Torrent Pharmaceuticals Ltd

NSE:TORNTPHARM

Earnings Call Analysis

Torrent Pharma sees growth in India and Brazil, faced challenges in the US

In Q1 FY '25, Torrent Pharma reported a 10% increase in revenue to INR 2,859 crores, driven by strong performance in India and Brazil. India's revenue grew by 15%, supported by cardiac and anti-diabetes divisions. Brazil saw an 8% revenue growth in constant currency despite floods impacting primary sales. Conversely, U.S. revenue declined by 13% due to a high base last year, though Torrent aims to return to profitability through upcoming product launches and addressing FDA observations. Gross margins are expected to be sustainable at 75%, and the overall leverage now stands at 0.65. The company remains focused on expanding branded generics and exploring new licensing opportunities .

Strong Performance and Challenges in Branded Markets

In the first quarter of FY '25, Torrent Pharma continued to show strong performance in its branded markets, particularly in India and Brazil. India's revenue grew by 15%, driven by chronic business growth in cardiac and anti-diabetes sectors. However, Brazil faced challenges due to a flood in one province and a 5% currency depreciation, temporarily impacting primary sales while secondary sales kept growing in double digits .

Financial Overview and EBITDA Margins

Torrent Pharma reported a revenue of INR 2,859 crores, marking a 10% increase year-over-year. The operating EBITDA saw a 14% rise. The EBITDA margins, accounting for a one-off expense of INR 20 crores, stood at 32.3%. The company's leverage improved, with net debt to EBITDA now at 0.65 .

Expanding India Business

Torrent's India business is outperforming market growth, with several significant developments. Field force strength stood at 5,700 by the end of the quarter, contributing to increased productivity. New product launches, particularly in chronic therapies, are expected to drive growth. Torrent commercialized Vonoprazan, under a licensing agreement with Takeda, becoming the first in the market with this product .

International Market Performance

Brazil saw a year-on-year revenue growth of 8% in constant currency terms, despite challenges. Torrent plans to launch 5 new products this year and maintains a strong pipeline awaiting approval. In Germany, revenue grew by 9% due to cost optimization and new tender wins. In the U.S., revenue was stable sequentially but registered a 13% decline year-over-year due to high base effects and site inspection issues .

Guidance and Future Prospects

Torrent Pharma expects sustained revenue growth, driven by steady contributions from its existing markets and new product launches. In India, revenue growth is anticipated to stabilize around 13%-15% for the remainder of the year. The company aims to maintain gross margins at around 75% and improve overall profitability, especially in the U.S. with new product approvals expected in the forthcoming quarters .

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to Q1 FY '25 Earnings Conference Call of Torrent Pharma Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sudhir Menon, Chief Financial Officer and Executive Director of Finance. Thank you, and over to you, sir.

[Sudhir Menon, executive]

Thank you. Good evening, and welcome to the first quarter earnings call for FY '25. We continue to see strong performance in our branded market. Our 2 largest branded markets, India and Brazil, both have done well.

Brazil, while secondary sales continue to grow in double digits, primary sales got impacted this quarter due to flood in one of the provinces. And therefore, quarter 2 should normalize this impact. The second impact, which Brazil had was on the currency depreciation of around 5% for this quarter. On the generic side, Germany continues to grow well. U.S. on a rolling quarter basis is consistent, while it has registered a degrowth due to a high base last year.

In terms of the key financial performance indicators, we have a revenue of INR 2,859 crores, up by 10%. The operating EBITDA is up by 14% Y-o-Y. Other expenses include one-off of INR 20 crores. And adjusted for this, the underlying operating margins are INR 924 crores and the EBITDA margins are at 32.3%. The overall leverage, which is the net debt to EBITDA, now stands at 0.65. I'll now hand over the call to Aman for India business.

[Aman Mehta, executive]

Thanks, Sudhir. India revenues at INR 1,635 crores registered a growth of 15%. As per the AIOCD secondary market data, the IPM growth for the quarter stands at 8% Torrent's chronic business grew at 14% versus the IPM's chronic business growth of 8%, driven by strong revival in our cardiac divisions and continued traction in anti-diabetes new launches. Torrent has entered into a nonexclusive licensing agreement with Takeda and has commercialized Vonoprazan during the quarter.

