glenmark pharmaceuticals ltd share price Management discussions

Source: IQVIA Market Prognosis, Sep 2022: IQVIA Institute, Nov 2022.

1. Covers Asia, Middle East and Africa, Russia, CIS, and Latin America

Average conversion rate in 12M FY 2022-23 considered as H 80.22 / USD 1.00 Average conversion rate in 12M FY 2021-22 considered as H 74.38 / USD 1.00

1. According to IQVIA MAT March 2023, Glenmark was ranked 2nd in the Respiratory segment of the Indian Pharmaceutical Market, with 1.5x higher value growth compared to the overall Respiratory market. Glenmark is now ranked 2nd across Dermatology and Respiratory segments in India.

2. Glenmarks Europe business recorded revenues worth USD 225+ Mn, continuing the strong growth momentum of the last two years.

3. Glenmarks ROW business recorded 20%+ growth across all sub-regions, driven by key product launches in the Respiratory and Dermatology segments.

4. RYALTRIS? was approved in the USA and was launched by Hikma, Glenmarks commercial partner.

5. In FY23, RYALTRIS? was launched in 12 markets by the Company / through a partner; in total, RYALTRIS? has now been commercialized in 27 markets across the globe.

6. Proof-of-Concept (PoC) studies were initiated for four clinical oncology assets that are part of the Glenmark / Ichnos development pipeline; study read-outs expected to be completed in FY24 for all four molecules.

7. Ichnos partnered asset in immunology, ISB 880, progressed to Phase 1 studies, which were initiated by Ichnos development partner, Almirall.

GPL is primarily focused on building a global formulation business with Branded, Generics and OTC segments in the therapy areas of Dermatology, Respiratory and Oncology. It also has a strong regional/country-specific presence in other therapeutic areas like Diabetes, Cardiovascular and Oral Contraceptives.

During the year under review, the India Formulations business recorded revenue of H 40,298 Mn as against H 40,855 Mn in the previous financial year, registering a decline of -1.4%. The growth was muted due to a high base in FY22 due to sales of COVID-19-related products, as well as certain other one-time impacts during FY23. The contribution of the India formulations business to the total revenues in FY23 was 31%, compared to 33% in FY22.

Glenmarks India business continued to significantly outperform industry growth rates. Based on IQVIA MAT March 2023, excluding the Covid portfolio, Glenmarks India business grew by 12.3% compared to the overall industry growth of 9.5%. Glenmarks India Formulation business is ranked 14th with a market share of 2.12%.

In terms of key therapeutic areas, Glenmark is now ranked 2nd in the Respiratory segment, continues to be ranked 2nd in the Dermatology segment, 5th in the Cardiac segment and 14th in the Diabetes segment. Glenmarks Dermatology segment market share increased to 7.35% from 7.12% last year; the Companys share in the Respiratory market increased to 5.59% from 5.44% last year; and the Cardiac segment market share increased to 5.17% from 4.66% last year. Glenmarks share in the Diabetes market was 2.31%.

(Source- IQVIA MAT March 2023)

Glenmarks performance and revenue contribution across the key therapy areas based on IQVIA MAT March 2023:

The Company launched multiple new products during the year and continued to gain market share in some of the key launches across segments. In the Respiratory segment, Glenmark became the first company in India to market Indamet? - an innovative fixed drug combination of Indaceterol, a long-acting beta-agonist and mometasone, an inhaled corticosteroid, for the treatment of uncontrolled asthma. In the Diabetes segment, Glenmark launched multiple products over the course of FY23. Some of the notable launches included sitagliptin under the brand name SITAZIT? and its fixed dose combinations with metformin and dapagliflozin respectively; teneligliptin + pioglitazone Fixed-Dose Combination drug for Type 2 Diabetes under the brand name Zita Plus Pio?; lobeglitazone 0.5mg, under the brand name LOBG?; Fixed-Dose Combination (FDC) of Teneligliptin (20 mg) + Pioglitazone (15 mg) + Metformin (500mg/1000mg) SR under the brand name Zita-PioMet™; Lobeglitazone + Metformin under the brand name LOBG-M?. In the Cardio-Vascular segment, Glenmark launched Sacubitril + Valsartan under the brand name, Sacu V™ for the treatment of heart failure. The sacubitril-valsartan combination belongs to the class ARNI (Angiotensin receptor neprilysin inhibitor). This drug helps reduce the risk of cardiovascular related deaths and hospitalization.

India Formulations Top Brands in the IPM 300 Brands League According to IQVIA MAT March 2023, Glenmark has the following nine brands among the top 300 brands in the Indian Pharmaceutical market:

Going forward, the India Formulation business will continue to keep a focused approach and strengthen the key therapy categories to continuously outperform the broader market. To bolster the Companys performance further, higher digital adoption will be a key lever in the current market scenario. Glenmark will continue to invest in new launches and will target expanding market share in its existing product categories.

GCC business clocked a revenue of H 2,330 Mn, marking a year-on-year growth of 30%. This growth can be attributed to the expansion of the product range across the three flagship brands. Candid? Powder maintained its market leadership and showed a sharp recovery in sales during the first half of FY23. Candid? Prickly Heat Powder also had a strong year, having been launched in the latter half of FY22. New products such as La Shield? Pollution Protect, La Shield? Probiotic Moisturizer and Scalpe? Pro Shampoo also contributed to business growth in FY23. Candid Powder™ delivered revenue growth of 17% for FY23. The La Shield™ portfolio delivered 73% growth in FY23. Finally, the Scalpe+™ portfolio recorded 13% growth in FY23.

The North America business registered revenues from the sale of finished dosage formulations of H 31,041 Mn (USD 387 Mn) in FY23 as against revenue of H 30,366 Mn (USD 408 Mn) for FY22, recording a growth of 2.2%. In FY23, the North America business accounted for 24% of the total revenue, compared to 25% in FY22.

In FY23, Glenmark was granted approval of 10 Abbreviated New Drug Applications (ANDAs), comprised of 6 final approvals, 2 Prior Approval Supplement approvals (for a new strength or formulation) and 2 tentative approvals. Notable approvals include Sodium Phenylbutyrate Tablets USP, 500 mg; Nicardipine Hydrochloride Capsules; and Clindamycin Hydrochloride Capsules. The Company filed a total of 8 ANDA applications throughout the fiscal year 2023. In FY24, the Company plans to file additional 10-12 ANDAs.

Glenmark successfully launched 8 new products during the fiscal year 2022-23, consisting of a mix of immediate-release oral solids and an injectable. Notable launches include Ezetimibe Tablets USP; Abiraterone Acetate Tablets USP, 500 mg; Fingolimod Capsules, 0.5 mg; Sodium Phenylbutyrate Tablets USP, 500 mg; Nicardipine Hydrochloride Capsules; Bumetanide Injection, 1 mg/4 mL (0.25 mg/mL) Single-Dose Vials; and 2.5 mg/10 mL (0.25 mg/mL) Multi-Dose Vials, and Teriflunomide Tablets. Glenmark launched one of the first generics, Teriflunomide (Aubagio?) Tablets. The Company also announced an exclusive distribution agreement with Cediprof for U.S. FDA-approved Mixed Amphetamines Immediate-Release Tablets.

The Company continues to develop a strong portfolio of complex generics filings, especially in injectables, and the respiratory segment. Glenmark is currently developing a generic Flovent pressurized metered dose inhaler (pMDI); a clinical trial is currently ongoing and Glenmark expects to file the ANDA in FY24. The Company intends to file at least one more generic respiratory pMDI in the U.S. in FY24 and to maintain its filing momentum thereafter.

As of March 31, 2023, Glenmarks marketing portfolio includes 183 generic products authorized for distribution in the U.S. market. The Company currently has 45 ongoing applications in various stages of the approval process with the U.S. FDA; 21 of which are Paragraph IV applications.

The Company and its US subsidiary (Glenmark Pharmaceuticals Inc., USA) have, subject to final documentation and approval of the Court, after the end of the accounting year, arrived at a settlement with Three Plaintiff Groups collectively representing all the claims against the Company and Merck in relation to multiple antitrust and consumer protection lawsuits, including a class action, consolidated in the Eastern District of Virginia, U.S. (the ‘Court), for a total amount of US$ 87.5 million, payable over two financial years. The final settlements will be in accordance with the separate agreements entered into with each of the plaintiff groups and will be subject to final approval by the Court. The settlements will make it clear that the Company denies each and every one of the allegation against it, and the settlements are not on the basis of the Company having conceded or admitted any liability, offence, wrongdoing or illegality.

After achieving the major milestone of exceeding annual sales of USD 200 Mn in FY22, Glenmark Europe operations revenue sustained its strong growth in fiscal year 2023. The revenues of the European formulations business totaled H 18,094 Mn in FY23, as against H 15,218 Mn in FY22, recording 18.9% YoY growth. During FY23, the Europe business contribution to the total revenues was 14%, compared to 12% in FY22. The growth was led by healthy performance in both markets of Western Europe (WEU) and Central and Eastern Europe (CEE), with most markets recording robust double-digit growth.

Key markets in the CEE, such as the Czech, achieved strong secondary sales growth of over 20% for the fiscal year 2023. This growth was an outcome of an uptick in the base business as well as new product launches during the year. The Western European business clocked high double-digit growth with markets like the United Kingdom and Spain growing substantially. Among the key markets, the UK recorded remarkable growth on the back of key launches in the generics business. Glenmark ranks among the top 15 companies in the generics market of Germany. The

Company continued to launch multiple new products across various markets in the European region.

Glenmarks respiratory portfolio in Europe continues to do well. The Company has launched RYALTRIS? in 15 markets in Europe, either directly or via its commercial partner, Menarini. The product has received strong coverage and acceptance within the first few months of launch across most markets. Over the next 18 months, RYALTRIS? will be launched in another 15 markets, covering the entire European region. Apart from RYALTRIS?, Glenmark is marketing three other branded respiratory products, namely Salmex? / Asthmex?, Tiogiva and Soprobec. All these brands continue to sustain their market shares, both, in terms of volume and value, particularly in the CEE markets.

Glenmark has a comprehensive strategy to grow its European business going forward. This entails leveraging key drivers such as sustained growth in base business, continued market share gains, new launches in the Respiratory segment and venturing into untapped markets. In the Respiratory segment, the Company has filed four additional respiratory products in the EU markets during FY23, which will be launched over the course of the next two to three years. With a view to driving further market expansion, Glenmark has recently established a presence in the Italian market and will be widening its reach across the country in the upcoming quarters.

In FY23, revenues from the ROW region stood at H 23,777 Mn, as against H 21,672 Mn in FY22, representing a growth of 9.7%. Excluding the one-time sales of COVID-19-related portfolio in FY22, the YoY growth in the ROW markets was ~13% in FY23. The ROW business contribution remained 18% in FY2023, similar to that in FY22. The Company witnessed healthy growth in the base business across all the sub-regions of ROW.

According to IQVIA YTD March 2023 and MAT March 2023 data, Glenmarks Russia business clocked a growth of 10.3% in value versus the overall retail market growth of 1.8%. This expansion has been driven by all key brands, including RYALTRIS?, Ascoril? and Montlezir™. RYALTRIS? continued to gain traction and achieve further market share during the year. Throughout the year under review, four new products were introduced in the market, including Fenismart™ (dimetindene) gel and Phelisans™ (phenasone + lidocaine) ear drops. In terms of key therapeutic areas, Glenmark recorded growth of 12% in value in the Dermatology segment versus the overall Dermatology market growth of 6.7% based on IQVIA^TM MAT March 2023. Among the Dermatology companies in Russia, Glenmark ranks 11th, according to IQVIA^TM MAT March 2023. In the Expectorants market in Russia, Glenmark continues to maintain a leading position, ranking 2nd as revealed by IQVIA^TM MAT March 2023.

The overall environment remained challenging in some of the Asian markets, such as Sri Lanka, Myanmar, Vietnam and Cambodia. Among the key markets in the Asia region, the Philippines has maintained double-digit secondary growth. Glenmarks major therapy areas in Asia are Dermatology and Respiratory, which contribute significantly to overall sales. The Company launched RYALTRIS? in the Malaysian market in the fourth quarter of FY23. It continues to gain market share in Australia, with 18.1% of the top allergic rhinitis products. Launched in South Korea in the third quarter of FY23 by Glenmarks partner, Yuhan, RYALTRIS? has witnessed rapid acceptance, with a double-digit share of the allergic rhinitis combination market.

During FY 2023, the Middle East and Africa region recorded over 20% surge in secondary sales (excluding the one-time sales of COVID-19-related portfolio in FY22). The Kenya market was hit by macroeconomic instability and currency devaluation in FY23. However, Glenmarks business remained resilient, and the Company continued to be ranked 3rd in the overall

Kenya Pharmaceutical Market. Additionally, the Company continued to achieve impressive secondary sales growth in South Africa and Saudi Arabia. Respiratory and Dermatology together accounted for ~60% of the overall sales in the MEA region. RYALTRIS? is expected to further drive growth in the Respiratory segment as the product gets launched across multiple MEA markets in the first half of FY24.

LATAM witnessed strong growth throughout FY23. The Respiratory portfolio remains the primary contributor for Glenmark in the LATAM markets. Glenmark Brazil achieved the highest growth rate among the top 20 companies in the covered market. The Company retained its leading position among the top companies in the covered market of the chronic respiratory segment in Brazil, according to IQVIA MAT March 2023. Secondary sales growth remained strong in Mexico, with Glenmarks business growing by over 60% in value and 50% in units (IQVIA MAT March 2023), while the overall Mexican Pharmaceutical Market grew at ~7% and the growth in the covered market was ~17%.

• As of FY23, marketing applications for RYALTRIS? have been submitted to over 70 countries worldwide. The product has been commercialized in 27 markets, including major markets like the USA, Europe (the UK and multiple markets across the EU), Australia, Russia, South Africa, and South Korea.

• Menarini, Glenmarks partner in the EU, initiated the commercial launch in Austria, Belgium, France, and Spain in the fourth quarter, and intends to launch the product in additional EU markets in FY24.

• Hikma, Glenmarks commercial partner in the USA, launched RYALTRIS? in the second quarter of FY23 and continued to see strong new prescriptions and repeat prescription growth as the allergy season progressed in the country. Hikma also recently served on a clinical advisory board and received positive feedback for RYALTRIS? from 14 senior allergy physicians in the USA.

• Grand Pharmaceutical (China) Co. Ltd., Glenmarks partner in Mainland China, has been conducting the Phase 3 clinical study in China and submitting the marketing authorization application in the second half of FY24.

• The value market shares of RYALTRIS? in key geographies as of March 2023 are listed below (Top10productswithin‘R1A1–NasalCorticosteroids

GRC 54276 (HPK1 Inhibitor) is being developed as an orally administered immunotherapeutic agent for Financial patients with solid tumors. Hematopoietic progenitor kinase 1 (HPK1) is a negative regulator of T and B cell receptor signaling and an attractive therapeutic strategy for immuno-oncology-based treatment for cancer. GRC 54276 is a novel, orally active HPK1 inhibitor. In pre-clinical studies, when administered alone, GRC 54276 has demonstrated substantial anti-tumor effects, which are further enhanced when combined with currently available immunotherapy.

GRC 54276 is currently being evaluated in the First in Human (FIH) Phase 1 clinical trial (GRC 54276-101). Part 1a of the monotherapy phase of the study has been ongoing in India since July 2022, and no dose-limiting toxicities have been observed during the DLT period so far. Acceptance of IND by the U.S. FDA was received in the fourth quarter of FY23. Initiation of Part 1b of the study for GRC 54276 in combination with pembrolizumab and atezolizumab is scheduled to begin in India and the U.S. in Q1 FY24.

The Companys respiratory pipeline asset, GRC 39815 (a RORyt inhibitor), is being developed as an inhaled therapy for treating mild-to-moderate Chronic Obstructive Pulmonary Disorder (COPD). It is now in Phase 1 clinical development in the U.S.

Glenmark Life Sciences is focused on the manufacturing and marketing of Active Pharmaceutical Ingredients (API) products across all major global markets. It also includes captive sales (i.e., the use of API by GPL for its own formulations).

For the fiscal year 2023, Glenmark Life Sciences registered external sales of H 14,582 Mn, as against H 12,709 Mn in FY22, recording a YoY growth of 14.7%.

For the fiscal year FY23, Glenmark invested H 6,833 Mn (USD 85.2 Mn) compared to H 6,627 Mn (USD 89.1 Mn) invested in the previous financial year.

• Consolidated Revenue Growth: 10-11%

• Consolidated R&D Investment: 8-8.5% of total sales

• Consolidated EBITDA Margin: 19-20%+

• Consolidated Capex: H 6-7 Bn

• Priority to enhance free cash generation for further debt reduction

• Close at least 1 out-licensing deal in the innovation pipeline

1. Growth in Revenue

• Revenue for the period under review was H 129,901 Mn, registering a growth of 5.6% over the previous year. The growth was slightly lower due to the high base in FY22 (as a result of one-time sales of COVID-19-related portfolio). The Europe and ROW regions recorded strong double-digit growth and the API business also registered external sales growth of ~15%.

2. Growth in EBITDA and EBITDA margin

• The company reported EBITDA of H 22,784 Mn, registering a marginal decline of -1.8% over the previous year. The EBITDA margin was 17.5% as against 18.9% reported in the previous year. The reduction in EBITDA margin was due to the increase in employee benefit expenses and other expenses (particularly sales and marketing costs), which was partially offset by an improvement in gross margins during FY23.

3. Research and Development expenditure

• R&D costs in the period under review were H 12,500 Mn, representing 9.5% of total revenues. Of this, expenditure related to Ichnos was H 6,833 Mn.

1. Movement in debt and debt to equity

• Gross debt for the company stood at H 43,477 Mn at the end of FY 23, as against H 36,703 Mn at the end of the previous year. Net debt (after adjusting for cash in hand) stood at H 29,047 Mn at the end of the period under review, as against H 22,598 Mn last year. The increase in net debt was mainly due to the movement in currencies (rupee vs. dollar) as well as an increase in working capital during the year.

2. Capex and its impact on Fixed assets

• Capital expenditure during the year was H 6,327 Mn as against H 7,895 Mn during the last financial year. Of this, Capital expenditure related to Tangibles was H 5,310 Mn as against H 6,121 Mn in the last financial year. Expenditure on Intangibles (including computer software) was H 1,017 Mn, representing a decline of 42.7% as compared to the previous financial year.

3. Working capital management – Receivables / Inventory and working capital cycle.

• The Company had debtors of H 40,986 Mn at the end of the period under review, representing 115 debtor days as compared to H 31,011 Mn and 92 debtor days in the previous year. Similarly, the Company had H 29,778 Mn of inventory, representing 84 inventory days, as compared to H 24,998 Mn and 74 inventory days in the previous year. Net working capital days were 132 days as compared to 98 days in the previous year.

( H in million)

The Company has not transferred any amount out of the profit of the year to the General Reserves.

The Dividend Distribution Policy of the Company has been formulated to ensure compliance with the provisions of Regulation 43A of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (‘Listing Regulations). The policy is uploaded on the Companys website at the link: https://glenmark.b-cdn.net/gpl_pdfs/about_us/Dividend-Distribution-Policy.pdf.

In line with the said Policy, the Board has recommended a Dividend of 250% (H 2.50/- per equity share of H 1 each) to be appropriated from the profits of the F.Y. 2022-23 subject to the approval of the Shareholders at the ensuing Annual General Meeting (‘AGM). The dividend will be paid in compliance with applicable Section of the Companies Act, 2013 (‘Act) & Listing Regulations. The dividend, if approved, will result in an outflow of H 705.42 million.

On Standalone basis the Company achieved gross revenue of H 82,206.62 million as compared to H 81,415.81 million in the previous year and the Standalone operating profit before tax and exceptional item was H 20,677.42 million as compared to H 19,071.13 million in the previous year.

On Consolidated basis the Company achieved a gross revenue of H 129,901.10 million as compared to H 123,049.03 million in the previous year and the Consolidated operating profit before tax and exceptional item was H 16,343.05 million as compared to H 17,021.59 million in the previous year.

The Company has voluntarily provided the Integrated Report, which includes both financial and non-financial information. The Integrated Report also covers aspects such as materiality assessment, forward looking strategy, value creation model, corporate governance, risk management, performance and prospects of value creation based on the six forms of capitals viz. financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital and natural capital.

The Company believes Corporate Governance is at the core of stakeholder satisfaction. As per Regulation 34(3) read with Schedule V of the Listing Regulations, a separate section on corporate governance practices followed by the Company, together with a certificate from the Companys Secretarial Auditor confirming compliance with the aforesaid Regulations forms an integral part of this Report.

Relevant details including profile of Mrs. Saldanha seeking the re-appointment are included separately in the Notice of AGM.

• Appointment of Mrs. Vijayalakshmi Rajaram Iyer (DIN-05242960)asNon-Executive-IndependentDirector:

Pursuant to Regulation 17(1C) of Listing Regulations, the appointment of Mrs. Vijayalakshmi Rajaram Iyer as Non - Executive Independent Director was proposed for the approval of the shareholders within a period of 3 months from the date of her appointment by the Board. The special resolution proposed for the appointment of Mrs. Vijayalakshmi Rajaram Iyer was approved by the Shareholders on 14 April 2023, with requisite majority through Postal Ballot.

All Independent Directors have declared that they meet the criteria of Independence as laid down under Section 149(6) of the Act and Regulation 16(b) of the Listing Regulations. In terms of Regulation 25(8) of the Listing Regulations, all the Independent Directors have confirmed that they are not aware of any circumstance or situation, which exists or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

During the year, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees and reimbursement of expenses incurred by them for the purpose of attending meetings.

In terms of Section 203 of the Act the following are the Key Managerial Personnel (KMP) of the Company:

• Mr. Glenn Saldanha - Chairman & Managing Director

• Mrs. Cherylann Pinto – Whole Time Director - Corporate Services

As per Section 129(3) of the Act, and Listing Regulations, the Consolidated Financial Statements of the Company and all its subsidiaries for the F.Y. ended 31 March 2023 prepared in accordance with Ind AS forms part of the Annual Report. Further, in terms of the first proviso of Section 129(3) of the Act and Rules 5 and 8(1) of the Companies (Accounts) Rules, 2014 a statement containing the salient features, performance and financial position of the subsidiaries in the prescribed Form AOC-1 is appended herewith as Annexure I to the Report. Further, a wholly owned subsidiary of the Company in the name of "Glenmark Healthcare Limited" was incorporated on 12 May 2023.

During the year :

• The Company entered into an agreement with J.B. Chemicals & Pharmaceuticals Limited to divest its cardiac brand, Razel (Rousvastatin and combinations), in India and Nepal. Razel and its combinations are indicated for the management of dyslipidemia.

• The Company entered into an agreement with Eris Oaknet Healthcare Private Limited, a wholly owned subsidiary of Eris Lifesciences Limited to divest the Tail Brands such as Onabet, Halovate, Sorvate, Luligee, Demelan, Aceret, Dosteil, Revize, and Powercort and their sub-brands from its dermatology segment for India and Nepal territories.

The Management Discussion and Analysis Report on the operations of the Company, as required under Schedule V of Listing Regulations is provided in a separate section and forms an integral part of this report.

Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act in the prescribed Form AOC-2 is appended as Annexure II to this report.

All Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature. A statement of all Related Party Transactions is placed before the Audit Committee for its review on a quarterly basis, specifying the nature, value and terms and conditions of the transactions.

The Company avails professional advisory services from Trilegal, a firm in which one of the Directors of the Company is a partner. In terms of the provisions of the SEBI (Listing Obligations and Disclosure Requirements) (Sixth Amendment) Regulations, 2021, the Company has formulated Policy on Related Party Transactions and its Materiality. The policy on Related Party Transactions and its Materiality in line with the SEBI (LODR) (Sixth Amendment) Regulations, 2021 is available on the Companys website at the link: https://glenmarkpharma.com/ about-us/governance/.

In terms of Regulation 23 of the Listing Regulations, the Company submits details of related party transactions as per the format specified in the relevant accounting standards/ SEBI notification to the stock exchanges on a half-yearly basis.

• STATUTORY AUDITORS:

The report given by the Statutory Auditor on the financial statements of the Company forms part of the Annual Report. There is no qualification, reservation, adverse remark or disclaimer given by the Statutory Auditor in their report.

• COST AUDITORS:

The Board, on the recommendation of the Audit Committee, has re-appointed M/s. Sevekari, Khare & Associates (Registration No. 000084) as Cost Auditors to audit the cost records of the Company for the F.Y. 2023-24 at a remuneration of H 2.31 million.

The Company has received consent from M/s. Sevekari, Khare & Associates to act as Cost Auditor for conducting the cost audit of the Company for F.Y. ending 31 March 2024.

Pursuant to Section 148 of the Act, read with The Companies (Cost Records and Audit) Rules 2014, as amended from time to time, the cost audit records maintained by the Company are required to be audited. In terms of the provisions of the Act, the remuneration payable to Cost Auditors is required to be ratified by the Shareholders at the ensuing Annual General Meeting and accordingly, a resolution seeking ratification has been included in the Notice convening the AGM.

Pursuant to the provisions of Section 138 of the Act and the Companies (Accounts) Rules, 2014, the Board, on the recommendation of Audit Committee has appointed Aneja Associates, Chartered Accountant as the Internal Auditor of the Company. The internal audit was also carried out by other audit firms having requisite expertise and resources.

• SECRETARIAL AUDITORS:

In terms of Section 204 of the Act, the Board of the Company at its meeting held on 19 May 2023 has appointed Mr. Surjan Singh Rauthan, proprietor of M/s. S. S. Rauthan & Associates, Company Secretaries, to conduct an audit of the secretarial records for the F.Y. 2023-24.

The Company has received consent from Mr. Surjan Singh Rauthan, proprietor of M/s. S. S. Rauthan & Associates, Company Secretaries to act as the auditor for conducting audit of the Secretarial records for the F.Y. ending 31 March 2024.

The Secretarial Audit Report for the F.Y. ended 31 March 2023 is appended herewith as Annexure III to this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remarks.

The Auditors of the Company have not reported any fraud as specified under the second proviso of Section 143(12) of the Act (including any statutory modification(s) or re-enactment(s) thereof for the time being in force).

There was no change in paid-up share capital in the F.Y. 2022-23.

At the Annual General Meeting of the Company held on

12 August 2016, the Shareholders had approved a Scheme ‘Glenmark Pharmaceuticals Limited - Employee Stock Options Scheme 2016 ("ESOS 2016") under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and other applicable laws, Regulations, etc. for the purpose of granting options to the permanent employees of the Company and its subsidiaries, as applicable. At the Annual General Meeting of the Company held on 29 September 2017 the Shareholders approved the amendment to the Scheme in relation to re- pricing of the options granted from H 800 to H 600 and maximum number of options that would be granted would be upto 1% of the paid up share capital of the Company as at 31 March 2017 i.e. H 282,168,156/- (282,168,156 Equity Shares of H 1/- each) i.e. 2,821,682 options which upon exercise would result in the issue of 2,821,682 shares of H 1/- each.

During the F.Y. 2022-23, no options were issued, exercised, or cancelled. As of 31 March 2023, 78,717 options were outstanding.

On exercising the convertible options so granted, the paid-up equity share capital of the Company will increase by a like number of shares.

The information in compliance with Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 as amended is appended herewith as Annexure IV to this Report.

The Company had issued Bonds on 28 June 2016. The Bonds become convertible at the option of the holders of the Bonds (the "Bondholders") after 1 December 2017 and upto the close of business on 18 June 2022 into equity shares. Each Bond will be convertible at the option of the holder thereof into fully paid equity shares at the initial conversion price determined on 30 November 2017.

On 30 November 2017, the Company set the initial conversion price (i.e. the price at which the ordinary shares of the Company will be issued upon conversion of Bonds subject to any further adjustments according to conditions) at H861.84 as determined in accordance with condition 6.1.3 of the Trust deed. As of 31 March 2022, none of the Bondholders have opted for the conversion option.

On 30 November 2017, the Company confirmed the fixed exchange rate as H64.5238 in accordance with the condition 6.1.1 (b) of the Trust Deed dated 28 June 2016 which provides that the fixed exchange rate shall be the FX rate (INR per U.S. $ 1) based on Bloombergs "BFIX" USD/INR spot mid-price rate 12.00 (Hongkong time) on 30 November 2017.

Unless previously converted, redeemed or purchased and cancelled, the Bonds were to be redeemed on 28 June 2022 (Maturity Date) at 126.42% of their principal amount, together with accrued interest (if any), calculated up to but excluding the Maturity Date. The Company may, at its own discretion, redeem the Bonds in whole, but not in part, subject to satisfaction of certain conditions.

In September 2018, the Company approved the launch of buybackofFCCBonds("BuybackFCCBs")fromexistingholders of FCC Bonds ("Buyback Bondholders"). MUFG Securities Asia Limited and J.P. Morgan Securities Limited were appointed as dealer managers, on behalf of the Company to buyback FCC Bonds at a buyback price of 105% of the principal amount outstanding (being U.S. $ 262,500 for each U.S. $ 250,000 of FCC Bonds), up to an aggregate purchase price of U.S. $ 100 million plus accrued and unpaid interest per FCC Bond. In October 2018, the Company agreed to buyback U.S. $ 86.5 million in aggregate principal amount (representing 346 FCC Bonds in number of U.S. $ 250,000 denomination for each FCC Bond) of the FCC Bonds. These Buyback FCCBs represented 43.25% of the aggregate FCC Bonds. On the closing/settlement date, the Company paid an aggregate purchase price of U.S. $ 90,825,000 for the Buyback FCCBs, plus accrued but unpaid interest. Following settlement, the FCC Bonds bought back were cancelled and U.S. $ 113.5 million in aggregate principal amount of FCC Bonds remained outstanding. The Company undertook buyback to monetize the opportunity available and to push maturity of external debt. The Company utilised proceeds from an unsecured External Commercial Borrowing facility of up to U.S.$ 100 million ("ECB Facility") from MUFG Bank, Ltd., Singapore Branch, to refinance these Bonds.

In September 2021, the Company executed a discrete buyback of FCC Bonds ("Buyback FCCBs") from an existing holder of FCC Bonds for principal value of U.S. $ 1 million. The Hong Kong and Shanghai Banking Corporation Limited acted as Dealer Manager, on behalf of the Company to buyback FCC Bonds at a buyback price of 120.30% of the principal amount (representing

4 FCC Bonds in number of U.S. $ 250,000 denomination for each FCC Bond) of the FCC Bonds. On 15 September, 2021, the Company paid an aggregate purchase price of U.S. $ 1,203,000 for the Buyback FCCBs, plus accrued but unpaid interest. Following settlement, the FCC Bonds bought back were cancelled and U.S. $ 75.75 million in aggregate principal amount of FCC Bonds remained outstanding.

In April 2022, the Company executed a buyback of FCC Bonds ("Buyback FCCBs") from an existing holder of FCC Bonds for principal value of U.S. $ 75 million. The Hong Kong and Shanghai Banking Corporation Limited acted as Dealer Manager, on behalf of the Company to buyback FCC Bonds at a buyback price of 125.26% of the principal amount (representing 300 FCC Bonds in number of U.S. $ 250,000 denomination for each FCC Bond) of the FCC Bonds. On 7th April, 2022, the Company paid an aggregate purchase price of U.S. $ 93,945,000 for the Buyback FCCBs, plus accrued but unpaid interest. Following settlement, the FCC Bonds bought back were cancelled and U.S. $ 0.75 million in aggregate principal amount of FCC Bonds remained outstanding.

Following the above buyback in April, 2022, the Company issued a Notice of early redemption to the remaining holders of FCC Bonds for principal value of outstanding U.S. $ 0.75 million for redemption in May, 2022. On 9 May, 2022, the Company paid an aggregate amount of U.S. $ 9,42,860.24 for the Buyback FCCBs, plus accrued but unpaid interest and concluded the redemption of FCC Bonds as per the terms of the Trust Deed. Subsequently, the FCC Bonds were delisted from the Singapore stock exchange.

The Company has obtained LRN from RBI to raise an ECB Facility to the extent of U.S. $ 100 million. In October 2018, the ECB Facility for U.S. $ 90,825,000 was raised and the proceeds were utilized for the purpose of repurchasing the FCC Bonds. The ECB Facility was raised from MUFG Bank, Singapore with an initial maturity of 5 years. The interest rate for the first 3 years is 4.956% p.a. and the interest for the subsequent 2 years is 5.25% p.a. However, in December, 2021, the loan was extended to bullet maturity of December, 2026. The interest rate was fixed at 4.69% p.a. up to September, 2023 and thereafter at an interest margin of 2.15% p.a. over SOFR.

The Company has obtained LRN from RBI to raise an ECB Facility to the extent of U.S. $ 40 million. The ECB Facility for U.S. $ 40 million was executed in February, 2021 and the Company availed U.S. $ 16,574,250 in April, 2021 and the proceeds were utilized for the purpose of refinancing the FCC Bonds. The Company further availed U.S. $ 7,500,000 and U.S. $ 1,203,000 in June, 2021 and September, 2021 respectively. The ECB Facility was raised from International Finance Corporation with a maturity of 5.7 years. The interest margin over U.S. $ LIBOR was 3.08%p.a. up to September, 2021 ; 2.83%p.a. up to June 2023 and 3.26% over SOFR thereafter.

The Company has obtained LRN from RBI to raise an ECB Facility to the extent of U.S. $ 228 million. During March 2022, the Sustainability linked loan for U.S. $ 228 million was raised and the proceeds were utilized for the purpose of refinancing the U.S. $ 200 million Syndication loan and U.S. $ 28 million Fifth Third Bank loan. The ECB Facility was raised from 10 Foreign banks with a maturity of 5 years. The interest margin is 1.75%p.a. over SOFR.

The Equity shares of the Company continue to be listed on BSE Limited and The National Stock Exchange of India Limited. FCCB Bonds were listed on Singapore Exchange Limited. They were delisted on 9 May 2022.

The information on Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo as stipulated under Section 134(3)(m) of the Act, read with Rule 8 of The Companies (Accounts) Rules 2014 is appended herewith as Annexure V to this Report.

Pursuant to Section 92 read with Section 134(3)(a) of the Act, the Annual Return as on 31 March 2023 is available on the Companys website at https://glenmarkpharma.com/ investors/reports-presentations/.

In pursuance of Regulation 39 read with Schedule VI of the Listing Regulations, the details of underlying shares in unclaimed suspense account and unclaimed shares / dividend transferred to IEPF, are provided in the Report on Corporate Governance.

Information as required under the provisions of Section 197(12) of the Act, read together with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is appended herewith as Annexure VI to this report. The information required pursuant to Section 197(12) of the Act, read with Rules 5(2) & 5(3) of the Companies

The Company believes in giving back to society in some measure that is proportionate to its success in business. CSR aims at balancing the needs of all stakeholders. The Companys CSR initiative goes beyond charity and believes that as a responsible Company it should take into account its impact on society as much as creating business impact.

The report on the CSR activities undertaken by the Company in the format prescribed in the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 including the composition of the CSR Committee is appended herewith as Annexure VII to this Report. The CSR Policy of the Company is available on the Companys website at https://glenmarkpharma.com/about-us/governance/.

A separate exercise was carried out to evaluate the performance of individual Directors, who were evaluated on parameters such as level of engagement and contribution, strategic vision of director, involvement, professional independence etc. The Independent Directors of the Company met on 17 March 2023 without the presence of Non-Independent Directors and members of the management to review the performance of Non-Independent Directors and the Board of Directors as a whole; review the performance of the Chairman and Managing Director of the Company and to assess the quality, quantity and timeliness of flow of information between the management and the Board of Directors.

FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS nI compliance with the requirements of Listing Regulations, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their roles, rights and responsibilities as an Independent Director, the working of the Company, changes in the regulatory environment, etc. The Board members are regularly updated regarding key developments and any important regulatory amendments applicable to the Company. During the F.Y. 2022-23, the Company had conducted exclusive session for Independent Directors on Regulatory and Compliance updates with the help of an external agency. The familiarization programme may be accessed on the Companys website at https://glenmarkpharma.com/about-us/governance/.

A calendar of Board and Committee Meetings to be held during the year was circulated well in advance to the Directors. Five Board Meetings were convened and held during the year. The Board at its meeting held on 10 February 2023, has reconstituted Audit Committee with Mr. Rajesh Desai as the Chairman and Mr. Sridhar Gorthi, Mr. Devendra Raj Mehta and Mrs. Vijayalakshmi Iyer as members. There have been no instances during the year where recommendations of the Audit Committee were not accepted by the Board.

Details of the Composition, attendance of members and other details of the Board and its Committees, are provided in the Corporate Governance Report, which forms an integral part of this Report. The intervening gap between the Meetings was within the period prescribed under the Act and Listing Regulations.

Companys industrial relations continued to be harmonious during the year under review.

Particulars of loans, guarantees and investments covered under Section 186 of the Act, form part of the notes to the standalone financial statements forming a part of this Report.

The Company endeavours to cater to the needs of the communities it operates in thereby creating maximum value for the society along with conducting its business in a way that creates a positive impact and enhances stakeholder value. As per Regulation 34(2)(f) of the Listing Regulations and in line with the SEBI Circulars dated May 5, 2021 and May 10, 2021, the Company has adopted the BRSR disclosing initiatives by the Company taken from an environmental, social and governance perspective. The Company has presented the BRSR, for F.Y. 2022-23 under a Separate section.

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Companies Act, 2013.

3. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

4. No significant or material orders were passed by the regulators or Courts or Tribunals which impact the going concern status and Companys operations in future.

The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board and General Meetings.

The Company has in place a Policy on Prevention of Sexual Harassment at Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("Prevention of Sexual Harassment of Women at Workplace Act") and Rules framed thereunder and an Internal Complaints Committee has also been set up to redress complaints received regarding sexual harassment.

The Company has ensured wide dissemination of the Policy and the provisions of Prevention of Sexual Harassment of Women at Workplace Act by constituting internal complaint committee and conducting sessions throughout the Company. Two (2) complaints were received and addressed during the F.Y. 2022-23, under the Sexual Harassment of Women at Workplace Act. No Complaint was pending as on 31 March 2023.

The Company is committed to providing safe and conducive work environment to all of its employees and associates.

The Company has adopted a Whistleblower Policy and Vigil Mechanism to provide a formal mechanism to the Directors, employees and other external stakeholders to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Companys Code of Conduct. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism. No personnel of the Company has been denied access to the Chairperson of the Audit Committee. The Whistleblower Policy and Vigil Mechanism ensures that strict confidentiality is maintained in such cases and no unfair treatment is meted out to a Whistleblower. The Company, as a Policy, condemns any kind of discrimination, harassment, victimisation or any other unfair employment practice being adopted against Whistleblowers. The Whistleblower Policy may be accessed on the Companys website at https://glenmarkpharma.com/ about-us/governance/.

The Directors express their gratitude to the Companys customers, shareholders, business partners viz. distributors and suppliers, medical profession, Companys bankers, financial institutions including investors for their valuable sustainable support and co-operation.

The Directors commend the continuing commitment and dedication of employees at all levels. For and on behalf of the Board of Directors

Chairman & Managing Director (DIN 00050607) Place: Mumbai Date: 19 May 2023

Notes

1. Reporting period of the above subsidaries is the same as that of the Company.

2. Glenmark Farmaceutica SpA was incorporated on 1 March 2023 and there were no transactions during the year.

3. *Amount denotes less than Rupees ten thousand.

4. Part B of the Annexure is not applicable as there are no associate companies/ joint Ventures of the Company as on 31 March 2023.