Caplin Point Laboratories Ltd Management Discussions

The global economy has faced sequential shocks this decade, starting with COVID-19 in 2020 21, the Russia-Ukraine war in 2022 (and continuing), trade conflicts triggered by USA tariff imposition in 2025, and escalating Middle East war since late February 2026. The global trade conflicts restricted growth to 3.4% in 2025 and sharply accelerated deglobalization, as businesses pivoted rapidly from global networks to localized supply chains. Concurrently, the massive technology boom of 2025 experienced an AI expectations bust in early 2026, leading to a market correction that tightened credit and financial conditions.

The Middle East conflict remains the primary headwind for 2026. Despite temporary pause following the US-Iran peace MOU, the wars economic fallout persists. Shortages in crude oil, fertilizers, and petrochemicals have triggered sticky inflation and widespread demand destruction. Major economies such as EU and Japan have raised interest rates, while the US Federal Reserve maintains a hawkish stance to curb inflation. In parallel, the developing nations face severe fiscal stress and currency depreciation driven by elevated energy and food import bills. Reflecting these headwinds, the IMFs April 2026 World Economic Outlook forecasts global growth to slow to 3.1%.

Economy	GDP Growth (%)
	2024 (A)*	2025 (A)*	2026 (P)**
Global Economy	3.4	3.4	3.1
Advanced Economies	1.8	1.9	1.8
Emerging Market &	4.5	4.4	3.9
Developing Economies
United States	2.8	2.1	2.3
Euro Area	0.9	1.4	1.1
Japan	-0.2	1.2	0.7
China	5.0	5.0	4.4
Middle East & North Africa	2.3	3.2	1.1
Sub-saharan Africa	4.2	4.5	4.3
Latin America & Caribbean	2.4	2.4	2.3

Source: International Monetary Fund April 2026 World Economic

Outlook report. *Actual; **Projections

INDIAN ECONOMY

India has firmly maintained its position as a major global growth engine and the fastest growing major economy despite persistent international headwinds. In spite of tariff measures enacted by the US, Indias Real GDP grew by 7.7% in FY 2025-26 as per MoSPIs provisional estimates. This was a significant increase over the 7.1% rise in output during the previous fiscal. The growth in FY2025-26 was driven by robust, double-digit growth across both Manufacturing and Services. The structural shift towards industrial production effected by the Government through Production Linked Incentive (PLI) schemes for various sectors significantly strengthened manufacturing performance, offering timely support as the Services sector navigates an AI-driven hiring transition.

Inflation remained at record low levels during FY2025-26 with annual average estimated to be 2.1%. However, the sudden outbreak of the Middle East conflict in late Q4 spiked crude oil prices much above USD 100/bbl. This combined with the capital outflows led to significant depreciation in the Indian Rupee. While both these factors have moderated due to a tenuous peace, the wars residual impact combined with a sub-normal monsoon forecast due to El Nino conditions, have weighed on the GDP growth projections for FY2026-27. Consequently, the Reserve Bank of India adjusted its FY 2026-27 growth forecast to 6.6% (from 6.9%) with inflation projected at 5.1% In addition, both the Government and the Reserve Bank have adopted various measures related to taxation and deposit schemes to combat currency depreciation and balance equity capital flows thus continuing to maintain the fine macroeconomic balance.

INDUSTRY OVERVIEW

GLOBAL PHARMACEUTICAL INDUSTRY

Market Overview

The global pharmaceutical industry serves as the foundational pillar of modern healthcare and global public health. It has contributed the most in saving countless lives, increase average lifespan and improving quality of life. The pharma industry is now highly industrialized and execution-driven covering the entire lifecycle of therapeutic solutions from early-stage scientific research, drug discovery, clinical testing, quality-controlled manufacturing and secure distribution networks. Global size of the industry was US$ 2 trillion in 2025 and was expected to reach US$ 2.15 trillion in 2026.1

The current state of the global pharmaceutical market is characterized by structural portfolio rebalancing and a definitive tilt toward large-molecule biopharmaceuticals vs. small molecules/ conventional drugs. Biologics and biosimilars are projected to claim an impressive 39.09% share of the total global market in 2026.2 Concurrently, small-molecule chemical entities continue to act as a crucial, lower-cost baseline for corporate cash flows, providing the baseline capital that diversified drugmakers require to fund complex pipelines. The commercial environment has transitioned from discovery-led valuations to execution-driven performance, where long-term success is dictated by manufacturing scale, supply-chain resilience, and rapid speed-to-market.

OUTLOOK

Data from the Fortune Business Insights report on the Impact of Covid-19 on Pharmaceutical Market (June 2026 update), indicates that the global pharmaceutical industry is expected to sustain an elevated CAGR of over 8%, and projected to reach US$ 4.04 trillion in size by 2034. This momentum highlights a critical industry transformation: despite navigating a massive patent cliff and intensifying state-backed price controls, the global market is successfully absorbing headwinds due to unprecedented breakthrough innovations in large-molecule biologics, precision oncology, and cardiometabolic therapies. The global industry is poised to see accelerating volume expansion across emerging geographies alongside selective value tightening in Western markets. While net pricing growth in developed economies will experience moderate downward pressure due to payer constraints, the absolute demand for innovative drugs will remain robust.

KEY GROWTH DRIVERS

The global expansion driving incremental revenues for the pharmaceutical industry is being driven in the following areas primarily:

GLP-1 and Obesity Medical Revolution: Cardiometabolic treatments have completely redrawn the industrys growth map. The global obesity medicines market reached $66 billion in list price value in 2025 and is forecast to rise to $92 billion in 2026, before climbing toward a projected window of $105 billion to $200 billion by 2027 and beyond. Innovation in this sector is expanding from basic weight loss to broad comorbidity benefits, including chronic kidney disease, cardiovascular health, and muscle preservation.

Precision Oncology and Targeted Biologics: Oncology continues to dominate as the largest singular therapeutic segment, capturing a 17.62% share of the global market in 2026. Growth within this vertical is propelled by the accelerating clinical adoption of Antibody-Drug Conjugates (ADCs), novel monoclonal antibodies (mAbs), and specialized bispecific therapies.

Innovation in Drug Development: There is surging interest in the next frontier of therapeutics such as mRNA, cell and gene therapies, and personalized medicine.

Demographic Tailwinds: The undeniable economic weight of an aging global population with an enhanced purchasing power is accelerating non-communicable disease (NCD) treatment volumes. Managing chronic conditions is projected to have secure long-term demand across central nervous system (CNS), immunology, and endocrinology segments.

Digital Health Integration: Use of AI and ML in drug discovery and clinical trial digitization, will result in shorter drug development and testing cycle and lower costs, thus boosting financial growth for the sector.

Increased Healthcare Spending by Governments: According to a comprehensive global impact report by WifOR Institute (published for the International Federation of Pharmaceutical Manufacturers & Associations or IFPMA), the public health sector is the primary buyer of the global pharmaceutical industrys outputs, consuming 52.4% of all goods and services. Hence, expansion in public healthcare programs and related spends acts as a catalyst for stable, high-volume growth for the industry.

EMERGING TRENDS

The newer trends that are gaining traction in the industry are as follows:

Biosimilars and Biologics: Accelerated global adoption, growing pipeline and updated regulatory paths that eliminate mandatory Phase 3 trials.

Precision Medicine: Advanced integration of AI, multi-omics, and biomarkers to design highly targeted, personalized patient treatments and commercial scaling of gene-editing tools like CRISPR.

Sustainability: Tightening ESG mandates driving green chemistry, zero-waste manufacturing, and carbon-neutral facilities to secure cross-border market access.

Continuous Manufacturing: Industry is transitioning from the legacy batch production to continuous compression platforms which reduce operational costs by 30% to 50% while automating real-time quality control.

Solubilization Technologies: Commercial deployment of nanoparticulation, advanced solid dispersions and lipid vectors to overcome hydrophobic small molecules have helped optimize drug bioavailability while reducing the dosage size and side effects.

REGIONAL OUTLOOK

The market demand and industry structure of the global market vary significantly by region, as detailed in the matrix below:

Region	Current Size & Outlook 3	Drivers
North America	Retains absolute global value dominance with an industry size of US$ 895.79 Billion in 2025 and projections to reach US$ 959.4 Billion in	Driven by premium innovative medicine launches, high per- capita healthcare spending, and robust private venture R&D capital.
	2026; the U.S. five- year growth trajectory continues to outpace the rest of the world combined.
Latin America, Middle East & Africa	Combined market size of US$ 116.22 Billion in 2025 that would rise to US$ 122.81 Billion in 2026 as per projections.	Enhanced purchasing power, ageing population, improvements in healthcare infrastructure and collaborations between domestic and global players are driving industry expansion.

KEY FOCUS MARKETS

Mexico: The pharmaceutical industry in Mexico is the second-largest market in Latin America (behind Brazil) and ranks among the top 15 global markets. Generating approximately USD 18.2 billion in revenue in 2025, the market is projected to reach USD 35 billion by 2033, expanding at a Compounded Annual Growth Rate (CAGR) of 8.6%. Generics make up over 70% of total prescriptions; however, large-molecule biologics and biosimilars represent the fastest-growing market segment.4

Mexicos pharmaceutical market requires localized strategies due to administrative backlogs at the regulatory agency, COFEPRIS, and the consolidation of public procurement under state platforms like IMSS-Bienestar (Source: PharmaBoardroom, 2025). Aligning with these dynamics, Caplins Plan Mexico rewards local presence. Caplin has purchased land in Toluca; landfilling and drainage works are underway, and construction of a localized manufacturing facility is expected to begin by mid-2027. This localization ensures Caplin can compete for tenders restricted to domestic manufacturers.

Chile: The pharmaceutical market in Chile is one of the most developed, highly regulated, and stable markets in Latin America. Generating approximately USD 2.7 billion in revenue in 2025, the market is projected to reach USD 3.12 billion by 2028 and expand to USD 5.32 billion by 2035 at a CAGR of 7.89%. Chile boasts the highest healthcare expenditure relative to GDP in Latin America at approximately 9%.5

Recent substitution mandates like Ley de Farmacos II require strict ISP bioequivalence and consolidate dispensing power among major pharmacy chains. Consequently, the state procurement agency, CENABAST, has become a vital channel for generic volume. Capitalizing on this, Caplin holds 24 running contracts in Chile expected to contribute USD 9.5 million in FY27. Furthermore, Caplin is aggressively entering the Chilean private market with 35 oral solid dosages and 8 oncology dossiers submitted.

