Ankush Mahajan: So sir, when we say 25% EBITDA margins, that includes gRevlimid also?
Erez Israeli: Like I mentioned before, this is our overall guidance, not for specific products. As you can see, when we launched the product, our margins were higher, so you can do the math.
Ankush Mahajan: Thank you, sir. Thanks you very much.
Operator: Thank you. [Operator Instructions] The next question is from the line of Surya Patra from Phillip Capital. Please go ahead.
Surya Patra: Yes. Thanks for this opportunity, sir. My first question is on the pricing trend that you’ll be seeing for Revlimid. And how sustainable the pricing trend currently that we are having for that because there are multiple grounds of [indiscernible] entry that we have seen. So whether that has impacted the realization put in sale of the product in the recent period.
Erez Israeli: So I’m not going to discuss quantities or prices of this product, as you know, so, sorry?
Surya Patra: Yes. On the pricing front, I’m not asking about this…
Erez Israeli: I just said I’m not going to discuss pricing or quantities of this product. We need to remain confidential to our agreements. And what we can say is that it’s going to stay meaningful products for us throughout the period of the agreement.
Surya Patra: Okay. Then my first question then would be on the domestic formulation business. So obviously, as for your indication that we have taken multiple initiatives to either introduce branded products or to expand qualitative products and the long-term sustaining kind of sustainable growth driving kind of products for the domestic formulation business, but in the initial period, possibly may not contribute much. So if you can give some sense let’s say, over a period of three years from now, what is the fair of revenue mix that you should be seeing for your domestic formulation business?
Erez Israeli: So you can see that we have a flow of agreements that are coming. So what we say that the base business – maybe a step back, the branded generic business that we have in India will grow. This quarter, it grew double digits if you take out the diversions that we had in the same quarter last year and likely that this will continue. On top of it, we started to launch already products. For example, we launched Nerivio and we launched other products that will come, and this will be on top of it. So naturally, the expectation of India is to grow beyond the growth that is expected from the branded generics. Right now, it looks like a very healthy pipeline that is coming up on both the NCEs, the nutraceutical deals that I mentioned, et cetera.
The expectation of both businesses. If you ask about the long term is to be top five in India. If you want an assumption, it’s in the neighborhood of around INR 12,000 crores somewhere in FY2030. But this is obviously a neighborhood that we are striving to be. We believe that this is what top five give or take will be at that period of time.
Surya Patra: Okay. Is it fair to believe, sir, this domestic formulation business is going to be the growth leader for Dr Reddy’s over the next few years. Is that fair to believe?
Erez Israeli: Yes, absolutely. India is a very important market for us, and we want to grow and we want to grow the rank. And it’s a growth engine, but it’s also our main half for innovation on both the back end as well as the front end. And the main place in which we believe that we can bring value because most of the people that are collaborating with us are – have an interest in our brand in India as well as in our go-to-market capabilities.
Surya Patra: Okay. My second question is about biosimilars business in the initiatives and also in collaboration with the R&D you spend that we are likely to have. So whether you have talked about 9% kind of R&D spend guidance for the subsequent period.
Erez Israeli: I mentioned that 20% of R&D is going to biosimilars.
Surya Patra: Okay. And are you indicating in line with the quarterly trends R&D spend as a percentage to sales. This is the kind of sustainable run rate [indiscernible].
Erez Israeli: We believe that is sustainable for us to be in, what I said, 8.5% to 9%. And it could be some fluctuation depends on the timing of the Phase III of the products. But this is – we believe that is sustainable.
Surya Patra: Okay. And so extended question to that on this. So we know that having seen the kind of challenges that is there about biosimilar success in the U.S. business and the kind of upfront investment that you required for each molecule to develop a biosimilar. So what is the kind of a right to success that you do think for your biosimilar status?
Erez Israeli: So I mentioned the time lines before. We decided at the time to skip the products that will relate to market in order to be among the first one to launch the product, and we still hope to do that. The second one is that we are not developing only for the U.S. Obviously, the U.S. is a very important market for us, but we are developing globally. And it’s actually, for us, it’s about U.S., Europe, India and emerging markets. And each one of them on the molecule that we chose is, these are meaningful markets for us.
Surya Patra: Okay. Yes, sure, sir. Thank you.
Operator: [Operator Instructions] The next question is from the line of Madhav Marda from FIL. Please go ahead.
Madhav Marda: Hi. Good evening. Thank you much for your time. Given that India is a core sort of focus market for us over the longer term, just wanted to get your thoughts on any risk that you see from rise of organized pharmacy retailing in this country like it happens in most developed markets that we have seen over the past few years? And rise of generic, generic drugs in the country, which the government has also tried to push last year. Obviously, within shape up. So just your thoughts on some of these factors and how they could play out for the country? Thank you.
Parag Agarwal: So there have been several attempts to make this generic, generic business success. But given the enforcement gaps in quality and concerns about doctors about quality, we feel that the branded generics business will continue for a while. We don’t see any imminent danger of it being commoditized by generics?
Madhav Marda: So given that the organized pharmacies come in doing this solve for the quality angle?
Parag Agarwal: Organized pharmacies are still a small portion of the overall sales. If you look at the market share, it’s probably 12% to 15% range at the most.
