Cautionary Statement
Statements in the Annual Report, particularly those, which relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations, may constitute forward-looking statements within the meaning of applicable laws and regulations. Although the expectations are based on reasonable assumptions, the actual results might differ significantly.
Key Economic and Industry Trends
In CY 2022, global economy witnessed slowdown in growth impacted by the Ukraine - Russia conflict, persistently high inflation levels across all major economies in the world and slowdown in the Chinese economy that was affected by numerous lockdowns imposed to control the COVID-19 pandemic.
As per IMF, the global economic output stood at 3.4% in 2022 from 6.1% in 2021. The global economys growth is forecast to further slow to 2.8% in 2023 driven by significant slowdown in major Advanced Economies such as the US, EU, UK and Canada. The slowdown in the Advanced Economies is led by the tight monetary and fiscal policies adopted in these countries to rein-in the stubbornly high inflation levels that reached several decade high marks. While inflation in most key markets have started trending lower, it is expected to continue at higher than desired levels for longer than previously expected.
The Indian economy grew by 7% in FY 2023 as compared with 9.1% growth in FY 2022. Full year GDP was affected by margin compression in industrial sectors owing to higher commodity prices, which was moderated by strong performance in the services sector. As per World Bank, in FY 2024 the GDP is expected to grow by 6.3%. Higher energy prices and a less than normal Southwest monsoon in 2023 pose downside risks to the Indian economy.
The COVID-19 pandemic was one of the most challenging global public health crisis in about a century and through it emerged the resilience of global health systems and the ability of pharmaceutical companies to deliver COVID-19 vaccines at a record pace, which helped in moderating the severity of the disease and ended up saving millions of lives globally.
COVID-19 vaccinations are likely to be the largest driver of medicine spending from 2022 to 2027 driven by the need for rapid inoculation of a large number of people followed by frequent booster shots. As per IQVIA, spending on COVID-19 vaccines and novel therapeutics are expected to generate more than US$300 billion in spending between 2020-2026 and the outlook is a cumulative US$133 billion higher than projected prior to the pandemic. The global medicine market is expected to grow at 3-6% CAGR between 2020-2026, to reach about US$1.8 trillion in total market size in 2026, including spending on COVID-19 vaccines.
Amongst categories, oncology and immunology are forecast to witness higher growth and deliver 9-12% and 6-9% CAGR through 2026, respectively, driven by significant increases in new treatments and medicine use. Oncology is projected to add 100 new treatments over five years, contributing nearly US$120 billion in new spending and bringing the total market to more than US$300 billion in 2026.
The Indian pharma industry has played an exemplary role in the battle against the COVID-19 pandemic by developing and supplying COVID-19 vaccines and medicines globally over the past two years. Indian vaccine industry developed the COVID-19 vaccine with indigenous technology in collaboration with research institutions such as Indian Council of Medical Research (ICMR) and National Institute of Virology (NIV) within record times.
Despite global trade disruptions, drop in demand for COVID-19 related medicines and Ukraine Russia war, Indias pharmaceutical exports grew in FY 2023 to US$25.3 billion from US$24.6 billion in the previous year.
Indian pharma industry has created a strong position in the global pharmaceuticals market with 60% of the worlds vaccines and 20% of generic medicines coming from India. India ranks 3rd worldwide for production by volume and 14th by value.
Radiopharma Segment
The Radiopharma segment comprises development, manufacturing and commercialisation of products through Radiopharmaceuticals business and distribution through the Radiopharmacies business. Our Radiopharmaceuticals products are used in the diagnosis and treatment of various diseases, including Pulmonary Embolism, Cancer, Coronary Artery Diseaseand many others. We are a leading player in nuclear medicine delivering robust quality and real value to our customers.
Jubilant Pharmovas Radiopharmacies business is the second largest radiopharmacy network in the US with 46 pharmacies distributing nuclear medicine products to the largest national Group Purchasing Organisations (GPOs), regional health systems, stand-alone imaging centres, cardiologists and hospitals. This business has over 30 years of experience in serving the US nuclear medicine community and its current geographical reach enables it to serve over four million patients yearly. The Radiopharmacies business complements the Companys niche Radiopharmaceuticals business and provides it with direct access to hospital networks.
During FY 2023, the Radiopharma business reported a revenue of RS. 25,524 million in FY 2023 as compared to RS. 21,228 million in FY 2022. The growth in revenues was driven by launch of new products in the radiopharmacy business and recovery in elective nuclear diagnostic procedures in the US market.
During the year, our I131-MIBG program for high-risk neuroblastoma made significant progress with record-high enrolment of patients in the OPTIMUM Phase II clinical trial.
The RUBY-Fill Cardiac PET franchise delivered a record year with the largest number of new contracts and installations since launch. In 2023, we received the US FDA approval to use RUBY Rubidium Elution System and RUBY-FILL (Rubidium Rb82 generator) in mobile settings. This will allow us to expand the use of Ruby-Fill into smaller community hospitals, in rural settings, and in areas with relatively lower volumes but need for cardiac
PET diagnostics. Jubilants application for Ruby-Fill Mobile and the subsequent approval demonstrates its commitment to expand the PET Cardiac imaging modality and to increase patient access to this crucial test. Strong growth outlook, a dedicated sales team and adequate manufacturing capacity will contribute to strong double-digit growth in RUBY-FILL over the next decade.
Our strategic partner SOFIE Biosciences Inc., in which the Company has a 25% of equity holding, delivered a record number of PYLARIFY? (piflufolastat F18) injection, an F18-labeled prostate- specific membrane antigen (PSMA) targeted Positron Emission Tomography (PET) imaging agent, which it manufactures and distributes as a CMO.
The Company has successfully built an integrated ecosystem including a dedicated Research & Development team, specialised manufacturing facilities, best-in-class regulatory affairs, sales and marketing operations. This business has promising growth through the Companys own vertically integrated Radiopharmacies as well through 3rd party radiopharmacies.
The Company is working on several active pipeline projects, which it plans to launch in the next few years. In its Radiopharmacies business, the Company is executing a detailed turnaround plan to grow top-line strongly with new customer wins, expand network to service newer geographies, increase product basket and enhance cost and procurement efficiencies.
The Company is well positioned in the North American nuclear medicine market, which is expected to grow across the therapeutic segments of oncology, neurology and cardiology over the next five years. The Company aspires to be the leading manufacturer of nuclear medicine products in North America. With a strong presence in North America, it is expanding its distribution channels in the Latin America, European and Asian markets.
Allergy Immunotherapy Segment
The Allergy Immunotherapy business provides products in the US and also exports to several international markets such as Canada, Europe and Australia. We supply bulk extracts to physicians who then use the products for diagnostic testing and to administer immunotherapy treatment. Allergenic extracts in our portfolio are offered in the form of consistent, high-quality, differentiated products along with a range of specialised diagnostic devices for skin testing. We are the sole manufacturer and supplier of venom immunotherapy products in the US.
A differentiated business of manufacturing and marketing of allergenic extracts is backed by one of the oldest and most trusted brands, HollisterStier, which has been in existence for over 100 years. The Company has been focusing on expanding market coverage and this has been bearing fruit with better performance. In addition to expanding the market, we have focused on building supply and ensuring robust offering of our antigens to customers. As a result, the extract volumes (ml) administered for patients have grown in high single digits. In addition, we have increased capacities in lyophilization and are further increasing capacities in the Allergy Immunotherapy manufacturing facility to ensure consistent and reliable supply of our flying insect venom products. During FY 2023, the business reported a revenue of RS. 6,028 million vs. RS. 4,894 million last year.
This business continues to build on the development of innovative products to address various allergies. It is our endeavour to expand the leadership that our products enjoy on the back of a robust product pipeline. The Company is expanding its footprint beyond the US and is building networks in other regions outside of North America including European Union (EU), Middle East and Africa (MEA) and Asia-Pacific (APAC) with a focus on our venom immunotherapy products in these regions.
CDMO Sterile Injectables Segment
We are a fully integrated leading Contract Manufacturing (CMO) player based out of North America with operations in Spokane, US and Montreal, Canada. The facilities offer manufacturing services including sterile fill and finish injectables (both liquid and lyophilization), full-service ophthalmic offer (liquids, ointments & creams) and ampoules.
We are among the leading mid-size contract manufacturers in North America for sterile fill and finish injectables. Our facilities have been approved by regulators across the world including the US Food and Drug Administration (US FDA), Health Canada, Agencia Nacional de Vigilancia Sanitaria (ANVISA) Brazil, Pharmaceuticals and Medical Devices Agency (PMDA) Japan, Medicines and Healthcare products Regulatory Agency (MHRA), and various others. Our CMO Montreal facility is under the OAI classification from the US FDA since May 2023 and we are engaging with the regulatory agency for quick resolution of this situation.
The products manufactured at both facilities are sold in over 50 countries globally. We also lay strong emphasis on the highest level of compliance and Intellectual Property Rights (IPR) with a lean operation setup and supply of quality products in a timely manner to our customers. These efforts are instrumental in helping us further grow the order book. Injectable forms an increasing proportion of new approvals by innovators for which there is shortage of capacity in the industry for high-quality manufacturing sterile facilities, which we have the capability to offer.
The CMO business has continued to play an integral role in the injectables space, with established contracts for manufacturing of both vaccines and therapeutic drugs. The business witnessed stable revenues during the year as COVID-19 related contracts tapered off in H2 FY 2022. Revenues were at RS. 11,547 million in FY 2023 as against RS. 13,340 million in FY 2022. We expect the CMO business to operate at normal healthy pre-COVID-19 levels for next 2-3 years before new capacity comes upstream and drive volumes.
Additionally we are investing in the area of sterile ophthalmics by setting up a 200 bottle per minute plant at the Montreal, Canada facility given the high Requests for Proposals (RFPs) we are witnessing in this field, which is led by the increasing aging population across the globe. This ophthalmic line is currently undergoing validations. Once operational in Q2 of CY 2024, it is expected to further encourage growth for the CMO business. With commissioning of this line, we would become the first contract manufacturer in North America that would offer additive free ophthalmics augmenting our full-service ophthalmic offering for ointments, liquids and creams.
We are also continuing to invest at our Spokane, US and Montreal, Canada manufacturing facilities to address future growth opportunities. In May 2021 for our Spokane US facility, we had announced a US$92 million investment to expand sterile injectable manufacturing capacity. This investment is being made to set up a high-speed 400 vials a minute injectable fill line with isolator technology, which will enhance Spokane facilitys capacity by 50%. This expansion, which will also include two 300 sqft lyophilisers, will be spread over 50,000 sqft at the Spokane facility and will be commercially operational the first half of FY 2026. We have all the approvals lined up and the construction of the building is already underway.
In May 2022, we further announced another expansion at the Spokane facility, which will involve setting up of one more new line to increase the total injectable filling production capacity at the plant by 100% from current levels at a cost of US$192 million.
Both these expansions will be part funded through the cooperative agreement of US$149.6 million that the Companys subsidiary Jubilant Hollisterstier LLC entered into with the Army Contracting Command, in coordination with the Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defence (JPEO- CBRND) on behalf of Biomedical Advanced Research and Development Authority (BARDA), within the US Department of Health and Human Services. This expansion is expected to commercialise by end of FY 2028.
At the CMO Montreal facility, we have undertaken an investment of ~US$73 million towards expansion of our liquid and lyo sterile fill operations. Of the total investment, ~US$48 million will be funded through concessional loan from the Canadian Governments and balance from internal accruals. The expanded capacity is planned to be operational by end of FY 2028.
Generics Segment
The Generics business includes development, manufacturing, distribution, sales and marketing of generics formulations. While initially, we focused on the US market, which is one of the largest market for generics, we are now extensively expanding in Europe & Rest of the World (RoW) markets like UK, Asia, Middle East, Latin America and Africa. We have promising plans for growth in India branded pharmaceutical space in the near future. The broad therapeutic areas covered include Cardiovascular System (CVS), Central Nervous System (CNS), Gastrointestinal (GI) and multispeciality (MS).
The business derives benefit of strength of two sources: Captive APIs and qualifying alternate suppliers for key APIs with an objective to de-risk our API source. This helps us continually reduce cost and manage risks.
We manufacture our products in Salisbury, US and Roorkee, India. A few products are also in-licensed from external partners. Our Roorkee facility is approved by Federal Agency for Medicines and Health Products (FAMHP) Belgium, Pharmaceuticals and Medical Devices Agency (PMDA) Japan, Therapeutic Goods Administration (TGA) Australia and South African Health Products Regulatory Authority (SAHPRA). While our Salisbury facility is US FDA approved, our Roorkee facility received an Import Alert in July 2021 followed by July 2022 inspection that got concluded with Official Action Indicated classification in October 22 from the US FDA. The Company is committed for regulatory compliance and engaging with the agency and is taking help from consultants to resolve the Import Alert at the earliest and ensure cGMP compliance.
As of March 31, 2023, the business had 15 commercial products in the US, 15 in Canada, 29 in Europe, and 32 in RoW. Additionally, we filed a total of 100 ANDA filings in US, 38 in Europe, 25 in Canada and 44 filings in other RoW countries so far. Additionally, we have received 62 approvals in the US, 37 in Europe, 24 in Canada and 42 in RoW markets.
Revenue during the year stood lower due to the impact of Import Alert, withdrawal of exemption for three products, pricing pressure in the US market and lower Remdesivir sales. Computer Systems and cleaning validation in H1 FY 2023 adversely impacted commercial production at Roorkee manufacturing facility. The total revenue from this business in FY 2023 was RS. 7,616 million as compared to RS. 11,569 million in FY 2022.
Our aim is to enhance focus on the key non-US (EU & ROW) markets and on India market, wherein we foresee significant growth opportunities. Currently, we have obtained approvals in the key markets of Asia and Africa (including South Africa, Philippines and Malaysia) and a number of these approved products are already commercialised. In Latin America and, Middle East markets, our growth will be driven by new filings and new product launches in key markets, including UAE and Chile.
Further, we continue to expand our operations in Europe, which has been a consistent revenue contributor for our global business over the year. UK continues to be a key growth market where we have established our subsidiary and are strengthening our team and product portfolio. During the financial year 2022-23, we commenced our sales in UK Direct to market through our subsidiary and as on 31st March 2023, we have import approval from Medicines and Healthcare Products Regulatory Agency (MHRA) for 7 products and 8 more products are expected to be added in next FY 2024. We have built a strong base with more than 35 B2B customers in Europe and UK and we are continuously strengthening our product portfolio with them. Similarly, we have established our subsidiary in UAE, which would focus on expanding operations in Middle East as part of our growth plan. Our businesses in Middle East, Canada and Australia are expected to see significant growth based on new launches and new partnerships.
In our Generics business, we are witnessing pricing pressure in some of the product categories in the US market.
Contract Research Development and Manufacturing Organisation (CRDMO) Segment
Our CRDMO segment includes Drug Discovery Services and CDMO-API businesses. Revenue for this segment stood at RS. 11,847 million in FY 2023 vs. RS. 10,050 million in FY 2022.
Drug Discovery Services
This business provides Drug Discovery and Development services under Jubilant Biosys Limited. Jubilant Biosys Limited operates from Bengaluru, Noida and Greater Noida in India, offering integrated as well as functional drug discovery and development services to global innovators. Total revenue from this business in FY 2023 was RS. 5,222 million compared to RS. 4,574 million in FY 2022.
In our Drug Discovery Services business, we focus on offering integrated solutions to our pharmaceutical customers, which maximises speed to develop a new lead. Our service offering includes early Drug Discovery Services, mg to kilo non-GMP and GMP scale up of novel compounds, intermediates and New Chemical Entities (NCEs). This provides an integrated solution (from early phase discovery and development to commercialisation of the molecule) to pharmaceutical customers. In FY 2023, our 14 portfolio of projects encompassed Full Time Equivalent (FTE), Fee For Service (FFS) and Integrated Drug Discovery (IDD) contracts.
It is our objective to provide solutions and services to the pharmaceutical companies and biotech industry as well as academic institutions during their research, preclinical and early clinical phases of drug development. Our therapeutic areas of expertise include Oncology, Metabolic Disorders, Central Nervous System (CNS), Pain and Inflammation.
We are continually strengthening our relationships in this sector by expanding our service offering through investments in new technologies and capabilities which will enhance our knowledge in select therapeutic areas. During the year, the Chemistry Innovation Research Centre at Greater Noida, India, was further expanded by 7000 sqft to provide in vitro ADME services to complement our chemistry services. Moreover, to better cater our customer needs, centres of excellence in drug discovery chemistry have been established with a focus on lipids, PROTACs, photoredox electrochemistry, solid phase peptide synthesis carbohydrate chemistry synthesis, solid form chemistry and library synthesis.
Our business presents a vastly capable and effective alternative to customers seeking world-class research and development services that are designed for speed to reach critical milestones. Our chemical development facility adheres to GMP and is capable of conducting multi-kilogram manufacturing campaigns for both pre-clinical toxicology and early clinical stage requirements.
We are strategically investing in capacity expansion and remain focused on integrated programs as well as discrete Full Time Equivalent (FTE) and Fee for Service (FFS). ? specialised in clinical trials, offers Cloud/ SaaS (Software as a Service) based on Artificial Intelligence /Machine Learning proprietary platform for clinical trials.
The eClinical suite includes TrialStat? Orbit for electronic database capture, TrialStat? CTMS for Clinical Trial Management Software and TrialStat Portal for analytics and customer interface software. The business is further expanding capacity in Greater Noida for Chemistry services to drive growth in the near term.
CDMO - API
APIs, also known as drug actives, are responsible for rendering the therapeutic action to the final formulation of a drug. As per IQVIA, global API Market was valued at about US$210 billion in 2022 of which the small molecule API segment is ~US$174 billion. The global API consumption grew at a CAGR of 5% in last five years and expected to grow at 6% in next 5 years. Growth drivers for the API market include rise in chronic diseases & geriatric population, favorable government policies for API production, increase in R&D expenditures and advancements in API manufacturing.
Our APIs business further adds value to the organisation by virtue of supplying cost-effective and high-quality APIs to our Solid Dosage Formulations business in the US, Europe, and Rest of the World (RoW). In FY 2023, revenue from the API business was RS. 6,625 million as compared to RS. 5,477 million in FY 2022. We are on track to obtain approval from the European Directorate for the Quality of Medicines & HealthCare (EDQM) for two APIs in FY 2024. As of March 2023, we filed 98 Drug Master Files (DMFs) in the US, 46 Certification of Suitability (CEPs) in Europe, 113 Active Substance Master Files (ASMFs) in the Europe, 42 DMFs in Canada, 15 DMFs in Japan, 14 DMFs in Australia and 3 CADIFA DMF Filings in Brazil. We have completed 15 filings in FY 2023 including 6 in Europe, 2 each in CADIFA, Canada & Malaysia and 1 each for ANVISA, Singapore & Philippines and balance in others. GMP of 21 APIs has been submitted to Brazil regulatory authority as part of CADIFA.
In March 2023, we received the Voluntary Action Indicated (VAI) classification from the US FDA for the Nanjangud, India API facility. With this the regulatory position stands resolved and we are hopeful of increasing volumes to the US market in coming years.
In line with our commitment towards our partners, we are leading various initiatives to reduce costs by continuously streamlining our operations, enhancing yield, refocusing on R&D, on-boarding alternative vendors, de-risking our operations and supply chain and optimising input material costs. We have relied on our patented in-house technology, supply chain robustness and optimised input material costs. Several cost improvement and process innovation programs are being undertaken for various commercial APIs as a part of product life cycle management. This will help us improve profitability and maintain market share despite increasing competition and pricing pressure.
According to estimates, 70% of Indias APIs requirement is met through China. We are aggressively working on reducing the dependence on China for raw materials by ramping up domestic capacity and developing reliable local vendors for sustainability & quality. For the critical APIs, the Company is aiming to secure the entire value chain through backward integration and in this context, we have already started the production of two Key Starting Materials (KSMs) in India using in-house technologies. We are creating an action plan for implementation of continuous manufacturing or flow chemistry for the KSMs.
In FY 2023, we initiated new project to re-set the organisation to increase our competitiveness & profitability by portfolio rationalisation, R&D reshaping, cost reduction and operational improvements.
Many digital initiatives have been started and planned for next three years at our manufacturing facility. Digital initiatives implemented during FY 2023 includes Distributed Control System (DCS) & Data Acquisition System (DAS) at API manufacturing facility.
Another initiative that has been planned for implementation in FY 2024 is capacity enhancement to add GMP Kilo Lab plant at Nanjangud for small volumes APIs and custom development.
The Company offers a broad portfolio comprising of around 100 different APIs from various therapeutic categories such as Central Nervous System (CNS), Cardiovascular System (CVS), anti-infectives and anti-diabetics. We are global leaders in Carbamazepine, Oxcarbazepine and Pinaverium. We have a diversified & large external customer base to drive growth across multiple regions.
Our new product development philosophy is innovation-led affordability and quality-by-design, giving our customers access to cost-effective APIs, while maintaining consistent global quality standards. Aided by strong process and analytical chemistry capabilities and IP and regulatory expertise, we will continue to focus on developing new products and filings for key markets.
Proprietary Novel Drugs Segment (Jubilant Therapeutics)
Jubilant Therapeutics is a clinical stage precision therapeutics company advancing potent and selective small molecule modulators to address unmet medical needs in oncology and autoimmune diseases. Its advanced discovery engine integrates structure-based design and computational algorithms to discover and develop novel, precision therapeutics against both first-inclass and validated but intractable targets in genetically defined patient populations. The Companys most advanced program - first in class dual inhibitor of LSD1/HDARS. 6 is undergoing Phase I/II clinical trials. The second program (PRMT5 inhibitor) has received IND approval and is likely to start clinical trials in FY 2024. Two additional preclinical programs, first-in-class PAD4 and small molecule brain-penetrant PDL1 inhibitor, are on IND track.
The Companys key strengths include:
• State-of-the-art discovery engine
• Differentiated pipeline and platform
• Multiple near term catalysts including Phase II data
• Experienced leadership and globally renowned advisory board members
• Premier research collaborations including with Memorial Sloan Kettering, Boston Childrens hospital, Wister Institute, Tel Aviv University
• Publications and recognitions in world class scientific conferences such as ASCO, AACR and peer reviewed journals such as Nature Scientific Reports
Within few years of inception, the Company has had many successes to its credit:
• Two programs received US FDA clearance of IND filing for clinical trials
• Received multiple orphan drug designations by US FDA
• Lead program transitioning to Phase II stage
• Validation of drug discovery platform with partnering of two programs that will continue to bring in milestone based revenues; one of the partnered programs was acquired by Blueprint Medicines (NASDAQ: BPMC), a formidable biotech and has proceeded to Phase I
• Invited to present at several global institutional investor conferences
The biotech sector faced significant headwinds in FY 2023 with the S&P Biotech Index down nearly 50%, however green shoots are emerging with Fed pausing interest rate hikes. Value has moved from preclinical stage to clinical stage biotechs with superior patient data. In this context, we are expecting larger value to be created going forward as we have successfully transitioned to clinical stage. Large pharma companies globally are facing major patent cliff in the next few years and are looking to innovative biotechs such as ourselves to replenish their novel drug pipeline.
Our drugs under development have the potential to address high unmet medical needs globally with multi-billion-dollar market size and the space that we operate in is marked by handful of peer companies commanding significant intrinsic value in recent transactions.
Particulars |
FY 2022 | FY 2023 |
Unit |
Rs Million | Rs Million |
Total Revenue from Operations |
61,302 | 62,817 |
Adjusted Revenue1 |
54,119 | 61,615 |
Reported EBITDA |
11,676 | 8,146 |
EBITDA Margin |
19% | 13% |
Adjusted EBITDA1 |
6,233 | 7,180 |
Adjusted EBITDA Margin |
11.5% | 11.7% |
Impairment of Intangible Assets |
154 | 1,714 |
Profit Before Tax |
6,304 | 278 |
Normalised Profit Before Tax2 |
6,458 | 2,556 |
Reported PAT |
4,130 | (649) |
Normalised PAT2 |
4,256 | 1,199 |
1 Adjustments to revenue and EBITDA include non-recurring / one-off revenues related to Remdesivir sales, one-time customer settlement in Generics business and COVID-19 related revenues in CDMO Sterile Injectables business.
2 Normalised PBT/PAT is calculated after adjustment in FY 2023 for exceptional items of RS. 568 million (foreclosure charges related to bond repayment and balance due to write-off of capitalised debt origination costs) and impairment of intangible assets of RS. 1,714 million.
Revenue
Total revenue from operations during the year was at RS. 62,817 million as compared to RS. 61,302 million in FY 2022. Adjusted revenue from operations during the year was at RS. 61,615 million as compared to RS. 54,119 million in FY 2022.
Revenue from Radiopharma segment was at RS. 25,524 million vs.RS. 21,228 million in FY 2022 and contributed 41% to overall revenue. For Allergy Immunotherapy, the revenue was at RS. 6,028 million vs. RS. 4,894 million in previous year, 10% of total revenue.
Revenue from CDMO Sterile Injectables segment was at RS. 11,547 million vs. RS. 13,340 million in FY 2022 and contributed 18% to overall revenue. CDMO Steriles adjusted revenue was at RS. 10,630 million vs. RS. 8,809 million in previous year.
For Generics, the revenue was at RS. 7,616 million vs. RS. 11,569 million in previous year, 12% of total revenue. Generics segments adjusted revenue was at ,331 million vs. RS. 8,917 million in FY 2022.
Revenue from CRDMO segment was at RS. 11,847 million vs. RS. 10,050 million in FY 2022 and contributed 19% to overall revenue.
Expenditure
Expenditure for operations was at RS. 55,054 million in FY 2023 as compared to RS. 49,738 million in the previous year. Material cost and change in inventory stood at RS. 16,257 million vs. RS. 12,864 million in FY 2022. Employee benefit expense in FY 2023 was at RS. 21,660 million. Other expense was at RS. 14,615 million as compared to RS. 14,424 million in FY 2022.
Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA)
The Reported EBITDA from operations was at RS. 8,146 million in FY 2023 as compared to RS. 11,676 million in the previous year. Adjusted EBITDA in FY 2023 was at RS. 7,180 million as compared to RS. 6,233 million in the previous year.
EBITDA from Radiopharma segment was at RS. 3,784 million vs. RS. 3,051 million in FY 2022. For Allergy Immunotherapy, the EBITDA was at RS. 2,055 million vs. RS. 1,641 million in previous year. EBITDA from CDMO Sterile Injectables segment was at RS. 3,451 million vs. RS. 6,131 million in FY 2022. CDMO Steriles Adjusted EBITDA was at RS. 2,579 million vs. RS. 1,827 million in previous year.
For Generics, the EBITDA was at -ve RS. 2,304 million vs. -ve RS. 566 million in previous year. Adjusted EBITDA of Generics was at -ve RS. 2,399 million as compared with -ve RS. 1,705 million in FY 2022.
EBITDA from CRDMO segment was at RS. 1,993 million vs. RS. 2,304 million in FY 2022.
Finance Cost and Depreciation
Depreciation and Amortisation was at RS. 5,540 million in FY 2023 vs. RS. 3,817 million in FY 2022. Finance cost was at RS. 1,822 million as compared to RS. 1,455 million in FY 2022. Average blended interest rate for FY 2023 stood at 5.43% as against 4.56% in FY 2022.
Profit Before Tax
Profit Before Tax was at RS. 278 million as compared to RS. 6,305 million in FY 2022.
Tax Expenses
Tax Expenses were at RS. 927 million in FY 2023 as compared to RS. 2,174 million in the previous year.
Profit After Tax
Profit After Tax was at -ve RS. 649 million vs. RS. 4,130 million in the previous year. Earnings per Share (EPS) was at -ve RS. 3.83 vs RS. 26.00 in FY 2022.
Normalised Profit After Tax was at RS. 1,199 million vs. RS. 4,256 million in FY 2022.
Segment Results
Particulars |
FY 2022 | FY 2023 | YoY Growth | Revenue Mix FY 2023 |
| Rs Million | Rs Million | (%) | (%) | |
Radiopharma |
21,228 | 25,524 | 20% | 41% |
Radiopharmaceuticals |
8,199 | 8,717 | 6% | 14% |
Radiopharmacies |
13,028 | 16,807 | 29% | 27% |
Allergy Immunotherapy |
4,894 | 6,028 | 23% | 10% |
COMO Sterile lnjectables |
13,340 | 11,547 | -13% | 18% |
Generics |
11,569 | 7,616 | -34% | 12% |
Contract Research, Development and Manufacturing Organisation |
10,050 | 11,847 | 18% | 19% |
Drug Discovery Services |
4,574 | 5,222 | 14% | 8% |
CDMO - API |
5,477 | 6,625 | 21% | 11% |
Proprietary Novel Drugs |
18 | 38 | 108% | |
Unallocable Corporate Income |
203 | 218 | 8% | |
Total Revenue |
61,302 | 62,817 | 2% |
Key Financial Ratios |
Units | FY 2022 | FY 2023 |
Debtor Turnover |
times | 6.5 | 6.4 |
Inventory Turnover |
times | 4.8 | 4.5 |
Interest Coverage |
times | 8.0 | 3.3 |
Current Ratio |
times | 2.2 | 2.1 |
Debt Equity Ratio |
times | 0.4 | 0.5 |
Operating Profit Margin |
% | 19% | 13% |
Net Profit Margin |
% | 7% | (1%) |
Return on Net Worth |
% | 8% | (1%) |
Net profit margin and Return on Net Worth were impacted by exceptional items of RS. 568 million (foreclosure charges related to bond repayment and balance due to write-off of capitalised debt origination costs) and impairment of intangible assets of RS. 1,714 million. Adjusted for these expenses, Net Profit margin and Return on Net Worth is at 2% each.
Business Enablers
Research & Development and Intellectual Property
Pharmaceuticals Businesses
Our Research & Development (R&D) is an ever evolving centre for excellence and remains strong on its belief towards innovation and quality to magnify the Companys business aspirations.
The focus of our R&D is to enhance innovation, scientific efficiency and effectiveness in compliance with Jubilants core values and support execution of business strategies. Our R&D centres are located in North America with expertise in the development of novel, robust and non-infringing processes for specialised and niche formulations and designs for radiopharmaceuticals and other products. Our R&D continues to lead to new, innovative processes and knowledge driven products that increase the efficiencies of our production and allow us to capitalise on opportunities for growth in competitive markets.
The multi-skilled R&D teams, with specialisation across the value chain of pharmaceuticals, focuses on novel drug delivery systems research, radiopharmaceuticals, allergenic extracts research, analytical research and biological support including clinical studies. R&D supports the activities of our various businesses by developing breakthrough technologies in new products, process chemistry, analytical chemistry, process intensification and establishing technologies at commercial scale. All the R&D centres are process driven and promote a disciplined work culture. Our strong internal audit framework ensures overall regulatory compliance. The R&D team keeps itself updated with the regulations, upcoming technological trends and proactively ensures pharmacopeial compliance while adopting best industry practices.
Our Radiopharmaceuticals business has a focused R&D team with radiochemistry expertise, based in Montreal, Canada and the team works on nuclear medicine for the diagnosis, treatment and monitoring of various diseases.
It serves hospital-based customers (nuclear medicine physicians and technologists) and radiopharmacies, globally, with high quality and reliable specialty products. The business is backed by a dedicated R&D team, specialised manufacturing, strong regulatory and medical affairs and commercial operations using radiation safety protocols. The areas of specialisation include cardiac, lung, bone and thyroid diseases. This team supports existing products and leads the development of new products.
We are continually engaged in the development of new products that have yielded a pipeline of products that will be introduced
in the future. We are striving to enhance the product offerings across diagnostics and therapeutics to increase the bandwidth of products and their applications.
The Company is also working in the space of allergy diagnostics and therapeutics for treating allergies caused by companion animals (cats and dogs), mites, pollen, dust etc. Allergy R&D has expertise in biopharmaceuticals— specifically sterile liquid vaccines. The core focus is on allergen (natural) extracts for immunotherapy with a range of vaccines to immunise patients against lgE mediated allergen specific hypersensitivity. The Allergy Immunotherapy business has evolved into a global player in providing high-quality products to the global immunotherapy market for diagnosis and treatment of allergies. Its cGMP facility manufactures products to meet the high-quality standards followed in the allergy industry. Over the years, the Company has extended its customer base to include allergists, ENT doctors and clinics, primary care physicians, hospitals and pharmacies in the US, Canada, Australia and many other international markets. It currently has over 200 allergenic extracts (standardised grass
pollen extracts, non-standardised tree, grass and weed pollen extracts, Acetone Precipitated product line of extracts, standard mite extract, standardised venom, mold extracts and foods and mixes and a line of specialised skin-test devices) in the market. We have evolved our production technologies including specialised proprietary know-how over a period of time with the help of R&D. We keep our options to licence- in/licence out technologies/ know-how to accelerate businesses of interest.
Our Intellectual Property (IP) - enabled innovative R&D efforts helped us avoid IP disputes after developing outstanding designing capabilities by identifying newer opportunities, better understanding of emerging challenges, developing alternative/ innovative research strategies and creating intellectual property which is well-protected in the geographies of our business interests. Our efforts have fructified into intellectual properties, which have grown over the years creating a strong position for the generic pharmaceutical business in regulated markets.
We protect our inventions by filing patent applications in India, US, Europe, Canada, Australia, China, International Patent Applications (PCT) and other countries.
In FY 2023, Generics business recalibrated its R&D strategy, to continually deliver innovative, high quality products for various markets. The new strategy leverages variety of product opportunities through in-licensing and/or external product development in collaboration with specialised Contract Research Organisation (CROs). This is expected to accelerate product introduction as well as deliver the products in to harness opportunities in timely and cost-effective manner.
Our lean and experienced R&D team engages with external CROs on development of niche generic products across the spectrum of available dosage formulation technologies including, but not limited to development of immediate release, extended release products and novel drug delivery system based products. This includes ophthalmic products, injectable products and formulations for veterinary business. Our broad development pipeline comprises dosage formulations ranging from immediate release oral formulations to more complex generics based on matrix, reservoir, Multi-Unit Particulate (MUPS) technologies and powder or granules for oral suspension. Solid Dosage Formulation R&D skill set includes development of various forms of immediate release of tablets, capsules, powder for oral suspensions, MUPS dosage forms, modified release dosage forms, inlay tablets, oral liquids, sterile dosage forms including prefilled syringes and lyophilized powders for injection, ophthalmic dosage forms, topical dosage forms and veterinary products. Our developed technologies and products are Intellectual Property (IP), regulatory and quality compliant.
Drug Discovery Services
Drug Discovery Services business offers state-of-the-art capabilities in small molecule discovery and pre-clinical development. These include capabilities in Discovery Informatics, Molecular Modelling, Structural Biology, Medicinal Chemistry, Synthetic Chemistry, in-vitro Biology, in-vivo Biology, DMPK studies, Pharmacology, Toxicology, Scale up and GMP. Our disease biology expertise spans across multiple therapy areas including oncology, metabolic disorders, neurological disorders and inflammation.
Drug discovery is driven by the passion of our scientists, to provide affordable drugs to patients worldwide in areas of unmet needs. Our scientists collaborate across technology and therapeutic platforms to identify and validate novel small molecules and platforms that will enable first or best-in-class healthcare solutions of our collaborators. The competence of our team has been demonstrated by the progression of molecules to candidates and beyond starting from targets in a span of less than three years. The ISO 27001-certified facility is designed to firewall collaborations for scientific, operational and data exclusivity.
We are constantly adding new technologies into our operations, and the additions in the current year include liquid handling systems including mosquito? Xtal3, mass spectrometers, and the IVIS? Spectrum in vivo imaging system. IVIS? Spectrum combines 2D and 3D optical tomography on one platform and helps in non-invasive monitoring of disease progression. This, in essence, helps minimise the use of experimental animals. The system is currently being used to conduct advanced imaging-based animal studies, including cell trafficking and gene expression patterns in living animals. The mosquito? Xtal3 combines speed, accuracy, and performance in crystallisation drop set-up and is currently being used by our structural biology group. The onboarding of mosquito? Xtal3 has greatly enhanced our success rate in obtaining protein crystals and co-crystals and helps accelerate the gene-to-structure determination of our customer programs. We have made significant progress in our AI/ ML enabled drug design and validation.
Digital initiatives were rolled out to improvise day-to-day operations, notebook keeping and customer engagement. We have launched a customer satisfaction survey and 80% of our customers are promoters of our services with peers and colleagues in the industry. In parallel, numerous investments were made to enhance Environment, Health & Safety (EHS) standards in the laboratories. Together, these strategic actions and investments will pave the way for business growth in the coming years. We have on boarded new customer programs in the disease areas of oncology and immuno-inflammation. Targeted therapeutics is a growing area, and with our specialisation in disease biology, we are currently supporting several drug discovery programs in this area. We have also successfully nominated developmental candidates in some of our research programs in the areas of liver diseases and inflammation. Our scientists have published the research being carried out by the business in reputed scientific journals. We continue to maintain a healthy pipeline of client programs that can help offset attrition and we continue our efforts to expand the business base.
Manufacturing
The manufacturing operations continue to be streamlined with a strong focus on the key enablers.
• Compliance: Compliance with diverse international regulations to maintain high-quality standards and a global customer base
• Customer service: Heightened awareness of our customer needs and striving towards delivering a quality product on time
• Capacity and Capabilities Enhancement: Sufficient capacity to meet demand as well as respond to market opportunities while implementing technology advancements
• Cost Leadership: Continue to improve our conversion cost to remain competitive and establish a long-term presence in the market
• Continuous Improvement: Review and revise our processes using business excellence models and lean strategies
• Continuity: Business continuity through risk mitigation and sustainability measures
Compliance
As a pharmaceutical manufacturer, our manufacturing facilities are required to comply with all applicable quality and regulatory authority requirements of the country of origin and country of export, including ensuring that the quality and manufacturing processes conform to current Good Manufacturing Practices (cGMP).