Our brand [ CAB-V ] of Vonoprazan was the first licensed product to be launched in the market and is ranked #1 as of June 2024, based on the AIOCD [ data set ] . The initial response of the molecule seems quite promising. This marks our third licensing deal in the recent quarters, and we continue to scout for similar opportunities, which can bring more novel treatments to the Indian market.

Field force strength at the end of the quarter stands at 5,700. We continue to see PCPM improvements in recently expanded divisions. Overall, PCPM for the India business during the quarter stands at 9.4 lakhs, and we are confident of crossing the 10 lakh PCPM mark once again in the next year. At the end of quarter, Torrent has 20 brands in the top 500 of the IPM, with 18 brands more than INR 100 crores sales as of MAT June 2024.

We expect the India business to continue outperforming the market growth. Our focus during the year will remain on improving our market share in chronic therapies, new launches, improving field force productivity in expanded divisions and regions and continuing the scale-up of the Consumer Health portfolio.

I will now have to Mr. Sanjay Gupta for the International business.

[Sanjay Gupta, executive]

Thanks, Aman. We will start with our branded generics market of Brazil. As per IQVIA, market growth was at 11% for Q1. Secondary, sales growth for Torrent was at 12%. Based on internal sales, Q1 constant currency revenue was BRL 123 million, registering an 8% year-on-year growth. We would be launching 5 products during the rest of the year. Going forward, we intend to maintain about 3 to 6 launches per year. And currently, we have 19 molecules waiting for ANVISA approval.

In Germany, constant constancy revenue were EUR 32 million, up by 9%. During the quarter, we won incremental new tenders, which will start delivering incremental sales from Q3 and Q4 of '24, '25. For the last 5 quarters, we have increased our overall value of wins in tenders. This is, in large part, due to cost optimization efforts, which has led to increased competitiveness in the tender segment.

Our overall share of the German generic market is increasing steadily quarter-on-quarter and currently stands at 6.1% for the quarter, with Torrent ranked #5 in Germany in the overall generics business.

In the U.S., we registered constant currency revenues of USD 31 million, down by 13%. Adjusted for one-off income in Q1 of the previous year, constant currency de-growth is 9%. Sequentially, U.S. business delivered stable revenue, backed by new contracts. During the quarter, U.S. FDA inspected our manufacturing facility at Indrad. And at the end of the inspection, we got a Form 483 with 5 observations. Torrent has responded to the U.S. FDA within the stipulated time, and we expect to hear back from the FDA in the next 90 days.

I would like to conclude by stating that our focus will remain on deepening our presence in the branded generic markets of Brazil, Mexico, et cetera, while continuing to grow in Germany and returning to profitable growth in the U.S.

Yousuf, we can open the call to questions now, please.

[Operator]

[Operator Instructions] First question is from the line of Neha Manpuria from Bank of America.

[Neha Manpuria, analyst]

Aman, my first question is on the India business. We saw 15% growth in this quarter, which seems pretty strong, given we already have Curatio in the base. Could you give us some color on how we should assume growth for the India business? Is this growth rate stable? And also, any color that you can give us on the Curatio asset that now it has been fully integrated, what's the traction that we are seeing there?

[Aman Mehta, executive]

Yes. So the breakup of the 15% growth roughly based on the AIOCD data for the quarter is 2.5% volume, 8.5% price and 4% new products. This is all fully organic driven because Curatio is in the base. The Curatio business grew at 19% during the quarter. So it's seeing continued high-growth traction in almost all the top brands.

In terms of margins of the Curatio business, also, we see consistent improvement now quarter-on-quarter. So in terms of acquisition integration, I believe we are on track or even slightly ahead of where we anticipate it to be as the growth momentum should continue.

Going ahead, depending on how the market growth plays out, 15% was a Q1 growth, but I think somewhere between 13% or low-teens growth for the rest of the year should be doable.

[Neha Manpuria, analyst]

Understood. That's helpful. And Sudhir, on the margins, gross margin expansion, again this quarter, was pretty significant, if I look at it from a quarter-to-quarter, year-on-year perspective. How much of this is sustainable? Is that -- is this the level we should be able to maintain? I understand there's some mix benefit because of higher India growth this quarter. And also, if you could give us some color on what the INR 20 crore one-off was related to?

[Sudhir Menon, executive]

Yes. So I think from a gross margin perspective, Neha, last year, if you look quarter-on-quarter, it was between 74.5 to 75, which I believe is something which should be sustainable. So 75 should definitely be sustainable, right?

The additional 0.7 which we got in this quarter, probably because India has done much better and the branded segments have done better than the generic segment, possibly attributable to that. But I think definitely, 75 is something that should be possible for the full year, is what I believe.

The INR 20 crores one-off expenses pertains to one of the potential international opportunities, which we were evaluating and finally didn't materialize,actually. So that's the expenses which [ pertains to quarter 1 ].

[Neha Manpuria, analyst]

Okay. Got it. And sorry, if I may squeeze in one more. I know I might sound like a broken tape here, Sudhir. But, capital allocation, how should we think about it?

[Sudhir Menon, executive]

I think the way you should look it, Neha, is that FY '26, I think I should be net cash, right? And therefore, whatever EBITDA generation or cash flow generation is happening, that would await capital allocation to be done, right? And I think acquisitions have been an integral part of our growth story. And that's something which we will continue to pursue as long as we believe that it's going to create a long-term shareholder value.

[Neha Manpuria, analyst]

And given that you mentioned we -- there was an international opportunity that we were pursuing, it's fair to assume that we are also open looking at larger deals outside of India? And which focus markets would these be in then?

[Sudhir Menon, executive]

Yes. I mean, if it's a good asset, Neha, definitely, yes. But provided everything fits into the international framework which we follow, right, in terms of creating value.

[Operator]

[Operator Instructions] Next question is from the line of Damayanti Kerai from HSBC.

[Damayanti Kerai, analyst]

My first question is on the U.S. business. So quarter-on-quarter, it's broadly stable. So just wanted to understand how supplies from Dahej plant is picking up? Because Indrad is yet to clear. So I assume when we got clearance for Dahej, there was expectation of better pickup to happen here. So some color on the U.S. business, please.

[Sanjay Gupta, executive]

Correct. So -- and I see the supplies from both Indrad and Dahej have been stable, right, because our current business was not impacted by any of the FDA actions. So what we are seeing now is a lot of [ site ] transfers are getting approved from Dahej. So gradually, the products which we were made at Indrad are now being made at Dahej. So the volumes have remained about 4 billion pills a year. And the mix is changing with Indrad coming down and Dahej ramping up appropriately.

[Damayanti Kerai, analyst]

So are we expecting like run rate to pick up slightly better than what is the trend in the last 2 quarters or so?

[Sanjay Gupta, executive]

No, that will depend upon new approvals, right? So we are expecting some new approvals to start coming in, hopefully, also from Indrad. We have some good filings from Indrad, which are still left in our portfolio. So as soon as the approvals start coming in, that will lead to a change in the base of business. It's not really linked to supply -- we don't have supply constraints in terms of capacity constraints.

[Damayanti Kerai, analyst]

Sure. And you mentioned one of the objectives for this year is to grow profitability of U.S. business. So right now, it's profitable or like it's a loss-making segment?

[Sanjay Gupta, executive]

I'll let Sudhir answer that. Sudhir?

[Sudhir Mehta, executive]

Can you repeat the question, Damayanti?

[Damayanti Kerai, analyst]

I was asking one of the objectives, which you mentioned in your opening remarks, is improving profitability of the U.S. business. So currently, I just want to understand whether it's profitable or it's a loss-making segment.

[Sudhir Menon, executive]

So pre-R&D expenses, we have breakeven -- kind of a breakeven for the U.S. business. And that's what Sanjay was implying that we want to move towards a profitable path, as far as U.S. is concerned, post-R&D.

