Concord Drugs Ltd Management Discussions

1. Global Overview (CY 2026)

Global economic growth is projected at 3.0% in 2026, with growth expected to strengthen to 3.4% in 2027, according to the International Monetary Funds July 2026 World Economic Outlook Update. The outlook reflects the resilience of the global economy amid continuing geopolitical uncertainties, with strong technology-related investment and demand partly offsetting the adverse impact of energy and conflict-related disruptions.

Global headline inflation is projected at approximately 4.7% in 2026, indicating that the recent disinflationary trend has moderated amid renewed pressures from energy prices and geopolitical developments. Nevertheless, financial conditions have remained relatively supportive, while improvements in energy supply diversification and increasing adoption of renewable energy have helped economies absorb external shocks.

Despite the resilience demonstrated by the global economy, the outlook remains subject to considerable uncertainty. Renewed geopolitical conflicts, volatility in energy and commodity prices, financial-market repricing, elevated public debt levels and renewed trade tensions could adversely affect global growth. At the same time, continued investment in technology, particularly artificial intelligence and related infrastructure, could provide an upside to productivity and economic activity over the medium term.

2. Global Pharmaceutical Sector (CY 2026)

The global pharmaceutical industry continues to demonstrate resilience, supported by increasing medicine utilisation, continued innovation and the expansion of access to advanced therapies. According to the IQVIA Institutes Global Medicine Use Trends 2026, global medicine use is expected to continue increasing through 2030, with total utilisation projected to approach approximately 4 trillion defined daily doses by the end of the decade. Growth in pharmaceutical spending is expected to be driven primarily by innovative therapies in areas such as oncology, immunology, diabetes and obesity, alongside the increasing adoption of new products and biosimilars.

The pharmaceutical industry is also undergoing a significant transformation, with biotechnology, complex generics, biosimilars, specialty medicines and technology-enabled research emerging as important growth drivers. At the same time, the industry faces increasing pressure from healthcare affordability concerns, evolving drug-pricing policies, patent expiries and regulatory requirements. More than USD 230 billion of biopharmaceutical revenues are exposed to loss of exclusivity by 2030, creating both competitive pressures and opportunities for generic and biosimilar manufacturers.

Overall, the global pharmaceutical sector is expected to maintain a positive long-term growth trajectory, although growth will remain uneven across geographies and therapeutic categories. Increasing healthcare expenditure, ageing populations, rising prevalence of chronic diseases and continued innovation are expected to support sustained demand for medicines.

3. Indian Economic and Pharmaceutical Overview (FY 2025-26)

Indian Economic Overview

Real GDP Growth: India maintained strong economic momentum during FY 2025-26. The Economic Survey 2025-26 estimated real GDP growth at 7.4%, supported by robust domestic demand, strengthening capital formation, improving manufacturing activity and continued growth in services.

Growth Outlook: The IMFs July 2026 outlook projects Indias growth at approximately 6.4% for FY 2026-27, while the World Bank projects growth of 6.6% for FY 2026-27. Despite external uncertainties and elevated energy prices, India is expected to remain among the fastest-growing major economies.

Consumer Inflation: Inflation remained relatively contained during FY 2025-26. Indias CPI inflation stood at 3.40% in March 2026, with food inflation at 3.87%, indicating a broadly stable domestic price environment.

Domestic Demand: Economic activity continues to be supported by private consumption, capital formation, infrastructure investment and the expanding services sector, providing a favourable underlying environment for healthcare and pharmaceutical consumption.

Indian Pharmaceutical Sector

Market Size: Indias domestic pharmaceutical market was valued at approximately 5.30 lakh crore (around USD 60 billion) in FY 2025-26 and is projected to expand to approximately 12.47 lakh crore (around USD 130 billion) by 2030**, supported by rising healthcare expenditure, wider access to medicines, increasing chronic disease prevalence and continued expansion into underserved markets.

Sector Growth: The Indian pharmaceutical sector is expected to maintain healthy growth, with industry revenues projected to grow by approximately 7-9% in FY 2025-26. Domestic pharmaceutical demand is expected to remain particularly strong, supported by chronic therapies, new product launches, wider rural penetration and expanding healthcare access.

Exports: Indias pharmaceutical exports remained resilient and surpassed USD 31 billion during FY 2025-26, despite global pricing pressures, regulatory challenges and geopolitical uncertainties. Formulations, biologicals, bulk drugs, vaccines and biosimilars continue to constitute important components of Indias export portfolio.

Global Position: India continues to be one of the worlds leading suppliers of generic medicines and vaccines and remains strategically important to global pharmaceutical supply chains. Its cost-efficient manufacturing base, skilled workforce and extensive regulatory capabilities continue to support its position as a major global pharmaceutical hub.

Innovation and Biopharma: The sector is increasingly moving beyond traditional generics towards biosimilars, specialty products, complex generics, innovative medicines and biotechnology. The Governments Biopharma SHAKTI initiative, with an outlay of approximately 10,000 crore, is aimed at strengthening biologics and biosimilars manufacturing, research capabilities and clinical infrastructure.

Manufacturing and Policy Support: Government initiatives including the Production Linked Incentive (PLI) schemes, strengthening of domestic API manufacturing and policy measures aimed at reducing import dependence are expected to enhance Indias pharmaceutical manufacturing capabilities and supply-chain resilience.

Export Diversification: Indian pharmaceutical companies are increasingly focusing on diversification across the United States, Europe, emerging markets and other international destinations. This diversification is expected to reduce concentration risk and create opportunities for Indian manufacturers in new and growing markets.

Technology Adoption: Increasing adoption of artificial intelligence and digital technologies in research, development, manufacturing and quality processes is expected to improve productivity, accelerate drug-development activities and strengthen Indias competitiveness in global pharmaceutical markets.

4. Outlook (FY 2026-27 & Ahead)

Global Outlook

The global pharmaceutical industry is expected to maintain a positive long-term trajectory, supported by rising medicine utilisation, continued innovation and increasing demand for treatments for chronic and complex diseases. Oncology, immunology, diabetes, obesity, biosimilars and specialty medicines are expected to remain important growth areas. However, pricing pressures, patent expiries, regulatory scrutiny, healthcare affordability concerns and geopolitical developments may influence the pace and distribution of industry growth.

Indian Outlook

Indias economic fundamentals remain favourable, with strong domestic demand and continued investment supporting economic activity. The IMF projects 6.4% growth for FY 2026-27, while the World Bank projects 6.6% growth, reinforcing expectations of continued economic resilience.

The Indian pharmaceutical sector is similarly positioned for sustained expansion, supported by a large domestic market, growing healthcare awareness, increasing chronic disease burden, expanding insurance coverage, strong manufacturing capabilities and rising global demand for affordable medicines. The industrys increasing focus on complex generics, biosimilars, specialty products and biotechnology provides additional avenues for long-term growth.

The Companys outlook therefore remains supported by the underlying structural growth of the Indian healthcare and pharmaceutical ecosystem, while maintaining an appropriate focus on operational efficiency, regulatory compliance, product quality and prudent risk management.

5. Risks & Concerns

Global Risks

The global pharmaceutical industry remains exposed to geopolitical tensions, trade disruptions, commodity and energy-price volatility, changes in international drug-pricing policies, supply-chain disruptions and tightening regulatory requirements. Global economic growth is projected at 3.0% in 2026, while global headline inflation is expected to rise to approximately 4.7%, indicating that the macroeconomic environment remains uncertain.

Industry Risks

Key sector-specific risks include:

• Increasing regulatory scrutiny and compliance requirements across international markets;
• Pricing pressures and reimbursement constraints in developed pharmaceutical markets;
• Patent expiries and increasing competition from generic and biosimilar products;
• Volatility in prices and availability of APIs, intermediates and other key inputs;
• Foreign exchange fluctuations affecting export-oriented businesses;
• Increasing investment requirements for research, product development and regulatory compliance;
• Intensifying competition in domestic and international pharmaceutical markets; and
• Geopolitical developments and changes in trade policies affecting international supply chains.

Domestic Risks

Within India, potential risks include changes in pharmaceutical regulations and pricing controls, evolving GST and taxation policies, regulatory changes relating to manufacturing and quality standards, increasing compliance costs and competitive pricing pressures. The industry may also face challenges arising from dependence on imported APIs and intermediates, although ongoing government initiatives to strengthen domestic manufacturing are expected to mitigate such risks over time.

6. Internal Control Systems

The Companys internal control framework remains robust and appropriate to its size, scale and nature of operations. The internal control systems are designed to safeguard the Companys assets, ensure accuracy and reliability of financial and operational information, promote operational efficiency and ensure compliance with applicable laws, regulations and internal policies.

The Companys internal and statutory audit mechanisms continue to operate effectively, with periodic review and oversight by the appropriate management and governance authorities. The Company remains committed to continuously strengthening its internal control environment in line with its evolving business requirements.

7. Human Resources / Industrial Relations

During FY 2025-26, the Company continued to focus on strengthening its human capital and organisational capabilities in line with its business objectives. Key initiatives included:

• Conducting training and development programmes to enhance employee capabilities and functional expertise;
• Strengthening talent acquisition and retention initiatives;
• Undertaking measures to identify and address key factors contributing to employee attrition;
• Strengthening leadership capabilities and filling critical positions required for business growth; and
• Promoting a professional, performance-oriented and collaborative work environment.

The Company recognises that its employees are an important enabler of sustainable growth and will continue to invest in talent development, employee engagement and organisational capability building.

8. Key Financial Ratios

Ratio	Standalone FY 2025-26	Standalone FY 2024-25	Consolidated FY 2025-26	Consolidated FY 2024-25
Current Ratio	2.74x	1.80x	2.53x	1.62x
Debt-Equity Ratio	0.48x	0.72x	0.54x	0.91x
Net Profit Ratio	1.37%	0.80%	1.34%	0.74%
Debt Service Coverage Ratio	1.86x	1.43x	1.80x	1.40x
Return on Equity	2.51%	0.87%	2.56%	0.99%
EPS (?)	0.93	0.30	0.95	0.34

9. Disclosure of Accounting Treatment

We have adhered strictly to prescribed Accounting Standards in FY 2025-26, with no deviations in treatment or reporting methodology from prior years.

10. Cautionary Statement

Certain statements in this MD&A are forward-looking and subject to risks and uncertainties such as changes in economic policies, geopolitical developments, regulatory shifts, and macroeconomic conditions. Actual results may vary. The company undertakes no obligation to update these statements publicly.

For Concord Drugs Limited

Place: Hyderabad

Date: 07.09.2026

Sd/-

S. Nagi Reddy

Chairman & Managing Director

(DIN: 01764665)

Sd/-

S. Koni Reddy

Whole time Director & CFO

(DIN: 02829319)