Guatemala: The Guatemalan pharmaceutical market is the largest and most rapidly growing market in Central America. It generated approximately USD 1.45 billion in revenue in 2025, and is projected to reach USD 2.1 billion by 2030, expanding at a compound annual growth rate (CAGR) of 7.2%. Serving as the geographic gateway to Central America, Guatemala acts as a strategic manufacturing and logistics launchpad for the entire region.6

R&D AND REGULATORY LANDSCAPE

The Global R&D and Regulatory environment in 2026 is witnessing major shifts leading to heightened complexity and stringent standards that the industry is expected to manage successfully.

Global Spends: The total global pharmaceutical and biotechnology R&D expenditure was between US$ 250 billion and US$ 300 billion in 2025. The industry is seeing a mixed picture where a good number of large players have pruned underperforming portfolios and restructured them, whereas others are riding high demand areas such as cardiometabolic drugs.

Implementation of the US Inflation Reduction Act (IRA): The first round of Medicare-negotiated drug prices took effect in 2026, altering the

https://www.linkedin.com/posts/patel-vaibhav-1b1ab0269_chilepharma-drugregistration-marketaccess-share-7457291266750328833-VjGi/

https://www.statista.com/outlook/hmo/pharmaceuticals/guatemala/Rssrsltid=Afm BOoqX74nMCqPk0f9PwAyXaT1yB5Ui8WkBmGJZgfsWPHvqMCIHoDz6

Geopolitical Decoupling and Sourcing Reforms: Legislative actions like the U.S. BIOSECURE Act are enforcing strict licensing boundaries on foreign-linked manufacturing partnerships, forcing global pharma companies to build "China+1" geographic redundancy into their supply chains.

CHALLENGES

The diversity of global markets and everchanging environment bring a multifaceted set of challenges for industry participants. The most critical challenges faced by the Global Pharma companies are as follows:

Forced Supply Chain Localization: Global pharmaceutical giants are facing immense pressure to re-shore active ingredient manufacturing due to tariff threats and national security concerns. This forced regionalization is fragmenting the historical low-cost, global supply model.

Severe PBM and Payer Concessions: The U.S. market is increasingly witnessing commercial concessions, rebates, and pharmacy benefit manager (PBM) clawbacks.

Escalating Clinical Complexity: The rising baseline complexity of targeted multi-omics, cell therapies, and specialized oncology lines is keeping drug development cost high despite efficiencies derived from AI/ ML usage.

Regulatory Compliance and Cybersecurity: Evolving global regulatory mandates and the escalating necessity to secure sensitive patient data from sophisticated cyber threats take up significant time and resources of the industry.

INDIAN PHARMACEUTICAL INDUSTRY

Market Overview

The Indian pharmaceutical industry has reached a pivotal milestone in its structural growth lifecycle. Long heralded as the "Pharmacy of the World" for its massive volume capacity, the sector is successfully executing a transition from a volume-driven framework to a value-driven scientific ecosystem including complex therapeutics, biosimilars, and integrated supply networks.

According to the Economic Survey 2025-26, the sector recorded a total turnover of 4.72 lakh crore (USD 55 billion) in FY 2025, which included exports worth USD 30.5 billion. India maintains its position as the worlds 3 rd largest pharmaceutical market by volume and ranks 11 th in export value globally. Indian products are exported to 191 countries, with over 50% directed to stringent regulatory environments across North America and Europe.7

Market intelligence from Mordor Intelligence and industry analysts indicates that the overall Indian pharmaceutical ecosystem was valued at approximately 4.97 lakh crore (USD 57.61 billion) in 2025, and is estimated to reach 5.20 lakh crore (USD 60.32 billion) in 2026,

7 https://static.pib.gov.in/WriteReadData/specificdocs/documents/2026/mar/ doc2026321831401.pdf maintaining a steady expansion rate of 7% to 9% as it scales toward a long-term target of USD 130 billion by 2030.8

Key Growth Drivers

The accelerated expansion of Indias pharmaceutical capability is powered by a combination of regulatory developments, policy interventions, and demand outlook:

1. Production-Linked Incentive (PLI) Schemes: The Government of Indias operational PLI scheme (with an outlay of 15,000 crore / $2.04 billion running through 2028-29) for Bulk Drugs/ API has successfully catalysed domestic investments in manufacturing.

2. Massive Infrastructure Funding: In late 2025, the Ministry of Chemicals and Fertilizers announced a targeted 60,000 crore ($7 billion) API-push framework designed to build specialized bulk drug parks, establishing strong state-backed clusters in Gujarat, Andhra Pradesh, and Himachal Pradesh.

3. Biologics & Biosimilars Push: In February 2026, the government unveiled the Biopharma Shakti investment initiative that earmarked 10,000 crores ($1.08 billion) to build next-generation clinical trial infrastructure, support cell and gene therapy networks, and scale indigenous biologics capabilities.

4. Quality Standard Overhauls: The institutionalization of the revised Schedule M guidelines under the Drugs and Cosmetics Act is aligning domestic quality frameworks directly with global regulatory baselines.

