Orchid Pharma Ltd Management Discussions

Economic Overview GLOBAL

According to the World Economic Outlook (WEO), global GDP growth is projected at 3.0% in 2025 and 3.1% in 2026. These estimates reflect continued resilience in major advanced economies, particularly the United States, and improved momentum in several large emerging markets, supported by accommodative fiscal policies and easing financial conditions. Despite persistent geopolitical tensions, energy supply vulnerabilities, and disruptions in global trade routes, the global economy has demonstrated notable adaptability. These factors continue to influence global healthcare investments and demand for pharmaceuticals, particularly in regulated markets.

The risks to the global economic outlook are seen as broadly balanced. On the positive side, if fiscal policies turn out to be more expansionary than currently projected, short-term economic momentum could increase—though potentially at the cost of more difficult policy corrections later. A faster-than-expected decline in inflation, supported by an expanding labor force, could allow central banks to accelerate monetary easing. Additionally, advancements in artificial intelligence and stronger-than-anticipated structural reforms may boost productivity. On the negative side, renewed price shocks due to geopolitical flashpoints such as the ongoing war in Ukraine or conflict in the Middle East and Tariff wars between the countries could impact supply chains and push inflation higher, prompt expectations of tighter monetary policy, and depress asset valuations. Uneven progress in lowering inflation among key economies may also result in volatile currency movements and increased stress in financial markets. Furthermore, elevated interest rates might exert more significant drag on growth than currently assumed, particularly as households face mounting debt and fixed-rate mortgages begin to reset.

While certain emerging markets have exceeded forecasts owing to solid domestic demand and favorable trade conditions, many low-income and developing countries remain under pressure from persistent inflation and escalating external debt burdens. These financial constraints hamper their capacity to channel resources toward critical sectors such as healthcare and infrastructure— both of which are essential to achieving long-term, inclusive growth.

In FY 2024-25, the Indian economy sustained strong momentum, supported by robust macroeconomic fundamentals, improving labor market dynamics, rising urban consumption, and a significant uptick in public capital expenditure. According to the National Statistics Organisation (NSO), Real GDP growth for the year is estimated at a healthy 6.5% while it was 7.6% in FY 202324. The governments Interim Budget for FY 2025-26 continues to reinforce Indias vision of economic self-reliance by reducing import dependency, promoting local manufacturing, and incentivizing infrastructure-led growth. While metropolitan centres remain critical to economic activity, the emergence of new regional hubs in tier-II and tier-III cities is reshaping the national economic landscape. India currently ranks among the worlds top five economies and is steadily advancing toward becoming the third-largest globally by 2028, with its GDP expected to reach the $5 trillion milestone in the near term. This transformation is being driven by sustained investment in infrastructure, digitalisation, demographic strength, and policy stability.

According to the International Monetary Fund (IMF), India is poised to contribute nearly 18% to global growth by FY 2027-28—one of the highest shares among major economies. This reflects not only strong domestic consumption but also improving productivity, supply-chain realignments, and continued policy reforms that enhance competitiveness across sectors, including pharmaceuticals

India continues to chart a path of strong and stable growth, with real GDP projected to maintain momentum through FY 2024-25 and beyond. With inflation expected to moderate and align with RBIs medium-term target of 4% by 2026, monetary conditions are likely to remain conducive to investment. This environment sets the stage for enhanced capital flows across key sectors, supporting broader economic expansion.

The governments sustained focus on infrastructure development, digital transformation, and high-impact public spending is expected to drive gross fixed capital formation. These structural investments are also set to generate positive spillovers for high-growth sectors such as pharmaceuticals and healthcare. Concurrently, rural consumption is gaining renewed traction, supported by flagship welfare schemes like the Pradhan Mantri Garib Kalyan Anna Yojana, which continue to strengthen demand fundamentals across essential goods and services.