Continuous Improvement
• We are committed to continuous business process improvements by means of automation and providing timely training to our workers, establishing clear Standard Operating Procedures (SOPs) and process guidelines, which will lead to a reduction in cycle time and improvement in productivity
• We continue to deliver safe and effective products to our clients in a timely manner. In the true spirit of continuous improvement and to be in line with the latest industry standards and trends, we will continue to make significant investments in our people, strengthen our processes, bring state-of the-art technologies and further develop in-house expertise like computer system validation
• We have formed a dedicated team to address the import alert issue. This team includes highly specialised consultants, who have wide experience in resolving such issues. This team will not only remediate the gaps identified by US FDA but will also take a holistic approach towards further improvising our cGMP quality systems, in addition to implementing a comprehensive program to improve our processes, this team will also proactively address all the gaps identified
• We are working very closely with the Agency and are providing them with regular updates and progress on the highlighted findings during the inspection
We continue to improve and harmonise our quality systems to ensure compliance with ever-evolving regulations. At Jubilant Pharmova Limited, we always strive to stay ahead of the curve to ensure compliance with regulations while meeting patient needs. During the financial year ending on March 31, 2023, various regulatory authorities inspected our facilities. Our North America facilities were inspected by Health Canada (CMO Montreal and Radiopharmaceuticals facilities) and by US FDA (CMO Spokane, CMO Montreal and Radiopharmaceuticals facilities). The Health Canada inspection at CMO Montreal in October 2021 concluded with the GMP certificate being issued following the close of the inspection. The US FDA inspected the CMO Spokane facility in August 2021 resulting in the inspection being classified as Voluntary Action Indicated. The US FDA inspected the Radiopharmaceuticals Montreal site in June 2022 resulting in the inspection being classified as Voluntary Action Indicated. The US FDA inspected the CMO Montreal site in February 2023 and our response to inspection observations has been provided to the agency. The Companys facilities in North America are operating in a state of GMP compliance based on the inspection history at each of the sites.
During FY 2019, US FDA inspected the API Nanjangud, India manufacturing facility and consequently in March 2019, the facility was put under US FDAs Inspection Classification status of Official Action Indicated (OAI). As a result, while supplies of the approved products to the US continued, the approvals of pending applications or supplements for products to US were withheld. The Company undertook a holistic review to implement necessary Corrective and Preventive Actions (CAPA) and also engaged third party cGMP consultants to support and identify areas of improvement and has been voluntarily updating US FDA. The Companys Nanjangud facility completed all identified CAPA actions and updated to the Agency. The site was inspected again by the US FDA in December 2022 resulting in the inspection being classified as Voluntary Action Indicated removing the previous classification of OAI.
Our Roorkee, India manufacturing facility received an Import Alert in July 2021 followed by an inspection in July 2022 that got concluded with Official Action Indicated classification in October 2022 from US FDA. The Company continues to engage with the US FDA and take all necessary steps, including comprehensive assessment and engaging independent consultants, to ensure further controls to resolve the import alert at the earliest and ensure cGMP compliance. Additionally, no other regulatory agency so far suggested or recommended similar action for any other market and/ or product. Manufacturing and supply of pharmaceutical products are continuing from Roorkee facility to all markets including and for non-restricted products to the US. The Company is engaging with the agency and is taking help from consultants to resolve the import alert at the earliest and ensure cGMP compliance.
In our Radiopharma business, we operate 46 compounding nuclear pharmacies (Radiopharmacies) including three Positron Emission Tomography (PET) drug manufacturing facilities across twenty-two states in the US. Our products are viewed as reliable and trusted in the industry, as we procure, prepare and deliver the highest quality US FDA approved products and fully support and comply with the State Boards of Pharmacy (BOP) and USP compounding standards. Our pharmacies are open formulary, providing customers with a full array of options that allow clinicians to achieve the greatest benefits for their patients.
The regulatory standards for compounding radiopharmacy facilities have been undergoing constant and stringent changes over the past few years. During the end of the financial year on March 31, 2023, many of our facilities underwent successful inspections by multiple regulatory agencies, including the State Boards of Pharmacy, US FDA, State Departments of Health and Radiation Safety, and Environmental Protection Agency. No major observations were noted during the regulatory inspections within the financial year. All minor observations during inspections have been corrected and confirmed as per the requisite standards. The business has a good compliance history and good standing with regulatory agencies.
Environment, Health, Safety & Sustainability
For Jubilant Pharmova, Environment, Health & Safety (EHS) compliance is a key decision enabler for any process implementation. Our vision is to achieve and maintain the highest standards of EHS performance that ensure compliance to regulatory reguirements and strengthen our commitment towards our stakeholders. Leaving minimal environmental footprint is integral to our EHS philosophy.
Over the years, EHS excellence has been extensively promoted as a part of our culture. It is also clearly reflected in our policies on sustainability, EHS, climate change and green supply chain. Performance reviews across the business regularly look at EHS key performance indicators (both lagging and leading) to reinforce leadership commitment towards employee safety, well-being and environmental sustainability. Inputs are also integral to our major business decisions, such as new product development, facility enhancements and contractor/vendor relations.
Caring for the environment is a core corporate promise and as a part of this commitment, requisite capital expenditure is being incurred on process improvements as well as upgradation of environmental management facilities using the latest technologies. While end-of-the-pipe solutions are implemented, we are also making progress on initiatives for the reduction of waste at source. Efforts to process more by-products and waste to make them reusable are paying off in terms of ecological and economic impact.
We are aware of the rapid changes in the business environment such as increased global competition; more rigorous customer and societal demands; and extensive investor requirements. To tackle these challenges and ensure sustainability, excellence in cost, quality and services, we treat Environment, Health and Safety as a topic of utmost importance to us.
The Company takes appropriate steps to ensure that our employees, the community at large and the environment, including natural resources, are protected. On the road to achieving excellence, we have adopted a top-down approach and have been enhancing the impact of initiatives by making it a line function responsibility through active employee consultation and participation. Efforts have been regularly implemented to drive a common governance approach on EHS across the board, and to adopt management programs and systems that follow a standard framework for deployment, but with the flexibility to tailor-fit local regulatory and other location specific reguirements.
The Companys operations are spread across different geographical regions and are subject to a wide range of EHS laws and regulations. In North America, we are regulated by various safety, health and environmental agencies and authorities including the United States Environmental Protection Agency (US EPA), Occupational Safety and Health Administration (OSHA), United States Nuclear Regulatory Safety Commission, Committee on Standards, Eguity, Health and Safety at Work (CNESST, Quebec), Canadian NuclearSafety Commission (CNSC), United States Boards of Pharmacy and Environment and Climate Change Canada. In India, we are regulated by various environmental agencies and authorities including the Central Pollution Control Board (CPCB) and State Pollution Control Boards.
In FY 2023, we deployed the Conformity tool for compliance management across our facilities in North America. The tool helps in linking compliances to our processes and where required, changing business processes/policies. The tool provides real-time MIS capability for the reviewer/approver and management. The compliance reports are reviewed by the Board periodically.
In FY 2023, we developed and deployed an EHS management system, which provides the structure for implementing proactive risk management solutions to ensure the safety of our people, ensure compliance with internal and external requirements, drives continuous improvement and support the overall strategy to operate in a safe and sustainable environment.
All our facilities have a process for employees to report workplace EHS issues and concerns. We also encourage dialogue with employees through educational initiatives and functional and cross functional committees. Our leadership team members are required to conduct regular GEMBAs not only to identify and address improvement opportunities but also to engage in EHS-focused conversations as part of building a culture of safety and caring. At our manufacturing facility level and at
Radiopharmacies, EHS programs are put in place including training and awareness to keep our employees, community and other stakeholders educated in key EHS aspects relevant to their operations. Contractors working at our facilities are educated and trained to conduct their activities safely and in an environmentally responsible manner. The operations leadership team reviews the progress made by the facilities on their EHS management system implementation during the monthly global EHS call.
Our manufacturing facilities in India are well-equipped with Occupational Health Centres (OHCs) run by experienced professionals. A comprehensive health assessment program is ensured for all the people working in our various facilities. The OHC provides curative, advisory and health promotion services to the employees. In North America, we work closely with local health care providers to ensure timely medical support for our employees.
We have regularly made investments for the up-gradation of process safety and enhanced process controls at our facilities. We have an EHS solution, GenSuite, which is a cloud-based management system that provides integrated EHS applications into a suite of tools specific for each business. The applications are related to the management of corrective actions, incidents recording, incident investigation, data mining, auto notifications, compliance calendar among others. GenSuite allows for greater flexibility in data collection that matches our business needs and helps drive consistency in terms of tracking EHS challenges and ultimately improve our overall performance.
We worked on enhancing the capabilities of Gensuite as part of our continual improvement strategy, to help provide a better user experience and reporting of data. One such enhancement is the development of a safety observations reporting tool called iCare in Jubilant Pharma Limited covering all of our North American facilities. Safety observations tool use computer as well as mobile technology to capture safe and unsafe behaviours and conditions and are tracked in the system till closure. Another enhancement in Gensuite is to unify all incidents and accidents reporting under one common reporting system to provide a better user experience and tracking and reporting of data. We also implemented HumanTech which is a cloud-based software utilising artificial intelligence technology to assess ergonomic risks in our manufacturing operations and provide solutions to systematically address them.
Our Radiopharmacies business in the US has introduced a driver safety training program called Driver Insights offered in collaboration with our fleet management vendor ARI which includes an electronically delivered Driver Skill Assessment and training to specifically address skill gaps. Our fleet in the US also utilises GeoTab which is a GPS based telematics solution which provides crucial driver behaviour information and helps is ensuring the overall efficient operation of our vehicles.
Jubilant Radiopharmacies network across the US completed 54 inspections, by environmental agencies, health agencies, radiation agencies and fire departments that did not have Notices of Noncompliance (NONs). The solid dosage manufacturing facility at Salisbury, Maryland, US completed a virtual inspection by the Maryland, US Department of the Environment for RCRA programs, a periodic inspection by Maryland, US Department of the Environment/ City of Salisbury, Maryland storm water division where all findings were abated within the allotted time-frame. An inspection by the City of Salisbury, Maryland wastewater treatment was conducted without any findings. Canadian Nuclear Safety Commission (CNSC) performed a compliance inspection of the Radiopharmaceuticals business activities under the Nuclear Substance and Radiation Device License. No notices of noncompliance were issued as part of this inspection. There were 12 recommendations focused on improving the training program which we responded to and followed up within the allotted time.
The API facility at Nanjangud, India operates on Zero Liquid Discharge (ZLD). Actions towards water conservation measures, improvement made in segregation of effluent streams, adoption of new technology SCALEBAN for cooling tower, etc. have resulted in improvement in ZLD operations with reduced operational cost. The construction of additional infrastructures have helped achieve improvement in compliance with hazardous waste management rules. With additional tanks being constructed for spent solvent handling, substantial improvement shall be achieved during FY 2023 taking the site to a benchmark in the sector for hazardous waste management. Enhanced focus on hazardous waste destruction through co-incineration in cement kilns is progressively reducing environmental footprint.
Our Roorkee, India facility has full fledge effluent treatment & sewage treatment facilities with a capacity of 130 KL & 70 KL respectively. It is a Zero Liquid Discharge facility and the treated water is used for irrigation as per the Consolidated Consent & Authorisation (CCA). There are also plans currently explored to utilise treated water in our cooling towers.
We continue to engage external subject matter experts to assess our operations and we jointly work with the help of their expertise to enhance our risk reduction efforts. These types of engagements include process safety, machinery safety & lockout tag out, electrical safety, ergonomics, industrial hygiene, investigation and root cause analysis, etc. In FY 2023, we engaged a Scotland based consulting company called STC Insisio to deliver Incident Investigation and Root Cause Analysis training for a group of our EHS & operations managers on their flagship and trusted investigation and root cause analysis solution COMET which is considered the best in class at reactive investigations and also provides users with the ability to pivot into proactive investigations. More training is planned this financial year as part of our competency building efforts. We engaged with an external expert agency for strengthening our safety management system as part of our Occupational Health and Safety strategy. The two- year project includes implementation of global OH&S Standards, competency building of the people, development of safety KPIs and driving safety governance across all the levels of the organisation till top management level.
Comprehensive safety improvement and capacity building exercises have been undertaken to improve the knowledge, competency, expertise and commitment level of the people through an external safety consultant.
Customer Service
Our operations fundamentally focus on Supply Level Adherence (SLA) and Right First Time (RFT). By achieving excellence in these two key metrics, high levels of customer service are automatically achieved. Bringing in customer centricity in our operations by leveraging excellent tools and methodology to unlock the Overall Plant Efficiency (OPE) and On-Time in Full (OTIF) is important to achieve a competitive advantage to support the business growth.
Capacity and Capabilities Enhancement
The Radiopharma business has undertaken several facility improvement initiatives throughout FY 2023. These include the implementation of ISO 7/8 classified cleanrooms per USP. Atlanta and Chicago were relocated where new office areas, laboratory and modular cleanrooms were installed and certified. The two new sites were inspected by their respective state boards of pharmacy at preopening with both obtaining approvals. Additional renovations were completed in FY 2023 to meet USP requirements at St. Paul, Cleveland, Pittsburgh, Harrisburg, Portland, and Loma Linda sites. Facility improvement projects were also completed in FY 2023 including the Savannah site. Two sites were closed during FY 2023, Valdosta, Georgia, US and Myrtle Beach, South Carolina, US. Additional USP compliance projects which have been initiated in FY 2023 in the US are Plainview, New York (relocation), Oakland, California (relocation), Detroit, Michigan (relocation) and Saginaw, Michigan (remodel) to be completed in FY 2023.
Over the last couple of years, we have optimised the process with an added Isolator technology at our Montreal, Canada manufacturing facility resulting in a 100% capacity increase as well as reduced radiation exposure to our employees. We have also automated our RUBY-FILL? manufacturing processes by installing automated loading stations resulting in a 15% capacity expansion, efficiency gains and improved compliance.
