LAURUS LABS CONCALL TRANSCRIPT 5TH FEB 2021

 

LAURUS LABS

CONCALL TRANSCRIPT

5TH FEB 2021

 

Dr. Satyanarayana Chava:

Our Q3 revenues  stood  at Rs.1,288  crores,  show-casing  a  robust  growth  of  76%  year-on-year  for  the quarter  and 71%  for  nine  months  of FY'21  year-on-year.

Our revenue  growth  was  driven  by  robust  demand  for  several  key  products  and  not  driven  by COVID-19 related stocking.

EBITDA margin was robust at 34% despite withdrawal of export incentives by the government and high logistics cost during this crisis.

The formulations division  achieved Rs.430  cr sales  in  the  quarter,  showcasing  a  growth  of almost  50%  YoY.  During  the  nine  months  of FY'21,  this division  achieved  sale  of Rs.1,234  cr, with a  revenue  contribution  of  about  36%  for  nine months, as against 28% in FY'20.

During  the  quarter,  we  got  approved  for  a  triple  combination  product  containing Tenofovir Alafenamide,  and  we  are  in  the  process  of  obtaining  in-country  approvals,  and  we  expect  to launch this product in the first half of next financial year.

Apart  from  LMIC business,  we  have  also  seen  growth  in  North America and EU. To leverage our marketing front end in US, we commenced the marketing  of  in-licensed  products,  products  developed  and  manufactured  by  our  business partners.

Out of five in-licensed products, two are launched, and we will launch the remaining three products during the Q1FY'22. We added a total of nine final approvals and nine months tentative approvals out of 26 ANDAs filed so far. In Canada, we have six product approvals, of which, four were launched, and we intend to launch the remaining two very soon.

For EU, we have validated an additional two products as part of our Contract  Manufacturing  Partnership.  We  expect  a  significant  upside  from  these  products from FY'23 onwards.

We also obtained approvals for five products in EU, of which we launched two products and we will be launching the others very shortly.

We  continue  to  invest  in  our FDF infrastructure.  Our  debottlenecking  exercise  of  existing capacities is on course and this capacity will be available for commercial manufacturing by end of the Q4,although with a delay of a few months.

Our Brownfield expansion project in FDF on the same site with similar capacities will be operational in a phased manner from August 2021 and will be fully operational by end of FY'22.On the R&D front, we continue to invest in our FDF business.

Overall R&D expenditure across all divisions was 4% of revenue for the 9 months of FY'21. So far  we have  filed  26 ANDAs in  US, nine  dossiers  in  Europe,12  in  Canada,  eight  with  WHO, two dossiers in South Africa and two in India, while we have filed several products across rest of the world. Out of the 26 ANDAs filed in US, we believe two are P4s and seven are potential first-to-file and P4s. Our approach remains product-specific rather than market-specific.

In Generic API business, our Antiviral API business recorded a very healthy growth  of  more  than  160% for  the Q3  with Rs.568  cr  sales.  And  in  the  first  nine months  of  this  financial  year,  we  almost surpassed the total  ARV sales  of  the  entire  financial year '20.

The growth was led by higher volumes of all key first line APIs. Second line ARV APIs continue to see healthy sales in Q3 FY'21. Due to the demand increases from third-party API sales, we are expanding capacities for key  APIs in the coming 12 months time. We expect to maintain sales at this level in the coming quarters. Our  oncology  APIs  segment  recorded  growth  of  36%  QoQ.

Onco sales declined by 25% from Q2 to Q3 due to higher offtake of few APIs based on approvals by a few customers. We are  one  of  the  largest high  potent API capacities  in  the country, and have plans to expand high potent API manufacturing capabilities in unit-IV as well. We expect reasonable growth in Onco business in the coming quarters as well.

In the other APIs, our sales remain flat from Q3 FY'20 to Q3 FY'21. But for nine months, we achieved a sales growth of over 45%. The sluggishness in the segment in Q3 was due to changes in delivery schedule from some customers.

