Y 2011 Earnings Call - Cadila Healthcare Dt-6 May’11 Operator Ladies and gentlemen, good day and welcome to the Q4 FY11 Post Results Conference Call of Cadila Healthcare Limited. As a reminder for the duration of this conference all participants lines will be in the listen-only mode. And there will be an opportunity for you to ask questions at the end of today's presentation. Please note that this conference is being recorded. I would now like to hand the conference over to Dr. Ganesh Nayak, Executive Director, Zydus Cadila. Thank you, and over to you, sir. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Thank you. Hi, this is Ganesh Nayak. Very good evening to you and welcome to our post-result teleconference for FY11. We have with us Mr. Pankaj Patel, Chairman, Managing Director and Chief Executive Officer. We also have Sharvil Patel, Deputy Managing Director. We have Nitin Parekh, who is our CFO and we have Vishal Gor, our General Manager, Investor Relations. Four years ago after we achieved our first milestone of the revenues of $400 million in FY07, we embarked on the journey towards our next milestone of revenues of 1 billion by FY 2011. It gives us immense pleasure and a sense of accomplishment and pride in announcing that we have continued the trend of achieving milestone after milestone and ended the year 2010-11 with a high note, crossing the important milestone of $1 billion. The year 2010-11 would be remembered as a landmark year in which we joined the elite billionaire club of Indian pharma companies. It's a big leap which has been achieved through an all-round effort of the four years in terms of strengthening existing businesses, building new capabilities and venturing into newer geographies. With that, let me recap the highlights of the initiatives and achievements of the year 2010-11. On the India formulations front, we became the first company in India to launch the indigenously developed and manufactured H1N1 vaccine, VaxiFlu-S. The egg-based inactivated vaccine based on conventional technology has been developed by researchers at our Vaccine Technology Centre in Ahmedabad. We signed an agreement with Bayer Healthcare to form by Bayer Zydus Pharma, a joint venture which would market products from India with a focus on women's healthcare, metabolic disorders, diagnostic imaging, cardiovascular diseases, anti-diabetic treatment and oncology. This win-win collaboration builds upon and significantly enhances, the existing relationship of both parties with long-term goals. This JV will leverage the strengths of Bayer's optimized products portfolio, and Zydus' marketing and distribution capabilities to enhance the launch of new products and the sale of existing brands. We launched over 60 new products including line extensions in the formulation markets market of India of which 24 were for the first time in India. Overall, our India formulations business posted a sale of 17,145 million, up 19%. Now, coming to Global formulations, our U.S. business continued its journey on the growth path and posted another year of strong performance. We posted sales of 9,655 million in the U.S., up 34% with the launch of 11 new including 4 day 1 launches. We are now amongst the top three players in the market for 9 out of 10 marketed by us in the U.S. and we have recently being ranked 12th among the generic companies based on scripts and the source for this is the IMS. In Europe, our business in France continued to progress even in this difficult time for the overall market and we are outpaced the market growth though the acceleration was lower compared to the previous years. We launched over 20 new products on line extensions including four day 1 launches. Coming to Spain, we continued to increase our market presence through new product launches and are now ranked amongst the top 20 generic companies. Overall, we posted sales of 2,755 million in Europe. In euro terms, the Europe business grew by 13%. In spite of huge price reductions in Japan during the year for some of our products which we market, we continued our undergo to establish our presence in the world's second largest pharmaceutical market. With the launch of Aldomet in Japan, we became the first Indian company to get the marketing approval and launch a product, developed and manufactured from India. We also launched three in-licensed products including Day 1 launches of Glimepiride and Rabeprazole. During the year, our Japanese operations posted a sale of Rs. 422 million, up 34% year-on-year.

To strengthen our presence and consolidate operations in the emerging markets of Brazil, Asia Pacific, Africa and Middle East, last year we created a separate business unit through internal restructuring, which would help us to have a better focus on these rapidly growing markets. Our business in Brazil continued to progress well with healthy growth in both the branded and the pure generic segments with the launch of four new products. Business in other emerging markets of Asia Pacific, Africa and Middle East also registered healthy growth rates, maintaining market leader positions in Sri Lanka, Myanmar, Uganda and Sudan. Overall, we registered a sale of Rs. 4,230 million in that emerging markets with a growth 24% year-on-year. Now, coming to the other businesses, Zydus Wellness continued its journey on the growth track and registered a sale of 336 million, up 25% and the net profit of grew to 595 million which was up 31.3%. During the year, Zydus Wellness launched a couple of new variants of existing categories like Sugar Free TeaLite, a unique concept which offers the goodness of tea minus calories. Sugar FreeMint, Sugar Free Natura sweet drops in liquid form, Sugar Free Herbia, which is the first herbal sweetener made from and also an eggless mayonnaise under the Nutralite brand name. Extending its wellness range, our Zydus wellness introduced ActiLife, a nutritional beverage in select markets, marking it's foray into the nutraceutical space. API expose, and this is other than the Nycomed JV, grew by 18% during the year in spite of challenges in the form of price erosion and the rupee appreciation. Zydus-Nycomed, our JV with Nycomed commissioned the newly expanded API manufacturing facility at Navi Mumbai slated to emerge as a hub for global supplies of APIs for Nycomed's branded generic portfolio. The facility will manufacture complex high-end APIs and would be audited by several international regulatory authorities. Zydus Hospira posted this is 50% share, posted a sale of 2,152 million and the net profit of Rs. 1,270 million. The JV commenced manufacturing and supply of products for the U.S. market during this year including the Docetaxel which was supplied in the month of March 2011. As was envisaged earlier, the profit contribution of Zydus-Hospira, the JV, has more than offset the deduction in profit contribution from Zydus-Nycomed JV and the combined profit contribution from both the JVs has more than doubled during the year, that is from Rs. 771 million last year to Rs. 1,513 million this year. Coming to Zydus Animals Health Limited, one of India's leading company in the Animal Health space, we posted sale of Rs. 1,390 million, up 17% with the launch of ten new products of which one was the first in India. It received the Indian Poultry Journalist Association Award 2010 for the best poultry healthcare products company of India. As you are aware, we also signed a strategic licensing deal with Abbott Labs to license our 24 branded generics in 15 key emerging markets, with an option of an additional 40 products to be included over the term of the collaboration. This deal in aims at leveraging strengths of both Zydus and Abbott and announcing competitiveness in the emerging markets. Now, coming to research and development, on the new molecule entity research front, ZYOG1, our novel orally acting GLP-1 agonist completed Phase I clinical trial during the year. We received the USFDA approval for conducting Phase I clinical trials for our IND ZYD1, a novel GLP-1 agonist for treating diabetes. We filed an IND for ZYGK-1, a novel glucokinase activator, which received permission from the USFDA for Phase I clinical trials recently. ZYPH0907, which is a novel oral PTH agonist for treating osteoporosis and ZYG19, a novel GPR 119 agonist for treating diabetes. These two have completed R&D enabling pre-clinical development. On the biologics front, we received the Indian Marketing Authorization for biosimilar versions of EPO during the year. We also completed clinical trials of biosimilar versions of Teriparatide and PEG-IFN alpha 2b. On the vaccine research front, we commissioned a new fully equipped state-of-the-art vaccine technology center near Ahmedabad which would develop several bacterial, viral and biotech waster vaccines. We filed 24 additional ANDAs with the USFDA including four ANDAs for parental products and two ANDAs for nasal products. Thus taking our total to 130 ANDA filings. We also filed 7 US DMFs with the USFDA taking our cumulative total to 97 DMFs. We received 11 more ANDA approvals from the USFDA taking our total approval to 65. We filed 26 additional new product dossiers for the EU market including seven for the Spanish market taking our cumulative number of new product dossier filings to a 116. We received 33 new product dossier approvals for the EU market and with that our cumulative number of product dossier approvals now in the EU have reached 67. We filed five additional dossiers in the Brazilian market taking our cumulative number in Brazil to 64