At both of our CMO facilities - Spokane US and Montreal, Canada, equipment reliability programs have been initiated and several initiatives are in progress to strengthen and improve the processes around equipment reliability as well as maintenance and engineering capabilities, spare parts management and overall plant capacity.
At our CMO operations in Montreal, Canada, we upgraded our filling line and are in the process ofprocuring additional ophthalmic manufacturing and filling capacities. The new ophthalmic line will have the capability to manufacture preservative free ophthalmic solutions and is expected to be operational by the Q2 CY 2024. We continue to contribute during the pandemic by manufacturing both drugs and vaccines at both our injectable facilities.
We have also been engaging and collaborated with various 3rd party CMOs in India, US and Europe and plan to continue to do so to de-risk and enhance our serviceability. We have plans to automate several other manual processes to enhance efficiencies and compliance while ensuring the health and safety of our employees.
Our Roorkee, India and Salisbury, US manufacturing sites are equipped with state-of-the-art facilities and machinery having sufficient capacity to cater to the growing demand. Our Salisbury, has undergone an upgrade in terms of overhauling the HVAC system for the GMP space.
As part of the transformation, various measures for increase in efficiencies coupled with reduction in the conversion cost is underway to make the products not only competitive but also affordable.
Several capacity de-bottlenecking projects have been implemented and facilities and processes have been upgraded to enhance GMP at our formulations and APIs manufacturing facility at Roorkee and Nanjangud, India respectively.
At Nanjangud, India various capacity enhancement and cost improvement projects aimed at products such as Carbamazepine, Tramadol, Losartan, Irbesartan, Esomeprazole Trihydrate, and Escitalopram Oxalate have been implemented to minimise the Cost of Goods Manufactured (COGM) and improve capacity utilisation as well as capability building.
Cost Leadership
Our focus has been on conversion cost optimisation without compromising our quality and customer service standards and several initiatives have been undertaken to reduce the conversion cost. Our manufacturing facilities in Salisbury, Maryland and Spokane US have led structured improvement projects designed to deliver significant conversion cost savings, while at the same time improving safety rate, deviation rate, productivity, batch rejections and service level. We have undertaken numerous energy-saving projects to reduce our utility costs. Several automation projects and increased batch sizes in our operations are leading to efficient headcount utilisation.
Our bottoms-up Business Excellence initiative named Eureka in North America and Sankalp and Seccess in India has allowed employees to come up with novel ideas and suggestions to bring efficiencies, reduce or eliminate cost or waste in our processes. Our focus on training and process improvements led to a reduction in discards and improved Right First Time (RFT).
At Nanjangud, India, as a part of the continuous improvement journey toward cost leadership/cost optimisation, our business excellence team along with a CFT (Cross Functional Team) of Production, Technical Services and R&D, focuses on the identification of waste across the value chain and eliminating it using a structured approach to improve product quality, RFT, service levels, productivity, planning and yields. They have successfully executed process automation and digitalisation projects.
Continuous Improvements
At Jubilant Pharmova Limited, the Business Excellence function is proactively creating the framework for new improvement strategies which drives competitive advantage backed by a strong execution mechanism and capability. These improvement strategies pertain to all the three critical pillars of the organisation, which are - customer, process and people.
The continual effort of the Business Excellence function is to understand processes and systems, model them using statistics and define crucial measurements which result in superior coordination and integration of processes, learning, reconfiguration and transfiguration. This leads to a competitive advantage, which can be effectively used to leverage Companys competitive strategy. During this journey of continual improvement, we have adopted improvement methodologies in line with the organisations priorities like Lean Six Sigma, Total Productive Maintenance (TPM) and Business Intelligence (Bl) tools like Power BI, Qlik Sense, etc. This year, the Business Excellence function continued to extend efforts towards Lean Lab fundamentals for optimising the efficiencies in Quality Labs. The use of the Internet of Things (IOT) for online Overall Equipment Efficiency (OEE) has helped in understanding our losses in detail and improvement of projects are executed around key losses. In addition, the team facilitated the deployment of Smartsheet for efficient project management across all businesses. This year the use of advance analytical model backed by AI/ML helped in resolving critical quality issue of one of our runner product. Plans are in place to use this for design space optimisation of many more products. As a part of our digitisation journey, Manufacturing Execution System (MES) deployment is under progress and after implementing online Overall Equipment Efficiency (OEE), EBR (Electronic Batch Record) deployment is in progress for next year. The business excellence infrastructure helps in creating a self-driven/Mission Directed Team (MDT), which drives their operational area towards excellence in alignment to business objective through right accountability and training. For our Salisbury, Maryland plant, this year we used IPT (Integrated Process Teams) concept for engaging team members from all functions which in turn helped in improving our delivery performance and thus the customer satisfaction.
Our technical services teams continue to transfer new products to the manufacturing facilities and are developing more efficient processes to optimise the manufacturing capabilities, cost and manpower. At our CMO facilities in the US and Canada, several of the technology transfers were completed in the record time to provide lifesaving drugs in response to the global COVID-19 pandemic. The knowledge and lessons learned from these rapid transfers are being applied to other transfers to further improve the efficiency of technology transfer processes, without compromising on process robustness, which is one of the critical factors for ensuring reliable supply chain, product quality and patient safety. Recent supply chain challenges of filters, tubings and raw materials have been mitigated by scientifically justifying alternate supplies.
With the vision and support of senior management, a culture of Right First Time (RFT) is engrained in the people involved and processes used to transfer technology from our own R&D centres, clients and from existing manufacturing facilities. To further support the RFT vision, an internal corporate policy on technology transfer got published in second half of FY 2023, with clearly defined roles and responsibilities of all functions responsible for the product transfers. As part of its commitment towards continuous improvement, knowledge transfers and enhanced product and process understanding, the Company strengthened the technology transfer groups at its manufacturing facilities and corporate offices as part of its commitment to new product introduction, product launches and continuous process improvement.
The technical services/technology transfer groups interface with key functions like R&D, Regulatory, Quality, Business, Supply Chain and Operations to ensure realisation of business objectives. Most importantly, the technical services functions ensure that fundamental knowledge gained during the development is transferred to the manufacturing scale using a robust Quality by Design (QbD) approach.
Continuity
Business continuity is essential for sustenance and the Company has already established a sound strategy. We also executed several risk mitigation projects to qualify alternate sites for key products, qualification of alternate sources for key active ingredients, excipients and components. This provides greater confidence in our overall supply chain with our customers. We see our sustainability programs as key enablers for ensuring business continuity. At Nanjangud, India a comprehensive asset health assessment exercise is carried out to replace the ageing assets in a phased manner to avoid business interruptions and for enhanced compliance levels. To bring about a cultural transformation across the organisation with a safety and quality mind-set, programs on the Companys Values, safety management system and quality culture transformation, continue to be carried out.
Supply Chain
Globally supply chains have remained a bottleneck in the last 1-2 years. However the Supply Chain at Jubilant Pharmova Limited continued its focus on ensuring the availability of all inputs in time to continue manufacturing and ensure timely delivery of our products to customers across the globe. This was achieved despite of global supply constraint and increased volatility in prices of most of the inputs.
The Russia - Ukraine war has significantly impacted the metal prices as well as logistics cost across the globe. The metal prices including mild steel, stainless steel, aluminium and copper also increased significantly impacting prices of capital equipment.
Global logistics continued to remain a challenge over last couple of years. However, Supply Chain at Jubilant had entered in annual contracts with leading global shipping lines which helped us in getting space on vessel and ensured availability of boxes.
The focus on Responsible Care and Sustainability initiatives in our supply chain management is paramount. The Supply Chain has also identified specific projects for Green procurement which were implemented in FY 2023. We always encourage micro, small and medium enterprise (MSME) vendors to be part of our supply chain in the area of raw and packing material as well as other material sourcing. We prefer vendors who are closer to our plants and our selection process gives preference to those who are using clean sources of energy, recycling their products and reducing the carbon footprint. We continue to remain platinum member of Nicer Globe, a responsible care initiative of ICC for safe and sustainable transportation of chemical products. We are having robust Supplier Code of conduct which is updated from time to time & expect all supplied to abide by it. We ensure that we are following all regulations and compliances related to supplies. We would like to sincerely thank all our external partners who put extraordinary efforts in maintaining a smooth supply chain during pandemic times.
Way Forward
The financial year 2024 is going to be a challenging year in terms of prices of most of the raw material, packing material and fuels. Global supply chain costs still in higher bracket. The year continues to witness higher inflationary conditions and risk of certain economies going into recession. This is going to impact the cost of operations as well as the cost of financing. Despite of above challenges, we are committed to ensure continuity of all our plants by supplying ingredients and fuel in timely manner. To address this, we are closely working with all our suppliers with whom we have strategic relationship. We are continuing to focus on localisation and external manufacturing of all imported products within India. This will not only de-risk us but also help us reduce price of product. Going forward, we shall continue to achieve higher levels of efficiency and productivity across categories with a primary focus on input and logistics cost and digitalisation while ensuring delivery of value to our end customer.
Business Excellence
We are striving towards customer-centricity in our process by leveraging excellence in our processes and methodologies. Our goal is to achieve efficiencies and make our businesses more sustainable. Identification of waste across the value chain and eliminating it by improving product quality, service levels, productivity, planning and yields are integral to our approach.
To bring about a cultural change across the organisation with a safety and quality first mindset, programs such as Values workshop, Integrated Process Teams, and Lean Workflow Management are undertaken consistently. Further, cross functional team collaboration has been actively encouraged for solving business problems using Lean Six Sigma approach.
There is a high level of commitment towards leveraging new technologies and automation to deliver breakthrough results and achieve competitive advantage. Dynamic project management through Smartsheet, use of Power BI dashboards and initiation of MES deployment is setting the path for efficient and agile operations. In continuation of our digitalisation journey the use of Artificial Intelligence and Machine Learning backed logistic planning and schedule optimiser tools helped us to leverage faster, efficient and reliable deliveries to our customers. Design space of key products optimised using Python-based advanced modelling techniques and improved product robustness.
Digital & IT Transformation
In the technology landscape across sectors and industries, we are witnessing a significant shift with digital technologies gaining widespread acceptance, promising to revolutionise outputs and outcomes in the coming years. In the Pharmaceuticals and Healthcare sector, we are witnessing this wave of digital transformation driving the adoption of Industry 4.0 principles and emerging technologies. Companies are embracing technologies like Artificial Intelligence/Machine Learning, Optimisation technologies, Internet of Things (IoT), Robotics and Mixed Reality, which are enhancing agility, simplifying processes, improving efficiency, minimising manual efforts and errors, improving quality and compliance and ensuring preparedness for future disruptions.
Moreover, these technologies enable swift and effective problem resolution. At Jubilant Pharmova, we have embarked on a transformational journey to become a digitally agile company, transforming patient and stakeholder experiences. This endeavour empowers us to reimagine our operations across the entire value chain.
Over the past year, the Company embarked on a journey to setup a robust foundation for the transformation and preparing for an exciting digital future. For setting up a strong digital foundation, the Company:
• Onboarded a Tier-1 world-class partner to modernise and manage all our global critical digital infrastructure. This has significantly improved service delivery, enhanced system availability and reduced unplanned downtime. We leveraged modern Artificial Intelligence based Ticketing tools that has helped shorten response and resolution time across our services.
• Transitioned to a best-in-class Next-gen Security Operations Center (NG-SOC) to significantly improve our overall Cybersecurity posture. This is particularly important given todays ever evolving cyber threat landscape.
• Transformed network infrastructure and moved to SD-WAN technology that will enhance our Application portfolio to be ready for the future and enable leveraging new age architectural paradigms such as Cloud, IoT, Digital Twins, etc.
• I s fostering a culture of innovation, experimentation and agility to enable us to adapt quickly to changing market conditions and customer needs. We launched an internal communications campaign called DigiScoop building digital awareness, encouraging collaboration and accelerating knowledgesharing across businesses and functions to promote a culture of continuous improvement.
As we move forward into an exciting digital future, we continue to invest across people, process and emerging technologies to build a Jubilant Pharmova 2.0. Over the next year, the Company has plans to:
• Accelerate Data and Analytics Driven Decision Making: we continue to invest in data and analytics a program named Project Insight. Insight would surface insights from the vast amount of enterprise and external data and help monetise that through accelerated data-driven decisions. By analysing large amounts of data, we would identify patterns and trends that were not otherwise immediately apparent, helping us to optimise our processes, reduce costs, and improve productivity.
• Transform Manufacturing & Supply Chains with Industry 4.0: we are actively exploring ground-breaking Industry 4.0 technologies to revolutionise our manufacturing processes and supply chains. Your company is diligently evaluating key 4.0 advancements that have the potential to be deployed across our manufacturing plants and supply chain networks. These cutting-edge technologies hold the promise of enhancing yield and throughput, optimising energy efficiencies, and propelling improvements in Overall Equipment Effectiveness (OEE). By embracing these transformative technologies, we aim to unlock new levels of operational excellence throughout our manufacturing operations. This entails leveraging advanced automation, data analytics, artificial intelligence, and other innovative solutions to optimise production efficiency, reduce waste, and streamline our supply chain operations.
