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Ladies and gentlemen, good day, and welcome to the Q1 FY '24 Earnings Conference Call of Torrent Pharmaceuticals. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Sudhir Menon, Chief Financial Officer and Executive Director. Thank you, and over to you, sir.
Thank you. Good evening, and welcome to Quarter 1 FY '24 Earnings Call of Torrent. While we see -- while we continue to see strong underlying market beating growth in our branded business. On the generic side, Germany has registered a sequential increase in the revenues on the back of tender wins in the last 3 quarters, while the U.S. business has delivered stable revenues for the quarter.
In terms of key financial performance indicators for quarter 1, revenues were INR 2,591 crores, up by 10% compared to the previous year same quarter. Operating EBITDA for the quarter is INR 791 crores. Operating EBITDA margin stands at 30.5% and registering a growth of 16%, adjusted for one-off in the previous year. Now I would request Aman to give us insights on the India business.
Thanks, Sudhir. India revenues at INR 1,426 crores grew by 14.5%. Adjusted for the one-time NLEM related price impact for the quarter, overall growth stands at 16%. As per the AIOCD data set, Torrent growth in Q1 stands at 9% against the IPM growth of 4%. We'd like to share some operational highlights in the quarter. The Curatio business continues to perform well with 18% growth in Q1, led by the flagship brand, Tedibar. Tedibar is now over a 100 crore brand, growing upwards at 25% and the top 5 brands of the portfolio all continue to deliver high teens growth. With the merger approval now in place, we have been able to accelerate integration in the last few months. EBITDA margins of the Curatio portfolio are now 7% higher than pre-acquisition due to operational efficiencies.
Further incremental margin expansion is looking visible in the coming quarters. While longer-term margin profile will continue to improve due to operating leverage. We are on track to reach our base business level margin in the near future given the current trajectory. PCPM of the Curatio business is now just under 5 lakh compared to 3.6 lakh pre-acquisition as we have restructured some divisions to focus more on the top 5 brands.
Moving [indiscernible] continues to remain strong and we are ranked #1 in the branded generic players in the Sitagliptin market. We are talking just around INR 10 crores per month in the 12th month of launch, which is one of our fastest launches to reach that scale.
Some updates on the Consumer Health division. Our first product, Shelcal 500 has shown positive outcomes in our pilot markets. And as a result, we have now spent the last quarter expanding our distribution and reach to 230 sales reps across the country in order to start our national campaigns. We expect the Shelcal national rollout to begin in the coming few months.
On similar lines, pilot for Unienzyme has been launched in some of the key states. And the campaign for Tedibar from the Curatio portfolio is also planned in H2 in the coming year. At the end of the quarter, Torrent has 20 brands in the top 500 of the IPM with 15 brands now more than INR 100 crores sales as per match June 2023. Our field force strength now stands at 5,500 MRs. We expect the India business will continue to outperform the market growth in the coming quarters.
And our focus during the year will remain on continuing to improve our market share in the base business, improving field force productivity in the expanded areas, realize integration synergies of the Curatio portfolio and execute our Consumer Health national rollout. I'll now hand over to Mr. Sanjay Gupta for the International business.
Thanks, Aman. We will start with our branded business market of Brazil. Brazil has reported a 3% growth during the quarter. In constant currencies, the revenues were BRL 114 million, registering a degrowth of 2%. The reported growth was lower due to revenue getting recognized in July, owing to a delay in dispatch to one of our largest customers. Adjusted for this, the underlying growth in constant currency is 12% and in INR, it is 17%. As per secondary data set, Torrent growth is 15% versus branded generate market growth of 11%.
Of the 7 brands launched in the last 24 months, we have achieved double-digit market shares in 4 of them. In Q1, we have launched pregabalin and we expect 5 additional launches in the balance of this fiscal year.
Our generics business is also scaling up fast, and we've achieved an 8.8% volume market share at the IQVIA June data in our covered market. Moving on to Germany. Our German business has registered a growth of 21% this quarter. Constant currency revenue was EUR 29 million, up by 11%. Since the last 2 quarters, the business is witnessing steady sequential recovery driven by new tender wins.
