balaxi pharma share price Management discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

INDIA Pharmaceutical sECTOR

The Indian pharmaceutical industry is a significant player globally, ranking third in pharmaceutical production by volume. It is renowned for its production of generic medicines and low-cost vaccines. In terms of its contribution to the Indian economy, the sector accounted for approximately 1.32% of the Gross Value Added in 202021, based on constant prices from 2011-12. The fiscal year 2021-22 saw a total annual turnover of Rs. 3,44,125 crore (USD 42.34 billion) in the pharmaceutical sector.

The major segments of the Indian pharmaceutical industry include generic drugs, over-the-counter (OTC) medicines, bulk drugs, vaccines, contract research and manufacturing, biosimilars, and biologics. India has established itself as a global leader in the supply of vaccines such as DPT, BCG, and Measles, accounting for 60% of global vaccine production.

Over the past few years, the pharmaceutical sector in India has experienced healthy growth. In terms of active pharmaceutical ingredients (APIs), India boasts 500 API manufacturers, representing approximately 8% of the global API industry. Furthermore, India is the largest supplier of generic medicines globally, producing around 60,000 generic brands across 60 therapeutic categories. It accounts for 20% of the global supply of generics.

india pharmaceutical sector

India is a major exporter of Pharmaceuticals, with over 200+ countries served by Indian pharma exports. India supplies over 50% of Africas requirement for generics, ~40% of generic demand in the US and ~25% of all medicine in the UK.

Indias pharmaceutical exports totalled $25.39 billion in FY23, a shade better than the previous fiscal but short of the $27 billion target as headwinds, including the impact of the Russia-Ukraine war, hampered the pace of growth. Negative growth in the important market of Africa, on account of an economic slowdown, as well as in the CIS countries, primarily in Russia on account of the war and sanctions, were key factors that weighed in on the performance. An increase in raw material costs and withdrawal of GST exemption on ocean and air freight charges were among the headwinds despite which pharma exporters clocked year-on-year growth.

OPPORTUNITIES AND THREATS

SWOT ANALYSIS OF INDIA PHARMA SECTOR

Strengths:

Manufacturing capabilities: India has a robust pharmaceutical manufacturing sector, with a wide range of production facilities capable of producing high-quality generic drugs at competitive prices. The country is known for its cost-effective production methods and has a vast pool of skilled labour.

Significant market potential: India is the worlds second- most populous country, providing a vast domestic market for pharmaceutical products. The growing middle class and increasing healthcare awareness drive the demand for pharmaceuticals, presenting significant opportunities for export growth.

Regulatory compliance: The Indian pharmaceutical industry adheres to stringent regulatory standards, with many companies complying with international regulations like U.S. FDA, WHO GMP and PIC/S. This compliance enhances the credibility and acceptance of Indian pharmaceutical exports in global markets.

Research and development (R&D): India has a strong pharmaceutical research and development base, with several pharmaceutical companies investing in R&D activities. This allows for developing new drugs, improved formulations, and cost-effective manufacturing processes, which can be leveraged for export opportunities.

Weaknesses:

Infrastructure challenges: Despite significant progress,

India still needs infrastructure challenges such as inadequate logistics and transportation networks. Efficient cold chain systems and reliable supply chains are critical for pharmaceutical exports, and addressing these weaknesses can improve competitiveness.

Intellectual property concerns: India has faced criticism regarding intellectual property rights (IPR) issues in the past. Some Indian pharmaceutical companies have been involved in disputes over patent infringements, which have raised concerns among international partners. Strengthening IPR protection can enhance Indias reputation and trustworthiness.

Opportunities:

Growing global demand: The global demand for pharmaceutical products continues to rise, driven by factors such as population growth, aging populations, and increasing healthcare expenditure. India can tap into these opportunities by expanding its export markets and catering to the evolving needs of the healthcare industry worldwide.

Emerging and Frontier markets: There is a growing demand for affordable pharmaceuticals in emerging markets across Asia, Africa, and Latin America. India can leverage its cost-effective manufacturing capabilities to penetrate these markets and establish strong export partnerships.

Threats:

Intense competition: The global pharmaceutical market is highly competitive, with several countries, including China, emerging as formidable competitors. Indian pharmaceutical exporters face competition in terms of price, quality, and regulatory compliance. Continuous innovation and maintaining high-quality standards are necessary to stay competitive.