[Damayanti Kerai, analyst]

Sure. And my second question on India business. So on the Consumer Health segment, if you can just talk about the progress in key brands. And what kind of marketing and promotional expenses you intend to incur for the brands there?

[Aman Mehta, executive]

So the key brand, which is Shelcal-500, has grown at 17% for the quarter. And again, this may not entirely reflect in the external data sets, given that it has a different set of [ stocks ]. So this is the internal number of the Consumer plus Rx growth of the brand.

We think high-teens growth looks sustainable in the next few quarters. We are continuing our base level of advertising spends and retail activation. The overall spends this year in Consumer are slightly higher than last year. So I think -- but what's there in this quarter should remain similar in the upcoming quarters in terms of percentage of spends.

[Damayanti Kerai, analyst]

Okay. So A&P will broadly remain at the current quarter level, going ahead? And then, you intend to go like top line by better engagement, et cetera?

[Aman Mehta, executive]

That's right. Broadly similar. Based on seasonality for some products, there may be some higher spends by INR 5 crores to INR 7 crores in a quarter, for example, but that shouldn't be too material. Broadly, what's captured right now is the rest of the year A&P spends.

[Damayanti Kerai, analyst]

Okay. And Consumer is what percentage of India business right now, in terms of value contribution?

[Aman Mehta, executive]

So we had mentioned last time also that we don't look at this separately in terms of contribution to sales because it's part of the Rx business and Consumer. So we look at the spends separately, but the overall top line is seen as one business together. This is essentially capturing Shelcal, Tedibar, Ahaglow and Unienzyme, which are the 4 key brands.

Shelcal-500 is somewhere in the vicinity of INR 300 crores, Unienzyme is about INR 150 crores. Tedibar is close to INR 140 crores, INR 150 crores. And Ahaglow is about INR 80-odd crores. This is the kind of broad base that we have. We are looking at maybe adding one more product towards the end of the year as well to this.

[Operator]

[Operator Instructions] Next question is from the line of Tushar M. from Motilal Oswal.

[Tushar Manudhane, analyst]

Am I audible? Sir, just on the Germany business, if you could -- while already highlighted in the comments that you would pick up in the coming quarters. But broadly, what kind of sort of growth for FY '25 one should think about for Germany business?

[Sanjay Gupta, executive]

So Germany is, usually, in the range of mid- to high single digits. So if we keep winning tenders, it will be towards the high single-digit growth rate.

[Tushar Manudhane, analyst]

And also on Brazil, while I missed the opening remarks, wherein the floods have impacted, say, Q1. But let's say, on a full-year basis, how to think about the growth, given that we have a good number of launches plus an interesting launch, in 2Q of FY '25?

[Sanjay Gupta, executive]

So Brazil, in previous calls also, we've highlighted that the long-term trend is similar to what we see in IQVIA. So if [ timely ] sales tend to be lumpy, depending upon issues that crop up from time to time, channel inventory, et cetera, but over a period of 2, 3, 4 quarters, we've seen that Brazil has always grown in line with IQVIA trends. And currently, IQVIA is showing us MAT and a quarter growth of about 12% for Torrent.

So I would say that this is a good indicator of where we are with our business currently. So I would say between 12%, 13% is the underlying growth rate for our Brazilian business.

[Operator]

[Operator Instructions] Next question is from the line of Saion Mukherjee from Nomura Securities.

[Saion Mukherjee, analyst]

Just one question on the acquisition. So if you're looking at international markets, are this -- are you interested in new markets? Are you looking at branded piece like what yo have in Brazil? Or you would be interested in generics and some sort of technology acquisition? What are the areas that would interest you at this point?

[Sudhir Menon, executive]

In branded, definitely, yes, right? I mean -- but we're not restricting looking at assets with only branded focus. If there are some good assets, which are even in the generic segment, it's something which we would look at and then decide whether we want to go that way or not. But branded, definitely, is the priority.

[Saion Mukherjee, analyst]

Okay. And would that be in the markets you already have presence, like Brazil, Mexico? Or you could look at completely new markets, where you would sort of set your base?

[Sudhir Menon, executive]

Yes, I mean a combination of both, right? I mean, new market, definitely, yes. And even within the existing market, if there are entry possibilities in terms of the other therapies where I'm not present, that's something which is also open to [ perceive ].

[Saion Mukherjee, analyst]

Okay. The next question would be to Sanjay. Sanjay, I mean, I think a few quarters back, you mentioned U.S. business, once the facilities are cleared, ramping up to 250 million or 200 million kind of an annualized revenue in 2 years or so. How do you assess that at this point? Do you think that's still achievable?

[Sanjay Gupta, executive]

So honestly, it depends upon the ANDA approvals that we get, right? So far, we've seen the first wave of approvals from the [indiscernible] come in, but they have been more on the site transfer approval rather than new ANDA approvals. So I think I was expecting about 7 to 8 approvals this year, most of them in the next 3 quarters.

So depending upon how it goes, we have a couple of expectation as for a couple of oncology approvals, some approvals, which could have an upside in terms of lesser competition. So that will drive the sales growth. So I would still expect between 5 to 10 approvals this year that would propel us forward. And next year onwards, it should be a higher rate.

[Saion Mukherjee, analyst]

And the limited competition opportunities you expect in this fiscal or next fiscal?

[Sanjay Gupta, executive]

I would expect in this fiscal. But again, you don't have it until you have it, right? So there are other people also trying for the similar opportunities. So we'll see who comes out ahead.

[Saion Mukherjee, analyst]

Okay. Good. And just one last question. Can you share your R&D number? And also, what's the expectation? Or what is it that you are factoring in as a full-year spend?

[Sudhir Menon, executive]

So currently -- so it's around 5%. And I don't think it's going to be materially different for the full year. So I think 5% is a number for this year.

[Operator]

[Operator Instructions] Next question is from the line of Sumit Gupta from Centrum Broking.

[Sumit Gupta, analyst]

Sir, in the domestic market, what is the MR count currently? And by FY '25, how much do you plan to take it to?

[Aman Mehta, executive]

The MR number in Q1 was 5,700. And we had mentioned last quarter that we expect maybe 300 to 400 reps addition by the end of the year.

[Sumit Gupta, analyst]

And sir, second question is on the tax rate. So you still maintain 25% tax rate for the FY '25?

[Sudhir Menon, executive]

No, FY '25 should be around 30%, the same as quarter 1. And maybe from second year -- I mean, from next year, I should start getting into the new tax regime from India perspective. So overall tax could be around 26%, 27%.

[Operator]

[Operator Instructions] Next question is from the line of Vibha Ravi from Citeline.

[Vibha Ravi, analyst]

Am I audible? So I just wanted to know what is the acquisition strategy going to be going forward? Whether the company will be looking at brands via slump sale? Or is it also looking at stake acquisitions from, say, promoters or from [ PE ] firms?

[Sudhir Menon, executive]

I think it's a very complex question. I think all along what we've done, the acquisitions which we have done are either a business transfer through slump sale and company acquisition, which was the recent one, right, Curatio, which we did. So all combinations are open, I would say. I think thinking would be more in getting 100% stake or whatever we plan to acquire.

[Operator]

Next question is from the line of Bansi Desai from JPMorgan.

[Bansi Desai, analyst]

My first question is on Indrad. We did see observations, and a couple of them were repeat in nature. So how should we think of resolution time frame for this particular plant of ours?

[Sanjay Gupta, executive]

We would expect a response in the October time frame from the FDA. And we think there's a high likelihood that the FDA would approve the plan and the plan would be VAI or NAI. But we'll still like to wait and see because there were 5 observations, and so we cannot be sure that will be 100%.

[Bansi Desai, analyst]

Okay. But response has gone from our side, and we are now awaiting FDA to kind of comment on that.

