Dipna Pharmachem Ltd Management Discussions

Annexure II

A. Global Economic Outlook:

The global pharmaceutical industry witnessed a transformative phase in the past year, driven by scientific breakthroughs, demographic shifts, evolving patient needs and rapid digitalisation. Amidst evolving global health demands and economic pressures, the industry strengthened its foundation for long-term growth while adapting to structural changes across regions and therapeutic segments.

In 2024, global medicine spending continued its upward trajectory, reflecting a growing demand for chronic care, specialty treatments and innovative therapies. Total pharmaceutical spending remains on course to exceed US$ 2.3 Trillion by 2028, supported by a projected CAGR of 5-8%. While volume growth plateaued in 2023, it is expected to grow at an average rate of 2.3% through 2028, driven by emerging markets such as China, India, Southeast Asia and Latin America. These regions are poised to drive the next phase of global demand, in contrast to mature markets such as North America, Western Europe and Japan, where per capita consumption levels are already high and future growth is expected to moderate.

Therapeutic innovation has remained a key driver with increased use of specialty medicines for chronic and rare conditions, along with growing adoption of novel biologics and small molecule therapies. Oncology and immunology have continued to lead growth in therapy areas, while new developments in neurology and mental health treatments have added momentum. In particular, the rapid uptake of GLP-1 agonists for diabetes and obesity are signalling a paradigm shift in metabolic care, further reshaping usage trends.

Despite lower manufacturer net sales due to confidential rebates and pricing pressures, last few years have seen robust spending across key regions, driven by the launch of new brands and the expansion of innovative treatment options. Developed economies, while mature in terms of volume, have continued to invest in high-value therapeutics, contributing to a more diverse and innovation-led portfolio mix.

Digital transformation has advanced across the pharmaceutical value chain in last few years. Companies are adopting data-driven tools to optimise clinical trials, enhance patient targeting and strengthen supply chains. AI-enabled drug discovery, real-world evidence platforms and integrated digital health solutions are redefining how pharmaceutical organisations engage with patients and deliver care outcomes. Operational agility has also improved, supported by advancements in modular manufacturing and predictive analytics.

Global disparities in per capita consumption have persisted through last few years. High- income countries like Japan and Western Europe have recorded usage levels more than twice that of lower-income regions. While consumption is gradually rising in Africa and the Middle East, challenges in infrastructure, affordability and access continue to limit growth. These persistent gaps underscore the critical need for inclusive access strategies.

As cost pressures mount, particularly in developed economies, payers are recalibrating reimbursement models to ensure value-based outcomes. Efforts to moderate spending include greater emphasis on generics and biosimilars, performance-linked pricing mechanisms and cost-sharing arrangements with patients. Striking the balance between affordability and innovation remains a core priority for healthcare systems worldwide.

B. Overview of the Indian Economy:

Indias pharmaceutical market is projected to see strong growth, with medicine spending expected to reach US$ 38-42 Billion by 2028, with a CAGR of 7-10% from 2024 to 2028. This growth is driven by a combination of expanding access, growing demand for treatments across both acute and chronic conditions, and continued reliance on affordable generic medicines.

In 2023, acute therapies such as anti-infectives and vitamins/minerals recorded notable volume increases, indicating a recovery in demand patterns. At the same time, chronic therapy areas like cardiac and respiratory treatments have sustained robust performance, supported by the rising burden of non-communicable diseases and improved diagnosis rates.

Indias cost-sensitive market continues to favour high-volume, lower-cost products, with generics dominating the therapeutic landscape. However, ongoing investments in domestic manufacturing, greater healthcare outreach, and increasing insurance coverage are expected to further support growth across therapy areas.

C. Indian Chemical Industry:

India continues to be the largest global provider of generic medicines and is widely recognized for its affordable vaccines and high-quality pharmaceutical products. As of FY 2024-25, the Indian pharmaceutical industry has grown into a USD 55 billion market, with exports contributing approximately USD 28 billion. The industry has been expanding at a CAGR of around 9% over the past decade, solidifying its position as the third-largest pharmaceutical producer in the world by volume and the fourteenth by value.

Key segments of the Indian pharma industry include generic drugs, over-the-counter medicines, bulk drugs, vaccines, contract research and manufacturing, biosimilars, and biologics. India has the highest number of USFDA-compliant pharmaceutical manufacturing facilities outside the United States and is home to over 500 active pharmaceutical ingredient (API) manufacturers, accounting for about 8% of the global API supply.

India supplies more than 50% of the global demand for various vaccines, 40% of the generic demand in the United States, and 25% of all medicines in the United Kingdom. The domestic pharmaceutical landscape includes around 3,000 drug companies and over 10,000 manufacturing units. With a strong scientific and engineering talent base, India remains well- positioned to lead the next wave of pharmaceutical innovation and manufacturing.

Over 80% of the antiretroviral drugs used worldwide for AIDS treatment continue to be supplied by Indian pharmaceutical firms. Indias ability to produce high-quality, low-cost medicines has earned it the title of the "pharmacy of the world." The sector currently contributes around 1.72% to the countrys GDP.

Looking ahead, the Indian pharmaceutical market is projected to reach USD 130 billion by 2030, supported by increased demand for innovative therapies, rising healthcare needs, and a growing global footprint. Meanwhile, the global pharmaceutical market is estimated to have crossed the USD 1 trillion mark in 2023, presenting vast opportunities for Indian players to expand their influence.

D. Opportunities and Threats:

Opportunities:

> Indias specialty chemicals companies are expanding their capacities to cater to rising demand from domestic and overseas

> With global companies seeking to de-risk their supply chains, which are dependent on China, the chemical sector in India has the opportunity for a significant growth

> Positive long-term growth for pharmaceutical products in India and emerging markets due to favourable macro-economic conditions

> Rise in demand from end-user industries such as food processing, personal care and home care is driving development of different segments in Indias specialty chemicals market.

> Expanding Beauty and Personal Care Categories

> Expansion of Digital Innovation along with online Expansion

Threats:

> Competitive pressures from local and international pharmaceutical companies in emerging markets

> Threat from government actions such as the imposition of tariffs and changes in payment models, including application of Most Favoured Nations model

> Rising regulatory scrutiny and potential government actions to control drug prices across global markets

> Geopolitical issues impacting supply chains, inflation and overall economic stability

> Global supply chain disruptions due to geopolitical tensions or economic downturns

E. Segment-wise or Product-wise performance:

The Company is primarily engaged in single segment i.e. Pharmaceutical Segment.

F. Future Outlook:

The Company presents the analysis of the Company for the year 2024-25 & its outlook for the future. This outlook is based on assessment of the current business environment. It may vary due to future economic & other developments, both in India and abroad.

G. Internal control systems and their adequacy:

The Company has taken adequate preventive and precautionary measures to overcome all negative factors responsible for low trend to ensure steady growth.

H. Discussion on financial performance with respect to operational performance:

The financial performance of the Company for the Financial Year 2024-25 is described in the Directors Report of the Company.

I. Material developments in Human Resources / Industrial Relations front including number of people employed:

The cordial employer - employee relationship also continued during the year under the review. The Company has continued to give special attention to human resources.

J. MATERIAL FINANCIAL AND COMMERCIAL TRANSACTIONS:

During the year there were no material financial or commercial transactions.

K. KEY FINANCIAL RATIOS:

In accordance with the SEBI (Listing Obligations and Disclosures Requirements) Regulations 2018 (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in Key sector-specific financial ratios. In this regard, the Company has no significant changes in any key sector-specific financial ratios to report.

L. HUMAN RESOURCES:

These statements are based on certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company operations include global and domestic demand supply conditions, Government regulations, tax regimes, economic developments and other factors such as litigation and business relations.

M. CAUTION STATEMENT:

Statements made in the Management Discussion and Analysis describing the various parts may be “forward looking statement” within the meaning of applicable securities laws and regulations. The actual results may differ from those expectations depending upon the economic conditions, changes in Government. Regulations and amendments in tax laws and other internal and external factors.

Registered Office:	By the Order of the Board of
A/211, Siddhi Vinayak Complex, Near D.A.V.	Dipna Pharmachem Limited
School, Makarba, Ahmedabad - 380 055
	Sd/-	Sd/-
	Keyur Shah	Dipna Shah
Place: Ahmedabad	Managing Director	Director
Date: 8th August, 2025	DIN: 03167258	DIN: 02507462