Aurobindo Pharma Ltd Management Discussions

Economic overview

Global economy

In 2023, the global economy demonstrated resilience with GDP growth of 3.2%, driven by several factors. Firstly, greater-than-anticipated government spending and resilient household consumption bolstered demand, supporting economic growth. Additionally, despite supply-chain disruptions, an unanticipated boost to labour force participation contributed to a supply-side expansion. Central banks globally responded swiftly to contain inflation, stabilise economic conditions, and bolster confidence. Furthermore, households in major advanced economies drew on substantial savings accumulated during the pandemic, mitigating the impact of inflationary pressures on consumption.

While inflation surged initially due to supply-chain disruptions and geopolitical tensions, it has gradually receded. However, challenges persist, particularly in controlling service inflation, which remains stubbornly high.

Despite the resilience displayed by the global economy, several challenges remain. Persisting inflationary pressures, especially in services, pose risks to the economic recovery. Moreover, geopolitical tensions, including conflicts in Ukraine and the Middle East could lead to new price spikes, impacting interest rate expectations and asset prices.

Fiscal challenges, particularly high government debt levels in many economies, could undermine confidence and hinder reform efforts. Additionally, medium-term growth prospects remain subdued due to lower total factor productivity growth and increasing geoeconomic fragmentation.

Global growth forecast (%)

	Actual	Projections
Particulars	2023	2024	2025
World output	3.2	3.2	3.2
Advanced economies	1.6	1.7	1.8
US	2.5	2.7	1.9
Eurozone	0.4	0.8	1.5
Japan	1.9	0.9	1.0
UK	0.1	0.5	1.5
Other advanced economies	1.8	2.0	2.4
Emerging market and developing economies	4.3	4.2	4.2
China	5.2	4.6	4.1
India	7.8	6.8	6.5
Emerging market and middle-income economies	4.4	4.1	4.1
Low-income developing countries	4.0	4.7	5.2

Outlook

According to IMF projections, global GDP growth is expected to remain steady around 3.2% for 2024 and 2025, with median headline inflation is gradually declining. Risks to the global outlook in broadly balanced, with potential downsides risks stemming from geopolitical tensions, persisting inflationary pressures, and fiscal challenges. However, looser fiscal policies and stronger structural reforms could spur economic activity and productivity growth. As the global economy approaches a soft landing, the near-term priority for central banks is to ensure a smootf transition in inflation levels. Simultaneously, a renewed focus on implementing medium-term fiscal consolidation is necessary to rebuild fiscal buffers and ensure debt sustainability.

Multilateral cooperation is essential to address global challenges such as geoeconomic fragmentation, climate change, and debt restructuring. Coordinated efforts are required to facilitate a transition to green energy and promote inclusive growth across economies. Additionally, intensifying supply-enhancing reforms could facilitate inflation and debt reduction, increasing growth towards higher pre-pandemic levels and accelerating convergence toward higher income levels.

Indian economy

The Indian economy witnessed robust growth in FY24, with a GDP growth of 7.8%, building upon the previous years growth of 7.0%. This growth was driven by robust private consumption, a continued government push for capital expenditure, and an overall positive sentiment.

Sectoral contributions to growth

Strong corporate profitability and improved balance sheets of banks and financial institutions facilitated sustained credit flow across various sectors, further bolstering economic activity. Key sectors such as construction and manufacturing played pivotal roles in driving economic growth. The construction sector surged with a doubledigit growth rate of 10.7%, while manufacturing registered substantial growth at 8.5%. Indias external sector remained robust, with strong performances in merchandise and services exports. While merchandise exports moderated in growth due to global demand fluctuations, they still reached a significant milestone of US$ 451.1 billion in FY23. Foreign investment inflows remained robust, affirming Indias position as an attractive destination for investors.

Inflation

While economic growth remained robust, inflation emerged as a concern. Despite moderation, with retail inflation easing to 4.85% in March 2024, the Reserve Bank of India maintained a cautious stance to ensure price stability and sustainable economic growth.

Outlook

Looking forward, Indias economic outlook remains promising, with the IMF projecting a growth rate of 6.8% for FY25. Private consumption and public investment, particularly in infrastructure, are expected to be the primary drivers of growth. Inflation moderation is anticipated to support consumption, while fiscal discipline provides room for calibrated budgetary allocations. However, risks from global uncertainties and domestic structural reforms need careful navigation to sustain growth momentum.

Industry context

Global pharmaceutical industry

In 2023, the global pharmaceutical industry witnessed significant shifts in medicine usage and spending growth across regions, setting the stage for robust expansion in the years ahead. Despite the challenges posed by the pandemic, the industry demonstrated remarkable resilience and adaptability, responding with agility to changing demands and adopting innovative therapies to meet evolving healthcare needs.

The outlook for medicine spending through 2028 has been revised upwards, with a projected compound annual growth rate (CAGR) of 5-8%, reaching a total spending of US$2.3 trillion. This upward revision reflects accelerated growth rates, underscoring the industrys pivotal role in addressing ongoing health challenges and improving global health outcomes.

Although the volume use of medicines globally plateaued in 2023, steady growth is anticipated at an average rate of 2.3% through 2028. This growth trajectory is primarily driven by burgeoning markets in China, India, and other Asian regions, as well as rapid expansion in Latin America. Conversely, North America, Western Europe, and Japan are expected to exhibit slower growth due to their higher per capita use levels.

Despite challenges such as confidential rebates and government-mandated discounts affecting manufacturer net sales, spending in regions like the U.S., Europe, Japan, and key emerging markets is poised to increase significantly. The introduction of new brands, increased uptake of original medicines, and adoption of novel therapies are anticipated to drive growth in these regions, further underscoring the industrys resilience and adaptability.

Biotech and specialty medicines targeting chronic and rare conditions are expected to drive growth, alongside advancements in therapy areas like immunology, endocrinology, and oncology. The steady increase in utilisation of immunology treatments, in particular, reflects the wider adoption of older therapies and the introduction of new treatments to address emerging healthcare needs.

Source: IQIVIA - Global Spending on medicine use 2024

Global growth forecast (%)

Exhibit 1: Historical and projected use of medicines by region, 2018-2028, Defined Daily Doses (DDD) in Bns

(Defined Daily Doses (DDD) in Bns)

Source: IQVIA Institute, December 2023

Global pharmaceutical market

(us$Bn)

Regions	2023	2019-2023 CAGR	2028	2024-2028 CAGR
Developed Markets	1,275.5	7.2%	1,775-1,805	5-8%
Pharmerging Markets	303.7	7.8%	400-430	10-13%
Other Markets	27.6	5.6%	33-37	3-6%
Global Pharmaceutical Market	1,606.8	7.3%	2,225-2,255	6-9%

Therapy-wise trends in medicine usage

Growth in immunology treatments

Immunology products, including biologies, have experienced significant volume increases since 2018. This growth can be attributed to expanded access to a variety of therapies, with nearly half of immunology biologic volume facing biosimilar competition. Immunology, while experiencing slower growth in the range of 2-5%, remains a pivotal therapy area, particularly in the treatment of autoimmune disorders. The launch of biosimilars, especially adalimumab biosimilars in the U.S., is expected to impact growth. Despite this, immunology products are anticipated to reach US$192 billion globally by 2028, driven by increasing numbers of treated patients and new product introductions.

2- 5%

CAGR between 2024 and 2028

Rapid Uptake of GLP-1 Agonists GLP-1 agonists, initially approved for diabetes treatment, have seen rapid uptake in both diabetes and obesity indications. The approval of additional therapies for obesity is expected to contribute to significant future volume growth. Manufacturing constraints experienced in 2023 may have impacted the availability of these therapies outside the U.S.

3- 6%

CAGR between 2024 and 2028

Source: IQIVIA - Global Spending on medicine use 2024.

