologics basically see, it's at an certain initial stage so there are not the entire costs get absorbed operationally in a full-fledged operation. So at this stage, it may not be appropriate to look at the margin profile of biologics separately.
The next question is from the line of Krishna [indiscernible], an Individual Investor.
First of all, congratulations on a good set of numbers. My first question is on the QIP money that we have raised around INR 500 crores -- so as far as I know, our prepayment option is opening up in July this year. So can we expect the bullet repayment to happen in July? -- because that will save around INR 45 crores to INR 50 crores of interest expense, which is huge. So when can we expect the debt repayment to happen?
So I think we need to wait till not July, but till mid of August to make a partial payment. We have already planned to make a partial payment towards that NCD. And of the QIP money that we have received, the QIP funding that has come in, portion of that has been already kept in FTE for the repayment that comes up -- that we can make in the month of August. There's no repayment obligation, but we have [indiscernible] to make a repayment of a partial amount. So a significant chunk of the NCD will be reduced. We will be carrying some small portion, maybe we'll try and settle it out or pay it out in the next 1.5 to 2 years' time maximum.
Okay. So majority will be repaid in August.
Yes. Yes.
And sir, another question is on the import alert. So how long will US FDA takes to issue the compliance certificate -- so I'm asking this because majority of our delta in, let's say, next 1 or 2 years is expected to come from formulation segment. So do you think that any risk would rise in future because of this. Of course, we have completed all the remediation expenses and -- but when will the final notification from U.S. FDA is expected to come?
Commenting on the final when they will give it is very difficult. But yes, we're working -- now, we're at this stage where we are almost trying to complete this all, whatever their expectations are there. So that much I can tell you. And the risk mitigations and the delta, what we are thinking for the U.S. see like Permetrexed we've launched from the other side. Another product we filed 505(b)(2) for the Borteomib that also probably we have already shifted and the review is going on that is from other sites. The another products, whatever we are doing, pardon?
No, no, sir. Continue.
Yes. So any products which we feel has a risk mitigation, we already have 2 sites. So the -- whatever the largest chunk of our products, which are like a 505(b)2 are very complex, we are parallelly keeping 1 more site also. So that is the reason why I think -- I don't think that any such risk we are carrying for this, our future growth.
Correct. So sir, for the metrics, we are using our own site? Or are we using some other companies site on contract manufacturing basis.
It's a CDMO side, another site area.
Okay. Okay. And sir, -- another question on formulations. What kind of products have we already developed in this segment, which we plan to monetize over a period of next 1, 2 years? I wanted to understand the potential sales number, which this formulation products can generate as a licensing fee in next, let's say, 1, 2 years?
Our policy is there to develop the complex products. So the licensing revenue will come always it will be there every year. That is the reason why you are seeing that there is a licensing revenue. Until and unless somebody sees the potential of this molecule, nobody is going to give you a licensing fees. So we are continuing to do such a complex project. So from that, how much revenue and all will come is very difficult to tell today. But the -- like Bortezomib 505(b)(2), what we are doing it. You can see the IMS data also. So we -- currently, nobody is there in a subcutaneous RTU. We have developed that product and we already filed 505(b)(2) and the review is going on. the and other products, what -- whichever the products we are trying to do it, either it should be a very complex product like [indiscernible] first to file, we are done and we -- only 2 people were there. It's a $1.2 billion product. The settlement has not done with us.
But we normally do the noninfringement or the complex or the patient compliance product we try to select in-house and try to see that such unmet need is always catered. Then only people will come here for the licensing and we'll be interested in to launch not only in the U.S., Europe and other parts of the world.
So sir, it's not the potential sale, if you can just tell us the number, let's say, how many agreements have we currently already signed, if you can tell the quantum of that, that would be helpful.
It's a difficult now to tell because in ROW market, if I will tell you -- in each product, there is a different agreement is happening. It is not 1 product, 1 company and 1 company and then we sign 10 products with them. We never do that. We specialize like somebody is specialized in onco, somebody is specialized in non-onco. So accordingly, we try to -- somebody specialize into the OTC segment where we do our farmers, the ODF and the TDF.
So accordingly, we work with the various companies. We have a flexibility of working such type of companies, then licensing deal happens. But particularly telling about how many licensing agreements were signed and all. But we have signed a number of that, that much I can tell you.