We also see better conversion of existing tenders. During the quarter, we have launched 2 products and we expect a similar run rate to continue in the next quarter result. There were additional tender wins in Q1, which will have a positive impact on sales starting in Q4 of this fiscal year.
In the U.S., we registered revenues of INR 293 crores, down by 2%. Constant currency revenue for the U.S. is at $36 million, down by 8%. Adjusted for one-off income in Q1 of current year and previous year, constant currency growth is 1%. Our Bileshwarpura Onco facility was cleared by the U.S. FDA, and we have now commercialized our first product in the U.S. in the month of July.
To conclude, I would like to say that we expect to further deepen our presence in value-right market, aided by the Curatio integration, new launches and foraying into new therapies and new divisions. [indiscernible] continue to witness continued recovery trend aided by incremental tender wins, cost improvement strategies and OTC expansion. And until the clearance of our U.S. oral solid facilities, our U.S. focus will continue to be to maintain a niche and profitable presence. Operator, we can open the call to questions now. Thank you.
[Operator Instructions] The first question is from the line of Damayanti Kerai from HSBC.
My first question is on India business. So can you split India growth into volume, new launches and price hike? And related question is, although like your India business remains very healthy in recent quarters, but some of the secondary data is showing volume to remain muted for the market. So how do you see market going for the current fiscal? That's my first question.
Yes. So the breakup of AIOCD numbers at overall growth for the quarter is 9% versus 4% of the IPM. Breakup of this 9% is minus 3% in volume compared to minus 4% of the market, 7% in price versus 5% of the market and 4.5% in new products compared to 3% of the market. So I think this quarter has been slightly weaker in terms of the acute sales that we're seeing trending across most data sets. So probably due to that, it's caused a bit of weakness, but should be recovering in the coming months.
As far as our chronic business is concerned, our total chronic piece has grown in double digits. And our gastro business, which contributes more than roughly around INR 1,000 crores for us overall. That has been impacted by the seasonality, which hopefully should recover in the coming months. But apart from that, we think there is a positive traction in the market going ahead.
So in your view, market can grow at least in single digit for the current fiscal and you will outperform the market?
That's correct.
Okay. And just like my last question is on your Consumer Health business, which you have recently launched so -- which is Shelcal, now you're taking pan-India but can you just talk a bit about like how many products you would like to bring in here? And what kind of cost you foresee for your plans here.
So we'll be looking at by the end of this year, around 3 to 4 products and maybe by next year, about 5 if execution is on track. In terms of costs, I think this quarter and last quarter, a good part of the fixed cost has already been kind of is part of the numbers. So incrementally, there won't be too much of a higher spend going ahead. It may depend on product wise, if we are launching a pilot depending on the scale of the pilot by a few crores here and there, but it would not be significantly higher from what we're currently seeing. This is I'm talking about advertising spends.
And also like sales rep, you have around 270 people that will be sufficient for the next few quarters, right? You won't be adding more?
Yes, this is 230 sales reps for the consumer distribution and we will be not be adding any reps this year.
Okay. And my last question is your margins are very healthy, like they are staying in like 30s level. So how do you see margins moving ahead say, like more efficiency come from Curatio, et cetera. So how should we look at numbers ahead?
So I think, Damyanti, this level I think it should be maintained for the rest of the year, for sure, is what we believe today. Over and above that, there's some amount of improvement can still come is what we believe. But that, let's see when the quarter gets reported subsequently.
The next question is from the line of Adi Rai from Equentis Wealth Advisory.
The first thing would be if you could give an update on the FDA issue on how is that panning.
So we would -- we are expecting a letter from the FDA sometime in September and that will be, I think, the stipulated time frame for a report on the age. We're kind of optimistic because the last inspection that we had, we had relatively 2, I would say, 2 observations, which were not very, very significant. So let's see where that letter goes. And then for the other plant at India, we are waiting for a reinspection, and that data has not been communicated by the FDA.