Oncology

Oncology volume has surged, reaching 21% higher levels than in 2018, primarily driven by markets in Latin America and Asia. This growth was fuelled by expanded access to traditional chemotherapy and novel targeted therapies. Notably, variations in per capita use exist even within higher-use regions, underscoring the need for equitable access to breakthrough therapies. Going forward, oncology remains a leading therapy area, poised to grow at a robust 14-17% CAGR through 2028, driven by the introduction of novel treatments. The forecast includes the addition of 100 new treatments over the next five years, contributing to a significant increase in spending, reaching more than US$440 billion in 2028. Despite facing some limitations due to new losses of exclusivity, the oncology segment continues to witness substantial investment in research and development, fuelling innovation and expanding treatment options for cancer patients globally.

14-17%

CAGR between 2024 and 2028

Source: IQIVIA - Global Spending on medicine use 2024.

Emerging trends in neurology and mental health treatments

The neurology and mental health treatment landscape is evolving rapidly, with advancements in therapies aimed at addressing conditions such as Alzheimers disease, depression, and anxiety disorders. The introduction of novel treatments and increased awareness of mental health issues are driving higher utilisation rates in these therapy areas, particularly in developed markets.

Antibacterial challenges and solutions

Antibacterials remain critical healthcare resources, but their usage presents challenges such as antimicrobial resistance. Efforts to promote appropriate stewardship and combat resistance are underway, including the development of new antibacterial agents and the implementation of antimicrobial stewardship programs. However, shortages of antibacterials in major markets continue to pose challenges to healthcare systems worldwide.

Key global markets

The global medicine market, measured by list price levels, is projected to grow at a Compound Annual Growth Rate (CAGR) of 5-8% through 2028, reaching approximately US$2.3 trillion in total market size. This growth outlook represents a 2% increase compared to previous forecasts, despite a significant downward revision in expected spending on COVID-19 vaccines and therapeutics. Developed markets, characterised by larger established economies, are expected to experience more rapid growth driven by the introduction of new and existing branded products.

In the United States, the market is forecast to grow at a CAGR of 2-5% over the next five years, a decrease from the 5.3% CAGR observed in the previous five years.

This projection includes the anticipated effects of the Inflation Reduction Act. Europe is anticipated to see an increase in spending of US$70 billion through 2028, propelled by the introduction of new brands, albeit offset by the presence of generics and biosimilars.

Japans medicine spending growth is expected to range from -1 to 2% through 2028. Despite robust brand growth, this increase is mitigated by annual price cuts and ongoing shifts towards generics. While spending growth in developed markets may vary, overall, they are anticipated to maintain positive trajectories, supported by ongoing innovation and market dynamics.

USA

Medicine spending at net levels in the U.S. pharmaceutical market is expected to grow at a rate of 2% to 5%, primarily driven by increasing brand spending on an invoice basis. Off-invoice discounts and rebates are projected to be amplified by the provisions of the Inflation Reduction Act (IRA), resulting in spending estimates that are 37% lower than invoice levels in 2023, anticipated to reach 47% lower by 2028. The IRA is anticipated to influence gross-to-net differences, impacting growth trajectories in various therapy areas.

US pharmaceutical spending and growth (US$ Bn) at invoice level

(US$ Bn)

2023	2019-2023 CAGR	2027	2023-2027 CAGR
711	7.6%	1,010	6-9%

Key trends

• Acceleration in Therapy Areas: Notably, oncology, immunology, diabetes, and obesity have shown accelerating growth, driven by the adoption of novel therapies. These therapy areas are expected to be major contributors to overall spending growth.

• Market Dynamics and Patent Expiries: Market dynamics around the use of medicines, adoption of newer treatments, impact of patent expiries, and competition from generics and biosimilars will significantly shape spending patterns through 2028.

• Increased Usage of Existing Branded Products: The largest driver of growth is expected to be increased usage of existing protected branded products, contributing substantially to overall spending over the next five years.

• Loss of Exclusivity Impact: Losses of exclusivity in the U.S. are projected to have a substantial impact on spending, totaling US$145.5 billion through 2028. This impact is notable in both small molecule and biologic products. Small molecule expiries are expected to reduce brand spending by US$106 billion, while biologies are forecasted to result in US$39.5 billion in lower brand spending over five years.

Europe

Medicine spending in the top five European markets is poised to increase by US$70 billion over the next five years, reflecting a notable shift in the drivers of growth. New brands, the largest contributor to growth from 2018 to 2023, are expected to continue driving spending but may face challenges due to the lingering effects of the pandemic on marketing operations and increasing budget pressures. However, generics, including biosimilars, are projected to contribute significantly to growth, adding US$18 billion over the next five years, despite facing price deflation.

WE5* pharmaceutical spending and growth (US$ Bn) at invoice level

(US$ Bn)

2023	2019-2023 CAGR	2028	2024-2028 CAGR
226	7%	296	5.5%

Key trends

• Impact of Losses of Exclusivity (LOEs): The impact of LOEs in the five largest European markets is expected to more than triple over the next five years, with over half of the impact attributed to biologies. This impact is particularly significant in 2023,2025, and 2026, driven by patent expiries of key biologies such as ranibizumab (Lucentis), ustekinumab (Stelara), and aflibercept (Eylea).

• Market Dynamics and Payer Actions: Payer actions will be influenced by the pace of economic and COVID-19 recovery, as well as broader inflation concerns and the impact of fuel commodity costs related to the Ukraine conflict. Economic recovery and budget pressures may shape reimbursement decisions, impacting the growth trajectory of new brands.

• Innovation and Health Technology Assessments:

* WE5 Pharmaceutical Markets include France, Germany, Spain, Italy and Uk. Source: IQIVIA - Global Spending on medicine use 2024.

Despite uncertainties, innovation is expected to remain strong over the next five years. However, there may be greater scrutiny of the value of new medicines, particularly through health technology assessments. This could affect the growth of new brands and established brands in the market.

Pharmerging market

Over the years, pharmerging markets have witnessed significant growth primarily driven by increased consumption of older generic medicines. However, recent trends indicate a notable shift in spending patterns, particularly in countries like Russia and Turkey, where rising pharmaceutical expenditures and improved GDP per capita have propelled them into the category of other developed nations. Despite these advancements, pharmerging markets continue to grapple with challenges, including limited access to specialty medicines, which accounted for 13% of spending in 2023 and are projected to maintain a similar share by 2028.

The growth trajectory of pharmerging markets is expected to be more influenced by volume rather than the adoption of expensive therapies. These markets typically rely on generics or non-original branded products, resulting in lower shares of spending on originator products compared to developed markets. Moreover, pharmaceutical products in pharmerging and lower-income countries often carry lower price tags, reflecting the cost-conscious nature of these regions and the need to ensure affordability for a significant portion of the population.

Pharmerging markets - Pharmaceutical spending and growth

(US$ Bn)

2023	2019-2023 CAGR	2028	2024-2028 CAGR
303.7	7.8%	400-430	10-13%

India

The Indian pharmaceutical market is poised for substantial growth, with medicine spending expected to reach US$38-42 billion by 2028, reflecting a robust compound annual growth rate (CAGR) of 7-10% between 2024 and 2028. Notably, acute therapies like anti-infectives and vitamins and minerals witnessed improved volumes in 2023, while chronic therapies, including cardiac and respiratory segments, continued to perform well. Other key drivers of growth include Indias growing population, demographic and lifestyle changes, expertise in low-cost manufacturing, improving affordability, and increasing access to modern medicines. These factors collectively underscore Indias significant potential as a key growth market in the global pharmaceutical landscape, with ample opportunities for both domestic and international stakeholders to participate in and benefit from the countrys dynamic pharmaceutical industry.

Indian pharmaceutical spending and growth

(US$ Bn)

2023	2028	2024-2028 CAGR
27	38-42	7-10%

Source: IQIVIA - Global Spending on medicine use 2024.

Production Linked Incentive (PLI) Scheme

The Indian governments robust support and attractive incentives, exemplified by initiatives like the PLI scheme, play a pivotal role in bolstering the pharmaceutical industry. These measures create a conducive business environment, attracting potential investors to explore opportunities in the Indian market.

About Aurobindo Pharma

Aurobindo Pharma Limited, currently positioned as Indias second largest pharmaceutical company in terms of revenue, is an integrated global pharmaceutical company headquartered in Hyderabad, India. The Company develops, manufactures, and commercialises a diverse portfolio of generics, specialty products and injectables, active pharmaceutical ingredients and complex offerings including biosimilars, vaccines, peptides, and metered dose inhalers globally in over 150 countries.

