Operator:

Ladies and gentlemen, good day, and welcome to the Quarter 3 FY '25 Earnings Conference Call of Dr. Reddy's Laboratories Limited. [Operator Instructions] I now hand the conference over to Ms. Richa Periwal. Thank you, and over to you, ma'am. Richa Periwal: Thank you. A very good morning and good evening to all of you, and thank you for joining us today for the Dr. Reddy's Q3 FY '25 Earnings Conference Call. We have with us the leadership team of Dr. Reddy's, comprising Mr. Erez Israeli, our CEO; Mr. M.V. Narasimham, our CFO; and the Investor Relations team. Earlier today, we have released our results, and the same is also posted on our website. We will kick off today's call with MVN taking us through the financial highlights of the quarter. This will be followed by Erez sharing his thoughts on business performance, post which we'll open the forum for Q&A. Please note that today's call is a copyrighted material of Dr. Reddy's and cannot be rebroadcasted or attributed in press or media outlet without the company's expressed written consent. This call is being recorded, and the playback and the transcript shall be made available on our website soon. All the discussions and analysis of this call will be based on the IFRS consolidated financial statements. The discussion today contains certain non-GAAP financial measures. For a reconciliation of GAAP to non-GAAP measures, please refer to our press release. Before I proceed with the call, I'd like to remind everyone that the safe harbor contained in today's press release also pertains to this conference call. Now I hand over the call to MVN. Mannam Venkatanarasimham: Thank you, Richa. A warm welcome to all. We continued our growth trajectory and delivered consistent results with a double-digit top line growth and steady margins, while continue to -- continuing to invest in our R&D, innovation and commercial capabilities. This is the first quarter of consolidation of the acquired Nicotine Replacement Therapy business, and this resulted in delivering at again highest ever quarterly revenues and EBITDA in Q3 FY '25 for the company. Let's look at the financial performance of the quarter. For this section, all amounts have been translated into U.S. dollar at a convenience translation rate of INR 85.55, which is the rate as of December 31, 2024. Consolidated revenue for the quarter stood at INR 8,359 crores, which is USD 977 million, a growth of 16% on year-on-year and 4% Q-o-Q. This includes revenues from the acquired NRT business of INR 605 crores. Excluding NRT revenues, the underlying growth is at 7.5% on a year-on-year basis and a decline of 3% on Q-o-Q. Consolidated gross profit margin stood at approximately 59% for the quarter, an increase of 19 basis points over the same quarter of the previous year and a decrease of 91 basis points sequentially. The year-over-year increase was primarily on account of improvement in product mix and manufacturing overhead leverage, partially offset by price erosion. Gross margin for Global Generics and PSAI were at 61.3% and 28.6%, respectively. The SG&A spend for the quarter was INR 2,412 crores, which is USD 282 million, an increase of 19% year-over-year and 5% on a Q-o-Q basis. The year-over-year increase was primarily on account of recently acquired NRT business, investment in the new business initiatives, building the capabilities and higher logistics costs due to increased freight rates. The SG&A spend as a percentage to the sales was 28.9% and was higher by 82 basis points on year-over-year and 15 basis points Q-o-Q basis. The R&D spend for the quarter was INR 666 crores, which is USD 78 million, an increase of 20% on year-over-year and a decrease of 8% on Q-o-Q. The continued investment in R&D was primarily towards development of complex generics and biosimilars. The R&D spend was at 8% of sales and was higher by 25 basis points on year-over-year and lower by 110 basis points on a Q-o-Q basis. We expect the investment to be in the range of 8.5% to 9% for the full fiscal. The EBITDA for the quarter, including other income was INR 2,298 crores, which is USD 269 million, an increase of 9% on a year-over-year basis and flat Q-o-Q. The EBITDA margin stood at 27.5% and was lower by 176 basis points on year-year and 95 basis points Q-o-Q basis. The net finance expense for the quarter is around INR 2 crores as compared to net income of INR 96 crores for the same quarter last year, primarily on account of unfavorable forex impact and lower interest income post NRT acquisition consideration payout. As a result, profit before tax for the quarter stood at INR 1,874 crores that is USD 219 million. EBITDA as a percentage of revenues was at 22.4%. This includes profit before tax from the acquired NRT business of INR 124 crores. Effective tax rate for the quarter was 25.1% versus 24.5% in the base quarter. We expect our normalized ETR to around 25%. Profit after tax attributable to equity holders of the parent for the quarter stood at INR 1,413 crores, which is USD 165 million a growth of 2% on Y-o-Y and 13% Q-o-Q. This is at 17% of revenue. Reported EPS is INR 16.94. But EPS has been derived on the increased number of shares post the stock split and after noncontrolling interest. Operating working capital as of 31, December 2024 was INR 12,782 crores, which is yearly [ USD 1.49 billion ] an increase of INR 716 crores, which is USD 84 million over 30th September 2024. CapEx cash outflow for the quarter stood at INR 709 crores, which is USD 83 million. Negative cash flow for this quarter was INR 209 crores, which is USD 24 million. We have a net cash surplus INR 1,603 crores, which is USD 187 million as of December 31, 2024. Foreign currency cash flow hedges in the form of