Astrazeneca Pharma India Ltd Management Discussions

Indian Economy

India is the 5^th largest economy in terms of 2024 GDP rankings, with an estimated GDP of US$ 3.94 trillion. ⁽¹⁾ When adjusted for purchasing power, it is ranked third - only behind China, and United States. ⁽¹⁾ India was the fastest growing major economy in 2023 with a GDP growth of 7.8%. The Indian economy has maintained robust macroeconomic fundamentals, and the expansion was driven by an uptick in the industrial, manufacturing and services sectors. The growth was supported by the governments sustained capital expenditure push, despite global headwinds caused by geopolitical uncertainties. In terms of future outlook, Indias economy will be boosted by strong public investment and continued growth in the manufacturing sector, with a GDP growth of 6.8% projected in 2024 and 6.5% in 2025. ⁽¹⁾

Strong domestic demand for consumption and investment, along with the governments continued focus on capital expenditure remain the major drivers for GDP growth.

External demand has been fuelled by significant export growth, supported by targeted government measures. On the supply side, industry and services sectors were the primary growth drivers.

An improving business environment and a growing workforce are set to enhance income, consumption, and investments, propelling Indias economic growth. Additionally, groundbreaking policies like PM Gati Shakti, the National Logistics Policy and the PLI Incentive Schemes are expected to reinforce this growth trajectory. ⁽²⁾ Another vital component of the plan is establishing a sturdy foundation for digital innovation and expanding public digital platforms, with a focus on investments in digital public infrastructure. Initiatives such as Aadhaar and Unified Payment Interface (UPI) have already delivered significant results in this domain. However, ensuring policy continuity will be essential to sustain this upward trend. ⁽³⁾

Indian Healthcare Environment

The Indian healthcare sector on a broad level comprises of pharmaceuticals, diagnostics, medical devices, equipment and supplies, healthcare delivery, clinical trials, and health insurance segments. The industrys rapid growth, fuelled by expanded coverage and services, alongside increased investments from both public and private sectors, achieved a remarkable 22.5% CAGR from 2016 to 2022. The industry size was estimated to be US$ 367 billion in 2023 and is projected to reach US$ 638 billion by 2025. ⁽⁴⁾

A growing burden of Lifestyle or Non-Communicable Diseases (NCDs), aging demographics, rising income, and awareness towards health and wellness coupled with improving access to healthcare in Tier-II and Tier-III cities and rural markets, increased diagnostic rates and health insurance coverage, along with emergence of telemedicine are a few of the notable trends contributing to the increased healthcare expenditure.

The Indian medical tourism market was valued at US$ 2.89 billion in 2020 and is expected to reach US$ 13.42 billion by 2026. India ranks 10^th in the Medical Tourism Index (MTI) for FY 2020-21 out of 46 destinations by the Medical Tourism Association. India stands as a global leader in Medical Value Travel (MVT) with a market size of US$ 5-6 billion, catering to 500,000 international patients annually. ^(4,5)

The e-health market size is estimated to reach US$ 10.6 billion by 2025⁽⁴⁾. The rapid adoption of smart phones and the increased penetration of internet services, supplemented by government policies has accelerated the growth of the Indian e-health market. Post the COVID-19 pandemic, the country continues to focus on creating a strengthened and innovative healthcare ecosystem that leverages digital channels across all major facets of the industry.

Increasing penetration of health insurance will drive the expansion of healthcare services and pharmaceutical market in India. A growing middle-class, coupled with rising burden of new diseases, is boosting the demand for health insurance coverage. With an increasing demand for affordable and quality healthcare, penetration of health insurance is poised to expand in the coming years. (4)

The central and state governments budgeted expenditure on healthcare touched 1.98 % of GDP in FY 2023-24 ⁽⁶⁾ and 2.1% in FY 2022-23, against 2.2% in FY 2021-22 ⁽²⁾.

The Ministry of Health and Family Welfare has been allocated 90,659 crore (US$ 10.9 billion) under the Interim Budget 2024-25, an increase of 1.7% compared to 89,155 crore (US$10.7 billion) in FY 2023-24. It aims to improve access to healthcare services and infrastructure in India. The governments announcement to establish more medical colleges by utilising existing hospital infrastructure will address manpower shortages while also increasing access to healthcare education. Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) was allocated 2,400 crore (US$ 0.3 billion). Human Resources for Health and Medical Education was allotted 5,016 crore (US$ 0.6 billion). National Health Mission was allotted 36,983 crore (US$ 4.5 billion). Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) was allotted 7,500 crore (US$ 0.9 billion). ⁽⁷⁾

AB-PMJAY provides a coverage of 5 lakh per family to over 30.6 crore beneficiaries, amounting to disbursals of 79,157 crore since its launch in 2018. This year, Ayushman Bharat scheme was extended to all ASHA and Anganwadi workers. The government also introduced programs to encourage Cervical Cancer Vaccination for girls aged 9-14 and improve nutrition delivery and early childhood care and development under Saksham Anganwadi and Poshan 2.0. It also introduced the U-WIN platform for immunisation efforts under Mission Indradhanush. ⁽⁸⁾

Indian Pharmaceutical Market (IPM)

The Indian Pharmaceutical Market comprises of generic drugs, bulk drugs, OTC medicines, vaccines, contract research & manufacturing (CRAMS), and biosimilars and biologics. India is the third largest market globally in terms of pharmaceutical production by volume and fourteenth in terms of value. India is the largest supplier of vaccines and generic drugs globally. The Indian pharmaceutical industry is also among the top 10 attractive segments for Foreign Direct Investment in India, receiving U$22.37 billion in FDI (April 2000-December 2023). ⁽⁹⁾

The estimated size of IPM for FY 2023-24 is 2,16,091 crore (US$ 26.04 billion). The growth of 7.6% (Value, FY 2023-24 over FY 2022-23) is a slight drop from prior years growth of 7.9% (Value, FY 2022-23 over FY 2021-22). Indian companies account for 83% share of the market (value) with a growth of 7.9% (Value, FY 2023-24 over FY 2022-23), while the MNCs grew at 6.05%. ⁽¹⁰⁾

Pharmaceutical Business Environment- Outlook

The Indian pharmaceutical market is forecasted to grow at a CAGR of 8.7% between 2023 to 2026 touching ~ US$ 37 billion in 2026⁽¹¹⁾. Some of the factors that would drive the growth include ageing demographics, rising income and affordability, rising incidence and diagnosis of NCDs, better awareness of wellness, diagnostics and preventive care, point of care treatment, expansion of healthcare delivery infrastructure to rural and Tier-II and Tier-III cities, quicker regulatory approvals, increasing health insurance coverage, conducive investment climate, and rising adoption of digital solutions in healthcare delivery.⁽⁹⁾ Patient pool is expected to increase over 20% in the next 10 years (until 2030), mainly due to rise in population.⁽⁹⁾

Key risks that could act as a dampener for growth include rising inflation and consequent pressure on margins exacerbated by ongoing geopolitical crisis; associated disruptions in supply chains, and exports; downward pressure on prices – arising out of potential NLEM expansion, and generic proliferation amidst LOE in key brands within IPM.

Growth and Demand Drivers:

1. Increasing Health insurance coverage: Indias private health insurance is expected to grow rapidly over the next decade, with standalone health insurance companies growing two times faster than the general insurance industry in FY 2023-24. ⁽¹²⁾ This growth is primarily driven by income growth, aging demographics, increase in awareness, tax incentives on insurance premiums, high value policies, and expanded coverage. In FY 2023-24, premiums underwritten by private health insurance companies grew to 98,249 crore (US$ 11.8 billion). The health segment has a 38% share in the total gross written premiums earned in the country. ⁽¹³⁾ Further, AB-PMJAY has improved access to healthcare by providing a coverage of 5 lakh to over 30 crore Ayushman card holders.