The Company has 29 manufacturing and packaging facilities that are approved by leading regulatory agencies including the US FDA, UK MHRA, EDQM, Japan PMDA, WHO, Health Canada, South Africa MCC, Brazil ANVISA. The Companys robust product portfolio is spread over 7 major therapeutic and product areas encompassing CNS, Anti-Retroviral, CVS, Antibiotics, Gastroenterological, Anti-Diabetics and Anti-Allergic, supported by a strong R&D set-up. It employs over 37,000+ people including a dedicated R&D team of over 1,500+ scientists and analysts working in 9 research facilities spread across the globe. The Companys R&D focus is on developing niche oral, sterile, specialty injectable products, biosimilars, and peptide-based products, involving clinical and end-point studies.

The Company continuously focuses on developing complex molecules, differentiated offerings, broad spectrum products, and newer technologies to improve health outcomes globally.

The Company is not only one of the largest vertically integrated generic and API pharma player, but also backward integrating into the key starting materials (KSMs) and intermediates. APLs strategic priorities are evolving while continuing to focus on the core capabilities.

APL continues to expand manufacturing footprint, backward integrate to build resilient supply chain, expand geographic presence, diversify product portfolio and be future ready with expansion into biosimilars.

?29,002cr	?5,843 cr
Revenue 5-year CAGR: 8%t	EBITDA

 

150+	9	37,000+
Countries market reach	Research facilities	Global employee base including contract workforce
1,500+	830	3,642
Scientists & analysts	ANDA filed with the US FDA	Formulation dossiers filed in Europe
291	1,859
DMFs filed with the US FDA	API dossiers filed in Europe

* As on 31 March 2024.

Snapshot:

Segment revenue

Amount (? Cr)	FY24	FY23	%y-o-y growth	FY24% of
Formulations
USA	13,867	1 1,227	24%	48%
Europe	7,166	6,426	12%	25%
Growth Markets*	2,517	1,951	29%	9%
ARV	868	976	-11%	3%
Total formulations	24,419	20,579	19%	84%
Active Pharmaceutical Ingredients (API)
Betalactam	2,970	2,448	21%	10%
Non Betalactam	1,270	1,400	-9%	4%
Total API	4,241	3,848	10%	15%
Consolidated sales	28,660	24,427	17%
Puerto Rico	342	428	-20%	1%
Revenue from operations	29,002	24,855	17%

Achievements of FY24

• Recorded revenue of ?29,002 crore, EBITDA at ?5,843 crore, with EBITDA margin at 20.1%

• Filed AO ANDAs with the US FDA, of which 9 are specialty products

• Received final approval for 68 ANDAs from the US FDA of which 22 are specialty products

• Launched 62 products in USA, including 14 specialty products

• Commercialised four major manufacturing facilities viz. Penicillin-G, 6-APA, Injectables and Granulation

• Branded oncology -

- Received the US FDA approvaI for Ryzneuta™ (Efbemalenograstim alfa Injection), an in-licensed product from Evive Biotech for US commercialisation, for the treatment of Chemotherapy-lnduced Neutropenia (CIN)

• Forayed in the fourth largest populus country, Indonesia, with acquisition of 17 brands from Pfizer/Viatris

• API business of our Company was transferred to Apitoria Pharma, a wholly owned subsidiary of the Company

Creating a road map for the future

Expanding manufacturing footprint

Backward integration to build resilient

Extending geographic presence

Diversified product portfolio

Future ready with biosimilars

(in ? crore)

FY20	FY21	FY22	FY23":	FY2 k 1
11,484	12,324	11,035	11,227	13,867

Formulations business

Formulations business (including Puerto Rico) posted a revenue of ?24,761 crore in FY24, thereby contributing to 85% of the total revenue. From a geographical standpoint, the US and Europe accounted for 73% of total revenue. During the year, our Company manufactured more than 45 billion units of various dosage forms, such as tablets, capsules, injectables, etc., in its 16 state-of-the-art manufacturing facilities, which are located in India, Portugal, the US and Brazil.

Formulations business revenue trend

(in? crore)

FY20	FY21	FY22	FY23	FY24
20,012	21,686	19,939	21,007	24,761

FY20-24 CAGR: 5% I^s

US formulations

The US formulations business (excluding Puerto Rico) revenue grew by 23.5%y-o-y to ?13,867 crore in FY24. Our Company held its top position in terms of prescription volume share in the US as per IQVIA data for the quarter ended March 2024. It has presence across generic orals, injectables, OTC, and branded oncology segments. During the year, our Company launched 62 products within the US formulations segment, including 14 specialty products.

US formulations ex-Puerto Rico business revenue trend

FY20	FY21	FY22	FY23	FY24
11,484	12,324	11,035	11,227	13,867

FY20-24CAGR: 5%

Revenue mix of the US formulations segment (%)

OS formulation segment	% share in US formulation sales (FY24)
Orals	64%
Specialty & Injectables	24%
Branded Oncology	6%
OTC	5%

Filings and approvals in the US

Orals

Oral segment sales within the US formulations business grew by 22% y-o-y to ?8,924 crore in FY24. The growth was due to new product launches, increase in market share of existing products, and positive forex impact. The price erosion remained stable. As of March 31, 2024, our Company has 489 Oral product ANDAs with final approval, while 118 ANDAsare awaiting final approval.

Specialty and injectables

Specialty and Injectables sales within the US formulations business grew by 42% y-o-y to ?3,287 crore in FY24. The growth was due to new product launches, higher volume and positive forex impact. The price erosion remained at lower levels than in the past. As of March 31,2024, our Company has 169 specialty and injectable product ANDAs with final approval while 54 ANDAs are awaiting final approval.

Branded oncology injectables

The US branded oncology business consisting of seven brands marketed by Acrotech Biopharma, witnessed 2% y-o-y growth in revenue to ?894 crore in FY24. During the year, Ryzneuta™ (Efbemalenograstim alfa Injection), an in-licensed product from Evive Biotech for US commercialisation, for Chemotherapy-Induced Neutropenia (CIN) received the US FDA approval.

Over-the-counter drugs (OTC)

OTC sales within the US formulations business grew by 4% y-o-y to ?762 crore in FY24. The growth was driven by new launches, higher volume, and positive forex.

Europe formulations

APL has a presence in ten countries in Europe/UK with full-fledged Pharmacy, Elospital, and Tender sales infrastructure. It ranks amongst the top 10 Generic companies in eight countries, including four of Top-5 EU countries. France and Netherlands are the top two markets for our Company in Europe. In FY24, Europe formulations segment revenue increased by around 12% y-o-y to ?7,166 crore. The increase was due to higher volumes and new product launches. Despite a relatively muted market in Europe, the Companys sales in the local currency grew at 5% CAGR over the last five years. As part of efforts to improve profitability of the Europe business, the Company is focusing on sourcing the products from its own manufacturing facilities in India.

EU formulations revenue trend

(in ?crore)

FY20	FY21	FY22	FY23	FY24
5,922	6,061	6,480	6,426	7,166

FY20-24 CAGR: 4%

Growth Markets formulations

Growth Markets sales in FY24 grew by 29% y-o-y to ?2,517 crore. The segment contributed to 9% of the total revenue of the Company during the year. The segment growth was driven by our foray into the Indonesian market with the acquisition of Viatris brands. Within the segment, the other key markets in FY24 include Canada, Domestic market (India), Mexico, South Africa, and Brazil. Domestic formulations sales stood at ?230 crore during the year.

Growth Markets formulations revenue trend

(in ? crore)

FY20	FY21	FY22	FY23	FY24
1,355	1,438	1,504	1,951	2,517

FY20-24 CAGR: 17% t

ARV formulations

During the year, the Company won bids to supply in both the Global Fund and PEPFAR allocation. In the Global Fund, APL has been selected as strategic supply partner for three years duration from January 2023 to December 2025. In PEPFAR, it has been selected under both Lot-1 and Lot-2 allocation.