delivered core as follows: U.S. dollar is hedged through structured delivered USD 285 million for the next quarter at INR 83.9 and USD 681 million maturing over the next financial year with the minimum production rate of INR 85.7 to the dollar, which also allows participation when USD strengthens. RUB 1,903 million with a minimum production rate of INR 0.9 to the ruble maturing in the next 3 months. With this, I now request Erez to take us through the key business highlights. Erez Israeli: Thank you, MVN, and very good morning and good evening to everyone. We have delivered another steady quarter with a double-digit top line growth and EBITDA margins of 27.5% and a return on capital employed of 28%. We remain committed to our stated strategy of strengthening our core generics business while also investing in our future growth drivers, primarily in three areas: consumer health care, access to innovative products and biosimilars. We are focused on driving productivity in research and development, scaling our manufacturing and commercial capabilities and leveraging our market access to capture opportunities while operating efficiently. Following the completion of acquisition of the Nicotine Replacement Therapy business in September, we are now focusing on its seamless integration, which will happen in phased manner starting April 2025. During the transition period, the seller, Haleon, will provide distribution and related services across all markets. In Q3 FY '25 is the first quarter of consolidation of NRT business -- financials. Let me take you through the other key highlights for the quarter. One, double-digit growth in revenue at 16%, with EBITDA margins at 27.5%, ROCE at 28%, USD 188 million of net cash surplus. We launched toripalimab, the first and only immuno-oncology drug approved for the treatment of nasopharyngeal carcinoma. And elobixibat, a first-in-class drug to treat chronic constipation under the brand name BixiBat in India. These launches are in line with our strategy to address issue of availability and accessibility of affordable innovation in India through an in-house and collaborative efforts. We also made progress on our biosimilars journey. We secured the marketing authorization for rituximab in the U.K. and denosumab has been filed in both U.S. and Europe. On the regulatory front, in November, the U.S. FDA completed GMP inspection at our facility CTO-2 in Bollaram, Hyderabad and issued a Form 483 with seven observations. We have responded to the observation within the stipulated time lines. We have integrated sustainability in our business operation and continue to recognize for our focused efforts in ESG. We have placed five globally among pharma companies assessed in the 2024 S&P Global CSA with ESG score of 79 out of 100. We continue to be members of the DJSI World Index for the second year in a row, along with DJSI Emerging Markets Index for the ninth year in a row. MSCI ESG rating has been upgraded to A in December. We continue to feature among NIFTY 100 ESG Sector Leaders. Further, Science Magazine named Dr. Reddy's in the top 20 global pharma and biotech employers for the third consecutive year. Now let me take you through the key business highlights for the quarter. Please note that all reference to these numbers in these sections are in respective local currencies. Our North America generics business recorded revenue of USD 401 million for the quarter, which was flat on a year-to-year basis with sequential decline of 10%. The benefit from volume growth and new launches was offset by price erosion, resulting in the year-on-year growth. Sequential decline was on account of lower sales from products, including lenalidomide. We launched four new products during the quarters, and we closed the full year within 15 to 20 launches. Our European Generics business segment, including -- includes NRT financials from the quarter. Europe recorded revenues of USD 134 million this quarter, a strong year-over-year growth of 142% and sequential growth of 14%. Excluding the NRT, the segment recorded a year-on-year growth of 22% and a Q-o-Q growth of 5%. We gained from the growth in our existing products and new product launches, which more than offset price erosion. During the quarter, we launched a total of nine products across markets. Our emerging market business recorded revenue of INR 1,436 crores in the quarter with year-on-year growth of 12% and decline of 1% on a sequential basis. Year-on-year growth was on account of new products launches in Russia and the rest of the world markets and was further aided by higher base business volumes. We launched 20 new products during the quarter across various countries of the emerging markets. Within this segment, the Russia business grew by 20% year-on-year basis in constant currency. India business recorded revenue of INR 1,346 crores in Q3 with a double-digit year-on-year growth of 14% and sequential decline of 4%. We benefited from the growth in our broad portfolio, including in-licensed vaccine portfolio and new launches. We launched six brands this quarter. As per IQVIA, our IPM rank continued to be at 10 and we outperform the IPM with [ MCT ] growth of 10.3%, while IPM growth was at 7.4%. However, excluding the in-licensed vaccines portfolio, our growth was at 5%. While many of our brands outperformed their respective categories, selected brands in cardiac, intestinal therapy areas witnessed a slower pace of growth. We are poised to return to the market-leading growth in these therapy areas in the coming quarters. Our PSAI business recorded revenue of USD 97 million in Q3 of FY '25, a year-over-year growth of 3% and sequential decline of 3%. The year-over-year growth was primarily on