OneSource Specialty Pharma Ltd Management Discussions

ECONOMIC ENVIRONMENT Global economy

According to the IMFs World Economic Outlook released in April 2025, the global economy grew at a moderate pace of 3.3% in 2024, reflecting a period of relative stability. However, underlying growth momentum remained subdued. As we enter 2025, the global economic landscape is undergoing a significant transition, shaped by shifting policy priorities in response to escalating geopolitical tensions and mounting economic challenges.

The US has implemented a series of new tariff measures, triggering swift and forceful retaliatory actions from major trading partners. This has led to a rise in effective tariff rates, posing potential downside risks to global GDP. The sudden and uncoordinated nature of these policy shifts has further amplified uncertainty, making the short-term economic outlook increasingly fragile.

Amid this evolving context, the decline in global headline inflation is projected to be slower than earlier anticipated. Inflation is now expected to moderate to 4.3% in 2025 and further to 3.6% in 2026. Revised forecasts indicate that inflation will remain elevated in advanced economies, partially offset by marginal downward adjustments in projections for emerging markets and developing countries.

GDP growth trend (in %)

2024		2025	2026
Global Economy	3.3	2.8	3.0
Advanced Economies	1.8	1.4	1.5
Emerging Markets and Developing Economies	4.3	3.7	3.9

(Source: World Economic Outlook, April 2025)

Outlook

Looking ahead, global growth is projected to slow further, with forecasts of 2.8% in 2025 and 3.0% in 2026, according to IMFs World Economic Outlook released in April 2025. This moderated outlook reflects the ongoing recalibration of global trade dynamics in response to evolving geopolitical alignments, the introduction of new tariff and regulatory regimes, and a stronger focus on supply chain resilience. While inflationary pressures have eased in several regions, structural challenges such as demographic shifts, fiscal tightening in advanced economies, and uneven access to capital in emerging markets continue to weigh on growth prospects. In this environment, it will be important for businesses and governments to stay agile, accelerate reforms, and prioritize clear and transparent policy frameworks that support investment, innovation, and inclusive development. Sustaining momentum over the medium term will depend on coordinated global action and the ability to adapt to a more complex and interconnected economic order.

Indian economy

Indias economy is projected to grow by 6.5% in FY25, underpinned by comprehensive reforms, rapid digital transformation, and substantial infrastructure investment. Robust domestic demand and sustained private-sector capital expenditure have reinforced this expansion, while a rural consumption revival bolstered consumer spending. At the same time, government final consumption remained supportive, reflecting continued fiscal stimulus. Against this backdrop of controlled inflation and prudent policy measures, macroeconomic stability has been maintained, fostering confidence among households and businesses alike.

Indian GDP trend (in %)

FY21	FY22	FY23	FY24	FY25
(6.6)	8.7	7.0	8.2	6.5
(Source: Government of India)

Outlook

The economic landscape in India appears robust but measured, influenced by geopolitical tensions, trade challenges, and possible variations in commodity prices. Revitalising private sector investment, enhancing consumer confidence, and accelerating corporate wage growth will be essential for maintaining expansion in the domestic landscape. Rural demand is set to bounce back, bolstered by a resurgence in agriculture, a decline in food inflation, and sustained macroeconomic stability. To bolster medium-term growth, India needs to improve its global competitiveness by implementing structural reforms and focused deregulation at the grassroots level. Creating a more conducive atmosphere for business will be crucial in addressing external challenges and securing sustained economic strength.

GLOBAL PHARMACEUTICAL INDUSTRY

The global pharmaceutical industry has demonstrated robust and sustainable long-term growth, primarily fueled by a rise in chronic diseases, sedentary lifestyles, an expanding elderly population, and heightened health awareness. The global pharmaceutical sector is experiencing a significant shift throughout its entire value chain, driven by a heightened emphasis on product innovation and the optimisation of operations.

As reported by IQVIA, the global pharmaceutical sector is anticipated to expand at a compound annual growth rate of 6-9%, potentially reaching a value of USD 2.2-2.3 trillion by the year 2028. The observed growth can be largely linked to various factors, such as rising prevalence of chronic illnesses, lifestyles characterised by inactivity resulting in health issues, and a heightened awareness of health among the population. The increasing number of older individuals is a significant factor contributing to

rising demand. According to the World Health Organisation, between 2015 and 2050, the proportion of the global population aged over 60 is expected to nearly double from 12% to 22%, reaching around 2.1 billion by 2050. The global pharmaceutical sector is experiencing significant changes throughout its entire value chain, propelled by a robust focus on product innovation, equitable healthcare access, technological progress, improved operational efficiency, better engagement with healthcare providers and patients, and supportive policies. Amid significant challenges within this evolving environment, the pharmaceutical sector has shown impressive adaptability and produced pioneering advancements, especially evident during the COVID-19 pandemic, experiencing robust growth.

Over the next five years, there will be an ongoing trend towards costly, high-value pharmaceuticals, especially in developed countries, while emerging markets strive to find a balance between affordability and enhanced access. The worldwide transition to cutting-edge, innovative treatments highlights the sectors importance in meeting unfulfilled medical demands, while simultaneously presenting difficulties in managing healthcare expenses. Investment in innovative treatments continues to thrive, yet the rising availability of generics and biosimilars is poised to alleviate price pressures, enabling healthcare systems globally to maintain growth while enhancing patient outcomes.

Global pharmaceutical market growth (USD billion)

Region	2028	2024-2028 CAGR
Developed	1,775-1,805	5-8%
Pharmerging*	400-430	10-13%
Lower Income Countries	33-37	3-6%
Global	2,225-2,255	6-9%

(Source: IQVIA Market Prognosis, September 2023; IQVIA Institute, December 2023)

*Pharmerging markets are countries with fast-growing pharmaceutical sectors but relatively lower overall healthcare spending per capita compared to developed markets. These markets are expected to contribute significantly to global pharmaceutical industry growth.

Global Pharma Market by Modalities#

The global pharma market is dominated by small and big molecular pharmaceuticals.

Small molecule medications have dominated the pharmaceutical business for almost a century. Small molecule drugs?€”organic compounds with low molecular weight?€”are affordable, easy to administer (mostly orally), and have broad therapeutic coverage. Drugs with small molecules are usually made via synthetic chemistry.

On the other hand, biologics have a much larger molecular weight and complicated protein structures compared to small molecule medications. Big molecular medications are expensive to make and usually only available by injection or infusion. Large molecular therapeutic compounds are usually derived from live organisms but may also undergo synthetic chemistry.

In 2023, small molecules accounted for over 65% of the global pharmaceutical market by revenue. Over the past decade, technology, synthetic methods, and biology have expanded small-molecule medication innovation. Small molecules are expected to remain dominant due to ongoing R&D efforts such as modulating RNA splicing, stimulating specific types of stem cells, and developing drugs with antibody or peptide conjugates. In recent years, big molecules or biologics have grown in the pharmaceutical sector. The biologics market is expected to grow 9.4% from 2023 to 2028, from USD 480 billion to USD 752 billion. The biologics segment is projected to outpace overall pharmaceutical market growth, driven by the rising adoption of innovative treatments such as immunotherapies.

# Large molecules or biologics refer to vaccines, antibody therapies, recombinant proteins, vaccines, cell and gene therapies, and peptides.

nesource

CDMO INDUSTRY

Contract Development and Manufacturing Organizations (CDMOs) are a strategic model within the global pharmaceutical industry. As globalization intensifies and major pharmaceutical companies aim to cut costs and streamline operations, CDMOs enjoy widespread acceptance across the sector. Rising demand for generic drugs and biologics, coupled with the need to accelerate time-to-market, the capital-intensive nature of pharmaceutical production, and increasingly complex manufacturing processes, lead many companies to recognize the advantages of outsourcing and contract manufacturing.

