ERIS Lifesciences Ltd Management Discussions

ECONOMIC OVERVIEW

GLOBAL

In 2025, the global economy proved more resilient than expected despite elevated trade tensions, policy uncertainty and geopolitical frictions. Growth was supported by robust private consumption, AI-related investment, strong production activity and accommodative financial and fiscal conditions, even as supply chains adjusted to higher trade barriers. This stronger- than-anticipated performance extended the five-year global recovery from the 2020 recession, one of the most sustained recoveries in more than six decades. However, the recovery remained uneven: while advanced economies broadly regained momentum, a significant share of emerging market and developing economies (EMDEs), particularly low-income and conflict-affected economies, continued to lag pre-pandemic income levels.

The start of 2026 has been more volatile, with escalating conflict in the Middle East increasing risks to energy markets, trade flows and financial conditions. Disruptions in the Strait of Hormuz and damage to regional energy infrastructure have contributed to higher energy prices and added uncertainty to the global outlook. Although financial conditions remain broadly accommodative, prolonged geopolitical stress may raise inflationary pressures and temper global growth momentum.

Looking ahead, Global GDP growth is projected to remain broadly stable at 3.1% in 2026 before edging up to 3.2% in 2027, sustained by robust technology-related investment and gradually lower effective tariff rates. However, the evolving conflict in the Middle East weighs on growth and generates significant uncertainty around global demand. These projections assume that the current energy market disruption is temporary, with prices easing from mid-2026 onward.

March 2020 interim Economic Outlook

Note: The figures show the projections for global GDP growth and G20 headline inflation from the December 2025 OECD Economic Outlook, the current March 2026Interim Economic Outlook and a preliminary update of the December 2025 Economic Outlook projections using revised data for 2025 and monthly information up until the end of February 2026. The preliminary update has a revised assessment for the first quarter of2026, with quarter-on- quarter growth and inflation in subsequent quarters set in line with those projected in the December 2025 Outlook. Source: OECD Interim Economic Outlook 119 database; OECD Economic Outlook 118 database; and OECD calculations

Note: The series shown in Panel A are PPP-weighted aggregates covering 36 advanced economies and 36 emerging-market economies. Source: OECD Consumer Price database; national sources; LSEG; and OECD calculations.

INDIA

In FY2020, Indian economy remained resilient with strong economic momentum and estimated to grow by 7.7% during the same period. This growth was supported by private consumption, with government consumption also contributing positively. Investment was sustained by easing financial conditions and continued public capital spending. Manufacturing output has grown steadily, reflecting robust demand for capital goods and steady growth in exports of engineering products. The services sector was a major contributor to growth, led by robust performance in finance, trade, transport, and information technology. Headline inflation fell to 0.3% in October 2025, driven by lower Goods and Services Tax (GST) rates, easing food prices, which constitute nearly half of the CPI basket, and lower energy costs. Core inflation remains around 4%.

However, the GDP growth was slightly moderated by bilateral tariffs imposed by the United States which weigh on exports and investment, especially in labour-intensive and export-oriented sectors such as textiles, chemicals, and engineering goods, later followed by escalating conflict in the Middle East increasing risks to energy markets, trade flows and financial conditions. Despite these headwinds the economy growth remained strong with growth now projected 6.8-7.2% in FY27.

1. Year-on-year growth rates. The sum of components may deviate from observed GDP growth because of balancing items, chain-linking procedures and direct/indirect seasonal adjustment methods. 2. Year-on-year growth rates. The shaded area corresponds to the tolerance band around the central banks inflation target. Source: OECD Economic Outlook 118 database; and RBI

PHARMACEUTICAL

MARKET

GLOBAL

The global pharmaceutical industry is navigating a complex environment shaped by scientific progress, demographic trends, and geopolitical factors that influence therapy development and delivery. Companies are accelerating innovation through biomedical research and curative treatments, while simultaneously expanding generics and biosimilars to improve access, affordability, and healthcare system efficiency.

