Dr Reddy's Laboratories Ltd (RDY) 2004 Q1 法說會逐字稿

Good evening ladies and gentlemen. I'm (inaudible), the moderator for this conference. Welcome to the DR first quarter in fiscal 2005 Q&A conference call. For the duration of the presentation, all participants' lines will be in a listen only mode. After the presentation, the question-and-answer session will be conducted for international participants connected to SingTel (ph). After that, there will be a Q&A session for participants connected to Cyber Bizarre International bridge followed by Q&A session for participants at Cyber Bizarre India. I would like to hand over the floor to Mr. Nikhil Shah, of Dr. Reddy's Laboratories. Thank you, and over to Mr. Shah.

Thank you Pretibar (ph). Good morning and good evening to all of you. I'm Nikhil Shah, the investor relations officer at Dr. Reddy's. I thank you for joining us to discuss Dr. Reddy's financial results for the first quarter of fiscal 2005. By now, you should have seen the press release as well as the additional financial disclosures which were sent out this evening. The results are also posted on our web site on the homepage under the quick links item.

Today, we have on the call G. V. Prasad our Chief Executive Officer, Satish Reddy, the Chief Operating Officer of the company, and V.S. Vasudevan, our Chief Financial Officer. To ensure full disclosure, we are conducting a live web cast of this call and a replay of the call will also be available on our web site soon after the conclusion of the call.

Additionally, the transcript of this call will be available on our web site at www.DrReddys.com under the quick links items soon after the conclusion of the call. Please note that today's call is copyrighted material of Dr. Reddy's and cannot be rebroadcast or attributed in press or media outlets without the Company's expressed written consent.

Now the safe harbor statement. I would like to remind you that the discussion and analysis during the duration of the call might include forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and projections about future events. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially.

Such factors include, but are not limited to changes in local and global economic conditions, our ability to successfully implement our strategies, the market acceptance or and demand for our products, our growth and expansion, technology can change, and our exposure to market risks. By their nature, these expectations and predictions are only estimates and could be materially different from actual results in the future. And now, to get started, let me turn the call over to G. V. Prasad our Chief Executive Officer.

Thank you Nikhil. Good evening to those of you in Asia, good afternoon for the participants in Europe. For those of you in the U.S., a very good morning. And, I'd like to thank you all for joining us on the call today. About a month back at our annual analyst meet, we restated our commitment towards our long-term strategy and vision.

We discussed the outlook of our major businesses and, the key challenges that lie ahead of us as we go forward with our strategy of becoming a mid-sized local (inaudible) enterprise in the medium-term. At the same meet, we stressed on the fact that while we make this transition, the short-term, that the next few quarters would be challenging, and this will all be reflected in the numbers for the current quarter.

Let me now cover the key aspects of the first quarter's performance. Revenues grew by about six percent to $111 million. This includes the revenue recognition of $5 million of license fees relating to DRF 4158. We also recorded a Forex loss of $7 million against a grain of $2 million in the same period last year. Vasudevan will cover these two items in detail in the presentation. This quarter, we invested close to 10 percent of our revenues in our R&D projects, primarily on drug discovery. Led by these factors, we ended the quarter with a profit after-tax of $4 million as against $17 million in the same period last year.

Moving onto the business mix, our formulations business in Russia and the API business in Europe as well as India performed quite well this quarter. This was however offset by the decline in our U.S. generic business, largely on account of the fall in fluoxetine and tizanidine sales. However, for your analysis I suggest that you compare the first quarter of these products, with the figures for the immediately preceding quarter. Russia and other allied markets delivered strong growth in this quarter, driving the overall international revenue growth in our branded formulations business by 28 percent.

In Europe, ramipril contributed about $6 million during the quarter, exceeding our expectations. As you all know, the generic version of ramipril was launched in Europe in January this year. In the U.S., we launched the generic version of ciprofloxacin our own label, and I'm pleased to share that despite significant competition, we have captured close to 20 percent of the total genericized market. This reflects positively on the effectiveness of our marketing and distribution capabilities, especially considering that we are among the youngest marketing and dispersion companies in the U.S. generics business today. We are looking forward to the launch of gluconozil (ph) in July and cetloflan (ph) in the third quarter.

In India, our new product launches in the finished (inaudible) segment have done exceedingly well, contributing almost five percent to the revenues in the segment. Among the recent launches, Retoz, which is our brand of etoricoxib, launched in March 2004, has become the third-largest selling brand in best category. During the quarter, we achieved another significant milestone, with Omez becoming the single largest selling brand of omeprazole in India.

On the R&D front, as I mentioned earlier, we spent close to 10 percent of our revenues in various R&D projects, with close to 55 percent being invested in drug discovery. The clinical development of DRF 10945 in Canada is progressing well and should be complete by the end of this year.

During the quarter, we filed two ANDAs, both Para IVs, with one first-to-file postion, another one also potentially a first-to-file position. We also filed the one drug master file in the U.S. Many projects are already in progress, and you will see a step up in the rate of filings in the coming quarters, in line with our full year targets. With this brief introduction, let me now ask Vasudevan to discuss them in immersing detail.

Thank you Prasad and good morning and good evening to all of you. By this time, I'm sure all of you have looked at the detailed note on our results, so let me focus on the key highlights of the quarter. As Prasad mentioned, revenues are up by six percent to $111 million. This includes $5.5 million of license fees relating to DRF 4158. If you recall, in September 2001, we received $5 million as a print payment on the DRF 4158 licensing deal with Novartis.

We deferred this revenue in fiscal 2002 as per U.S. GAPP requirements. Now, on completion of all obligations under the agreement, we have a contract for (inaudible) during the quarter. (inaudible) excludes the income relating to DRF 4158. Our revenues have registered a small increase of one percent to $106 million this quarter, and we have achieved this despite the competitive pressures on our leased (ph) products fluoxetine and tizanidine. May I suggest that you compare the revenues from fluoxetine and tizanidine on sequential basis rather than year on year basis.

Revenues in Russia grew by a strong 21 percent, driven by greater best on key brands as well as market penetration. Revenues from Europe API increased to $8 million as against $3 million in the same period last year. This increase was largely on account of ramipril, which has performed well, contributing $6 million in the quarter. The API business in India grew by 33 percent on the back of volume growth in key products.

Moving onto the margin, on account of the change in business mix and product portfolio, the gross margins for the first quarter at 51 percent of revenues compared to 55 percent in the same period of last year, despite $5 million of revenues coming from the DRF 4158 licensing deal.

Talking of the key expense items, the SG&A expenses are at $36 million. That is about 32 percent of revenue as against $39 million in the fourth quarter after excluding the exceptional charges as we recorded for that quarter.

The first quarter, we invested about 10 percent of our revenues in our R&D projects, as against seven percent in the same period last year. Of the total, we have spent close to 55 percent in drug discovery, primarily on the clinical development of DRF 10945. When you look at the operating income before Forex loss, it is about $8 million, as against $17 million in the same period last year.

Let me now talk in greater detail about the products loss for the quarter. We recorded a loss of $7 million against a full year gain on $6 million for the previous year, and a gain of $1 million especially in the preceding quarter. This reversal is due to the change in the rupee-dollar parity during the quarter. However, in the coming quarters, we do not anticipate additional losses, and in fact, a substantial part of the first quarter's loss may possibly be recovered.

Other income is at about $2 1/2 million compared with $8 million last year. Finally, on the tax provision, given the low profit before tax and, significant tax credits available to us due to higher R&D expenses, we did not have to pay any additional tax provision. The net income for the quarter is at about $4 million against $17 million in the same period last year. And, this is on account of a unique set of factors that I just discussed.

This concludes my presentation, and now I'll hand it over to Prasad once again.

