Balaxi Pharmaceuticals Ltd Management Discussions

Dependence on Off-Patent and ESSENTIAL

LMICs rely heavily on off-patent and WHO-listed essential medicines, which should theoretically be both affordable and available. However, supply disruptions, poor planning, and lack of commercial incentives frequently lead to stockouts and unavailability. In Latin America, these problems are exacerbated by limited local manufacturing and import dependencies. Access gaps are most prominent for essential antibiotics, maternal health drugs, and pediatric formulations, further driving demand for reliable and affordable supply channels.

69% of all products assessed in the Index are off-patent.

80% of treatments for priority infectious diseases are off-patent, but many are not widely available.

70% of products on the WHO Essential Medicines List assessed in the Index lack registration in at least 20 countries in scope.

India

In FY25, Indias pharmaceutical sector recorded a significant milestone by surpassing $30 billion in exports, marking a 9.4% increase from $27.85 billion in the previous fiscal year. This growth was particularly driven by a sharp 31% export surge in March 2025, highlighting the sustained global demand for Indian pharmaceutical products. The United States remained the leading destination for Indian pharma exports, with shipments increasing by 14.29% year-on-year to approximately $8.95 billion. Among product categories, drug formulations and biologics accounted for over 75% of total exports, supported by continued demand in regulated markets. Bulk drugs, intermediates, and herbal products also contributed positively, reinforcing Indias reputation as the pharmacy of the world. A key development in the international trade landscape was the imposition of a 26% tariff by the United States on several categories of Indian imports under Executive Order 14257. This move initially raised concerns across the Indian export community. However, the pharmaceutical sector received a major reprieve when these products were specifically exempted from the tariff list. The exemption followed strong bilateral engagement and lobbying from industry and government stakeholders. The decision not only preserved the competitive edge of Indian pharma companies in the US generics space but also boosted investor sentiment, with Indian pharmaceutical stocks registering up to 5% gains in the immediate aftermath.

Beyond the United States, Indias pharma sector expanded its footprint in frontier markets, notably across Africa and Latin America. Countries such as Nigeria, Kenya, South Africa, and Ghana continued to be vital export destinations in Africa. Indian companies enhanced their local presence through distribution partnerships and logistics improvements, particularly in East and Southern Africa. The demand for essential medicines, vaccines, and branded generics remained robust, driven by public health programs, non-communicable disease burdens, and donor-backed procurement mechanisms such as those funded by WHO and GAVI. Indias role in supplying affordable HIV/AIDS drugs and maternal care medicines continued to be crucial in the regions healthcare response.

In Latin America, markets like Brazil, Mexico, Colombia, Peru, and Chile emerged as significant growth areas for Indian pharmaceutical exports. Indian companies were able to increase their market share by addressing drug shortages and expanding their product portfolios to include speciality generics, oncology drugs, and APIs. Regulatory harmonisation and active engagement with agencies such as Brazils ANVISA and Mexicos COFEPRIS enabled faster approvals and deeper market penetration. Strategic collaborations with regional distributors further bolstered Indian presence. At the same time, local challenges such as rising demand for chronic therapies and strained public health infrastructure provided a growth opportunity for agile Indian players Indian pharmaceutical companies have been increasingly pivoting towards a diversified export strategy. While the US remains the largest and most lucrative market, the shift towards frontier markets in Africa and Latin America reflects a conscious attempt to de-risk the overdependence on the US generics market. By focusing on value-added products, branded generics, and localized operations, Indian pharma players are building a more resilient and globally integrated export base. Companies like Sun Pharma, Dr. Reddys, Cipla, and Lupin have already reported double-digit growth in their Africa and Latin America operations for FY25, underscoring the success of this diversified approach.

FY25 has proven to be a defining year for Indian pharma exports. Despite global uncertainties and the spectre of protectionist trade measures, the industry has not only maintained but expanded its international leadership. The ability to secure a tariff exemption from the US, while deepening its presence in emerging markets, underscores the strategic maturity and global competitiveness of Indias pharmaceutical sector. This evolving export narrative from a US-centric, volume-led approach to a multi-market, value-driven strategy signals a more balanced and sustainable growth trajectory for the years ahead.

Key

In FY25, Balaxi Pharmaceuticals advanced several pivotal initiatives across its operating markets. The companys transition from an outsourced, asset-light business model to a more integrated, asset-right approach reached an advanced execution stage. Construction of its pharmaceutical formulation facility in Jadcherla, Hyderabad located in a Pharma SEZ was completed by April 2025, with commissioning scheduled for H1 FY26. This facility, focusing on General Oral Solid Dosage (OSD) formulations, is designed to enhance regulatory compliance, boost margins, and shorten time-to-market, specifically for Africa and Latin America.

Geographically, the company marked its entry into Nicaragua, further expanding its presence in the Latin American region. Honduras and El Salvador demonstrated positive commercial performance, contributing to revenue momentum. In contrast, political and economic headwinds challenged Dominican and Guatemalan operations.

On the product front, the company managed 915 registered products across seven countries as of FY25, along with a pipeline of over 300 additional registrations. Compared to FY24, this slight reduction indicates an active effort at portfolio optimisation. Importantly, Balaxi continued to shift towards branded generics, with branded products now accounting for 41% of its portfolio a strategic move aimed at improving profitability.

Operationally, Balaxi sustained its distributed presence with 38 warehouses and continued to replicate its "produce, stock, sell" model across markets. The deployment of centralized digital procurement systems, automated regulatory workflows, and custom CRM tools further enhanced market responsiveness and operational efficiency.

Financial PERFORMANCE

In FY25, Balaxi demonstrated resilience despite volatility in select markets. The company strengthened its distribution channels and expanded sales into newer geographies, such as Honduras and El Salvador. These improvements were partially offset by disruptions in the Dominican Republic and Guatemala due to local political uncertainty. Strategically, Balaxis growing portfolio of nearly 900+ registered products, supported by over 300 additional filings in the pipeline, enabled sustained market coverage. The companys backward integration via its manufacturing facility in Hyderabad is expected to improve cost control and operational agility starting FY26 meaningfully.