filings. Now coming to awards and recognition, our commitment towards excellence and consistency in delivering high performance year-on-year has been appreciated and we were declared the emerging company of the year by the prestigious ET Awards for Corporate Excellence 2010. Recently, we were ranked 75th among the top 100 stocks in India by ET Mint. Now let us take you through the broad financial members for the year 2011 on a consolidated basis. But before that, I would like to make a mention. In appreciation of the efforts of the employee and the commitment towards the billion dollar aspiration which we had for this year, the management was pleased to announce a special incentive and bonus to all the employees of the organization, which resulted in a financial outflow to the extent of 51 crores on a gross basis and net of tax of 39 crores or Rs. 390 million. Which means if you take this into consideration, the profits which we have declared for the year of 7,110 million is actually Rs. 7,500 million. Coming to the numbers on details. Our total income from operations was up 25.6% year-on-year to 46.3 billion, that is over $1 billion from last year's sale of Rs. 36.9 billion. Our EBIT was up 26.9% year-on-year to 10,262 million from 8,086 million last year. Our EBIT margin was up by 0.3% to 22.2 from 21.9 last year. Our operating profit before tax that is excluding non-operating incomes, exceptional items and exchange rate fluctuation on ForEx loans was up by 38.3% year-on-year to 8,212 million from 5,939 million last year. Our net profit tax, net profit after tax was up by 40.8% year-on-year to 7,110 million, which as I told you should actually be read as 7,500 million, if you do not take that one-time employee incentivization Rs. 390 million. And last year, our PAT was 5,051 million. But obviously in line our, EPS also is up by 30.8% to Rs. 34.73 from Rs. 24.67 last year. The return on average capital employed increased to 24.2% vis-à-vis 21.1% last year while return on average net worth increased to 37.5% from 35.9% last year. Going forward, we shall continue to achieve newer zeniths year-after-year and the trend of crossing new milestones will continue. On our journey beyond a billion, we have our eyes now set on the next goal post of revenues of over US$ 3 billion by the year 2015. To that effect, and in that context, we have already initiated focused efforts towards that direction and we shall keep you updated on these developments from time-to-time. Thank you very much and we shall now start the Q&A session. Over to the coordinator for the question-and-answers. Thank you.

Questions And Answers Operator Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]. The first question is from Kartik Mehta from Daiwa Capital. Please go ahead. Kartik Mehta Yeah, hi. Now that we have reached about 1 billion hello? Corporate Participant Yeah. Kartik Mehta Yeah. Is there any the revenues from the previous JV that you can share in terms of the product that we'll actually launch in FY12, I mean how will be the overall tie up, will it be on NDD based product or will it be the same products that they have, if you can throw... Corporate Participant Well, at this point and time, Kartik, we are not in a position to give you more details on that front.

Kartik Mehta Okay. And on the India growth, we have seen fair amount of growth in this quarter as well as for the year. What would be a sustainable growth without assuming anything for the Bayer JV for the next two three years because we are very higher base now. So do you see going off the branded formulations both for the branded formulations growth that we are in --. Can I finish? Analyst Yeah? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd As you would be aware from the past conferences that we shared with, we have formed some expansion in our domestic business with some new divisions and also addition of fieldforce to sustain our growth over the next four years or five years till the year 2015. And coming specifically to the numbers, our growth expectations would be in excess of 15% plus. Kartik Mehta Is this try to assume without any of the assumptions for the bigger JV? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Yes, yes. Kartik Mehta And if I can just take one last one. Yeah, in the case of our construction, we have launched in early March this year seems to be a really high number. But could you share what would be the run rate now that this is actually the second? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd At this point in time we are not in a position to forecast anything on that front. Kartik Mehta Okay. Then, would you have at least about two months inventory because you would be knowing that, Sun would be entering the market. Can you at least share your thought on that? Thanks. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd I think my recommendation that you Hospira is giving guidance as far as this product is concerned. And you can follow that because the end market is done by Hospira. So, as JV partner, we would not be able to throw any more further details than what Hospira has already shared publicly with everybody. So, I would suggest that you follow what Hospira is already publicly made information as far as this product is concerned. Kartik Mehta Okay, sir. And apart from this do you have any product in FY13 from this JV? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Yeah, we do have some further products because currently we are selling about three products and we expect our overall number of