Indias long-term reform agenda is focusing on skilling, innovation, MSME growth, gender equity, and energy transition — is propelling the country towards becoming a $7 trillion economy by 2030. These measures collectively lay the groundwork for a resilient, inclusive, and future-ready economic ecosystem.

Industry Overview GLOBAL

The global healthcare ecosystem has showcased remarkable adaptability in navigating persistent inflation and geopolitical tensions. Health systems worldwide are embracing innovation, with increased adoption of novel therapies and a continued shift toward advanced treatment modalities. Global medicine usage and expenditure are projected to continue outpacing historical trends through 2034. The pharmaceutical sector remains a vital contributor to global GDP, underpinned by rising demand for effective treatments and the sectors pivotal role in public health and economic stability.

The global pharmaceutical market size accounted for USD 1.67 trillion in 2024 and is predicted to increase from USD 1.77 trillion in 2025 to approximately USD 3.03 trillion by 2034, expanding at a CAGR of 6.15% from 2025 to 2034. The rising demand for vaccines, drugs, and personalized medicines is expected to boost the growth of the pharmaceutical market. The growing prevalence of chronic disease is fostering the demand for innovative drugs, contributing to market growth.

Forecasted Global Pharmaceutical Sector Market Size from 2025 to 2034 (USD Trillion)

The pharmaceutical market is projected to reach $3.03 trillion by 2034, with a CAGR of 6.15%. While North America held the largest revenue share in 2024, while Asia Pacific is expected to grow the fastest during period from 2025 to 2034. In 2024, the prescription segment dominated the market which was 84% in 2024, but the over-the-counter segment is anticipated to grow rapidly from 2025 to 2034, and biologics are expected to see the highest growth among molecule types (which had highest market share of 55% in 2024). The oncology segment (19% which was the highest amongst other therapeutic segments in 2024) generated highest revenue share and obesity sectors are significant revenue contributors and likely to expand further, with oral administration (58% market share in 2024) leading in route of delivery and hospital pharmacies remaining the primary distribution channel from 2025 to 2034. By age group, the adults segment captured the highest market share of 64% in 2024.

At a dominant position the United States of America pharmaceutical market size is exhibited at USD 490.98 billion in 2024 and is projected to be worth around USD 907.86 billion by 2034, growing at a CAGR of 6.34% from 2025 to 2034. North America dominated the global market by capturing the largest share of 42% in 2024. This is mainly due to the increased prevalence of chronic disease, high demand for personalized medicine, an aging population, and the adoption of automation in drug discovery.

On the Production side, the China pharmaceuticals companies have about 40% of global active pharmaceutical ingredients (API) output. Chinese pharmaceuticals production to grow by 4.2% in 2025 and by 4.6% in 2026. Pharmaceutical investments in China are forecast to increase by 7% annually in 2025. The government aims to make the country more attractive for pharmaceutical production and innovation.

As we step into 2025, the pharmaceutical industry stands poised for transformative shifts, shaped by rapid technological advancements, evolving regulatory landscapes, and dynamic market forces. Key trends gaining momentum include the continued dominance of small-molecule drugs, the expanding adoption of biologics, increased outsourcing of drug development and manufacturing, and a heightened focus on personalized medicine powered by AI. Simultaneously, there is growing emphasis on tapping into emerging markets. Amid these opportunities, pharma companies are also navigating complex challenges—from rising R&D expenditures and supply chain complexities to stricter compliance requirements, intellectual property management, and the escalating costs associated with drug development and patient access.

INDIA

The Indias pharmaceutical industry continues to assert its global presence, currently ranked third worldwide in pharmaceutical production by volume. Having evolved significantly over the last decade, the sector has grown at a compound annual growth rate (CAGR) of 9.43% over the past nine years. Notably, India houses the highest number of pharmaceutical manufacturing facilities approved by the US Food and Drug Administration (USFDA) and is home to over 500 Active Pharmaceutical Ingredient (API) manufacturers—accounting for nearly 8% of the global API market.