The market has expanded at a compound annual growth rate (CAGR) of around 8%, rising from USD 1,570 billion in 2021 to around USD 1,939 billion in 2025. Key factors driving this growth include an ageing population, the rising prevalence of chronic diseases robust development in the generics market, and the increasing consumer orientation of healthcare, particularly in the over the counter (OTC) space, with increasing focus on personalised treatment and precision medicine, aiming to tailor medical care to individual patient characteristics, needs, preferences, and genetic profiles.

Going ahead, the market is projected to continue growing at a 5-8% CAGR over the next five years, reaching an estimated USD 2,630 to 2,660 billion by 2030

INDIA

The Indian Pharmaceuticals market clocked growth of 9.9% in FY26 majorly on the back of price increase. As per IQVIA MAT March26 data, chronic segment continued to outperform, growing at 13.8% vs acute segment growth of 7.4%. Muted acute season was the primary cause behind slowIPM growth.

The domestic formulations continue to grow at a healthy rate of ~9% from FY20 to FY26 and expected to grow at a CAGR of 8-9% over the next five years from FY25 to reach an estimated size of Rs. 3.3-3.5 trillion in FY30. This growth will be driven by rising demand stemming from the increasing prevalence of chronic diseases, greater awareness, higher insurance, rural penetration and improved access to quality healthcare.

The future of the Indian pharmaceutical sector is optimistic, supported by a mix of domestic demand, international market prospects and strategic changes towards innovation and value-added products. Many trends are going to drive this path. The transition from volume-led to value-driven growth is imperative, involving specialty generics, biosimilars, new drugs, and cutting-edge therapies like gene and cell therapies.

Digitalisation and the use of artificial intelligence (AI) and machine learning (ML) are anticipated to revolutionise drug discovery, clinical development, manufacturing, and supply

chain management. Regulatory simplification, quality improvement, and sustainable manufacturing are also recognised as key enablers for future growth. Meanwhile, the nation is afflicted by an increasing burden of metabolic dysfunction-associated steatosis liver disease (MASLD) due to obesity, diabetes, physical inactivity and insulin resistance among non-drinkers as well which will further accelerate demand for medication

FINANCIAL REVIEW

Financial Highlights

Summary Consolidated Income statement

Particulars (INR million) FY 25 FY 26 Growth %

Revenue from Operations	28,936	31,294	8.1%
Gross Profit	21,797	23,338	7.1%
EBITDA	10,172	11,201	10.1%
EBIT	7,017	8,406	19.8%
Profit Before Tax	4,888	6,385	30.6%
Profit After Tax	3,747	6,475 A	72.8%
Earnings per share (INR)	25.9	46.7 A	80.8%

Includes One-off upside from deferred tax adjustment in PAT Summary Standalone Income statement Particulars (INR million) FY 25 FY 26 Growth %

Revenue from Operations	16,978	18,217	7.3%
Gross Profit	11,985	11,950	-0.3%
EBITDA	4,866	6,123	25.9%
EBIT	3,048	4,580	50.3%
Profit Before Tax	1,201	3,621	201.6%
Profit After Tax	774	2,441 A	215.4%

Includes One-off upside from deferred tax adjustment in PAT

Revenue from Operations:

For the year under review, the Companys consolidated Revenue from Operations grew by 8.1% to INR 31,294 mn from INR 28,936 mn in FY 25. The Domestic Branded Formulations revenue grew by 11% to INR 27,776 mn.

Gross Profit:

The consolidated gross margin stood at 75% in FY26 representing a 7% growth yoy and a margin compression of 75 bps on account of significant changes in product/ business mix. With a gradual uptick in the scale of insourcing manufacturing operations (of the portfolios acquired in previous years), we expect further upside in gross margins going forward.

Employee Expenses:

Employee Expenses were up by 10%.

OtherExpenses:

The consolidated other expenses in FY26 were INR 6,569 mn, remained flat in FY26. However, as a % of sales it is down by 173 bps.

Depreciation and Amortisation:

Consolidated Depreciation decreased from INR 885 mn in FY25 to INR 547 mn in FY26. Amortisation decreased from INR 2,270 mn in FY25 to INR 2,248 mn in FY26, owing to addition of acquisition related intangible expenses during the year.