products are above rates. So we expect other products to increase. Kartik Mehta Thank you. Operator Thank you. The next question is from the Jaishal Shah from JM Financial. Please go ahead Analyst Okay. Thank you. And congratulation to the entire management and the team for achieving 1 to $10 target for this year. Just a question... some questions on just say financials. If you can just help us understand is raw material to sales has increased quite a bit this quarter. Anything which is driving back? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Yeah. I think Vishal, would you like to take that Vishal Gor, General Manager-Investor Relations Jaishal, basically if you see around last quarter of... if you can take last three, four financial year, it is normally high on raw material front, because of basically a business mix we have less contribution coming in from the domestic, when compared to exports. So here again, there is a question of business mix plus also Nycomed contribution has gone down from this quarter. So basically it's an issue of the business mix and the Nycomed contribution coming down. And also in case of some company's and business like Wellness, the input cost have gone up. So that is also a partial reason for increasing overall material cost. Analyst Right. Right, right, right. And this if you can just give us the fourth quarter number for your Hospira JV or the profit number for Hospira JV? Corporate Participant Yeah I'll give it to you. Fourth quarter you want profit number? Analyst Yeah, profit number. Corporate Participant 912 million. Analyst 912 million okay, okay. And last question form my side is on, next year any guidance in terms of how many ANDAs you are looking to file? Corporate Participant

Yeah, our target is to file about 15 ANDAs next year. Analyst Sorry, 15? Corporate Participant Yeah. Analyst Okay. Thank you. Operator Thank you. The next question is from Bino Pathiparampil from IIFL. Please go ahead. Bino Pathiparampil Hi. Congrats on the great success. Just couple of quick questions on the U.S. market. One, can I get some color on where... which medal can be enforced the quarter compared to the prior quarter is coming from? And two, now that your base is 200 million plus in U.S., do you think the kind of historic rate in excess of 50% is maintainable here going forward? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd I didn't understand your first question correctly. So would you please repeat the first question? Bino Pathiparampil Yeah, sure. From the 3Q to 4Q there is most extra 10 million of revenue. So was there any particular product that contributed to that? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Okay. Let me just share few things. I think we saw some very surprising demand into U.S. market during the month beginning of this quarter. And we saw some buyers coming in the last moment asking for product from us reason being some issues with the supply of some other companies. And we saw some them additional demand coming up, which we were able to encash because we had inventory in the marketplace. And so that's the reason why we could see that some additional business coming up, but that was basically ultimately resulted into a contract which will become a kind of annual now sustainable business from our point of view. Regarding your second question is about the... now the business is around $200 million. We knew that that 's a problem, so we cannot expect the same percentage of growth going forward given the fact that the burden become big, but we expect reasonably good growth further going for... as far as U.S. market is concerned. As we are not providing any guidance, I am not able to give you a specific number, but we expect good growth to continue. However, it will not be the same. Analyst Right, right, right. Yeah, one more quick question on the side of Austria if I roughly assume an API price to be overall market size of the Docetaxel opportunity in the U.S. do some rough that calculations, it looks like almost full year of API inventory has been accounted for in this quarter. If not full year, maybe at least nine, 10 months. So is that a correct calculation or do you think it's far

from growth? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd I don't think it's true. Analyst Okay. Okay. Thanks, I will join back the queue. Operator Thank you. The next question is from Manoj Garg from Edelweiss. Please go ahead. Manoj Garg Good evening to all of you and congratulations for good set of numbers. I just want to understand like in Q4, the supply of Hospira, does it also include Gemcitabine supply for the U.S. market or it's only Taxotere. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd It's only Taxotere. Manoj Garg Okay. And when do we expect the supply of Gemcitabine in the U.S. market? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Somewhere within the next financial year, but exact date I don't having with... I am not having with me. Manoj Garg Okay. fair enough. And second thing you have indicated about eight product. Is that tie up for the six products or it worked with Hospira. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd The tie up is for the six products actually. Manoj Garg Okay. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd So it has a slippage I set it. Manoj Garg Okay. So it's for six products only?

Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Yeah. Manoj Garg And do we see like further expansion of the scope of the tie up in terms of number of products looking forward? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Well, I cannot say specifically whenever something happens we can talk about it. At this moment we have this tie up. Manoj Garg Okay. And just want to understand about Nycomed JV. Now since I think probably the quarter we have seen the full generated an impact of Cantor pressure. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Yeah. Manoj Garg So can we take this as a sustainable run rate going forward? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Well, you can reasonably I think so. It's very fluid at this moment to give you a very clear guidance for sure, because of the fact that it just began. So we'll know exactly as we move forward but couple of quarters we all will have very clear idea of what's going to happen. Manoj Garg Fair enough, sir. And sir like quarter four of this year has seen a dramatic growth in the domestic market. But in the gross of 23% I think which is the highest among last couple of quarters. Anyone one-offs or like what have basically there is no disclosure? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd I think there are no one-off here, but it's a base effect also. Look at our base historical number if you see is very low. So it's also a base effect. However, we are not done more than the budget. So as such there is no one-off here. Manoj Garg Okay, okay. And the current filtrants in the domestic market is still stand around of 4,500 or do you have increased the number of people doing the quarter also? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Yeah, same. Manoj Garg

