LUPINNSEQ3 FY2025February 19, 2025

Lupin Limited

8,128words

75turns

10analyst exchanges

4executives

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Management on call

Vinita Gupta

CEO, LUPIN LIMITED

Nilesh Gupta

MANAGING DIRECTOR, LUPIN LIMITED

Ramesh Swaminathan

EXECUTIVE DIRECTOR, GLOBAL CFO & HEAD OF API PLUS SBU, LUPIN LIMITED

Ravi Agrawal

M&A AND INVESTOR RELATIONS, LUPIN LIMITED

Key numbers — 40 extracted

rs,

lity. I would like to highlight that our margins are the highest we have achieved in the last 5 years, despite higher investments in R&D during the period. We feel confident of maintaining our growth m

22%

od. We feel confident of maintaining our growth momentum going ahead with margins in the range of 22%-23% in the current fiscal year. Our US business delivered strong QoQ and YoY growth this quarter

23%

We feel confident of maintaining our growth momentum going ahead with margins in the range of 22%-23% in the current fiscal year. Our US business delivered strong QoQ and YoY growth this quarter with

50%

elieve that our pipeline will enable us to continue to drive the shift to complex products to over 50% of our portfolio over the next couple of years. Coming to India, we reported growth of 11.9% YoY

11.9%

over 50% of our portfolio over the next couple of years. Coming to India, we reported growth of 11.9% YoY led by growth in India Formulations business and additional tenders in our Global Institutiona

9.1%

al tenders in our Global Institutional business. Our India Formulation business recorded growth of 9.1% for the 9M this fiscal year against an IPM growth of 8.2%. While key therapies like Diabetes, Car

8.2%

Formulation business recorded growth of 9.1% for the 9M this fiscal year against an IPM growth of 8.2%. While key therapies like Diabetes, Cardiac, GI grew ahead of the market and we also increased our

7.7%

xtensive reach through 10,000 people sales force. Switching to R&D, our R&D as % to sales was at 7.7% during the quarter and 7.4% for the 9M. We successfully filed Ranibizumab in EU during the quarter

7.4%

people sales force. Switching to R&D, our R&D as % to sales was at 7.7% during the quarter and 7.4% for the 9M. We successfully filed Ranibizumab in EU during the quarter and are looking forward to

INR 1,800 crore

of which more than 50% will be complex products. As previously guided, we expect R&D to be around INR 1,800 crores for fiscal year 25, which would mean a significant increase in our R&D spends in Q4. From a com

24.3%

wth across the top and profits lines. I am particularly pleased to highlight our EBITDA margins at 24.3% during the quarter, which is the highest we have achieved in the last 5 years. Now, Diving into t

INR 5,619 crore

Ramesh Swaminathan: February 12, 2025 Sales Sales for Q3 FY25 came in at INR 5,619 crores as compared to INR 5,080 crores in Q3 last year, a growth of 10.6% YoY. On a 9M basis sales came

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Guidance — 20 items

Vinita Gupta

opening

“Apart from key products like Tolvaptan, we have an exciting portfolio of injectable products like Glucagon, Risperdal Consta, Liraglutide which we anticipate bringing to market next fiscal year that should help us deliver strong growth in the year .”

Vinita Gupta

opening

“We have an exciting pipeline, with more than 20 respiratory products and 40 injectable products in development and plan to file more than 30 ANDAs in the next 2 years, of which more than 50% will be complex products.”

Vinita Gupta

opening

“As previously guided, we expect R&D to be around INR 1,800 crores for fiscal year 25, which would mean a significant increase in our R&D spends in Q4.”

Ramesh Swaminathan

opening

“February 12, 2025 Sales Sales for Q3 FY25 came in at INR 5,619 crores as compared to INR 5,080 crores in Q3 last year, a growth of 10.6% YoY.”

Ramesh Swaminathan

opening

“On a full year FY25 basis, we anticipate our US business to deliver double digit growth, ahead of our earlier guidance of high single digit growth in the segment.”