Finance Expenses and Other Income:

Consolidated Finance Cost decreased from INR 2,313 mn in FY25 to INR 1,927 mn in FY26. We expect the finance cost to further decrease on account of debt reduction during the year. Consolidated Other Income decreased from INR 184 mn in FY25 to INR 78 mn in FY26.

Earnings before Depreciation, Amortisation, Interest and Taxes (EBITDA):

Consolidated EBITDA stood at INR 11,201 mn, representing a 36% margin and expansion of ~64 bps over last year. Domestic Branded Formulations EBITDA margin expanded from 36.5% in FY25 to 37.0% in FY26; driven by synergies from business integration.

Tax Expenses:

Our effective book tax rate decreased to 22% (Excluding DTL impact) in FY26 from 23% in FY25, down by 140 bps

Profit After Tax (PAT):

Our Consolidated reported Profit After Tax (PAT) for the year stood at INR 6,475 mn, a 73% YoY growth due to One-off upside Rs. 1,500 mn from deferred tax adjustment in PAT. Normalised PAT excluding the impact of Deferred Tax was Rs. 4,975 mn, a growth of 33% driven by disciplined cost management and a reduction in finance and tax expenses

Debt:

During the year, we acquired remaining stake of 30% in Swiss Parenterals. We also initiated a second round of investment of INR 1,000 million in Levim Lifetech and acquired the probiotics business of Velbiom Probiotics Pvt. Ltd. (Velbiom) for INR 500 million in March 2026. Furthermore, we front-loaded our capital expenditure plans at the BioNxt and Swiss Unit-III facilities to accelerate our growth infrastructure. Our consolidated net debt as of March

31, 2026, stood at approximately INR 22,550 million; we remain committed to a disciplined capital allocation strategy, with significant debt prepayment targeted across FY27andFY28.

Operating Cashflow:

Our consolidated Operating cashflow (OCF) to EBITDA ratio in FY 26 stood at 48%. We have maintained an average OCF to EBITDA ratio of 76% from FY17 through to FY26.

Working Capital:

Our core working capital (inventory, debtors and payables) on a consolidated basis stood at 92 days of operating revenue. Our Debtor turnover days in the consolidated operations increased from 58 days of operating revenue in FY25 to 80 days of operating revenue in FY26.

Key Financial Ratios - Consolidated

Ratio FY 25 FY 26 Variance

Profitability Margin ratios
Gross Margin	75.3%	74.6%	-75 bps
EBITDA Margin	35.2%	35.8%	64 bps
EBIT Margin	24.3%	26.9%	261 bps
PAT Margin	12.9%	20.7%	774 bps
Return ratios
Return on Capital Employed (ex treasury investments and cash & cash equivalents)	14.0%	14.5%	47 bps
Return on Net Worth (RoE) (ex treasury investments and cash & cash equivalents)	14.5%	17.9%	336 bps
Working capital ratios
Net Working Capital days	-20	-63	207%
Debtors days	58	80	37%
Inventory days	42	51	21%
Gearing ratios
Interest coverage ratio	3	4	44%
Debt/Equity ratio	0.61	0.76	25%
Liquidity ratios
Current ratio	0.9	0.7	-16%
Current Assets	12,230	15,399	26%
Current Liabilities	13,846	20,777	50%

Includes One-off upside from deferred tax adjustment in PAT

Key Financial Ratios - Standalone

Ratio FY 25 FY26 Variance

Profitability Margin ratios
Gross Margin	70.6%	65.6%	-499 bps
EBITDA Margin	28.7%	33.6%	495 bps
EBIT Margin	18.0%	25.1%	719 bps
PAT Margin	4.6%	13.4%*	884 bps
Return ratio
Return on Capital Employed (ex treasury investments and cash & cash equivalents)	10.5%	12.3%	171 bps
Working capital ratios
Net Working Capital days	-79	-139	47%
Debtors days	52	63	22%
Inventory days	42	25	-41%
Gearing ratios
Interest coverage ratio	1	3	84%
Debt/Equity ratio	0.9	0.7	-26%
Liquidity ratios
Current ratio	0.6	0.6	-6%
Current Assets	6,275	10,228	63%
Current Liabilities	9,939	17,177	73%

Includes One-off upside from deferred tax adjustment in PAT

Internal Financial Control

Eris has established and maintains a robust system of internal financial controls and governance processes commensurate with the size, scale, and complexity of its operations. The Companys internal financial controls with reference to financial statements are designed to provide reasonable assurance regarding the reliability of financial reporting, safeguarding of assets, prevention and detection of frauds and errors, operational effectiveness, and compliance with applicable laws, regulations, and internal policies.

