Kobo Biotech Ltd Management Discussions

GLOBAL PHARMACEUTICAL MARKET

In recent years, the global pharmaceutical market has experienced significant growth, reaching an estimated value of 1.48 trillion U.S. dollars in 2022. This is due to adoption of new technologies, cost-effective manufacturing approaches, and a surge in investment flow. The industry?s continuous focus on innovation has reduced manufacturing downtime and waste. This market plays a crucial role in providing people with medications and determining the costs of such medications. However, some markets are more favourable for pharmaceutical companies than others.

With the lingering effects COVID-19 pandemic hitting the world, the need for new therapies and vaccines became apparent, and pharmaceutical companies were under immense pressure to provide quick results. The global leaders in the vaccine market, including GSK, Pfizer, Merck & Co., and Sanofi, were in the public?s focus.

The Global Active Pharmaceutical Ingredients (APIs) market was US$ 190.5 Billion in 2022 and will surpass US$ 261.3 Billion by 2027, expanding at a CAGR of 6.52 from 2022 to 2027. The global API market is expected to experience substantial growth between 2024-2028 due to several factors. The increasing demand for specialty medicines and the high adoption rate of generic drugs are key drivers of market growth. The biopharmaceutical sector?s expansion and development of new drugs with active pharmaceutical ingredients also propel market growth.

Moreover, the rising prevalence of chronic and infectious diseases such as cancer, diabetes, and hepatitis A is surging the demand for APIs. The market is segmented by type of synthesis, manufacturer, route of administration, drug type, therapeutic application, and region. Due to adequate manufacturing units and technological advancements, North America will continue dominating the market.

INDIAN API INDUSTRY

The Indian Active Pharmaceutical Ingredient (API) market is expected to reach US$ 27.9 billion by 2023. The API industry is a crucial part of the Indian pharmaceutical industry and accounts for more than half of the country?s pharmaceutical exports. In 2020, India exported APIs worth US$ 3.5 billion. Based on forecasted values, the API market size was expected to increase by almost nine percent from 2020 to 2024. The government has launched the Production Linked Incentive (PLI) scheme for the pharmaceutical industry, which includes a specific scheme for promoting domestic manufacturing of critical KSMs and APIs.

India?s resilience and the growing demand for pharmaceutical products have positioned our company as a reliable source for quality APIs. Furthermore, the ‘China +1? strategy presents an advantageous opportunity for us to expand our business. As we navigate the short-term challenges, we remain committed to delivering value to our stakeholders and accelerating our growth strategy.

Source: India Brand Equity Foundation (IBEF) - https://www.ibef.org/ industry/pharmaceutical-india- showcase.aspx

Pharmabiz - https://www.pharmabiz.com/NewsDetails.aspx?aid=141391&sid=1 COMPANY OVERVIEW

Kobo Biotech Limited is a customer-centric manufacturer of active pharmaceutical ingredients (API). However owing to the regulatory and financial issued faced by the company currently there are no operational activates being carried out by the Company at its Solapur site, India.

FINANCE

Currently there are no operational activates being carried out by the Company and hence no analysis is made under this head.

RISKS AND CONCERNS

All businesses are subject to certain element of risks, internal as well as external. The internal risks are controllable risks and our Company attempts to identify such risks and formulate actions to mitigate the effect of such risks. The external risks like change in government policies etc are not within the control of the Company. Particularly the global as well as the Indian Pharmaceutical industry continues to be regulated by various regulatory agencies. Stringent regulatory norms, delay in obtaining regulatory approvals for key products, patent litigations, currency fluctuations, pricing guidelines in the domestic market are certain risks that can affect the Company?s business. Emerging markets are increasingly pivotal in the growth of the pharmaceutical industry. Pharmaceutical companies operating in these markets, whether global or domestic players, are exposed to market-specific social risks that affect public health and may also pose material financial risks.

INTERNAL AUDIT AND CONTROL

Our Company believes that sound internal control systems are necessary prerequisite to good governance. The management is committed to ensuring an effective internal control environment, commensurate with the size and complexity of the business, which provides assurance on the efficiency of the Company?s operations and the security of its assets.

Kobo?s internal control systems and procedures are designed to enable the reliable reporting of financial statements, reporting timely feedback on the achievement of operational or strategic goals and ensure compliance with laws and regulations.

HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS

As the Operational activities at the Solapur Manufacturing facility are standstill there are no new recruitments in the Organisation. Harmonious relations continued to prevail throughout the year.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Company?s objectives, projections, estimate, expectations may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company?s operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors.