Emcure Pharmaceuticals Ltd Management Discussions

Management Discussion and Analysis (MD&A)

Industry Developments Global Economic Outlook

The global economy enters calendar year 2025 at a pivotal juncture, navigating a dynamic landscape shaped by evolving trade policies and structural shifts.

While recent tariff measures and global policy realignments have introduced a degree of uncertainty, the international economy continues to demonstrate underlying resilience. Global growth is projected at

2.8% for 2025 and 3.0% for 2026, reflecting a period of adjustment as economies recalibrate to new trade and investment realities. In ation is on a gradual downward trajectory, with expectations anchored in most regions. While advanced economies are moderating, emerging markets continue to contribute meaningfully to global momentum. Policymakers are focused on restoring predictability, strengthening macroeconomic frameworks and leveraging opportunities from digital transformation and demographic transitions. With coordinated global efforts and clear communication on trade and monetary policy, there remains potential for a more robust and balanced recovery path.

Indias growth trajectory continues to outpace most large economies

Indias economic outlook remains relatively robust in

2025, with GDP growth projected at 6.2%. This reflects continued support from resilient private consumption, particularly in rural areas. In ation is expected to moderate to 4.6%, aligning with the RBIs target, while the current account de cit is projected to narrow to 1.7% of GDP amid strong remittance in flows and improved export competitiveness. India benefits from a favourable demographic pro le in the near term, contributing positively to potential output growth and reinforcing Indias long-term structural strengths.

Overview of global pharmaceutical market

The global pharmaceutical industry has traditionally been characterized by the concentration of consumption, production, and innovation in a relatively small number of high-income and developed regions like North America and Europe which continue to account for a major chunk of this market in value terms on account of higher priced drugs and newer products.

However, middle-income countries, like India and China and Brazil ("Pharmerging" markets) now account for a significant share in volume consumption of pharmaceuticals. The share of Pharmerging in production has also picked up over the years. These emerging markets are now the strategic focus points for many pharmaceutical companies, which is evident from pharmaceutical products exports from these countries.

The global pharmaceutical market was valued at

~US$1,600 billion in 2024 and is projected to reach ~US$2,300 billion by 2030, growing at a CAGR of 6.1% from 2025 to 2030. The market is driven by rising chronic disease prevalence, aging populations, and increased healthcare spending.

Overview of India pharmaceutical market

The industry is seeing focus on both innovation and cost control globally. In terms of innovation, pharmaceutical companies are now offering drugs for customized treatment and precision medicine for different diseases, which aims provide medical care according to the patients individual characteristics, needs, preferences, and genetic makeup. At the same time, generic medicines are also seeing increased uptake with cost advantages and effective treatment options Among the global pharma industry, India is becoming a key player. India continues to encourage domestic drug production through Production-Linked Incentive (PLI) schemes aimed at both bulk drugs and

finished pharmaceuticals. These incentives are driving growth in the generics sector and building self-reliance in active pharmaceutical ingredients

(APIs), aligning with national priorities on pharmaceutical security.

The Indian pharmaceutical industry is the worlds third largest by volume and was valued at ~Rs 3.7 trillion (including bulk drugs and formulation exports) as of 2024, with an expected compounded annual growth rate of 8.0% between 2024 and 2029 (IQVIA Market Prognosis). At present, generic drugs constitute a large part of Indian exports. India accounts for ~3.5% of total drugs and medicines exported globally, and exports pharmaceuticals to more than 200 countries and territories, including highly regulated markets such as the US, the UK, the European Union and Canada.

Opportunities and Threats

The pharmaceutical sector is navigating a dynamic landscape marked by robust growth drivers, regulatory tightening, and significant technological disruption.

Pharmaceutical players building complex generics and specialty molecules portfolio

A de ning shift is underway toward biologics, specialty medicines, and personalized therapies, particularly in oncology, immunology, and metabolic disorders such as obesity. The commercial success of GLP-1 drugs and the maturing pipeline of gene and cell therapies are reshaping the competitive landscape, attracting both strategic investment and licensing interest.