Regulatory challenges: Compliance with different regulatory frameworks across various export markets can be complex and time-consuming. Keeping up with evolving regulations, documentation requirements, and product registrations can pose challenges for Indian pharmaceutical exporters.

OUTLOOK - REVIEW OF OUR EXISTING AND EMERGING MARKETS

OVERVIEW OF THE FRONTIER MARKETS

The pharmaceutical industry plays a vital role in providing essential healthcare solutions worldwide. While developed markets have traditionally been the main focus for pharmaceutical companies, the rising demand for pharmaceutical products in frontier markets has garnered significant attention.

Understanding Frontier Markets:

Frontier markets are characterised by economies with relatively low to middle-income levels, emerging industries, and significant growth potential. These markets are often located in Sub-Saharan Africa, Southeast Asia, and Latin America. They present unique challenges and opportunities for pharmaceutical companies due to limited infrastructure, poor healthcare systems, and diverse regulatory environments.

Growing Population and Increasing Healthcare needs:

Frontier markets are experiencing rapid population growth, directly translating into increased healthcare needs. The expanding middle class and improving living standards contribute to higher demand for pharmaceutical products, including prescription drugs, over-the-counter medications, and healthcare equipment. As these markets progress, the prevalence of chronic diseases and noncommunicable ailments rises, further driving the demand for pharmaceutical solutions.

Improving Healthcare Infrastructure and Access:

Many frontier markets are making significant investments in healthcare infrastructure, including establishing hospitals, clinics, and healthcare centers. Governments and international organizations are also working to improve access to healthcare services in these regions. This enhanced infrastructure, coupled with increasing healthcare expenditure, leads to a higher demand for pharmaceutical products to meet the growing medical needs of the population.

Rising Disease Burden and Epidemics:

Frontier markets often face several disease burdens, including many infectious diseases such as malaria, tuberculosis and many other diseases due to bacterial and viral infections. These countries may also experience periodic epidemics, such as Ebola outbreaks. Addressing these challenges requires access to effective pharmaceutical products for prevention, treatment, and control. Consequently, pharmaceutical companies face increased demand from various therapeutic areas.

Regulatory landscape and Intellectual Property Rights:

The regulatory landscape in frontier markets can be complex and diverse. Pharmaceutical companies must navigate varying registration processes, quality standards, and intellectual property rights regulations. The absence of a harmonised regulatory framework across these markets can pose challenges to market entry and product distribution. However, efforts are being made to streamline regulations and improve intellectual property rights protection to attract investment and enhance market access.

Partnerships and Collaborations:

Pharmaceutical companies are increasingly partnering with local entities, including channel partners, governments, NGOs, and healthcare providers, to expand their presence in frontier markets. These collaborations facilitate technology transfer, arbitrage benefits, capacity building, and the development of localised healthcare solutions. By working closely with local stakeholders, pharmaceutical companies can better understand the unique needs of these markets and tailor their products accordingly.

Price sensitivity and Affordability:

Affordability is a critical factor affecting the demand for pharmaceutical products in frontier markets. Many consumers in these regions have limited purchasing power, and out-of-pocket healthcare expenses are often high. Consequently, pharmaceutical companies need to adapt their pricing strategies, explore differential pricing models, and collaborate with government initiatives to make essential medicines more affordable and accessible to the population.

Conclusion:

The demand for pharmaceutical products in frontier markets is rising due to population growth, improving healthcare infrastructure, rising disease burdens, and efforts to enhance regulatory frameworks. To capitalise on these opportunities, pharmaceutical companies must navigate the unique challenges these markets pose. By understanding the local dynamics, establishing strategic partnerships, and developing innovative pricing strategies, pharmaceutical companies can cater to the growing demand for healthcare solutions in frontier markets, ultimately improving the health and well-being of millions of people.

Indian Pharma Exports to Frontier Markets:

Indias pharmaceutical industry is known for its global presence and exports to various markets worldwide. Frontier markets, which typically refer to emerging or developing economies with significant growth potential, present opportunities for Indias pharmaceutical exports. These markets often have a growing demand for affordable healthcare solutions and pharmaceutical products, making them potential targets for Indian pharmaceutical companies.