Ramesh Swaminathan

opening

“Manufacturing & Other Expenses Q3FY25 came in at INR 1,696 crores, increasing 8.7% YoY from INR 1,667 crores in Q2 FY25 and INR 1,560 crores in Q3FY24 translating to 30.2% of sales versus 30.7% last year.”

Ramesh Swaminathan

opening

“R&D R&D is at INR 434 crores, 7.7% of sales as compared to INR 448 crores, 8.2 % of sales in Q2 FY25, with almost two thirds of our R&D directed towards complex portfolio.”

Ramesh Swaminathan

opening

“For the full year, we expect R&D to be around INR 1,750-1,800 crores with a significant increase in R&D in Q4.”

Ramesh Swaminathan

opening

“Putting all of this together, we believe that we should be able to deliver EBITDA margins in the region of 23-23.5% range in FY25.”

Ramesh Swaminathan

opening

“For the full year, we expect the ETR to be around 20-21%.”

Risks & concerns — 14 flagged

February 12, 2025 Emerging Markets Our Emerging Markets include the APAC and LATAM regions and have registered sales of INR 451 crores, a decline of 4.7% YoY.

— Ramesh Swaminathan

Are you planning to continue selling it at risk?

— Vinita Gupta

So there would be a decline for sure next year.

— Surya Patra

There is nothing to anticipate or nothing to see any kind of risk relating to the Mirabegron right now?

— Surya Patra

So given that, is there any risk that one should think or consider about this portfolio?

— Ramesh Swaminathan

You can't pinpoint the reason why there is a decline in any part in India and so on.

— Ramesh Swaminathan

Although it has been indicated to be around 2.5% on the pharma also or any US tariff thing area of concern or uncertainty for this moment?

— Vinita Gupta

But we know it's difficult to really get on market assets.

— Bansi Desai

And given the biotech funding has been weak out there in the US, is it fair to assume that there are good assets that are available in the market?

— Bansi Desai

If you see, there's increasing risk that 10% import tariffs come on critical imports in the US and the critical imports do include pharmaceuticals at this point of time.

— Ramesh Swaminathan

Given that this is going to be an at risk launch and you have highlighted that this is going to be REMS product and conversion is expected to be slower.

— Vinita Gupta

Vinita, there has been a lot of general concern in the sector with respect to sector facing certain sort of US sales erosion in FY27 post-Revlimid® sales going away.

— Vinita Gupta

So I mean as you see the business looking through a couple of years out in FY27, do you see a risk of growing or , not growing over the FY'26 base that you will end up creating?

— Vinita Gupta

On Mirabegron, we've assumed that Albuterol faces competition or impact of competition that has already started.

— Vinita Gupta

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Q&A — 10 exchanges

We'll take the first question from Kunal Dhamesha from Macquarie. Thank you for the opportunity and congratulations on a good set of numbers. First one on the limited competition launches for us in US market over the next two, three quarters. We have discussed a few names. I just wanted to understand that for those names like generic Jynarque®, generic Glucagon, and probably Risperdal Consta, are we on track? And am I missing some key product here, which we might be able to launch over the next couple of quarters?

Vinita Gupta

The major products are Tolvaptan and Glucagon, Risperdal Consta and potentially Liraglutide. So those will be the key products for next year. And can you suggest the probable timelines of that? Tolvaptan is I believe is quarter one FY26 but on glucagon and Risperdal Consta, is there any update in terms of approval? So we are making progress on both applications with the agency and would expect that hopefully, approval sooner rather than later. But I think it'll be safe to assume that Tolvaptan would be the major contributor in the first half of the fiscal year and the injectables should ramp u

Thanks for the opportunity, sir. Particularly first on the R&D spend, though the guidance is that it is going to increase in the fourth quarter, is there any specific projects which you would like to highlight which is going to require a higher R&D spend compared to INR 434 crores spend? Your voice was very muffled, but if we got your question correctly, you're asking about the reason for the R&D spend ramping up. A good part of it is our complex generics portfolio. It's five nasal sprays actually that we expect to file in Q4 versus the rest of the year. So majority of the spend is coming into

Management

Just following up on that question on India. So this contribution from this tender business which has helped us show growth in that line. What's the nature of that? Is it going to be steady next year as well or will it grow or will it drop off next year? In India on the institutional business. I mean it's been fairly flat. It's been a meaningful number. It will continue into the next year as well. But I mean, we always call out the business with and without. The India Region Formulation business, which is the domestic sales business, is 5.8% year-on-year or 9.1% for nine months.

Bino Pathiparampil

So this tender part of the business is likely to stay flat next year? Yes. I mean it's a good number and it will continue with that good number. Second on Mirabegron, what are your latest thoughts around the litigation? Are you planning to continue selling it at risk? Any further thoughts since the last call? So no change in terms of litigation status. We continue to navigate through that process. In the meantime, the generic substitution has gone up. The overall available market has gone up and our share has ramped up nicely as well. So no real change from a competitive scenario standpoint fr

One question is on Radicava. Vinita, which year can you launch it? Is it next one, two years or beyond that?

Vinita Gupta

Which product are you referring to, Anubhav? The Somerset where you have the PAI on Radicava? I think it's out for a good number of years. It's not in the next two years. Second is on the Canada - Semaglutide opportunity. Would you be in the first year of the opportunity or are you pursuing that? The team is working on it. We're hopeful that we'll be in the first wave between FY26 and FY27. We'll take the next question from Bansi Desai from JP Morgan. Vinita ma'am, you mentioned about increasing our focus on the specialty business in the US. So if you could just elaborate on that. Are we talki

So Vinita, Nilesh, if you can talk about Semaglutide, other than Canada, which all markets you already filed. And if you can take us through 2026 and 2027, how should we think about the launches? And your preparedness in terms of formulation and API? And how much will be the dependence on partners for this product? So if you can just draw the landscape broadly for this product over the next two years? I think on India - on the injectable, I mean there's going to be many players. We'll have it in that first wave as well. The more interesting part to solve for in India is the oral product, and w

Saion Mukherjee

And in terms of capacity, anything you can share? Your ability to service the markets? Have you invested in that from a formulation perspective? February 12, 2025 For the oral solid, definitely we have internal capacity, as well as injectable, although we have partnered with companies, we have the ability to double up with our Nagpur facility. But right now, we are counting on partners for the injectable. And next one was on green propellant. You mentioned Vinita about that opportunity. So how should we think about it? When do we get more clarity on this? And how meaningful this opportunity yo

On the European market, the kind of growth that we have seen about 20%. If you could kind of articulate what's driven that growth. I think you called out two products, but just want to understand the sustainability of the growth in the European market for the path ahead. So you know, respiratory portfolio has been a big contributor in the European growth, in particular in the UK as well as Germany, where we've continued to grow our market share with Luforbec®. And now with the Nalcrom® addition in Germany in particular that's helped us grow Germany, you know, the combination of Luforbec® as we

Management

Vivek Agrawal So the question is related to Tolvaptan. Given that this is going to be an at risk launch and you have highlighted that this is going to be REMS product and conversion is expected to be slower. So what kind of the market share you are expecting during exclusivity? Is this going to be let's say around 15%, 20% or maybe higher like 30% - 40%. So any colour if you can provide that would be super helpful. We hope that it gets to the 30% - 40% level based on the partnerships we have established with the key channel partners on the product. And a related question. Post 180 days exclusi

Vinita Gupta

Yeah. We are expecting two, three additional players.

Vinita, there has been a lot of general concern in the sector with respect to sector facing certain sort of US sales erosion in FY27 post-Revlimid® sales going away. While we don't have the Revlimid® challenges, we do have our set of large ticket products in FY26 like Tolvaptan, maybe Mirabegron as you mentioned continuing in FY26. So I mean as you see the business looking through a couple of years out in FY27, do you see a risk of growing or , not growing over the FY'26 base that you will end up creating? So we have a strong pipeline that we are pursuing. Some of these products that we are ex

Nitin Agarwal

So I mean if we are going to do double-digit growth all over in '27 or '26? It depends on so many things really essentially. So we have a rich pipeline but as you say there are moving parts because of various things. But over the next five years, we are focusing on what we think would be the complex portfolio and that would help in kind of securing growth over the next four years, five years. We expect in fiscal year '26, the US should be at a USD billion plus and then look at how we can sustain the growth from there.

Quick question first on the capital allocation. If I were to you know ask for a rank order in terms of, you know, where we would pursue M&A, would it be India, Specialty, biosimilars How should I think about priorities for capital allocation for Lupin?

Ramesh Swaminathan

You correctly pointed out, the highest priority would obviously be India. There would of course be opportunities in generics up to a particular limit in February 12, 2025 other parts, including America. And of course, we have a larger chunk reserved for specialty itself. And would you like to earmark a number as to what we would like to spend in, India or US generic in case of acquisitions? I think Ramesh meant to say, you know, India, Specialty and then generics, wherever we need it, in that order. With specialty and India being the major focus. We don't have like an earmark number as to this

Just continuing on R&D spend. While we have highlighted INR 1,750 crores to INR 1,800 crores for FY25.,would you follow it for FY26 as well? On an absolute basis, how much R&D spend will be?

Ramesh Swaminathan

I would say, as an absolute there would be an increase but as a percentage of sales, it will perhaps be around the same levels. But given the focus that we have on more complex stuff and the like, this is inevitable. So INR 1,800 crores to INR 1,900 crores safe to assume that much of spend to happen? Yeah, that's a slight increase over that if necessary. And just if you could share specifically for Canada Semaglutide, like market in terms of units, how big it could be? Ramesh Swaminathan: We can take that offline, please. I now hand the conference over to the management for the closing remarks

Speaking time

Vinita Gupta

Ramesh Swaminathan

Moderator

Nilesh Gupta

Kunal Dhamesha

Bino Pathiparampil

Surya Patra

Anubhav Agarwal

Neha Manpuria

Tushar Manudhane

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Opening remarks

Vinita Gupta

February 12, 2025 Welcome to Lupin Limited Q3 FY25 Earnings Conference Call. Please note that all participants' line will be in listen-only mode and there will be an opportunity for you to ask questions after the opening remarks. Please note that this conference is being recorded. I now hand the conference over to the management. Thank you and over to you, ma'am. Good evening friends, I am very pleased to welcome you to our Q3 Financial year ’2025 earnings call. I have with me our Managing Director Nilesh, our CFO Ramesh and our head of Investor relations Ravi. We look forward to sharing with you our highlights for the quarter as well as outlook for the year ahead. We are very happy to report another quarter of strong performance across our key markets both on a sequential and YoY basis. This has been backed by continued improvement in margins and profitability. I would like to highlight that our margins are the highest we have achieved in the last 5 years, despite higher investments i

Ramesh Swaminathan

February 12, 2025 Sales Sales for Q3 FY25 came in at INR 5,619 crores as compared to INR 5,080 crores in Q3 last year, a growth of 10.6% YoY. On a 9M basis sales came in at INR 16,630 crores versus INR 14,761 crores last year, a growth of 12.7% YoY. We have registered robust growth across most of our key geographies. India business has grown by 11.9% YoY, North America has grown 12.3% YoY, EMEA grew 20.9% YoY whilst API grew 4% YoY. US Business During the quarter, the US business recorded sales of USD 235 million, a growth of 10.5% YoY and 6.8% QoQ on constant currency basis. On a 9M basis, US sales were USD 682 million, a growth of 12.5% as compared to 9M of FY24. As Vinita mentions, while we have benefited from volume growth in inline products and new product introductions, this has been offset by low single digit price declines in base products and anticipated new generic competition in products like Albuterol and Suprep®. Our respiratory portfolio continued their strong performance

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