. With declining opportunity in the conventional generics segment and pricing pressures on the existing portfolios, it has become important for generic players to look for high-value and high-margin drugs. Players have been developing niche products to weather the impact of pricing pressure. Some of the leading global generic companies have a major pipeline of specialty drugs to mitigate the impact of base erosion in the US.

Growth of biopharmaceuticals, Speed-up of Approvals & Opportunity for Indian Players

The global biopharmaceutical industry has shown significant growth due to the efficacy and safety biopharmaceutical products, which can treat previously untreatable conditions and command high prices. Patented biopharmaceuticals, with sales of $60-70 billion in 2019, are set to expire in the next 5-10 years in the US and Europe. Despite expired patents, biosimilar penetration remains low due to regulatory challenges and clinical trial requirements.

The expiry of these patents presents a lucrative opportunity for Indian companies to launch biosimilars in regulated markets. Unlike generic chemical molecules, biopharmaceutical drugs for chronic ailments can yield higher revenue and margins. Regulated markets have been cautious with biosimilars of due to quality concerns, leading Indian players to focus on semi-regulated markets with lower demand and margins.

However, increased interest in biosimilars in regulated markets, driven by the need to reduce healthcare costs, has accelerated approval processes. Consequently,

Indian generics players are now increasingly focusing on the biosimilars segment.

Performance and Outlook

FY2025 was a de ning year for Emcure Pharmaceuticals as it reaffirmed our position as a differentiated and future-ready pharmaceutical player. In a global environment shaped by scienti c transformation and rising demand for specialty care, Emcure stands out for its ability to combine deep therapeutic strength with innovation-led growth.

With a presence across 70+ countries, a robust India franchise, and a growing international portfolio, we are today one of Indias leading pharmaceutical companies and among the most diversi ed by therapeutic reach. With 19 of our top 20 brands ranked in the top 3 in their respective therapy areas, our business spans high-impact categories. Our strong anchor brands enable us to scale adjacencies and introduce differentiated new products.

FY2025 was a year of strong, broad-based performance. Revenue from operations grew by 18.6% YoY, reaching Rs. 78,960 million, driven by double-digit growth across both

The digital transformation of pharma is accelerating, with AI, machine learning, and real-world data analytics now integral to drug discovery, trial design, and commercial operations. Adoption of telemedicine, e-pharmacy platforms, and smart hospital infrastructure is enhancing care delivery and patient engagement, particularly in Asia and the U.S.

Geopolitical and supply chain dynamics remain in focus. Global players are actively diversifying API sourcing and manufacturing footprints to build resilience, driven by cost, quality, and risk considerations. India is emerging as a central hub for low-cost, high-volume production of generics and intermediates.

domestic and international markets. EBITDA grew by 19.4% to Rs. 14,689 million, with slight margin improvement. Pro t After Tax grew by a strong 34.1% to Rs. 7,075 million. Our investments in R&D, front-end expansion, and digital transformation have been made without compromising pro tability, highlighting our ability to balance growth with operational discipline. Our Net Debt^* stood at Rs. 4,883 million down from Rs. 15,580 million in FY24.

In FY2025, our domestic business delivered 16.4% YoY revenue growth, led by strategic initiatives such as the in-licensing of Sano s cardiac portfolio, the expansion into dermatology via Emcutix, and the scaling of womens health offerings through launches targeting menopause, PCOS, and intimate care. Our foray into consumer wellness under the Arth and Galact brands opened a new frontier as we enter high-growth lifestyle segments with science-backed formulations.

Internationally, revenues grew 20.5% YoY, contributing over half of our total revenues. Canada and Emerging Markets led growth, while Europe laid the foundation for future acceleration with key wins such as the approval of Liposomal Amphotericin B and the acquisition of Manx Healthcares portfolio in the UK. Our differentiated global pipeline positions us for sustained growth in regulated and semi-regulated markets alike.