Pharma, biopharma, and biotech companies are collaborating with manufacturing partners in emerging markets, leveraging access to skilled, cost-effective talent and reliable quality data. Key drivers of this trend include cost optimization, accelerated innovation, access to specialized expertise and technologies, reduced capital expenditure, and enhanced speed and agility in operations. As outsourcing continues to expand, CDMOs are well positioned to outperform traditional in-house manufacturing setups, offering scalable and efficient solutions that align with evolving industry demands.

Overview of CDMO services

Reliance on CDMOs is poised to strengthen as pharmaceutical companies increasingly seek out their end-to-end expertise?€” from formulation and analytical development through process optimization to scale-up manufacturing. Critical to a CDMOs success are a robust technical and R&D infrastructure, access to skilled scientific talent and quality manufacturing capabilities, and a clean track record of regulatory compliance. Reflecting this growing importance, the global CDMO market expanded from USD 86 billion in 2018 to USD 120 billion in 2023 (6.9% CAGR) and is on course to reach USD 176 billion by 2028 (7.9% CAGR).

CAGR, 2018-23

6.9%

CAGR, 2023-28

7.9%

Global CDMO Market by Modality, 2018-2028

W CD

176.1

Biologics Small Molecule ?€? Total

Growth Rate of Global CDMO Market by Modality, 2018-2028

15.7%

5.4%

2018-2023

12.5%

6.8%

2023-2028

Biologics Small Molecule

(Source: Evaluate Pharma, Frost & Sullivan) 80

OneSource Specialty Pharma Limited

In the CDMO industry, small molecules currently dominate the industry with 80%+ proportion, as they can target a wide range of diseases and disorders and remain a fundamental component of pharmaceutical markets. With increase in outsourcing and growing complexity and diversity of small molecules, small molecule CDMO industry is expected to grow at a faster rate of 6.8% during 2023-28 to reach a USD 137 billion by 2028, as compared the historical growth rate of 5.4% during 2018-23.

Key Growth Drivers

Strategic Outsourcing Driving Growth

Pharmaceutical and biotech companies are increasingly outsourcing to CDMOs to reduce costs, accelerate innovation, and focus on core competencies such as drug discovery and clinical development. This trend is especially pronounced among mid-sized and early- stage biotech firms lacking internal manufacturing infrastructure, as well as large pharma companies aiming to streamline fixed-cost operations. CDMOs now offer a full spectrum of services?€”including formulation R&D, analytical testing, packaging, and regulatory support?€” positioning themselves as indispensable partners across the drug development lifecycle.

Accelerating Time-to-Market

Time to market is a critical differentiator, particularly in high-priority therapeutic areas, such as oncology and other fast-track indications. CDMOs offer ready-to- deploy capacity, proven tech-transfer processes and deep regulatory expertise, enabling rapid scale-up from clinical batches to commercial production. This agility helps sponsors secure first-mover advantage and deliver life-saving therapies to patients faster.

Navigating Complex Modalities

The rise of advanced drug modalities?€”biologics, cell and gene therapies, ADCs, and mRNA platforms?€” are reshaping the pharmaceutical landscape. These therapies demand specialized infrastructure and technical expertise that many sponsors lack in-house. As a result, sponsors that own the drug asset and oversee its development, are turning to CDMOs with proven expertise in high-containment manufacturing, cold- chain logistics, and stringent regulatory compliance to navigate the intricacies of modern drug development and production.

Capital efficiency and Cost optimisation

Building and maintaining GMP-compliant manufacturing facilities demands substantial capital investment, long gestation period, and significant fixed overheads. CDMO partnerships convert fixed costs into variable expenditures, improving financial flexibility. For early- stage biotech firms, outsourcing eliminates the need for costly infrastructure. For large pharma, it enables consolidation of legacy assets and reallocation of resources toward high-value R&D. In a climate of economic uncertainty and inflationary pressure, this asset-light model offers compelling financial advantages.

Industry shifts and trends

Boom in Biologics: Biologics are driving CDMO demand, especially biosimilars and gene therapies. By 2028, biologics (large molecules) is projected to represent 22.4% of the CDMO market 1 . Specialized infrastructure and expertise make CDMOs critical partners in this rapidly evolving therapeutic space.

