indoco remedies ltd Management discussions

a) Indian Pharmaceutical Industry

The Indian pharmaceutical industry is currently the worlds third-largest in volume and tenth-largest in size. The overall scale of the industry (including medications and medical devices) is about US$43 billion and is currently seeing a growth pace of 7–8% in the drug market. Net exports (medicines and medical equipment) amount to about US$20 billion, of which about 90% are medicines. Branded generic products lead the Indian pharmaceutical industry, contributing 70% of the market share in revenues. The generic drug market accounts for 21% of total revenue in the Indian pharmaceutical market, while over-the-counter drugs account for 9%. Regarding product diversities, the anti-infectious group dominates sales revenue, generating nearly 16% of overall pharmaceutical sales. Products like cardiovascular medication sales contribute about 13%, anti-diabetic drugs share around 7%, gastrointestinal drugs contribute 11%, vitamins 8%, minerals 9% and respiratory and pain/ analgesic segments share about 7%. In comparison, other segments contributed approximately 29% of overall generic medicine sales in India, Indian products are shipped to over 200 countries around the globe, with Japan, Australia, West Europe and the US as the main destinations. The country exported around US$18 billion in pharmaceutical products, with a reported rise of 10.72% from 2021 to 2022. Drug formulations and biologicals account for 77% of Indian pharmaceutical exports, with bulk and intermediate pharmaceuticals accounting for 21%. From 2021 to 2022, the share of bulk drugs, intermediate products, drug formulations and biologicals exported was around US$176 billion. Meanwhile, generic medications account for 20% of global exports, making the country the worlds top provider of generic pharmaceuticals in volume. Currently, the pharmaceutical industry contributes around 1.72% to the gross domestic product (GDP) of the country.

India is the largest provider of generic drugs globally and is known for its affordable vaccines and generic medications. The Indian Pharmaceutical industry is currently ranked third in pharmaceutical production by volume after evolving over time into a thriving industry and growing at a CAGR of 9.43% over the past nine years. Generic drugs, over-the-counter medications, bulk drugs, vaccines, contract research & manufacturing, biosimilars, and biologics are some of the major segments of the Indian pharma industry. The Indian pharmaceutical sector supplies over 50% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicine in the UK. The domestic pharmaceutical industry includes a network of 3,000 drug companies and ~10,500 manufacturing units. India enjoys an important position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers with a potential to steer the industry to greater heights. India is rightfully known as the "pharmacy of the world" due to the low cost and high quality of its medicines. According to a recent EY FICCI report, as there has been a growing consensus over providing new innovative therapies to patients, Indian pharmaceutical market is estimated to touch US$ 130 billion in value by the end of 2030. Meanwhile, the global market size of pharmaceutical products is estimated to cross over the US$ 1 trillion mark in 2023.

b) Opportunities & Threats:

The Life Sciences sector is witnessing uncertain yet promising scenarios. Acquisitions and investment will play a large role in shaping the pharmaceutical spaces globally and within the country. With a high trend in life expectancy and strong capital inflow, the life sciences sector is poised for growth over the coming years.

India is predicted to overshadow China as the most populated country in the world over the next decade due to an even higher fertility rate. India will be home to around 1.5 billion citizens by 2025. Consequently, the patient population will grow by more than 20% over the next ten years. This will result in a growing demand for treatment and medication, which poses an outstanding opportunity for the Indian pharmaceutical industry. With the increased prevalence of lifestyle-related illnesses, along with communicable and infectious disorders, there is likely to be a more significant cardiovascular disorder, oncology and diabetes related ailments.

As the pharma sector has successfully evolved from the Covid era, the focus on growth now shifts to mitigate the threats of higher borrowing costs around the globe, an increase in complexity and risk in external environments, as well as the compounding effects of each such force exerts on one another, not to mention the already existing challenges of cost savings, high cost of quality assurance, constant readiness to deliver on time and longer term external challenges. c) Risks & concerns:

The pharmaceutical industry is facing upcoming challenges due to the impending patent cliff, thereby giving rise to a situation of ‘Price War among the generic players.

While research & developments can result in newer opportunities, the time span involved is considerable and the change in technology may outpace the outcome of such research much faster. While more and more drugs are brought under price control mechanism by various government throughout the world, the time span from research & development to commercialization may be outpaced by an even quicker pace of price reduction in various therapies worldwide.

d) Internal control system and their adequacy: The Company has an Internal Control System, commensurate with the size of its operations. The Internal Audit department monitors and evaluates the efficacy and adequacy of the internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report, significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. The Companys Internal Auditor also monitors and evaluates the internal control system and submits Quarterly Reports which are placed before the Audit Committee of the Board.

e) Discussion on Financial performance with respect to Operational performance:

Net revenues for the year are at 1638.13 crores, as against 1,502.70 crores last year. Other operating income in the current year is at 28.56 crores, as compared to 37.02 crores in the previous year. Material consumption to sales is 31.82% at 521.29 crores, as compared to 30.39 % at 456.75 crores in the previous year. Staff cost to sales is 19.60 % at 321.15 crores, as compared to 19.63 % at 294.95 crores in the previous year. Recurring R&D expenses to net sales are 4.94 % at 80.97 crores, as compared to 4.97 % at 74.64 crores in the previous year. Other expenses to sales are at 27.98 % at 458.39 crores, as compared to 25.71 % at 386.38 crores in the previous year. Finance cost to sales is at 1.53 % at 25.03 crores, as compared to 0.94 % at 14.14 crores in the previous year. Operating profit is at 270.23 crores, compared to 308.55 crores in the previous year. Depreciation is at 70.60 crores, as against 78.95 crores in the previous year. Profit / (Loss) Before Tax is at 191.59 crores, as compared to 236.23 crores in the previous year. Profit / (Loss) After Tax is 142.80 crores, as against 149.19 crores in the previous year. Basic & Diluted Earnings Per Share (EPS) for the year is 15.34, as against 16.77 in the previous year (both after and before the extra-ordinary items). Outstanding long term debt as on March 31, 2023 was 143.50 crores, as compared to 95.88 crores in the previous year. Cash outflow on account of Capital Expenditure (CAPEX) during the year was 179.27 crores, as compared to

125.34 crores in the previous year. During the year, an amount of 63 crores was contributed to the national exchequer by way of payment of Income Tax and 18.09 crores by way of Goods & Services Tax (GST). Net worth of the Company as on March 31, 2023 was 1027.02 crores, as against 904.30 crores in the previous year, on account of retained profits. The Debt-equity ratio during the year was 0.19, as compared to 0.16 in the previous year.

Key Financial Ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key financial ratios along with detailed explanation thereof. The Company has identified the following ratios as key financial ratios:

	Standalone			Consolidated
Particulars	As at 31.03.23	As at 31.03.22	Change %	As at 31.03.23	As at 31.03.22	Change %
Debtors Turnover	4.7	5.1	-7.84	4.7	5.1	-7.84
Inventory Turnover	5.0	4.8	4.17	5.0	4.8	4.17
Interest Coverage ratio *	7.0	10.4	-32.69	7.0	10.1	-30.69
Current Ratio	1.9	1.8	5.56	1.9	1.8	5.56
Debt Equity Ratio	0.19	0.16	22.36	0.19	0.16	22.36
Operating Profit Margin (%)	16.5	20.5	-19.51	18.2	20.5	-11.22
Net Profit Margin (%)	8.6	10.3	-16.50	8.7	10.3	-15.53
Return on Net Worth (%)	13.8	17.1	-19.30	14.0	16.5	-15.27

Domestic Formulation Business:

Indoco is ranked among the top 30 companies in the Indian Pharmaceutical Market (as per Sales Audit Report of All India Organization of Chemists and Druggists-AIOCD). With pan India presence and adding new products year on year, Indoco has been able to maintain growth in its domestic formulation business.

The Company offers high quality medicines in multiple therapeutic categories, which include diabetology, respiratory, stomatology, womens health, nutritional products, gastroenterology, cardiology, metabolic disorders and primary care medicines. The Company has a predominant presence in South (34%) and West (31%), followed by East (20%) and North (15%). The Company caters to multiple doctor specialties and generates more than 109 million prescriptions annually from over 3,00,000 doctors across India (as per IQVIA Medical Audit Prescription Data).

Performance of key therapy areas:

THERAPY	Cont %	2022-23	2021-22	Gw %
Stomatologicals	20.2	16,221	14,960	8.4
Gastro Intestinal	15.1	12,092	10,492	15.2
Respiratory	15.0	12,022	14,797	-18.8
Anti-Infectives	14.9	11,932	14,370	-17.0
Vitamins / Minerals / Nutrients	6.8	5,431	5,149	5.5
Ophthal / Otologicals	5.4	4,330	3,826	13.2
Dermatology	4.4	3,552	2,939	20.8
Gynaec.	4.3	3,455	4,067	-15.0
Pain / Analgesics	4.0	3,195	3,001	6.5
Urological	3.7	2,949	1,901	55.1
Anti-Diabetic	3.0	2,375	2,944	-19.3
Cardiac	2.3	1,826	1,668	9.5

The Company enjoys a good position in the domestic market, with 45 products ranking amongst the top 5 positions in their respective sub-segments:

Product	RANK MAT	Broad Therapy	Market Share % (Respective Sub-Segments)
Cyclopam	1	Gastro Intestinal	49.9
Sensodent-K	1	Stomatologicals	97.7
Karvol Plus	1	Respiratory	65.6
Sensoform	1	Stomatologicals	60.3
Cital UTI	1	Vitamins / Minerals / Nutrients	26.6
Kidodent	1	Stomatologicals	63.2
Rexidin M	1	Stomatologicals	80.0
Lignox A	1	Pain / Analgesics	75.8
Dentogel	1	Stomatologicals	17.0
Aloja	1	Anti Diabetic	100
Homide	1	Ophthal / Otologicals	88.7
Renolen	1	Ophthal / Otologicals	52.2
Noxa	1	Derma	26.4
Dexoren – S	1	Ophthal / Otologicals	93.4

 

Product	RANK MAT	Broad Therapy	Market Share % (Respective Sub-Segments)
Aloja M	1	Anti Diabetic	100
Sensodent-KF	1	Stomatologicals	47.8
Snowdent	1	Stomatologicals	100
Febrex Plus	2	Respiratory	13.4
SM Fibro	2	Vitamins / Minerals / Nutrients	22.1
MCBM 69	2	Gynaecological	21.4
Sensodent-K Plus	2	Stomatologicals	20.0
Zincoren	2	Ophthal / Otologicals	16.4
Bfloren	2	Ophthal / Otologicals	10.4
Cyclopam Plus	2	Gastro Intestinal	26.3
Rexidin Plus	2	Stomatologicals	15.8
Sensodent-R	2	Stomatologicals	5.2
Fedris	2	Respiratory	28.2
Dropizin	3	Respiratory	11.1
ATM	3	Anti-Infectives	8.7
Cital	3	Urology	25.4
Cloben G	3	Derma	10.9
Carmicide	3	Gastro Intestinal	5.5
Otorex	3	Ophthal / Otologicals	13.5
Rexidin SRS	3	Stomatologicals	9.2
Macuchek	3	Ophthal / Otologicals	7.0
RR Sensoform Dental	3	Stomatologicals	7.5
Scabex	4	Derma	8.6
Mofloren LP	4	Ophthal / Otologicals	6.6
Tuspel	4	Respiratory	2.9
Vepan	4	Anti-Infectives	7.4
Oxipod	5	Anti-Infectives	6.3
Hemsyl	5	Blood Related	8.8
Cital-H	5	Urology	3.2
Nosic	5	Gastro Intestinal	3.0
Mofloren-D	5	Ophthal / Otologicals	7.1
(Source : AWACS)

Domestic Marketing Divisions: Indoco Pharma

Indoco Pharma division holds a 5.94 % Market share in covered market, with respect to the products wherein Pharma division products/therapies are presently promoted, with cumulative prescription growth of 36% and prescriber growth of 9.7% in February 2023, the division launched Ninaf (Naftifine 2% Cream). Ninaf is a next generation topical allylamine antifungal agent. (Topical allylamine antifungal agent is approved by USFDA and DCGI) Ninaf brand has superior antifungal action with once daily application, that will help to improve patient compliance. These advantages make Ninaf an ideal partner with oral therapy in the management of fungal infection. With a strong presence in GP, the launch of this new product will further strengthen the divisions portfolio. This will be the next mega launch in continuation to the successful launches such as Noxa (Rank No.1* in the Ozenoxacin market) & Subitral (Rank No 8 in the SUBA Itraconazole market).

Cyclopam reached a new mark with 176^th Rank among all brands in IPM, with a prescription growth of 45%. With focused promotion of Oxipod to key specialties such as GP/Paed/ ENT, prescribers have grown by 28.6%. Cital UTI, with its unique "Non-Antibiotic therapy" promotional model has maintained its No.1 rank* in its respective category. Karvol Plus digital promotion gained momentum for the brand with > 1.9 crore impressions recorded in January 2023.

Now Indoco Pharma division will focus on major specialities such as GP, CP, Paediatricians, and Gynaecologists, who have high prescription potential for newly launched brands, while maintaining focus on legacy brands (AWACS Mar23).

Indoco Spade

The year 2022-23 was a very important year for Indoco SPADE in terms of building new brands. This is a very significant step for the division as the team is already well known for its big brands like Febrex Plus and ATM. The division, which has anti-infectives and respiratory care as part of its portfolio, enjoys strong equity among General Physicians, ENT surgeons and pediatricians to a large extent. Given its strong franchisee in the respiratory segment, there was a need to build up this portfolio further. Dropizin was launched with the objective of building it further. Team SPADE has taken up the launch of DROPIZIN right earnestly and has established it as the ‘Best Launch in INDOCO REMEDIES so far. The brand is also in the race to earn the BEST LAUNCH award of the industry in the coming year. During the year, ATM was awarded the ‘Champion Brand of the Year award for its outstanding performance. ATM also continued its progress as the best performing Azithromycin brand as per AWACS for FY 2022-23.

Indoco Warren NxGen

Warren NxGen continues to thrive on developing newer niche segments catering to the specific needs of patients.

In this quest the product range has been expanded to various other categories which has increased the product offering and options for consumers. The prescription and prescriber share have increased across all specialities which signifies acceptance by the medical fraternity. Many initiatives to increase awareness on the importance of oral health have been taken under the guidance of medical practitioners. These will certainly boost the confidence of general population to abide by recommendations to promote oral health. Warren NxGen will continue to pioneer in its journey towards providing innovative products.

Indoco Warren ACE

Harbouring the legacy brands viz. Sensodent K & Sensoform, Warren Ace continues to penetrate the market through various strategies. These initiatives have created deeper penetration and competitive edge in a very intense sensitivity market. The Pain Management portfolio gives an immense opportunity and is also an indispensable part of dental treatment for the division. New age marketing tools like digital marketing has been a critical area of focus to reach out to the newer consumer base. With the legacy of large brands and the new age marketing outlook will ensure a healthy growth for the division.

Indoco Spera

Indoco Spera division is a specialised division to cover the Gynecologists & caters to womens health. The product mix includes, nutraceutical brands for pregnancy care like MCBM 69, METHYCAL & NOSIC and lifestyle management products like D-CHIRO PLUS & KG LOW. Differentiated brands like Methycal 2000 with unique technological advantage helps to stand distinctly in the crowded market. Scientific activities like Continuing Medical Education (CMEs) - SPERACON & Round Table Meets (RTMs) have helped to establish Spera as a scientific oriented division among Gynecologists

& Key Opinion Leaders (KOLs). Participation in All India Gynecology Conference (AICOG) and other state conferences has also strengthened the divisions presence in the market. Customer centric approach through patient awareness activities and patient camps, viz., Synergy camps and STAR Hemoglobin detection camps for pregnant women has helped the division to garner attention of the Gynecologists. Spera launched dydrogesterone (gynaecological hormone) for precious pregnancy with the objective to further increase productivity and strengthen focus on Gynecologists.

Indoco Excel and Vision

Excel & Vision caters to Ophthalmology with a wider therapeutic range. Product range covers acute, chronic surgical disorders in ophthalmology. The ingredients and packaging materials of some of these products are formulated in state-of-the-art plants.

The division has achieved ever highest sales of 55 crores with 16 % growth and 3.65% market share. (AWACS Mar23). Growth driver brands are at the forefront with double digit growth. In the year 2022-23, extensive focused efforts are given to the IMP Prime basket, this has resulted in substantial increase in IMP prime contribution up-to 54%, which is so far the highest. This is positively impacting the profitability of the Excel division. The major growth driver brands like

Mofloren Group, Irivisc Group & PGVISC are spearheading the performance with 15.3% internal YTD growth. All IMP group brands are growing at par with the market, Mofloren : 20 %, Mofloren D : 17% & PGVISC : 40% (AWACS Mar23). In year the 2022-23, strategic steps into product upgrades for focused brands were taken, starting with the launch of IRIVISC 15 ml pack – a major boost for the CMC basket. The division has been successful in putting IRIVISC on a positive growth and this will ensure good consolidation in FY 23-24. Nepachek has created a large impact for its new formulation i.e. BAK free and is now growing at 48% in Nepafenac market against IPM growth of 14% (AWACS Mar23) For FY 2023-24, the division is aiming at building big new brands in the Ophtalmology segment and will make efficient promotional effort to significantly increase size and profitability of the division.

Indoco Synergy

Indoco Synergy is the newly formed division with the primary objective of strengthening its foothold among the Endocrinologists, Diabetologists, Cardiologists and CPs. The division offers a wide range of diabetic portfolio with brands like Aloja group (Alogliptin & Comb.), Glychek Group (Gliclazide & Comb), Prichek Group (Glimepiride & Comb), J-Ring Group (Teneligliptin & Comb.), Telmichek Group (Temisartan & Comb.) & Cal-aid (Calcitriol & Comb.) to meet the requirement of every Diabetic patient. As an inception year, Synergy participated in all major conferences in therapy like RSSDI, CSI & ESICON, IDS, giving exposure to Aloja, Glychek & Telmichek to over 12,000 doctors, who participated in the conference. In 2022-23, on performance parameter, IQVIA showed a significant jump in prescription and prescriber with 25% & 15% respectively. The division is in the process of strengthening its portfolio as per the needs of Diabetes practitioners

Institution

The Institution division covers most of the Central, State Government and Public Sector Undertakings, including TNMSC, ESIC & ESIS, Indian Railways, Command & Military Hospital, CGHS, BHEL, BEML, HAL, ONGC and Port Trusts. Indoco is registered with most of these government institutions and participates in annual rate contracts and local tenders for branded and proprietary products. The division aims to get the products registered and add proprietary products to the formularies of prestigious government institutions. The division has a good range of Anti-Diabetic, Analgesics, Anti-Haemorrhoidal cream and calcium preparations.

Branded Generic

This was launched indivision 2021 with 20 products. In the second phase the division introduced 54 new products and in the third phase, 52 products were introduced, taking the total product range to 124 products. This division has Anti-diabetic, Analgesic range of tablets and topical preparations, Anti-hypertensive, Protein Supplements, Multivitamin range of tablets & syrups, Antibiotics tablets, syrups & Injectables, Oral Rehydration Powders, Antacids, Antihistaminic etc. The division is planning to make this a product basket of 200 by the end of March 2024.

New Product Launches:

To cater to the increasing demands in the domestic market, Indoco has successfully launched three new products viz. Fedris tablets in the Respiratory segment, Ninaf cream in the Dermatology segment and Ladyboon tablets in the Hormonal segment.

International Business:

Pharmaceuticals is one of the top ten attractive sectors for foreign investment in India. The pharmaceutical exports from India reach more than 200 nations around the world, including the highly regulated markets of the USA, West Europe, Japan, and Australia. Nearly 40% of US generic demand and almost 25% of UKs pharmaceutical products demand are catered from India.

Indian drugs are exported to more than 200 countries in the world, with the US being the key market. Generic drugs account for 20% of global exports in terms of volume, making the country the largest provider of generic medicines globally. Out of the total export earnings accounted for in India, approximately 6% are generated from pharmaceutical sales alone.

India has the largest number of USFDA approved facilities, which is next only to the number of such approved facilities in the USA itself. Indias export performance was resilient inspite of all macro head winds and is currently poised for a steady growth. There have been significant new launches, business deals and tender wins in important markets, which have contributed to the growth of Indocos international business.

North America Business

North America Business recorded a growth in sales by total sales of 25% as compared to the previous financial year. Indoco was successful in launching 2 injection products through its front end partner. Indoco was also successful in winning the incremental business awards for an oral solid & an ophthalmic product. Executed License, supply & distribution agreement with one of the biggest wholesalers in the USA to commercialize Lacosamide Tablets. Indoco filed 2 ANDAs and received approval for an Injection & an ophthalmic product in FY 23.

The status of ANDAs as on March 31, 2023

Particulars	Own Filings	Through Partners	Total
Approvals till date	15	15	30
Filed, but pending approval	12	13	25
Total	27	28	55

In the European Pharmaceutical market, Generic drugs accounted for 26.8% of the market. (~ $72.5 billion) Indoco has shown a growth of 17.5% in the Financial Year 22-23 to a total of 320 crores. With a second consecutive win for a major tender in Germany and the launch of three new products in the UK, the Company well on its way to achieving growth goals. The Company has also signed a new multi-territory deal and finalized deals to enter a couple of new countries in Europe. In addition, the Company has successfully developed a portfolio for the future with in-licensing deals and are on the lookout for external supplies.

South Africa, Australia and New Zealand SOUTH AFRICA-

Indoco received 15 Marketing Authorizations with SAHPRA in FY 22-23 along with commercial orders. Indoco won prestigious South African tenders for some of the formulation products. There have been successful Product Launches with multiple partners. Indoco received high value orders from the South Africa market.

NEW ZEALAND-

Indoco launched Paracetamol in the private market with a new distributor. Indoco received 6 Marketing Authorizations

AUSTRALIA-

Indoco received TGA Approval for its oral solid facility in Goa in the month of September-2022. Indoco managed to get re-launch orders for a few products. Indoco filed 4 sterile products with the TGA and is currently awaiting product registrations.

Emerging Markets

Africa - The Company Acquired ready MAs from third party for FWA markets, launched in two countries Ivory Coast and Congo. Initiated business in two new countries i.e. Democratic Republic of Congo and Tchad. East Africa -Participated in KDA Dental conferences and OSK ophthal conference. ABZ No. 1 brand in Kenya.

New geography- The Company Started a new business model, out licensing in Zimbabwe. New country identified Angola, Madagascar won tender in Botswana.

Asia – Sri Lanka- Won SPC tender-Salaz,

Myanmar- Indoco won a private hospital tender for few products. Appointed new distributors for 9 products.

Malaysia- Arian tender awarded for 2 year supply, singed agreement with new customers in Thailand Philippines.

CIS- Uzbekistan- Registration received for two new products and signed agreement with new customer.

MENA-Afghanistan- 1^st commercial supply of multiple products.

UAE- New products Bloat EZ launched successfully. Oman- 1^st commercial order received for ophthalmic products.

LATAM

Latin America has a large population and expanding healthcare demands, making it a key market for the pharmaceutical sector. Latin American governments efforts to reduce costs and the rising acceptance of these goods by patients and healthcare professionals are driving market growth for generic medications and biosimilars.

Indoco has strategically filed 40 new dossiers in various countries. The Company received its first registration in Paraguay as it ventures into a new Country. In Chiles MOH and pharmacy tenders, the Company have won a 100% market share for some of its products. Indoco aims to gain inroads through new strategic in-licensing with the new product pipeline.

API Business :

The Active Pharmaceutical Ingredient (API) is the core strategic business unit for the organization. Indoco realized that backward integration is the key to success in the formulation business and, hence, an API manufacturing facility at Patalganga (in Maharashtra) is fully operational and ensures that the majority of the Companys ANDAs and Dossier filings are backed by its own APIs. Over the years due to growing demand, both for captive as well as for external sales, the API manufacturing capacity was expanded by the commissioning of a new multipurpose manufacturing block at Patalganga. In addition the Company has two more manufacturing sites at Rabale (Thane) to manufacture small volume and high value APIs, and an intermediate manufacturing facility, that supplies intermediates to both the Patalganga and Rabale plants.

High quality manufacturing standards, backed by the state-of-the-art manufacturing facilities that are audited and approved by various regulatory agencies like the USFDA, EDQM, TGA- Australia, PMDA- Japan, KFDA- Korea, make Indoco one of the most trusted and Quality driven API Manufacturing companies in the world.

Indoco offers a broad portfolio of APIs across various therapeutic categories like anti- diabetic and anti-gout and has a leadership position in Ophthalmic APIs. With a strategic focus on New and Complex APIs, adding new manufacturing capacities and consolidating the existing ones with a profitable product mix and also backed by DMFs (Drug Master Files) and Certificates of Suitability (CEPs), the API division is well positioned to register an impressive growth in the coming years.

Research and Development:

The R & D approach in Chemical research includes synthetic chemistry consisting of generic research, custom synthesis, contract research, the development of new polymorphs and impurity synthesis. The analytical research consists of method developments, method validations, spectral analysis, impurity isolation, identification and synthesis.

The Research Team continues to file technology patents in India and Regulated markets. For the year 2022-2023, two patent applications were filed, and two patent applications which were filed earlier were granted by the Indian Patent Office. The examination reports of other patents were duly addressed by filing responses with the patent office. A few more patent applications are in the prosecution stage in India. In the coming financial year, Indoco intends to file multiple patent applications for novel formulations and processes.

The IPR Cell is actively involved in filing and prosecution of patent applications in different territories. It is well equipped with different patent search tools and has access to various scientific journals. Out of several approved ANDAs many are niche products. Currently, many Solid oral and Injectable ANDAs are in various phases of registration and expect approvals in due course. A complex generic MUPs project (multi-unit particulate systems) is completed and awaiting ANDA approval.

With the capabilities developed at Indoco, the organisation is one of the most preferred partners for many large pharmaceutical companies globally. Plans for expanding into different therapeutic chronic ailment categories backed by the products developed by R&D, will further potentiate the future growth of the organisation.

Regulatory Affairs:

The Regulatory team comprises of 45 members, engaged in the submission of Dossiers to Regulatory Authorities across the globe. Indoco holds more than 25 ANDAs for the US and has recently secured approval of Lacosamide tablets on the day of the patent expiry. Moreover, Lacosamide Injection of Indoco is the first generic version approved immediately after the patent expiry and is the only generic product currently available in the US market. New Marketing Authorizations and market extensions have been granted for Europe as well. Indoco is working towards establishing its own identity in UK through Marketing Authorizations from the MHRA. Over 790 products are registered across more than 50 countries in emerging markets. In addition, Indoco possesses Drug Master Files for 26 Active Pharmaceuticals (APIs).

The regulatory function is equipped with eCTD software to support submissions in all advanced countries and a software for Structured Product Labelling (SPL) to support US applications. Electronic submissions of DMFs and Dossiers are done through the Electronic Submission Gateway (ESG) to the USFDA and through the Common European Submission Platform (CESP) to EDQM and other European National Competent Authorities (NCA) and through a specific National Portal of the MHRA for submissions to UK.

AnaCipher (CRO):

AnaCipher Clinical Research Organisation offers a comprehensive range of clinical research services including Pharmacovigilance, Bio-availability, Bio-equivalence, Pharmacokinetics, Food effect, Taste evaluation, Steady state and multiple dose studies.

The CRO is equipped with 150 beds in four clinics, a volunteer database of over 23,000, 8 LC-MS/ MS, an in-house NABL approved Clinical laboratory, volunteer cross participation track software, a wireless nurse call system, walk-in freezer with 24X7 monitoring, pharmacy with a walk-in stability chamber, 21 CFR compliant archival and IT infrastructure, round-the-clock qualified physician availability and Tertiary hospital care assistance.