EXPORT & GLOBAL INTEGRATION

Indias pharmaceutical exports rose by more than 2% year-on-year to hit a record US$ 31.11 billion in FY 2025-26, breaking the previous high of US$ 30.47 billion recorded in FY 2024-25. India fulfils 20% of the global volume demand for Generics and supplies 55-60% of the UNICEFs global vaccine procurement.9 USA remains the largest export market for India and more than 50% of the export volumes are sent to highly regulated western markets. However, the share of alternative emerging destinations such as EU, Brazil, Russia, Francophone Africa, etc. is on a rising trend due to emphasis on diversification away from the USA Indian pharma players are also moving up and across the value chain by growing their share of the Branded Generics, Biosimilars, and API/Bulk Drug markets.

R&D AND INNOVATION TRENDS

The Indian pharmaceutical industry has over the years shifted away from simple reverse-engineering toward advanced drug discovery models, complex delivery systems, and specialty biopharmaceuticals, and this trend has accelerated in the last few years.

Digitalisation: By integrating Artificial Intelligence and Machine Learning technologies, Indian companies are successfully cutting down baseline drug discovery and clinical trial validation cycle times by up to 20%.

PRIP Scheme: Indian Government has allocated 5,000 Crores towards the Promotion of Research and Innovation in Pharma-MedTech (PRIP) scheme to provide state-backed risk capital to fund early- and late-stage R&D in precision medicine, gene therapies, and novel medical devices.

Focus Shift: Capital expenditure across mid-and large-cap firms heavily favouring biopharmaceuticals, high-barrier and sterile delivery platforms, and inorganic acquisition of product portfolios and proprietary platforms in addition to internal R&D.

OPPORTUNITIES AHEAD

Global Patent Cliff: Between 2026 and 2030, multiple blockbuster biological drugs and small-molecule formulations are set to lose patent exclusivity. The global industry is looking at an exclusivity loss amounting to US$ 200 billion by 2030. This offers an enormous multi-billion-dollar opportunity for Indian pharma players.

Sourcing Shift: Indias Contract Research, Development, and Manufacturing Organizations (CRDMO) sector is projected to double its market size to US$ 14 billion by 2028 because of the rapid "China+1" diversification wave.

SEGMENT WISE OUTLOOK

Segment	Current Size & Outlook	Drivers
Generics API/ Bulk Drugs	20% of global supply volume is from India. It is projected to grow at 8-10% in revenue terms. Valued at US$ 19.21 Billion in 2025 and expected to touch US$ 20.7 Billion in 2026. Long-term CAGR of 7.8%.10	Evolving product shortages in the US; rising demand for complex generic formulations State-backed Bulk Drug Park allocations; implementation of green chemistry protocols
Biosimilars	Valued at US$ 1.29 Billion in 2025 and projections of US$ 1.54 Billion in 2026. Long- term CAGR of 21.3%.11	Dominated by Monoclonal Antibodies (mAbs); rapid commercial scale-up of Insulin analogues.
Domestic Formulations	Expected to maintain healthy CAGR of 10% over a 10-year period from Rs. 2,00,000 Crores in 2024.12	Volume expansion in chronic therapies (Oncology, Anti- Diabetic, and Cardiac segments).
OTC & Wellness	Expected to grow from 47,000 Crores in 2024 to 98,000 Cr in 2030, i.e., 13% CAGR.13	Driven by a systemic post- pandemic shift toward preventive health.

CHALLENGES FOR INDIAN PHARMACEUTICAL INDUSTRY

Despite staggering growth over the years, the Indian Pharma industry continues to face significant structural challenges that also offer opportunity for the players to innovate and differentiate.

Key Starting Material (KSM) Dependency: Indian formulation players continue to depend heavily on imports, primarily from China, for approximately 35% of their total raw material requirements. This could lead to severe margin compression due to price shock in input costs.

Heightened Regulatory Oversight: Compliance remains an active operational risk. The trend of post-pandemic acceleration of physical USFDA plant audits, for e.g., has resulted in delayed product launches and heavy financial cost due to a rise in warning letters and strict import alerts.

Geopolitical & Logistic Vulnerabilities: Ongoing regional wars, particularly in West Asia, continue to trigger severe shipping bottlenecks, erratic container availability, and steep freight rate spikes, impacting export volumes and lengthening global time-to-market metrics.

Pricing Pressures: The Drug Price Control Order (DPCO) framework leaves little pricing headroom for domestic drug manufacturers to address escalating raw material and energy costs and invest in upgraded compliance regimens. Correspondingly, in the export market, intense competition and concentrated buying power of the customers in the biggest export market, USA, has resulted in deflationary pressure generics pricing.

COMPANY OVERVIEW

Caplin has established itself as an industry benchmark based on its consistent financial high performance across revenue, profit and generation. Caplin successfully doubled its revenues to 2,300 crores while tripling both its free cash reserves and liquid assets over the last five years. It has maintained a highly resilient, debt-free balance sheet while internally financing its strategic evolution with a continuous, aggressive CAPEX of around 900 crores during this period.

