Lupin Ltd

Good evening, Kunal Randeria from Axis Capital. Vinita, should we expect Spiriva® Respimat® launch in FY27?

No, it actually was one of the FY29 DPI products.

Secondly, just a bit more on R&D where Ramesh did give some colour. Since majority of your incremental growth is coming from inhalers, how much of that is being spent on inhalers?

We don’t state platform wise details. But we are just saying bundling all of this expenditure relating to complex together as a percentage it is close to about 70%. Sure, and just one more if I can. I think inhalers is partly 30%. Yeah, I would say roughly about that. 30%, right. I don’t quite understand your biosimilar strategy so when I look at your pipeline. Most of your products are coming maybe 4 or 5 years after the first entrant. So, I don’t know, is it more opportunistic because the regulatory barriers seem to be lower now. Just a thought process behind it?

It has been quite an evolution. The strategy has been evolving on the biosimilars front just given the market evolution. When you look at the changes that have taken place in the US. It is really creating opportunity for older products as well for us. For example, Pegfilgrastim it’s a very old product, multiple players in the marketplace. But as we have had conversations over the last year with the customer base the fact that we will come in with a new ASP that’s attractive for providers makes it a very attractive opportunity. So, we really see value in bringing Pegfilgrastim to market. Whether we do it ourselves or we do it with a partner is a question mark.. We have both options available to us. So, when you look at the other products, if you start looking at the first product that we had invested in was Etanercept - Enbrel®, and the idea with Enbrel® was global, we wanted to get into the US market, European market, everywhere we can and there's a submarine pattern that appeared in the US that held the product back until 2029. But we launched in Europe through Viatris, now Biocon, as well as other parts of the world through other partners. In the US we have the ability to bring the product into the market ourselves in s fiscal year 30. It will be a material opportunity for us because we likely will still be one of four in the marketplace. So, for us so far it has been a learning on the biosimilars front.

We have tried to mitigate the risks through partnerships, partnerships on the development cost, partnerships on commercialization. In the last 12 months with the changes in the US we really see an opportunity of going direct into the market with biosimilars. Particularly for products like Pegfilgrastim

certainly there is an opportunity. But also for the Ophthalmic products - the two products that we have on the Ophthalmic front, Ranibizumab and Aflibercept. we have the relationships with Ophthalmic distributors right now. AmerisourceBergen which is now Cencora is 70% of the ophthalmic market, they visit 70% of the ophthalmic clinics. So, we have the relationships in place to be able to enter that market if we get approval in time and can launch the product.

Having said that going forward now given the barriers are reducing it becomes like a complex generic play for us. So, the focus is on products where the number of competitors are limited or where we can be one of few in the market place.

This is Neha from Bank of America, thanks for taking my question. Ramesh, if I was to think about margins after FY26, obviously FY26 we have Tolvaptan helping us and then you have the injectables. As we think about after that, Vinita mentioned Spiriva® sees competition, Tolvaptan FTF goes away. Is the margin expansion entirely dependent on the adjacencies turning around given we would continue to invest in R&D?

Yeah, I do see turning around would of course be a very important part of the whole thing. At some point of time we would also perhaps look at allowing them to spin on their axis by getting a private equity player or a strategic end to kind of allow them to grow also. Clearly, their evolution and their growth and their profitability is also important. But it is not going to be the most critical factor from our perspective, it is going to be really the core, really contributing in terms of the buoyancy on the top line and other initiatives that we have taken on.

Vinita, on your foray into specialty. One, what are the therapy areas that we are looking at this time, is it different from what we were looking at previously which was women’s health. Second, you know from a P&L as well as balance sheet investment when does the P&L investment kick in, how much are we thinking we want to invest, given the pipeline that you have. And from balance sheet what's the number that you are looking at committing for M&A or asset acquisition for specialty?

So, on the areas of focus, they are very much Respiratory and CNS. In respiratory given that we have Xopenex®, we have a position in respiratory already. We can bring synergies through our development lifecycle management within our internal capabilities. So, respiratory definitely is a big focus, building on what we have. And CNS neurology - with NaMuscla®, we are now doing the study to bring the product to US as well, that’s multiple times the opportunity of the current product. If we can get other neurology products, they will be synergistic with the infrastructure that we have in Europe as well as what we will build in the US. Those are still the two focus areas. Opportunistically we look at other areas as well based on the assets that come to market. Our focus is very much on accretive assets; on a limited basis we are looking at pipeline assets. On the pipeline front we obviously want de-risked pipelines, so late-stage programs and will want to look at creative structures around it to be able to mitigate the risk on our P&L. In terms of capital allocation maybe I will let Ramesh talk about it. I mean the overall allocation is the focus is specialty and India region.

