Fredun Pharmaceuticals Ltd Management Discussions

This report contains forward-looking statements identified by words such as plans, expects, will, anticipates, believes, intends, projects, and estimates. These statements address future expectations or projections regarding the Companys growth strategy, product development, market position, expenditures, and financial performance. As these are based on certain assumptions and future events, the Company cannot guarantee their accuracy or actual realization. Actual results, performance, or achievements may differ materially from those expressed or implied. The Company assumes no obligation to publicly amend, modify, or revise any such statements in light of subsequent developments.

ECONOMIC OVERVIEW AND OUTLOOK Global Economic Overview

In FY25, the global economy grew moderately amid inflation and geopolitical uncertainties. Advanced economies stabilized gradually, while emerging markets faced debt and currency pressures. Global trade and investment rebounded, supported by technology, renewable energy, and supply chain adjustments. Central banks balanced growth and inflation through cautious policies. Overall, the global economy showed resilience, despite ongoing trade tensions and market volatility. As of April 2025, global growth is projected at 2.8% in 2025 and around 3% in 2026, below the 2000-2019 average of 3.7%. Advanced economies are slowing, while emerging markets are expected to grow 3.7-3.9%. Global inflation is anticipated to ease gradually to 4.3% in 2025 and 3.6% in 2026.

Indian economic overview

The economy grew by 6.5% in FY25, remaining one of the fastest-growing major economies despite global challenges. Inflation eased, leading the central bank to cut the repo rate by 25 basis points to 6.0%, supporting stability and consumer confidence. Retail inflation fell to a five-year low of 3.3% in March 2025, allowing for further rate cuts. The IMF projects GDP growth of 6.2% in FY26, driven by domestic demand and infrastructure spending. Government initiatives focus on infrastructure, manufacturing, and digital sectors to support long-term growth and competitiveness.

INDUSTRY OVERVIEW

Global Pharmaceutical Industry

The global pharmaceutical industry has demonstrated consistent growth momentum, with the market expanding from USD 1,747 billion in 2024 to an estimated USD 2,384.6 billion in 2029E, reflecting a CAGR of 6.4% over 2024-2029. This growth is driven by rising demand for specialized therapies, increased focus on biologics, and advances in personalized medicine. The oncology segment remains the largest contributor, followed by anti-infective and central nervous system drugs.

In FY25, Sri Lankas market remained around USD 1.9 billion, driven by generics, while the MENA region reached USD 44.1 billion, led by Saudi Arabia and the UAE. South Africas market grew to USD 7.88 billion, supported by biosimilars, and the CIS region saw steady uptake of insulin and specialty therapies, reflecting rising healthcare access and demand.

Source: The Business Research Company, IMF, Grand View Research, Fitch Solutions, Future Market Insights, Industry Reports

Source: The Business Research Company, IMF, Grand View Research, Fitch Solutions, Future Market Insights, Industry Reports

Indian Pharmaceutical Industry

Indias pharmaceutical industry continues to strengthen its global leadership. Valued at approximately USD 50 billion in 2024, the industry is expected to reach USD 65 billion by 2025 and further grow to USD 130 billion by 2030. India is the third-largest producer by volume and fourteenth by value globally, supplying affordable,

high-quality generic medicines and vaccines to over 200 countries. The sector remains a vital pillar of Indias economic and healthcare framework, contributing around 1.7% to GDP and providing robust employment opportunities. Significant investments in R&D, capacity expansion, and compliance upgrades have enabled Indian companies to compete effectively in highly regulated international markets. Policy support, such as the Production Linked Incentive (PLI) scheme and initiatives like the Strengthening of Pharmaceutical Industry (SPI) scheme, continues to bolster manufacturing competitiveness, encourage API self-reliance, and promote exports. Government initiatives such as the Pradhan Mantri Bhar- tiya Janaushadhi Pariyojana (PMBJP), which aims to provide affordable generic medicines through 10,600+ Jan Aushadhi Kendras, are enhancing medicine accessibility and affordability. The industry is also seeing rapid rural penetration, supported by stronger distribution networks and increased patient awareness. Furthermore, the push toward indigenous manufacturing of APIs and complex formulations through PLI schemes and bulk drug parks strengthens the domestic pharmaceutical ecosystem, reducing import dependency and improving supply chain resilience.