From its start as a plain-vanilla generic manufacturer serving frontier markets across Latin America and Francophone Africa, Caplin has undergone a profound strategic transformation. It has evolved into a technology-led, R&D-driven, and vertically integrated pharmaceutical player that offers a highly diversified portfolio of branded generics and difficult-to-manufacture products across 36 therapeutic segments with a presence in more than 23 countries including the core Emerging and new Regulated markets. Its in-house R&D facilities and state-of-the-art manufacturing facilities are certified by US-FDA, INVIMA-Colombia, WHO-GMP, EU-GMP, UAE-MoHAP, ANVISA-Brazil, ISP-Chile and DCGI-India.

Caplin has 5,000+ product registrations and 30,000+ touch points in the Emerging Markets of Latin America, Caribbean and Africa, clearly demonstrating the breadth of its product portfolio and deep distribution strength in these markets. It has particularly strong presence in the Central American countries. Alongside its retail and private brand distribution channels, in key Latin American growth markets such as Mexico and Chile, Caplin is also successfully scaling its footprint by actively securing high-value institutional tender wins. Its business growth in these key markets is supported by a growing portfolio of over 160 product licenses across both countries and a rapidly expanding pipeline for filings. It has also bolstered the product pipeline in Emerging Markets through its "China 2.0" strategy of partnering with Chinese companies that have ANDAs/ MAs approved in US and EU. Caplins commitment to Latin American region is further reinforced by targeted local infrastructure investments, including an operational warehouse in Chile and industrial land acquisition in Mexico for localized manufacturing. It is scaling up complex, high-margin delivery platforms, including Ready-to-Use (RTU) bags and specialized Unit Dose Ophthalmics utilizing advanced Blow-Fill-Seal (BFS) technology. This portfolio pivot has established a rapidly expanding footprint in highly regulated spaces, driven by a surging US ANDA pipeline alongside active expansions in Canada, Australia, and Brazil.

Caplin systematically allocates capital toward comprehensive backward integration via advanced API plants, specialized contract research (CRO) setups like Amaris Clinicals. Supported by 5 state-of-the-art R&D centres and owned distribution, Caplin remains structurally insulated from global supply disruptions and perfectly positioned for sustainable global scaling.

FINANCIAL PERFORMANCE DURING THE YEAR

Metric	FY25	FY26	Growth
Total Revenue	2,034	2,303	13.2%
Revenue from Operations	1,937	2,187	12.9%
Gross Profit	1,167	1,322	13.3%
EBITDA	743	876	17.9%
EBIT	677	803	18.6%
PAT	541	650	20.1%
Cash & Cash Equivalents	1,180	1,471	24.7%
R&D Spend	89	101	13.5%

Caplin maintained its track record of delivering sustained growth across the top line and the bottom line in FY 2025-26. Thus, the charismatic combination of the founder Chairmans guiding vision and smartwork of Caplins young and dynamic operational leadership team continued to propel Caplins structural transformation, without compromising on the balance sheet quality and financial performance. Caplin surpassed its previous highest consolidated revenue from operations to touch a new high of Rs. 2,187.19 crore during the year. The margins showed improvement across all profitability metrics in FY 2025-26 with the EBITDA margin jumping 160 basis points from 36.5% to 38.1% and the PAT margin going up to 28.2% from 26.6% in the previous year.

STRATEGIC & OPERATIONAL PARAMETERS

Caplin continued to achieve milestones on its transformational journey by delivering progressing on key strategic parameters.

&127; Company remained debt-free with Rs. 1,471 Cr cash reserves on its balance sheet.

&127; Its premiumisation push delivered a 25% revenue share of Branded Generics in FY 2025-26.

&127; Revenue contribution of the Regulated markets (USA) went up from 18% in FY 2024-25 to 21% in FY 2025-26.

&127; Tender business (Institutional Channel) is getting increased traction in larger markets like Chile.

&127; Share of exports from India went up to 76% from 73% in FY 2024-25 and is expected to go up further as full capacity addition comes online.

R&D & MANUFACTURING SCALE-UP (CROSS-GEOGRAPHY IMPACT)

During FY 2025-26, Caplin continued to set newer benchmarks with its R&D and Manufacturing initiatives.

&127; Imminent launch of a lineup of Branded Pre-Filled Syringe products in LatAm, providing a unique value addition to our growing portfolio.

&127; Entering highly niche and complex Blow-Fill-Seal (BFS) technology segment, with the first product development nearing completion for Unit Dose Ophthalmics and Sterile Inhalation products, backed by a development pipeline of over 14 products.

&127; Amaris Clinical (CRO): To cater to growing demands for internal pipeline products BE and Clinical studies, Company plans to take up expansion activities at Amaris Clinical to increase capacity up to 120 Beds.

&127; API: the API unit at Vizag received its manufacturing license and completed validations for 4 APIs; plans on track to validate 12 more APIs before the end of the calendar year 2026.

&127; COL Injectable facility at Gummidipoondi for injectables and ophthalmics is scheduled for completion by Q1 FY2027-28.

&127; Oncology API facility at Thervoy Kandigai is scheduled for completion by Q4 FY2026-27.

&127; OSD facility at Puducherry is scheduled for completion by Q1 FY2027-28.