Same 4,500. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Yeah. Manoj Garg Thank you. That's all from my side and all the best. Operator Thank you. The next question is from the Nimish Mehta from MP Advisors. Please go ahead. Nimish Mehta Yeah, thank you for taking my question and hearty congratulations for the great set of numbers. I wanted to ask about this product selling for the U.S. market. Are you likely to receive the approval before the final patent expiry or in other words, is there any opportunity left there with this product in terms of no competition? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd The opportunity still exist. We have not yet got approval. And we cannot comment about FDA approval that's because that's very unpredictable at this moment. So, that we were expecting approval quite ahead of that all of a sudden we saw at end of the quarter, wherein, last quarterly call, we were talking about something else. So, it's very unpredictable to say give you a specific date. Nimish Mehta Okay. But the opportunity still exist so you believe that - Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Yeah, opportunity still exist. Nimish Mehta Okay. And the second question is related to the oral GLP-1 compound. Can you throw some more details because it's quite interesting to see an oral compound - Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd It's basically... it's a GLP-1 mimetic compound, which is orally absorbed. We have completed the Phase I studies and we have seen good plasma level of the compound and also from first initial proof-of-concept. We are now going to pursue the Phase II study on that, which will give us basically the full proof-of-concept that the values as of orally and also is having GLP effect. Nimish Mehta Thank you. And this Phase I has been completed in India, right? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd

Yes, that has been completed in India. Nimish Mehta Okay. Are you likely, are we targeting this product to be launched in India or we also are looking at licensing? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd No, we are looking at... ultimately we would be looking at this product for licensing and co-development with some partner. Nimish Mehta Okay. Is it fair to say that this is kind of most exciting compound in your - Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd It's one of the very exciting compound in our portfolio. We have some other compound also, we believe we as equally exciting. Nimish Mehta Okay. Can you name the other one - Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd We have a thyroid mimetic compound, we believe that's a very exciting compound. It is differentiated from the currently known compound like treat around. We have a better profile than that compound. So, we believe that, we have a differentiated compound selectively absorbed in the right organ et cetera, which would give the right therapeutic window for this class of compound. We also have follow-on compound on GLP-1 which also shows a very interesting pre-clinical data. And also we have a the PTH mimetic compound, again that has that is again using our proprietary technology. It's an orally absorbable compound, a small peptide again. But works like a like a PTH full length and we expect... we also see a very good pre-clinical data as far as PK is concerned and also some initial proofs with respect to the improvement in the bone or growth of bone and their densities. We are currently doing a long-term study on this compound which would clearly prove the efficacy, but these are some of the compounds I believe are very interesting from a long-term perspective. Nimish Mehta Okay. Fine. Final question on the domestic market. We have this JV with Bayer and can we... I know you will not be able share more color there. But can we expect this to be a trend for Cadila in terms of growth for the domestic market, meaning trying licensing product from multinational or licensing I mean basically JV like this? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd I think we as a company has been following the partnership model right from '95 and we have been creating number of partnerships. And we very strongly believe that partnership is the way to grow. And our number when... of last 10 years if you realize that partnerships have contributed significantly to our EBITDA to grow and also make additional profits. So, we will continue going forward also creating more partnerships. Now, I cannot specifically for domestic market will create partnership, but we are basically willing to consider partnership as a part of growth model going forward. So, Bayer we already have an existing relationship and I am happy that we have actually strengthen the relationship by creating not only from the distribution to a joint venture arrangement. Nimish Mehta

Okay. Okay. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Yeah. Nimish Mehta Thank you very much. Operator Thank you. The next question is from Girish Bakhru from HSBC. Please go ahead. Girish Bakhru Yeah, hi. Thanks for taking my question. I just wanted little more color on the U.S. market. If you could just throw light on... if you have been in facing more market share than -- I mean just wanted know what kind of products are driving this strong growth? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd I think we have several products now in the U.S. markets. So, I cannot specifically say that this is happening because one or two products. But I can say most of the products which we announced we have got good market share. We have got almost all major customer is now in buying our products from, not all the products but different products that if you get. Our business is quite divided and it creates a work of product range rather then one or two products skewed. And also, actually provides us much more comfort in terms of... we are not get it... going to get some rude shocks, generally happens, and then we have your business dependent only on one or two products. So, we don't see that even going forward this is what the model we have followed from the beginning and we continue to see new players entering, we see sometime competition. But because we have wide product range now we do not see any issues, we are able to continue growing. We just challenge I see in the U.S. market is about company's ability to become a sustainable supplier both from quality perspectives and also from supplier regulatory perspective. And I think that's where our lot of efforts and strategies going around. Our emphasis on basically compliant to the current good manufacturing packages. And also to excel in supply chain is actually hibernates to got more and more market share. Girish Bakhru Right. I mean just a little more, if you can throw color on if you are kind of focusing more on the NDBS this product, like you have that you have fight for a parental products and nasal products. Are we seeing that there would be more kind of a launches in those limit competition products going forward? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Yeah, I think going forward, because I think somebody asked the question before also. Our base has become big and for those who sustainable growth and reached to our next milestone, we need products which are much larger in terms of size and limited competition to have better market shares in U.S rate and market growth in the U.S marketplace. So, we are focusing on filing such products and yes we have entered into nasals, we have entered into injectables, we have entered into some facial products where you could have first to find opportunities in terms of that. So going forward we will see more and more such opportunities.

Girish Bakhru Right. And on Brazil market, I mean just wanted to know, how is the growth trend looking there both in the generics and branded segment? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd I think our generics business is growing around 15%... sorry the branded business is growing around 15%, the generics business is growing around 25%. And going forward, also we see this kind of trend continuing. Our challenge is again regulatory approval for speed. That has been one area where we are not getting as many products as we should, though we have filed numbers. So, we expect going forward, we would have more approvals because now we've seen visibility of products getting closer to our product. So moment we are more... we could actually see acceleration of growth. Girish Bakhru Okay. And on the tax rate, I know this quarter was had a very low tax rate, probably this year, probably was supposed to end somewhere around 15% but to 12.5%. What is the guidance for the next year? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd We will lay down our net rate, around 3% only. Girish Bakhru Okay. And is there any ForEx component, precisely ForEx gain in the other income, other expense, does it have any ForEx loss or gain? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd No, no. Girish Bakhru All right. Thank you. I'll join back the queue. Operator Thank you. The next question is from Sonal Gupta from UBS. Please go ahead. Sonal Gupta Hi. Congratulations and thanks for taking my question. One was to understand... I mean I know and I understand you are not giving any numbers. But in terms of family but any number of approvals I mean you expect all those launches you expect in U.S. in the next year? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Okay. Well I can say that, last year we got about 11 approval and exactly there is a run rate we should also look at around 10 plus approval this year. Sonal Gupta