Indias expertise in the sourcing, producing and exporting pharma products across a wide range of therapeutics at low-cost can be particularly advantageous in frontier markets where access to affordable healthcare is a crucial factor. Indias large-scale manufacturing capabilities, coupled with its reputation for quality and competitive pricing, position it well to cater to the pharmaceutical needs of these markets.

OVERVIEW OF THE AFRICAN PHARMA MARKET

The African health sector is estimated to be worth $259 billion by 2030. The African pharmaceutical market is a rapidly growing industry with significant potential for expansion. The continents population is projected to reach 2.5 billion by 2050, driving the demand for healthcare products and services. Africa heavily relies on imports for its pharmaceutical needs, with a substantial portion of medicines being sourced from outside the continent.

The pharmaceutical market in Africa faces several challenges, including limited access to healthcare, inadequate healthcare infrastructure, counterfeit drugs, and high treatment costs. However, there are promising developments, such as increasing investments in healthcare infrastructure, rising disposable incomes, and a growing middle class, which drive the demand for quality pharmaceutical products.

As a leading player in the global pharmaceutical industry, India has significant potential to expand its exports to African countries. India has a well-established and competitive pharmaceutical manufacturing sector known for producing affordable generic medicines. This aligns with the needs of African countries, where access to affordable healthcare is a critical concern.

During FY23 as per the Pharmexcil Report Indias pharmaceutical exports to Africa exhibit diverse trends across different regions. In Central or Middle Africa, Congo D. Rep. experienced a decline in exports, while Southern Africa saw a mixed scenario with South Africas exports increasing, Angola witnessing growth, and Malawis exports declining. In East Africa, Kenya and Tanzania showed positive trends, while Ethiopias exports slightly declined, and Rwandas remained stable. Western Africa displayed a varied picture with Nigeria and Ghana facing declines, Senegal experiencing significant export growth, and Mali, Guinea, and Burkina Faso witnessing decreases. These fluctuations highlight the complexity of Indias pharmaceutical exports to Africa, suggesting the influence of factors such as market dynamics, local demand, regulatory environments, and competition in shaping export patterns.

SEVERAL FACTORS CONTRIBUTE TO INDIAS POTENTIAL In THE African PHARMA MARKET:

Cost-Effective Production: Indian pharmaceutical companies have a strong track record of manufacturing cost-effective medicines, making them attractive to African countries facing budget constraints in their healthcare systems.

Diverse Product Range: Indian pharma companies offer various medicines, including generics, over-the-counter drugs, and essential medications for various diseases prevalent in Africa, such as malaria, HIV/AIDS, and tuberculosis.

Regulatory Expertise: Indian pharmaceutical companies comply with international quality standards and have experience navigating complex regulatory environments. This expertise can help ensure the quality and safety of medicines exported to African countries.

Collaborative Initiatives: India has been actively engaged in collaborative initiatives with African countries to enhance pharmaceutical access and healthcare capacity. These partnerships involve knowledge sharing, capacity building, technology transfer, and joint ventures, promoting long-term sustainable growth.

Strong distribution Networks: Indian pharma companies have established robust distribution networks that can effectively reach remote areas in African countries, facilitating the availability of medicines where they are needed the most.

However, India should also be aware of specific challenges and considerations when exploring the African pharma market:

Regulatory compliance: African countries have diverse regulatory frameworks, and navigating these complexities can pose challenges for Indian pharmaceutical companies. Adhering to country-specific regulations and obtaining necessary approvals is crucial for market entry.

Infrastructure Limitations: African countries may face infrastructure challenges, including inadequate storage facilities, unreliable transportation networks, and limited healthcare facilities. Indian exporters need to address these challenges to ensure the timely delivery of medicines and proper storage conditions.

Competition: India faces competition from other countries and multinational pharmaceutical companies in the African market. To maintain a competitive edge, Indian companies should focus on innovation, quality assurance, and building strong relationships with local stakeholders.

OVERVIEW OF THE LATIN AMERICAN PHARMA MARKET

The Latin American pharmaceutical market is a dynamic and expanding market with considerable growth potential. the regions population, currently around 650 million, is characterised by increasing life expectancy, urbanisation, and a rising middle class, leading to a greater demand for healthcare services and products. Latin America relies heavily on imported pharmaceuticals, making it an attractive market for countries with strong pharmaceutical manufacturing capabilities like India.