Thank you Vasudevan. This year, we are set to cross the $500 million revenue mark. We also built (inaudible) generics business cumulatively which can help us cross the one billion revenue figure in the medium-term for the generics business alone. In addition, while we are building up the generics business (inaudible) we are also investing in building innovation based businesses. That is a specialty in drug discovery businesses.

That we have to fully established core businesses, the branded formulation and API businesses, funding the emergent (inaudible) growth driver and generator (ph), and the longer-term innovation businesses consisting of specialty and NCE (ph) products. The building up of these businesses requires large investment in research and development, with the attendant lead-time.

Obviously, this has impacted our financial results. However, we believe in the long-term the innovation businesses are key to sustainable growth and we are committed to building these businesses. We must find ways to continue on this trajectory and actually mitigate the risks through partnerships and alliances. And this is the key priority for all of us here. We now leave the floor open for the interactive Q&A session and we will be pleased to answer your queries. Pretibar, can we have the first question?

Sure sir. At this moment, I would like to hand over the floor to Sinel to conduct the Q&A session for participants on the SingTel Bridge. After this, we will have a Q&A session at the international center Cyber Bizarre, and then a Q&A Session for the Cyber Bizarre India Bridge. Thank You, and over to Sinel.

Thank you Pretibar. We'll now begin the question-and-answer session for participants connected SingTel Bridge. Please press star zero or pound zero to ask a question. At this moment, there are no further questions from participants at SingTel. I would like to hand over the proceedings to Pretibar.

Thank you very much Sinel. We will move onto the Q&A interactive session of the Cyber Bizarreinternational bridge. I'll hand over the floor to Christian.

Thank you very much. At this time, international participants may press star one if they would like to ask a question. On pressing star one, participants will get a chance to present their questions on a first in line basis. At this moment, there are no further questions from participants outside India. I would like to hand over the proceedings back to Pretibar.

Thank you very much Christian. We will now begin the Q&A interactive session for participants connected to Cyber Bizarre India. (OPERATOR INSTRUCTIONS) First in line, we have Mr. Aschwun Algalvar (ph) from Akashka Investments (ph).

Hi. This question is for Mr. Prasad. Whether you are looking at supplementing the organic growth for the specialty by having any acquisitions in the U.S.

Aschwun, yes. We are looking at building the specialty business through a combination of product acquisitions, organic pipeline, and deals to build up the pipeline. So to answer your question, yes, we are looking at ...

Any timeline (inaudible) because in a recent newspaper article, it was quoted at 5200 million could be the size.

Yes, given the fact that valuations are in the range of between 3 to 4.5 (inaudible) sales.

Yes, OK. Secondly, I would like to ask you in the recent annual analyst net presentation you said that you have shifted focus from primary segment to the mid segment because the strategy (inaudible) and other follow-ups did not work, but whether these mid segments could give you the critical size of the 75 million from each product which you'll be hitting.

It could be a product or a connection of products.

So you remain confident that even this mid segment could give you that size?

Yes, because you know the mid segment don't require a large sales force. So consequently, we don't need large brands to support the operation.

Does that mean that we are to believe out of this time many segments as far as the sanity business is concerned?

In good time, yes.

OK. And I see returning the business has been in the shape they look for R&D on our prospects Ciprofloxacin?

Aschwun , the litigation on our India filing for Reniga (ph) ...

Yes?

-- is already in the public domain. And I guess Anji talked about this a couple of quarters back.

But any court here ...

For the online patients, the position is that this acquisition fired by the non (inaudible) that this company process is still on and, this company process is likely to be over by April of next year.

OK.

So I'll come back to you with the schedule for court hearings.

OK. OK. Thanks.

Thank you very much, sir. Next in line, William Stubotinger (ph), SSKI.

Hi. My first question is for Mr. Prasad. So did you say that you're looking at $500 million in fulfillments this year?

Yes, for the full year.

OK. And do you have then about $100 million in the first quarter? So, can you explain, I mean, what clearly is going to drive this, from acquisition that you have factored in?

No, acquisition is not factored in. With the current drop date we are expecting to cross the $500 million barrier.