account of new product launches and improved volumes. We filed 23 drug master files globally this quarter. We invested 8% of our revenues to strengthen our R&D capabilities. Our R&D investment this quarter stood at INR 666 crores, and we are increasingly focusing on developing of our complex generic pipeline, including promising GLP-1 assets and biosimilars. We are also building commercial capacities, enhancing our manufacturing and commercial capabilities and investing in new technologies to capitalize on growth opportunities. We have made 53 global generic filings during Q3 of FY '25. We remain committed to sustainability, quality and operational excellence. We continue to invest in the three areas of strategic focus, which are consumer health care, innovative products and biosimilars to build a solid foundation for future growth. Our strategic investment in R&D, recent acquisition and CapEx putting us in a position of strength in this journey. We are excited about the opportunities ahead and remain steadfast to drive sustainable growth. With this, I would like to open the floor for questions and answers. Operator: [Operator Instructions] Our first question comes from the line of Kunal Dhamesha from Macquarie. Kunal Dhamesha: The first one on the India business. So we have grown at around 16% year-on-year. But if we just look at the core business, how that performance has shaped up. And we have also mentioned that there is some weakness in cardiac and gastrointestinal segment, lower volume pickup. So is it transitory in nature? Or is there something more to be taken into account there? Erez Israeli: Yes. So indeed, if you take out -- so all the other categories will outperform the market and actually all of them grew double digit beside these two segments. As for both of them, there are solutions for -- in terms of, let's call it, the actual execution of the way we do sales and marketing as well as the product performance per se. Specifically to gastro, I have no doubt that it will come relatively soon. Cardiovascular may take additional quarter as we need some more adjustments to do. In both cases, we are investing more in both businesses in order to grow them faster. So we are very much focused on that. Other than that, the business in India did pretty well. Kunal Dhamesha: Sure, sure. There is one more question on our biosimilar [indiscernible]. We have already filed rituximab now with denosumab also filed, but with partner. So if you could throw some light on the economics here for denosumab. And in terms of, let's say, eventual launch, can we assume that this would be the second product after rituximab and then followed by another one abatacept is the way we should look at? Erez Israeli: Yes, that's how we should look at it. So denosumab is actually supposed to facilitate abatacept launch because the two products are going for the same segments and give or take to the same type of doctors. So it was also the strategic rationale of why to license the product. We wanted to create the team and the capability in the marketplace to be able to then gain more or faster market share on abatacept. So this was also the rationale. In terms of time lines, normally in the U.S., it takes about 12 months, give or take for approval. So as we submitted in December, give or take, this is where we should expect the launch. In Europe, it's a bit slower. We submitted in October. So likely we normally takes around 14, 15 months to get all the approvals. So that's also where the time that we are supposed to launch denosumab. And yes, it will be after rituximab in Europe. Kunal Dhamesha: Sure, sure. And with your permission, last one for MVN. The INR 1,240 million of NRT PBT that we have suggested, would it include any allocation of interest expense or just the amortization? Mannam Venkatanarasimham: Only amortization. No interest. Operator: The next question comes from Neha Manpuria from Bank of America. Neha Manpuria: Erez, on the U.S. business, you mentioned that a few products have seen moderation quarter-on-quarter, including Revlimid. While Revlimid, we understand there's lumpiness, but what was the reason for the decline in the base business, excluding Revlimid? Because have we lost market share? Is the pricing erosion higher than we were expecting? Any color there? Erez Israeli: So nothing major happened. The products that were declined were the famous product that we got is the competition like [ Copaxone ] and the [ Suboxone ], stuff that the competition entered some of them 9 months ago, some of them 6 months ago. So there was certain continuation. This happened also before. Nothing major happened in per se. Against that, most of the growth that compensate for it was primarily market share less about new products and more about market share. Neha Manpuria: So just to get this correctly, we have lost market share in some of these products and hence, the decline. So that's -- this is the new base we need to work with. Is that understanding, right? Erez Israeli: Yes, it's a combination of market share and prices. Neha Manpuria: Understood. Okay. Got it. And my second question is on the Consumer Healthcare business on the NRT transaction. Given that Haleon is still running the business for us till the time the integration happens, how should we look at investments in the business and the ramp-up in the NRT? Would that happen only after the integration is done? Is that fair to assume that in the next 12 months, the focus would be in actually integrating and then probably the business would go into investment stage? Erez Israeli: No, we do have an agreement with them on investment and increase of even investment in certain areas in -- this is a business that actually