[Sanjay Gupta, executive]

Correct. There is a little more heavy procedure for a plant with the baggage that Indrad has for it to be reviewed inside the FDA and for the [ status ] to be changed. So it is a higher level of approval, I think, so it takes some time, yes. But by October, it should be there.

[Bansi Desai, analyst]

And my second question is on Curatio. You mentioned that even quarter-over-quarter, we have seen improvement in profitability there. Do we still have scope of improvement in that asset?

[Samir Mehta, executive]

Yes, we do. Still some way to go.

[Operator]

Next question is from the line of from Tushar M. from Motilal Oswal.

[Tushar Manudhane, analyst]

Sir, just on price hikes in the India market, we've seen now almost 3, 4 years where similar kind of price hikes have been taken at the portfolio level. Just like to understand how sustainable this is in terms of subsequently having the growth in [ VF ] business based on the price hike.

[Aman Mehta, executive]

Yes, it's been broadly in this range last couple of quarters and possibly should be okay in the next couple of quarters as well beyond that. We don't have exact visibility, but should not be materially different. Some quarters here and there, there's a bit of a mix change, so reflection sometimes is higher, lower. But the 6.5% to 8% price growth is what I think should be -- should continue.

[Tushar Manudhane, analyst]

Is it largely on the single set of the products within the portfolio, if you could clarify?

[Samir Mehta, executive]

Similar set meaning?

[Tushar Manudhane, analyst]

As in the [indiscernible], let's -- we -- of course, as a portfolio across the therapies, there are different brands and products. Like, let's say, over past, let's say, 2 years, the kind of price hikes you have taken is broadly for the same set of products or brands or it's different in different years?

[Aman Mehta, executive]

Well, it would be different across years, depending on competitive situation. Every year, we take a [ call in ] based on overall absolute pricing also, sometimes that takes -- we decide whether to take an increase or not take an increase. So I would say it's very varied every year.

[Tushar Manudhane, analyst]

And just lastly on the U.S. generics. While the sales have been pretty stable quarter-over-quarter, but any comment on the price [ revision ] on the base [ products ]?

[Sanjay Gupta, executive]

Similar to previous quarters, I would say, mid-single-digit type of price [ revision ] continues. And now we are able to compensate for it by increased market share and some small launches here and there.

[Tushar Manudhane, analyst]

And do you still continue to see the API prices falling for your U.S. generics portfolio per se?

[Sanjay Gupta, executive]

Sudhir, you want to comment on API prices?

[Sudhir Menon, executive]

We don't see any material impact on the API prices from our perspective.

[Operator]

[Operator Instructions] We have our next follow-up question from the line of Neha Manpuria from Bank of America.

[Neha Manpuria, analyst]

Aman, on the India business, if you were to hear the commentary and the strategy of some of the peers in the industry, everybody seems to be focusing on the chronic business. And we still see Torrent doing really well in the chronic segment.

One, have we changed the approach of how we are continuing to gain market share, given competition? I know competition has always been there. But has there been any change and therefore, change in the way we look at the India business strategy? And is there a risk that either trade generic or the new competition could slow that growth in the chronic business? Just your views on the -- our chronic growth versus the competition.

[Aman Mehta, executive]

Yes, there has been a change, I would say, because obviously, last couple of years, everyone in the market has been focusing more on the chronic side. So there has to be a response to kind of counter that or ensuring that at least we don't lose market share and try to gain market share.

And a lot of that has been addressed through the expansion activities that we have undertaken over the last 12 to 18 months, which I believe are now showing meaningful results. So that, particularly in the cardiac, diabetes side; are looking [ positive ] at the moment.

Another thing on the [ cardiac ] side, particularly, if you recall, we had a high dependence on [ Losar ]. [ Losar H ] was our #1 brand, is still the #1 brand. And there has been a systemic kind of approach to derisk our cardiac portfolio from Losar because it's a very low-growth brand now because it's a less preferred molecule. We now have adequate growth engines in place to kind of derisk Losar completely, so that it doesn't affect our overall cardiac growth.