Okay. And - Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Again, it is very difficult to predict because nobody can say about it, but that's what we expect. Sonal Gupta Right. And just to understand out of the 65 approvals, how many have been commercialized? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd At this moment, how many only 65 - Corporate Participant Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd 41. Sonal Gupta Okay. And you've also said that you are looking to file only 15 ANDAs which is sort of the slowdown from the 24 you are filing. So, any sort of change in strategy here in terms of the filing? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd No, I think we are talking about 15 plus, but as a guidance we will likely to give 15, we would like to do that 15 would be mostly focused on overall but we are also filing injectable, nasal and other ones. So numbers would be in... aggregate numbers will actually be 20. Sonal Gupta Okay. And anything on, because I think in the past you have mentioned about patches or which I think you have a tie-up as well. So, any updates there as to when are you... Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd We have filed two ANDAs for that. Sonal Gupta Okay. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd During the last quarter.

Sonal Gupta Okay. And anymore products you expect there? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd We are expecting to file more next year. Sonal Gupta And any other product area that you can highlight, where you're looking at in terms of U.S. filings? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Other areas is basically, we're focusing on basically first two file opportunities and some drug delivery based products, where there is limited or no competition. Sonal Gupta Okay. And finally just want to understand on the Abbott, on the Abbott tie-up. When do you expect really this thing to scale up? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Abbott has started filing in the different market. So, it all depends on their approvals. But, we expect that next fiscal year the first revenue will start and of course full ramp-up will take some time. Sonal Gupta Right. But any key markets that you're targeting to begin with in this area? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd No. We have the 15 markets, we're filing in all markets. Sonal Gupta Okay, right. Thank you so much. Operator Thank you. The next question is from Ravi Agarwal from Standard Chartered. Please go ahead. Ravi Agarwal Yeah. Good afternoon and thanks. Great set of numbers, congratulations. The first question is on the Hospira margins, if I see for the full year we've done around 50, 59% margins. Is this kind of a run rate one can look for just because, is there skew because of the 4Q numbers and the March number? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Well, it depends upon the kind of, generally competition we see in the U.S. market. So, it's very difficult to say, because this is

basically coming out of one product into U.S. market and we don't know what's going to happen as more and more player comes into that, to the margin. But, I think our margins will be dependent on the market, what's happen into the market. So, very difficult to predict for myself. But you can basically take the guidance which Hospira has provided to their investors. Ravi Agarwal The second question is again on the product roll-outs in Hospira especially for the U.S. market, now gemcitabine you're seeing as a product, which you see sometime in FY12. Are there other products which we can expect to see in FY12 in these five products which are there in your basket? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Well, I cannot say because it's very, very, it' all contingent to approvals and all that. So, it's very difficult to say that that will be there or not. It's tough for us to really predict this whole complex situation. But I think Hospira's guidance has been there on their website and you can follow that basically. Ravi Agarwal The second question is on the gross margins, how do you see a GS to sales, now it's up quite sharply. You are mentioning that part of it is because of the mix and part of it is because of the increased cost in the OTC business. Just wondering that what is the kind of cost which one expects going forward to carry forward from this, in the scenario given the fact that from Q1 traditionally this mix should start to improve? And do you find any spin-over in this COGS which you'll see in the next three quarters? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd No, I don't think we should, we should look at, we should be seeing a kind of a stable COGS going forward. I think we should not take fourth quarter as a number, but average number of the whole year is what we can expect in this year as well. Ravi Agarwal Okay. I guess one, actually one housekeeping question. Tax which you provided for this quarter is around 10 crores. And you have been mentioning that the post tax salary, the bonus which you paid to your staff actually is figure of around 11, 11.5 crores. So, do I read this in a way to say that the tax rate offset with the staff increase is actually negative for the quarter? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd No, not really. I think that what was basically explained was that we had given a special incentive, because the company achieved the important milestone to all the employees that had a revenue impact of 51 crores. Have we not given that, our profits would have been higher before tax by 51 crore. And if you remove the tax effect from there, then it would have been 38 crores. So, that was basically based on the assumed tax rate, which we believe the other tax that we will have, but on our 51 crore if additional profit would have come, then also then the additional tax involve there. And that's why the bottom-line impact would have been not 51, but 38. That's what we were trying to explain to you. Ravi Agarwal But it would have all been paid in the fourth quarter, right? Maybe staff cost... Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Yes, yes. Yeah. Because to that extent the fourth quarter profit would have been higher by that much money. Ravi Agarwal

What I understand that is, just that because we have paid a total tax outflow of around 10 crores, the reported number of 10 crores and the tax impact on the salary is already 13 crores. I was wondering where the difference is actually coming from? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd I think, Vishal can explain you exact that. Ravi Agarwal Yeah. Vishal Gor, General Manager-Investor Relations Ravi, what you are saying is net tax expense for the fourth quarter. But the breakup of that is, that 10 crore is made up of about 20 crore of current tax and deferred tax. Ravi Agarwal Okay. Vishal Gor, General Manager-Investor Relations And minus 10 crore was a refund of prior year's equity. Ravi Agarwal Okay. Vishal Gor, General Manager-Investor Relations Okay. But as for the - FBT has to be shown along with normal tax. Otherwise, the current tax and deferred tax provision is inline with what we have guided you earlier about 14, 15%. And for computing the tax component in the incentive or bonus, we have considered the full net, because on a standalone basis that is what we would be paying, if we were to pay the tax on the bonus part. Ravi Agarwal Okay. Thanks. Thanks so much. Operator Thank you. The next question is from Anubhav Aggarwal from Credit Suisse. Please go ahead Anubhav Aggarwal Yeah. Thanks. Sir, just one question on the mechanics of Bayer partnership, officially it's a 50-50 JV. So, just had a question that initially when you are starting up this JV, would both the sides were contributing equal amount of sales, when you are starting up? I know you can't give the details about the future products, but when you stared up, because my question was arise from this point that at least the profit should be shared equally, but I'm not very clear whether Bayer will be contributing the same amount of sales what you are contributing to the JV, initially when you starting that? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd

It is not exactly the same, but almost the same I can say that. So, it's more or less the same contribution by both the partners. And the going forward basically Bayer's pipeline products will come in and also we'll look at some brand generate this opportunity. So, we will have some branded - as well in the JV. Anubhav Aggarwal Would you be comfortable sharing that number, what exactly are you contributing to the Bayer JV? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd It's almost say, it's not the big gap that one can say that. And this is exactly what Bayer is and it's almost same. Anubhav Aggarwal Okay, okay. But in terms of your contribution, what is the sales, which is basically going as part of JV, I mean if we can get an idea about that? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd You are asking the me the question round-and-round like an -, but I tell you that it is exactly the same and very soon we will share the Bayer figure with you. So, you will know exactly. Anubhav Aggarwal Okay. Thanks. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Because this is joint venture, generally we don't give figures of joint venture because we need a partner's approval before we can talk about joint venture. So, usually we avoid talking about joint venture numbers as we have specific approvals on them. Anubhav Aggarwal Okay. Thank you, sir. Operator Thank you. The next question is from Kartik Mehta from Sushil Finance. Please go ahead. Kartik Mehta Good evening, sir. Sir, my question is on the ForEx side like what is our billing ratio of the total ForEx number in terms of dollar and euro? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Sorry, come again. Kartik Mehta What is our billing ratio of the total export amount in terms of dollar and euro? Are we billing everything in dollar?

Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd I can give you the data offline, but only the Europe sales is in euro. Kartik Mehta Okay. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd And the Hospira sales would be in euro, sorry in dollar. I think - in euro, but everything is in dollar. Kartik Mehta Okay, fine. And what sort of waging strategies we have in place or any cover we have? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd We have cover of US$93 million. Kartik Mehta Okay. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd That is for the year '11, '12. I think September 2011, going up to March 2012. Kartik Mehta Okay. And that is at what exchange rate sir? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Average rate of 47.72. Kartik Mehta Okay. That is the only cover we have as of now. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Only cover we have. Kartik Mehta Okay. And can you just tell the CapEx number for, what was the CapEx number for '11? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd

It was 457 crores. Kartik Mehta Sorry? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd 457 crores. Kartik Mehta Okay. And what is it likely to be for '12 and '13? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd 500 crores. Kartik Mehta 500 crores? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Yes. Kartik Mehta Okay. Sir, what should be our doctor coverage ratio in domestic market? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Any particular reason, why do you want to know that? Kartik Mehta The way, my reason is very clear sir, the way almost all domestic companies are increasing the field force, it is not yet reflecting in their turnover and in fact margins are getting shrinking quarter-on-quarter. So, just wanted to know what has been our doctor coverage.. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd See, this is a very complex, if I ask you, if the answer, this question you will have to qualify and I would say may be offline you can talk to me, I'll tell you. Because see I will tell you, it is caught with so many angles. It is not that because you're increasing your field force, your coverage of doctor will increase. It depends whether you have a specialty division, whether you have a task force or is it that you're increasing your total number in the general division. For example, if you have a division of 500, are you making that 700 or are you adding 200 rest in the, for a new division or is it a task force to just concentrate on metros, where there will be an overlap of coverage of doctors. But see broadly, I mean just back of the envelop side, no company in the country covers more than 130 to 140,000 doctors, that is a maximum. Kartik Mehta

Okay, okay. So, my point is like in the domestic formulation market, what sort of sustainable margins do we see in the light of increasing competition? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd I think by enlarge we should manage to maintain the existing one, Pankaj I would like you to answer that question. Pankaj R. Patel, Chairman, Managing Director & Chief Executive Officer See, I think it all depends on the model you follow, one follows. Kartik Mehta Okay. Pankaj R. Patel, Chairman, Managing Director & Chief Executive Officer There are models, where we - in the models where you actually gain sale and that's where the difference would be and I think it's a push and pull kind of a thing. So,we're very confident that the model what we've followed for our business and growth, we're not buying sale, we're actually achieving sell through, by creating actual demand. And that's why we do not see any reason that our margins would have any challenge from a sustainability point of view. The only challenge and margin will be for industry would be it come and come forward and reduce its prices. But, otherwise we do not see any reason why our margin should get effected, because we do not follow certain practices, which is followed by some other companies and that's why we do not see any challenge. Kartik Mehta Okay. And, yeah please continue. Hello? Pankaj R. Patel, Chairman, Managing Director & Chief Executive Officer Yeah. Kartik Mehta Under domestic front and the API side, we have been witnessing degrowth in, since last two years. So any specific reason behind it? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Not really, the domestic API, we only sell if we have some excess quantity, but that's not the area where we want to focus our future growth. So, we are not very focused on that. Kartik Mehta Okay. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd We are basically looking at more exporting because that's where the margins are better.

Kartik Mehta Sir off-letting Europe what we have seen earlier in last three, four year and particularly in FY11, the growth has been muted. So, any reason behind it and probably also going ahead? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd No, I think it all depends on what kind of new products are in a particular year. There were some price reduction in the quarter also that has some effect. Going forward Europe market is going to remain challenging. We expect France, the growth will be better. We expect Spain, we would have very good growth. So overall I would say Europe will show a small growth, but not show a decline. Kartik Mehta Okay. So, you, out of the total export market, the main growth drivers will be U.S. as well as Brazil and emerging market? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Right. Kartik Mehta Okay. Sir, in terms of filing and launches, you say that 130 is a total number of filing, ANDA filing and 65 is a total approval. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Yes. Kartik Mehta Right. So, can you just share the total launches so far made in? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd 41, we just said. Kartik Mehta Sorry? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd 41. We have launched 41 products. Kartik Mehta Okay. Same number if you can share for European market as well as Brazilian market? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Vishal?

Vishal Gor, General Manager-Investor Relations If you want the total number of products, which we have launched out of the filing which we made from India and for Europe, out of the total file transfer of approvals of 48% margin we launched 21. Kartik Mehta Okay. Vishal Gor, General Manager-Investor Relations Sorry, this is a new product. File transfer approval is 46% and almost all of them have been launched from India. Kartik Mehta Okay. Vishal Gor, General Manager-Investor Relations For Spain market, we have about 19 approvals, we have yet to launch them from India. We have just received seven. Kartik Mehta Okay. Vishal Gor, General Manager-Investor Relations And out of file transfer of three products, we have started one product. Kartik Mehta Okay. Vishal Gor, General Manager-Investor Relations But this is not the total number of launches, which we have done in France, because France has its own portfolio also. Kartik Mehta Okay, okay. In Brazil, sir? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd In Brazil, we have 23 approvals and 16 launches. One, six. Kartik Mehta Okay. And emerging markets? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd

Emerging market is very large number. I don't have the number in front of me right now. Kartik Mehta Okay. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Still very large. Kartik Mehta Okay. Sir... Vishal Gor, General Manager-Investor Relations Total filing in Brazil is 64. Kartik Mehta Sorry? Vishal Gor, General Manager-Investor Relations Total filings in Brazil is 64. Kartik Mehta 23 are approved and 16 are launched. Vishal Gor, General Manager-Investor Relations Correct. Kartik Mehta Okay, okay. Sir, last question on the consumer wellness side. If you can share the quarterly number of Sugar Free, EverYuth? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd We are not giving breakup. Kartik Mehta Okay. So this year's number, full year number you can... Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd We are not giving breakups from product wise, we are only giving you a consolidated number of the sales, but we're not giving individual brand breakup.

Kartik Mehta Okay. So, within that also if you can just share where the growth is actually coming and? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd All the brands are growing. Kartik Mehta How is the response to ActiLife? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Good. Kartik Mehta In which geography you have launched that? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd We have test, marketed this first in the Tamil Nadu. And we have got very good response from the market. So, we plan to launch nationally now. Kartik Mehta Okay. Thanks a lot, sir. Wish you good luck. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Thank you. Operator Thank you. The next question is from Monica Joshi from Avendus Securities. Please go ahead. Monica Joshi Hi. Congratulations on your numbers. I just have a question, I didn't follow what the tax rate you've guided for in FY12? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd The tax rate for next year we expect should be below net. Monica Joshi So, should we take that at 16%, 17? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd

Around 15%. Pankaj R. Patel, Chairman, Managing Director & Chief Executive Officer Around 15%. Monica Joshi Okay. Also on your $3 billion target and so we wish you achieve that. I just wanted to know if you are really looking at any inorganic opportunities to achieve this? One. Secondly if you are exploiting opportunities what do you think are the areas that you would want to fill-up today in your portfolio, both in India and overseas? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd So, I think whatever number we are talking about 3 billion, we are not talking about any inorganic place. We are talking about organic growth, they achieved 3 billion number. So, we do not see that is the way we would like to do it. However, as a company we always looked at strategic acquisitions, acquisitions which would help us either a market access or capability building in the particular market or particular area. So, we will be open to such acquisitions in future also. The only area, which I would like to acquire and consolidate going forward will be India, where we are very willing to look at acquisitions and consolidate all market share further in Indian market. Monica Joshi Right. Just wish Vishal, if you could give us the PAT number for Nycomed Q4 please? Vishal Gor, General Manager-Investor Relations Yeah, sure. Q4 PAT number for Nycomed was Rs. 7 million. Monica Joshi Okay. Also if you could just throw some light on the depreciation figures for FY11, despite almost of 5, about 600 crore CapEx, how is that you have a sequential fall? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd See, this is basically because some of the intangibles which we have in our animal health subsidiary and it's a large number. These intangibles have completed there estimated useful life, though we continue using them, but we specific them in 10 years and that 10 year period is now over. So, it's a huge number, Rs. 8 crore a year and about Rs. 2 crore a quarter. Plus also in French subsidiary, we have some intangibles and last year fourth quarter, we took some one-time write-offs of some of the older assets, which is not there this year. So, two put together would be having an impact of about 10 crore to Rs. 12 crore. Plus there are some other assets also where, tangible assets where the useful life would have been over. So, if you take an apple-to-apple comparison of the assets which were there last year and the assets which are there in current year, there will be a growth of about 10% in depreciation. But because of these two or three factors, you'll see a flat number or a reduction in the depreciation number. Monica Joshi Understood. And the 500 crore target for FY12, any specific plans or any details that you would like to share on where this will go? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd

You are asking about CapEx? Monica Joshi Yes, that's right. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Well, about half of that would be on formulation vaccines, biologicals et cetera, about 100 crores in APIs and others, about 60 crore also in R&D. Monica Joshi Okay, okay. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd And rest would beyond on IT and other corporate assets. Monica Joshi Understood. Thank you so much. And wish you all the best. Operator Thank you. The next question is from Hitesh Mahida from Marwadi Shares. Please go ahead. Hitesh Mahida Hi. Congratulations for good set of numbers. Just wanted to know whether you have the sole supplier to Hospira as far as gemcitabine is concerned? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Yes. Hitesh Mahida Okay. And as far as the Lialda is concerned, I guess we have para-pro status on the drug. So, any updates on that? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd No. We are currently under the litigation. So, currently there is no further updates, because the case has not move to hearing stage. Hitesh Mahida Okay, sir. Thanks a lot. Operator Thank you. The next question is from Umesh Morker from Major Trend Financial Services. Please go ahead.

Analyst Yeah. Thank you for taking my question. I wanted to know your Q4 net profit has decreased on quarter-on-quarter and as well as on year basis. So, is this a cause of concern? And what you're expecting in future? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd I don't think there is any cause of concern. If you see historically our quarter four numbers are not exactly the same as the first three quarters. Number two is we just mentioned before a while that there is a one-time charge of 51 crore in this quarter four number which was the intend to given as part of the achieving $1 dollar target. So, that's a one-time cost booked in this quarter. Analyst Okay. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd So, we do not have, this is very standard, I don't think, we're on budget. We don't see any reason why we have undo worry about this. Analyst Okay. And sir on domestic formulation front, the company has shown good growth. So, do you expect the same growth or not same, but a good growth in future as well? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Yes. Analyst Okay, okay. Thank you for taking my question. Operator Thank you. The next question is from Surya Patra from Systematix Shares. Please go ahead. Surya Patra Yeah, congrats for the good set of numbers. All my questions has been answered. Just one query, any progress on the vaccine or biosimilar front sir? Vishal Gor, General Manager-Investor Relations Biosimilars Mr. Nayak already said in the opening that we have got, we are not getting approval for the product and we would expect number of biosimilars will launch this year. Surya Patra In India?

Vishal Gor, General Manager-Investor Relations Yeah. Surya Patra On the vaccine front sir, apart from that... Vishal Gor, General Manager-Investor Relations Vaccine front, we are still under various stage of development. So, we would see the real approval and things occurring only in the next few quarters. Surya Patra Okay. And going forward what would really drive the growth, make parity to achieve the $3 million, what would be the real growth driver for Cadila sir? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Well, I think India continue growing, contribute significant part of the growth which is expected. We would also expect similar results coming from Europe, U.S. And the U.S. growth happened mainly one is on our existing business, which is oral solids, where we are basically filing more value-added product plus we are entering to new franchisees like nasal, transdermal, and injectable area. We expect also growth coming from Brazil and South Africa and the emerging market. We also expect contribution coming from our joint ventures and subsidiaries and all of that put together will take us to this number. So, new franchisees, new product lines and basically leveraging that distinct markets would be the key driver. And we will enter maybe one or two additional market, we already told you before that we are entering now Mexico. And that would basically provide us the support. Currently we are, our strategies are in a vary advance stage of finalization. So, we are not able to say furthermore as far as this is concerned. Surya Patra Okay. And on the R&D front since you have taken your R&D pipeline to some developed level and you would possibly require some good investment there. So, what would be your R&D guidance for next year? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd No, R&D cost will grow, but we don't expect a significant jump in terms of, it will grow in a similar way as you have grown in past. So, we expect the R&D cost to grow by about 5, it will be around 5 to 6% of sale and that's a kind of ratio we will maintain. Surya Patra Okay. Last question from my side. On the Nycomed, do you think, whether you have added any other product? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd We started manufacturing the API and they are all being filed now. So, we will have approval very soon and the real business will start in this financial year for the API. Surya Patra Okay. Thank you sir. Thanks for taking my question.

Operator Thank you. The next question is from Arvind Bothra from Bank of America. Please go ahead. Arvind Bothra Yeah, hi. Most of my questions have been answered. Just a small question. Can we know what is the gross debt position in the books, right now? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Yeah, sure. The gross debt on a consolidated basis was Rs. 1,097 crore. Arvind Bothra Yeah. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd 1097 crores. Arvind Bothra Okay. And the cash position? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd The cash in the balance sheet was Rs. 295 crore. Arvind Bothra Okay. Given we are at a comfortable leverage right now, any plans of raising any debt to fund may be possible acquisitions or any such inorganic ambitions for the company, given we have very good amount of ground to cover to reach our target? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd I think we are ambitious, so there is good opportunity. We will look at options how to finance it. And so currently we have no plan to borrow further, but if we get good opportunities and we are fully aware that there is an opportunity. Arvind Bothra Okay. Finally, I mean we saw, on the wellness side quite a bit of cost pressures, just to highlight, is it something that is sustainable or the hang on the gross margins over there is a problem? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd No, I think we saw one of the key input in Nutralite prices almost doubled and as a result, we saw the situation, where we have a margin pressure coupled with that also they had also the similar thing for their staff, one-time bonus impact in this quarter. Going forward, we're looking at seeing the trend that oil price may under ease. We cannot predict, because its commodity price prediction is most difficult part of it. So, we're trying to address this two ways.

One is that we're seeing some signals of prices are easing. We also are taking some possibility of price increase of the finished products. Also looking at mix between consumer product and institutional product as far as this product is concerned. And with these three strategies, we're trying to consolidate our margins. We see kind of a problem currently, but we do not see there is a sustainable problem. It will, we will come out of this and the margins will be then inline with what we should tasked. Arvind Bothra Okay. Thank you so much. Operator Thank you. Ladies and gentlemen due to time constraint, we'll take one last question from Chirag Talati from Espirito Santo. Please go ahead. Chirag Talati Yeah, hi. Congrats on a great set of numbers. Just one question on the mechanics of Hospira JV. Hospira have indicated that there is the cap on the amount of distribution margin that they can earn for the JV products. I just wanted to understand if there is a cap and floor mechanism in terms of margins for the JV, in other words if pricing were to crash for Docetaxel, would your margins be protected below a certain level? Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd Yes. Chirag Talati Okay. Thank you. Operator Thank you. Ladies and gentlemen that was the last question. I would now like to hand the floor over to Dr. Ganesh Nayak for closing comments. Ganesh Nayak, Executive Director, Zydus Cadila HealthCare Ltd So, thank you very much. It was a pleasure. We had a good year. And we look forward to another eventful year FY12. Thank you very much and a very good evening. Operator Thank you. On behalf of Cadila Healthcare Limited that concludes this conference call. Thank you for joining us and you may now disconnect your lines. Thank you.