is now gaining momentum. It is growing actually for the second year in a row, and we want to continue that momentum. So there is a certain agreement of gross to net, how much marketing expenses we should put at a time. Once, of course, the market will come to us -- we don't need to pay that fee anymore to Haleon. So it will save that amount of money that we are paying a certain amount of money for the service that they are giving us as we speak. And it will allow us, of course, to accelerate this process. In terms of priority, absolute integration is a priority, but also to grow the business. So to grow the business, to build the capabilities to -- there is a lot of innovation that was not done there and to introduce it. The real growth will come post this integration, but it -- but we are going to invest more also in this 12 to 14 months that we are going to get -- the time that we get those markets. We are not waiting for them. Neha Manpuria: Okay. And that investment will flow through our P&L in the SG&A cost. That's a fair assumption? Mannam Venkatanarasimham: Yes. Erez Israeli: Absolutely. Absolutely. Operator: The next question comes from the line of Amey Chalke from JM Financial. Amey Chalke: Congrats to the management on good set of numbers. So first question I have is on semaglutide. We understand that Reddy is one of the players who have filed for the Canada market when the patent expiry is expected somewhere early next year. At present, there are two to three players for this market. By the time we would be launching this product in this market, do you expect the players to increase? Or what would be the competitive scenario at that point of time? Also, if you can also explain Canada market, how similar is it with respect to U.S. when it comes to price realization, market share gains, et cetera, how easy or difficult it is to gain market share in Canada, particularly because we have seen in case of Revlimid, there were a lot of -- there were a few players who had filed for this product even for Canada, but ramp-up had not been very encouraging. So if you can give some color on the Canada market with respect to semaglutide opportunity. Erez Israeli: Sure. I'll do my best. First, the product, if I recall correctly, in January '26 is where the patent expiration will happen for Ozempic, and this is the product that generic version of it is expected to be launched if we will get approval. We -- I believe we are positioned well to get approval for that period of time. And internationally, it is a very important market for us. Normally, between the time that you submit the product to the Canadian authorities until you get approval is 12 to 14 months, so people will have to -- if they want to be in January of '26, they have to already file it to be on time. Anyone that filed after the date likely to get approval only after that. So what you're going to see is probably sequence in which people will get approval, and we hope to be the first one in the pack. And of course, but for that, we need to get the approval. Second, it's a product that, although possible, but it's not easy to make the APIs not easy and it's -- as you know, you need to make the autoinjector, the pen, and it requires capacity to align for that. The way you take market share in Canada is in that respect, similar to what you are familiar in the United States or in the U.K. in which you are collaborating with the main distributors and the retailers who -- and to gain market share, they normally share this product. In this respect, you should look at it like it's a retail product, and that's probably what you do. The reimbursement mechanism in Canada is different. Every product that is coming is taking by law the reimbursement price down. So in terms of the pricing versus the reimbursement pricing, naturally, the more competition, the price will go down accordingly. This is very normal in Canada. So potentially, it could be that in the earlier time, it will be more of a limited competition. And of course, it will intensify over time as more people will join and the reimbursement price will go down. But to put a scenario, time will tell who will get approval, who will not get approval. At least we are -- we believe that we have a good chance, let's see. Amey Chalke: Sure. And one more question related to semaglutide. Considering there is too much demand, which is expected to be there when the generic player enter this market all over the world. I believe there is still -- from the supply point of view, there would be a constraint in terms of both API as well as the pain assembly lines. So how are we going to ensure that our execution would be better there? Are we blocking some of the capacity, both in the pen as well as API side? How are we going to keep that thing in check? Erez Israeli: We are working on this project, including capacity for the last 10 years. It's not that 10 years ago, we knew that the product will be that big. This is obviously information that came over time. But if you see the level of R&D and CapEx, you can assume that a big portion of it went for this activity. By the way, it's not just the API. It's the API for both the synthetic as well as the semi-synthetic. It's about both internal as well as external options for manufacturing. It is about having access to the relevant devices. We are working it for quite some time. And indeed, not everybody will have to be able to cater with this magnitude. I agree with it. But I'm assuming that the product is so attractive that eventually it will be very competitive marketplace. But at least in the initial days, people will have to build a certain level of capacity and market access to make things to make it happen. I just