Asston Pharmaceuticals Ltd Management Discussions

1. Industry Structure and Developments

The Indian pharmaceutical industry continues to remain one of the fastest growing sectors globally, driven by increasing healthcare awareness, government initiatives, expanding insurance coverage, and a strong pipeline of generic drug exports. According to industry estimates, India is the largest provider of generic medicines worldwide, accounting for 20% of global supply by volume. The sector has also seen heightened focus on specialty medicines, biosimilars, and vaccines. Regulatory reforms, investment in R&D, and digital transformation in manufacturing and supply chain management are shaping the competitive landscape. Global medical expenditures in 2024 kept rising, indicating a rise in the need for specialized care, chronic care, and cutting-edge treatments. With a predicted compound annual growth rate of 5 8%, total pharmaceutical spending is still expected to surpass US$ 2.3 trillion by 2028. Although volume growth stalled in 2023, rising markets including China, India, Southeast Asia, and Latin America are predicted to propel it to an average growth rate of 2.3% through 2028. Unlike developed economies like North America, Western Europe, and Japan, where per capita consumption levels are already high and future growth is anticipated to decline, these regions are well-positioned to drive the next phase of global demand.

2. Opportunities and Threats Opportunities:

Rising demand for affordable generics in the US, EU, and emerging markets. Increasing investments in biotechnology, biologics, and vaccines.

Growth in domestic demand through Ayushman Bharat and other government healthcare schemes. Potential in contract manufacturing and CRAMS (Contract Research and Manufacturing Services). Growing demand in African markets: Africa is witnessing a rapid expansion in healthcare infrastructure, supported by government initiatives and international funding. Rising prevalence of infectious diseases, coupled with increasing incidence of chronic conditions, is driving demand for affordable generics, anti-retrovirals, and vaccines. Indian pharmaceutical companies, with their cost competitiveness and WHO-prequalified facilities, are well-positioned to serve this growing market

Threats:

Stringent regulatory scrutiny in developed markets.

Price control measures under NPPA (National Pharmaceutical Pricing Authority).

Volatility in Active Pharmaceutical Ingredient (API) prices due to global supply chain disruptions. Currency fluctuations impacting export competitiveness.

3. Segment-wise or Product-wise Performance

Our business operations are broadly categorized into:

Domestic Formulations: Continued leadership in chronic therapy areas including cardiovascular, diabetes, and respiratory care. Growth supported by new product launches and expanded field force coverage. Export Formulations: Strong presence in the US generics market, with approvals for multiple ANDAs. Europe and LATAM markets contributed significantly to revenue growth. APIs and Intermediates: Increased backward integration to reduce import dependence, particularly from China. Research and Development: Strengthened pipeline in specialty therapies and biologics with enhanced focus on oncology and critical care.

5. Risks and Concerns

Key risks include:

Regulatory Compliance Risk: Continuous monitoring to comply with USFDA, EMA, and CDSCO standards. Currency Risk: Active hedging strategies in place to manage forex volatility. Supply Chain Risk: Diversification of raw material sourcing to mitigate geopolitical uncertainties. Price Control Risk: Constant engagement with policymakers and balanced portfolio approach to manage impact of NPPA regulations.

6. Internal Control Systems and Their Adequacy

The Company has robust internal control systems commensurate with the scale and complexity of operations. Independent audits, SAP-enabled ERP systems, and a strong internal audit team ensure compliance with statutory requirements and safeguard of assets.

7. Government backed schemes

The Indian government has launched several medical welfare schemes aimed at improving public healthcare and ensuring access to affordable medical services for all and with tha laying the roadmap for achiving the expected growth rate of US$38 42 billion by 2028. One of the most prominent is Ayushman Bharat - Pradhan Mantri Jan Arogya Yojana (PM-JAY), which provides health insurance coverage of up to 5 lakh per family per year for secondary and tertiary care hospitalization to over 10 crore poor and vulnerable families. Additionally, Jan Aushadhi Yojana aims to make quality generic medicines available at affordable prices through special stores called Pradhan Mantri Bhartiya Janaushadhi Kendras. Rashtriya Arogya Nidhi (RAN) provides financial assistance to patients living below the poverty line who are suffering from life-threatening diseases and need medical treatment at government hospitals. The National Health Mission (NHM), including sub-missions like the National Rural Health Mission (NRHM) and National Urban Health Mission (NUHM), focuses on strengthening healthcare systems, particularly in underserved areas. These initiatives reflect the governments commitment to building a robust, inclusive healthcare system across the country.

8. Outlook

The Company is well-positioned to leverage growth opportunities in both domestic and international markets. Expansion into specialty therapies, investment in biologics, and a strong compliance record provide a competitive edge.

Africa represents a strategic growth frontier, with rising demand for affordable, high-quality medicines. The Company is strengthening its presence in key African regions through direct market entry, partnerships with local distributors, and participation in government tenders. Focus will be on supplying essential medicines, anti-infectives, and vaccines to meet healthcare needs across Sub-Saharan and North Africa. While regulatory challenges and pricing pressures remain, focus on cost efficiency, operational excellence, and innovation will drive long-term value creation.

For and behalf of the Board of Directors of Asston Pharmaceuticals Limited

(Formerly known as Asston Pharmaceuticals Private Limited)

ASHISH NARAYAN SAKALKAR SAILI JAYARAM MORE Managing Director Whole time Director DIN: 06601011 DIN: 02691527

Place: Mumbai Date: 25/08/2025