We have initiated discussions with one of our key generic partner for contract manufacturing opportunities where we have several APIs, and we expect  to  build  a  dedicated  block  to  accommodate  these  generic  API  contract  manufacturing. We are also creating a lot of capacity for non-ARV APIs.

When it comes to Synthesis business, we recorded a growth of 60% from Q3 FY'20 to Q3 FY'21. In the nine months, we have achieved Rs.343 crs sales.

We  have  incorporated  another  step  down  wholly-owned  subsidiary  Laurus Ingredients Private  Limited  during  Q3 FY'21.  We're  expanding  the manufacturing infrastructure  for  this  division-to  focus  on  few  core  areas  under consideration. Construction activity initiated at the proposed dedicated synthesis R&D at Genome Valley, close to our current R&D center. A new manufacturing site for this division will also be a Greenfield project at Vizag, which will cater to the manufacturing needs of the division for the next four to five  years.

We  are  acquiring  land  for  this  division,  and this  site will  have capabilities to  handle  steroids  and  hormones,  high  potent molecules  apart  from  large  volume commercial products. We're also happy to share that we acquired majority equity in Richcore and the company will be renamed  as  LaurusBio.  Laurus Bio is  on  course to  commission  large  scale  fermentation capability  during  the Q4  FY'21, and  we  are  confident  of  achieving  growth  as  outlined earlier during the acquisition.

We're also acquiring additional land for further expanding manufacturing capacities and capabilities for Laurus Bio.

V V Ravi Kumar:

Our  EBITDA  is  34%. Diluted EPS per  quarter  is  at  5.1, not  annualized basis, showcasing more than  250% growth  over Q3  FY'20. Diluted EPS for  nine  months  is Rs.12.8,not annualized. Our ROCE improved to 40% on an annualized basis due to operational leverage.

On the CAPEX front, we invested around Rs.433 crs during nine months of current fiscal.  To strengthen our position as a cost-effective integrated player, we have invested in backward integration for one of our ARV products and which was operational in January ‘21.

We acquired a land for FDF site in Hyderabad. We are in the process of acquiring an additional site for our API and Synthesis division.

Dr. Satyanarayana Chava: The shift in therapy from Efavirenz to Dolutegravir came in to our benefit. While we continue to increase our market share in Efavirenz and its intermediate, we also continue to sell significant volumes of Dolutegravir as part of third-party API, and also, majority of our formulations sales are coming from TLD and some sales are coming from TLE. As you are aware, there are only three  approvals  for  TLE whereas  there  are  nine  approvals  for  TLD.  So  we  continue  to  have advantage in TLE, while we capture more market share, and we continue to retain the market share what we have achieved in TLD. And when it comes to the revenue split from LMIC versus North America and EU, as we explained earlier, the split is three-fourth and one-fourth, about one-fourth of revenue came  from advanced markets and three-fourth came  from LMIC. ARV APIs, we are adding more capacities to meet our demand. Surprisingly, our order book for ARV API was much bigger than at the beginning of Q2 FY21 to beginning of Q4FY21. So we see a lot of uptick in the demand for APIs. That could be because of our scale, because of our quality compliance and sustainability, we are getting a lot of traction and high demand for our key first line APIs. If you look at our Q3,we have done Rs.568 crs ARV API sale.

We are confident to maintain that in the coming quarters.

Dr. Satyanarayana Chava:Our  gross  margin  was  little  less  in Q3  because  of  withdrawal  of  export  incentives,  and  also higher logistics cost due to the COVID crisis. But we are confident that we'll be able to maintain the gross margin levels. Our operational leverage by increasing asset utilization is clearly visible by showcasing a consistent increase in our EBITDA margins as well.

Dr. Satyanarayana Chava: We also had some high gross margin APIs. We supplied significant volumes of APIs, including our ARVAPIs for launch in Europe and US. So that also contributed to higher margins in API division.

Dr. Satyanarayana Chava: Currently,  we  are  using  our  capacities  at  the  optimum  level  and  our debottlenecking exercise will also be finished during Q4. And new capacities will be available from August onwards. So we are gearing up to meet higher demands. See, as I mentioned, we are looking at healthy top line growth. So we are cautious to get market share while we maintain our third-party API sale. So if you look at our ARV, we have done more API sale to third parties in ARVs rather than our formulations division.  So  we  would  like  to  maintain  that  strategy.  Not  to  cannibalize  our business by going aggressively into formulations as well.

Dr. Satyanarayana Chava: Efavirenz and its intermediates, we continue to have leadership position where we are making about 700, 800 tons in a year, if we look at, Efavirenz is 600 milligrams dose or 400 milligrams versus 50 milligrams of Dolutegravir. So the dosage is significantly low, but pricing is high. If you  look  at  the  franchisee  of Efavirenz  plus  Dolutegravir in FY'20  and  FY'21,  we  have  done more sales in the franchisee than the last year.

Dr. Satyanarayana Chava: In the API market for ARV, even though many players who would have got approval from the global tender in the global fund, how many players are active in terms of supplying APIs?

Dr. Satyanarayana Chava: I  think there  are  not  many  APIs  which  are  pre-qualified  by WHO but  when  it  comes  to formulations,  there  are  about  eight  approvals  right  now  for Dolutegravir-based  combinations. And we believe we have reasonable market share in the formulations and largest market share in the APIs Dolutegravir.

Dr. Satyanarayana Chava: we are number three when it comes to the overall market share in the formulations.

Dr. Satyanarayana Chava: We have largest capacities installed and we have one of the cost-effective process, and we have regulatory approvals in place by WHO, by FDA. So we believe we will maintain our leadership position.

Dr. Satyanarayana Chava: There are two therapies which we have very strong focus and also building pipelines. The one is diabetes. The second one is cardiovascular. And we have a very good basket of products in diabetes right now. And we are building our strong basket in cardiovascular products as well. So these two will drive our growth in the coming years. If you look at the evolution from 80% to ARV APIs, in the five  years  we  moved to 38% of ARV APIs. Similarly, our revenue dependency on ARV formulations currently is very high. But in the next five years, we will also diversify our revenues coming from non-ARV formulations significantly and the dependence on ARV will come down.

Because there are no new formulations to be developed in the ARVs, we are almost done with developments. So, development focus is shifting from ARV to non-ARV. And also, we are adding very large capacity in Vizag and we have taken land for formulations expansion in Hyderabad as well. So if you want to look at where we will be in say, three, four years down the line, I am sure we will be discussing on non-ARV in five years from now. If you look  at  the  calls one  and  a  half  year  back,  half of  the  times  people were  asking  questions  on Efavirenz. Now nobody asks questions on Efavirenz. Two years from now people will not ask questions on ARV APIs. And maybe another two years from then people will not ask about ARV formulations, people may talk about what is we are doing in our Laurus Bio?, what growth we have in Laurus Bio?, what other therapy areas we will be focusing? What kind of delivery dosage forms we are doing?. So, company s in the transformation phase, so we need time and we are very confident to expand our portfolio beyond just ARV.

Dr. Satyanarayana Chava: Laurus  Bio will  be  a CDMO for  recombinant  proteins,  it  could  be food,  or  for  therapeutics. Currently,  the  expansion  going  on  at  Laurus  Bio to  meet  customer  demand  for  recombinant protein-based  foods.  And  we  are  looking  at  acquiring  land,  as  I  mentioned  in  my  opening remarks, to expand that recombinant protein manufacturing capabilities, not only for food, but also for therapeutics. We are also identifying a lot of areas where the synergies could be built between our chemistry and fermentation capabilities of bio. So, the synergies are also looking very attractive. So, a lot will happen. And we will give you more details as and when we expand into new areas. That is very exciting for us.

Dr. Satyanarayana Chava: In our CDMO business, we have evolved very significantly in the last decade. In 2010, we need to explain about company first 15 minutes in the meeting. Now, we don't need to explain our capabilities. And we need not explain about our scale, we need not explain our sustainability. So we  are  recognized  as  a  strong  player  in CDMO for high  potent molecules,  and  in  very  large volume molecules. So people look at us on the two extremes, like our API also, we're doing high potent oncology  molecules, and we're doing very large volume, diabetic and ARV molecules. CDMO,  our  efforts  are  also  culminating  in  the  same  trend.  People  are  looking  at  us  for high potent molecules, which  we have several  molecules in pipeline. And we're  also doing several tons of opportunity in commercial molecules. So although the number of small molecules in the development by big pharma is constant, I don't want to say going down, constant, and we have great opportunities there.

Dr. Satyanarayana Chava: We'll be talking  about ANDAs in diabetes, ANDAs in cardiovascular and P4 launches, and maybe new dosage forms, currently we are doing only solid oral, maybe situation will change, we may enter into other delivery forms as well. So a lot of things are at the drawing board   stage, and   we're   very   comfortable   to   de-risk   our   dependence in   ARV without compromising  our  growth  in ARV.  If you  look  at  80% ARV APIs  company  to  38% ARV companies, but our ARV API sales went up by Rs.500 crs from when we were 80% dependent to  when  we're  38%  dependent.  So  you  could  understand  how  much  of  diversification  is happening in the organization.

Dr. Satyanarayana Chava: It's  not  that  significant  investment.  We  do  believe  our  subsidiary, Laurus Bio,  will  be  able  to generate its own cash to invest or raise its own debt to invest, because their margins are very attractive,  sustainable,  so  we  don't  see  any  challenges  to  invest  there.  We  do  believe  they're capable of raising money and if necessary, we can assist them.Tushar Manudhane:Secondly, particularly  on  the  APIside,  what  is the  capacity  utilization?Is it  that  Brownfield expansion is getting delayed because of COVID,that will be operational from August '21?Dr. Satyanarayana Chava:Only formulation expansion was delayed during the crisis. But our API expansions are on track.Earlier,we used to say we are one of the top five API companies with respect to reactor volume. Now we can say we are number four with respect to ARV volume. Currently, we have 4.5 million liters of reactor volume and we are adding close to a million liters in the next expansion phase. So that  will  take  us  to  5.5  million  liters  reactor  volume.  That  is a significant  addition, almost 20% what we have, we're adding in next 12-months.

Tushar Manudhane:Lastly, on overall CAPEX guidance for next year?

Dr. Satyanarayana Chava:As  we  mentioned  in  the  last  quarter  conference  call,  we  envisage  about Rs. 1200  crores investment over the next 24-months.We believe that is enough for our growth.We don't see any additional CAPEX required to meet our growth.

Krish Mehta:I wanted to ask what is the percentage of revenue this quarter which is non-ARV, all divisions put together?

Dr. Satyanarayana Chava:Maybe  closer to 35%.

Krish Mehta:And another question I wanted to ask is about capital allocation going forward after the Richcore acquisition. So if you can give a sense of the split between how much CAPEX might be thinking of allocating between Richcore versus like our core ARV business?

Dr. Satyanarayana Chava:In the capital allocation, what number we just gave Rs.1200 crores is not inclusive of CAPEX envisaged to Laurus Bio. I think that is not going to be very significant, and they will be able to raise or interest from their own cash.

Sameer Shah:First question is in the opening remarks, you said that significant upsideis expected from EU partnerships from FY'23. If you can just elaborate on that?

Dr. Satyanarayana Chava:We  have  done  validations  for  two  products  in  the  diabetic space.  And  we  expect  significant volume uptick in FY'23. And also, as we wanted to expand and diversify into non-ARV, that is the year where we expect significant diversification happens out of non-ARV.

Sameer Shah:Secondly, on the Custom Synthesis business, if you can give some idea of the funnel, in the last phone call, you mentioned that business will be on its own from next year onwards, so are there any significant orders under discussion?

Dr. Satyanarayana Chava:We have a lot of opportunities there. As we are not giving any guidance, we do expect to create dedicated R&D as I mentioned, we are creating dedicated site for the division. They will grow from FY’23 onwards significantly, and we are very excited about that growth in the division.

Dr. Satyanarayana Chava:Out of seven potential first-to-file, the earliest opportunities will be in 2025.

Tushar Bohra:Sir, just quickly to start with, taking forward from Jeevan's question, and linking back to your earlier answer, you mentioned that 2025 is when we see the FTF, and 2023 we expect significant diversification  in  the  business  on  the  non-ARV  side  as  well as  presumably,  a  lot  of  this diversification will be from regulated markets. So should we look at this as that we have a very clear growth visibility for the next two, three years even before the FTF start kicking in?

Dr. Satyanarayana Chava:Yes,  see,  the non-ARV  growth  coming  from  first  time  generic  launches,  which  are  not  P4-related, and also launching very large volume, fully integrated formulations, which some of them are  fine,  some  of  them  are  under  development.  Our  growth  in  formulations  division  is not dependent on launching our first-to-file products.

Tushar Bohra:And  we  had  plans  for injectables,  I  believe,  it  was  highlighted  in one of  the  earlier  con-calls. Any updates on that front?

Dr. Satyanarayana Chava:We'll update you probably in the next couple of quarters as and when we have concrete timelines and ideas.

Tushar Bohra:On the capacity expansion side, so, we did almost Rs.1,300 crores revenue this quarter. Is it fair to assume that the current capacity is able to support this on an annualized basis, so, the 1,200 crores expansion that you see, none of it is in the numbers right now, so, that is a further growth possibility for us?

Dr. Satyanarayana Chava:We don’t give guidance, and wouldn’t want to comment on that.

Tushar Bohra:No-no, sir,I am not trying to reveal my hand here, I am just trying to understand that a) it is fair to assume that this 1,300x4 is the bare  minimum, right. And then I  would like to understand, how  much  of  the  CAPEX  is  already  done  and  exactly  from  this  point  forward,  how  much CAPEX still needs to be done, which will fuel the growth for next two years? And if you can segregate that by division?

Dr. Satyanarayana Chava:We  don't  want  to  reveal  division  wise  CAPEX,  but  we  can  tell  you,  every  quarter  we  have capacity  additions  ever  in  the  form  of  backward  integration  of  intermediates,  additional  API capacities  for  existing  products,  additional  API  capacity  for  new  products,  formulation debottlenecking lines coming commercialization for formulation. These are coming at a regular pace and not coming in bunch, every quarter we have something coming handy for our growth.

Tushar Bohra:So in Q2, we mentioned that we will have capacity constraints that will obviously affect some of the profitability in Q3 and Q4 we should see the full effect of new capacity coming in. Now that we've said that there is a slight delay on the formulations side, we should expect that maybe Q1 will probably see the ramp up far better than Q4?

Dr. Satyanarayana Chava:Q4 also will be good

Tushar Bohra:If  you  can  help us understand  the long-termvision  for  your  nutraceuticals,  cosmaceuticals business,  is  there  a  potential  to  scale  that  part  of  the  business  into  a  much  larger  meaningful segment for us?

Dr. Satyanarayana Chava:See, nutraceuticals, cosmeceuticals business were added into our CDMO business because we are  not  in  doing  a  commodity  product,  we  are  doing  one  product  to  one  customer  kind  of business. So, we are doing a lot of business with very big companies. We don't want to name those  because  of  confidentiality.  We  are  working  with who’s who in  nutraceuticals  and cosmeceuticals.

Tushar Bohra:A clarification on the number you mentioned. So this Rs.1200 crores CAPEX does not include the Richcore acquisition and possibly anything on the sterileside. Is it a fair assumption to make?Dr. Satyanarayana Chava:Yes.

Andre:Hi, this is Andre, Sangeeta's partner. One is, as far as the EBITDA margins are concerned, is it good for us to expect these to increase with time with the effect of operating leverage? And my second  question  was  that  in  the  FTF  business,  it  was  marginal  QoQ  line.  Should  we  read anything into this or is this another variation?

Dr. Satyanarayana Chava:I think the slight decline in FDFrevenues from Q2 to Q3 is only order execution, and nothing significant there. And when it comes to EBITDA margins, as we mentioned, we can't give you a specific number, but we will keep on mentioning, we are confident to maintain 30% or more EBITDA despite our continued growth in our top line.

Sangeeta Purushottam:I had a follow up question, that when we're looking at the composition of business, in FDF, it's been  sort  of  flattish  like  you mentioned in  synthesis,  and bulk of  our  growth  has  really  come from the antiviralAPI, even within the generic API division we've seen oncofallen and other APIs stabilize. Now, what is outlook on Onco if other API and this is in Generics?These are the divisions which are really going to lead to a mix for you going forward.

Dr. Satyanarayana Chava:The Onco APIs  will  have  revenues  around Rs. 300,  because  we  are  not  adding  the  oncology sales related to a CDMO business. This is a generic oncology APIs. And in other APIs, because significant revenue in other APIs is coming  from contract  manufacturing, so the sales will be bulky. So you might have seen in Q1, we have done Rs. 135 crores, in Q3, we've done Rs.100 crores,but in Q4, the sales will be bigger than Q3. So it is a timing of deliveries in other APIs.The products what we're validating in other APIs, will see commercial sale in FY'22 and there are  a  good  number  of  APIs commercial  suppliers  in FY'23.  The  growth  in  other APIs is  also very good attractive rate right now.

Sangeeta Purushottam:In the Generic Synthesis, I don't see any concerns in terms of growth. This is something where the numbers are picking up forward?

Dr. Satyanarayana Chava:InSynthesis, yes. Because of some delivery commitments to be done in Q4...Q4 was bulky last year and we expect Q4 will be bulky this year as well in the synthesis division. But if you look at our last three quarters, we have done Rs.100 crores in Q1, Rs.116 crores in Q2, Rs.127 in Q3, so it is growing, and we're very happy with thatgrowth.

Dipan Mehta:Can you give us an overview on the pricing scenario for tenders as well as the open market sales,are you witnessing any pricing pressure from year-on-year ago, quarter to now and even quarter-on-quarter?

Dr. Satyanarayana Chava:I think we indirectly answered this question.As we mentioned, despite of our growth in top line, we're  able  to  maintain  the  EBITDA  margin.That clearly gives  an  indication  that  quality  of business is very good, and we are not compromising profitability for just top line growth. So we are comfortable right now and we expect we'll be able to manage the slight decline in prices by effective cost control measures by the way of procurement or operations improvement.We do expect the numbers will be good.

Dipan Mehta:But the  margin  can  be  maintained  also  because  of  change  of  product  mix.  So,  my  specific question is that for the same product, quarter-on-quarter can you give us some idea as to what the price declines have been in the range of 3% to 5% or in the range of 8%to 10% something give us an idea that what is the kind of pricing impact which may be there on the top line which has of course been covered by better cost management and improving on the product mix?My question is around for the same type of products,molecules on an average basis what would be the price decline,I am not asking product wise,overall for the company on an aggregate basis,something to give us an idea as to what we are dealing with in terms of price erosions? 

Dr. Satyanarayana Chava:Our sales in US and Europe is a quarter of our formulations sales and we are not seeing any price decline significantly there. And when it comes to the LMIC, ARV segment because these tenders are not weekly tender or monthly tender,pricing are reasonably stable over a period of a few quarters. So there is no pricing decline for every tender.Moderator:Thank you. 

Ranvir Singh:Can you give me a break up of finished doses between ARV and non-ARV?

Dr. Satyanarayana Chava:As I mentioned, it is 75%and 25%.

Ranvir Singh:Now this is for advanced countries and...?

Dr. Satyanarayana Chava:Yeah, yeah, our LMIC sales are predominantly ARVsand then Europe and North Americaarenon-ARVs.

Ranvir Singh:Okay, but TLE600 we had rollout in US as well, right?

Dr. Satyanarayana Chava:That's not a very significant sale.

Ranvir Singh:I think previous participant has already asked this, but just in general, because the selling price of TLD is $75 and people were selling it at a discount,so, this discount has increasingly been higher,the tender price  is  much-much  lower  than  what  the  selling  price  is  versus last  year  or how is the trend there,in general for industry for all players I wanted to understand?

Dr. Satyanarayana Chava:You have  to  look  at  how  much  of  backward  integration  people  are  doing.  If  somebody  buys APIs and participation in tenders,somebody buys intermediates and make APIs and participate in tenders. Somebody makes starting materials and make intermediates and APIsand participate in tender.So the profitability margins depend on where they stand. So for integrated players like ours,  we  have  biggest  advantage  of maintaining  profitability  versus  people  who  are  non-integrated by APIs, and do formulations. Some people even don't do formulations, some people outsource  formulations manufacturing  by  buying  APIs  and  giving  it  to  somebody  else  for formulations.  For  those  companies,  the  profits  will  be  even  less.  So  you  have to look  at  how integrated the offering in ARV is more important to maintain profitability, just not the top line.

Ranvir Singh:Just a clarity aboutRichcore revenue is built in this quarter.Any amount or it's not at all?

Dr. Satyanarayana Chava:Norevenue or profitability included in Q3,probably we will do it from Q4 onwards.

C Srihari:Recently,one month injectable has been approved by the USFDA. I would like to know what kind of  impact  that  could  have on  the ARV portfolio?  And  on  the FDFfront,  could  you  give some kind of just outlook?

Dr. Satyanarayana Chava:Maybe I'll answer your long acting injectables business. So, we are in ARV business sincelast two decades and we are watching the developments very carefully. And if there is a disruption, we want to be part of the disruption rather than follow it. As you could see, the transition from Efavirenz, Dolutegravir,we took benefit out of that disruption.And even if Tenofovir will move to another low dose Tenofovir Alafenamide, we have approvals in place and we have another combination products under development, which we are filing probably next week. And if there is  a  long  acting  injectable  will  enter  market.When  and  how  will  be  depending  on  the WHO guidelines which are not yet released.And even if it is as part of the treatment guidelines, it will be not before 2025 and we have the APIs developed already and depending on the guidelines, we will develop formulations and if there is a disruption because of this, I am sure we will be part of that. So you can be rest assured on that.

C Srihari:You mentioned that the quarterly run rate is sustainable. So, what is the kind of growth guidance you will give for FY'22 for the ARV business? Dr. Satyanarayana Chava:We're not giving specific growth, but we are comfortable to say we will continue to grow in API business not only FY'21 but also in FY'22.C Srihari:On the FDFfront, would it be possible to give the volume share? You said 25% of the revenue comes from the developedmarkets.

Dr. Satyanarayana Chava:I can't give you those details. If there are very specific questions, please write to us and we are happy to share you the details.

C Srihari:The 25%, how do you see moving over the long-termnext two to three years?

Dr. Satyanarayana Chava:We  will  increase  that  share ofrevenue  coming  from  Europe  or  North  America  than  what  we have  today  significantly  because  of  productslaunch  planned which  are  non-ARV.  So  that revenue share will go up.

Charulata Gaidhani:If you could give byproduct, the traction in ARV API?Dr. Satyanarayana Chava:The  majority  growth  in ARV  APIs sales came  from  our  three  core  products–Tenofovir,Lamivudine, Efavirenz and Dolutegravir. All four products sales have increased significantly.

Charulata Gaidhani:Second question pertains to the Europe partnership.Have you filed for marketing authorization?

Dr. Satyanarayana Chava:It is  a  very  interesting  question.  Our  partner  had  marketing  authorizations.We  are  becoming their  contract  manufacturer  as  an additional site.  So  the  approval will  be  much  easier.  So  our growth in those products in FY'23 has nothing to do with approvals. So our facility was approved by  European  authorities  and  products  are  approved  by  the  authorities  and  we  are  becoming  a contract manufacturer to them, where we make APIand also formulations for them.

Charulata Gaidhani:Can you name the partner?

Dr. Satyanarayana Chava:No.