ARV formulations revenue trend

(in ? crore)

FY20	FY21	FY22	FY23	FY24
1,252	1,863	833	976	868

API business

In Oct 23, API business of our Company was transferred to Apitoria Pharma, a wholly owned subsidiary of the Company. Under the newly appointed management, the Company has been focussing on improving topline and bottom-line performance, leading to improved growth, productivity, and regulatory compliance.

The API segment of the Company, which is a key pillar for the Companys vertically integrated business model, witnessed 10% y-o-y growth in revenue during FY24 to ?4,241 crore, thereby accounting for 15% of the total revenue. APL has a presence in both Beta Lactam and non-Beta lactam APIs, with the former contributing to 70% of the total API sales. The Company aims to efficiently supply APIs meeting stringent quality requirements. It employs strict cost control and efficiency measures in R&D, supply chain, and manufacturing operations.

During the year, the Company commercialised Penicillin-G manufacturing facility of 15,000 tonnes per annum capacity, as part ofthe PLI scheme ofthe government of India, along with 6-APA manufacturing capacity of 3,600 tonnes per annum.

API revenue trend

(in?crore)

FY20	FY21	FY22	FY23	FY24
3,083	3,086	3,516	3,848	4,241

Financial review: Consolidated

Key ratios

	As on March 31, 2024	As on March 31,2023
Debtorsturnover	6.3	5.9
Inventoryturnover	3.2	3.1
Interest coverage ratio	16.7	20.0
Current ratio	1.9	1.8
Debt equity ratio	0.11	0.03
Operating profit margin (EBITDA Margin %)	20.1%	15.1%
Net profit margin (%)	10.9%	7.8%
Return on net worth (%)	11.2%	7.5%

Manufacturing review

APLs manufacturing footprint includes 29 commercialised manufacturing units for formulations and APIs, spread across India (26), Portugal (1), Brazil (1) and the US (1). Several leading regulatory agencies such as US FDA, UK MHRA, Europe EMA, Japan PMDA, WHO, and Health Canada have approved the facilities. The integrated nature of business enables seamless production schedules, with on-time availability of raw materials and finished products, ensuring timely response to market opportunities.

During the year, six units received EIRs from US FDA and the Company has commissioned four manufacturing facilities viz. Penicillin-G, 6-APA, Injectables, and Granulation facility. APL also has six manufacturing facilities under the construction stage, including two in the US and two in India, one each in China and Puerto Rico. Post commercialisation of the units mentioned above, APL will have operational manufacturing capabilities in complex generic products, including injectables, inhalers, topical and transdermal products, biosimilars, and vaccines.

SCOT Analysis

Strengths	Challenges	Opportunities	Threats
• Manufacturing capacity of 50 billion+ units	• Competitors with similar offerings and business structures	• Backward integration into the KSMs and intermediates	• Intense competition from established player: and new entrants
• Vertically integrated manufacturing	• High mobility of workforce within the industry	• Addressing the market shortages	• Increasing focus on value-based healthcare and drug pricing regulations
• Presence in multiple therapeutic areas	• Pricing pressures for generics, price erosions for new launches and older molecules	• Foray in Biologies CDMO	• Disruptions in supply chain and raw material sourcing due to geopolitical and economic factors
• Global footprint across 150+ countries	• Regulatory challenges in existing/new markets	• Capacity expansion and building diverse capabilities.	• Evolving customer preferences and changing market dynamics
• Strong R&D capability	• Supply chain assurance	• Successful execution in new business areas like vaccines, dermatology, transdermal patches, and respiratory medicines
• Skilled workforce		• Expansion into new emerging markets
• Capability of delivering high-quality, low-cost generics		• Achieving a global scale of operations
• Dominant API player
• Technology strength in manufacturing, and robust marketing infrastructure
• Track record of successful acquisitions

Workforce

Aurobindo Pharma, a US$3.5 billion company by FY24 turnover, employs 26,000+ permanent workforce and 11,000+ of contractual workforce. The Company, with its strong manufacturing prowess and marketing network, is successful in the highly competitive generic pharmaceuticals segment due to a strong, capable, and dedicated workforce. Aurobindo Pharma believes their employees are the core assets of the organisation and focuses on providing a secure and safe working environment to its employees and ensures training and development opportunities across all its businesses.

The Company conducts engaging initiatives that empower the workforce, fostering a vibrant and resilient team that drives our success and growth. The Company prioritises its people, fostering inclusivity, championing diversity, and promoting equal opportunity. At Aurobindo Pharma, creating a learner-centric environment is a priority where individual and organisational growth is encouraged, valued, and rewarded.

Our Company focuses on building a strong and dynamic

team across the organisation by:

• Fostering a work environment where every individual can thrive through talent development, employee engagement, and performance management.

• Leveraging technology and performance measurements to build capabilities.

• Focus on leadership development through training, coaching, and mentorship through programmes in partnership with top institutions.

• Promoting a collaborative environment by integrating its global workforce through various projects.

• Providing a diverse and inclusive work environment which is integral to our organisational culture.

• Prioritising health and well-being of its people.

• Realigning its strategies to adapt to the changing work environment.

Sustainability at Aurobindo

Aurobindo Pharma is deeply committed to sustainable goals and contributing towards a better future. Our dedication to environmental stewardship is evident in our adoption of sustainable practices across all operations. We have achieved significant milestones in various areas, such as sustainable packaging and energy generation. By embracing sustainable packaging techniques, we have successfully reduced waste and promoted responsible resource management. Moreover, our investment in solar power has resulted in the consumption of 1,24,446 MW encompassing both self-generated and purchased solar power from our joint venture and associate companies of solar energy, contributing to cleaner energy sources and a decreased environmental impact. We also generate energy from renewable sources like biomass including rice husk, briquette and natural gas. To address water pollution and antimicrobial resistance, we have proactively implemented wastewater treatment measures at our manufacturing facilities, thereby highlighting our commitment to responsible resource management and a healthier environment. We have strengthened our integrated water management systems, including rainwater harvesting on-site and off-site, to achieve water conservation and restoration goals by 2025.

Some of our notable accomplishments that underscore our commitments are:

• Generated -43,000 MW of energy through solar plants and consumed 1,24,446 MW of renewable energy, highlighting our commitment to sustainability.

• Actively participated in The Antimicrobial Resistance Benchmark in 2018,2020, and 2021, demonstrating our engagement in addressing this critical issue.

• Engaged in the AMR Industry Alliance Survey report in 2020, 2021, and 2022, showcasing our continuous involvement in combating antimicrobial resistance.

• Became full member of PSCI in 2024, indicating our dedication to responsible supply chain practices.

• Participated in the CDP Disclosure 2022,2023 for Performance in Climate Change and Water Security, underscoring our transparency and commitment to addressing these global challenges.

• Received a C score for Climate Change and Water Security as a first-time responder in the CDP assessment, recognising our exemplary performance in these areas.

As we expand our manufacturing scale and strengthen our market presence, we understand that sustainable growth necessitates a focus on nurturing and empowering our talented workforce. We recognise the importance of providing opportunities for employee development and cultivating a culture of inclusivity and diversity.

This approach ensures a skilled and engaged team that drives innovation and operational excellence. Our commitment to talent development not only strengthens our organisation but also enhances the well-being of our employees and the communities in which we operate.

By combining sustainable manufacturing practices with a focus on talent, we are confident in expanding our market presence while upholding our commitment to sustainability and long-term success.

A responsible organisation

We firmly believe in creating a healthier ecosystem and driving positive change through a holistic approach encompassing robust governance, transparency, and efficient information flow. To ensure the integration of sustainability into our operations, we have implemented a three-tier sustainability governance model emphasising accountability and continual improvement.

Through our Corporate Social Responsibility (CSR) initiatives, we actively target marginalised groups, enhance patient health, and tackle pressing social challenges.

Our focus areas include diversity and inclusion, water conservation, responsible supply chain practices, carbon emissions reduction, and social accountability. By adhering to these principles, we strive to foster community well-being and contribute to building a sustainable future. In FY24, we spent ?373 million on CSR activities.

Our CSR initiatives encompass a wide range of areas, including education, healthcare, sanitation, rural water systems, nutrition, sustainable agriculture, women empowerment, rural development, and environmental sustainability. These efforts have positively impacted the lives of 8.59 lakh individuals.