The control environment is supported by well-defined policies, standard operating procedures, authority matrices, and monitoring mechanisms that promote accountability, transparency, and disciplined execution across the organization. As a pharmaceutical company operating in a highly regulated environment, Eris maintains strong

compliance and quality systems aligned with applicable regulatory requirements, including Good Manufacturing Practices (GMP) and other industry standards.

Core business processes are enabled through SAP S/4HANA and other integrated digital platforms with embedded controls covering user access management, segregation of duties, change management, logs, and data integrity. Continuous investments in technology, process automation, cybersecurity, and digital governance further strengthen the environment control and enhance operational resilience.

The Company operates an independent, risk-based internal audit function under the oversight of the Audit Committee. Audit findings and management action plans are periodically reviewed to ensure timely remediation and continuous improvement. Eris also maintains a robust vigil mechanism that enables reporting of concerns relating to unethical conduct, fraud, or violations of applicable laws and the Companys Code of Conduct.

The Company remains committed to continuously strengthening its governance and control environment through ongoing process improvements and adoption of best practices.

Risk and Risk Mitigation

The Company has established a robust Enterprise Risk Management (ERM) framework to identify, assess, monitor, and mitigate risks that may impact on the achievement of its strategic objectives. Oversight of the framework is provided by the Risk Management Committee, which periodically reviews the Companys risk profile, key mitigation measures, and emerging risks.

The ERM framework covers strategic, operational, financial, regulatory, compliance, quality, supply chain, information security, cybersecurity, business continuity, and reputational risks. Risk management is embedded into business planning and decision-making processes through structured risk assessments, defined risk ownership, and ongoing monitoring.

The Company continuously evaluates changes in the business and regulatory environment and proactively implements mitigation measures to enhance resilience and safeguard stakeholder interests. Internal audit reviews, business continuity planning, and appropriate insurance coverage further strengthen the overall risk management framework.

The Board and management remain committed to fostering a strong risk-aware culture and continuously enhancing risk management capabilities to support sustainable growth and long-term value creation.

Outlook

STRENGTHS AND OPPORTUNITIES

Strong brands: The Company continues to focus on maintaining the strength of its brand portfolio; the Top 25 Mother Brands contribute ~ 65% of its Branded Formulations revenue. With 13 out of these 25 brands being ranked among the Top 5 in their respective segments, they are well poised for strong future growth. The Company has 6 mother brands with revenues of Rs. 100+ crore p.a. and 10 mother brands with revenues of Rs. 50 - 100 crore p.a. The Companys strong portfolio of Mother Brands enjoys leading prescription ranks with their respective doctor specialties. The Company holds a dominant position in key specialty areas such as Diabetologists, Cardiologists, Neurologists, Gynecologists, Dermatologists and Consulting Physicians.

Prescription ranking among super specialists:

Diabetologists	6 th
Cardiologists	8 th
Dermatologists	3 rd
Neurologists	6 th
Gynecologists	12 th
Consulting Physicians	10 th

(Source: IQVIA MAT Mar26)

Expansion in Emerging Specialties: The company derives 48% of Branded Formulations revenue from eight emerging specialties of Dermatology, Insulins, Womens Health, CNS, Oncology, Critical Care, Gastro and Nephrology, giving us significant headroom for disruptive growth in these segments.

Patent Expiration Opportunities: A number of key molecules in the cardiometabolic segment are expected to go off-patent over the next 3-5 years. Given our established position in this market, Eris is well placed to capture these opportunities, as reflected in the strong franchise positions we have built over the last few years.