Our R&D platform remains at the core of our strategic advantage powering our portfolio of differentiated and high-value assets. In parallel, we are transforming how we manufacture with process innovations such as flow chemistry, photochemistry, and green chemistry improving yield, quality, and sustainability.

As we enter FY26, we believe Emcure is uniquely positioned as a scienti cally strong, therapeutically deep, and operationally agile organization. With a strong balance sheet, healthy cash flows, and improving return metrics, we enter FY26 with greater financial flexibility and strategic momentum. We are expanding our addressable market, investing in execution excellence, and staying ahead of global trends. With a growing pipeline and a scalable infrastructure, we remain con dent in our ability to outpace industry growth and create lasting impact for patients and stakeholders.

Risks and concerns

The Companys business operations are subject to certain risks that may affect its operations and ability to achieve its objectives. The Company does not perceive any risks or concerns other than those that are common to the industry such as regulatory risks, exchange risk, cyber risks and other commercial and business-related risks. The

Company has deployed a strong risk mitigation plan which is reviewed regularly for the above areas.

Internal control systems and their adequacy

The Company has an established process to identify various risks and accordingly formulate and implement mitigation strategies through an independent and robust internal audit system. The internal auditors reports and recommendations are reviewed and endorsed by the Audit Committee of the Company. The overall policy and framework for managing risk is reviewed periodically by top management to ensure that requisite internal control mechanisms are in place.

Financial performance with respect to operational performance

Consolidated financial performance of the Company with respect to operational performance for the financial year ended March 31, 2025 is as under:

Parameter (Rs. in Mn)	2024-25	2023-24	YoY Growth (%)
Revenue from operations	78,960	66,583	18.6%
Gross Pro t	47,494	41,828	13.5%
EBITDA	14,689	12,297	19.4%
PAT	7,075	5,276	34.1%

Material developments in Human Resources / Industrial Relations front, including number of people employed

There has been no material development on human resources and industrial relations front. The relationship with employees and workers continued to be cordial at all levels. As on 31 March 2025, total employees strength was 11,474.

Key Financial Ratios

The key financial ratio for 2024-25 and changes therein as compared to the immediately preceding financial year along with detailed explanation in cases where the change is 25% or more is as under:

a) Debtors Turnover ratio:	b) Inventory Turnover ratio:
Revenue from operations (excluding other operating revenue) divided by average trade receivables. This ratio for the year was 4.04 (times) as against 3.75 (times) in the previous year c) Interest coverage ratio: EBITDA (with Other Income) divided by Interest Expense.	Cost of goods sold divided by average inventory This ratio for the year was 1.82 (times) as against 1.70 (times) in the previous year d) Current Ratio: Current assets/Current liabilities.
This ratio for the year was 8.71 (times) as against 5.38 (times) in the previous year. Signi cant prepayments of Term Loans from IPO Proceeds lead to decline in Finance Cost which resulted in an increase in Interest Coverage Ratio	This ratio for the year was 1.71 (times) as against 1.33 (times) in the previous year. Post listing, the Company repaid its long term borrowings (including its current maturities). Hence there was substantial reduction in current borrowings which has impacted current ratio
e) Debt-Equity ratio:	f) Operating Pro t Margin:
Total Debt/Total Equity. This ratio for the year was 0.16 (times) as against 0.67 (times) in the previous year. During the current year there was capital infusion as well as repayment of borrowings, after the Company got listed on stock exchange. Hence the major change in Debt-Equity ratio	EBITDA for the year divided by Net Sales Operating profit margin for the year was 18.60% as against 18.47% in the previous year

g) Net Pro t Margin:

Pro t for the year/Net Sales Net profit margin for the year was 8.96% as against 7.92% in the previous year

Return On Networth

Return on Networth during the year was 15.32% as against 16.87% in the previous year.