The state-of-the-art facility is spread over a 40,000 sq. ft. area located in Hyderabad, India. AnaCipher CRO has been successfully audited and approved by diverse global authorities, including the European agencies (Germany, Netherlands, Italy, Spain, France), UKMHRA, WHO, ANAMED Chile, Gulf Co-operation Council (GCC-Middle East), CDSCO, and USFDA with zero 483s in the last seven (7) inspections. Apart from these, product based approvals have been received from Algeria, Australia-TGA, Belarus, Canada- TPD, China-NPRA, Costa Rica, Indonesia, Lebanon, Libya, Malaysia-NPRA, Oman, South Africa, Taiwan and Ukraine.

Indoco Analytical Solutions (IAS), Rabale

Indoco houses a separate Indian FDA, USFDA and Health Canada (HC) approved public testing Lab at its R&D Centre at Rabale. Indoco Analytical Solutions (IAS) is equipped with the latest and most sophisticated analytical instruments. IAS provides extractable and leachable (E&L) studies for drug-device combinations. IAS provide de-formulation studies of RLDs to generic formulation developing companies. IAS provides elemental impurities assessment in pharmaceuticals as per ICH Q3D. The lab is well equipped to provide potential Genotoxic, Nitrosamine and Azido impurities testing in drug substances and drug products along with In Silico toxicity assessment as per various regulatory requirements. Identification, isolation, and characterization of impurities in pharmaceuticals are also carried out at IAS. IAS provides crystallographic services by carrying out patent evaluation studies for polymorphism in drug substances and drug products. IAS is completely equipped to carry out thermal studies on drug substances and drug products. As a part of expansion, IAS has added more sophisticated instruments this year, worth about 9 crores.

Intellectual Property Rights (IPR):

The Company has from time to time added to its kitty of Intellectual Property by obtaining patents for its innovative manufacturing processes. The IPR Cell is actively involved in the filing and prosecution of Patent applications in different territories. It is well equipped with different patent search tools and has access to various scientific journals. The patent applications are filed in the respective countries based on the market potential.

Status of patent applications filed:

Patent Applications	India	PCT	Europe	USA	Japan	Total
APIs	44	18	5	4	1	72
FDFs	32	5	2	2	-	41
Total	76	23	7	6	1	113

Out of the 72 API patent applications filed, 28 applications were accepted and patents granted. Out of the 41 patent applications filed, 22 were granted patents for Finished Dosage Forms (FDFs).

g) Human Resources:

Human Resource Management plays a key role in developing, reinforcing and strengthening the culture of Indoco. All significant functions initiating from Emoluments, Performance Management, Training and Development, Recruitment & On-boarding right up to the pinnacle of reinforcing the values and ethics are all essential elements taken care by the Human Resource Team @ Indoco. Team H.R. contributes positivity to create strategies for the growth of business as well as the quality of life of every Indocoite. The Company firmly believes that people are the greatest assets and adopt best practices to ensure healthy employee relations, employee growth and overall development of each and every individual. Various Training Programs and Employee Welfare initiatives continued phygital i.e. online as well as physical classroom and outdoor training during the year.

These initiatives develop the overall persona of every indocoite and enhance team building, values and ethics and sense of oneness from every location and strata of workforce.

THE NEXT ORBIT : ‘Lets us Trans Perform - A Leadership Management Program, wherein a clear next phase of growth plan is in place aligned with an overall financial goal, which will take the organization into a great leap of the Next Orbit. This highly impactful program will translate the organizations aspirations into specific goals and strategies LDPi - A new impactful Training & Development Program was initiated this year, the Leadership Development Program at Indoco for the Top Management Team in addition to the existing ODIs already in place for the various customized training programs. Strategic decision-making and Retreats for business planning are the core function of this dynamic team.

PROJECT BODHI – As a part of Indocos super transformation journey, SAP S/4 HANA was implemented across the organization. Internal team was trained to implement almost all modules of SAP.

HUMAN CAPITAL IDENTIFICATION – As a part of the employee retention strategy, the identification of departmental employees for "Talent or Human Capital" has been identified to put them on fast track to career growth. Capturing Potential / Competence, Talent pool, past performance, Behavioural & Technical Aspects of these employees.

CAREER SUCCESSION PLANNING – Post annual appraisal, top talent has been identified to put on fast track career growth. Accordingly, Career Planning and Succession Management have been planned for top leaders in the organization.

GEMS – Guiding, Empowering, Mentoring and Supporting, an in-house mentoring program at Indoco to develop ‘Leaders from within was started at Indocos manufacturing location at Goa with the second batch. This was initiated at Mumbai location and witnessing its tremendous success, it will be promoted to other locations as well in the future to embark on this exciting journey of learning and self-discovery.

CATALYST – The game changer training program that builds a culture of excellence. The concept is to encourage Leadership at every level, thus improving productivity and quality of work.

SATURDAY LEARNINGS & TED TALKS – Sharing valuable knowledge through short stories with morals & motivational talks, to encourage, inspire and help Indocoites approach difficult situations in a professional and mature way.

REWARD & RECOGNITION : A system where employees are acknowledged for their performance. Employees are rewarded for their excellent contributions towards the organizational development. Rewards and Awards like Analyst of the Month/Year, Reviewer of the Month/Year. Special recognition and felicitation of employees who were the key contributors to the successful USFDA Inspection.

EMPLOYEE SATISFACTION SURVEY: Employees are the biggest asset of an organization; hence employee opinions and satisfaction levels matter to us. Hence, to understand their opinion in large and to make improvements accordingly the ESS Survey was launched and completed this year.

EMPLOYEE ENGAGMENT ACTIVITIES: Team HR continues to conduct Engagement Activities like the Ganesh festival, Dussehra Pooja, Navratri, Diwali and Christmas. Besides the above, knowledge forums on ‘Financial Awareness and Wealth Management were conducted a with special focus on Savings and Investment, Insurance, Loans and Retirement Planning. Sessions on Innovations through Digitization gave a deep insight into the new techniques and strategies for business development.

MILESTONES :

Indocos Annual Day – PACE (Performance Achieved with Combined Efforts) a sports event was organized.

Indocos Foundation Day is celebrated pan India. These programs showcased the talent, art and creativity of every indocoite.

STAFF WELFARE PROGRAMS: Birthday celebrations, retirement felicitation functions, Employees completing 25 years of service and children of Indocoites with outstanding performance in the Std. X examination were felicitated. Various competitions and debates were held during the year. These initiatives were successful in bringing together and strengthening different departments and also helped in bonding and team building. Online sessions were held for all Indocoites on interesting topics such as, ‘Yoga for Wellness, ‘Mediclaim, Medical Camps and Health check-ups. An educational session and "Health and Nutrition Care" was conducted on the occasion of Womens day pan India imparting valuable knowledge which was well appreciated by all the divas of Indoco. POSH : Under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, sessions were conducted by professionals to educate women of their right to protection and equality creating a stress-free working environment.

ENVIRONMENT, HEALTH & SAFETY: Keeping in mind the EHS policy Indocoites adhere to the strict guidelines to maintain the Environment, Health & Safety.

SOCIAL AWARENESS: To encourage employees to support a social cause, many philanthropic initiatives are continuously being conducted during the year like Blood donation drives, School Kit drives for children in rural areas, Wish Tree Activity thus bringing smiles to millions of underserved communities.

The HR Team at Indoco takes full responsibility and ensures a productive environment where people feel valued and motivated to contribute their best to the growth of the organization.

INDOCO GOAL SETTING PROGRAM: Offering guidance and direction, facilitating a plan to set and track SMART goals and KPIs for the year 2023-24.

The HR Team at Indoco takes full responsibility and ensures a productive environment where people feel valued and motivated to contribute their best to the growth of the organization.

h) Future Outlook:

The Companys Domestic business continues to focus on brand building, with a thrust on the chronic and sub-chronic segment, as well as, penetration in the North and East regions. The Company will selectively launch new products in the specialty segment to boost growth. With well-known legacy brands, Doctor loyalty of over 7 decades, a highly motivated field force, distribution network across India and presence in growing segments, including Stomatology and Ophthalmology will help the Domestic business to grow on a sustainable basis.

On the International front, the Companys US business witnessed ANDA approvals from the USFDA thus giving a further boost to its existing business in the US. EU-GMP compliance for Goa Plant-I and Baddi (Plant-III), followed by own product launches will boost the EU business, with the availability of larger manufacturing capacity and control over the supply chain, respectively. Indoco is also consolidating its position in the Emerging Markets through active brand promotion in select markets. A robust pipeline in specialty dosages, viz., Ophthalmics & Injectables, will enable the company to have an edge over its competitors in the International business.

The capacity expansion at the Companys API manufacturing facility at Patalganga for the captive requirements has already started to yield the desired results and has boosted the sales of APIs. Expertise in Research & Development, backward integration with own APIs, a full-fledged CRO setup, excellence in finished dosage manufacturing and a strong customer base makes the Company, a preferred partner, offering complete solutions to generic companies worldwide with a focus on the development and marketing of niche products and also by offering quality and affordable medicines to patients in India and worldwide.

Disclaimer

Statements in this ‘Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, plans or industry conditions or events are ‘forward-looking statements within the meaning of applicable securities laws and regulations. Actual results, performance or achievements could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and Indian demand-supply conditions, finished goods prices, feedstock availability and prices, competitors pricing in the Companys principal markets, changes in government regulations, tax regimes, economic conditions within India and the countries within which the Company conducts business and other factors, such as litigation and labour unrest or other difficulties. The Company assumes no responsibility to publicly update, amend, modify or revise any forward-looking statements, based on any subsequent development, new information or future events or otherwise, except as required by applicable law.