So Losar is our #1 rank brand right now. I think in the next couple of quarters, it will drop down the rank because there are brands growing significantly faster. And next year, I think Losar should be down to rank #3. So all these are the measures that we've taken to this -- counter the recent changes in the market. And we believe this is a sustainable level of growth in the chronic side, at least, within 1% or 2% should be okay to sustain.

[Operator]

Next question is from the line of Praful Bohra from Incred.

[Praful Bohra, analyst]

The 12% to 13% growth that you mentioned in Brazil, this is in constant currency for the reported [ quarter ]?

[Sanjay Gupta, executive]

No, constant currency.

[Praful Bohra, analyst]

Yes. So the recent movement in Brazilian real, it's almost [ sum ] of from [ 16.5 ] to 14.9 How does this impact our overall growth numbers in [ margins ]?

[Sudhir Menon, executive]

So for quarter 1, we have -- so I think -- so while revenues go down in terms of INR, the expenses also go down similarly, right? And therefore, to the extent of the profitability which Brazil has, that could be the impact, which would be seen from a bottom line perspective. And Brazil today, for us, is 10% of our revenue. That's the way to look at it. So the impact would not be significant.

[Operator]

Next follow-up question is from the line of Vibha Ravi from Citeline.

[Vibha Ravi, analyst]

This is with relation to Takeda, who [indiscernible] -- can you hear me?

[Sudhir Menon, executive]

Yes, we can hear you.

[Vibha Ravi, analyst]

Right. So this is with regard to the Vonoprazan [ deal ]. Since Takeda is now licensed to others like Zydus and Dr. Reddy's, so do you expect your growth trajectory, you spoke about positive response on launch. But how do you expect this trajectory to be affected?

And second question is also in continuation kind of to what Neha has asked earlier. So do you expect -- you also spoke about more licensing deals. So do you expect them to be in the same areas that you're already currently strong? Or are you looking at certain white spaces where you would like to grow?

[Aman Mehta, executive]

Yes. So the Takeda license was always nonexclusive. So there was always the likelihood of more players coming in. it should not materially change the trajectory of our current brand. There may be some loss of market share, but the absolute value should be quite reasonably good, I would say, for the year.

Wouldn't want to comment as of now on what the annual sales could look like as its only been 1 month of launch, 1.5 months of launch. Maybe next quarter, we can share some light on that. But as of now, we remain ranked 1 in the market.

In terms of licensing deals, we prefer to add in our existing therapy areas, but we haven't restricted it to that. So if there is any new interesting opportunity in a noncore focus area, that's something also we are open for as well.

[Operator]

Next question is from the line of Aarti Rai from Equentis Wealth Advisory.

[Aarti Rai, analyst]

I just had a question around the margin. So during the last quarter, Q4, you did mentioned that there's a possibility of a margin expansion, say, around 50 to 100 basis points. This was post, I mean, factoring for the Consumer Health business, the spends around that. And U.S. being a very important driver at top and bottom line.

So does that still hold true? Or there have been some changes there with respect to the margin expansion that we're looking at, for the full year?

[Sudhir Menon, executive]

No, no. I think the guidance given holds true. So on a full-year basis, you should see that margin improvement happening.

[Aarti Rai, analyst]

So given -- I mean the question comes in light there, U.S. sequentially remains flat. So -- and that was supposed to be one of the key drivers as well.

[Sudhir Menon, executive]

Yes. So I think for the subsequent quarters, you'll see some of the other launches coming in, as far as U.S. is concerned. So at least that should drive positively to the overall performance of the company. That is what was implied earlier.

[Operator]

[Operator Instructions] Next follow-up question is from the line of Sumit Gupta from Centrum.

[Sumit Gupta, analyst]

Sir, just one clarification on the U.S. business. So you said that you expect the U.S. business to be profitable post R&D. So by when? Is it next quarter? Or like can you please [ repeat ] the timeline?

[Sudhir Menon, executive]

I think I cannot predict that because it all depends upon the new product launches, which will span over the next 2 or 3 years. And depending upon what kind of revenue sizes we have on all those product launches, it will depend when we can be reaching the profitable zone.

But I think the indication for U.S. is that so long, we didn't have any new product launches, so it was quite negative on the overall performance, from U.S. But with the new product launches coming in, at least from an overall performance perspective, U.S. is going to be positive. I think that's the way to look at for the next 2 to 3 years.

[Sumit Gupta, analyst]

And sir, for the next 5 to -- or the over 5 to 10 approvals that you were targeting, so it will be including oncology, right?

[Samir Mehta, executive]

Correct.

[Sumit Gupta, analyst]

And so apart from oncology also, are there other therapeutic areas, significant therapeutic areas?

[Sudhir Menon, executive]

Yes. I mean it's a diversified portfolio. And as you said, one of the therapeutic areas, oncology, which will play out.

[Operator]

Next question is from the line of Shrikant from Nuvama.

[Shrikant Akolkar, analyst]

Just one question on the domestic portfolio. The 2 products that we have in our portfolio, Unienzyme and Vizylac, both have been doing quite well. And in fact, in the ongoing quarter, we have done quite a strong growth. So if you can explain what is happening here? And how should we look at the future for these 2 products?

[Aman Mehta, executive]

Yes. I think this quarter was higher growth than the usual run rate, probably because also, particularly in Vizylac, last year, the acute season was a bit weak in Q1. So this year, I think that has kind of normalized. But going ahead, both Unienzyme and Vizylac, we believe lower-teens growth is what should be doable.

[Operator]

Next question is from the of Abdulkader Puranwala from ICICI Securities.

[Abdulkader Puranwala, analyst]

Just one question. In your earlier remarks, you mentioned that Losar will slip to #3 next year. So could you highlight which are the brands in the cardiac portfolio, which is growing faster? And when you're talking about derisking the entire cardiac portfolio, I mean going ahead, how should we look at it from a new product launches perspective? That's all.

[Aman Mehta, executive]

The [ data ] of sharing the brands once this rank change happens for comparative reasons, but there are adequate levers in place to at least ensure that the Losar-related slowdown in the cardiac portfolio doesn't really remain a concern anymore.

There are at least kind of 4 to 5 different brands that have been selected and targeted over the last 12 to 18 months for this purpose. And those markets are all kind of future growth markets, where we have a very strong market share position.

In terms of new launches, currently, nothing significant is expected in cardiac specifically. Some of the launches that we did last year were anticipated to do well, but somehow have not picked up in terms of prescriptions. So they may take a longer period. And that's usually the case in some of these niche molecules, they take time to get a prescription traction. So not much of new launches in cardiac, [ right ]? It will be more of the existing brand that should drive the growth.

[Operator]

[Operator Instructions] Next follow-up question is from the line of Vibha Ravi from Citeline.

[Vibha Ravi, analyst]

Please forgive me if you answered this question earlier, but at least I didn't hear it on this call. So the 10G plan [ ports ] to begin commercial production from the first quarter -- from this quarter, right, Q1 FY '25? So has that happened, if you can give us an update on that? And second is, what is the reason of transferring antibiotic and -- move on antibiotic business to [indiscernible] India?

[Sudhir Menon, executive]

No, I think your voice is not audible, clearly. I mean can you repeat the question?

[Vibha Ravi, analyst]

Yes. I said please forgive me if you answered this question I'm asking right now earlier. But the [ penicillin ] plant was to begin commercial production in the first quarter which is the quarter you're talking about, right? Has that happened, if you could give us an update on that? And second...

[Sudhir Menon, executive]

Yes, just hold on. I think you've got it wrong actually. I think the penicillin plant to start in quarter 1 was always [indiscernible] Torrent, is what I think.

[Vibha Ravi, analyst]

Please forgive me for the question. Yes, that's it. I don't have a question then. I apologize.

[Operator]

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Sanjay Gupta, Executive Director of International Business, for the closing comments.

[Sanjay Gupta, executive]

Yes. I'd just like to thank you for your interest in Torrent. And we remain available to answer all queries, going forward. Thank you very much. Have a good day.

[Operator]

Thank you. On behalf of Torrent Pharma, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.