Okay. And on the India business, you just mentioned that in this quarter, 3% was from volume. And in the previous quarter, when we were speaking, you did highlight that at least 2% volume growth is something that you were looking at. So is this something that we look to maintain? I mean, is the view changed there from the last quarter, assuming we have done a 3% volume growth this year? So what's the view there for the full year, more or less both on price and volume?
Just to clarify, this is the AIOC data that we're talking, which shows that the IPM volume growth is minus 4% as against which we are at minus 3%. So our volume traction is ahead of the market but our internal volume trend is positive. Our overall growth numbers when you look at either the reported or the underlying growth are close to 16%. So obviously, volume will be positive there. What is important for us to look at here is because we are in this phase of high new product contribution. Some products will see a slowdown in volume because they're in competing therapies. So it's the net of new products and volume that we need to look at, which is actually looking quite healthy right now. So volume trends, we believe that we should be 1% or 2% higher than the market going ahead as well.
Okay. Just a last question from the Bileshwarpura plant. I mean, July, we just started the commercial production for the first product. And we are expecting to launch about 2 to 3 products every year is what I understand. So any other product that we are working or an expected outlook there?
Yes. I mean you'll see them once they get approved. So for competitive reasons, we don't disclose the pipeline. But we have a pipeline of 10 onco assets right now, all scheduled for launch over the next 4 years.
[Operator Instructions] The next question is from the line of Sriraam Rathi from BNP Paribas.
Just a couple of clarifications. The staff cost and other expenses were slightly elevated this quarter. In estimate amounts as well as in the percentage of sales. Any specific reason for that or is this a new normal run rate that we should consider or there could be an element that the sales [indiscernible].
Sriraam your voice is not at all audible. I'm not able to understand the question.
So may I please request you to use the handset mode while speaking.
So just a couple of clarifications. Firstly, the staff cost and the other expenses are looking slightly elevated this quarter. Is this a normal increase, which was due or there is something more to it?
No. As far as the staff cost is concerned, Sriraam, if you look at the quarter 4 number and apply a normal increment over that and annualize it, it looks similar, I would say, okay? As far as other expenses are concerned, I think there should be a normal level for this year, I would say, for all the quarters.
Okay. Because I mean, as a percentage of sales also it is looking higher. I mean, is it also because the Brazil sales have been decreased due to some extent. So the expenses might have already booked this quarter for those.
Yes, yes. That could be one of the reason as well.
Okay. Got it. Perfect. And secondly, in terms of tax rate, I mean, earlier guidance was like around 31%, 32%. This quarter, we are around 28%, 29%. So how should we look at for the full year?
So I think this is the effective rate, which would work out for the full year, and that's how the rate has arrived there. So I think for the full year, we should hold at 29%. Effectively coming because of the Curatio tax benefit flowing in, right?
And lastly, just on the India business. Has Curatio have been grown in double digit in terms of revenue?
Yes, that's correct.
The next question is from the line of Tushar Manudhane from Motilal Oswal.
Sir, given that the sort of confidence is getting better for Dahej, so I would like to understand how the R&D cost and subsequently product filing is going to be.
So last few years, we maintained the momentum in filings. So again, now we've guided towards the high single-digit filing for the U.S. So there should be no change. The only thing is that now we will start getting some approvals, right? So from the previous file products, a lot of them are become irrelevant, given the evolved market scenario. Many of them we would not be bringing to the market, but there are still pockets of value where we can bring some of assets that we -- some products that will get approved to the market. So you will start to see an incremental pace of launching from September, hopefully, September, October onwards.
Understood. And also on the base portfolio, how has been the price erosion? Is it reduced? Is it similar?
Yes. We did not see material price erosion in Q1.
So if any broad or as a ballpark range you would like to highlight?
No, no, it's nothing much. It's not material at the scale of the company or it's not -- right now, Q1 was, I would say, more price stability story than a price erosion story.
The next question is from the line of Ashish Thavkar from IIFL Asset Management.