want to make sure that the full transparency, it's not just about specific markets like Canada. There are about 80 markets that can be open for 2026 because the product is in demand in all the markets in the world, but there are certain markets in which the innovative product will not even come to it. We believe that it's also a nice opportunity in its own. Amey Chalke: Sure. Just last question on the SG&A spend. I believe because we have Revlimid opportunity at present, which is giving us good cushion to spend more, there is a good amount of discretionary spend, which is happening at present. So is it possible for the management to give some visibility on how much this spend is discretionary at present, which could reduce post Revlimid? Or you think because these semaglutide kind of opportunities are there, it might continue? Erez Israeli: Let me take it. The -- we -- I mentioned to you in the past, we feel very, very comfortable with 25% EBITDA, which allow us and we mentioned it in the past, allow us to give a greater return to the shareholders as well as allow us to invest in the system. Absolutely, we took an advantage of the fact that we had a few years of generic Revlimid, and we absolutely took it to invest more. With this money, we use to buy the NRT business. With this money, we put more CapEx, we have much more CapEx. The investment that we mentioned before on semaglutide, it was part of it. And that now -- in the case that -- which I believe will be that the activities that we mentioned of growing the base as well as the productivity as well as the big products like semaglutide, abatacept, as well as [ BD ] will allow us to grow, which I believe that this is what will happen. We will continue to invest also further into the future because we're also building growth engines not just for the immediate future like '26 and '27, but also for '28 or '29. We are planning to be in the neighborhood for quite some time. If we will not have this money, absolutely, we have the ability because a lot of our expenses are discretionary, especially SG&A and R&D, we will absolutely adjust our expenses closely. So that level of the philosophy that we want to stay profitable is important to us. Operator: The next question comes from the line of Bino Pathiparampil from Elara Capital. Bino Pathiparampil: A couple of questions from my side. Would you give some color on iron sucrose filing that you have done? Or do you expect approval in time soon? Erez Israeli: So we filed it actually a long time ago. We recently got a CR on the API side, which we are planning to address. So we thought that it's a good opportunity to launch it in these coming months. This is right now will be delayed because we need to answer this, yes. Bino Pathiparampil: Got it. Second on abatacept, some of your competitors have tried in the past, but it seems it's a difficult product and some of them seem to have given up. What gives you the confidence that your product can see through the FDA approval process? Erez Israeli: We had a very successful Phase I. And so far -- and normally, when you pass Phase I, you have a good chance to -- of course, to be very successful in Phase III. Also so far, the rollout and the fact that we even finished the rollout all the patients is very encouraging. We did it in actually very, very good timing. We have a very -- we believe in our clinic and -- and I hope that we will be able to submit sometime next year. Bino Pathiparampil: Got it. And last one question, if I can, on lenalidomide. Going into FY '26 in 4Q, that is in Jan '26, the kind of settlement with lower volume restrictions are coming to an end. So how should we look at lenalidomide? Will it continue a rough quarterly estimate smoothly until 3Q of next year and then drop off? Or do you think it will get front entered in the next year? Erez Israeli: I don't know exactly how the quarters will be because this is a decision normally by the customers. It's not that we are planning this way. We have serving the customer in the way they want to be served. But yes, we likely that we will not sell in this level of pricing, let's say, post somewhere September, maybe October of calendar '25. Now what exactly how it will work, I don't know. But post that period of time, unlikely that it will come because of the normal what we call shelf adjustment, shelf adjustment stuff like that. So give or take, until that period of time, you should see similar behavior of the product as you saw in the last say couple of years. Operator: [Operator Instructions] The next question comes from Surya Narayan Patra from PhillipCapital. Surya Patra: First question is on the NRT portfolio acquisition. See, while we have indicated that the SG&A cost this quarter has seen a kind of uptick post this acquisition and integration. And even after that, the PBT percentage of NRT portfolio, around 21% looks interesting. So how to think about the profitability of this acquired asset going ahead because current quarter is anyway is seeing the support of Haleon. And simultaneously, we have also thinking about spending more on building the portfolio and franchise. So while it looks interesting in terms of the profitability compared to our base business. So going ahead, how should we think in terms of the synergy benefit at the margin and profitability level for this acquired asset? Erez Israeli: It should continue to be profitable. So we're absolutely going to finance the additional investment growth, and we are planning to keep it profitable. There is no plan now to go for, let's say, 2, 3 years of investment and then take it from there. The idea is to indeed spend more, but to keep it in the -- for sure, the 20-plus digit on EBITDA should continue on this asset. Surya Patra: Okay. My second point is on the Nestle JV and the domestic business. put together, I'm asking this question. So how long that we will take for the Nestle JV to really contribute meaningfully to the growth of the domestic business? That is one. And the second part of the domestic business question is while we do anticipate this is the business segment which should be growing the fastest among all other business segments for Dr. Reddy over the next few years. But right now, it is not even matching the industry growth momentum. So how should one think and what will start contributing incrementally to the anticipated so that it can reach the anticipated growth rate? Erez Israeli: So the question on Nestle, this will absolutely go to take time. The reason for that is that we need to bring the products to India. We need to invest behind brands that are not today recognized in India. So it's not that you're investing behind something that is already known. And I'm sure you know well, it takes time to build brands that both Nestle and us are very much aligned to that. By the way, so far, the business is doing even ahead of our expectations. So I'm very happy about it. But in terms of significant contribution to the growth, it will take a couple of years. As for the -- what your comment about the India business, I mentioned it with the previous questions. Actually, the business is doing well. We do have two segments that underperformed. We mentioned it also the GI and the cardiovascular, we have a plan to bring on track, but the business is actually doing well. What we believe really will drive the business, I'm saying it for quite some time, actually for quite some years. We believe very much in introducing innovation to India rather than branded generics. I strongly believe I'm emphasizing also today that the branded generics growth will decline over time because of various reasons that we discussed in the past. And I believe that the right products to bring to India are technologies that are addressing unmet need that with patent protection, and that's what we are building on. I'm very, very -- I believe in what we praise and very committed to what we discussed in the past. We are going to grow and the [ top focus ] in India. Surya Patra: Okay. So the momentum accelerated growth will be seen in the domestic side starting next year onwards, sir, or it is '27 onwards? Erez Israeli: No, we are growing also today. We are doing it both organic and inorganic. We are growing in 15%, 16%, [indiscernible] growth is everything. And we are growing faster than the market. The market is growing 7%, and we are going to grow about 15%. This will continue. This will continue. What we do not take into account at this stage because of valuation is, of course, major acquisition that we discussed in the past. Right now, this -- at least the multiples of India were too high for us, and we are trying to do organically, this is why it's taking more time. But we are very bullish and India is a very, very important focus market for us. Surya Patra: Okay. Even the vaccine portfolio... Operator: Maybe we request to return to the queue for the following questions. Surya Patra: Sure. Okay. Operator: [Operator Instructions] The next question comes from Damayanti Kerai from HSBC. Damayanti Kerai: Erez, my question is again on semaglutide. So what kind of addressable market you are looking at outside of the U.S. You mentioned a lot of markets will open up starting 2026. And with the kind of capabilities which we have built on API or on the device front, what kind of market share you are looking for yourself? Erez Israeli: So the markets will happen -- will open in a certain sequence in '26. The most notable markets will be Canada, India, Brazil. markets that we are discussing are primarily markets in which there was no patent protection -- these are markets in primarily emerging markets like in Asia, Africa, Latin America, much smaller markets in nature, but accumulate-wise and demand-wise, it can add a very nice growth to that. We are working both B2B and B2C. We have global partners in which they are licensing our product that have great presence in those markets and some of them, we are going to do it by ourselves. So it's a combination of selling API, selling finished dose, and of course, marketing the product. And we are going for all the products, Ozempic, Wegovy and the oral products. So overall, it's something that will come in multi-markets. This specific product, as you know, U.S. and Europe will come later into the year. Damayanti Kerai: Okay. But any size indication, which you are targeting, say, for the bigger addressable markets? Erez Israeli: It's hard to tell market share because we don't know yet who is going to compete in which one of these markets, et cetera. But naturally, in all the markets that we will be sourced, we have a high expectation of performance, obviously, from the market. But any number that I will indicate to you will be wrong. Time will tell. It's not the flaring. We really don't know. Operator: The next question comes from Tushar Manudhane from Motilal Oswal Financial Services. Tushar Manudhane: Sir, just on abatacept, the time line to file the product I missed in the comments, if you could repeat? Erez Israeli: Timelines to file, sorry? Tushar Manudhane: Abatacept biosimilar? Erez Israeli: So if everything will go right, we should submit it in December of '25. Tushar Manudhane: December of this year? Erez Israeli: December 2025. Yes. Tushar Manudhane: Got it. So -- and then assuming 12 to 15 months' time line to the regulatory review cycle, right? Erez Israeli: Like the Muslim said [Foreign Language]. We hope for the