CAPLIN STERILES LIMITED (CSL):

CSL continued its journey of growing its share of contribution in the overall growth journey of Caplin. The major developments in CSL, during the year were as under

&127; 10 new ANDA approvals received in FY26, alongside 10 ANDAs acquired from 3 rd party companies.

&127; Around 15 products in the development pipeline, which are likely to be filed in the US within FY27, predominantly in Pre-Filled Syringes and niche segments.

&127; Filed 54 products (of which 32 are approved) across multiple Non-US markets (Canada, EU, Australia, Mexico, Brazil, South Africa, Saudi, UAE, etc.), with plans to file 50+ products in these regions over the next 18 months.

&127; Company expands capacity of IV Bag lines to 3X the current size, since multiple products have been approved in this niche segment.

Caplin maintained its track record of delivering sustained growth across the top line and the bottom line in FY 2025-26. Thus, the charismatic combination of the founder Chairmans guiding vision and smartwork of Caplins young and dynamic operational leadership team continued to propel Caplins structural transformation

&127; Companys unique "Project Visual Integration" has been operational by the fisrt quarter of FY27. This project will ensure complete integration and monitoring of all critical processes, as part of Caplins continuous push towards Automation and Compliance.

OWN-LABEL FRONT-END IN THE US:

This ambitious strategic move for the regulated markets continued progressing successfully in FY 2025-26.

&127; CSU launched 30 products and secured critical distribution infrastructure, including weekly ordering cycles with the Big 4 US wholesalers and direct supply agreements with over 30 Integrated Delivery Networks (IDNs) and hospital systems.

&127; Tied up with major wholesalers and 30+ direct buyers (hospital systems).

&127; Current end users: 14,300 (hospitals, pharmacies, clinics, etc.)

THE STRATEGIC GROWTH INITIATIVES:

Caplin continued its journey of successfully compounding returns while building strategic redundancies in FY 2025-26. It invested in creating new capacities, adding and acquiring newer products, and enhancing product portfolio through R&D. Following is an update on the key projects as at end of FY 2025-26 from Mr. C.C. Paarthipan, Chairman of Caplin Point Laboratories Limited, who said:

"Our Emerging Markets business continues to be a reliable growth engine, driven by deep market presence, expanding product portfolios, and increasing participation in institutional channels. At the same time, we are making meaningful strides in strengthening our footprint in Regulated Markets, particularly in the United States, where Caplin Steriles is gaining scale and depth."

"During the year, we made significant investments in building future capabilities across manufacturing, automation, compliance strengthening, backward integration, product development, and regulatory filings. Our progress in Oncology, APIs, and complex dosage forms such as Pre-Filled Syringes and Blow-Fill-Seal technology, positions us well for the next phase of growth."

"We are also encouraged by the early success of Caplin Steriles USA, our front-end initiative in the US, which achieved profitability within its first year of operations an outcome that reflects both execution discipline and the strength of our product selection. This was done without a de-growth in our B2B business, which shows our discipline in capacity utilization and ensuring consistent supply across segments."

"As we look ahead, our focus remains clear: to build a diversified and resilient business across geographies, deepen our presence in complex and differentiated products, and continue investing in quality, compliance, and automation. Initiatives such as our backward integration program, expansion into new technologies, and digital transformation efforts will play a critical role in strengthening our competitive position."

FINANCIAL RATIOS

Below are some of the Key Financial ratios:

Particulars		Consolidated			Standalone
	FY26	FY25	Variance	FY26	FY25	Variance
Debtor Turnover Ratio (Times)	3.00	3.30	(9.10%)	3.35	4.95	(32.40%)
Inventory Turnover Ratio (Times)	2.26	2.21	2.41%	3.01	3.12	(3.39%)
Current Ratio (Times)	6.70	6.97	(3.93%)	6.77	8.27	(18.15%)
Interest Coverage Ratio (Times)	NA	NA	-	NA	NA	-
Debt Equity Ratio (Times)	NA	NA	-	NA	NA	-
Operating Profit Margin %	34.90%	33.31%	4.78%	54.38%	49.81%	9.18%
Net Profit Margin %	28.22%	26.60%	6.06%	42.47%	38.27%	10.99%
Return on Net Worth %	17.89%	18.75%	(4.54%)	19.34%	38.27%	(49.46%)

Explanation for variance in ratios:

*Primarily attributable to increased sales during the later part of the year coupled with normal credit period available to customers.

**Increase in foreign exchange translation reserve of Rs. 141.42 Crores, which is part of Net worth, has not been routed through P&L account thereby marginally reducing the Return on Networth year-on-year basis.

RISK MANAGEMENT

Caplin recognises that effective risk management is a key factor in operating its business successfully. To achieve operational and financial excellence, Caplins Enterprise Risk Management (ERM) Framework prioritises realising a fine balance between managing risks and exploiting opportunities. The Framework, which is well-established and robust, covers these steps that are performed regularly: Identify (recognize and define the risks), Analyse (assess impact and probability), Strategise (prioritise risks and design approach/es to tackle them), Address (implement strategies designed to tackle the risks) and Monitor & Improve (review performance and improve the Framework). The feedback loop, and monitoring of significant external developments and internal operational milestones that can impact the risk portfolio, is critical to tackle any new/ emerging threats and note changes in the severity or probability of any existing risk. The ERM framework enables Caplin to navigate complex global environments effectively by keeping a vigilant eye on any changes in its risk profile.