• Reimagine Customer Journeys and Experiences: across our businesses we are embarking on a transformative journey to reimagine customer journeys and experiences. This initiative involves a comprehensive overhaul of various aspects, including ordering, billing, and customer support, through the integration of modern and mobile technologies. By leveraging the power of digital advancements, we aim to revolutionise the way customers interact with us throughout their entire journey. Through this endeavour, we strive to establish new benchmarks in customer satisfaction and engagement, setting ourselves apart as an industry leader in delivering exceptional service.
• Quality Renaissance: Empowering Compliance through Digital Transformation: In an industry as critical as pharmaceuticals, ensuring quality and compliance is paramount. The pursuit of excellence in these areas not only upholds the safety and wellbeing of patients but also safeguards the reputation and trust of the entire pharmaceutical ecosystem. As we embark on a new era of digital transformation, we recognise the immense potential for digital technologies to drive a quality renaissance within our businesses and the industry. By leveraging innovative digital solutions, we are revolutionising our approach to quality management and compliance, laying a foundation for a brighter, safer, and more efficient future.
• Setup a Digital Center of Excellence (CoE): in response to the ever evolving digital landscape, we are taking bold steps to establish a cutting-edge Digital Centre of Excellence. This dynamic initiative brings together a core team of data scientists, data engineers and cross-functional teams from various business units, all united in driving forward specific digital initiatives. By harnessing the collective power of these teams, we are poised to lead the way in digital transformation across our organisation. Furthermore, we have launched comprehensive talent development programs to empower our employees with the essential digital skills and capabilities required to thrive in this rapidly changing environment. We recognise the importance of equipping our workforce with the latest tools and knowledge to navigate the digital realm effectively. Through these initiatives, we are investing in our people, ensuring they are well-prepared to embrace the challenges and opportunities presented by the digital age.
In summary, the past year has been critical for us in building a strong digital foundation and over the next years our digital transformation journey will be a game-changer for our long-term growth. It has required substantial efforts, but we recognise its indispensable role in our ongoing success. Moving forward, we remain committed to further investing in state-of-the-art digital technologies, refining our business processes, and cultivating an innovation-driven culture. These actions are vital for us to stay ahead in our industries, constantly evolving and remaining relevant in an ever-changing landscape. We are confident that these strategic initiatives will continue to drive value for our organisation, paving the way for a prosperous and triumphant year ahead.
Human Resources
We see ourselves as a responsible and committed organisation which is guided by Our Promise of Caring, Sharing, Growing. In line with this promise we work with our Employee First approach as the underlying principle for all initiatives.
Central to any business success is for the employees to feel they are supported to give their best efforts to build a sustainable workplace.
With the objective of building an even more sustainable workplace, it is imperative that we as an organisation listen to Voice of the Employee and work on the valuable feedback. In this context, we introduced Employee Engagement Survey JUBI VOICE- a safe space for all employees to express themselves and for leadership to listen and action on.
We have a robust Learning Platform that caters to varied needs of employees across levels. To prepare senior leaders for Strategic challenges and build their leadership capabilities in an Age of Disruption, we introduced Global Leadership Program which is a nine months long leadership development journey with a combination of learning events. The major events of the journey include virtual classroom sessions with INSEAD, 360-degree feedback survey, Action Learning Projects. As we gear up for Digital 2.0, we launched DigiScoop an initiative to build employee awareness through success stories where we get industry experts to talk and share best industry practices.
Diversity & Inclusion is an important agenda for Jubilant, we have redesigned all our key people processes from hiring to building an inclusive culture with defined matrices. The effort has resulted in improving diversity statistics.
As part of our digital transformation agenda, we continue to bring more efficiencies in our processes and amplify our employee experience. In last one year, we have launched digital compensation process, mobile enabled Reward & Recognition program, delivered the most prestigious Global Chairmens Award on Metaverse platform and launched pre on-boarding platform that provides a sneak peek into of the Companys multi businesses and culture which helps the new joinee engage better with us before they are on-boarded. Further to improve new employee experience, we designed & launched a well-structured on- boarding & orientation program for all new joinees- Spotlight, it focuses on seamless joining & induction, meet & greet with team and stakeholders.
Analytics is critical to us, we continue to enhance our systems and processes to measure our processes health across the globe so that we can take faster and better decisions. Further, our global analytics helps in maintaining data integrity, ensuring better process governance and control, enhancing processes and delivering higher productivity.
We continue to strengthen our performance management process to drive a culture of performance.
Corporate Social Responsibility (CSR)
The Corporate Social Responsibility (CSR) is an essential pillar of Jubilant in its endeavours towards sustainable & responsible growth. CSR activities at Jubilant are weaved in accordance with the provisions of Section 135 read with Schedule VII to the Act. Besides, the CSR initiatives at the Company are in line with the United Nations Sustainable Development Goals (SDGs).
Jubilant Bhatia Foundation (JBF) formed in the year 2007, a not-for-profit arm of the Jubilant Bhartia Group, works towards conceptualisation and implementation of CSR activities of all group companies of Jubilant. Through CSR, the company is working in the realm of Health, Education & Livelihood. The CSR projects focuses towards empowering and adding value in the lives of the communities around the area of operations of Jubilant with a 4P (Public-Private-People-Partnership) during the implementation.
JBFs detailed activities are available on its website www.jubilantbhartiafoundation.com.
With a vision to bring progressive social change through strategic multi-stakeholder partnership and bring about a social change involving knowledge generation & sharing, experiential learning and entrepreneurial ecosystem, during the Financial Year 2023, Jubilant continued working towards enhancing the quality of life of the community around the manufacturing locations, considered as an apex stakeholder.
The brief information is as below:
Providing affordable basic & preventive health care through Jubilant Aarogya (providing affordable healthcare through mobile and static clinic enabled with JUBICARE- a tele-clinic platform along with need based health awareness camps.)
Audio messages and counselling for expecting mothers through Swasthya Prahari project.
The Company sends pre-recorded voice messages to the expecting/pregnant mothers, which includes information on their well-being and nutritional requirements.
Village health profiling project - Identifying health-related issues and prioritising the cycle of public health process for improvement.
Combating malnutrition - Providing Poshan Kits to malnourished kids as identified by the Government.
End Tuberculosis (TB) - An initiative to raise awareness on TB in association with the Union.
Supporting rural government primary education through Khushiyon Ki Pathshala (KKP)-Value based education, with focus on promotion of science & technology along with bridging the digital divide with projects like Mobile Science Lab, Digital Education and Muskaan Kitaab Ghar.
Khushiyon Ki Pathshala- A children centric program with teachers acting as facilitators. The project entails training of teachers on making the school more inclusive and to create value based society with children friendly while at the same time giving equal attention to moulding their personality.
Mobile Science Lab- Inspiring students from rural backgrounds towards science by teaching them hands-on science experiments through Mobile Science Labs.
Muskaan Kitaab Ghar- Increasing accessibility of every child to books, so as to improve readability, improved learning parameters and absenteeism from schools through employee engagement.
Working towards providing sustainable livelihood to the community through Nayee Disha (Skill Development), Samridhhi (SHG and Micro Enterprise Promotion), Jubifarm (Sustainable Agriculture program), Soochnapreneurs- linking community to welfare schemes of Government and Wementorship program.
Nayee Disha- Skill development program are carried out in the vocational centre.
Samriddhi- aims to empower women by promotion of entrepreneurial venture and to promote a sustainable income generation source by promoting a locally nurtured business thereby developing reliable supply source.
JubiFarm initiative - Aims at promoting agri-business in remote areas as a source of livelihood. Under the umbrella of JubiFarm, promoting rural women entrepreneurship through formation of SHGs (Paryavaran Sakhis) on a self - sustainable model. The project includes plantation of neem saplings in the wasteland by SHG women.
Soochnapreneur/Jansuvidha Kendra- Linking community members with government welfare schemes related to their social and financial securities.
Wementorship Program- Creating an ecosystem that is more hospitable to the needs of young women in industry thus raising their participation in the manufacturing sector. These women are selected from ITIs and are being provided requisite workplace skills and a practical knowledge through industry exposure visit and mentorship.
Internal Control Systems and Risk Management
Risk-taking is an inherent trait of any enterprise. It is essential for the growth or creation of value in a company. At the same time, it is important that the risks are properly managed and controlled, so that a Company can achieve its objectives effectively and efficiently.
Internal Financial Control Framework
Section 134(5)(e) of the Companies Act, 2013 requires a company to lay down Internal Financial Controls (IFC) system and to ensure that it is adequate and operating effectively. Internal Financial Controls means the policy and procedures adopted for ensuring the orderly and efficient conduct of business. The above requirement has the following elements:
• Orderly and efficient conduct of the business
• Safeguarding of assets
• Adherence to Companys policies
• Prevention and detection of frauds and errors
• Accuracy and completeness of the accounting records and timely preparation of reliable financial information
At Jubilant Pharmova Limited, an Internal Financial Controls (IFC) system has been established and incorporates all the above elements. In addition, our Company has a transparent framework for periodic evaluation of the Internal Financial Controls in the form of perpetual internal audit exercises and quarterly online controls self-assessment through Controls Manager software, thereby reinforcing the commitment to adopt best corporate governance practices.
Policy and procedure adopted by the Company to adhere to IFC elements are given below:
Orderly and Efficient Conduct of Business
The Company has an established organisational structure, which defines the roles and responsibility relationship. The Company has a formal financial planning and budgeting system encompassing short-term as well as long-term planning. In order to ensure that decisions are made and action are taken at an appropriate level, the Board of Directors of the Company have formulated the Delegation of Authority, which has been designed to ensure that there is a judicious balance of authority and responsibility. Adherence to the Delegation of Authority is a part of the internal audit plan. The Company also has a risk management framework which has been discussed under the heading Our Vision on Risk Management.
We have implemented a web-based automated compliance management and reporting system. The objective of the system is to ensure that compliances are regularly monitored and controlled with a view to support the Companys business objectives and corporate policy requirements. The system includes a comprehensive checklist for ensuring compliance with the laws and regulations applicable to all plants and offices of the Company. To ensure timely and effective compliances, the compliance status is monitored on a real-time basis by the respective functions. The status is presented by the legal team and reviewed on a quarterly basis by the senior management and the Board of Directors. Pursuant to the Listing Regulations, the Company Secretary and Compliance Officer present a compliance report to the Board of Directors on a quarterly basis.
Safeguarding of Assets, Adherence to the Companys Policies
The Company has taken an Industrial All Risk (IAR) policy for its plants as well as a fire policy for the Corporate Office to safeguard its assets. It also carries out physical verification of its assets.
The Company has two-tier policies and procedures: Entity Level Controls and Process Level Controls. The entity-level controls include a comprehensive Code of Conduct. The Company also has a Whistle Blower policy and any employee of the Company can directly write to the Ombudsperson. We also have process level controls which cover a wide range of key operating, financial and compliance related areas like Accounting, Order to Cash, Procurement to Payment, Inventory and Production, Treasury, Legal, Forex, Fixed Assets, Direct and Indirect Tax, Research and Development (R&D) and Information Technology General Controls (ITGC).
Self-assessment certification of controls is being done by the control owners through a verifiable and transparent process and such certification is reinforced by activity and location owners, as they give in-principle approval to the self-assessment by the control owners. Result of Controls Manager certification is prepared and presented to the audit committee every quarter by the Chief Financial Officer (CFO) for exception review.
Controls certification is also being validated by the in-house team through a review of the assertions certified by the Control Owners on sample basis regularly across business units, plants, branches and corporate office. The policies are periodically reviewed and refreshed in line with the changes in business and regulatory requirements.
The audit committee, on a quarterly and annual basis, reviews the adequacy and effectiveness of the internal controls beinq exercised by various business and support functions.
Prevention and Detection of Frauds and Errors
Due to the presence of a stronq Code of Conduct and Whistle Blower policy, it is qenerally expected that serious frauds will not take place. In order to prevent and detect frauds and errors, Deloitte Touche Tohmatsu India LLP (Deloitte) internal auditors carries internal audit activity. Action points and suqqestions made by them are discussed in sub-audit committee meetinq before presentinq the same to the audit committee. Subsequently, followup audits are also carried out by in-house internal audit team/ internal auditors to ensure implementation of the suqqestions. In addition, special audits are carried out by in-house internal audit team/internal auditors in areas that may be vulnerable to fraud.
Accuracy and Completeness of the Accounting Records and Timely Preparation of Reliable Financial Information
Financial consolidation is carried out through an Enterprise Resource Planning system called Hyperion, thereby minimising the chances of manual errors. The financial information is verified by the statutory auditors on a periodic basis as per the requirements of the Companies Act, 2013, Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations), Institute of Chartered Accountants of India (ICAI) guidelines, etc. The Company provides structured training to the accounts and finance team on a wide range of topics covering Ind AS (Indian Accounting Standards), IFRS (International Financial Reporting Standards), Companies Act, 2013, Direct & Indirect taxes, etc. through in-house and outside experts.