best. Normally, it's about 12 months. So let's hope. But let's say, from point of view, January of '27 will be a great time line if we can achieve it. Tushar Manudhane: Understood. And will this product be manufactured completely in-house as in drug product as well as drug substance? Erez Israeli: Correct. We will make both DS as well as DP. Tushar Manudhane: Sorry, I didn't get your comment? We will manufacture? Erez Israeli: You are correct. We will make both drug substance as well as drug product. Tushar Manudhane: Understood. And just one more, if I may squeeze in, with respect to semaglutide, while the addressable market size seems to be difficult to highlight. But broadly, given that ex North America market, let's say, Canada, India, Brazil market, can this product do as much as Revlimid has done for us in North America? Erez Israeli: I wish. It's -- I don't see -- first of all, the product has the potential to be big, but let's see. We need to see what will be the prices, what will be the market share, et cetera. But there is a potential for something significant. We -- like I mentioned before, we are not -- it's not product replacing one product. The growth post Revlimid will come from four elements that I mentioned. First of all, the growth of the base products. We have about INR 30,000 crores sales that is growing double digit of base business, including, of course, the new products that will be launched that are not big. Second one, we discussed, we are aligning our expenses to the relevant revenues that we have. And we are creating that level of productivity as well. Number three, we have those special products like semaglutide and abatacept, [indiscernible] we have DP. We are all the time doing DP. So all four elements will grow. It's not one silver bullet. We highlighted specifically the sema at the time because of the timing in which this product is going to affect, and I'm happy that you guys picked it up. But it's not that sema will replace lenalidomide. It's all the business leaders will have to grow, and this should allow us to continue to grow the company also post the arrangement of Revlimid. Operator: The next question comes from Saion Mukherjee from Nomura. Saion Mukherjee: Just one question on semaglutide. Is the oral formulation available for launch in 2026 in India and the other emerging markets? Or it would just be injectable and oral would come sometime later? If you can highlight the time lines for different formulation? Erez Israeli: Oral will come later. In some places, there are also patents on the oral and the formulations. So in most of the markets, it will come between 12 to 18 months after the Ozempic. But we are planning to be day 1 in all the places that we can with spot. Saion Mukherjee: So in calendar 2027, even see oral launches? Erez Israeli: In some markets, it can be '27 and some of it will be '28. Operator: The next question comes from the line of Foram Parekh from Bank of Baroda Capital Markets. [Operator Instructions] Foram Parekh: Am I audible now? Operator: Yes, you're audible. Please go ahead. Foram Parekh: My question is on the European market. So ex of NRT, the European market has grown at 22%. So how sustainable is this growth rate going forward? And if you could explain the reason for this kind of growth. Erez Israeli: First of all, it is sustainable. We are launching products. So the main, of course, is [indiscernible] we are -- the various leaders in primarily in five countries that we are operating in. So today, we are working in really top five, but we are expanding to five more. And so it's a combination of new products, volume growth in the product that we launch and new markets. So it's absolutely sustainable. Operator: The next question comes from the line of Anubhav Agarwal from UBS. Anubhav Agarwal: Two questions. One is for MVN sir. Just trying to understand the selling expenses in this quarter. So do they include any selling expense for NRT or they don't? Mannam Venkatanarasimham: Yes, it includes the NRT business SG&A. Anubhav Agarwal: So just trying to understand the SG&A sequentially, December over the September quarter, selling expenses excluding amortization is up like INR 50 crores, INR 60 crores, whereas NRT itself should have selling expenses of INR 150 crores plus. So what else has gone down that net increase is only [ INR 50 crores to INR 60 crores ] for us? Mannam Venkatanarasimham: So if you look at just maybe recap our last quarter discussions, I think there was one exceptional expenses of stamp duty was amount INR 52 crores was there in the previous quarter. And this quarter, we have full NRT expenses. So if you look at then you'll get the right match. Anubhav Agarwal: Okay. Sure. Second question is on -- you guys have earlier mentioned that you have two good products in the U.S. You talked about iron sucrose as on API. What about the other? Is there any query or inspection or anything pending for it? Or do you still expect the approval for the other products now? Erez Israeli: So there were no other queries that came recently. As for inspections, yes, we do expect inspections in all the sites that were not inspected for quite some time. So we do have about five or six sites to count that we should see inspections. Of course, those inspections will come at the time that the FDA will choose to do. But there is no pending activities. So all the rest is business as normal. Anubhav Agarwal: Sorry, my question was very specific to the product. So you guys have mentioned two approvals, one, you talked about iron sucrose, second is for another product. Do you still expect approval of the other product anytime now? Or is that pending some query or anything else? Erez Israeli: I don't know which other products you are referring to, but I'm expecting the [indiscernible] products in the U.S. in addition to iron sucrose. Anubhav Agarwal: Sorry, Erez, you mentioned in last quarter. Erez Israeli: Iron sucrose, we just mentioned because answering your question that we got [indiscernible] . Operator: The next question comes from Vishal Manchanda from Systematix. Vishal Manchanda: Thanks for the opportunity. Hope I'm audible. Erez Israeli: Yes, please. Vishal Manchanda: So, on abatacept filing, whether you'll be filing both the IV and the subcutaneous -- in December 2025? Erez Israeli: The answer is yes, we do. But the time of launch is not the same because there is additional patents on this up to 10 years, which takes us, if I remember correctly to beginning of '28. Vishal Manchanda: So, subcutaneous is the beginning of '28. Erez Israeli: This is what we believe is the time to enter the market as per the IP [indiscernible] Vishal Manchanda: Okay. And second, on the semaglutide filing in Canada. Are there any device patents that can block your version as a substitutable version to the innovator copy? Erez Israeli: We don't think so. Vishal Manchanda: And is your device identical to the innovator device or you have a different device? Erez Israeli: We have a great device. Vishal Manchanda: Sorry? Erez Israeli: We have an amazing device. Vishal Manchanda: And just one final one, whether we should expect your SG&A expenses to stay at current levels, 28% of sales going forward? Mannam Venkatanarasimham: Yes, around this level. Vishal Manchanda: 28%. Mannam Venkatanarasimham: Yes. Operator: The next question comes from Shashank Krishnakumar from Emkay Global. Shashank Krishnakumar: First one was just wanted to get your sense on the broader U.S. biosimilar landscape given that our incremental investments are being directed towards biosims. We're increasingly seeing PBMs launching their own private labels. I think starting this year, several Humira biosimilars will also face formulary exclusions. So how do you see the overall U.S. biosimilar landscape shaping up given that there are several products in the pipeline? Erez Israeli: So it's -- I'm assuming it's more of a strategic question. So, first of all lots of products, if you go [indiscernible] for the next decade will be the off-patent, many products and many bispecific as well. So in that respect, it creates an opportunity. Second will be there will be absolutely products will be more crowded and the very high level of competition [indiscernible] product that will be less crowded in that respect. Absolutely we're going to see -- by the [indiscernible] we want to see all kinds of phenomenon related to pay for the products. So we are preparing for a very competitive landscape. And like I mentioned in the past, we are not going that we select certain products that we believe that we can make the difference and add value to the respective markets. We are trying to grow for limited number but with hopefully less competition type of a product. And hopefully, we will be right in the way we select it. So far, I believe that the product starting from abatacept are meeting this criteria. Shashank Krishnakumar: That's helpful. And secondly, I just had a question on DFD-29. Are we also eligible for sales-based royalties here given that the product has not been approved? Erez Israeli: Yes. Yes, we do. Operator: The next follow-up question comes from Bino Pathiparampil from Elara Capital. Bino Pathiparampil: Just quick housekeeping questions. One, the depreciation and amortization rate this quarter, is this quarter a good benchmark to project it forward? Mannam Venkatanarasimham: No. This quarter's amortization includes NRT's business amortization. It will continue. Bino Pathiparampil: So this rate is a stable rate to look forward to? Okay. Second question, the Russian currency has depreciated. Do you -- have you hedged the currency and for how long? Mannam Venkatanarasimham: So we have both. I think we do cash flow and balance sheet hedges. This quarter, we have a little bit impact, I think, because of the ruble volatility in the balance sheet on the cash flow hedges, I think as per our policy, we don't cover 100%. We cover some extent and then there, we are not losing any value. Bino Pathiparampil: Okay. So this quarter, Russia reported revenue in INR will be roughly at the current market rate of rubles, right? Mannam Venkatanarasimham: Yes. This quarter, I think if you see constant currency and INR both 19% and 20%, not much difference, both INR and ruble terms. Operator: Thank you. The next follow-up question comes from Surya Narayan Patra from PhillipCapital. Surya Patra: Yes. Just a clarification. In case of the semaglutide opportunity, what is the level of integration that we are having in terms of our manufacturing capability to the level of advanced, intermediate, intermediate levels or it is API and formulation? Erez Israeli: So we are fully integrated for all the stages of the API. We are making the peptides from the basic building blocks as well as the formulation. We are buying the device. Surya Patra: And it is for both solid state as well as liquid state, as you mentioned, the entire value chain that you said. Erez Israeli: The entire value chain, yes. Operator: Ladies and gentlemen, we will take that as our last question for today. I now hand the conference over to Ms. Richa Periwal for closing comments. Richa Periwal: Thank you all for joining us for today's evening call. In case of any further queries or clarifications, please get in touch with Aishwarya or myself. Thank you once again. Operator: On behalf of Dr. Reddy's Laboratories Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.