A comprehensive review of the risk management policy is also carried out annually by the Risk Management Committee (RMC; formed by the Board) and the Board of Directors to ensure long-term business continuity. The RMC meets periodically and brings together the expertise of our CFO, Independent Directors, and senior operational executives. In addition, Caplins senior leadership team actively drives risk governance measures at the corporate, plant and regional levels to enforce standard operating procedures.

Caplin recognizes that structural risks cannot be entirely eliminated, however, it tries to execute comprehensive mitigation measures to minimise the impact of such risks. It adopts four high-level approaches to tackle all risks, which are as follows:

Mitigation: Minimise the threat level by changing workflows or improving physical security/ protection.

Transfer: Offload the financial and operational risks to a third-party.

Avoidance: Drop the high-risk activity in case of very high impact where mitigation and transfer are not feasible.

Acceptance: Live with the risk while setting aside a financial buffer in case of an eventuality and ensure active monitoring.

Below is the updated, summarized account of our key risks and the corresponding mitigation measures.

The feedback loop, and monitoring of significant external developments and internal operational milestones that can impact the risk portfolio, is critical to tackle any new/ emerging threats and note changes in the severity or probability of any existing risk.

STRUCTURAL RISKS & MITIGATION ARCHITECTURE

Area	Category	Impact	Mitigation
Country Risk	Portfolio	Political instability, changes in local regulations, or localized economic crises in core territories could disrupt established revenue flows.	Securing first-mover advantage by pioneering entry into challenging frontier markets across Latin America (LATAM) and Francophone Africa, building a deep, defensive distribution moat.
			De-risk footprint by expanding its presence in highly regulated and larger economies like USA, Mexico, Chile, Colombia, Brazil, etc, and entering newer markets.
			Stock and Sale model helps insulate operations by keeping enough inventory close to its end-customer. It also helps minimise sensitivity to trade friction, currency fluctuations and supply disruptions.
Regulatory Risk	Portfolio & Operational	Evolving validation standards or negative audit observations from international regulatory bodies could lead to production halts, import alerts, or delays in product	Enforcing an "always-ready" regulatory compliance posture across all manufacturing and R&D facilities (proven by its successful inspection track record with premier global regulators including the USFDA, EU-GMP, ANVISA, and INVIMA).
		commercialization.	Gaps caught during internal audits trigger immediate, rigorous corrective and preventive actions (CAPA).
Supply Chain & Operational Risks	Operational	Over-reliance on single-source supply (whether raw material or final products) or localized assetproduction through a strategic manufacturing split: 60% constraints could stall order fulfilment and compromise marketAllocated outsourced volume across thoroughly vetted share.	Fine balancing of the need for speedy and asset-light expansion; supply diversification and in-house control on in-house production and 40% outsourced volume. multiple Contract Manufacturing Organizations (CMOs) in
			India and China.
			Vertical integration with its own API plants, R&D and distribution.
Talent Pipeline &	Operational	Loss of specialized scientific talentInvesting in specialized on the job technical training
Human Capital Attrition Risk		in research domains or high attrition rates among technical shop-floor personnel could stall R&D pipelines and impair strict GMP compliance.	to employees, performance-linked incentives, and transparent career progression mapping.
			Actively recruiting and upskilling rural women work force for core manufacturing and laboratory roles leading to a highly disciplined, resilient, and locally rooted workforce that significantly reduces shop-floor attrition and safeguards technical continuity.
Product Portfolio & Lifecycle Risk	Portfolio & Operational	Lack of new product pipeline and overdependence on a small set of products can lead to attrition in market share. Without swift approvals, the R&D ROI would fall due to cost overruns and obsolete pipelines.	Maintaining a highly disciplined R&D spend, currently at 4.6% of revenue from operations, distributed across 5 independent, state-of-the-art R&D centres.
			Distributed research focus yielding a robust and diverse product portfolio and future pipeline across 36 distinct therapeutic segments that covers over 65% of the WHO
			Essential Medicines List. Tactical acquisition of 15 third-party ANDAs taking the cumulative ANDA portfolio to 65 filings, 59 approvals and
			55+ in pipeline. Active focus on increasing the base of product registrations leading to a massive portfolio of 5,000+ registrations for 650+ pharmaceutical formulations in the emerging markets. Across non-US regulated zones such as Canada, Australia, Caplin Steriles Limited (CSL) has successfully filed 54 products out of which 32 have been approved.
			Focus on niche delivery platforms and difficult to manufacture products to get a competitive edge.
Regulated Market Compliance Risk	Portfolio	Entering highly regulated countries like the USA and EU increases the vulnerability to stringent systemic audits.	Maintain an entirely segregated, dedicated manufacturing units and specialized regulatory affairs teams specifically for highly regulated territories.
			Execute aggressive internal cross-audits and deploy automated data logging systems to match the evolving oversight demands of Western regulatory bodies, keeping
			Caplin insulated from systemic enforcement actions.
Data Governance Risk	Operational	Sophisticated cyberattacks, ransomware, or network breaches could compromise proprietary drug formulations, disrupt automated manufacturing lines, or result in data integrity violations.	Implement an enterprise-wide cybersecurity architecture in step with its digital transformation roadmap (includes next-generation firewalls, continuous end-point tracking, multi-factor authentication, and encrypted air-gapped backups across all 5 R&D hubs and operational facilities). Subject systems to routine independent vulnerability assessments to guarantee absolute data security and strict compliance with global digital data storage mandates.
Environmental Impact & ESG Compliance Risk	Operational	Failure to keep pace with changing environmental mandates or global sustainability benchmarks could lead to penalties, operational closures, or institutional investor alienation.	Integrate ESG benchmarks directly into operational protocols. Aggressively control its environmental footprint by integrating green logistics and maximizing energy efficiency across plant sites. On the social front protect community relations through targeted investments in rural healthcare via CSR. Advance corporate governance and social equity by expanding high-value, safe career pathways for the rural workforce.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Caplin maintains a comprehensive system of internal controls and monitoring procedures tailored to the scope, scale, and operational complexity of its business. This framework establishes robust checks and balances designed to ensure the orderly and efficient conduct operations, strict policy adherence, and the prevention and detection of administrative errors or fraud. The system ensures that all transactions are accurately authorized, recorded, and reported, while safeguarding corporate assets against loss from unauthorized use or disposal.