Implementation of Internal Financial Controls
To compete globally, world-class Corporate Governance and financial control over operations are necessary for the Company. The Internal Financial Controls as mandated by the Companies Act not only requires a certification from Chief Executive Officer (CEO) and Chief Financial Officer (CFO) but also put an obligation on the Board of Directors to ensure that the Internal Financial Controls are adequate and operating effectively. Besides this, the statutory auditors are also required to give an opinion on the adequacy and effectiveness of Internal Controls over Financial Reporting (ICFR).
To make the Internal Financial Controls framework robust, we have worked on three lines of defence strategy, which is as under:
• First Line of Defence: Build internal controls into operating processes - to this end, we have ensured that a detailed Delegation of Authority is issued, Standard Operating Procedures (SOPs) for the processes are created, financial decision making is done through Committees, IT controls are built into the processes, segregation of duties is done, strong budgetary control framework exists, the entity level controls including Code of Conduct, Ombudsperson office etc. are established.
• Second Line of Defence: Create an efficient review mechanism - we created a review mechanism under which all the business units and functions are reviewed for performance at least once a month by the respective Chief Executive Officers (CEOs) and once in a quarter, by the corporate team. The formats for these reviews are detailed and finalised with the help of global consulting firms.
• Third Line of Defence: Independent assurance - we have appointed a Big Four firm as our internal auditor to perform a systematic independent audit of every aspect of the business to provide independent assurance on the effectiveness of the internal controls and highlight the gaps for continuous improvement.
A program has been developed under which more than 1,500 financial controls have been established and certified on a quarterly basis by the relevant process owners before the financial results are closed for the quarter. A quarterly certification process is maintained through a workflow based IT tool called Controls Manager and this certification is the basis of the CEO- CFO certification of internal controls as per Regulation 17(8) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations).
The Company regularly updates the control library and Risk & Control Matrices.
The Company has six business segments namely:
• Radiopharma
• Allergy Immunotherapy
• CDMO Sterile Injectables
• Generics
• Contract Research Development & Manufacturing Organisation (CRDMO), and
• Proprietary Novel Drugs Segment
To improve the controls in operations, we have established, for each line of business, the concept of financial decision-making through operational committees. The entire purchase, credit control and capital expenditure decisions are taken jointly in committees. The key roles of these business committees are as under:
• Supply Chain Committee, which ensures high-quality purchases at economical cost and maintains reliability of supplies from reputed suppliers with long-term relationships. This committee includes CEO, CFO, Head of Supply Chain and the relevant BU (Business Unit)/ Functional Head.
• Capex Committee, which ensures cost reduction with proper negotiation and monitors time and cost overrun. This committee includes CEO, CFO, Head of Project, Head of Supply Chain and the relevant BU Head/ Functional Head.
• Credit Committee, which evaluates the credit risk and approves the maximum credit, which can be provided to a customer. This committee approves the credit limits at the beginning of the year and is empowered to make changes as and when required. This committee includes CFO and the BU Head.
• Business Performance Committee, which reviews the business performance on a monthly basis. This committee includes CEO, CFO, Functional Heads and the relevant BU Head
In addition, to maintain periodic review and control, we have a structured weekly meetings between the corporate team and the business leadership team. Through this meeting, the corporate team keeps itself abreast of the latest business developments and guides the business team to undertake mid-course corrections, if required. This meeting also provides a forum for obtaining the relevant approvals required from the corporate team as per Delegation of Authority. Participants at this meeting are Chairman/ CCMD from the corporate side and CEOs and CFOs from the business side.
Further, a detailed quarterly review of the business performance with the Chairman/CCMD and the corporate committee is organised to identify any gaps in performance and to consider mid-course corrections.
Risk Management Vision
To establish and maintain enterprise-wide risk management capabilities for active monitoring and mitigation of organisational risks on a continuous and sustainable basis.
Risk Management Strategy
We have formed a strong risk management framework that enables regular and active monitoring of business activities for identification, assessment and mitigation of potential internal or external risks. We have established processes and guidelines, along with a strong overview and monitoring system at the Board and senior management levels. Our senior management team sets the overall tone for risk minimisation culture through defined and communicated corporate values, clearly assigned risk mitigation responsibilities, and appropriately delegated authority. We have laid down procedures to inform Board members about the risk assessment and risk minimisation procedures. As an organisation, we promote strong ethical values and high levels of integrity in all our activities, which by itself significantly mitigates risk.
Risk Management Structure
Our risk management structure comprises the Board of Directors, Risk Management Committee and Audit Committee at the apex level, supported by CEOs, CFOs, Functional Heads, Business Heads and Head of Management Assurance function. As risk owners, the heads are entrusted with the responsibility of identification and monitoring of risks. These are then discussed and deliberated at various review forums chaired by the CEOs and actions are drawn upon. Progress against the risk management plan is periodically monitored. The Risk Management Committee, Audit Committee, CEOs, CFOs and Head of Management Assurance act as a governing body to monitor the effectiveness of the Risk Management and Internal Financial Controls framework.
Risk Mitigation Methodology
We have in place a comprehensive internal audit plan and a robust Enterprise Risk Management (ERM) exercise which helps to identify risks at an early stage and take appropriate steps to mitigate the same.
Each business head updates the risk register and identifies top risks for the business. The Risk Head then consolidates top risks and report them periodically to the Risk Management Committee along with a mitigation plan.
We have a quarterly certification process wherein, the concerned control/process owners certify the correctness of entity level and process level controls. The certification process has been in operation for over ten years and covers over 1,500 controls. The process level controls cover a wide variety of key operating, financial and compliance-related areas while entity level controls cover integrity and ethical values, adequacy of audit and control mechanism and effectiveness of internal and external communication, thereby, strengthening the internal financial control systems and processes with clear documentation on key control points. This has made our internal controls and processes stronger and serves as the basis for compliance with the provisions of the Listing Regulations.
Managements Assessment of Risk
The Company identifies and evaluates several risk factors and draws out appropriate mitigation plans associated with the same. Some of the key risks affecting its businesses are laid out below:
1. Manufacturing Operations Risk
As a pharmaceutical manufacturer, our manufacturing facilities are required to comply with extensive US FDA and several foreign regulatory authority requirements, including ensuring that quality and manufacturing processes conform to current Good Manufacturing Practices (cGMP).
During the financial year ending on March 31, 2023, various regulatory authorities inspected our facilities. Companys North America facilities were inspected by Health Canada (Radiopharmaceuticals, Montreal facility) and by US FDA (CMO, Montreal facility). The Health Canada inspection at
Radiopharmaceuticals, Montreal facility in February, 2023 has resulted in a Compliant GMP rating for the site. The US FDA inspected the CMO, Montreal facility in February 2023 and the site submitted an action plan to the US FDA in March 2023 for corrections to the observations. The Jubilant Pharma Limited facilities in North America are operating in a state of GMP compliance based on the inspection history at each of the facilities.
US FDA audit was conducted at Nanjangud, India site in December 2022, wherein the regulatory agency assigned the inspection classification of the API facility as Voluntary Action Indicated, Based on this inspection and the US FDA VAI classification, this facility is in compliance with regard to current good manufacturing practices (cGMP).
Our solid dosage formulation facility at Roorkee, India which manufactures and distributes finished solid dosage pharmaceutical products, received import alert notification from the US FDA in July 2021 after the site was inspected by the agency in March 2021. In early August 2022, the US FDA conducted an audit of the Roorkee facility and issued six observations. The Company has submitted the action plan to US FDA. The Company continues to engage with the US FDA and take all necessary steps, including comprehensive assessment and engaging independent consultants, to ensure further controls to resolve the import alert at the earliest and ensure cGMP compliance for the Roorkee manufacturing facility.
Risk Mitigation Plan
• We are committed to business process improvement by means of automation and providing timely training to workers, establishing clear Standard Operating Procedures (SOPs) and process guidelines, which will lead to a reduction in cycle time and improvement in productivity.
• We continue to improve and harmonise our quality systems to ensure compliance with ever evolving regulations
• We have formed a dedicated team to address the import alert issue. This team includes highly specialised consultants, who have wide experience in resolving such issues. This team is supporting in remediation of the gaps identified during the US FDA inspection.
• We are working very closely with the Agency and are providing them with regular updates and progress on the highlighted findings during the inspection
• We continue to deliver safe and effective products to our clients in a timely manner. In the true spirit of continuous improvement and to be in line with the latest industry standards and trends, we will continue to make significant investments in our people, strengthen our processes, bring state-of the-art technologies and further develop our in-house expertise
2. Information Technology (IT) Risk
Today, Information Technology has become the backbone of any business. Robust IT strategy that includes adequate IT infrastructure, integrity, data confidentiality and data availability at all times is key to achieving our business objectives. Occurrence of any unforeseen threats to information technology systems could have an adverse impact on data availability and continuity of business operations. Our systems may be the target of malware and other cyber-attacks.
Risk Mitigation Plan
• Our Information security framework is certified for ISO/IERS. 27001 Standards, which ensures that all the information assets are adequately safeguarded
• Disaster Recovery (DR) site has been setup on cloud and has been tested periodically
• There is an information security steering committee at the apex level, which gives directions and resources to manage information security of the Company
• All the IT security events affecting critical IT infrastructure are being logged and monitored round the clock by our Next Gen Security Operations Centre (NGSOC)
• Most of the IT assets are hosted in the ISO certified data centres, which are subject to appropriate physical and logical access controls
• Requisite redundancies have been built within the IT infrastructure to ensure availability of information at all times
• We also publish an information security newsletter to create end-user awareness about cyber security risks and mitigation strategies
• During the reporting period, the Company strengthened its cybersecurity controls and focused on enabling swift action on risks emerging across the businesses
• Jubilant has deployed specialised controls to protect from Ransomware attacks
3. Decline in Financial & Operational performance
The Company has long-term liabilities, which require the Company to comply with certain financial covenants. In the event of any significant decline in Companys operational and financial performance, there may be a situation where the Company is not able to comply with those financial covenants.
Risk Mitigation Plan
Multiple steps is being taken to improve the revenue, margin and earnings of the businesses by:
• Entry into new geographies for the existing products
• Improving operating efficiencies and through cost optimisations
The Company is taking several steps to improve its financial performance including resolving the regulatory status at Roorkee facility and reducing losses in Radiopharmacy business, which shall ensure substantial improvement in operational & financial performance.
4. Dependence on Certain Key Products and Customer Risk
The Company depends on certain key products and key longterm contracts with customers for a significant portion of its total revenue and any events that adversely affect the markets for key products or key contracts may adversely affect its financial condition, results of operations and profitability.
Risk Mitigation Plan
• Our R&D team has taken a pro-active approach to introduce new products, by deploying various technological platforms and capabilities. New products continue to get developed by experienced and talented R&D teams which work in alignment with the marketing strategy by developing new cost effective products/processes.
• We continue to sharpen Customer Relationship Management (CRM) and secure long term contract with our customers. Our business team focusses on identifying new profitable markets or increasing the share of business in existing markets.
5. Dependence on Single Manufacturing Facility Risk
Some of our products are produced by a single manufacturing facility. For instance, Allergy products within Specialty Pharmaceuticals are solely produced by our manufacturing facility Jubilant HollisterStier LLC in Spokane, US and our Radiopharmaceutical products are solely produced by our manufacturing facility Jubilant Draxlmage Inc. in Montreal, Canada. Similarly, the manufacturing facility in Nanjangud, India is the sole manufacturing facility for APls.
Risk Mitigation Plan
• Though our businesses are fairly diversified and we are not dependent upon one facility, however, we are exploring options for diversifying manufacturing presence for some of our businesses such as APIs.
• Furthermore, the Company is working on developing alternative manufacturing site for its radiopharmaceuticals products through technology transfer.
6. Supply Chain Disruption Due to Few Suppliers Risk
In our Radiopharma, Generics and API businesses for some of our key raw materials, we have only a single or a few external sources of supply and alternative sources of supply may not be readily available.
Risk Mitigation Plan
• We have an effective strategy to mitigate these risks by developing alternative suppliers on a continuous basis that minimises any order cancellations and decrease in revenues. The Company is able to de-risk and significantly reduce the percentage of single source value during the last financial year
• We identified common suppliers and initiatives were taken to consolidate spending between various businesses to leverage procurement from common suppliers
• We have established long-term supply arrangements with suppliers to ensure uninterrupted material availability
7. Human Resources - Acquire and Retain Talent Risk
Given the nature and complexity of the regulatory regime of the pharmaceutical industry, it is imperative that we recruit and retain high quality personnel. Lack of credible, talented successors or effective knowledge transition mechanism may adversely affect operations.
Risk Mitigation Plan
• As a part of our strategic talent and succession management process, the leadership invests valuable time in identifying high potential candidates and planning their development for succession to critical positions
• We conduct the leadership development program and the 360-degree feedback mechanism for these employees based on the leadership competency framework
• Management employees at critical positions enrol in customised general management programs at premier institutes to prepare for larger roles and build cross-functional capability in the organisation
• As a new initiative, Global Leadership Program at INSEAD has been launched for Senior Management team members
• We have launched a Learning Management System (LMS), which comprises an extensive collection of training and learning resources and can be accessed by all employees through the online portal
• Cultural change initiative started with focus on employee retention program and transparent communication with employees
• We conduct regular communication forums in the form of town halls, skip-level meetings and new joiner assimilation programs to understand employee concerns and a structured mitigation process is developed for effective redressal
• We ensure that there is full adherence to the Code of Conduct and fair business practices are followed
8. Compliance and Regulatory Risk
Our business operates within a highly regulated environment
and regulatory affairs play a vital role in the development of all
businesses. Due to constantly increasing regulatory obligations, new requirements as well as globalisation of market, the demands and responsibilities of business in terms of regulatory readiness are becoming stringent. We deal with various international regulatory agencies like US FDA, EU agencies, Australian agency, Canadian agency, World Health Organisation (WHO), Central Drugs Standard Control Organisation (CDSCO), India and various other international regulatory agencies in different parts of the world pertaining to drug substances and drug products.
Risk Mitigation Plan
• We have put in place a compliance management system to ensure compliance with all applicable laws and regulations
• We have a dedicated team of experts whose knowledge ensures that the global regulatory compliances are met and we can build competitive advantage
• We also undertake training and orientation programs to keep the relevant process owners updated on new regulations and changes in the existing laws
9. Competition, Cost Competitiveness and Pricing Risk
Being a global manufacturer the Company is exposed to pricing risk both as a buyer and seller. Concentration of raw material procurement to a few suppliers may lead to unfavourable and unethical price setting by suppliers, thereby eroding financial margins and affecting competitiveness. The competition we face in some of our businesses is described in detail below:
Radiopharma and Allergy Immunotherapy
Many of our competitors have substantially greater experience in the development and marketing of branded, innovative and consumer oriented products. Other risks are the introduction of generic versions when our proprietary products lose their patent protection or any new entrants into a Generics market in which we are already a participant. In addition, distributors of our products could attempt to shift end-users to competing diagnostic modalities and products. Our current or future radiopharmaceutical products could be rendered obsolete or uneconomical because of these activities.
Risk Mitigation Plan
• We aim to differentiate through improvement in our service quality, provision of added services such as product development, targeted formulation, laboratory analytical services as well as superior technical expertise.
CDMO Sterile Injectables
Contract Manufacturing is an operations oriented business requiring cost and quality leadership and robust business development. There is a risk that a new entrant or an existing competitor accepts to operate at a lower margins or resort to penetration pricing in order to gain market share and develop key relationship with customers. Our competitors may succeed in developing technologies, processes and products that are more cost effective than we may develop or manufacture.
Risk Mitigation Plan
• To mitigate this risk, Company has initiated various programs for improving efficiency and cost reduction by coordinated efforts of various functions. Several initiatives are currently under implementation towards cost improvement for existing projects.
Generics
Pricing pressure could arise from competitive products being introduced into a particular product market, price reductions by competitors, the ability of competitors to capitalise on their economies of scale to create excess product supply, the ability of competitors to produce or otherwise secure APls at lower costs than what we are required to pay to our suppliers.
Risk Mitigation Plan
• Increasing penetration in other geographical regions and strengthening our supply position with our existing strategic customers through competitive offering to achieve a higher share of customers business
• Building long-term relationships with key customers by offering improved quality and service experience
• Building economies of scale in manufacturing, distribution channels and procurement to maintain cost advantage and sustained entry barrier
• Introducing cost improvement initiatives and manufacturing efficiency improvement plans at plants by undertaking projects under Business Excellence programs
• Significant steps has been taken to improve raw material and utilities consumption and increase manufacturing efficiency
• Developing external manufacturing facilities to make the products expeditiously and at lower cost
Contract Research, Development & Manufacturing Organisation (CRDMO)
Drug Discovery Services
In the Drug Discovery Services area, the Clinical Research Organisation (CRO) market has experienced significant growth over the last five years, reaching a peak in 2022, largely due to the COVID-19 pandemic, which led to increased investment in new therapies. However, demand for CRO services, has recently slowed down and this trend is expected to continue for a few quarters due to factors such as inflation, geo-political instability, and a reduction in ROI of the last 18 months IPOs. This may result in higher contract terminations and renewals. Inability to fully cover the available capacity may occur. Also, the pharmaceutical industry is facing significant challenges such as escalating cost of R&D, patent expirations, pricing pressure, increased regulatory and safety hurdles as well as lower productivity. A further risk in this business is the intrinsic discovery and development risk when programs fail to meet efficacy, which leads to suspension of the efforts, and short-term decline in revenue until other compensatory programs are developed.
Risk Mitigation Plan
• To mitigate this risk, we are strengthening the sales team, penetrating the large pharma or large deal market, increasing scientific and technological differentiation by creating five centres of excellence, investing in high end technology and creating additional capacity.
• Additionally, we are constantly reviewing our internal processes and organisational structure to ensure higher efficiency, increased scientific output and cost effectiveness.
CDMO-API
There is an intense competition in the market for APls. We need to identify and partner with a generic drug manufacturer that will use our APls in their formulation or wait for our solid dosage formulations to receive the requisite approvals. The regulatory approval process for new suppliers of APls to generic manufacturers imposes significant timing constraints in bringing products to market.
Risk Mitigation Plan
• For some of our generic formulations, we have captive manufacturing of APls to ensure timely material availability and effective cost control to focus on improving profit margins
• External manufacturing for sourcing of Key Starting Material (KSM) is being initiated. This will not only de-risk China dependency but will also help in cost reduction of the finished products.
Proprietary Novel Drugs
In Proprietary Novel Drugs segment, we face significant competition in an environment of rapid technological and scientific change, and our failure to effectively compete may prevent us from achieving significant market penetration.
Risk Mitigation Plan
• Significant number of products are currently under development and may become commercially available in the future, for the treatment of diseases and other conditions
• Our precision medicine target and biomarker discovery platform and our scientific and technical know-how give us a competitive advantage in this space, though competition from many sources remains
10. Capacity Planning and Optimisation Risk
Our production capacity may not be aligned with market demand. Insufficient capacity threatens our ability to meet demand and be competitive and excess capacity threatens the organisations ability to generate competitive profit margins.
Risk Mitigation Plan
• The Company continues to invest in the optimisation of our manufacturing capacity utilisation. Such optimisation is driven by continuous de-bottlenecking our manufacturing plants and by value engineering through the application of Six Sigma, Lean Sigma and other value-added tools for productivity enhancement
• To cater the increasing demand, capacity expansion is being done at our Spokane and Montreal facility to double sterile fill and finish capacity from current levels
• The business teams regularly track the trends for each product to ensure that there is sufficient capacity to meet demand
• We periodically undertake other initiatives to improve efficiency in terms of throughput, cost reduction and to build additional capacities without committing significant capital outlay thereby generating better return on investment
• We have developed a dedicated external manufacturing team, which can help to outsource some capacities and capabilities in order to ensure quicker response to unforeseen market demand
11. Research and Development (R&D) Effectiveness Risk
As a pharmaceutical manufacturer, our business growth is dependent on successful execution of R&D strategy. Our R&D is focused to develop commercially viable and sustainable new products, effectively improve and enhance our existing products, along with process improvements that can improve time, quality and cost efficiency.
Risk Mitigation Plan
• In FY 2023, the Generics business recalibrated its R&D strategy, to continually deliver innovative, high quality products for various markets. The new strategy leverages variety of product opportunities through in-licensing and/or external product development in collaboration with specialised CROs. This is expected to accelerate product introduction as well as deliver the products in to harness opportunities in timely and cost- effective manner
• We have an effective strategy to mitigate potential risks and ensure R&D effectiveness with earmarked budgets and investments in R&D commensurate with the business plans. We routinely evaluate and prioritise our R&D programs based on market dynamics and commercial viability
• We are continuously engaged in the development of new products for pipeline of products that can be introduced in future
• The focus is on development of processes within the deadlines at optimum cost with effective and efficient scalability
12. Uncertainty due to COVID-19
The impact and uncertainty due to COVID-19 pandemic have relatively eased off during the year. However, in the event of any new wave of infection, we might have an impact on our employees and business.
Risk Mitigation Plan
• At Jubilant, as we continue in our endeavours to fight COVID-19, our priority remains the well-being of our employees and business continuity for our clients.
• We continue with several measures to help our employees and their families, including establishing vaccination centers and providing them access to medical care facilities. We facilitated vaccination drives for employees and dependents, including booster doses by conducting vaccination camps for the benefit of employees
• We continue to maintain strict COVID-19 protocols over the last three years, at our all locations including our research and manufacturing facilities.
• Amid these transitions and pandemic-related uncertainties, the well-being of our employees has become a critical focal point. We continue to have several well-being initiatives for our employees, including sessions with experts on mental-health, self-care along with sessions on creating a healthy work-life balance
13. Protecting Intellectual Property Rights (IPR) Risk
There has been substantial patent related litigation in the pharmaceutical and medical device industries concerning the manufacture, use and sales of various products. We take all reasonable steps to ensure that our products do not infringe valid third-party IPRs. Any material litigation or other communication alleging such infringements could delay the sale of or prevent us from selling our products.
Risk Mitigation Plan
• We protect our products with patents in major markets. Depending on the jurisdiction, patent protection may be available for individual active ingredients; specific compounds, formulations and combinations containing active ingredients; manufacturing processes; intermediates useful in the manufacture of products; and new uses for existing products
• The Company has filed intellectual property applications in various countries for innovations. The Company has trademarks primarily in India, US, Canada, Europe, Nigeria, South Africa, Mexico, Columbia, China and Australia
• Besides patents, the Company relies on trade secrets, knowhow and other proprietary information and hence, our employees, vendors and suppliers sign confidentiality agreements
• We have a dedicated team of scientists whose primary task is to ensure that the products are manufactured using only noninfringing processes and compliance requirements are met by reviewing and monitoring IPR issues continuously
14. Failure to Supply to Customers Risk
In the Pharmaceuticals segment, if we are unable to supply our products to customers as per the agreed timelines or specifications or other conditions, we may face penalties from our customers as per the terms of the agreement.
Risk Mitigation Plan
• We ensure that such risks are monitored and mitigated on a continuous basis to avoid customer dissatisfaction, order cancellations and decreased revenues.
15. Changes in Tax Legislation Risk
The Companys activities are subject to tax at various rates around the world computed in accordance with local legislation and practice. Actions by governments to increase tax rates or to impose additional taxes may reduce our profitability. Revisions to tax legislation or to its interpretation (whether with prospective or retrospective effect) may also affect our results and significant judgment is required in determining our provision for income taxes. Likewise, we are subject to audits by tax authorities in many jurisdictions. In such audits, our interpretation of tax legislation might be challenged and tax authorities in various jurisdictions may disagree with and subsequently challenge, the amount of profits taxed in such jurisdictions.
Risk Mitigation Plan
• We have a dedicated team of tax professionals whose primary task is to ensure that the tax liabilities are correctly computed and any revision in the tax legislation is monitored continuously.
16. Foreign Currency Exposure Risk
• There has been significant movement in exchange rates over many years. An increasing amount of our sales, particularly in the US, Canada and European countries, is recorded in local currencies, which exposes us to the direct risk of exchange rate fluctuations.
• The Company did not use any derivative financial instruments or other hedging techniques to cover its potential exposure since net foreign exchange exposure is not significant.
17. Climate Change Risk
Our operations are spread across multiple geographical regions, making them vulnerable to both physical and transitional risks associated with climate change. According to the
Intergovernmental Panel on Climate Change (IPCC) and other global think tanks/tools such as the World Resources Institute (WRI), ThinkHazard and others, there is an increase in global temperature compared to pre-industrial levels. The associated events such as changes in precipitation patterns, variability in weather patterns, and rising sea levels might have an impact on our operations and business.
Risk Mitigation plan
• We are focusing on de-carbonising operations, reducing Green House Gas (GHG) emissions and utilising renewable energy like solar, wind etc. We are also focusing and allocating funds on energy efficiency, resource efficiency, green chemistry, low carbon technologies and use of biomass as a fuel for addressing the climate change and assessing physical climate risk for climate-proofing assets.
18. Environmental, Social and Governance (ESG) Ratings Risk
With growing awareness and demand for climate action amongst consumers, ESG Performance is now more important than ever for businesses to thrive in present and future proofing. Investors/ customers look for ESG ratings prior to take any decision related to investment, product/service agreement, acquisition, merger, issuing license to operate etc. Risk of failure to meet benchmarked ESG performance might not only challenge regulatory frameworks but also alter relations with shareholders, investments, demand for products & services and reputation.
Risk Mitigation Plan
• We are improving capabilities and competencies of our personnel on ESG by imparting various trainings on different ESG standards, frameworks and policies
• The requirements of various ESG ratings were shared with concerned departments to allocate resources and strategise proper implementation of the requirements ofrating organisation
• We are becoming signatory to different relevant standard and reporting frameworks and are keeping ourselves updated with the changing regulations and needs of our stakeholders
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