We have drawn very good guardrails in terms of our overall capital allocation policy. In terms of for example the overall debt that we will take on the balance sheet will be around the 2:1 ratio in terms of Debt to EBITDA . If we are talking about EBITDA close to about INR 5,000 - 5,500 crores and you are talking about potentially the debt we can raise is about INR 10,000 - 11,000 crores. We are also kind of prioritizing in terms of where we will be putting our money in and from our perspective it is going to be in India and of course specialty. Though we would of course like to address white spaces in distribution program across say geographies like Europe. And we have also said that when it comes to adjacencies, we would restrict our overall involvement to what we envisaged at the time of drawing up the investment program for various adjacencies. Beyond that we would actually involve private equity houses or a potentially strategic of the like. So, we also said in terms of financial returns we would be expecting return of about 20% and in terms of a payback period between 4 to 6 years depending upon the project.

So, some of these guardrails are already operational. And going forward we would make sure that most of the projects qualify under this.

Nilesh, last one for you. For the India business you know you talked about double digit growth for next year. Given Empagliflozin, just went generic we have that impact, we had a large tender number in the base. Despite of that we would be able to grow double digit, would that be a fair conclusion, and what would be driving that growth. Is it new product launches? You mentioned about 400-500 MR additions, are there new divisions that you are launching, just some colour there?

I think we are really coming into our own in some of these therapy areas. We have had all of the disruptions on the cardiovascular side. So, that’s all played out and the like. So, now we are seeing that 30% ahead of market growth. We see diabetes obviously with this happening, but we will still see good volume growth and I think we will still grow at a double digit in diabetes as well.

Respiratory has been slow in the last couple of years. We have launched a new task force for nebulization, we have expanded our Uday Division which

is focused on extra urban as well. That will lead to growth again as well. So, sum of it all I think we are going to grow at double digit and not just for the next year. I think the intent is to grow at 20-30% ahead of the market, I believe the market will grow at 6-7% or 8% as the case maybe. On top of that if you grow at 20-30% ahead you will be at that double digit. I think the sum of this all, trade generics we have launched into a separate subsidiary, that entity is expected to grow at a strong number. OTC is expected to grow at a very strong double-digit number as well. Summation of all of this adds up to a good double-digit number.

So, while we collate some of the audiences while we put up a queue here, there are a couple of questions from the people who have joined online.

One question is the US government has expressed a desire to reduce dependencies on PBMs and increase the transparency of drug pricing. And the question which is asked is does this lead to better predictability of drug pricing and is it a positive measure from a generic pricing perspective going ahead? The scrutiny on PBMs?

The actual question is the dependency on PBMs the government in the US would like to reduce and does that mean that the pricing environment for generics in the US improves further actually going ahead?

I think the PBMs take a big part of the value so certainly improves the opportunity for generic drugs. Also is a big opportunity for the government to save drug spend. So, it is a combination. I mean we certainly think that it will reduce drug spend overall, because right now it is going into the pockets of folks that don’t pass it on to patients, nor pay us either. And potentially can help us with generic pricing.

And a couple of questions on Mirabegron, I think we did answer some parts of it. One question is are we continuing to sell Mirabegron till the litigation dates in Feb and added question on the ‘780 patent are we fighting against infringement or invalidity? Add on question to that is if you win against infringement do we have a pathway till 2030 when the patent actually expires?

Well, we hope. But so the first question was, do we continue to sell? Yes, we continue to sell. And two, in terms of our defences it is going to be both, non- infringement as well as invalidity. And then if we have the opportunity to prevail on infringement only, we might have a long-term opportunity. So, we will see.

A couple of questions have come, actually Rajeev did answer but again this concern that with the launch of the generic GLP-1s in India there could be some cannibalization on the diabetes side especially on insulin. I know Rajeev did mention that they are two very different categories. But is there anything else that we have in terms of talking about the fact that our diabetes portfolio, we have visibility and confidence that it will continue to grow even with the GLP-1s coming in?

I mean the market is going to open up, right. It is going to take time to shape therapy itself. So, it is a near term opportunity to grow on the GLP-1 side itself.