Gradual shift toward self-administration: The growing preference for self-administered therapies is accelerating demand for advanced drug delivery systems. The growing adoption of GLP-1 therapies and their need for user-friendly formats are gently accelerating demand for innovative delivery solutions, creating new opportunities for CDMOs.

Capacity expansion: Manufacturing capacity worldwide has surged in response to rising demand, particularly for injectables and GLP-1 therapies. Additional greenfield and brownfield expansions across North America and Asia are underway to close supply gaps and support scalable production.

Consolidation and competitive dynamics: M&A activity is accelerating consolidation in the CDMO space, tightening supply in high-demand segments. As large- scale buyouts reduce available capacity for products such as injectables and soft-gel capsules, sponsors are increasingly partnering with mid-sized, independent

CDMOs that offer flexible infrastructure, diverse capabilities, and deep technical and regulatory expertise to mitigate supply-chain risks.

Supply-chain diversification: Geopolitical tensions and cost pressures have prompted sponsors to reconfigure their supply chains. US companies in particular are seeking alternate manufacturing partnerships, with Indian CDMOs emerging as attractive options due to their cost competitiveness, skilled workforce, and agility.

Tech-driven efficiency: Automation, AI, and singleuse systems now define modern CDMO facilities?€” streamlining processes, accelerating turnaround, and ensuring quality and compliance for scalable manufacturing. The result is a more agile and responsive production environment that meets evolving client demands.

Sustainability imperatives: Environmental performance is gaining prominence across the CDMO industry, driving a shift toward green chemistry, resource- efficient operations, and sustainable packaging. These efforts align with ESG goals and address growing client expectations for responsible manufacturing. This has driven widespread investment in energy-efficient equipment, waste-minimization processes and greener supply-chain practices.

1 Frost & Sullivan

Key growth segments

Drug-Device Combinations (Including GLP-1s)

This segment is witnessing accelerated growth, primarily fuelled by the expanding use of GLP-1 therapies, biosimilars, and a shift toward homecare and self-administration models. The growing demand for user-friendly, injectable delivery systems is creating significant opportunities for CDMOs with integrated drug-device development and assembly capabilities.

DDCs including GLP-1s (USD billion)

Biologics (Drug Substance and Drug Product)

The biologics segment continues to gain momentum, driven by increased R&D spending, the emergence of new therapeutic modalities, and greater global acceptance of biologic treatments. CDMOs offering high-end biologics manufacturing are in high demand as the complexity and volume of biologic pipelines continue to grow.

Biologics (DS and DP) (USD billion)

Softgel Capsules 1

This niche category is expanding steadily due to sustained supply constraints, high technical barriers, and the need for specialized capabilities in pharma-grade softgel production. CDMOs with proven expertise in formulation and encapsulation are becoming increasingly strategic for customers seeking differentiated dosage forms.

Sterile fill-finish (excluding DDCs)

Drivers include lifecycle extension strategies for legacy products, the need for cost optimization, and the replacement of ageing fill-finish infrastructure. CDMOs offering reliable sterile fill-finish services continue to play an essential role in ensuring uninterrupted product availability.

Outlook

The pharmaceutical sectors growing dependence on cost- effective, scalable, and adaptable partners is expected to propel the global CDMO industry towards consistent growth. CDMOs are transitioning from being vendors to strategic collaborators in a post-pandemic world, where supply chain resilience and rapidity are essential. The future will be characterised by the increasing complexity of drug development, the demand for biologics, and the

adoption of digital technologies to facilitate quicker, more intelligent execution. The next phase of industry evolution will be led by CDMOs that integrate specialised capabilities with tech-enabled operations and a customer-centric approach. Integrated, agile, and globally connected CDMOs will become indispensable to the life sciences ecosystem as innovation intensifies.

Creation of OneSource

On 25 th September 2023, the Board of all the three Companies i.e. Stelis Biopharma (now known as OneSource Specialty Pharma), Strides Pharma and Steriscience approved a Scheme of Arrangement to bring together softgel business of Strides, complex injectables business of Steriscience and Biologics-DDC business of Stelis Biopharma to create OneSource, a multimodal pure-play specialty pharmaceutical CDMO.