2. Production efficiency: Expertise in end-to-end production of low-cost drugs and robust R&D boosts efficiency of Indian pharma companies, leading to competitive exports. Indian drugs and pharmaceuticals touched US$ 25.39 billion in FY 2022-23 and reached US$ 15.78 billion between April-October 2023. As of 2019, Indias cost of production ~33% lower than that of the US. Indias ability to manufacture high quality, low-priced medicines, presents a huge business opportunity for the domestic industry. (9)

3. Expansion of Medical infrastructure: Pharma companies have increased spending to tap rural markets and develop better medical infrastructure. The National Medical Devices Policy, 2023 is expected to boost the growth of the medical device sector. The market is expected to increase at a CAGR of 37% from 2020 to 2025 to reach US$ 50 billion. (4)

4. Increasing adoption of telemedicine and digital platforms: The governments National Telemedicine Service, eSanjeevani, has clocked 23.5 crore teleconsultations as on April 2024. ⁽¹⁴⁾ The pandemic-induced constraints and adversities have resulted in the utilisation of innovative models that integrate diagnostics, healthcare delivery as well as engagement with Healthcare Professionals (HCPs) with technology. The increasing proliferation of several health-technology players that offer additional services like Electronic Medical Records (EMR), and patient analytics solutions, is clearly indicative of this trend towards the adoption of newer digital platforms in healthcare delivery. Moreover, research has shown that most of the HCPs preferred digital connects with pharmaceutical companies during periods of lockdowns, and this behaviour shift of using digital platforms for communication is here to stay. ^(15,16) Most major organised hospital chains have introduced video consultation services and operate them in tandem with regular in-person consultations. This has increased convenience, improved compliance for follow-up, and ultimately broken physical barriers in accessing quality healthcare advice.

5. Increasing proliferation of e-pharmacies: The growth of e-pharmacy in India has been significant in recent years. Indias e-pharmacy market is projected to reach US$ 3 billion in 2024, seeing an eightfold increase in the market value vs. 2019. ⁽¹⁷⁾ Major conglomerates such as Reliance, Tata and Amazon are key players in this segment. This growth has been backed by a significant increase in Foreign Direct Investments (FDI) over the last five years, especially in health-tech companies.

6. Conducive investing climate: There has been an overall focus on facilitating investments – making capital accessible across stages of business – including venture, and early stage. Healthcare sector will certainly be one of the key beneficiaries. Policy focus towards making capital available will only augment the rising interest in India Inc. Notable foreign players in the healthcare sector are setting up R&D centres and hospitals in India. India allows up to 100% FDI for Greenfield projects and up to 74% through automatic route for Brownfield projects, and up to100% through government approval. The cumulative FDI equity inflow in the Drugs and Pharmaceuticals industry is US$21.58 billion during the period April 2000-September 2023. ⁽⁴⁾

7. Policy Support: In February 2021, the government approved a Production Linked Incentive (PLI) scheme for the pharmaceuticals sector from FY 2021-29. The scheme is expected to attract investments of 15,000 crore (US$ 2.07 billion) into the sector. It is also expected to lead to incremental sales of 294,000 crore (US$ 40.63 billion) and exports of 196,000 crore (US$40.63 billion) between FY 2023-28. ⁽⁴⁾ In September 2023, the government introduced the National Policy on Research and Development and Innovation in Pharma-MedTech Sector, along with the Scheme for promotion of Research and Innovation in Pharma MedTech Sector (PRIP). These policies are directed towards encouraging innovative R&D in the pharma sector and transforming the sector into a value-based industry. ⁽²⁶⁾ The government also strengthened the Uniform Code for Pharmaceuticals Marketing Practices to ensure transparent and ethical promotion of drugs.

8. Increasing R&D investments: The Indian pharmaceutical industry is now seeking to move up the global pharmaceutical value chain by investing in R&D for drug development, drug repurposing, process improvements and digital manufacturing. India plans to set up a nearly 1 lakh crore (US$ 1.3 billion) fund to provide boost to companies to manufacture pharmaceutical ingredients domestically. ⁽⁴⁾

Risks:

1. Supply chain disruption, and rising input costs: The ongoing geopolitical crisis has resulted in supply chain disruption and affected multiple industries, in particular, oil and gas - leading to increased costs of fuel and thereby, making Indian exports less competitive. ^(23,24) Due to the high reliance on import of Active Pharmaceutical Ingredients (APIs), the Indian firms are vulnerable to supply shocks. The governments two Production Linked Incentive schemes will be a major step in the direction to achieve a 25% cut in API import reliance by 2024. (25)

2. Imminent threat of price reduction: Pressure on drug prices will intensify, driven by the imposition of caps on trade mark-ups applied to a growing number of non-scheduled products and an increase in the number of molecules listed on Schedule I of the Drug Price Control Order (DPCO), which are subject to explicit regulatory control. The impact of the DPCO on prices will increase if more products are added to the National List of Essential Medicines (NLEM) and escalate more dramatically if DPCO controls were applied to all forms of molecules on the list.