That doesn’t take away the fact that there is a lot of diabetes in India, a lot of untreated diabetes in India. It is not like everybody is going to jump onto GLP- 1 product to change where the therapy is headed. Obviously with the genericisation price point comes down, access becomes much more available to people to access GLP-1 products itself. But I think we are talking many years out , certainly our MTP is talking about the double-digit growth on the diabetes side as well. And to add to that I think Rajeev talked about the insulin, I think the insulin opportunity, I think we can emerge as a very large insulin player as Lupin and specially if we can bring access to tier 2 - tier 3 towns I think the opportunity is a very large opportunity in itself.

Just quickly Canada USD 45 million sales, we are launching Semaglutide in India, we are not there in Canada are we?

No, we don’t have the product as of yet. The team is actively looking at an opportunity of in-licensing but we have an internal product which will come later into Canada.

On the European part Nanomi acquisition, and the French injectable acquisition, we have Risperdal coming from Nanomi so how does it complement. Could you show light on the acquisition how does it help us, or whether it doesn't help us at all. Just trying to understand that landscape.

I am just trying to understand is there any benefit from both combined acquisitions because I think we got Risperdal Consta® injectable from Nanomi as far as I remember. Does it help us?

I think they are independent in any case. I mean Nanomi is more a platform that we bought for long acting injectables. It is a very unique platform. Risperdal Consta® of course will be the validation of the platform, it will be the first product that we bring to market through the platform. But what we are doing with that platform is really exploring innovative opportunities, 505(b)(2) opportunities. We have put peptides on that platform. We are working on biologics on that platform to see how far we can extend the use of the platform. But to us the biggest opportunity with Nanomi is really the ability to innovate and build a novel pipeline.

The Medisol acquisition and injectable business acquisition in France. We didn’t have a presence in France until we bought Medisol. So it gives us a presence in France. And on top of the portfolio we have there we are looking at all of the injectables that we have in India including Risperdal Consta® but we are looking at the broader portfolio of injectables to bring into France.

Last question, all the DPI / MDI are coming from Indore. Just a clarification? Future filings?

Future filings will be a combination of India as well as Coral Springs.

You spoke about pricing pressure in Albuterol. Can you elaborate?

Another question to Ramesh. Ramesh, you showed the chart on capex of INR 700 or INR 600 crores kind of run rate for last several years. But your cash flow statement shows a capex of INR 1600 crores in FY25 and INR 900 crores in FY24 What is the difference for that number?

The Cashflow shown here reflects just the Capex portion and the one in the Balance sheet also includes acquisitions.

So, these are acquisitions of ANDAs or intangibles other than that?

It could have been intangibles. We bought into companies like Medisol, Vinita just mentioned that, so, all of those acquisitions that came in. The Cash flow is after taking into account all of that.

I was talking about the capex number, the INR 700 crores numbers which you had showcased for last couple of years on an average versus the cash flow statement where there is the capex number over there, the gap is very wide is what I am saying.?

No, I showed only one figure which is the capital expenditure on an annual basis for 4-5 years really. And that I think average is about INR 500 to INR 700 crores. A larger chunk was for really maintenance capex and there's been some expansion in some parts especially when it comes to biosimilars, injectables and the likes.

This is Kunal from Macquarie. The first question is on Tolvaptan. I think our understanding was that this is going to be a long tail product for us. Has there been any change in that view that we had on this product?

No, we always said that in the 6-month exclusivity we will gain a lot more than the period where we have additional competition. But given the launch efforts and what we have learnt in the last couple of months, the specialty distributors and that market works a little bit differently. They really like to establish longer term relationships. So, for REMS product we expected in any case the tail to be longer and now with the relationships that we have established with the specialty distributors we feel even stronger that we should be able to maintain a high share in the time when others get in.

Second question on the overall impact on our P&L, let’s say from next 3 to 5- year perspective because we are looking at a lot of shift towards complex generics and specialty. Margins wherever they are right now or ROCE whatever it is right now where do you see that panning out over next 3 to 5 years because it also seems that there are a lot of investments, R&D may be inching up for that future pipeline. So, how should we think beyond FY26 just looking at this shift in the business mix that we have put out today?

I think we will take a last question, it is online. It says on Semaglutide we have highlighted that we are partnered as well as we have our own version. The question is what was the reason to have both and is it to compress the timeline or is there something else?

We have a play in the oral solid the tablet as well as injectables. The tablet we have internal, injectable we have partnered.

Thank you, I think if we have no further questions we would like to end. Thank you so much, we really appreciate your time, effort, it has been a busy day for you. We end this session and looking forward to seeing you and connecting with you again going ahead as well. Thank you.