The sector plays a vital role in global healthcare, supplying over 50% of the worlds vaccine demand, 40% of generic drug demand in the US, and approximately 25% of all medicines in the UK. Domestically, the industry is supported by a vast ecosystem of around 3,000 pharmaceutical companies and more than 10,500 manufacturing units. Indias strength in this sector is underpinned by its large talent pool of scientists, engineers, and regulatory professionals who continue to drive innovation and cost efficiency across the value chain.

Indian pharmaceutical industry is known for its generic medicines and low-cost vaccines globally. Transformed over the years as a vibrant sector, presently Indian Pharma ranks third in pharmaceutical production by volume.

The Pharmaceutical industry in India is the third largest in the world in terms of volume and 14th largest in terms of value. The Pharma sector currently contributes to around 1.72% of the countrys GDP.

The Indian pharmaceutical industry is currently valued at approximately US$ 58 billion, with over US$ 27.82 billion attributed to exports, according to government data. India meets about 20% of global exports in generic drugs, reinforcing its position as a major supplier to international markets. The market size is expected to reach US$ 65 billion by 2025, and further grow to US$ 130 billion by 2030, with an ambitious projection of becoming a US$ 450 billion market by 2047. This growth is underpinned by increasing healthcare demands, robust manufacturing capabilities, policy support from the Government of India, and a reputation for producing high-quality, affordable medicines for global consumption.

The Indian pharmaceutical sector plays a pivotal role in countrys foreign trade and continues to present attractive opportunities for global investors. India has emerged as a key global supplier of affordable generic medicines, reaching millions of patients across the world. The country houses a substantial number of WHO-GMP and USFDA-compliant manufacturing facilities, reinforcing its reputation for quality, safety, & regulatory adherence. This robust manufacturing base, combined with cost-effective production, makes India a strategic hub in global healthcare supply chain.

Indian government is also keen to expand its share in the global medical devices market from the current 1.5% to 12% by 2030 which will also have a positive impact for pharmaceutical companies. Indias drug and pharmaceutical exports have increased from $2.13 billion in 2023 to $2.31 billion in 2024. Medicines and Med Tech devices have become the fourth largest merchandise export item for the Indian economy. The government has initiated Production Linked Incentive (PLI) scheme, with a financial outlay of $400 million, to attract large private sector investments in manufacturing of cancer care devices, radiology and imaging devices, anesthetics devices, and implants. In terms of share in global markets, India supplies 40% of the generic drug demand in the U.S. and provides a quarter of all medicines in the UK. Moreover it currently commands over 20% share of the global pharma supply chain, and addresses approximately 60% of the worldwide demand for vaccines.

The Government of India has rolled out a host of initiatives to lower healthcare costs and strengthen the pharmaceutical ecosystem. Budget 2025-26 features a noticeable rise in support for the sector—Rs1,615 crore is allocated under the "Development of Pharmaceutical Industry" scheme, up from Rs1,300 crore in Budget Estimates for FY 2024-25, and Rs359 crore in the Revised Estimates for the same year. The Promotion of Bulk Drug Parks Scheme is set to receive Rs1,460 crore in FY 2025-26, a significant increase from the proposed Rs1,000 crore in FY 2024-25s Budget Estimates and a marked correction from the Rs300 crore Revised Estimates. Support for medical device clusters continues to grow, with funding for common facility development set at Rs360 crore—more than double the Rs166 crore Revised Estimate for FY 2024-25. The affordable medicines distribution under the Jan Aushadhi (PMBJP) scheme has been boosted to Rs353.5 crore for FY 2025-26, up from the Rs284.5 crore Revised Estimate in FY 2024-25

OPPORTUNITIES AND THREATS

The future holds both opportunity and increased complexity for the pharmaceutical industry.