Export Market

As per IBEF, India remains a global pharmaceutical export powerhouse, supplying about 20% of global generic exports and meeting significant demand for low-cost vaccines. In FY24, pharmaceutical exports reached USD 27.8 billion and are estimated at USD 24.3 billion (April-January FY25). The US continues to be the largest export market, accounting for about 35% of exports.

Indian pharmaceutical companies are increasingly focusing on high-value products, such as complex generics, injectables, biosimilars, and specialty therapies, to expand global market presence and improve margins.

Looking ahead, Indian pharma exports are projected to to reach USD 350 billion by 2047.

Other Important Developments

• Strong R&D Focus: Indian pharma companies are increasing R&D investments, targeting biosimilars, new chemical entities, and advanced biologics. The governments Scheme for Promotion of Research and Innovation in Pharma (PRIP) supports this momentum.

• Digital Transformation and Automation: Adoption of digital quality systems, advanced data analytics, and automation is helping Indian manufacturers improve efficiency and maintain global quality standards.

• Strategic Collaborations and M&A: Companies are actively entering new therapeutic areas and geographies through acquisitions, partnerships, and licensing agreements, supporting growth diversification.

• Policy and Infrastructure Push: Initiatives like the creation of medical device parks and greenfield API parks under PLI schemes are expected to drive sectoral competitiveness and attract substantial investments.

Source: Indian Pharma Industry - CareEdge Report 2025 and IBEF Pharmaceuticals February 2025 Report Indian Generic Drugs Market Market Overview

Indias generics market continues to anchor the countrys leadership as the pharmacy of the world, serving both domestic and global healthcare needs with high-quality, affordable medicines. The market is forecast to grow at a healthy CAGR of around 6.7%.

The sustained growth underscores the critical role generics play in improving healthcare accessibility and supporting Indias healthcare priorities.

Key Growth Drivers

The expansion of the generics market is driven by multiple structural and policy-level factors:

• Chronic disease prevalence: The rising incidence of diabetes, cardiovascular diseases, and cancer in India has created a strong demand for long-term, cost-effective treatment options.

• Government policy push: Initiatives such as the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) have expanded rapidly, with over 13,800 Janaushadhi Kendras operational as of 2024, providing affordable generics to underserved populations.

• Supportive regulatory framework: Recent government directives mandating the prescription of generic drugs in central hospitals and wellness centers have accelerated domestic adoption.

• Patent expirations: The growing wave of patent expiries globally opens up new opportunities for Indian manufacturers to launch high-quality generic alternatives in both domestic and export markets.

• Digital healthcare growth: The emergence of online pharmacies and telemedicine platforms is enhancing the reach and distribution of generics across urban and rural India.

Outlook

Indias generics industry will continue to play a pivotal role in making quality healthcare accessible worldwide while supporting the nations goal of self-reliance in critical health infrastructure. With strong policy backing, a robust manufacturing ecosystem, and a focus on innovation, the segment is poised for steady and sustainable growth beyond 2024.

Source: CareEdge Indian Pharma Industry Report 2025, IBEF Pharmaceuticals February 2025, and MarketLine India - Generics, December 2024.

Pet Care Industry

The Indian pet care sector is experiencing dynamic growth, driven by increasing pet ownership, urbanization, and evolving consumer preferences. As per Mordor Intelligence the Indian pet care market is projected to grow at a CAGR of 17.1%. The pet food segment is expanding, with a notable shift towards premium and natural products, reflecting a growing awareness of pet health and nutrition. Grooming services are also on the rise, fuelled by urbanization and the humanization of pets, leading to higher demand for specialized care.

Additionally, the large animal care market is witnessing advancements, supported by government initiatives and a focus on livestock health and productivity. This multifaceted growth presents significant opportunities for innovation and investment across the pet care value chain.

Indian Nutraceuticals Market

The Indian nutraceuticals sector is experiencing dynamic growth, driven by increasing health awareness, urbanization, and a shift towards preventive healthcare. As per Mordor Intelligence and Grand View Research, Indian nutraceuticals market is projected to grow at a CAGR of 13.5% from 2024 to 2030. Consumers are increasingly adopting functional foods and dietary supplements to enhance well-being and manage lifestyle-related health issues. The market is witnessing a surge in demand for products targeting immunity, digestive health, and cognitive function. Additionally, there is a growing preference for natural, plant-based, and Ayurveda-inspired nutraceuticals, aligning with Indias traditional health practices.

Indian Cosmetology Industry

As per IBEF Indias beauty and personal care market is expected to grow at 10-11% annually whereas Indias beauty e-commerce market is projected to grow at a 25% compound annual growth rate, solidifying the countrys position as a key player in the global beauty landscape. Consumers are increasingly seeking products that combine cosmetic appeal with therapeutic benefits, addressing common skin concerns such as acne, pigmentation, and aging. Additionally, the availability of natural and Ayurvedic ingredients in affordable formulations is resonating with a broad consumer base, further fuelling market expansion.

Indian Mobility Market

As per Grand View Research Indias orthopaedic devices market is projected to grow at a CAGR of 7.4% from 2024 to 2030. Indias mobility aid market is witnessing strong growth, driven by an aging population, rising disability awareness, government support, and technological advancements. Innovations in ergonomic, smart, and customizable devices, along with improved healthcare access, are enhancing convenience, comfort, and independence.

Company Overview

Established in 1987, Fredun Pharmaceuticals Ltd (Fredun or the Company) is a leading formulation manufacturing company in India. With over 35 years of expertise in pharmaceutical formulations, the Company has earned the trust of customers across Africa, Southeast Asia, the Commonwealth of Independent States (CIS), Latin America, and the MENA region.

Freduns robust manufacturing foundation, advanced R&D capabilities, and strong global customer relationships support its growth trajectory. The Company has a comprehensive product basket with 697 global registrations across 52 countries. Its therapeutic focus areas include Anti-Diabetics, Anti-Infectives, Anti-Retroviral, and Anti-Hypertensive products, while also maintaining a broad presence across other key therapies. In line with its strategic vision of becoming a holistic healthcare and wellness provider, Fredun is actively pivoting towards new-age, high-margin, consumer-centric businesses.

The Company is expanding aggressively into pet care (Freossi), Cosmeceuticals/Dermaceuticals (Bird n Beauty and BeautyFred), nutraceuticals (Fredun Nutrition), and mobility solutions (Brace On and Chuu Balm) all segments with strong growth potential and higher profitability profiles. This strategic realignment reflects Freduns commitment to moving beyond transactional pharma formulations and focusing on premium branded products, lifestyle wellness solutions, and animal healthcare. By diversifying its portfolio towards these future-ready segments, the Company aims to build a more resilient, margin-accretive, and consumer-connected business model that supports long-term sustainable growth and value creation.

Business Segments

• Total Income: In FY25, the Company reported a total income of Rs. 456.3 crore, reflecting a strong 30.7% increase over Rs. 349.1 crore in FY24. This growth was driven by higher contributions from generics, pet healthcare, nutraceuticals, and cosmeceuticals segments.

• EBITDA: EBITDA rose to Rs. 55.1 crore, up 41.6% from Rs. 38.9 crore in the previous year, underscoring operational efficiencies and disciplined cost management.

• Net Profit: Profit after tax stood at Rs. 20.8 crore, representing a 33.2% increase from Rs. 15.6 crore in FY24.

• PAT Margin: Improved to 4.6% reflecting steady profitability.

Fredun operates across five strategic business segments through different brands:

• Pet Healthcare (Freossi): Under the Freossi brand, Fredun strengthened its leadership in pet healthcare with an expanded portfolio covering MCHC-based supplements, animal feed additives, grooming, and advanced pet pharmaceutical lines. Launched Fredna Vet Diagnostics Indias first dedicated advanced diagnostic centre for pets and also completed export registration in Sri Lanka and commenced sales. Notably, Fredun is the only Indian company offering a complete integrated pet care portfolio, including upcoming launches in functional foods and targeted surgical products.

Nutraceuticals (Fredun Nutrition): Fredun Nutrition continues to build on its strong foundation with a focus on personal healthcare products using natural active ingredients, free from harmful additives.

• Generics (Exports & Fredun Gx): The generics business continues to be a strong pillar, accounting for a significant share of revenue. About 65% of exports are under the Companys own Fredun Generics brand, with the remaining 35% from OEM exports. Importantly, Fredun fully or jointly owns product registrations for these OEM exports, ensuring strategic control and long-term client retention. In FY25, the Company secured over 697 global registrations and over 1,200 registrations are under pipeline.

• Cosmeceuticals (Bird and Beauty or BnB / BeautyFred): Fredun is a pioneer in introducing Emu Oil-enriched personal care products in India under its Bird and Beauty (BnB) and BeautyFred brands. Production was scaled up at its state-of-the- art lotion manufacturing unit in Palghar, which became fully operational in Q3 FY25 and has already produced over one million bottles.

• Fredun Mobility (Chuu Balm, BraceOn, NebOn, DigiOn): Leveraging existing distribution strength, Fredun launched a new mobility aids line under BraceOn, including rehabilitation products such as back braces and post-surgery aids. The launch of Chuu Balm continues to receive excellent market response, particularly in the mass segment.

Manufacturing

Freduns manufacturing facility is located at Palghar, Maharashtra, supported by third-party units across 37 locations in India. Investments in advanced manufacturing technologies continued in FY25, including a second Italian tube filling machine and new automated cartonators, which reduced manual dependency by over 70%. The Company is also expanding ointment manufacturing capacity and increasing granulation output with a new installation set to complete in Q3 FY26. Additionally, the expansion of functional food is underway and expected to commence operation in FY26.

Opportunities and Threats

Freduns diversified portfolio across generics, pet healthcare, nutraceuticals, cosmeceuticals, and mobility aids offer multiple growth levers. Opportunities include strong global demand for affordable generics, increasing pet care awareness, rising consumer preference for wellness and preventive products, and supportive policy initiatives in healthcare and veterinary segments.

However, challenges include global competitive pressures, regulatory hurdles, potential supply chain disruptions, and market fluctuations. Freduns strong focus on quality, innovation, and compliance remains critical in mitigating these risks.

Risk Management

Fredun remains committed to adhering to all applicable statutory and regulatory frameworks. Given the highly regulated nature of the pharmaceutical and healthcare industries, the Company proactively manages risks related to product quality and safety, intellectual property, regulatory compliance, and supply chain dynamics. Comprehensive risk management frameworks support consistent product quality, safeguard patient and animal safety, and ensure long-term sustainability.

ANNEXURE VI

The details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

a) Ratio of the remuneration of each Director to the median remuneration of the Employees of the Company for the Financial Year 2024-25;

{Amount in Rs.)

Name of Director / KMP	Designation	Remuneration of Director/KMP for the F.Y. 2024-25	Ratio of remuneration of each Director/ KMP to median remuneration of employees
Dr. (Mrs.) Daulat Medhora	Chairperson & Jt. Managing Director	12,00,000	3.05
Mr. Fredun Medhora	Managing Director & CFO	54,00,000	13.74

b) Percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the Financial Year 2024-25 compared to 2023-24:

			Amount in Rs.)
Name	Remuneration for the Year ended 2023-24	Remuneration forthe Year ended 2022-23	% Change
Dr.(Mrs.) Daulat Medhora	12,00,000	12,00,000	-
Mr. Fredun Medhora	54,00,000	54,00,000	-
Mrs. Jinkal Soni (Ms. Jinkal Shah)	3,00,000	3,00,000	-

c) The median remuneration of the employees has increased to 16.59 % in 2024-2025 as compared to 2023-2024.

d) The Independent - Non-Executive Directors of the Company are only getting sitting fees.

e) There were 261 employees on the rolls of the Company as on March 31,2025;

f) Ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year- Not Applicable.

g) Key parameter for any variable component of remuneration availed by the director - Not Applicable as no variable remuneration is paid.

We hereby affirm that remuneration paid to Executive Directors is as per the Nomination and Remuneration Policy of the Company approved by the Board of Directors. The said policy is available on the Website of the Company at https://www. fredungroup.com/investor-relation