India holds significant potential in exporting pharmaceutical products to Latin American countries for several reasons:

Cost-Effective Production: Indian pharmaceutical companies are known for their cost-effective production methods, which align well with the needs of Latin American countries seeking affordable healthcare solutions. Indias expertise in manufacturing all kinds of medicines allows for competitive pricing, particularly in countries with limited healthcare budgets.

Generic Medicines: Latin America has a significant demand for generic medicines, as they offer cost savings and increased access to essential treatments. Indian pharmaceutical manufacturers have a strong reputation for producing high-quality generic medications, making them well-positioned to meet this demand.

Regulatory Compliance: Indian pharmaceutical companies comply with international quality standards and have experience navigating complex regulatory environments. This adherence to regulatory requirements ensures that the medicines exported to Latin American countries meet the necessary safety and quality standards.

Therapeutic range: Indian pharmaceutical companies offer a diverse range of pharmaceutical products, including generics and medications for prevalent diseases in Latin America, such as cardiovascular diseases, diabetes, and infectious diseases like dengue and Chagas. This breadth of therapeutic offerings allows Indian exporters to cater to the specific healthcare needs of Latin American populations.

Collaborative initiatives: India has been actively engaged in collaborative initiatives with Latin American countries, fostering partnerships in the healthcare sector. These collaborations involve technology transfer, knowledge sharing, and joint ventures, which contribute to long-term growth and mutual benefits.

While India possesses significant potential, it is essential to consider certain challenges and factors in the Latin American pharma market:

Regulatory Environment: Latin American countries have their own regulatory frameworks for pharmaceutical products, and compliance with these regulations is crucial

an analysis of Indian export of pharma to markets served by balaxi (usd million)

In FY23, Indian pharma exports to key markets of Balaxi Pharma experienced mixed trends compared to FY22. Angola saw an increase in exports from 78.32 usD million in FY22 to 93.03 usD million in FY23. However, Honduras witnessed a decline in exports from 33.76 usd million in FY22 to 29.75 usd million in FY23. similarly, the Dominican Republic experienced a slight decrease in exports from 70.43 usD million in FY22 to 67.35 usD million in FY23.

On the other hand, Nicaragua saw an increase in indian pharma exports from 24.16 usD million in FY22 to 27.79 usD million in FY23. Ecuador experienced significant growth in exports, with an increase from 40.95 usD million in FY22 to 50.69 usD million in FY23. chile, witnessed a decline in exports from 169.23 usD million in FY22 to 156.94 usD million in FY23.

Furthermore, the central African Republic experienced a notable decrease in exports from 12.04 usD million in FY22 to 7.81 usD million in FY23. Guatemala and El salvador also saw declines in Indian pharma exports, with guatemala decreasing from 77.18 usD million in FY22 to 73.16 usD million in FY23, and El salvador declining from 36.13 usD million in FY22 to 31.83 usD million in FY23.

COUNTRY	FY22	FY23	% change
Angola	78.32	93.03	18.78%
Honduras	33.76	29.75	-11.86%
Dominic Rep	70.43	67.35	-4.36%
Central A Republic	12.04	7.81	-35.18
Guatemala	77.18	73.16	-5.22
El Salvador	36.13	31.83	-11.88

for market entry. Indian companies must understand and navigate these regulatory complexities to ensure timely approvals and successful market access.

Intellectual Property Rights: Intellectual property protection is a critical consideration for pharmaceutical companies. Indian exporters must ensure that they comply with the intellectual property regulations of individual Latin American countries to safeguard their products and technologies.

Market Competition: Latin America is home to both local pharmaceutical manufacturers and multinational companies operating in the region. Indian companies face competition from established players. Maintaining a competitive edge requires a focus on quality, innovation, and forging strong relationships with local partners.

Localisation and Language: Latin America comprises diverse countries with distinct cultural and linguistic variations. Indian companies should consider localisation efforts, such as translating product information and labels into local languages, to communicate with consumers and healthcare professionals effectively.

Review of operations

Balaxi Pharmaceuticals Limited operates as an intellectual property rights (IPR)-based pharmaceutical company with a focus on frontier markets.

Product Portfolio: Balaxi Pharmaceuticals boasts a vast and growing portfolio of drugs across multiple therapeutic segments. With 808 registered pharmaceutical products in 6 countries, the company has a diverse range of offerings. This extensive portfolio positions the company well to cater to the healthcare needs of its target markets. Apart from this, the company has over 700 registration submitted or in the pipeline.

Market Presence: Balaxi Pharmaceuticals has a strong on-ground presence in markets within Africa, the Caribbean Islands, and Latin America. The company has established itself in existing markets like Angola, Guatemala,

Dominican Republic, El Salvador, Honduras and Central African Republic . It also aims to expand into newer geographies in Africa,Latin America, CIS and SEA markets. This expansion strategy demonstrates a commitment to tapping into emerging markets and capitalising on their growth potential.

Business Model: Balaxi Pharmaceuticals operates as an asset light pharmaceutical company. While participating in all stages of the pharmaceutical value chain except research and development and manufacturing, the company prefers to register established generic drugs under its brand. By sourcing these products from cost- effective WHO GMP-certified contract manufacturers in India, China, and Portugal, Balaxi Pharmaceuticals minimises manufacturing costs and time to market. This asset-light approach allows the company to focus on its core strengths such as registrations, sales growth, and expansion.

Manufacturing Facility: Balaxi Pharmaceuticals plans to establish a manufacturing facility in Hyderabad, India. This strategic move signifies the companys evolution toward becoming an asset right model. By gradually moving toward in-house manufacturing, Balaxi Pharmaceuticals is strengthening its value chain and becoming a prominent player in RoW markets. The facility will initially focus on producing niche branded products and proprietary drugs that are not easily outsourced. it will contribute to creating differentiated products for existing semi-regulated frontier markets.

Distribution and Logistics: Balaxi Pharmaceuticals has a robust distribution network with 37 warehouses and a fleet of owned vehicles across four countries. This infrastructure ensures efficient and timely delivery of pharmaceutical products to target markets. The company is planning additional pharma warehouses in our existing and target markets.

Growth strategy: Balaxi Pharmaceuticals aims to capture incremental market share in existing geographies while establishing strong positions for sustained organic growth in selected markets. The company has demonstrated success in frontier markets and aims to expand its presence in additional African and Latin American markets. Balaxi Pharmaceuticals also strives to maintain an ideal blend of branded and generic medicines to maximise returns.

Review of Financial Performance

The consolidated financial performance of the Company for the Financial Year 2022-23 ("FY 23) is as follows:

Revenue from Operations: During the FY 23, the Company recorded a revenue from operations of Rs. 33,643.27 Lakhs as against Rs. 27,938.78 Lakhs in the Previous Financial Year.

Other income: During the Financial Year 2022-23, the Company recorded other income of Rs. 263.69 Lakhs as against Rs. 497.17 Lakhs in the Previous Financial Year.

Total income:

The total income, including revenue from operations and other income for the Financial Year 2022-23 was Rs. 33,906.96 Lakhs as against Rs. 28,435.95 in the Previous Financial Year.

Total Expenditure:

Total Expenditure for the Financial Year 202223 was Rs. 28,214.73 Lakhs as against Rs. 22,983.72 Lakhs in the Previous Financial Year. Further, for Financial Year 2022-23, Cost of Material Consumed stood at Rs. 20,241.56 Lakhs as against Rs. 19,559.63 Lakhs in the Previous Financial Year.

Profit Before Tax (PBT): During the year under review,

PBT increased to Rs. 5,692.23 Lakhs as against Rs. 5,452.23 Lakhs in the Previous Financial Year.

Tax Expenses: The companys tax expense, including current tax and deferred tax, increased to Rs. 1,095.98 Lakhs in FY 23 from Rs. 686.45 Lakhs in FY 22.

Profit After Tax (PAT):

PAT for the period decreased to Rs. 4,596.25 Lakhs in FY 23 from Rs. 4,765.78 Lakhs in FY 22.

Earnings Per share (EPs): Basic EPS decreased to Rs. 45.81 in FY23 from Rs. 47.66 in FY 22. Diluted EPS decreased to Rs. 45.40 in FY 23 from Rs. 47.66 in FY 22.

Ratios

DEBTORS TURNOVER RATIO:

Explanation: The debtors turnover ratio has increased significantly. This is mainly due to the consolidation of Angola, where the secondary turnover is now captured as part of the consolidation.

INVENTORY TURNOVER RATIO:

Explanation: The inventory turnover ratio has decreased. This is mainly due to the consolidation of Angola, where the secondary turnover is now captured as part of the consolidation.

INTEREST COVERAGE RATIO:

Explanation: The interest coverage ratio has decreased.

This is due to the company availing a working capital facility in FY 23. However, the ratio is still positive, indicating that the company is able to cover its interest expenses.

CURRENT RATIO:

Explanation: The current ratio has improved significantly. This is because the company has reduced its trade payables and increased its overall debtors, resulting in a better current ratio. A higher current ratio indicates improved short-term liquidity.

DEBT EQUITY RATIO:

Explanation: The debt equity ratio has increased on account of the Working Capital Facility that company availed in FY 23.

operating PROFIT margin (%):

Explanation: The change in the operating profit margin is less than 25%, indicating a relatively stable performance in terms of profitability.

NET PROFIT MARGIN (%):

Explanation: The change in the net profit margin is less than 25%

RETURN ON NET wORTH,

NET OF GOODwiLL (%):

Explanation: The return on net worth has decreased.

Given the current scenario, the company has managed to maintain the same level of profits as last year, the equity portion has gone up due to the preferential issue and the previous years profits. This has resulted in a lower return on net worth.

Management Discussion & Analysis

Risk and Risk Mitigation:

Risk and Concerns: Balaxi Pharmaceuticals Limited faces risks and uncertainties commonly encountered by global players in the pharmaceutical industry. These risks have the potential to impact the companys earnings and future operations significantly. The Board of Directors, in collaboration with the executive management, conducts robust assessments to determine and evaluate these risks within the companys risk context. The Board is confident that these risks are being appropriately and consistently managed.

Risk: Regulatory Compliance

Risk impact: High

Risk Probability: Medium

Mitigation: Balaxi Pharmaceuticals operates in a highly regulated industry, and non-compliance with regulatory requirements can have severe consequences. To mitigate this risk, the company should establish a robust compliance framework. This includes staying updated with evolving regulations, maintaining strong relationships with regulatory authorities, conducting regular audits to ensure adherence to regulations, and implementing effective compliance training programs for employees. By proactively addressing compliance requirements, Balaxi Pharmaceuticals can minimize the risk of penalties, legal issues, and reputational damage.

Risk: supply Chain Disruptions

Risk impact: Medium to High

Risk Probability: High

Mitigation: Balaxi Pharmaceuticals relies on a complex global supply chain to source raw materials and finished products. Any disruptions, such as natural disasters, transportation delays, or supplier issues, can significantly impact the companys operations and product availability.

To mitigate this risk, the company should diversify its supplier base, maintain strong relationships with key suppliers, and implement robust supply chain management practices. Developing contingency plans and implementing risk mitigation strategies, such as buffer stocks and alternative sourcing options, can help minimise the impact of supply chain disruptions.

Risk: intellectual Property infringement

Risk impact: Medium to High

Risk Probability: Medium

Mitigation: Balaxi Pharmaceuticals operates in an industry where intellectual property (IP) rights are critical. There is a risk of infringement claims from competitors or legal challenges related to the companys own IP To mitigate this risk, Balaxi Pharmaceuticals should invest in comprehensive IP protection measures, including patent filings, trademarks, and copyrights. Conducting regular IP audits and monitoring the market for potential infringements can help identify and address issues proactively. Additionally, establishing strong legal partnerships and conducting thorough due diligence when entering into collaborations can help safeguard the companys IP rights.

Risk: Market Competition and Pricing Pressure

Risk impact: Medium

Risk Probability: High

Mitigation: The pharmaceutical industry is highly competitive, with pricing pressures and the presence of numerous competitors. This can impact Balaxi Pharmaceuticals market share and profit margins. To mitigate this risk, the company should focus on product differentiation, innovation, and maintaining a strong brand reputation. Investing in research and development to introduce new products or improve existing ones can help maintain a competitive edge. Additionally, establishing strategic partnerships, exploring new markets, and diversifying the product portfolio can help mitigate the impact of intense competition and pricing pressures.

Risk: Economic and Currency Fluctuations

Risk impact: Medium to High

Risk Probability: Medium to High

Mitigation: Balaxi Pharmaceuticals operates in multiple markets, exposing it to economic and currency fluctuations. These fluctuations can impact the companys revenue, profitability, and financial stability. To mitigate this risk, the company should regularly monitor economic trends and currency movements in its key markets. Implementing hedging strategies to manage currency risk, maintaining a diversified market presence, and closely managing costs can help mitigate the impact of economic uncertainties. Additionally, conducting thorough market research and adjusting pricing strategies based on local economic conditions can help maintain competitiveness in different markets.

Management Discussion & Analysis

INTERNAL CONTROLS:

An esteemed external agency is conducting an audit of Balaxi Pharmaceuticals Limiteds internal controls. This comprehensive evaluation ensures an impartial and independent assessment of the effectiveness and adequacy of the companys internal control systems in achieving optimal operational outcomes. The primary objectives of these controls are to safeguard and protect the companys assets from unauthorised use or disposition, maintain accurate accounting records, and verify the authenticity of all transactions.

Balaxi Pharmaceuticals Limited has implemented an efficient compliance management system that promptly issues preventive warnings in the event of any violations. The companys independent Audit Committee and/or Board of Directors regularly review its performance to ensure alignment with overall corporate policies and predetermined objectives. Internal auditing services are provided by PCN & Associates, who play a crucial role in facilitating smooth risk management operations, raising awareness of risks across businesses and corporate functions, developing formal reporting and monitoring processes, and creating maintenance plans to keep risk management information up to date. They have also implemented an Enterprise Risk Management (ERM) framework in key business areas and corporate functions, aligning risk management with the business plan.

MARKET REsEARCH:

Market research plays a vital role as a catalyst for Balaxi Pharmaceuticals Limited, enabling the development and global marketing of differentiated generic and speciality products. The company utilises best-in-class technologies to support its Market Research capabilities, enabling the cost-effective delivery of products worldwide. Proactive investments are made to build a robust global pipeline of generics, over-the-counter drugs, and speciality products. With a team of intellectual property experts, the company focuses on sourcing products in various dosage forms, including injectables, orals, liquids, ointments, gels, and sprays. Given the highly competitive nature of frontier markets, Balaxi Pharmaceuticals Limited adopts a pragmatic approach to identify future projects.

people - the core OF our strength:

Balaxi Pharmaceuticals Limited strives to provide its employees with a congenial work environment that encourages a balanced, healthy, and safe lifestyle. The company offers various growth opportunities, rewards merit, and recognises employee achievements. Training programs are available to enhance employees skills and promote inclusive growth and knowledge sharing.

The company continues to upgrade its HR processes and institutionalise them to create a value system and behavioural skills necessary for achieving short and longterm goals. As of March 31,2023, Balaxi Pharmaceuticals Limited had over 600 employees on a consolidated basis and continues to attract exceptional talent from within and outside India to further its business interests. The company maintains cordial industrial relations.

information technology

Balaxi Pharmaceuticals Limited is making substantial investments in its digital reinvention platform. The company aims to automate as many business processes as possible to enhance efficiency and accuracy. A comprehensive framework has been developed to leverage the opportunities presented by new-age digital technologies, transforming the company into a digitally proficient pharmaceutical organisation. Several technologies and platforms have been piloted to provide a seamless and integrated experience to partners and clients. The company prioritises data analytics for agile decision-making, business process automation, innovation through digital business models, and consumer engagement to identify, reach, and engage with customers. Analytics and automation form the core of the companys business strategy. Digital consumer engagement is being increased to improve automation in manufacturing plants year after year.

CAUTIONARY sTATEMENTs

The Management Discussion and Analysis statements provided by Balaxi Pharmaceuticals Limited may contain "forward-looking statements" within the scope of applicable securities laws and regulations. Actual results may differ from expressed or implied projections, estimates, and expectations. Various factors, such as economic conditions affecting demand and supply, price fluctuations in domestic and overseas markets, changes in government regulations and tax laws, and other incidental factors, can influence the companys operations.