Attractive Opportunities: As per Economic Survey, the Total Health Expenditure (THE) in FY22 is estimated to be W 9,04,461 crore (3.8 % of GDP and W 6,602 per capita at current prices). Total Health Expenditure per capita (at constant prices) has shown an increasing trend since FY19. In the total health expenditure of the country between FY15 and FY22, the share of government health expenditure has increased from 29 % to 48.0 %.

Rising Manpower: Availability of a large pool of well trained medical professionals in the country. The number of allopathic doctors with recognised medical qualifications (under the I.M.C Act) registered with state medical councils/national medical council increased to 1.386 million in July 2024, from 0.83 million in 2010.

Lifestyle related disease: Indian population is witnessing a change in lifestyle which is resulting into rise in conditions like diabetes, cardiovascular disease, and obesity which is driving demand for specific medications, while simultaneously highlighting the need for preventative measures and lifestyle interventions. This creates a complex landscape for pharmaceutical companies, requiring them to adapt their strategies and product portfolios to address both treatment and prevention. Overall cardiovascular diseases have now become the leading cause of death in India, accounting for 28% of all deaths in FY 2024.

Policy and Government support: Government of India is steadfast in its vision to transform the country into a global healthcare hub, and strengthening public health surveillance is central to this mission. In the Interim Union Budget for FY 2025-26, the Ministry of Health and Family Welfare (MoHFW) received a substantial allocation of W99,859 crore (~US$ 12 billion)—marking an 11% increase over the revised FY 2024-25 estimates—with W95,958 crore earmarked for health and family welfare and W3,901 crore designated for health research. Notably, FY 2021 witnessed the passage of the National Commission for Allied & Healthcare Professions Act, 2021, establishing a regulatory body to uphold educational and service standards for allied healthcare professionals.

Foreign investment: According to Indias consolidated FDI policy, the pharmaceutical sector maintains liberal foreign investment norms. For greenfield (new) projects, 100% FDI is permitted under the automatic route, with no approval required from the Department of Pharmaceuticals (DoP). For brownfield (existing) pharmaceutical projects, 100% FDI is likewise allowed, but subject to a two-tier route—74% under the automatic route, with any additional inflows above that requiring approval from the government.

Growing space: The Indian pharmaceutical industry is currently in the growth phase of its life cycle, indicating strong potential for expansion and market consolidation. With the right blend of strategic marketing, innovation, and global outreach, the industry is well-positioned to strengthen its market dominance and extend its global footprint even further.

Continued Rise of Digital Health: The rise of digital health technologies is set to transform the pharmaceutical industry by enabling remote patient monitoring through telemedicine, wearable devices, and mobile health platforms. These innovations not only improve access and continuity of care but also generate real-time data, empowering pharmaceutical companies to develop more targeted and effective treatments based on patient-specific insights.

Tariff Wars: US President announced significant tariffs on imported goods which includes pharmaceuticals, impacting trade relations, particularly with India. These tariffs have created a complex and challenging environment for the pharma industry, which relies heavily on global supply chains for ingredients and finished product. The pharma industry operates on complex global supply chains and tariff significant delays, create shortages, and increases operational expenses. Tariffs may also negatively impact research and development in the pharmaceutical sector by increasing costs for laboratory equipment, raw materials, and other necessities. This can also delay the introduction of new drugs and potentially impact research and innovation.

Regulatory complexity and compliance Risks: Navigating stringent and evolving regulatory frameworks across different markets—especially with new global standards for digital health, AI in healthcare, and biosimilars—is a major challenge. Non-compliance can lead to severe penalties, product recalls, and reputational damage, affecting market access and investor confidence.

Demand for a skilled workforce: The pharmaceutical industry heavily depends on a highly skilled workforce, including scientists, researchers, and regulatory professionals. The widening skill gap, coupled with rapid technological advancements like AI-driven drug discovery and biotech innovations, makes it challenging to recruit and retain talent. Upskilling and reskilling initiatives are essential to maintain operational efficiency and innovation.