New Business Segments: The acquisition of Swiss Parenterals Ltd. and Biocons domestic branded formulations business have provided us with a strong platform to deepen our presence in the Indian injectables market. In addition, leveraging Swiss Parenterals distribution network in semiregulated markets will help us build an oral solid dosage business in these geographies and expand our addressable market.

Patient Care Initiatives: Our differentiated Patient Care Initiatives model supports science-led doctor engagement and helps build trusted, long-term relationships with healthcare professionals. Beyond contributing to disease management efforts, these initiatives also strengthen our brand equity.

Strong Balance Sheet and Cashflows: The Company has consistently generated profits and healthy cash flows. Our disciplined capital allocation framework has helped us maintain a strong balance sheet, with superior returns on invested capital and net worth for shareholders.

Operating Efficiency: The yield per man (YPM) for the Company has potential of scaling up to industry leading numbers. With improvement in the YPM metric margin efficiency also improves.

Manufacturing Footprint: The addition of manufacturing facilities of Eris BioNxt and Levim along with manufacturing facilities in Guwahati, Assam and Ahmedabad, Gujarat will provide significant operating leverage benefit to the Company going ahead as sales of the products manufactured from the facility increases and new products are brought in-house for manufacturing.

Demographic Tailwinds: Overall healthcare spending in India is expected to rise due to rise in population, consistent economic development and rapid urbanisation, improved affordability, high real GDP growth rate and improving GDP per capita rising healthcare awareness among the masses and greater demand for insurance coverage, boosted by government and private insurer initiatives.

Increased Lifestyle Related Diseases: A more sedentary lifestyle, changing consumption patterns, and rapid urbanization have contributed to the rising incidence of chronic diseases. As the market matures, India is expected to see a higher share of chronic conditions, in line with other emerging and developed markets.

Health Insurance Coverage: Rising demand for insurance coverage, supported by both government and private insurers, is expected to further support the expansion of healthcare services and the pharmaceutical market in India.

Rising Healthcare Awareness: Greater access to medical information portals and healthcare start-ups is improving patient awareness around diseases, preventive therapies, and treatment options.

Increase in Government Health Expenditure: The governments continued focus on healthcare, including higher spending as a share of GDP, is expected to support the long-term growth of the sector.

THREATS, RISKS AND CONCERNS

Pandemic-like Situation: The outbreak of the COVID-19 like pandemic across the world and subsequent disruption in economic activities apart from impacting GDP across countries also causes various disruptions which impacts demand of pharmaceutical products.

Regulatory Overhang: The Drug Price Control (Amendment) Order limits price increases in schedule drugs mentioned in the National List of Essential Medicines (NLEM). While it has been observed that competitive forces in the market have been more effective in controlling prices, amendments in the list will continue to pose challenges for the industry. As on 31st March 2026, 17% of the Companys revenue was from drugs scheduled in the NLEM (vs. 17% for the Indian Pharma Market).

GOING AHEAD

Eriss strong current portfolio will further reap benefits of investments in products, promotions, processes and people in last couple of years. While the existing business remains the main engine of growth for the Company, in-licensing, exploring newer therapeutic areas and future patent expiries are some areas that it will leverage for future growth. Productivity is also expected to improve further with further expansion in doctor reach.

The Company is confident to continue to outperform in core therapies as a result of super speciality focus, strong power brands, presence in fast growing molecules and adaptability and resilience of the business model.

Safe Harbour and Cautionary Statement

Statement in this Management Discussion and Analysis describing the Companys objectives, projections, estimates or predictions may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied.

Important factors that could make a difference to the Companys operations include our ability to successfully implement our strategy, our growth and expansion plans, obtain regulatory approvals, technological changes, changes in the value of the Rupee and other currency changes, changes in the Indian and international interest rates, allocations of funds by the Governments in the healthcare sector, increasing competition and the conditions of our customers, suppliers and the pharmaceutical industry, global and Indian demand-supply conditions, finished goods prices, cyclical demand and pricing in the Companys principal markets, changes in government laws and regulations, tax regimes, our provisioning policies, economic and political developments within India and the countries within which the Company conducts businesses and other factors such as litigation and labour negotiations. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent development, information or events or otherwise.