Further, a mid to high risk of price reduction for Non-Scheduled products due to Trade Margin Rationalisation (TMR) may be anticipated in the latter half of FY 2024-25.

3. Patent Infringement and risk of counterfeit drugs: In the Indian pharmaceutical market, innovator companies especially face significant risks of patent infringement, illegal imports, spurious drugs, and counterfeits which threaten their financial and intellectual property assets. These practices not only lead to undermining investment in research and development and compromise patient safety, but also erode trust by introducing counterfeit and substandard medications into the market. Additionally, the prevalence of such activities places a considerable strain on the regulatory framework, necessitating more stringent enforcement and policy reforms to protect both public health and industry interests.

Business model

The Company is engaged in the business of manufacturing, distribution and marketing of pharmaceutical products and co-ordinates clinical trial services with an overseas group company.

During the year under review, total revenue from operations is amounting to 12,955.3 million out of which sales of pharmaceutical products is 12,056.4 million (93.1%) and sale of services from clinical trials is 898.9 million (6.9%).

Since all the Companys activities fall within a single business segment, separate segment-wise disclosures are not provided in the financials.

Outlook

The Company operates across various therapy areas – Oncology, Cardiovascular Renal Metabolics (CVRM), Respiratory, Immunology & Infectious Diseases, and has recently forayed into the Rare Disease segment.

The Company has introduced several new products and indication expansions in FY 2023-24. Pathbreaking launches in the Oncology business include Trastuzumab Deruxtecan (Enhertu) for adult patients with unresectable or metastatic HER2 positive breast cancer. Enhertu has also received indication approvals for HER2-Low Metastatic Breast Cancer and Locally Advanced or Metastatic Gastric Cancer. Enhertu has gathered considerable momentum and quick acceptance amongst Healthcare professionals (HCPs). The Companys robust portfolio and future pipeline in Oncology will lead the way in transforming outcomes for cancer patients in India. In CVRM, Dapagliflozin (Forxiga) expanded its indication in Heart Failure. The Company has been instrumental in shaping the market for use of SGLT2i class of drugs in this novel indication. The Company also entered the Rare Disease Market with the launch of Selumetinib (Koselugo) for treatment of NF1 and plans to expand its portfolio further, leveraging its wide global asset offering.

Inspired by our purpose and values, were transforming the future of healthcare by unlocking the power of what science can do – for people, society, and the planet. In FY 2024-25, The Company will continue to strive towards its ambition to be pioneers in science, lead in specialist disease areas, and transform patient outcomes. The Company remains committed to making novel therapies available to patients in India, putting innovation and sustainability at the heart of its operations.

Cardiovascular and Renal Metabolics

India harbours a high diabetic burden and is often cited as the diabetes capital of the world. In a recent study conducted by ICMR, it was estimated that in 2021, 101 million people in India suffered from diabetes - making India the second-highest country in terms of prevalence of diabetes, after China. ⁽²⁰⁾ The Oral Anti-diabetic (OAD) segment constitutes close to 75% of the total anti-diabetic segment in terms of value, and is valued at 14,232 crore ⁽¹⁰⁾

The Company has a strong portfolio of oral antidiabetic drugs with presence in 2 key drug classes: - SGLT2 inhibitors, and DPP4 inhibitors. Amidst 100+ generic brands the companys innovator brands have bounced to growth this year. The company will continue to prioritize Dapagliflozin family ensuring expanded access to the eligible patients. The Company is dedicated to enhancing patient outcomes in Heart Failure (HF) by leveraging the recent indication expansion of Dapagliflozin (Forxiga) within HF, a leading cause of hospitalization in India. Forxiga also reduces the risk of sustained eGFR decline, cardiovascular deaths, and heart failure hospitalizations in adults with progressive Chronic Kidney Disease (CKD), applicable for both diabetic and non-diabetic CKD patients. The Companys metabolics portfolio with its clinical evidence, and endorsements by the latest international guidelines for improving patient outcomes- beyond just HbA1C control which includes cardio-renal protection, would certainly improve the lives of millions of patients.