I would like to know your views on trade generics because a lot many companies are venturing into it. So obviously, in the core business, it seems that there's a lot of fighting as far as the volumes acquisition is concerned. So is that a reason why most of the companies are wanting to go into trade generics, but then at the end of the day, even that would be a saturated market. So I would like to know your view there.
Yes. It's definitely there's space to grow in both trade generics and branded without eating into the other share because the regional contribution is different and the product mix is different. So for example, the reason why we entered some time back was our acute presence in the branded business is very minimal.
And we think this is a very a good way to enter the acute space and in regions where we're not present with our MRs. So for us, it was a complementary portfolio addition. So and then we don't launch conflicting brands in our branded business and trade generics. So there's absolutely no cannibalization happening there. So given that this market itself is complementary to one region and product mix, there is very little scope of kind of taking away share from each other and there's enough room for both to grow.
Yes. And given that we now have a sizable cash on the books, obviously, we have turned a lot many acquisitions in the past. But this time around, would acquisitions be slightly different in terms of how -- what we have acquired in the past because there was like -- more like what we already had. And then we added by acquiring more? But is it possible that you would go ahead and acquire something, which is totally a white space -- totally a world for you and then acquire that and then turn around.
No. I would say the acquisition theme would remain similar in the sense that it will predominantly be focused on Indian branded businesses, either in existing therapies or new therapies that depends on the quality of the asset and the strategic fit but definitely still remains an important priority for us. Curatio being the example of how we enter into a new segment through the inorganic route. That's the preferred option.
Sir, lastly, on this capital allocation. So at this juncture, would you be more inclined towards the now putting that extra dollar again in the U.S. market, you feel in terms of capital allocation, that part would still be a lot more skewed towards the India market?
So I think we have made clear our priorities in terms of external growth rate. In terms of inorganic growth, our focus remains on the India market followed by branded generics and other emerging countries and then comes generic, generic markets. So as of today, our focus is not so much on the U.S. market. We have substantially diversified our ongoing R&D investments also the portfolio, which used to be skewed a lot towards the U.S. is now kind of evenly distributed across our various geographies. So the amount of investment going into the U.S. is considerably lower in proportion to what it was 2 or 3 years before.
Sir, and at least in terms of the competition, has some fundamental change in the U.S. market? Or you feel structurally or basically, fundamentally, things remain as it is as they were, like, say, in the last few quarters?
Yes. We haven't noticed any structural changes, neither on the customer side nor on the supplier side.
The next question is from the line of Rahul Jeewani from IIFL.
Yes. Can you just indicate your new product launch pipeline for the Brazil business, I missed out on that comment. So you indicated 5 launches in the upcoming quarter or on the full year.
For the full year. So for this year, we would have a total of 6 launches. We just did one in quarter 1 and 5 to come in the remaining 3 quarters. And these are branded products in the CNS and cardio theraputic areas.
Okay. And are we doing any rep expansion in Brazil to support these launches?
Correct. So we've already added 77 CNS reps in the last, I would say, 18 months and we are adding another 26 reps in August.
Sure, sir. And sir, on the Germany business, why the Y-o-Y growth looks good because the base was replaced last year. But if I look at your euro-denominated Germany revenue, that has been pretty flat at around EUR 28 million, EUR 29 million for past 3 quarters. So when do we see a pickup as far as the Germany business is concerned?
I would say that you would see a pickup towards the Q4 of this year. So because we have new tender wins. So Germany business is fairly visible because there is a lag between winning tenders and the start of the business. So whatever the tenders we participated in Q1, they will actually start in Q4 because there's a time difference of 6 months before your new tender wins start. So I can optimistically guide you towards a higher threshold of sales in Q4 of this year and more or less stable sales for Q2 and Q3.
Sure, sir. And just one last question from me would be on the debt. So what is our debt position as of 1Q? And what will be your debt reduction target for the full year?
The net debt-to-EBITDA as at 30th June is 1.3x. For the rest of the year, we should be repaying another INR 600 crores.
The next question is from the line of Nitin Agarwal from DAM Capital.
In the U.S. business, given with the plans Curatio benefit up to now and the changed market dynamics right now. I mean where do you see the U.S. business for us settle in the next 3, 4 years from a scale perspective?
So the contribution of the U.S. to Torrent is quite low. So if you look at it this quarter, it's about 10%, right? So I would say that given the amount of growth that we are seeing in the other territories and the current issues that we have with the plans, I don't expect it to go up in a very material fashion as a share of the overall business.
Our goal right now until the new product approvals start to come through is to maintain profitability and to try to maintain top line to the extent possible. And once the new product launch comes, I think we can be back on growth and growth in the U.S. from the very low base we have. So if you look at a base of about $35 million a quarter, I don't think in the next couple of years, it will be difficult for us to reach $50 million, $60 million a quarter with the new product approvals on hand.
Yes. But is it -- are we looking at like getting to $100 million number over the next 3 or 4 years. Is that something that we're working towards or this is something, which is not where the capital allocation is going to be happening.
So at Torrent, we have a lot of priorities. I think that our key priorities remains our expansion in the branded generics market. So we are kind of investing in new reps, as I highlighted to the person, who asked the question before that in Brazil. All in all, we have added about close to 100 reps in the last 18 months. So we have a lot of places to invest in. We are investing in the U.S., high single-digit ANDAs per year, complex ANDAs, onco ANDAs, some specialty drugs. But I would say that it's not going to be a disproportionate share of investments towards the U.S.
And secondly, on the India business, I mean, what's been the experience with Curatio in terms of things, which have played out and which haven't quite played out its expectations?
Yes. So what we have done in the last few quarters increased our coverage of pediatricians and dermatologists and increase the number of calls per day compared to earlier. So that has kind of given a pretty good initial result in terms of sales pickup in those regions led by the key brands, Tedibar, Atogla, which are the 2 largest brands.
So in terms of the overall growth profile, we would say this has done slightly better than what we anticipated so far. And in terms of the operational synergies, we had merged 1 division with our existing base business. That was also part of the plan. So merging a few brands with our existing derma coverage has given a good result there as well. So overall, I would say that a few positive surprises, no real negative kind of surprises at all. And we believe this trajectory should continue from here.
And I mean are you calling out the number for the Curatio business for the quarter.
So if we look at the overall underlying growth adjusted for this NLEM impact, it's at 16%. So roughly 5% contribution is from Curatio in that.
The next question is from the line of Alok Dalal from Jefferies.
Sudhir. Gross margin for the quarter is 25% at a multi-quarter high. So do these margins essentially capture price increases, lower raw material costs? And do you think this kind of margin is sustainable.
I would think so this is sustainable at this point. What we are seeing is basically the margin improvement of 3% has 2 components. One, I think because of a better branded mix and price increases playing out across our branded generic segments, plus in terms of generic segments also, we have seen some amount of good product mix playing out, which is adding to the margin. And the third is there were some cost efficiency measures, which we have undertaken H2 of last year, which actually has played out now in quarter 1. So I think a substantial portion of this should be sustainable from your outlook.
Great. And other income is also slightly higher than previous quarters. Any one-off here?
Yes. There is a one-off in the other income of roughly, I think, INR 20 crores.
Okay. And Sanjay, for the U.S. business, do you expect prices to remain stable over the next 1 or 2 quarters?
I think Alok, we will take 1 quarter at a time. Q1 was stable. I am very reluctant to provide you for guidance going forward, right? It can change all the time. As you know, it depends on a product-wise basis as to how many new approvals come through, et cetera, right? It's not generalized for our portfolio. So why we are seeing a decent amount of stability. I'm just hoping that it continues.
Because if there is no structural change in the market, then there is no reason for prices to also remain stable given the way the U.S. has behaved in the past.
Yes. I think it just depends upon where the people are investing on what type of products and how many players are coming with new products and only people are going after older products. So I would say there is a point beyond which price erosion doesn't make sense because I have seen that buyers have had difficulties with supply in the last 6, 9 months based on going after the cheapest supplier.
So very often as a buyer, you get tempted to go with a lower cost supplier and then you get your fingers burned. I think we are currently in that phase where people with a reliable supply are not being squeezed to the last cent on prices.
Okay. And from the Dahej site, any meaningful products, any products that are currently in the shortage in the U.S. and where maybe you could -- if you get clearance, then you can come in.
We'll see that. Alok, we can't comment upon it because also it's not automatic. So assuming that we get a Dahej [indiscernible] in the September and time frame, product approvals will still take some time. It can range from like 1 month to 3 months to 6 months. So there is a big queue of products in the FDA. We hope to get -- start getting approvals, but I don't know the exact timing by product. So based on that, we'll see the potential. But we would be trying to launch at least, let's say, mid-single digit to close to double-digit number of products, which are pending from Dahej.
The next question is from the line of Shyam Srinivasan from Goldman Sachs.
On your investor presentation, I'm just looking at the last 2 lines of the revenue, right? Other countries have grown 16% and other others has declined. So if you could just comment about these 2 line items.
So others category is basically the insulin manufacturing business, which we have for one other and another portion of the Europe B2B business, which is there. So that put together is the others. Other countries basically, other than what has been stated above.
I was looking at the growth rates more rather than the classification and why we have seen -- sorry.
I think the major reason for the degrowth, which you're seeing in the others category is the uptake in terms of the insulin business, has been lower compared to quarter 1 of last year because there has been some amount of inventory rationalization steps, which Novo Nordisk has taken from quarter 4 onwards. So that should come back maybe in a quarter or so, I would say.
And the other countries, it's like is there any country that starts up higher in terms of concentration? Or it's like a bunch of many countries you have put together in that line?
Mostly a bunch of many countries. But essentially, if I can name 1 or 2 markets, which are reasonably bigger than the other markets, I would say Mexico is one. The other is U.K. and the third is Philippines.
Got it. Helpful. My last question, I think in the opening remarks, there was mentioned about 33 SKUs being launched. So just -- I was not sure whether I got the comment right. And what's the kind of trajectory we are looking at for the remainder? Is there any areas that we are focusing more on.
So not sure this is related to India, but we have not mentioned anything about 33 SKUs. We were mentioning about our diabetes launch traction being strong. In terms of new products being launched in the quarter, I would say it's about 4% to 5%, which has been a usual run rate. Going ahead, this year, no real meaningful new launches are in the pipeline. But last year's launches are giving us enough kind of headroom to continue the growth for the next 1, 2 years. The next wave of launches will likely be in the chronic segment in the next financial year.
Got it. Sir, last question, again, on India, just on the in-licensed portfolio, what's our contribution, if any? And any products that you will likely see go off patent in the next 12 months?
Yes. So in-license portfolio as an empagliflozin brands, which is from Boehringer Ingelheim. They are performing as per our expectations so far. This has already been a relatively kind of entrenched market. So we're being a late entrant. We didn't expect this to be a very large brand, but it's still an important entry for us into this segment before the patent expires in '25. And that's when we really hope to leverage the brand and brand recall when the generics enter the market. So it's more from a future horizon that we're looking at this rather than a current contribution. In terms of other launches, there are a few in the diabetes segment, but will not be very large in this coming year.
The next question is from the line of Rashmi Sancheti from Dolat Capital.
On the Curatio, you mentioned that EBITDA, you all have improved by 7% versus pre-acquisition. Is there a further scope of improvement in Curatio with the cost efficiency and the productivity? Or you feel most of the thing is done?
No, there is still significant headroom left here. This is just in the third quarter of integration that we've been able to achieve this. A lot more will come from operating leverage. So that will be the ongoing annual kind of margin improvement that we hope to achieve. But incrementally, in this year also, we feel there is further scope as we continue to realize the operational efficiencies of synergies. So as I mentioned, some of the division had been merged so that should give a further benefit. But definitely a lot more scope to increase margins from here as well.
So is it good to say that FY '25, we could actually see the overall margin improving at least 100, 200 basis points from the current level?
So I think 2 pointers for you. One is, I think the branded segment for us constitutes roughly 72%, 73% of our overall revenues. And there are 2 levers, which play out every year for us. One is the price increases, which we take in all our markets and the other is the operating leverage. And typically, we find that there are no negatives from the other segments, which is the generic segment. Then I think 75 basis to 100 basis points should come as improvement year-on-year.
And on Brazil business, when you said that the sales have been shipped to quarter 2, this entire sales would be recovered in quarter 2 or you might see some loss of sales also.
No, it's already booked in the first week of July, I would say. So this went into July because of the revenue recognition principles under the accounting standards. So there was a delay in dispatch. So it couldn't get delivered to the customer. And therefore, the revenue had to be booked in July and not in June.
So accordingly, we should see a much higher growth in quarter 2 FY '24?
That's right.
The next question is from the line of Karan Vora from Goldman Sachs.
So 2 from my end, also first on the Brazil business. So adjusted for the delay in shipment, roughly INR 215 crores of sales is what it looks like for Q1. So is that the run rate on which we should kind of build on? And does Brazil have a stronger second half versus first half from a financial year point of view?
Yes, good question. So traditionally, Brazil always has a stronger second half. So Q3 and Q4 are where we do the larger proportion of our sales. And then just due to the structure of the market, there are some strong sales coming before Christmas and then Q4 is linked to the price changes that usually take place in April. So structurally, Q3, Q4 is higher. In terms of run rate, it's hard to give you a run rate, what I would tell you is that there are 2 -- besides the sales that we do and book in our books, there are 2 other criteria. One is we can use the IQVIA data, and one is what we also get from our distributors is sell-out data.
So both of these indicators are pointing towards a 15% type of growth. So if you look at the branded generics business, which is the bulk [indiscernible] business. IQVIA is showing a 15% growth for Torrent compared to a 9% growth for the market. And if I look at the sell-out data, I see a similar trend. So what I can tell you is that the underlying trend is healthy double-digit growth and that is what we should see things balance out over 2 or 3 quarters. So quarter-on-quarter, it changes because of what has been invoiced, what have been received inventory management on the part of distributors. But over an annualized basis, heavy double-digit growth is normal for business.
Okay. Clear. On the India business, I guess you mentioned around 1.5 percentage point impact on growth due to NLEM so that should stay -- as that should keep impacting the future quarters as in the base will not have that impact, right? So can you highlight as to which products or which therapies were highlighted for -- or were impacted for us?
So our NLEM contribution is just about 10%, right, overall to business. So specific product-wise, I don't have the exact details, but whichever products have been impacted, the price, one-time reduction has been factored into Q1, which will no longer continue from Q2. So it was a one-time impact.
Okay. Got it. And lastly, on Curatio. Also, you mentioned a significant headroom for margin improvement. So any targets in mind as to by, say, in 1 year or 2 years, you would want to reach the India base business margin levels?
So it will all depend on the growth trajectory that the business shows. So no real kind of hard target that we have set. But directionally, we do believe that the performance so far gives us confidence that this can reach out near our base business margins. Whether it's 2 years or 3 years, that's something that we haven't really put in as a target. But directionally, all we can share is that it's all on track.
The next question is from the line of Neha Manpuria from Bank of America.
On the India business, if I were to -- given we also have contribution from generics, if I go to just some numbers and adjust that, is it fair to assume that the domestic formulation business is growing below the 8% run rate. That seems particularly low given what we are seeing from some of our other peers that are reporting. Just wanted some color on what we think will be the ex-Curatio growth for the branded business in India.
I don't know which 8% is being referred to, but base business growth is above double digits and maybe trade generics adds 0.5% or so to that growth. So if you break it down from the 16%, 0.5% is contributed by trade generics because the beta is small, so the growth is faster and Curatio is adding about 5%.
Yes sir, but that does not include the NLEM impact, right?