The Scheme received overwhelming support from the shareholders and creditors and was approved by the Honble National Company Law Tribunal, Mumbai Bench vide its order dated November 14, 2024 (certified copy of which was received on November 26, 2024) and OneSource got listed on BSE and NSE on January 24, 2025.

Q More details on the Scheme are covered under the Directors report which is part of this annual report.

Financial Highlights (? million)

Particulars	Proforma FY24 1	FY25	YoY Change
Revenue	11,082	14,449	30%
EBITDA	2,287	4,665	104%
EBITDA Margin (%)	21%	32%	+1,165 bps
Adjusted PAT 2	(2,326)	936	100%+
Adjusted EPS 3 (?)	(8.3)	21.4	100%+

Particulars	Proforma FY24 1	FY25
Capital employed (? million) 4	9,551	14,666
ROCE (%) 4	12.5%	22.9%
Fixed asset turnover excl. Intangibles (x)	1.3	1.9
Net Debt/EBITDA (x)	4.3	1.0

1 Proforma FY24 refers to management-certified, unaudited numbers. These are calculated on a tike-to-Like basis, as the FY24 audited results are pre-OneSource formation and therefore not comparable.

2 Adjusted PAT excludes exceptional one-time scheme-related expenses (FY25: 1,108 million).

3 Adjusted EPS excludes exceptional items, scheme amortisation and discontinued operations.

4 Goodwill and Scheme Intangibles arising from the business combination is excluded from the ROCE calculation as it is not reflective of operating performance in the absence of common control. Capital employed excludes new capital investment in progress.

OPERATIONAL PERFORMANCE in FY25
Revenue stood at ? 14,449 million, registering a 30% year- on-year growth. This was primarily driven by 16 new DDC project MSAs, the initiation of CDMO offerings for softgel capsules, and multiple new product launches.	?14,449 million Revenue
EBITDA grew by 104% to 4,665 million, supported by a favourable shift in product mix towards DDCs and biologics. EBITDA margin expanded by 1,165 basis points to 32%, driven by improved line utilizations and operational synergies.	?4,665 million EBITDA
The company recorded its first profitable year, with profit after tax at ?936 million.	32% EBITDA margin
Earnings per share stood at ?21.4.
39 new RFPs and licensing deals were secured across global markets. 15 new customers were on board, reflecting growing confidence in our integrated CDMO capabilities.	?936 million Profit After Tax
6 US programs initiated, including 1 NBE and 5 NCE-1s in US 60 regulatory inspections and customer audits were successfully completed, reinforcing our focus on quality and compliance.	?21.4 Earnings per Share

People at OneSource

As we build capabilities across complex drug modalities and strengthen our position as a trusted CDMO partner, it is the passion, precision, and purpose of our teams that drive our success. Our workforce brings together deep scientific knowledge, cross-functional agility, and a shared commitment to operational excellence enabling us to deliver on the evolving needs of our customers.

We invest consistently in talent development, safety protocols, and collaborative work environments that foster innovation and accountability. From scientists and engineers

to quality experts and operations professionals, our teams work with discipline and integrity across every stage of the value chain. Through a culture of continuous learning and a strong emphasis on compliance and transparency, we empower our people to contribute meaningfully to both client outcomes and organizational growth.

We believe that building a future-ready organization begins with building our people. Their expertise, ownership mindset, and relentless focus on quality form the foundation of our differentiation in an increasingly complex CDMO landscape.

Risk Management

Our comprehensive risk management framework empowers us to anticipate and address potential threats proactively. In todays fast evolving business environment, its essential for organizations to anchor themselves in strong risk assessment and mitigation practices. Both conventional and emerging risks pose significant challenges that could derail our growth path. Thats why remaining vigilant and agile in response to these threats is key to safeguarding our long term success.

Risk Management Framework and Governance Structure

Our Risk Management Framework provides a structured and consistent approach to identifying, assessing, and mitigating risks, ensuring clarity and effectiveness in safeguarding our strategic objectives and operational resilience.

Risk Identification and Prioritization Approach

OneSources risk identification and prioritization approach is anchored in a robust governance framework that integrates strategic priorities and stakeholder insights. Through structured assessments and survey-based evaluations, key enterprise risks are identified, prioritized, and validated. The process culminates in an updated risk register and a refined risk management policy, approved by the Risk Management Committee, ensuring proactive oversight and alignment with the companys long-term objectives.

Risk Management Policy

Define key elements of risk management framework including:

Risk governance structure

Roles & Responsibilities

Risk identification, prioritization, mitigation and reporting/monitoring mechanism

Update risk management policy encompassing key elements of the framework

Finalized risk management policy

Table risk management policy for RMC approval

KEY RISKS AND THEIR MITIGATIONS

Compliance Risk

Our manufacturing facilities are subject to regular inspections by regulatory authorities. Non-compliance with quality standards and GMP may lead to product liability claims, financial losses, and reputational damage.

We have implemented a Quality Management System (QMS) aligned with global standards such as FDA cGMP and EU GMP. Senior management conducts monthly quality reviews to ensure continuous improvement. These reviews help us proactively identify compliance gaps and implement corrective actions, ensuring consistent product quality and regulatory adherence across all operations.

Human Resource Risk

Failure to attract, retain, and develop skilled professionals could disrupt operational efficiency, innovation, and long-term growth.

We follow a structured talent strategy that promotes diversity and performance-based rewards. Key initiatives include expanding future talent programs, streamlining hiring processes, and strengthening retention through recognition and incentive schemes. Engagement efforts are tailored to boost motivation and alignment with company values, while succession planning ensures leadership continuity and crossfunctional mobility.

Financial Risk

?€? Operational inefficiencies or market volatility may affect the companys financial stability, profitability, and ability to meet business objectives.

We have implemented strong financial controls to monitor and manage operational costs effectively. Our teams regularly review business performance and take corrective actions to protect margins. We also optimize debt maturity and access diverse liquidity sources to reduce financing costs and ensure financial resilience.

Occupational Health and Safety Risk

Ineffective health and safety management can lead to workplace incidents, employee distress, reputational harm, and potential financial losses.

We ensure compliance with all health, safety, and environmental regulations through a structured governance process. Our Process Safety Management (PSM) system oversees safety across operations. Each manufacturing facility operates a 24/7 Occupational Health Centre staffed by qualified professionals, ensuring a safe and supportive work environment at all times.

Data Privacy and Protection Risk

Increased digital reliance exposes the company to cyber threats and data privacy violations, potentially resulting in financial and reputational damage.

We proactively monitor cyber threats and report incidents in real time. Our IT infrastructure undergoes regular updates to keep pace with evolving technologies and comply with regulatory standards. Our IT security is continuously monitored 24/7 through advanced Security Information and Event Management (SIEM) tools and a dedicated Security Operations Centre (SOC). These practices enable us to protect sensitive data, ensure uninterrupted business operations, and uphold stakeholder trust.

?€? Risk

?€? Mitigation

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

OneSource maintains a robust internal control framework tailored to the scope and complexity of its operations. Detailed policies and procedures cover financial, operational, and compliance domains, ensuring disciplined execution and responsibility. Supported by capable professionals and a continuous internal audit program, we regularly assess control adequacy and suggest process, policy, accounting, and regulatory enhancements. Internal Auditors work closely with Senior Management to keep our controls dynamic and adaptable. The Audit Committee further enhances oversight by reviewing audit findings and ensuring improvements are implemented.

CAUTIONARY STATEMENT

This report contains forward-looking statements, which are made in accordance with applicable legal requirements. These statements reflect the Companys current expectations and projections about future events. However, actual results may differ materially from those expressed or implied due to a range of factors, including but not limited to changes in market conditions, regulatory developments, operational risks, and other uncertainties that may affect future performance. Readers are advised to consider these risks and uncertainties when evaluating forward-looking information.