Cardiovascular (CV) disease continues to be the leading cause of death in the country. The Company with its strong CV portfolio of drugs is committed to alleviating the burden imposed by CV diseases. Ticagrelor (Brilinta) – belonging to Oral antiplatelet (OAP) category of drugs, used in the management of Acute Coronary Syndrome (ACS), continues to remain the market leader. Following the patent expiry in 2019, 40+ generics have been launched in the market. Brilinta, by virtue of its value proposition, sustains its market leadership with double digit growth ⁽⁴⁾ and continues to save numerous patients lives every year. The company has also received CDSCO approval to import and market Andexanet Alfa, a novel treatment that addresses life-threatening or refractory bleeds associated with the use of Factor Xa inhibitors. This underscores the companys commitment to advancing medical solutions that address critical healthcare needs.

Respiratory, Immunology & Infectious Diseases

India has a very high prevalence of chronic respiratory illness- contributing 13% to the global asthma burden and a disproportionate 43% of the global asthma deaths ⁽²¹⁾. Chronic Obstructive Pulmonary Disease (COPD) is the second leading cause of mortality in the country, and accounts for almost one-fifth of global mortality due to COPD. ⁽²²⁾

The Company has partnered with Mankind Pharma to expand access to asthma medicines for Indian patients, entering into an exclusive distribution and promotion agreement for Budesonide/formoterol (Symbicort). Benralizumab (Fasenra) is the No.1 respiratory biologic (by value) in the country. ⁽¹⁰⁾ Fasenra continues to see strong patient enrolments and redefine the standard of care for the management of severe asthma. The Company plans to expand its respiratory portfolio further, tapping into the strong global offerings and pipeline within Respiratory, Immunology & Infectious diseases.

Oncology

Over a million patients are diagnosed with cancer in India every year ⁽²⁷⁾ and tackling cancer is an urgent public health priority. Globally, the Company is leading a revolution in oncology to redefine cancer care. Our ambition is to follow the science to discover, develop and deliver life-changing treatments that transform outcomes and increase the potential for cures. We strive to push the boundaries of science to change the practice of medicine and transform the lives of patients living with cancer through our focus across scientific platforms and tumor types. We are committed to bringing the latest scientific advances to serve patients with cancer in India and are pleased to share that the Company is one of the top five leading companies in oncology business in India as per the Sales Audit Report, for June MAT 2023 of Ipsos Research Private Limited, an independent international market research company.

The Company has maintained strong performance across its key tumor areas: Lung, Breast, Gastrointestinal, Genitourinary, and Gynecological cancers. Osimertinib (Tagrisso) has become a leading oncology brand in India, established as a standard of care for advanced and early-stage resectable lung cancer with EGFR mutations.

Durvalumab (Imfinzi) continues to demonstrate significant growth in its indications across Non-Small Cell and Small Cell Lung Cancer.

Our efforts to transform breast cancer outcomes for all subtypes and stages were enhanced by the introduction of Trastuzumab Deruxtecan (Enhertu) for HER2-positive metastatic breast cancer, which saw strong adoption and received a breakthrough designation from the US FDA. In March 2024, Enhertu also gained approval for treating patients with unresectable or metastatic HER2 low breast cancer, further amplifying its impact.

With the significant burden of GI cancers in India, the Company is dedicated to delivering innovative patient solutions. The introduction of Imfinzi for advanced BTC has redefined the standard of care and contributed to the brands growth in FY 2023-24. We plan future expansion with additional indications for both Imfinzi and Enhertu, which was approved in March 2024 for HER2-positive gastric and GEJ adenocarcinoma post-trastuzumab therapy.

Our aim is to establish new treatment paradigms in genitourinary and gynaecological cancers with cutting-edge therapies. We aspire to touch many more patient lives with the future indication expansions for Olaparib (Lynparza) and Goserelin (Zoladex).

With a strong portfolio and a promising pipeline of innovative molecules, we are dedicated towards significantly improving outcomes for patients living with Cancer in India.

Rare Diseases

The Company marked its entry in the Rare Disease segment with Selumetinib (Koselugo), the only approved drug used for the treatment of pediatric neurofibromatosis type 1 (NF1) patients with inoperable plexiform neurofibromas (PN). In the coming years, the Company further hopes to make significant strides in the Rare Disease space with its strong pipeline of C5 inhibitors.

Diverse and committed workforce remain integral to the success of our Company. The Company continues to emphasise continuous learning for people development. It has made available multiple avenues and tools to learn new skills, and hone existing expertise. Apart from industry leading educational platforms, the Company also actively offers cross country immersion stints/roles to help its people develop cross culture leadership, build global networks, and replicate best practices, and learnings in various markets.

The great place to work certification - 6 times in a row is a testament to our engaged and motivated workforce. The Company also ranks highly amongst inclusive, and best companies for women.

The Company is dedicated to fostering innovation and utilising strategic partnerships to provide patient-centric solutions, driving sustainable growth. Through collaborations with cutting-edge health technology player, the Company empowers healthcare professionals (HCPs) with comprehensive, beyond-the-pill solutions, specifically targeting the holistic management of chronic conditions such as - Diabetes and Cardiovascular Diseases. These solutions have witnessed a notable increase in adoption and patient enrolment. One such initiative is to implement an affordable, scalable, and sustainable AI powered, chest

X-ray based identification of incidental pulmonary nodules, precursors of lung cancers in predominant cases. In this endeavour, the Company developed partnership with Indian start-up solutions, private hospitals, and the different state Governments (Karnataka and Goa). This initiative helps to screen the presence of incidental pulmonary nodules in myriad of patients using a simple chest X ray ubiquitously present in the healthcare ecosystem, identify the high-risk patients and follow up for lung cancer confirmation. This will bring the stage-shift in lung cancer detection and may provide significant treatment benefits to the Indian patients.

At AstraZeneca, we recognise that taking action to drive sustainability is fundamental – to build a healthy future for people, society, and the planet. By using a science-led approach and ensuring we act with integrity and in accordance with our AZ Values, we are transforming the future of healthcare and making a positive impact. We seek to create value for society beyond the impact of our life-changing medicines. Sustainability is part of our organisational DNA, embedded into everything we do from the lab to the patient, and delivered thanks to the efforts of our employees in India.

We are united by a desire to harness the power of science and innovation and our global reach, to deliver life-changing medicines and work in partnership with all our stakeholders. We are playing our part in tackling the biggest challenges of our time, from climate change to access to healthcare and disease prevention. Our sustainability strategy has three interconnected strategic pillars: Access to healthcare; Environmental protection; Ethics and transparency, driving our commitment to people, society, and the planet. To drive positive change across our three strategic priority pillars, our ambitions are to:

• Increase access to life-changing treatments, promote prevention, and strengthen global healthcare system resilience and sustainability.

• Accelerate the delivery of net-zero healthcare, proactively manage our environmental impact across all activities, and invest in nature and biodiversity.

• Ensure ethical, open, and inclusive behaviour across our organisation and value chain.

The Company will continue to emphasise transparency and high standards of ethics in all its operations. Patient centricity remains at the core of our actions and guides our day-to-day decision-making. The Company will remain committed to high product quality, which underpins the safety and efficacy of its medicines. The Company will maintain a strong focus on cost optimisation and controls. The Company is undertaking measures to reduce unproductive discretionary and non-customer facing spending. It also continues to develop simple and more efficient processes to encourage accountability and improve decision-making and communication.

Internal control systems and their adequacy

The Company has internal control systems comprising of authority levels and powers, supervision, checks and balances, policies, procedures, and internal audit. During the year, the Companys Internal Finance Control was independently tested and validated by external auditors through the AstraZeneca Financial Control Framework (FCF). The Company ensures that the internal control system is reviewed and updated on an on-going basis through FCF and the use of external management assurance services. The Company monitors and manages risks in its interactions with third parties (Vendors) through its Third-Party Risk Management (3PRM) framework. This framework provides methodology, guidance and tools for managing third-party risks related to Anti-Bribery and Anti-Corruption, Data Privacy, Confidentiality, Trade Control and Competition, Product Communication and Product Security. Internal audits for FY 2023-24 were carried out by independent auditors, based on the audit plan approved by the Audit Committee. The plan included the audit of the depots of the Company, key processes within Operations and Marketing units including enabling functions. The Audit Committee and the Management have reviewed the recommendations of the Internal Auditors and appropriate remediation steps are being taken to implement their recommendations.

