Glaxosmithkline Pharmaceuticals Ltd Directors Report.

The Directors of your Company are pleased to share their Report for the year ended 31 March 2022.

1. Financial Results for the year ended 31 March 2022

(Rs in crores)

Year 2021-22 2020-21
Continuing Operations:
Revenue from operations 3218 2921
Other income 76 110
Total income 3294 3031
Profit before exceptional items and tax 762 626
Add / (Less): Exceptional items 12 (173)
Profit before tax 774 453
Less: Income tax expenses (397) (166)
Profit for the year from continuing operations 377 287
Discontinued Operations:
Profit before tax from discontinued operations 1708 97
Less: Tax expense of discontinued operations (394) (26)
Profit from discontinued operations after tax 1314 71
Profit for the year 1691 358

2. Dividend

Your Directors are pleased to recommend a dividend of Rs 90 per equity share (including special dividend of Rs 60) for the year. This dividend for the year ended 31 March 2022 is subject to the approval of Members at the Annual General Meeting on 26 July 2022 and will be paid on or after 27 July 2022. If approved by the Members at the Annual General Meeting, the dividend will absorb Rs 1525 crores. The Board of Directors of your Company had approved the Dividend Distribution Policy on 27 October 2016, and it is available on the Companys website (https://india-pharma.gsk.com/media/6486/dividend-distrubtion-policy.pdf)

3. Management Discussion and Analysis

1. Economy review

Indian economy and outlook

The Indian economy recovered from the pandemic- induced environment experienced in the previous year, witnessing sequential improvement as the year progressed. According to the Indian Economic Survey 2021-22 issued in February 2022, Indias GDP is estimated to have grown 9.2% in FY 2021-22 after contracting 7.3% in the previous year. The rapid roll-out of vaccination drives along with fiscal and monetary policy measures have supported this economic recovery.

The geopolitical fallouts of recent times have further aggravated inflationary pressures and policy makers the world over will be on a tight balancing act. As a result, businesses will have to address supply chain disruptions and inflationary concerns through novel approaches.

2. Industry review and outlook

The Indian pharmaceutical industry is the third largest in the world by volume, making significant contributions to global health. According to ICRA, the pharmaceutical industry is expected to grow between 9-11% in 2021-22. The industry demonstrated commitment during the pandemic, by not only providing adequate medicines, but also contributing significantly to other areas such as sanitation, preventive healthcare and quarantine facilities. The industry was able to overcome the challenges posed by the pandemic by carefully evaluating the potential use of available drugs. According to the Indian Economic Survey 2021-22, the domestic market is expected to grow 3x in the next decade. Indias domestic pharmaceutical market stood at $ 42 billion in 2021 and is likely to grow to $ 65 billion by 2024.

The Indian pharma industry has been a key contributor to improving the countrys healthcare and economic outcomes. The pandemic has enhanced several opportunities and challenges for the industry. To emerge as a winner in the post-pandemic world, the industry needs to continue building on its strength while enhancing focus towards innovation. New capabilities need to be introduced across business functions to improve skills and to enhance the value chain. The government also needs to provide the right enablers and a supportive business environment for growth.

3. Company overview

We aim to bring differentiated, high quality and essential pharmaceuticals and vaccines to as many people as possible, with our global business, scientific and technical know-how along with a diverse talent pool. Our greatest contribution is towards improving the health of people around the world and this clear ambition has resulted in our parent company, GSK plc, being ranked number one yet again in the Access to Medicine Index. Our three priorities - Innovation, Performance and Trust - help us realise our ambition for patients and drive robust growth for our shareholders and people.

Business performance Pharmaceuticals

Our business continuity measures ensured consistent growth of our focus brands, with Augmentin, Calpol, Ceftum, T-Bact and Neosporin featuring amongst the top brands in the Indian Pharmaceuticals Market (IPM). However, some of our leading categories such as Dermatology had early setbacks due to physical distancing restrictions during the Covid-induced lockdowns.

Our pharmaceutical manufacturing team worked round the clock to fulfil increased demand for our key brands, especially for Calpol (paracetamol). This effort ensured that patients continued to have access to this important medication during the pandemic. The first quarter of the financial year coincided with the second wave of the pandemic and presented an opportunity to serve significant sections of our population with brands like Calpol. Therefore, many of our key brands witnessed strong growth fueled by disciplined execution, enhanced digital capabilities and agility in the market, resulting in again in market share and higher-than-market evolution index.

Adapting to the Covid lockdowns, your Companys field force remained active on the ground, using digital channels effectively to engage remotely with Healthcare Professionals (HCPs). Your Companys robust digital infrastructure proved to be a reliable means of communicating the science behind our medicines. Touchpoints were increased to over 40 million across teams through enhanced use of telecalling, webinars and emailers, coupled with adoption of technology platforms for virtual detailing such as Veeva Engage. Your Company also successfully launched a line extension with Augmentin ES deploying technology in reaching out to key specialists in ear, nose and throat (ENT) and Paediatrics practice.

Throughout the period of multiple pandemic waves, your Company focused on skill enhancement of its field force to upgrade their skills and efficiencies amid the new norms of functioning. As a result, your Companys representatives were amongst the first in the industry to prudently adopt all necessary personal safety and physical distancing guidelines to resume field work. In line with the changing business realities, your Company adapted its in-clinic communications to the need for delivery of key messages with greater immediacy and impact.

