J B Chemicals & Pharmaceuticals Ltd Management Discussions

INDUSTRY DEVELOPMENTS

The Indian Pharmaceuticals market clocked growth of 8% in FY25 majorly on the back of price increase. As per IQVIA MAT March25 data, chronic segment continued to outperform, growing at 10% vs acute segment growth of 6%. Muted acute season was the primary cause behind slow IPM growth. Domestic industry sales for the year stood at INR 23,326,100 lakhs vs INR 21,593,100 lakhs in FY24 (IQVIA MAT March25 data).

Overall international business environment witnessed inflationary pressure. Pricing pressure continued to prevail, however, it softened during the second half of the year. Logistics were still impacted by geopolitical uncertainties and affected overall costs especially in H1. The Company remains vigilant of the geopolitical and economic developments and will continue to alter its approach accordingly.

opportunities & THREATS And Segment WiSE performance

Domestic Business:

JB Pharma operates exclusively within the pharmaceutical sector.

According to IQVIA MAT March 2025 data, the Company has outpaced the Indian Pharmaceutical Market (IPM), registering a growth of 12% compared to the industrys 8% growth. Even after excluding the ophthalmology portfolio, JB Pharma maintained a consistent 12% growth. It continues to be one of the fastest-growing companies among the top 25 in the IPM, currently holding the 22^nd position.

The domestic formulations business delivered a strong performance, growing by 20% year-on-year to Rs. 226,900 lakhs. Within this, the acute segment grew by 7%, while the chronic portfolio posted a solid 18% growth.

In MAT Mar21, just 5 brands accounted for approximately 75% of the domestic revenue, highlighting a high dependency on a few key products. By MAT Mar25, this revenue contribution was distributed across 18 brands, reflecting the companys success in broadening its revenue base and reducing reliance on a limited number of brands. Despite the diversification, the overall contribution from other smaller brands remained stable at around 25%, underscoring JB Pharmas effective brand-building strategy and consistent performance. Additionally, the Company has built a strong portfolio that includes 6 mega brands with annual sales exceeding Rs. 100 crore, along with multiple high-potential brands in the pipeline.

Notably, five of JB Pharmas flagship brands now feature among the top 150 brands in the IPM. Furthermore, Sporlac has made its way into the top 300 brands, marking a significant milestone in its growth journey.

Throughout the year, the Companys comprehensive four- pillared strategy yielded positive outcomes

1. Realigned Go-To-Market (GTM) model to drive productivity

The Company remains committed to driving productivity, strengthening engagement with prescribers, and building robust brand franchises. Since MAT March 2021, JB Pharma has climbed 7 positions in the Indian Pharmaceutical Market and now holds the 22^nd rank, as per IQVIA MAT March 2025 data. It is also ranked as the 16^th most prescribed Company in the IPM, reflecting the strong trust it has established among healthcare professionals. Notably, Rantac and Metrogyl are among the top 10 most prescribed brands in the industry.

Per capita sales per month (PCPM) further improved to INR 8.0 lakhs for FY25 vs INR 3.6 lakhs in FY20 including ophthalmology portfolio.

The Company has done well on building a strong prescriber connect with specialities and now services nearly 345,000 practioners across the country. This includes 160,000 general/ consulting physicians, 21,000 dentists, 14,000 ophthalmologists, 15,000 cardiologists, 6,500 nephrologists, 2,500 gastroenterologists, 26,000 gynaecologists and 40,000 paediatricians. The Companys prescription grew at a CAGR of 17% from FY 21 to FY 25 ( IQVIA, MAT March, 25 data).

2. Increasing contribution from chronic Therapies

The Company continues to focus on growing its chronic portfolio which now accounts for 47% of the total business (excluding ophthalmology portfolio) as per IQVIA MAT March25 data vs 44% a few years ago. Chronic portfolio of the Company grew 18% in the year as against industry chronic segment growth of 10% (as per IQVIA).

JB Pharma ranks among the top 20 companies in the chronic segment and has significantly strengthened its presence, delivering ~2.6 times outperformance compared to the Indian Pharmaceutical Market (IPM).The Company ranks amongst the top 10 in the cardiology segment and 3 of the largest brands of the Company namely Cilacar, Cilacar-T and Nicardia now rank amongst the top 20 brands in the cardiology segment.

The Cilacar brand has delivered an impressive performance, growing by 19% from Rs. 388.2 crore in MAT Mar24 to Rs. 462.7 crore in MAT Mar25. The Cilacar franchise also demonstrated robust momentum, recording a 22% growth, significantly outperforming the overall cardiac therapy market which grew by only 12% during the same period. This consistent and superior growth reflects the strong brand equity, physician trust, and market leadership of the Cilacar portfolio within the cardiac care segment.

The Razel franchise has also demonstrated strong growth over the past three years. Franchise sales increased from Rs. 6,700 lakhs in MAT Mar23 to Rs. 8,300 lakhs in MAT Mar24, and further to Rs. 9,900 lakhs in MAT Mar25, reflecting a 48% growth over two years and a 19% year-on-year growth in the most recent period, establishing it as a fast-growing franchise.

3. Making Big Brands Bigger and Building Strong Franchise

6 of its key brands ranked in the Top 300 of the Indian Pharmaceutical Market (IPM) as of MAT Mar25, collectively contributing to approximately 50% of the Companys domestic formulations revenue.

Cilacar leads the portfolio with a MAT value sale of Rs. 46,300 lakhs, ranked #1 in the CVM segment and #23 in the IPM, holding a market share of 55% and delivering a CAGR of 19%.

Rantac follows closely with Rs. 35,500 lakhs in sales, ranked #2 in CVM and #42 in IPM, with a market share of 41% and a CAGR of 10%.

Metrogyl clocked Rs. 22,400 lakhs, securing #3 in CVM and #120 in the IPM, backed by a strong market share of 82% and CAGR of 18%. Metrogyl franchise demonstrated exceptional growth through effective lifecycle management, with its revenue increasing from Rs. 13,700 lakhs in MAT Mar21 to Rs. 34,200 lakhs in MAT Mar25, more than doubling in four years.

Cilacar-T reported Rs. 22,500 lakhs in value sales, ranked #3 in CVM and #118 in IPM, with a market share of 37% and an impressive CAGR of 30%.

Nicardia, with Rs. 20,500 lakhs in sales, ranked #4 in CVM and #136 in IPM, commands a remarkable market share of 93% and a CAGR of 22%.

Lastly, Sporlac recorded Rs. 11,500 lakhs in sales, ranked #4 in CVM and #298 in IPM, with a market share of 18% and a CAGR of 25%, marking its entry into the top 300 brands.

4. Acquisition-led growth, via strong brand franchises

The Company always had a strategy of investing in progressive and value-accretive portfolios to fuel domestic business growth. The Company has completed 5 transactions in the last three years. Due to these acquisition the Companys progressive portfolio has increased significantly. As per the latest IQVIA data, around 75% of the Company business is generated from segments which are growing faster than IPM. This augurs well for the Company as it can sustain the growth momentum over the next few years.

In the last year, JB Pharma invested in Novartis ophthalmology portfolio and executed trademark license agreement with Novartis Innovative Therapies AG, Switzerland which is perpetual in nature for a consideration of $116 million payable on or before December 31, 2026. The Company also executed promotion and distribution agreement with Novartis Healthcare Private Limited for the same ophthalmology portfolio for a period of three years starting December 2023. JB Pharma paid INR 12,500 lakhs for this exclusive promotion and distribution agreement. The portfolio consists of 10 brands - Simbrinza, Travatan, Travacom, Azopt, Azarga, Vigamox, Vigadexa, Nevanac, Illevro and Pataday. 5 of these brands have leadership positions in their respective covered molecule market space.

In the first year itself, the ophthalmology portfolio has registered double-digit growth. The same portfolio was not growing for the previous two financial years. As per IQVIA data, the ophthalmology franchise has generated revenue of INR 56 crores for Q4 FY25 as compared to INR 46 crores in Q4 FY 24. The franchise now has employed 120 personnel including managers and is poised for good growth over the next few years.

The acquired Sporlac franchise has also shown remarkable growth over the past three years. Sales increased from Rs. 6,900 lakhs in MAT Mar22 to Rs. 13,400 lakhs in MAT Mar25, nearly doubling during this period. This growth reflects the strong performance of key products under the Sporlac portfolio, including Sporlac GG, Sporlac EVA, and Sporlac Plus, reinforcing the brands positioning in the market.

The Razel portfolio has also done well growing from INR 67 crores in FY 23 to INR 99 crores in FY 25 as per IQVIA data. Azmarda is now INR 70 crore brand as per IQVIA data. The sacubitril-valsartan market is expected to grow 15-20 % over the next 5 years. We anticipate that during this period Azmarda will also emerge among the top 300 brands in the country.

International Business:

JB Pharma operates through distinct business models across its international markets. It maintains a direct presence in Russia and South Africa, while leveraging distributor partnerships across the U.S., Asia, Africa, and Latin America.

The Company is also recognized among the top five global manufacturers of medicated and herbal lozenges and serves as a contract development and manufacturing (CDMO) partner to some of the worlds leading consumer healthcare and FMCG companies. The CDMO vertical continues to be a strategic area of focus, given its strong growth potential.

During the year, the Company strategically reduced its exposure to the low-margin tender segment in South Africa, shifting focus toward expanding its footprint in the private market. While this move temporarily impacted revenue growth in the international segment, it contributed positively to the overall margin profile.

Key drivers of international business growth include the launch of new products in home and branded generic markets, increased emphasis on private markets in South Africa, and the introduction of innovative offerings within the CDMO business.

For the year under review, the Companys international business grew by 4%, reaching Rs. 1,65,000 lakhs, compared to Rs. 1,58,700 lakhs in FY24. The international formulations business registered a 5% growth to Rs. 112,700 lakhs. The CDMO business contributed Rs. 44,600 lakhs, marking a 3% growth, while the API business stood at Rs. 7,600 lakhs. While the Russia and the Branded Generics exports business grew double digit for the year, the US and the South Africa business were subdued. The CDMO business was muted in the first half of the year due to a muted season in core markets. However, the CDMO business rebounded strongly in the second half of the year recording significant growth for H2 FY25. During the year under review, the CDMO business has bagged fee global projects which should be start commercialisation in the next 12 to 18 months.

OUTLOOK

The Indian economy continues to remain in a healthy state despite global headwinds. The Indian Pharmaceuticals Market should continue to grow in the range of 8 % to 10 % making it one of the fastest growing markets in the world. The growth in the market will be driven by chronic therapies. FY24 was marked by a muted acute season which should bounce back in upcoming years and further fuel growth.

JB Pharma will strive to better the industry and will continue to focus on its strategies of building bigger brand franchises, enhancing its chronic portfolio and improving productivity. The international business environment will continue to be impacted by the ever-changing geopolitical scenario. JB Pharmas endeavor shall be to continue to grow on the back of new launches in the branded generics markets, expansion into newer areas in the CDMO business, an improved pipeline of the ANDA filings and deeper penetration with anchor customers.

Despite all the challenging conditions we remain optimistic about the next financial year.

RiSKS AND CONCERNS

The Company does not foresee any significant risks beyond those typically associated with the pharmaceutical industry, such as regulatory challenges, foreign exchange fluctuations, cyber threats, and general commercial or operational risks.

A comprehensive risk mitigation framework has been put in place to address these areas, and it is reviewed periodically to ensure continued effectiveness and responsiveness to emerging risks.

internal controls SYSTEMS and THEIR adequacy

The Company has established a robust internal control system designed to protect its assets from loss or unauthorized usage and to ensure that all business operations are conducted in line with defined policies and procedures. These controls also ensure that transactions are duly authorized, accurately recorded, and reported in compliance with generally accepted accounting principles.

In addition, the Company undertakes regular internal audits, carried out by qualified professionals engaged for this purpose. The internal audit plan is approved by the Audit Committee, and the audit findings are consistently reviewed by both the Audit Committee and the Board of Directors.

Considering the scale and nature of the Companys operations, the internal control framework is assessed to be sufficient and well-aligned with its operational requirements.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

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

(Rs. in lakhs)

Parameter	2024-25	2023-24	Growth (%)
Revenue from operations	391,799	348,418	12
Total income	395,631	352,145	12
Reported EBITDA	103,184	89,689	15
Operating EBITDA (excl. ESOP Cost)	108,674	93,886	16
Profit before tax and exceptional item	88,739	75,151	18
Profit after tax	65,958	55,263	19

During the year under review, the Company registered revenue growth of 12%. While domestic business grew 20% international business recorded growth of 4%. The reported EBITDA witnessed an improvement of 15% to INR 103,184 lakhs vs INR 89,689 lakhs in FY24. The Operating EBITDA (excluding ESOP costs) increased by 16% to INR 108,674 lakhs.

Standalone financial performance of the Company for the financial year ended on March 31, 2025, is as under:

(Rs. in lakhs)

Parameter	2024-25	2023-24	Growth (%)
Revenue from operations	372,292	329,864	13
Total income	375,766	333,332	13
Reported EBITDA	101,793	87,942	16
Operating EBITDA (excl ESOP Cost)	107,141	91,956	17
Profit before tax and exceptional item	87,711	73,834	19
Profit after tax	65,254	54,336	20

HUMAN RESOURCES

There has been no material development on human resources and industrial relations front. The relationship with employees and workers continued to be cordial at all levels. As on March 2025, permanent employees strength and temporary employees strength was 5,304 and 2,347 respectively.

KEY FINANCIAL RATIOS

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

a) Debtors Turnover ratio: Net Sales/Average account receivables

This ratio for the year was 5.22 (times) as against 5.52 (times) in the previous year.

b) Inventory Turnover ratio: Cost of Goods sold/Average inventory

This ratio for the year was 2.55 (times) as against 2.53 (times) in the previous year.

c) Debt service coverage ratio: Earnings Available for Debt Services /(Finance Cost + Current borrowings including lease liabilities)

This ratio for the year was 26.29 (times) * as against 1.91 (times) in the previous year.

*(Change is primarily due to repayment of debt during the year)

d) Current Ratio: Current assets/Current liabilities

This ratio for the year was 3.04 (times) as against 2.10 (times) in the previous year.

e) Debt-Equity ratio: Borrowings/Total Shareholders Equity

This ratio for the year was 0.008:1 (times) ^{^} as against 0.129:1 (times) in the previous year.

^ (Change is primarily due to repayment of debt during the year)

f) Operating Profit Margin : EBITDA (excluding ESOP charge)/Sales

Operating profit margin for the year was 27.74% as against 26.95% in the previous year.

g) Net Profit Margin: Net Profit/Net Sales

Net profit margin for the year was 16.83% as against 15.86% in the previous year.

The ratio for the previous year has been re-stated wherever necessary to make it comparable to current year calculation.

RETURN ON EQUITY

Return on Equity during the year was 19.21% as against 18.90% in the previous year.