Jagsonpal Pharmaceuticals Ltd Management Discussions

(Source: IMF April 2026 Outlook)

A defining shift in the global landscape is the growing fragmentation of trade and investment flows, increasingly shaped by strategic and regional priorities. This realignment has strengthened the focus on building resilient and diversified supply chains. At the same time, ongoing geopolitical conflicts, particularly in the Middle East and other energy-sensitive regions, have heightened uncertainty across global trade corridors. Disruptions to key shipping routes, rising freight costs, longer transit times, and volatility in energy and commodity prices have created intermittent supply chain challenges and cost pressures for businesses worldwide. These developments are reinforcing the importance of supply chain resilience, localisation strategies, and diversified sourcing models across industries.

Inflation dynamics remain fluid, with levels expected to rise to 4.4% in 2026 before moderating to 3.7% in 2027. Monetary conditions are therefore expected to remain firm, with higher interest rates influencing liquidity, investment decisions, and capital allocation across markets. Businesses are increasingly focused on preserving financial flexibility while maintaining investments in strategic growth priorities.

Even as near-term uncertainties persist, the foundations for long-term growth remain strong. Investments in infrastructure, digital capabilities, automation, advanced manufacturing, and energy transition continue to support productivity gains and economic resilience. Emerging

economies, particularly in Asia, are expected to remain central to global expansion, supported by urbanisation, rising incomes, expanding industrial ecosystems, and favourable demographic trends.

These structural drivers are also expected to support sustained growth in the global pharmaceutical industry. Rising healthcare expenditure, improving access to medical services, ageing populations, increasing prevalence of chronic diseases, and growing demand for affordable and high-quality healthcare solutions continue to create longterm opportunities across pharmaceutical value chains. As healthcare systems evolve and supply chain resilience becomes increasingly important, pharmaceutical companies with strong manufacturing capabilities, regulatory compliance, and reliable execution are expected to play an increasingly critical role in meeting global healthcare needs.

The Indian economy continued to exhibit strong resilience during the year, underpinned by robust domestic demand, sustained public spending, and strengthening industrial activity. India remains among the fastest-growing major economies globally, with GDP growth estimated at 7.6% in FY 2025-26, reflecting continued momentum driven by consumption and investment.

(E: Estimated; Source: MoSPI)

India is steadily emerging as a preferred destination in global supply chain realignment, supported by its cost competitiveness, skilled workforce, improving infrastructure, and policy stability. This is enabling the development of integrated manufacturing ecosystems and strengthening the countrys role in global production networks. However, evolving trade policies, tariff-related measures across key markets, and periodic currency volatility continue to influence export competitiveness and business planning. Companies are increasingly focused on enhancing operational agility, strengthening local value chains, and diversifying markets to navigate these uncertainties.

Indias economic outlook remains positive, supported by strong domestic demand, continued infrastructure investments, expanding manufacturing capacity, and sustained policy support. Ongoing improvements in ease of doing business, coupled with initiatives such as Make in India, Production Linked Incentive schemes, and logistics

infrastructure development, are strengthening the countrys position as a global manufacturing and outsourcing hub. While external risks including geopolitical uncertainties, trade disruptions, exchange rate movements, and commodity price volatility may create periodic challenges, Indias structural strengths and growing economic scale are expected to support sustained medium- to longterm growth. This environment also provides favourable conditions for the pharmaceutical sector, supported by rising healthcare demand, increasing healthcare expenditure, stronger domestic manufacturing capabilities, and a growing focus on innovation and self-reliance.

The global pharmaceutical market continues to expand steadily, driven by rising healthcare demand, increasing disease burden, and continued advancements in treatment modalities. Expanding access to healthcare across both developed and emerging markets, along with a strong pipeline of innovative therapies, continues to support longterm growth and improve patient outcomes across regions.

Global medicine spending is projected to exceed USD 2.6 trillion by 2030, growing at a CAGR of 5-8%. Growth is being driven by innovation-led demand in developed markets, particularly in specialty and advanced therapies, alongside volume-led expansion in emerging markets, where affordability and access to essential medicines remain key priorities.

A key structural shift shaping the pharmaceutical market is the move towards higher-value therapies. Growth is increasingly influenced by changes in therapy mix, with rising adoption of biologies, precision medicine, and targeted treatments improving clinical outcomes while expanding value. At the same time, patent expiries and the growing use of generics and biosimilars are enhancing affordability and widening patient access across both developed and emerging markets.

Over the medium term, growth is expected to be led by therapy areas such as oncology, immunology, diabetes, and obesity, supported by sustained innovation, improved diagnosis rates, and broader access to treatment. However, pricing pressures, regulatory scrutiny, and reimbursement constraints are likely to moderate growth, resulting in a more balanced and sustainable trajectory. While several therapy areas may experience relatively slower growth compared to earlier cycles, select segments such as lipid regulators are expected to see renewed momentum, driven by higher generic volumes and the uptake of newer therapies.

Looking ahead, the global pharmaceutical market is expected to transition into a more stable and resilient growth phase.

Increasing demand, expanding access in emerging markets, and continued innovation across key therapy areas will remain key drivers. Although growth may be tempered by pricing pressures and patent expiries, the overall outlook remains positive, supported by a sustained focus on affordability, value-based care, and supply chain resilience.

The Indian pharmaceutical industry maintained strong growth momentum in FY25, supported by resilient fundamentals and balanced expansion across domestic and global markets. The sector reached approximately USD 60 billion, recording around 10% year-on-year growth, while sustaining a steady CAGR of nearly 8% between FY2017-18 and FY2024-25. Growth has been driven by rising healthcare demand, improved access, and a diversified product mix. Looking ahead, the industry is expected to continue its upward trajectory, expanding at an estimated CAGR of about 9% through FY2029-30, to reach close to USD 90 billion, reinforcing its position as a key pillar of Indias healthcare and economic landscape.

Growth remained well diversified across domestic consumption and exports. The domestic market was driven by rising prevalence of chronic diseases, increasing healthcare awareness, and improved access to medical infrastructure. Demand stayed strong in chronic therapies such as cardiovascular, anti-diabetic, CNS, and gastrointestinal segments, supported by longer treatment durations and better diagnosis rates. Expanding insurance coverage and government initiatives improved affordability, while deeper penetration into tier-2, tier-3, and rural markets widened the consumption base.

Globally, India strengthened its position as a key supplier of affordable medicines, particularly generics, contributing nearly 45% of generic volumes in the United States. Export growth was supported by recovery in regulated markets, improved pricing dynamics, and higher approvals for complex products. Formulation exports led growth, driven by expansion into complex generics, injectables, and biosimilars, while the API segment showed gradual recovery supported by policy measures and import substitution efforts, despite continued pricing pressures.

Increasing life expectancy and improving healthcare access are expanding the demand for long-term disease management and specialised therapies. As Indias elderly population continues to grow, the need for sustained treatment across chronic and age-related conditions is expected to increase, creating opportunities for pharmaceutical companies with established therapeutic franchises and strong physician relationships.

India is witnessing a steady rise in chronic diseases, including diabetes, cardiovascular disorders, osteoporosis, hormonal

imbalances, and other lifestyle-related conditions. Changing lifestyles, urbanisation, and greater disease awareness are driving demand for long-duration therapies and preventive healthcare solutions. This trend is expected to support sustained growth across several therapy segments within the Indian pharmaceutical market.

Government healthcare initiatives, rising income levels, wider healthcare infrastructure, and increasing penetration of private healthcare services are improving access to treatment across urban and semi-urban markets. Greater affordability and awareness are encouraging earlier diagnosis and higher treatment adherence, supporting long-term pharmaceutical demand.

Health insurance penetration continues to increase across India, supported by public and private sector initiatives. Broader insurance coverage is improving access to quality healthcare, reducing out-of-pocket expenditure, and encouraging greater utilisation of medical services. This is contributing to higher treatment uptake and expanding the addressable market for pharmaceutical companies.

Therapy areas such as gynaecology, orthopaedics, dermatology, paediatrics, and other specialist segments are witnessing increasing patient volumes and higher prescription intensity. Growing awareness, improved diagnostics, and greater engagement with specialists are creating opportunities for companies with focused therapeutic expertise and strong doctor relationships.

The adoption of teleconsultation, digital health platforms, electronic medical records, and technology-enabled

patient engagement is reshaping healthcare delivery. These developments are improving access to healthcare services, strengthening disease awareness, and creating new avenues for patient engagement and treatment continuity.

The Indian pharmaceutical industry is well positioned for sustained, long-term growth, supported by strong structural drivers across domestic and global markets. Rising demand for chronic therapies, increasing healthcare access, and expanding insurance coverage are expected to continue strengthening the domestic market, while deeper penetration into semi-urban and rural regions will further broaden the consumption base.

On the global front, India is likely to consolidate its position as a key supplier of affordable and high-quality medicines, driven by opportunities in generics, complex formulations, injectables, and biosimilars. The upcoming patent expiry cycle, along with improving regulatory approvals and pricing stability in key markets, is expected to support export growth and portfolio diversification.

At the same time, advancements in digital health, increasing life expectancy, and the growing burden of lifestyle-related diseases will reshape demand towards more specialised, technology-integrated, and value-added therapies. Backed

by its cost-competitive manufacturing base, strong talent pool, and policy support, the industry is expected to transition towards higher-value segments while maintaining scale. Overall, the sector remains on a steady growth trajectory, reinforcing its critical role in global healthcare delivery.

Founded in 1978, Jagsonpal Pharmaceuticals Limited has built a strong and credible presence over four decades, driven by its commitment to delivering high-quality healthcare solutions across India. The Company operates across key therapeutic areas including gynaecology, orthopaedics, and dermatology, with a consistent focus on quality, innovation, and stakeholder value, while remaining committed to contributing meaningfully to a healthier nation.

Over the years, Jagsonpal has developed a diversified and clinically relevant product portfolio, achieving consistent market success. Nine of its brands rank among the top five in their respective molecule categories, reflecting strong acceptance among prescribers and patients.

With a pan-India footprint and a strong presence in northern markets, Jagsonpals reach is supported by a dedicated sales force of over 1,000 professionals, engaging with approximately 50,000 doctors and ensuring wide specialty coverage across the country.

The Company continues to strengthen its presence across focused therapeutic segments, supported by strong brand positioning and deep doctor engagement:

The Company delivered a steady performance in FY26, reflecting consistent execution and sustained demand momentum. Revenue grew by 7% to f2,872 million from f2,687 million in FY25, supported by portfolio strength and improved market traction.

Operating EBITDA stood at f609 million (from f579 million in FY25), with margins at 21.2%, reflecting disciplined operations despite marginal moderation. Profitability remained robust, with operational PAT increasing by 19% to f446 million (from f375 million in FY25), translating into a margin of 16%, supported by operating leverage and improved cost efficiencies.

The business regained traction in Q4 with growth of 10% on strength of sharper strategic execution. This is reflecting in our industry outpacing performance, with Pharmarack reflecting a 12.2% growth for Jagsonpal as compared to IPM growth of 8.6%.

The Company maintained a strong balance sheet, with cash and cash equivalents increasing to f1,907 million as of March 31, 2026, reflecting healthy cash generation and prudent financial management. Performance was driven by strong traction in key brands, with the top 10 brands contributing nearly 58% of revenues. The Company also outperformed the industry, registering growth of around 12.2% compared to IPM growth of approximately 8.6% on a MAT basis (annual).

In line with its disciplined capital allocation philosophy, in May 2026, the Company successfully completed a f40 crore share buyback and the board recommended a 200% dividend for FY 25-26, including a special dividend, reflecting its confidence in the business and commitment to creating long-term shareholder value.

The Companys people remain central to the Companys growth and long-term value creation. With a team of over 1,200 employees, including a strong field force, the Company is committed to fostering a workplace built on fairness, inclusivity, and performance excellence. The organisation continues to provide equal opportunities for employment and career progression, creating an environment where individuals can contribute meaningfully and grow professionally.

The Company places strong emphasis on capability building and productivity enhancement. Focused training programmes are conducted to strengthen medical representative effectiveness, deepen therapeutic knowledge, and improve engagement with healthcare professionals. Continuous learning initiatives, combined with structured performance management systems, ensure alignment between individual goals and organisational priorities.

Employee well-being remains a key priority. In addition, wellness initiatives covering preventive healthcare, stress management, and awareness programmes support both physical and mental well-being.

Jagsonpal continues to uphold high standards of integrity, transparency, and ethical conduct across the organisation. A robust governance framework ensures a safe and respectful workplace, supported by a Whistle-blower Policy

that enables employees to raise concerns confidentially without fear of retaliation. The Company maintains a zero- tolerance approach towards harassment, with a structured mechanism in place to address grievances in line with regulatory requirements.

The Companys people practices are anchored in fairness, transparency, and compliance, supported by well-defined policies and processes:

Recruitment is driven by meritocracy, with clearly defined role requirements and structured evaluation processes ensuring equal opportunity and objective selection.

A transparent performance appraisal system aligns individual Key Performance Objectives with organisational goals. Regular feedback and structured evaluations support continuous improvement and reward merit- based performance.

Employees are covered under comprehensive Group Mediclaim policies, with options for dependent coverage and access to cashless healthcare services. Term Life and EDLI policies provide financial protection, while Group Accidental Insurance ensures support in case of unforeseen events.

Ongoing training programmes focus on enhancing domain expertise, sales effectiveness, and leadership capabilities, enabling employees to adapt to evolving business requirements.

A secure and confidential mechanism enables reporting of unethical practices or policy violations, with strict assurance of non-retaliation and fair resolution.

The Company maintains a zero-tolerance stance on harassment. An Internal Complaints Committee ensures timely and impartial resolution of grievances, supported by regular awareness and sensitisation initiatives.

Overall, Jagsonpal continues to strengthen its people capabilities, recognising that a motivated, skilled, and ethically grounded workforce is essential to sustaining growth and delivering value to stakeholders.

In line with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, the Company has constituted a Risk Management Committee comprising members of the Board. Details relating to the Committees composition, charter, meetings, and participation are provided in the Corporate Governance Report. The Committee meets periodically to review the evolving risk landscape and guide mitigation strategies.

As part of its enterprise risk management framework, the Company undertook a comprehensive risk assessment to identify key strategic and operational risks that could impact performance. Appropriate mitigation measures have been implemented to proactively address these risks. A summary is presented below:

The Company remains committed to building a forwardlooking and agile risk management culture. By continuously monitoring emerging risks and strengthening internal controls, it aims to safeguard stakeholder interests and ensure sustainable long-term growth.

Trust across our ecosystem is reinforced through a strong commitment to data privacy, cybersecurity and responsible data governance. We recognise privacy as a fundamental right and embed robust controls across the collection, use, storage and sharing of information. Supported by clearly defined governance structures, organisation-wide awareness programmes and proactive compliance measures, we continue to strengthen our readiness in line with evolving

regulatory requirements, including the Digital Personal Data Protection (DPDP) Act.

Our multi-layered cybersecurity framework combines advanced security technologies, real-time monitoring and continuous risk assessments to safeguard critical systems and information assets. Supported by ongoing employee training and a culture of accountability, these measures help enhance resilience against emerging cyber threats. Reflecting the effectiveness of our approach, we reported zero data breach incidents during the year. Going forward, we will continue to strengthen our data protection capabilities through technology, governance and awareness, ensuring privacy, security and trust remain integral to our digital growth Journey.

Movement in PPE reflects normal capitalisation and depreciation during the year.

ROU assets remained stable, with changes reflecting lease accounting adjustments.

The movement in non-current investments was primarily driven by the Companys treasury management strategy, involving the reallocation of surplus funds to long-term investment from short-term funds.

Goodwill remained stable during the year, representing value arising from past business acquisitions.

Inventory levels remained largely stable, supported by efficient inventory planning and control.

The increase in the receivable is largely attributable to the normal credit on account of sales growth and does not necessarily indicate deterioration in collection efficiency.

Movement in other financial assets reflects optimisation of treasury balances and reallocation of surplus fund from short-term instruments to long term instruments.

The increase in other current assets is primarily driven by higher accumulated GST input credit with GST authorities following the change in GST rates. This is essentially a timing- related build-up of recoverable tax credit, which is expected to be utilized against the future tax liabilities.

The increase in equity was primarily driven by profit earned during the year and the exercise of employee stock options, partially offset by dividend payments.

Non-current liabilities remained stable, with minor movements on account of adjustments in respect of lease accounting and changes in deferred tax liabilities in line with profitability.

The increase in trade payables is primarily attributable to improved credit terms negotiated with vendors and a reduction in vendor advances, in line with the Companys overall working capital management strategy.

Other financial liabilities remained broadly commensurate with business growth and relate primarily to obligations arising from the Companys normal business operations.

* WorkingCapital/Revenue from Operation

The Company remains focused on driving sustainable growth through a balanced strategy centred on portfolio expansion, productivity enhancement, and operational efficiency. With a strong foundation across key therapeutic segments and a diversified product portfolio, Jagsonpal is well-positioned to capitalise on emerging opportunities in the domestic pharmaceutical market.

New product introductions continue to be a key growth lever, with a focus on expanding presence in existing therapies while selectively entering adjacent segments. The Company is also strengthening its core brands, with the top portfolio contributing a significant share of revenues, ensuring stability and scale.

Growth is being supported by enhanced field force productivity and deeper doctor engagement. Continued investments in training, sharper market execution, and improved coverage across specialties are expected to drive prescription growth and market share gains.

Operationally, the Company remains focused on cost optimisation and improving operating leverage. Integration benefits from recent acquisitions, along with disciplined cost management, are expected to support margin expansion over the medium term.

Looking ahead, Jagsonpal expects to sustain healthy revenue growth, supported by strong brand traction, improved execution, and a favourable industry environment. While near-term performance will be driven by productivity gains and portfolio momentum, long-term growth will be anchored in value-accretive initiatives, differentiated product offerings, and continued focus on profitability.

The Company has established a robust internal control framework designed to safeguard assets, ensure compliance

with applicable laws and regulations, and maintain the integrity of financial reporting. These controls are embedded across all key business processes and are regularly reviewed and strengthened in line with evolving business needs.

The internal audit function operates independently and conducts periodic reviews of operational, financial, and compliance controls. The Audit Committee actively oversees the internal audit process, reviews audit findings, ensures timely implementation of corrective actions, and maintains continuous engagement with statutory and internal auditors.

Standardised policies, well-defined approval matrices, and system-driven controls enhance transparency, accountability, and operational efficiency across the organisation. The Company continues to strengthen its internal control environment through process improvements, digital interventions, and risk-based monitoring mechanisms.

Statements in this section describing the Companys objectives, projections, estimates, expectations, or predictions may constitute forward-looking statements within the meaning of applicable laws and regulations. These statements are based on certain assumptions and expectations of future events and are subject to risks and uncertainties.

Actual results may differ materially from those expressed or implied due to various factors, including changes in economic conditions, regulatory developments, market dynamics, and other external factors beyond the Companys control.

The Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.