Discussion on financial performance with respect to operational performance

During the year ended March 31, 2024, the Companys total income was at 13,303.3 million as against 10,290.7 million reported in the corresponding previous year.

The total cost was at 11,272.4 million during the year as compared to 8,547.4 million in the previous year. The profit after tax was 1,615.1 million during the year compared to 992.9 million in the previous year.

Significant changes in Financial Ratios

During the year, the significant changes in the financial ratios of the Company, which are more than 25% as compared to the previous year are summarised below:

Financial Ratio	2023-24	2022-23	Change	Reason for change
Net Profit Ratio	12.5%	9.9%	26.3%	Increase is on account of higher net profit due to change in product mix and growth in sales
Return on Equity Ratio	24.8%	16.9%	46.7%	Increase is on account of higher net profit due to change in product mix and growth in sales
Debt-Equity Ratio	0.6%	1.2%	(50.0%)	Decrease is on account of increase in equity due to higher profits during the year
Financial Ratio	2023-24	2022-23	Change	Reason for change
Debt-Service Coverage Ratio	42.0%	29.9%	40.5%	Increase is on account of higher net profit due to change in product mix and growth in sales
Inventory Turnover Ratio	2.8%	2.2%	27.3%	Increase is on account of increase in sales
Trade Payable Turnover Ratio	0.7%	0.5%	40.0%	Increase is on account of change in credit terms with vendors
Return on Capital Employed	31.1%	22.9%	35.2%	Increase is on account of higher net profit due to change in product mix and growth in sales

Development in Human Resources/Industrial

Relations

Everything we do is underpinned by our dedication to being a Great Place to Work. We recognise that our people are our greatest asset and know whats possible with a talented and diverse team. We enable our people to thrive in a dynamic, inclusive and high-performing culture, driven by our Values and behaviours, so together, we can show what science can do for people, society and the planet.

We empower our people to reach their full potential in a dynamic, inclusive and high performing working environment and by recruiting, retaining and developing talented people we will continue to grow and prosper. To make the Company as a great place to work, we are focusing on inclusion and diversity and learning and development.

Our talent remains at the forefront of everything that we do.Through our talent development initiatives, we are committed to foster a culture of lifelong learning, strengthening and evolving our capabilities, and instilling confidence to challenge convention and explore possibilities. We accomplished this by focusing on short-term certifications, leadership development sessions, job rotations, stretch assignments. In 2023, we invested in developing a culture of lifelong learning to support the up-skilling of our people. 98% of our employees used Degreed - our global online learning platform that provides employees with access to an extensive number of educational resources.

Our Inclusion & Diversity (I&D) mission is to create an inclusive and equitable environment where people belong, using our diversity as a competitive advantage to push the boundaries of science to deliver life-changing medicines to patients. We continue to focus on fostering an environment promoting‘Speak your Mind and ‘Listen Up thus building an Inclusive Culture. One of the ways we adopted to leverage the strength and diversity of our teams across is by launching ‘180? Reverse Mentoring where the Country Leadership team is being mentored by diverse employees across roles, experiences to establish well-rounded cohorts and enable cross-generational and inquiry-based conversation. We continue to focus on building and sustaining a diverse leadership and talent pipeline.

Our biannual employee opinion surveys help us measure employee sentiment and progress in our aim of being a great place to work. In our most recent survey (November 2023), we continued to score highly, achieving an average result of 89% across all questions in the Marketing Company. Our response rate also reflects the high levels of engagement with 94% of all employees in Marketing Company choosing to participate in the survey.

In 2023, we have earned the following external recognitions:

‘Great Place to Work certification - 6 times in a row.

• Best Companies for Women in India (BCWI) - 6 times in a row.

CAUTIONARY STATEMENT

Statements made in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, and expectations may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include amongst others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which it operates, changes in government regulations, tax laws, and other statutes and incidental factors.

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27. Globocan India Fact Sheet 2023