Caplin has engaged an independent, professional Internal Audit firm evaluate its control systems. The Audit Committee reviews and approves annual audit plans derived from systematic internal risk assessments.

Audits are conducted on an ongoing basis, and the internal auditors present their findings quarterly to the Audit Committee. Any significant deviations are brought directly to the Committees notice, allowing for early remedial actions and the swift execution of recommended corrective measures.

The Audit Committee routinely consults with executive management, statutory auditors, and the internal audit team to gauge the strength of the financial controls. The Committee is satisfied with the adequacy and operational effectiveness of these controls and keeps the Board of Directors informed. Caplin mandates technological updates based on periodic reviews to ensure the systems evolve dynamically alongside business environment and growth.

INDUSTRIAL RELATION AND HUMAN RESOURCES

The Industrial Relations scenario continued to be cordial during the year under review. Caplin regards its expanding global workforce of 3,389 employees across manufacturing, R&D, distribution, and corporate functions as its most valuable asset. Caplins sustained growth is driven by the relentless dedication, passion, and strong sense of ownership displayed by its people.

Caplin maintains a culture of openness, transparency, and a distinct bottom-up approach to its shop-floor decision-making that helps in providing its employees a hospitable and encouraging work environment. This environment fosters a profound pride of association that translates into high engagement levels and a lower employee turnover rate across all operational units.

Talent Acquisition: The Human Resources department has put in place a modernized, long-term talent acquisition strategy to support Caplins growth that is aligned with its operational expansion. Caplins streamlined recruitment cycle swiftly onboards specialized professionals in stringent regulatory, advanced R&D, and sterile manufacturing domains. In order to maintain deep market alignment, especially in regulated territories, the front-end teams in the US and Latin American markets continue to be driven heavily by local talent acquisition.

Work Culture: Caplin has expanded its technical and soft-skills training protocols, utilizing the "Caplin Connect" internal digital platform with an objective to cultivate a continuous learning culture. In tandem with Caplins digital transformation roadmap, targeted upskilling initiatives have actively prepared employees to operate advanced analytical tools, smart manufacturing frameworks, and e-logbook applications, minimizing operational risks and securing internal talent mobility. Caplin focuses on meritocracy and accountability through its existing performance management framework that includes a KPI-linked Variable Pay and Employee Stock Option Plans (ESOPs), thus directly rewarding employees based on corporate success. The founding management team is actively involved in mentoring mid-level managers for leadership roles.

Diversity & Inclusion: Caplin continues to champion social equity and operational excellence by actively recruiting and upskilling women professionals from rural and semi-urban areas near its manufacturing facilities, structurally strengthening shop-floor discipline and data integrity, while improving gender diversity of the workforce. It also delivers social impact through healthcare and employment initiatives, particularly for underserved areas, where their employees need to align with the needs of the communities neighbouring their facilities. Caplin also prioritises holistic employee well-being through engagement activities that include celebrating cultural festivities, acknowledging big and small team wins, events and involvement of employees in Caplins CSR initiatives. Through these continuous efforts, Caplin ensures a safe, agile, and empowering environment that positions its human capital for sustained global success.

Caplin maintains a culture of openness, transparency, and a distinct bottom-up approach to its shop- floor decision-making that helps in providing its employees a hospitable and encouraging work environment.

This environment fosters a profound pride of association that translates into high engagement levels and a lower employee turnover rate across all operational units.

ADHERENCE TO ACCOUNTING STANDARDS

Caplin continues to adhere to standard accounting policies under the Indian Accounting Standards (Ind AS), as applicable.

CAUTIONARY STATEMENT

Certain statements made in this section describe Caplins objectives, projections, expectation and estimations which may be forward looking statements within the meaning of applicable securities laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events. Caplin cannot guarantee that these assumptions and expectations are accurate or will be realised by Caplin. Actual results could differ materially from those expressed in the statements or implied due to the influence of external factors which are beyond the control of Caplin. Caplin assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments.