Neha Manpuria

Neha Manpuria inquired about the future of Revlimid sales in Q3, the US product pipeline following recent discontinuations, and management's confidence in upcoming biosimilar approvals for Semaglutide and Abatacept.

Answer

CEO Erez Israeli confirmed a reduced but present Revlimid contribution in Q3, highlighted a pipeline of around 100 products with 20 complex generics, and expressed high confidence in the Abatacept BLA submission by end of calendar 2025, noting a CMO strategy for risk mitigation. He also mentioned awaiting Health Canada feedback on Semaglutide and confidence in selling 12 million pens globally.

Neha Manpuria from Bank of America asked about the US pipeline, specifically the timeline for semaglutide approval in Canada, the potential for other high-value launches, and the outlook for gross margins and SG&A costs.

Answer

CEO Erez Israeli stated they are targeting semaglutide approval between October and November for a potential January launch, contingent on IP and regulatory approvals in Canada. He noted the full-year outlook does not assume any other major launches. CFO M V Narasimham projected gross margins to remain at similar levels for the year and guided for full-year SG&A to be in the 28-29% range, not the 30% seen this quarter. Erez Israeli added that a successful semaglutide launch would ensure EBITDA margins remain north of 25%.

Neha Manpuria inquired about the potential impact of U.S. tariffs on generics and APIs, Dr. Reddy's mitigation plans without a U.S. manufacturing footprint, and the flexibility to reduce the cost base post the Revlimid patent cliff to maintain margins.

Answer

CEO Erez Israeli stated the company is preparing for various tariff scenarios by focusing on supply sustainability with customers, adding that a U.S. footprint is desirable but not an immediate priority. CFO Mannam Venkatanarasimham and CEO Erez Israeli explained that post-Revlimid, they aim for double-digit sales growth to outpace expenses, supported by new products like semaglutide, biosimilars, and business development, to maintain their margin targets.

Neha Manpuria from Bank of America questioned the potential scale of the OTC business by fiscal '27-'28, including the role of future M&A, and asked for specific filing and launch timelines for the denosumab and abatacept biosimilars.

Answer

CEO Erez Israeli stated that the OTC business, currently around $320 million, will grow to over $600 million with the Nicotinell acquisition. He noted that reaching the $1 billion mark would require further acquisitions. For biologics, he projected the abatacept filing for the end of calendar 2025 with a launch in late 2026 or early 2027, and the denosumab filing for the end of calendar 2026.

Neha Manpuria inquired about the new Nestle joint venture, asking for the timeline for brand rollouts, revenue ramp-up, and its impact on the existing double-digit growth guidance for the India business. She also asked about the drivers for the high R&D spend, the expected timing for contributions from the complex product and biosimilar pipelines, and the R&D guidance for the next fiscal year.

Answer

CEO Erez Israeli explained that the Nestle JV's revenue contribution will likely be seen post-FY'26 or even post-FY'27, following a period of brand registration and building. This growth will be incremental to the existing India business guidance. Regarding the pipeline, he noted that small molecule contributions are expected in FY'25, while internally developed biosimilars will likely start contributing in FY'27. He guided for R&D spending to be in the range of 8.5% to 9% of sales for the next year.