These initiatives led to market share consolidation and gains in competitive performance for your Company across the categories of Anti-infectives, Pain, Dermatology and Vitamins. Augmentin and Calpol have figured consistently amongst the top 5 brands in the Indian Pharmaceuticals Market (IPM) with Evolution Index above market.

Your Company also repositioned Eltroxin as a women- centric brand. An HCP-focused campaign was started for creating awareness and better diagnosis in hypothyroidism roping in Indian playback singer, Neha Kakkar, as the brand ambassador for Eltroxin to share her experiences about her thyroid disorder.

Besides leading the topical antibiotics market, your Company has been making gains consistently in the topical corticosteroids and emollient categories. Within the growing moisturiser category, Physiogel emerged as one of the fastest growing brands driven by some innovative social media campaigns and online organised trade channels. Even though Dermatology was one of the impacted segments during Covid, your Company further consolidated its leadership in this segment during the year by remaining digitally engaged with key opinion leaders. Virtual platforms, such as Tell e-Skin, PG-ki-Paathshaala were deployed during the lockdown periods to disseminate the opinions and information shared by Dermatology experts with general practitioners, paediatricians and PG students on diagnosis and use of steroids, thereby improving the outcome for patients.

Biologicals

Over the past couple of years, globally, the role of vaccines has not only been better understood but has also been appreciated, giving GSK an opportunity to protect people as well as deliver growth. Your Company currently markets 10 vaccines across age groups - infants, adolescents and adults.

The financial year 2021-22 saw six of your Companys vaccines featuring amongst the top 15 vaccines in the self-pay market (IQVIA MAT March 2022). Though the vaccines self-pay market is estimated to be over Rs 2,285 crores, it is currently not reflecting any value growth (IQVIA MAT March 2022) on account of the slower uptake of vaccination during the Covid waves.

Your Company launched vaccination awareness campaigns during the year. Former captain of the Indian national cricket team and prolific scorer of sixes, MS Dhoni, featured in the 6 in 1 vaccination campaign to raise awareness about combination vaccination with the tagline ‘Less injections, less pain for infants. Also featured was Kareena Kapoor Khan, Indian actress and an aspirational icon for mothers, in the Health Ka Passport campaign to raise awareness about routine immunisation for children.

During the year, we launched a new vaccination awareness website (www.myvaccinationhub.co.in) that provides parents with vaccination related information.

It also has an interactive vaccination tracker tool, reminding users about missed or upcoming vaccinations.

An innovative and industry-first HCP vaccine ordering app called VaxiKart was also launched. This app enables HCPs to order GSK vaccines from their preferred distributors.

We plan to grow our vaccines business by optimising our portfolio and expanding into newer segments. During the year, we got approval for Herpes Zoster (Shingrix) vaccine for prevention of Herpes Zoster (HZ) and Post-Herpetic Neuralgia (PHN) it causes in adults over 50 years of age. Its launch plans are currently underway.

Specialty

Nucala is the first anti-IL5 drug launched in India (March 2019) for patients suffering from severe eosinophilic asthma (SEA) in adults. Since its launch, Nucala has positively impacted many patients lives across India by reducing exacerbations and hospitalisations, helping patients to reduce and even stop their oral corticosteroids.

We also launched the Nucala auto-injector formulation in June 2021 that enables patients to self-administer Nucala without the need for hospital visits. The autoinjector provided much needed compliance and ease during the pandemic-induced travel restrictions. The commercial and medical teams have actively engaged pulmonologists in the country to disseminate the robust clinical and real-world evidence of Nucala.

During the year, we organised RespiTalk roundtable meetings and forums led by experts on Severe Asthma across India, to increase understanding regarding the diagnosis of severe eosinophilic asthma, along with choosing the right treatment options based on phenotyping.

We launched Trelegy Ellipta in India, the countrys first single inhaler triple therapy (SITT) in a once-daily regime for chronic obstructive pulmonary disease (COPD) patients. The product was approved by the Drugs Controller General of India (DCGI) as a maintenance treatment to prevent and relieve symptoms associated with COPD patients aged 18 and above.

Supply chain and manufacturing excellence

Our manufacturing facility in Nashik, along with our Contract Manufacturing Organisations (CMOs), are consistent with our pursuit of excellence, ensuring that we tided over supply chain disruptions caused by the pandemic, to provide unhindered supply of products to patients. We de-risked operations by enhancing capabilities of existing CMOs and developing alternate product sources in vicinity of demand nodes and devising business continuity plans including re-aligning resources to execute them. Some of the key highlights were:

• Over 3 million safe man-hours without reportable illnesses

• Over 0.7 million safe man-hours without reportable injuries

• Installed 100 KWP Solar PV System

Increase in production capabilities, particularly for products such as Calpol and Eltroxin, expansion of our fleet count and the continued measures of Covid- appropriate behaviours at each of our CFAs were some of the hallmarks that ensured each link of our supply chain remained resilient to ensure last-mile connectivity.

Warehousing and distribution

Responding to the unprecedented challenges during the year, the warehousing and distribution team moved with agility, collaborating with our vast network of stockists, warehouses, and contract manufacturing facilities. This not only improved access to quality healthcare, but also ensured that the supply chain network was not disrupted during the lockdown period.

The warehousing and distribution network comprising of more than 30 contract manufacturing facilities, 26 warehouses and 6,000 stockists continued to provide high levels of customer service on time.

We continued to implement automation and digitalisation initiatives, helping rationalise costs, and driving excellence every step of the way to pharmacies, healthcare professionals clinics and patients.

4. Opportunities, risks, concerns and threats

With the pandemic came lockdowns and resulting disruptions to normal functioning of pharmaceutical businesses. Healthcare professionals continued practising at their clinics, as patient footfall through most of the year continued to remain comparatively low. This impacted prescription generation and demand for pharmaceuticals and vaccines.

Adapting learnings from the pandemic, we put in place agile business continuity processes, ensuring optimum levels of production and supply chain reliability are maintained. Over the medium- to long-term, we remain positive about delivering healthy growth.

Adverse regulations on product prices may impact revenues and profit margins, as we operate in a price- regulated market. We periodically assess our product portfolio to make it more diversified, with focus on high- volume growth products and operational efficiencies to control costs. With the revised National List of Essential Medicines (NLEM), expected to be released by the government later in 2022, we are engaging in various stakeholder discussions on NLEM.

We continue to adopt emerging technologies and expand the use of digital tools to equip our commercial teams with capabilities to better understand the needs of healthcare professionals, through innovations such as the My Vaccination Hub web portal and the HCP Persona Tool, a digital platform which leverages emerging technologies for better understanding of behavioural trends of healthcare professionals.

5. Finance and accounts

Revenue from continuing operations increased by 10% during FY 2021-22. This increase was mainly driven by growth in our General Medicine and Specialty portfolio, where we continued to gain market share in the respective categories. Our focus on key brands helped us revitalise growth, particularly in the Anti-infectives, Dermatology and pain therapeutic areas, as we notched up our strategy to reach more patients. While our Vaccines business was impacted due to low vaccination rates, many of our key brands witnessed strong growth backed by disciplined execution. We continued to maintain leadership in the private vaccines market resulting in market share gains. The revenue from operations for the year are not strictly comparable with that of the previous year, on account of the impacts of Covid-19.

Profit before exceptional items and tax along with EBITDA from continuing operations, increased by 22% and 26% respectively, as compared to previous year. The tax expenses for the year have been impacted by provisions in respect to earlier years towards possible disallowances of expenses which are under litigation. Adjusting for these tax provisions for earlier years and any exceptional items, Profit After Tax has increased by 20%. During the year, your Company also completed the transfer of the trademarks pertaining to ‘Iodex and ‘Ostocalcium brands in India, along with legal, economic, commercial and marketing rights of such brands and other identified assets to GlaxoSmithKline Asia Private Limited, which form part of the profits from discontinued operations.

Despite the difficult external environment, cash generation from operations remained strong during the year and was in line with the good underlying business performance. The Company focused its efforts on achieving working capital efficiencies and faster cash conversion. The Company also continued its efforts towards pursuing refunds from the tax authorities for past years.

There are no loans or guarantees given, securities provided, and investments covered under Section186 of the Companies Act, 2013. The Company has not accepted any fixed deposits during the year. There was no outstanding amount towards unclaimed deposits payable to depositors, as on 31 March 2022. Further, there are no significant or material orders passed by regulators, courts or tribunals, which impact the going concern status of the Company and its future operations. There are also no material changes and commitments affecting the financial position of the Company as on the date of this report.

Financial Ratios

Key Financial Ratios Year ended 31-Mar-22 31-Mar-21
Profitability Ratios
Operating Profit Margin (%) Profit from Operations/ Sale of Products 21.79% 19.48%
Net Profit Margin (%)* Profit after Tax (excl. exceptional)/ Revenue from operations 11.85% 16.61%
Return on Net Worth* Profit after Tax (excl. exceptional)/ Shareholders equity 21.71% 26.37%
EBITDA % EBITDA/Revenue from operations 23.57% 21.76%
Return on Capital Employed Profit before tax (excl. Exceptional) / Net Worth 43.49% 35.90%
Key Financial Ratios Year ended 31-Mar-22 31-Mar-21
Efficiency Ratios
Current Ratio Current assets# / current liabilities 2.19 1.51
Inventory turnover ratio Sale of products / Average inventories 673 6.28
Debtors turnover ratio Sale of products / Average trade receivables 16.58 20.04

Ratios are calculated including profits from discontinued operations but excludes the impact of sale of brands and identified assets and other exceptional items (Refer Note 40 and 55 of the Standalone Financial Statements).

*Net profit margin (%) excluding the impact of tax adjustment of prior years would be 17.19%, Return on Net Worth would be 28.69%.

# Current Assets includes cash and bank balance which is mainly on account of cash received from sale of brands.

6. Regulatory affairs

The following applications were submitted to Central Drugs Standard Control Organisation (CDSCO) for marketing authorisation in India:

• Adsorbed Diphtheria, Tetanus, Pertussis (Acellular Component) and Inactivated Poliomyelitis vaccine I.P (Infanrix-IPV) for active immunisation in infants from the age of two months against diphtheria, tetanus, pertussis and poliomyelitis, as well as a booster dose for children who have previously been immunised with diphtheria, tetanus, pertussis (DTP) and polio antigens

• Label expansion of Mepolizumab Solution for Injection (Nucala) to include two additional indications viz. Eosinophilic granulomatosis with polyangiitis (EGPA) and Hypereosinophilic syndrome (HES) in adults

• Marketing authorisation was successfully obtained for Herpes Zoster (Shingrix) vaccine for prevention of Herpes Zoster (HZ) and PostHerpetic Neuralgia (PHN), in adults 50 years of age or older, along with an alternate ready-to-use liquid formulation of Rotavirus vaccine (Rotarix liquid)

We also applied to CDSCO for two Global Clinical Trial Applications to conduct a multi-country phase 2 study with Belantamab Mafodotin, in participants with Relapsed or Refractory Multiple Myeloma, along with a Phase 1/Phase 2 study with Staphylococcus aureus vaccine, for prevention of staphylococcal infections respectively.

The following Clinical Trial Applications were also approved during the year:

• A Global Clinical Trial Application for conducting a multi-country phase 3 study with Respiratory Syncytial Virus (RSV) Maternal (RSVPreF3) vaccine in India [Study RSV-MAT-012]

• A local Phase 3 Clinical Trial Application for Herpes Zoster Vaccine (Shingrix) [Study Zoster-081]

• A real-world evidence, post marketing observational non-interventional study with Mepolizumab Injection in Emerging Markets [Nucala Effectiveness Study (NEST)]

These filings and approvals will enable timely access to new and innovative therapeutic options and vaccines for patients in India, besides improving compliance and convenience of use with new formulations.

7. Medical affairs and medical governance

During the year, we launched several innovative digital programmes targeted at changing the ways in which we connect with our HCPs and key external experts.

The GSK Anti-infectives medical team has been at the forefront of driving correct science through local, regional, and national meetings, and prestigious congress presentations, as well as participating in industry-wide stakeholder consultations on combating antimicrobial resistance (AMR). The Primary Care medical team delivered over 200 scientific presentations to over 30,000 HCPs and conducted more than 300 one-on-one interactions with experts, including ear, nose and throat specialists (ENTs).

At GSK, we are advancing science through Phase 4 clinical trials that generate evidence on the safety and efficacy of our drugs in patients, along with several successful publications driving strong scientific messages on the appropriate use of antibiotics and reducing AMR.

In 2022, our Medical Affairs team has been leading ‘ASCENT, a programme on Advanced Surgical Conclave for ENTs for disseminating high science to ENTs on advancements in surgery and perioperative infection management.

Through more than 900 scientific presentations to over 30,000 HCPs and approximately 1,500 one- on-one scientific interactions with dermatologists, the Dermatology medical team continued its efforts to drive scientific discussions on appropriate use of topical steroids and various important dermatological diseases. The Dermatology medical team created E-Clinics, a learning platform for post-graduate education of young physicians through case clinics conducted across the country throughout the year.

In addition, the ‘Dermatosis Case Study clinics are designed to exclusively engage key institutional dermatology experts through interesting clinical discussions on systematic approach. The ‘Challenging infectious diseases of skin initiative is aimed at driving interactive, case-based discussions on challenging clinical scenarios in skin infections amongst Dermatologists. The popular ‘PG ki Pathshala continues to be rolled out to help strengthen connect with Dermatology PG students and teachers through robust educational programmes.

Your Company is generating real-world data on Mepolizumab (Nucala) use in India by running clinical studies in patients with severe asthma. The efforts towards generating real world India-specific data in severe eosinophilic asthma would not only help pulmonologists be confident in the safety of newer biologics but also ensure the eligible patients get the right treatment at the right time. Your Companys medical team is also ensuring that the patients are supported with the timely diagnosis of severe eosinophilic asthma as well as continue their biologic therapy from the convenience of their homes despite Covid-related restrictions. As a team, we have delivered over 1,300 scientific presentations through virtual and physical GSK standalone scientific promotional meetings (SPMs), national and regional webinars and focused group discussions, engaging more than 50,000 HCPs across the country.

8. Human resources

GSK aims to be a Company where outstanding people thrive. We provide an inclusive work environment in which we develop our talent, reward great performance, protect our people and value our differences. We believe that such an environment for our employees is essential to best deliver on our ambition for patients.

Your Company was recognised as one of Indias Best Workplaces in Health & Wellness 2021 by Great Place to Work Institute. Your Company was also recognised as one of the 100 Best Companies for Women in India 2021 by Working Mother and Avtar, a diversity, equity and inclusion solutions firm.

Organisational culture

GSK has globally rolled out its new purpose, strategy and culture to deliver a step-change in growth and performance. To bring alive this change in India, cultural immersion workshops were conducted with senior management personnel to familiarise them with nuances of the change and cascading them to their teams.

Your Company conducted an organisation-wide annual culture survey to undertake a dipstick of the perception of culture. A score of 91% in the survey results demonstrated strong, continued engagement and connect amongst employees. They expressed confidence in our purpose, doing the right thing in addressing health needs, prioritising patient and product safety and acting with integrity and care.

Inclusion and diversity

Our inclusion and diversity agenda is central to the organisational culture that we are striving to foster within GSK. Your Company has strengthened the diversity in its workforce with 26% female diversity in hiring.

Your Company aims to ensure that its employees are empowered to be themselves, feel good and keep growing. Other supportive initiatives such as the Womens Leadership Initiative, which functions as one of our Employee Resource Groups (ERGs), are being prepared to identify and report inclusion-related issues. Spectrum, our other ERG, provides a similar supportive and nurturing forum for GSK employees across the spectrum of sexual orientation or gender identities, where they have the freedom to truly be themselves.

WeLeAP is an initiative which aims to develop women professionals by enhancing their confidence, credibility, capability and connections. Another initiative involves hiring more young women in sales roles from pharma and science colleges located in tier-2 cities. Another pilot underway is Resurge or Second Careers for Women programme. As a part of this initiative, we are working with various NGOs and civil society organisations to induct women on a career break, after matching skillsets with role requirements. We are also leveraging digital platforms such as the Woloo app, which helps women employees on the move to easily locate safe and hygienic washrooms.

Learning and development

GSK has developed several in-house competencies to meet the diverse learning needs of our employees.

Our virtual university, Keep Growing Campus, provides a blended e-learning and experiential learning space to enable on-the-go learning.

Our First Line Leaders (FLLs) undergo training through the Lakshya programme which serves to spot and develop potential talent through an academia- oriented approach. This year, another programme called First Line Leader Training was conducted for all first-time team leaders, with a focus on four themes — ‘motivate, ‘focus, care and ‘develop.

Career progression trainings are offered through programmes like Catalyst that work with FLLs over a four-month period and use a blend of training, development and evaluation to prepare them to take on roles of Second Line Leaders (SLLs).

Your Companys One80 programme works at building openness and interactivity within the relationship that managers share with their teams. As a part of this programme, team members give feedback on their managers, which is also aligned with performance and evaluation systems and help people managers refine their interactions with their teams.

The Global Employee Recognition is an avenue through which managers can recognise employees championing GSKs priorities and achieving its objectives. A sales incentive scheme is also in place which recognises both productivity and outcomes through efforts put in by our field force.

Leveraging technology to deliver solutions to employees

The Service Now portal, an online case management and resolution platform, was introduced to resolve employee queries related to various HR processes that could be raised via tickets, tracked and addressed. The introduction of this platform has ensured resolution of HR-pertinent queries for employees across the organisation with transparency and accountability.

Employee relations

Your Company works with unions for the mutual benefit of its members and provides them forums to voice their opinions and effectively represent themselves. Your Company considers these unions to be an integral part of its business and growth.

Four unions, based on the selling area zones (North, East, West and South), represent the Medical Business Associates (MBAs) in their respective locations. The union in the West Zone also represents employees of the Nashik manufacturing facility. The management and all the four unions of your Company have recently signed long-term wage and benefits settlements, operative for a period of four years i.e. till 30 September 2023. Your Company is grateful to its unions for their positive contributions and maintenance of cordial industrial relations.

Prevention of sexual harassment at the workplace

Your Company has a policy to make the workplace safer, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (India) and the rules thereunder. Your Company has established Internal Committees (ICs) across different zones and manufacturing facilities to address any kind of sexual harassment (SH) complaints. All the members of these ICs are trained to handle such complaints. During the year, your Company received two sexual harassment complaints and two sexual harassment complaints were already under investigation. All four complaints have been closed. Your Company aims to further increase awareness around prevention of sexual harassment and the working of ICs through refresher e-learning modules and training programmes.

Employee health and well being

Building a positive environment for our employees and taking care of their holistic healthcare needs has been an ongoing priority.

Our preventive healthcare programme, Partnership for Prevention (P4P), continues to be available to all our permanent employees and their dependents, as a corollary of the group medical insurance programme, providing 40 preventive healthcare services at little or no cost. These include immunisation for adults and children, preventive examinations covering disease clusters such as cardiovascular health and diabetes, communicable diseases, cancer screenings and womens health issues.

The Employee Assistance Programme (EAP) enables access to professional, confidential counselling through a 24-hour helpline to your Companys employees.

Effective January 2022, existing coverages under the medical insurance scheme for your Companys employees in domains such as maternity coverage and home quarantine expense coverage have been increased. In alignment with our larger inclusion and diversity initiatives, gender reassignment surgery has also been added to the list of coverages.

GSK designed several special support packages to help our employees and their families through the Covid pandemic.

• Oxygen support: Oxygen concentrators were available at the GSK offices at Ahmedabad, Bengaluru, Chennai, Delhi, Gurugram, Hyderabad, Kolkata, Lucknow, Mumbai, Nashik and Patna.

Oxygen concentrators were made available on first-come, first-served basis for our employees and their dependents.

Accommodation to facilitate self-isolation:

We partnered with GIG hospitality, a hotel service provider, to offer rooms at very reasonable rates, in more than 130 mid-size hotels, across 29 cities for those seeking self-isolation on a self-pay model.

Home isolation packages: In association with PORTEA Medical, GSK devised three home isolation programmes which could be used by asymptomatic to mild or moderate symptomatic Covid positive patients.

These timely initiatives helped to alleviate the difficulties that many families faced during those difficult months.

Environment and Human Health, Safety, and Security (EHSS)

The GSK head office in Mumbai was conferred the ‘Safe Place to Work recognition by Equinox Labs, a food, water and air testing lab. Your Company also introduced 12 ‘Life Saving Rules with an aim to ensure all employees get home safely. Nine of these rules are for job-specific roles while three of them are applicable to personnel across departments.

Your Company is subject to Extended Producer Responsibility (EPR) obligations, and we have collected 1,583.31 MT of post-consumption plastic garbage from across India until January 2022. The garbage was subsequently properly disposed of in an environmentally friendly manner. By the end of March 2022, we had collected 1,652.75 MT of total plastic garbage. Our Nashik manufacturing facility has been focused on Single Use Plastic Reduction (SUPR) and has eliminated 268 kgs in 2021. The Nashik site also has programmes in place to reduce water consumption, CO2 emissions, and hazardous waste.

9. Corporate social responsibility (CSR)

Giving back to society is integral to how your Company operates. With continued efforts in CSR activities, we have contributed significantly to society. The focus of our CSR efforts, during the year, was on impacting life-changing and lasting differences in human health by addressing the healthcare burdens of accessibility, affordability and awareness.

Education

The GSK Scholars programme enables meritorious, but financially disadvantaged students to study Medicine from government colleges. Under this scholarship, a sum of upto Rs 1,00,000 is granted over a four- and a half year period to cover the academic expenses incurred for the MBBS programme. The programme aims to make STEM education accessible within the country as it is one of the most expensive educational streams and every year, countless eligible students cannot pursue this line of education due to shortage of funds.

117 32 million 10,000+ 5,200+
students benefitted across 15 states tablets contributed for elimination of LF children supported through water, sanitation and hygiene (WASH) initiatives employee volunteering hours

Partnering India to eliminate lymphatic filariasis (LF)

In India, more than 650 million people are at risk across 272 districts. We have been donating albendazole tablets, used during mass drug administration (MDA) to the World Health Organization (WHO) since the inception of the programme in 2000. We have donated nearly 3 billion albendazole tablets to WHO for distribution in affected areas and have pledged to donate albendazole for as long as needed to help eliminate LF as a public health issue from the country.

During FY 2021-22, 32 million tablets were contributed for elimination of LF. We partnered with Project Concern International (PCI) and have been working to mobilise lymphedema and hydrocele patients and connect them with the services in endemic districts of Unnao, Sitapur in Uttar Pradesh. The project assists the state government in updating the line listing of patients—both hydrocele and lymphedema (based on the symptoms).

‘Trust in Science initiative

The life sciences industry faces acute shortage of well-trained and experienced biostatisticians and bio-informatics professionals. Under our ‘Trust in Science (TiS) initiative, your Company partnered with the Regional Centre of Biotechnology (RCB), an academic institution established by the Department of Biotechnology, Government of India, to support 12 PhD students over almost seven years, as they pursue their research. Through this, we hope to promote scientific and technological cooperation that has mainstream impact.

Employee volunteering

In 2021, we contributed over 5,200 volunteering hours towards varied social causes. Volunteering is one of the key mechanisms that we have chosen to channelise our employees towards societal good. At GSK, we strive to strengthen communities and bring the change that we wish to see in this world through volunteering.

The CSR policy of GSK can be accessed on our website (https://india-pharma.gsk.com/media/6492/csrpolicyrevised-310715.pdf). A detailed report on the CSR programmes undertaken during the year is provided in Annexure ‘A to the Directors Report of this Annual Report.

10. Risk management

The significance of risk management holds an important place in the management of a healthcare company. We focus on delivering products to serve millions of patients across the world. Hence, risk management goes beyond ensuring business success, gaining investor confidence or ensuring regulatory compliance. An adverse impact on the business could result in disruption to patient service, directly impacting quality and sustenance of human life.

We take immense pride in our culture, including the maturity of our risk management processes. Our risk management culture is driven via the Internal Control Framework (ICF) model which is approved by the Global GSK Leadership Team (GLT) and global Risk Oversight and Compliance Council (GROCC). At a country level, the Risk Management and Compliance Board (RMCB) is responsible for promoting the ‘tone from the top and an appropriate risk culture, in addition to ensuring effective oversight of internal controls and risk management processes. The risk management process is monitored by the RMCB on a regular basis (minimum bimonthly meetings). The Risk Management Framework, covering business, operational and financial risks, is also reviewed twice a year by the RMCB and presented to the Risk Management Committee of the Board of Directors.

Each function maintains risk registers where each risk is described, the root cause is identified, along with existing controls and monitoring. Mitigation actions along with owners and timelines are agreed upon. All significant risks are discussed at the bimonthly RMCB and then subsequently, at the Risk Management Committee of the Board at least twice a year.

Real-time internal risk management processes ensure that your Company is able to manage any crisis, including black-swan events like the global pandemic. The maturity of the process has changed the approach from risk mitigation to risk-resilience. This has helped with timely business decisions aligned with the risk appetite and culture, helping to ensure our brands remain available to our patients and customers, during the most challenging pandemic times.

At present, in the opinion of the Board of Directors, there are no risks which may threaten the existence of GSK.

Vigil mechanism

Your Company has a ‘Speak Up programme which offers people, whether working for GSK or not, a range of channels to voice concerns and report any misconduct. The Speak Up channel and procedures encourage everyone to raise concerns about potential unethical, illegal or inappropriate conduct and assures confidentiality and protection from retaliation, retribution or any form of harassment to those reporting such concerns.

An independent third party manages these reporting lines and calls are logged through their central system to ensure the integrity of the programme.

We endeavour to treat all questions or concerns about compliance in a confidential manner, even if the person reporting a question or concern identifies himself/herself. We also have an extensive and widely communicated process to prevent and take disciplinary action, and deter acts of sexual harassment. The Speak Up channels can be accessed on our website (https://gsk.com/speakup).

We also have in place a whistleblower policy, to provide a mechanism for its employees/external stakeholders to approach local/group management or the Chairperson of the Audit Committee in case of any grievance or concern (accindrx. audicomitteechairmanqskindiarx@qsk.com).

The GSK Code can be accessed on our website

(https://www.gsk.com/en-gb/about-us/codes-and-standards/codes-and-standards).

11. Internal control framework

We conduct our business with integrity and high standards of ethical behaviour, in compliance with the laws and regulations that govern the business. Our Internal Control Framework (ICF) is a comprehensive enterprise-wide risk management model and supports the continuous process of identification, evaluation and management of the Companys risks. ICF is supported by standard operating procedures, policies and guidelines, including suitable monitoring procedures and self-assessment exercises.

Compliance with laws and regulations is monitored through a well-crafted framework. As required by the Companies Act 2013, we have implemented an Internal Financial Control (IFC) framework. We continue our annual Independent Business Monitoring (IBM), designed by GSK plc to review activities, data, exceptions and deviations, for monitoring and improving the quality of operations.

As part of the due diligence activities for onboarding of vendors and third parties engaged by us, they are required to confirm compliance with our corporate values through a detailed Third Party Oversight (TPO) process.

As an annual exercise, our senior executives review and confirm adherence to GSK plcs IFC. The GSK Code (https://www.gsk.com/media/7727/the-code- printable-version.pdf) sets out the commitments your Company and its employees make to get ahead together - so we can deliver on our ambition in the right way, bring our culture to life and make GSK an exciting and inspiring place to work. During the year, an enterprise-wide training was undertaken for all employees on ‘Protecting GSK everyday, ‘Focusing on Anti Bribery & Corruption (ABAC) and ‘Creating an Inclusive Workplace. These trainings presented scenarios that explored our values and their application to our ways of working and risks such as those associated with information security, privacy, Anti-Bribery and Corruption (ABAC), inclusion & diversity, and conflicts of interest.

4. Directors

Ms. P. Thakur, ceased to be whole-time Director & Chief Financial Officer of the Company with effect from closing hours of 31 March 2022. Mr. M. Dawson would cease to be Director with effect from 30 June 2022. The Board places on record their appreciation of the valuable services rendered by Ms. P Thakur and Mr. M. Dawson during their tenure and for their contribution to the deliberations of the Board.

Mr. S. Venkatesh was re-appointed as Managing Director for a period of one year from 1 April 2022. Mr. J. Chandy was appointed as Whole-time Director and Chief Financial Officer of the Company for period of three years from 1 April 2022. Both their appointments have been approved by the Members through Postal Ballot.

As per the provisions under Section 149 of the Companies Act, 2013, the Board and Members have approved the appointment of all the existing Independent Directors viz. Mr. P. V. Bhide, Mr. N. Kaviratne, Mr. A. N. Roy and Mr. D. Sundaram for second term of five years from 30 March 2020 and Dr. (Ms.) S. Maheshwari for a first term of five years from 18 May 2020. Mr. Manu Anands first term of five years would be approved in upcoming AGM by the Members.

The Independent Directors have submitted the Declaration of Independence, as required pursuant to Section 149 (7) of the Companies Act, 2013, stating that they meet the criteria of Independence as provided in sub-section (6).

During the year ended 31 March 2022, seven Board & six Audit Committee Meetings were held, the details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

5. Remuneration Policy and Board Evaluation

In compliance with the provisions of the Companies Act, 2013 and Regulation 27 of the Listing Obligations & Disclosures Regulations (LODR), the Board of Directors on the recommendation of the Nomination & Remuneration Committee, adopted a Policy on remuneration of Directors and Senior Management. The Remuneration Policy is stated in the Corporate Governance Report. Performance evaluation of the Board was carried out during the period under review. The details are given in the Corporate Governance Report.

6. Familiarization programmes for the Independent Directors

In Compliance with the provisions of LODR, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibilities as Directors, the working of the Company, nature of the industry in which the Company operates, business model, etc. It is also available on the Company website:

http://india-pharma.gsk.com/en-in/investors/shareholder-information/policies/.

7. Particulars of Contracts and Related Party Transactions (RPT)

In line with the requirements of the Companies Act, 2013 and LODR, your Company has formulated a policy on RPT. All RPTs entered into, during the year ended, were on arms length basis and were in ordinary course of business. There were no materially significant RPTs with the Promoters, Directors or Key Managerial Personnel which may have a potential conflict of interest of the Company at large. The Policy of RPTs can be accessed on the Company website:

http://india-pharma.gsk.com/en-in/investors/shareholder-information/policies.

All RPTs are placed before the Audit Committee for review and approval. Prior omnibus approval is obtained for RPTs on a quarterly basis for transactions which are of repetitive nature and / or entered in the ordinary course of business and are at arms length. All RPTs are subject to independent review by a reputed accounting firm to establish compliance with the requirements of RPTs under the Companies Act, 2013 and LODR.

8. Directors Responsibility Statement Your Directors confirm:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31 March 2022 and of the profit of the Company for the year ended on that date;

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis;

(v) that proper internal financial controls laid down by the Directors were followed by the Company and such internal financial controls are adequate and were operating effectively and;

(vi) that proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and were operating effectively.

9. Annual Return

In line with the requirement of the Companies (Amendment) Act, 2017, effective from 31 July 2018, the extract of annual return, is no longer required to be part of the Boards Report. However, copy of the Annual Return is available on the Companys website (https://india-pharma. gsk.com/en-in/investors/shareholder-information/annual- return/).

10. Corporate Governance & Business Sustainability Report

Your Company is part of the GSK plc group and conforms to norms of Corporate Governance adopted by them.

As a Listed Company, necessary measures are taken to comply with the Listing Obligations & Disclosures Regulations, 2015 (LODR) with the Stock Exchanges. A

Business Responsibility Report, describing the initiatives taken by your Company from an environmental, social and governance perspective, given in Annexure ‘B, forms a part of this Report. A report on Corporate Governance, along with a certificate of compliance from the Auditors, given in Annexure ‘C, forms a part of this Report.

11. Auditors

As per the provisions of section 139 of the Companies Act, 2013, Deloitte Haskins and Sells LLP, Chartered Accountants were appointed as the Statutory Auditors of the Company for a period of five years at the 92nd Annual General Meeting held on 25 July 2017 to hold office from the conclusion of the said Meeting till the conclusion of the 97th Annual General Meeting to be held in 2022 on a renumeration to be determined by the Board of Directors.

Subject to the approval of the Members, the Board of Directors has recommended the re-appointment of Deloitte Haskins and Sells LLP, Chartered Accountants as the Statutory Auditors of the Company for the second term of five years effective conclusion of this Annual General Meeting. Members attention is drawn to a Resolution proposing the reappointment of Deloitte Haskins and Sells LLP as Statutory Auditors of the Company, which is included as Item No 4 of the Notice convening the Annual General Meeting.

Pursuant to the provisions of section 204 of the Act, and the Rules made there under, the Company has appointed Parikh & Associates, Practicing Company Secretaries, to undertake Secretarial Audit of the Company for the financial year March 31,2023. The Report of the Secretarial Auditor is annexed to the Board Report as Annexure ‘D which forms a part of this Report. The Secretarial Audit Report does not contain any qualification, reservation, or adverse remark.

Pursuant to Section 148 of the Companies Act, 2013, the Board of Directors on the recommendation of Audit Committee have appointed R. Nanabhoy & Co., Cost Accountants for conducting the audit of the cost accounting records maintained by the Company for its Formulations for the year 2022-2023. The Committee recommended ratification of remuneration for year 202122 to the Members of the Company at the ensuing Annual General Meeting.

12. Transfer of Equity Shares Unpaid/Unclaimed Dividend to the Investor Education Protection Fund (I EPF)

In line with the statutory requirements, the Company has transferred to the credit of the Investor Education and Protection Fund set up by the Government of India, equity shares in respect of which dividend had remained unpaid/ unclaimed for a period of seven consecutive years within the timelines laid down by the MCA. Unpaid/unclaimed dividend for seven years or more has also been transferred to the IEPF pursuant to the requirements under the Act.

13. Compliance with Secretarial Standards

The Board of Directors affirms that the Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India (SS1 and SS2) respectively relating to Meetings of the Board and its Committees which have mandatory application.

14. General

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated in section 134(3) M of the Companies Act, 2013, and the rules framed there under is attached herewith as Annexure ‘E which forms a part of this Report. The Disclosures pertaining to the remuneration and other details as required under section 197(12) of the Companies Act, 2013 and the rules made thereunder is enclosed as Annexure ‘F which forms a part of this Report. Pursuant to section 129(3) of the Companies Act, 2013, a statement in form ‘AOC-1 containing salient features of the Financial Statements of the Subsidiary Company is attached. Pursuant to section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014, a statement in form ‘AOC-2 relating to material contracts or arrangement or transactions at arms length basis of Company is attached.

Although the audited statements of accounts, relating to Companys subsidiary is no longer required to be attached to the Companys Annual Report, the same is enclosed as and in way of better disclosure practice.

The information relating to top ten employees in terms of remuneration and employees who were in receipt of remuneration of not less than Rs 1.02 crores during the year or Rs 8.5 lakhs per month during any part of the year forms part of this report and will be provided to any Member on a written request to the Company Secretary. In terms of Section 136 of the Act, the said report will be available for inspection of the Members through electronic mode up to the date of Annual General Meeting. The Members may write an email to in.investorquery@qsk.com by mentioning "Request for Inspection" in the subject of the email.

15. Acknowledgments

The Directors expressed their appreciation for the contribution made by the employees to the significant improvement in the operations of the Company and for the support received from all other stakeholders, including members, doctors, medical professionals, customers, suppliers, business partners, and the government.

The Board and the Management of your Company are indeed appreciative of the substantial support being received from GSK plc, the parent organization, in providing new healthcare solutions which are products of its discovery labs and the technology improvements which benefits your Company immensely.

On behalf of the Board of Directors
Ms. R. S. Karnad
Mumbai, 16 May 2022 Chairperson