We'll take the next question from the line of Harsh Bhatia from Bandhan AMC.
Just 2 quick questions. One, just from an accounting perspective in the audited statements -- again, this is a stand-alone model of consol. Licensing and service income is INR 584 crores in the consol and INR 28 crores in the stand-alone level. And in the presentation, under formulations, it is somewhere around INR 32 crores, INR 33 crores for this quarter. If you can help us sort of better understand how are these numbers getting segregated? Maybe stand-alone is where the formulation-related licensing and service income is coming, and therefore, that is the difference. So maybe you can help us understand.
Yes, yes. So Harsh, basically, the licensing income, what you see in the presentation that is provided for the formulation business. And we do receive licensing income in our other subsidiaries also foreign subsidiary where we could have done the deal. So especially in this particular year, there was some licensing income that was also received in the European territory in a separate subsidiary. So what you see here is basically a formulation business and not a stand-alone business. Yes.
Okay. Okay. Understood. And in terms of this new facility for Albumin that will probably come in this first quarter, ongoing to first quarter. Without getting into the numbers, the incremental OpEx part, do we feel anything incrementally that could come into picture? Obviously, I'm not sure to what part of the construction is done and to what part of the OpEx is there in the P&L. So if you could just help us understand qualitatively.
We completed almost all construction and the majority of the equipment at play. That is why we are starting probably next quarter, we'll start the trial batches. So the major OpEx probably will be -- CapEx will be completed by the next quarter. So another maybe INR 50 crores additionally, we may have to spend it. This is what I can tell you.
And manpower cost is yet to come into picture.
That will automatically will come once we complete this, and once we start the commercial production, that only it will be there more. But otherwise, it will be less of the initial days. That is why we have not provided any guidance. We are saying that the next year first after the next year, March only, we should be able to get some revenue from this particular site. Until then, the stabilization, the -- some of the batches, exhibit batches we need to complete that all work will be completed in this current financial year.
Sure. And sir, 1 last clarification. I think, sir, there is some confusion at my end that the metric rated sales, nothing has been booked in March because the product has been launched in April. So your shipments must have gone out in March, maybe I'm assuming. So it is fair to say that fourth quarter didn't have any metric-related shipment because the U.S. formulation has also shown an uptake, if I am not wrong.
Yes, there is -- you are correct. We have shipped this material in the month of March to the U.S. But the -- please note that we are here giving on a transfer price to the -- our U.S. partner. There is a profit share arrangements once the sale starts, there's a substantial profit share agreements.
Sure. So manufacturing is both...
Just to add on initial supplies related -- even the initial orders which were there have been shipped and have been booked in our U.S. sales for Q4. That's where you see the uptick also there. And as Vishnu was mentioning that once we have the entire reconciliation done for the profits that are generated during the quarter, then the profit related portion will be booked at that point in time. Sorry, go ahead.
No, sir, that's very helpful.
The next question is from the line of Dheeresh Pathak from WhiteOak Capital.
At Slide 12, sir, you're talking about third type molecule so can you just explain the assets that you have here. This is -- I'm assuming for U.S. DMF filling? Is that correct? And which are the other things you can talk about? And whether they have been filed in the U.S. or not?
Which for the peptide you are talking?
Yes. You had mentioned -- Slide 12 mentions liraglutide, it is our third peptide molecule trial that successfully completed, meeting global standard quality. So you are going to file this already filed in the business U.S., I'm more interested in U.S. DMF filling. So have you filed there? And the other one is filed there as well? And which are those other 2, can you explain?
No liraglutide, still were not filed in the U.S. We completed this -- the batches. And probably with the stability data, we'll file now to the U.S. Of course, our intentions are there to complete this validation and all was our intention was there to file globally, including U.S. The another 2 molecules are still already earlier are there, but we are trying to take this semaglutide and the tirzepatide also in the future. Okay.
So this is the first GLP-1, -- the other 2 will be non-GLP one, the other 2 peptides?
Yes, both GLP on.
No, you think semi and tirzepatide that we will file now means that you have already completed the studies?
No, no, we are not filed. Please, please, we at sema and this, we are still under development. Only lira will be filed. Okay.
So it's our third peptide molecules, you're referring to all the 3 GLPs or you're talking about some other non-GLP peptide molecules when you expect the lira as third?
No, no. Another 2 is non-GLP.
Non-GLP. Okay, understood. -- let Okay. And this type 4 DMF filings for Albumin, that you will do once the commercial plant in ready, from there you will take [indiscernible] or you will side from the current capacity.
For the API or formulation?
So albumin, Type 4 exceeding grade DMF filing that you will do once the plant IS ready -- commercial plant is ready, then you'll file or you'll file from the existing capacity, the type [indiscernible].
No, we will file from both sides. We'll add both sides.
The next question is from the line of Sanjay Kumar from IThought BMS.
First on pemetrexed injection, what is the agreement with Amneal, if you could share? Do we get some kind of royalty? Or is it cost plus some profit share?
Cannot be disclosed on this. But I think you are right that there is a cost plus, plus the -- there is a profit share.
Okay. And second, just a follow-up to the previous question. So you mentioned semaglutide and tirzepatide. When can we launch any time lines for all 3 GLP-1s. Lira, sema, and tirza?
No, Lira, we are completing the exhibit batches. Sema and this tirza is under development. Maybe another 1.5 year minimum.
Okay. And then on Alterman, why are we not focusing on developed markets parallelly? And why limit ourselves to India and ROW?
I have not said that we are not focusing on the developed market. We're definitely doing that. That is the reason why we are completing this study with the EU RLD. That means including Europe, we are completing it. once we see the results of the EU and the other and this, then we'll parallelly work on the U.S.
Got it. And finally on the fermentation CDMO. So any special technology about this fermentation and how big can this segment be in the next few years for us? Is it a very niche technology?
As you know, now the world is moving to the clean technology. So the demand for the -- especially on a fermentation is very high. And current situation of the China because of the [indiscernible] that fiasco. Now the majority of people are moving to the other than the China to have this CDMO work to be done. So -- and the size of the fermentation facility, what we have put it probably very few companies in the India has such type of the capabilities into the GMP environment. So the -- answering your specific question that the -- yes, there is a huge opportunity for this CDMO.
We are working into like a microbial facility, which is the demand for the enzymes and other products also and the food grade or the -- including the Albumin, all these things can be done in our facility. So it's a multipurpose plant. And we see that there is a serious interest in the large scale -- size plant.
How big can this segment be said I think you mentioned INR 6 crores in the last call for the Phase II of the Korean order. But how big can this segment be in the next few years? And if you could talk about the U.S. order also that would be very helpful.
No, no, no. INR 6 crores is from biologics I think. It's not that something or the Albumin plant. That is some of our biologic facility from the Dharwad. Not from this facility.
Okay. Okay. And any size for the segment?
Pardon?
Any size you could call out for, let's say, how big can this segment be for us in the next few years?
Size can be very huge that what I can tell you, but we -- commenting on number will be difficult. But the size is much bigger when we have put around 230 [indiscernible] fermentation facility. And with the Albumin is going, current prices of Albumin, you can calculate. And accordingly, you can judge.
[Operator Instructions] The next question is from the line of Tushar Bohra from MKVentures.
Sir, the first question is on agreement -- can you just confirm by when will we be able to file the excipient grade DMS agreement. Do we expect to do this in the next month, a couple of months?
Yes, I think this quarter end or early next quarter.
Okay. So later by Q2 of this financial year, we should be able to file? There is no dependency on these new facilities starting 12 and then for this DMF filing, right?
Not at all.
Okay. Second, just picking up from the previous participant's question on CDMO. Is it fair to assume that we can do more than 1x of the gross block at the biologics plant between our own products as well as CDMO in terms of revenue on a full-scale utilization basis?
No, biologics, there are -- which biologics you are talking -- there is 1 Shilpa Biologics and Shilpa Biocare is where we are trying to put the large commercial scale facility for de-fermentation on the Albumin. And biologics is like adalimumab, aflibercept and, of course, the CDMO process, which 1 you're talking?
So I'm looking for the biologics for the mammalian facility.
Current the commercial life for adalimumab and all facilities. Is it correct?
Yes.
Yes. Once we start working on, the probably comment number will be difficult, but it should happen because once we are doing this adalimumab, aflibercept, and then the CDMO work what we are trying to put it, plus we have a facility for CDMO especially for the -- as I mentioned, microbial to the mammalian, plus loan development to the [ fill-finish ]. So such type of the GMP-grade facility, with this such -- all these infrastructure availability and working on a CDMO, very rare to find. So I think we are getting quite good interest. We have -- as I mentioned in our presentation also, we successfully completed 1 NCE for the Korean client. Now they are given the second -- in that next stage, they have given it to us. That shows that we have good capabilities working on that. And definitely, we'll get a CDMO as well as the other -- ones we start completing the fleet aflibercept itself and adalimumab getting it approved into the various markets. But it's a slow process. So I cannot say that immediately this will happen. But biologics is not the way it will happen overnight. It takes time.
Sir, the second project that we have signed with the U.S. line, there is also a fermentation project? Or is it in the mammalian plant?
It's, I think, the very difficult to tell, but it's, I think, on the same microbial.
Sir, just a follow-up on this. I'd just like to understand for the biologics plant, not the fermentation, but the other one, right? What are the initiatives that we are taking, what kind of inquiries you have? Or any qualitative details of the CDMO pipeline or partially being discussed? And also on the regulatory status, are we looking at US FDA approvals for this facility, what is the regulatory status in next steps?
Currently, we are not working on to the U.S. for sure. So we are trying to see that the Europe and the ROW market, including the [indiscernible] countries, European approval. So that we're going to trigger it. U.S. still we're not able to file it or anything. We don't have our intention to currently go to the U.S. because the spending is huge. And until unless we find some good partner in that, and then we wanted to take it. But initially, Europe and ROW market in India market, we are focusing on this.
And the developments of business development for CDMO projects?
Yes. We're doing a lot. We have appointed the in the U.S., in Europe, in -- so we are now 3 business development people. Those who are working in various regions to get the CDMO business.
The next question is from the line of Abishek [indiscernible], an individual investor.
I would request that we take only 1 question from each participant now in the interest of time.
[Operator Instructions] As the current participant is not answering, we will move on to the next question, which is from the line of Prashantkumar Hazariwala, an individual investor.
Yes. How are you going to use QIP money that we have, that INR 500 crores.
Already, it has been explained. No, I think you are not there in that during that -- we are in.
Yes, just -- can you repeat for me see.
Broadly, what we are doing is we are predominantly using it to deleverage our balance sheet. -- that chunk of it is getting used towards partial repayment of the NCD that we have raised in the month of August. And for that, we need to wait for the partial repayment until mid of August. So we have kept that much amount in FDs with bank. So we will -- we are not using up that particular money, what is required to be repaid for the MCVs. so predominantly, it is getting used for deleveraging the balance sheet and also to an extent using it for providing the growth requirement of the business.
All right. So like how much money will go forward do you deleveraging?
So substantial thing is going there. And I think you'll start seeing those results in the coming figures.
We'll take the next question from the line of Karan from Invexa.
I had 2 questions on formulation segment. So for formulation, can we expect the profit share to come in quarter 1 of FY '23?
Yes, I think we should be.
Okay. And sir, second question is on...
So maybe June, July, April, May, June, I think, definitely, there will be a sale. And we can see from the next quarter onwards.
Okay. And sir, secondly, on the formulation segment again. So this year -- this quarter, the number has been INR 72 crore. So can we expect this in the new base for formulation segment going ahead?
Your voice is not clear, dear.
Sir, so my question is on the formulation segment. So this quarter, we have been INR 72 crores. So can we assume this as a new base going ahead.
Can you speak a little slow.
So my question is on formulation segment. So this quarter, sir, we have done INR 72 crores. So can we assume this as a new base going ahead?
Yes, you can assume.
Okay. And sir, lastly, on the overall EBITDA. So can we assume the EBITDA margins and absolute EBITDA to grow from the base which we have set this quarter?
So see, basically, we have -- as I had mentioned earlier, that we are constantly working at improving the overall business mix, business quality, plus working on various other aspects of cost optimization and all. So ideally, as those things should result into better results. but to what extent and what it would be, we can't provide that kind of a guidance. But we certainly look to keep improving from where we are currently.
The next question is from the line of Shashwata Chakraborty, an individual investor.
So like to move your CapEx and for the next upcoming year, like the maintenance CapEx you have or you have some growth CapEx plan for the upcoming year?
There will be, as I mentioned in my opening commentary that we are building up the capacity enhancement for the tranexamic acid from the 15 metric ton to 25 metric ton per month. So that will be there. And the additional CapEx to complete this plant of this or biocare for the fermentation of this. That will be there. [indiscernible], I don't think we need anywhere in the CapEx.
And can you tell any numbers regarding this? How much money you're going to invest in particular amount? Particular number in this, like how money [indiscernible] for this particular project?
So for this tranexamic acid project, I think we are expecting to invest somewhere about INR 25-odd crores for this particular block capacity enhancement that we are doing. So that's not very significant in any case.
And second thing I would like to know, sir, like last 1 year back, the net profit margin was negative. But this year, it becomes positive. And the revenue was good, but is there anything happens in this regard, like the price or any particular demand is increased because of that profit margin in positive? And in the future, also, you can see the positive. Can you please tell a bit on light on this particular topic?
Yes. So basically, which I've already mentioned in my opening remarks as well as in 1 of the answers that we have been -- as a management team, we have been looking at constantly opportunities to rationalize our cost structure as well as bringing operational efficiencies like the way we are increasing our tranexamic acid capacity. Similarly, we have done similar things in the past. We have also, to an extent, been helped by softening of some of our input costs and all. But broadly, if you see, we have been fairly active on our cost personalization aspect and obviously also looking at improving the overall quality of the business.
So these things obviously have helped us in changing our profitability profile significantly. And obviously, we intend to continuously strive to improve this further to action feasible. But I -- we can't really provide any specific guidance as to what extent it will keep it going.
Ladies and gentlemen, this will be the last question for today, which is from the line of Rahil Dasani from Mittal Analytics.
Yes. Quickly on Adalimumab, we not being the only manufacturer in our dosage concentration, how are we competing in terms of prices for our products, especially when we have come in second in the market.
No, we have licensed this particular product to the...
Sorry, sir, your voice broke your voice is breaking. Vishnu Sir, your voice is breaking.
[Technical Difficulty]
Ladies and gentlemen, the line from Vishnu Sir is connected. Over to you, sir.
Yes. I was mentioning that the Adalimumab, we have already licensed to the Sun Pharma -- and this the -- with the additional indications, which we applied for the getting it approved from the drug authority. With that, year-on-year, we feel that the volume as well as the value will increase.
Okay. Yes, I think that I got my answer. On licensing, I wanted a very simple understanding, for example, a milestone would be INR 100 crores or maybe 100 tons, then you get a payment from the licensee, then at INR 150 crores, you get the next payment and going on. But if the partner don't scale up from 100 to 150, then what happens. Do your agreements have something built in around time lines and total offtake or how is it?
Answering specific will be difficult. But I think we have taken enough precaution to see that licensing revenue comes through us. But if there is a failure from either side, we have to look that this is not only from their side, sometimes in a licensing revenue, we have to see from our side also. So we take enough precaution while doing the licensing agreement. That the importance is not getting the more licensing fees, importance is getting the licensing fees at this stage. And then we -- increasing the ultimate sales is more important in this.
So sir, that's what I'm trying to understand. Because from what I am understood, we have recently licensed a lot of products and a significant chunk would be from the initiation fees. So I wanted to understand if the partners are not able to scale up those licensing, our numbers would get stuck there. So if you could explain how is the partners be able to scale or something around it?
See, first of all, it depends on the product to product. So no product is mentioned that the licensing revenue from this -- which initiation or the initiation will happen, but you have to see that the whether that's already developed or we filed or it is ready for the launch -- it's an area -- product has a various aspect in this. So nobody is -- now we are not licensing at a very initial stage. We're licensing at the stage where the -- we feel that the -- confident that this is in 1 year to 2 years down the line, the product should get launched.
Okay. Got it. And how many products have we licensed till now?
No answering number will be difficult. But we have done quite a number of products.
Ladies and gentlemen, as that was the last question for today, I would now like to hand the conference over to Mr. Nachiket Kale for closing comments. Over to you.
Hi. Thanks, everyone, for joining the call. I would also like to thank the management for taking time out for the schedule and answering all the queries. [indiscernible] is the Investor Relations Adviser to Shilpa Medicare for any queries, please feel free to connect with us.
Thank you, sir. Thank you, members of the management. Ladies and gentlemen, on behalf of Shilpa Medicare, that concludes this conference. We thank you for joining us, and you may now disconnect your lines.
Thank you.
Thank you very much, everybody.