Because see if I were to remove the first quarter numbers of the previously, from last fiscal numbers, I get $236 for the balance and that we've been looking at 20% growth in the balance quarters? Four hundred on 236 for the last, I mean you know, the last 3 quarters of FY04.

That's right, William. That's the rate proof of local.

Can you, sir, explain that work clearly from the drivers? Because in the U.S. I mean other than what you spoke about for Canozol (ph) and since you've gone there again I'd think competition would be large. I mean they're not the bearer of what need be. They do expire in terms of the UPI also. What is going to drive this group?

You have to look at the different components of the business mix. But, in the foundations commission of this business then there'll still be one. Again, we will work well in the second and third quarter. And then in the international business, the share has been performing well as we are only telling the conditioned position growth with.

In UK, possible that it could be pertaining to as well as product label has been doing well. In the case of generics that you have mentioned, there is a positive growth within the brand also, being better than what it was in the case of Ciprofloxacin. And Cuconozole (ph) is one of those products, which is coming in. When we are launching the data business, we expect some products to do better.

OK. OK. Now Morris (ph), you see I don't think I still understand. You're lost $16 million in working with the traditional revenues. First quarter's been flat. But forward, is there anything specific that we're missing on?

I think it's a collection of things. It's not any single thing.

Can you say just from them?

I think what we just spoke to and then beyond that we cannot be more specific.

OK, fine. Then second question is for Mr. Vasudevan. Can you explain the historic growth? I thought you both had assets, I mean, in terms of cash and investments overseas. That's one. So on the legal, unless you've taken some meter for exposition in terms of taking it. I don't - can you explain that, how it's being worked out?

Normally, our products position has a quality as we do practice the underlying assets. We do not feel the underlying assets are missing those as well as audible position.

What we do is we do track it based on the forward cover, which we take. Based on the profits, which are booked U.S. GAAP on the mark to market basis on that side, 31 March, and one thing of that as with anything the notion for (inaudible) larger charges upon service for it. It would take $8 million. Seven million dollars of net loss and $8 million of gross market to market, mark to market loss.

Sir, are you saying, let me just understand this a little more, March of 2000. I'm sorry. March what would (inaudible) have been at cost?

I think it was 43.7 for the file.

Yes, 43 point whatever, 44 let's say. And now it's 46. So, what I'm trying to understand, if you have assets you said that you are underlying would be receivables. And, also you would have a lot of end cash, I think. Ideally I thought you would have gained something there.

The current data not only the currently but based on the future quotient moment.

So you're saying that, OK. Can I ask you to say again how much would be the receivables on the cash that you have, say, in the U.S. market?

That would only be on our balance sheet in the 6K. That would be available to you. The total cash and cash equivalent has been an amount of $205 million. As far as the receivables are concerned, it is, we think it would be $18 million.

And all of that, no. You're saying all of that. I mean I'm sure that can be in the U.S. so that sort of what I'm trying to understand.

Yes. It's based on what there was the 6 before which we have the (inaudible) and also the audible proof sheet.

OK, fine. Thanks.

Thank you very much, sir.

Next, we have Amojan Box (ph) from S&BC (ph).

Can you tell us, Mr. Prasad, on the Frolics (ph) losses. Are you stating that this could be reversed? Can you just explain how the somehow the loss could be gain going forward?

What is the essence I use motion of loss based on the period and what it explains 05, the closest spot rate. As on 30 June, what happened is somebody wasn't active and also we gave the transmission gain. And, we are reducing $46 from that's been under present levels, 65 to 70% now. On the forward, which we take, based on the trend of which will be coming up now.

OK. But do you still have a cover? So, does this mean that, I know our company's to appreciate you would continue to have a loss of - everything is now covered. I mean, what will it mean, sir?

On the next month we'll be gaining, because the cover is less than the underlying assets.

OK.

And, also the forward corrective is less than what we have grouped on a promotional basis.

OK. For the other questions that you have a sense of Gloxophin (ph)? What will be the revenues in the fourth quarter for it suppose, sir?

It's only first. It's only not first quarter, the first month booking in June.

Yes.

As we now have half a million dollars.

Half a - I mean, so you are in the business are you giving, you have quite a good market share. So, the supply chain fill up has marketing and you have been as far supply goes?

It still happens as we go along. The booking will happen because of June of the first month, we expect that sales to happen on a periodical basis.

I mean, are you typically in the first month, the first shipment is to be used for a big portion of sales. So that is actually happened in sales support?

Yes, that's correct Amojan. That has not happened in case of support.

I see. Has our calling policy changed all in the market? And if so, what has been the reason for this change, sir?

It is based on the honorable portion and the context, which has been. What we were booking down in June. Let's see, as sales for June and customers have not been booking the rest of the sales.

OK. And going forward, do you have a written policy for the Cuconozole (ph) and for the (inaudible)?

Yes. Based on the support trend, if we are, it's the low and Gluconozole.

OK. A question for Mr. Vasudevan, in your GAAP accounting, there's been a significant increase in rate costs with a real last year of one quarter. Are we, does that mean that there's been a rate hike across the board from the last quarter almost?

Normally the rate GAAP is the bending of year and that what you are seeing.

OK. But you spent some relative to Gluconozole?

Yes.

And are those costs to have been much higher, as come back to any of those 4 quarters earlier. So any special reasons why it took such a significant high number in this quarter?

Amojan, which number are you talking about, the Indian GAAP?

Indian GAAP, Indian GAAP. Indian GAAP consolidated.

Right. That's, yes, let me explain the GAAP.

Yes. Are any of them close?

Yes. That includes, in the Indian GAAP ...

The products have included a very, with the U.S. GAAP numbers. For instance, between the Indian GAAP and the U.S. GAAP numbers ...

Yes.

... that achievement is different. In U.S. GAAP it's shown completely. In Indian GAAP it is included in my book, if you look both.

No. But in Indian GAAP are the (inaudible) high in this quarter is it?

Yes, it is.

And how much is the loss more in the Indian GAAP?

In Indian GAAP or consolidated level of (inaudible).

(Inaudible). So if this doesn't peak in the next quarter, the other costs will not be high as it was in this quarter?

That's right.

OK. Fine. Fine, thanks a lot, sir.

Thank you very much, sir.

We take our next question from Mr. Dall Hushina (ph) of Carly Staff Working (ph).

In the middle of the (inaudible).

It does improve the new drug space. It's treated as our licensing income until we've done the euro.

Fine. In which learned to - have we by any chance is it conquered off your chart of the income total is total sales?

No.

OK. Thank you.

Thank you very much, sir.

Next in line, we have Mr. Fudi Jevala (ph) from Upeon Ashwan (ph).

Yes. Hi, everybody. My question is for Mr. Prasad. Sir, the increasing constant refusals in entry level, does that reflect the increased competitive business in the part of the country you're operating in?

No, the increase is a line that's increases. We have not seen the sanction increase both in our fulfillment or in consolidated business as well as the new entry. It is more or less left in line with the operation.

I mean if you see that direct sales, they've grown 1% when the accounts receivable has increased much faster sundry and wintry and intervals by 10%.

Yes. Refuse, if you take it only as a growth in international formulation of business, there's been a 28%.

Yes.

That's one of the reasons. We went on to pay the generated percent. The income from our department that are holding in the ...

Once per the quarter.

And there is at least do it normally. There is not any significant spike in this trend.

OK.

So add to that (inaudible) the increase, which you're referring to with respect to the March quarter. And sequentially this year to having this level 6 to 7%.

OK. Interesting. My second inquiry is on the increasing the cost of book sold? They've increased to 51.1%, averaging 47.7% in the previous quarter. Now, is this a trend that we will see because of the trend in the product mix or, is it a randomly linked in this particular quarter?

I believe you're correct in any explaining to this. So this is the way it was when we have new launches, which are of next competent and in jeopardy.

I see.

And we'll call it a trend.

OK. Just one final question, how much of (inaudible) did you book in this quarter in Europe?

We reported about $1 million sales.

OK. Thank you very much. I'm done with my questions for the time being.

Thank you very much, sir. Coming up next is a question from Mr. Samid Betibala (ph), Morgan Stanley.

Hi. We've been through on first mission and seed pipeline, the chemical span or 10945. Mr. Vasudevan, do you think this would be the experience every quarter?

Well, I'll give you an estimate. This could be a little expensive this quarter. And, if you recall in our analyst conference, we said that our R&D expense would be going up because of that department would be one of the reasons.

I see. And the second question is, are you in for a 3108, which was slated to go into Phase I? And, so what (inaudible) be doing clinical trials for them and, can we expect each incremental molecule or we see clinical trials to build about $5 million per quarter in chemical expense?

It is a variation in each molecule, depending on the complexity of the trial. It's not automatic that we would fund all the clients. Certainly select molecules we would take the clinic also. And those would be (inaudible).

By the end of this year, do you expect more than one molecule will need an in-house or receive clinical trial?

Well, we may do a combination of all in (inaudible) and India.

OK. The second question was on your Russian business. (inaudible)

Samid, this is the (inaudible)--

Yes.

Talking about Russia, the top 3 to 4 products that we have nice kick (inaudible).

Yes?

It contributes about 80% of the total revenues.

OK. In the near future do you, what's the news of the launch panel there? And, do you see the groups for this perhaps maturing any time soon?

Yes, the middle of this year. I think there is, the new target to launches will be kind of delayed from our own pipeline. We are told we have time to work in terms of financing the other countries. We have to try and get the products into the market to our franchise. But to (inaudible). You will see some launches that could be important, significant in terms of the number of launches.

OK. And the second part, do you see the groups for this (inaudible) production any time soon?

Not really because the short market, the product's life cycle tends to be longer. If you see (inaudible) table just launched maybe 2, 3 years back in fact. So between is much room for growth.

OK. The next question is on when you are intending that launch in the U.S. market. Do you expect (inaudible) for this market?

For new (inaudible). The (inaudible) will likely be less than 10.

OK. And, my last question on the two impending district board decisions. Both of them deemed a both March, 2000 filing. Do you think the district board will print that for certain, for the post filing?

There are various interpretations of this, but it depends on, of course, (inaudible) as to what you said. There is exclusive we can take and being. It's like a course deficient. But, if you're confident the launches from molecule, it is likely to reduce the value of your exclusivity. So, it's either launch or the second (inaudible).

I'm not quite sure I understood, are you saying that the circuit court would (inaudible) exclusivity and not the district court?

No. It's the district court and after that if the company launches at risk, we exclude the cost from that launch date. If you choose not to launch if could break in the second quarter and then gain exclusivity.

So you think you have the option, in spite of it being post March, 2000 filing?

Yes.

OK. That's all for my side, thanks.

Thank you.

Thank you very much, sir.

We take the next question from Mr. Uvich (ph) of Conscine Research (ph).

Good evening, everyone. Sir, I just have one question. How do you (inaudible)?

I think there is a lot of reaction about this. After (inaudible) excluding the exclusivity when the result in the lowering the total size of the pie, but still it's a very significant pie. So, we can reduce that effectiveness of the (inaudible). I would still say it's a very significant opportunity in spite of the activity.

Thank you, sir.

Thank you very much, sir. Coming up next, a question from Mr. Valdish Rover (ph) of ITI Securities.

Good evening, gentlemen.

I have a very quick, one question on the two key products in the U.S. and I'll try to do it. And I've impacted the numbers. It's very sleek. I've stood by and Prasad to the numbers of the client seems to be still reasonably high at about 15% from the 49 million of these in March '04 was just 93 million with these.

Can you throw some light in terms of what has happened in this quarter in particular? More importantly, going forward, where do you see this? Have we seen the worst or we could see some product price that we get into this two products?

I'll say that it is still possible. It is not bottomed out yet, these two products. I think (inaudible) if you compare it with the 102 and MG, the MG is still at a premium. If you want it in the competition has been not that intense yet. So, I think the rate of decline has been definitely slowed down very significantly, but I cannot conclusively say that it will not decline further.

(inaudible)

Thank you.

Thank you very much, sir. The next question from the (inaudible) of Core Duck (ph).

Based on the (inaudible) guidance, basically we are expecting this 13 year (ph) plus one. (inaudible) now the guidance whether they will (inaudible) based on nine month about $400 million (inaudible) nine months. So, can we expect that the (inaudible) in the first quarter?

Given the hit that we took on the quarter, it could well be the worst quarter. But, you know, in the (inaudible) business typical (inaudible) outcome.

And (inaudible), basically you mentioned that the (inaudible) will be better than the (inaudible). So, what kind of (inaudible) and what kind of (inaudible)?

There is some new patents which are coming up based on (inaudible) launch date. But by and large, we expect this not to be as intense as (inaudible) ...

OK.

... the number of players involved in those two product (inaudible) significantly higher, so we are hearing numbers ranging from 3 to 5 (inaudible) launch..

But this litigation is possible (inaudible)?

Not a big chance, but we've heard of two new patents coming up.

OK.

Know that we are not intending on that.

OK, yes. Thanks, (inaudible).

Thank you very much, sir. Next in line is a follow-up question from Mr. (inaudible).

My question here is for Mr. (inaudible). In the Indian consolidated numbers, I see an interest cost of 48 million rupees. I (inaudible) that no debt then so you know or no interest costs so, is this because of the (inaudible) or what is the reason for this cost?

It had more to do with the (inaudible).

OK.

But (inaudible).

Yes, sure, sure, sure. OK. And the second is that, again, you know, you've (inaudible) a million dollars of revenues and 4% percent as R&D costs, right? So looking at about $60 million as a full-year R&D charge as against 44 last year. So is that, I mean, 37% growth in R&D this year?

If you work on those two numbers, yes, (inaudible) can work with.

OK, fine. And finally a question from (inaudible). So, you said that new patents are likely to come up (inaudible) and you also said that you're not possibly (inaudible). So, you possibly could launch (inaudible) if there is any such situation?

There is no (ph) more litigation as of (inaudible) of the product, so I don't think it's going to be (inaudible).

Yes, recently Forest in their conference call said that they are not going to - you know, the initial (inaudible) will have them listed on the orange book. So that will - there was speculation in some (ph) of them and (inaudible) on the orange book and hangs (inaudible) the beginning of 30-month (inaudible) companies having to address those (inaudible), but it's clearly mentioned that the (inaudible) listed on the orange book.

But despite that, you can have some litigation?

Yes, but it's an (inaudible) which can trigger the associated (inaudible).

OK. So you can go ahead and launch, I mean, beat that risk?

Yes, we'll have to see how that fans out in terms of, you know, how the other - the market (inaudible) those will file the NDA (inaudible). But, yes - but I don't think - we don't think that it's a major issue.

OK, fine. Thanks and good luck.

Thank you very much, sir.

Pretibar, can we take one last question?

Sure, sir. The last question comes from Mr. Jamu Shamir (ph). This is a follow-up from Mr. Jamu Shamir of (inaudible).

(inaudible)

(inaudible)

OK, (inaudible) the legal expenses you have incurred for the quarter?

Legal expenses for the quarter on the litigation (inaudible) were $4 million.

OK, and (inaudible) the full year (inaudible).

Yes, that's right.

OK. (inaudible)

In the third quarter.

OK, thank you.

Thank you very much, sir. At this moment, I would like to hand over the floor back to (inaudible) for final remarks.

Thank you, Pretibar. We would like to thank all of you for joining us on the call today and for further clarifications, please feel free to get in touch with the (inaudible) or on e-mail. Thank you very much.

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