No, that does not. That's right. So when we look at without adjusting for the M&A impact, it's about 16% growth, whereas the reported growth is 14.5%.
So that's what my point that if I -- on the 14.5%, if I were to adjust Curatio and adjust the trade generics, the growth seems probably closer to 8.5%, 9%, probably not 8%, so 8.5%, 9%. Given our chronic exposure and the fact that we are gaining market share, doesn't it seem particularly low? Or is this the growth that we should be building in for the base business?
So that's what I mentioned that because our gastro business has such a high contribution, that market was slightly weaker in this quarter, which should hopefully recover in the coming quarters. Chronic business was not really impacted in that sense. So it's a matter of seasonality, which should hopefully bounce back.
Understood. So then for the full year, we should still assume higher than market growth for the branded generic business.
That's right. That's right.
Understood. And Sudhir, on the other expenses, sorry, if I missed this number. Was there any one-off in the quarter?
No, no one-off Neha.
So this is the base that I should be building going forward. It seems to have jumped pretty significantly quarter-on-quarter.
Yes, it was INR 620 crores in quarter 4. Now it is INR 651 crores. So INR 30 crores more year.
The next question is from the line of Tushar Manudhane from Motilal Oswal.
So just on the India business, if you could also highlight about the business breakdown in terms of the tier of cities, say Tier 1, Tier 2, Tier 3? And how has that changed over, say, last 5 years?
That's a number that I don't have right now. But directionally, what we can share is that our metro contribution is much higher than industry average. And Tier 2 to 6 is lower than industry average because we historically haven't had the coverage and presence in those regions. But in some divisions and certain brands where as part of either lifecycle management or routine expansion, we are entering into these areas, particularly covering GPs that we have not covered before. So that should help us increase our contribution from Tier 2 to 6 as well going ahead.
Understood. Sir, particularly here, the thought process was that once the super specialist prescribed and automatically the Tier 2, Tier 3 cities doctor sort of get acquainted to that prescription, and that is how it drives the business without much of the marketing spend. So do you see change in this philosophy? Or it is more like the Tier 2 doctor have also got certain super specialists where it becomes more important for MR to reach out.
Yes, I would say the latter because already, there is an increasing presence of the industry in these regions. So to grow that further, you definitely need your presence and reps on the ground.
Okay. So from that perspective, then scope to add MRs, particularly to expand the reach or existing MRs, is sufficient to drive that.
For now, we don't see any expansion need because already in the last 12 to 18 months, we have added more than 1,000 MRs that some of it is for regional expansion as well. So it's already covered. As we see some progress in PCPM and sales growth in those regions, maybe next year onwards, we can look at further expansion.
The next question is from the line of Sriraam Rathi from BNP Paribas.
Just one question on Revlimid. I mean if you can indicate, I mean, when are we planning to launch, will it be FY '24 opportunity for us or not?
I'm sorry.
Revlimid, Revlimid.
For which market?
For the U.S.
No, no. So right now, it's not an opportunity for us in the '23-'24 or '24-'25 time frame. So we are a late launcher.
The next question is from the line of Bino from Elara Capital.
Just a follow-up on Revlimid. Would you be launching it at all [indiscernible] when it becomes completely [indiscernible] after that?
No. So we have a settlement. So before us, there will be all these limited quantity launches. So we will see the state of the market when we come to market. So we have the approval already from the FDA. We have tentative approval -- I mean we have approval on 3 of these kinds. So I think the only barrier to us is the settlement date, which we've not disclosed the factory when it is. So yes, we'll be coming to the market. But it will still be a -- most of the people before us would be the limited quantity folks.
Okay. So when you launch, you are not limited by any quantities.
We haven't disclosed exactly the terms of the settlement.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Sanjay Gupta, Executive Director, for closing comments. Thank you.
Thank you very much for attending our call today and we look forward to hearing from you soon. Thank you. Bye-bye.
Thank you. On behalf of Torrent Pharma, we conclude today's conference. Thank you for joining. You may now disconnect your lines.