Escalating R&D Costs & Timeframe: The cost of developing a new drug now exceeds billions of dollars, with a typical development cycle of 10-15 years. With rising pressure to accelerate time- to-market and demonstrate real-world effectiveness, companies must adopt smarter R&D strategies such as Al-led drug discovery, real-world data usage, & partnerships with biotech startups.

Supply chain disruption: Global supply chains have become increasingly vulnerable due to geopolitical tensions, pandemics, and reliance on specific countries for APIs (Active Pharmaceutical Ingredients). These disruptions affect timely drug availability, increase costs, and compromise patient care. Companies are now focusing on localizing supply chains and adopting circular and digital supply chain models to build resilience.

Intellectual property: Protecting patents and exclusivity periods is critical to profitability. However, increasing challenges from generic manufacturers, compulsory licensing provisions, and shortened patent life due to faster drug development pipelines pose significant threats. Legal battles over IP rights also add to operational costs.

Pricing pressures and Public Scrutiny: Governments, insurance providers, and patients are demanding greater price transparency and affordability, especially for essential and life-saving medicines. The global push for price caps, reference pricing, and generic substitution limits pricing power and squeezes margins, making it difficult for firms to reinvest in innovation.

Supply chain management: Ensuring end-to-end traceability, especially with the rise of counterfeit drugs and temperature-sensitive biologics, is a pressing challenge. Stringent Good Distribution Practices (GDP) and serialization requirements must be met to protect patients and maintain regulatory compliance, making supply chain governance more complex and costly.

Orchid Pharma Limited currently operates mainly in API business. This segment has two (2) categories namely Oral and Sterile. The category wise sales data is given below:

Financial Year	Oral
	Quantity (Per MT)	Value (Rs in Lakh)
2024 - 25	421.33	64,698.08
2023 - 24	379.25	62,029.38

 

Financial Year	Sterile
	Quantity (Per MT)	Value (Rs in Lakh)
2024 - 25	154.94	24,609.79
2023 - 24	106.76	19,136.20

OUTLOOK

Orchid, a 100 % Export Oriented Unit (EOU) specializing in the manufacture of sterile and oral cephalosporin APIs, has a strong legacy in commercial production and boasts one of the most comprehensive portfolios in the segment. The companys strengths include: Deep expertise in producing complex APIs that involve high entry barriers; Long-standing customer relationships across diversified international markets; An advanced API manufacturing facility equipped with in-house R&D and regulatory support; and A seasoned promoter, supported by a professionally managed senior leadership team and a technically skilled workforce.

Research & Development, Technology Development / Absorption and Intellectual Property

Research and Development (R&D) forms the cornerstone of innovation at Orchid, enabling the development and adoption of cutting-edge technologies in the pharmaceutical sector. Our R&D team, comprising highly qualified professionals, is specialized across the value chain—from chemical and analytical research to process development and engineering of APIs, intermediates, and key starting materials. Backed by world-class infrastructure and global standards, the R&D centre is a strategic enabler of our growth and technological advancement.

Our R&D performance is anchored in strong synergy between scientists and manufacturing personnel, fostering rapid knowledge exchange and technological advancement. This close collaboration ensures that our teams remain agile in responding to competitive pressures and developing innovative, future-ready solutions. The R&D function prioritizes process intensification, absorption of new technologies, and seamless transition from lab-scale development to commercial manufacturing.

Our core R&D capabilities span cephalosporin and heterocyclic chemistry, development of advanced heterogeneous catalysts, and expansion into chiral and non-heterocyclic compounds. The team also focuses on enhancing existing products through process improvement and intensification, as well as developing novel animal healthcare solutions. With a commitment to value creation, our scientists continuously explore new frontiers in chemistry and process engineering.

New technologies are rigorously tested at the laboratory level, and a robust coordination framework with the manufacturing function ensures smooth scale-up to commercial production. The process parameters established during lab development are maintained within defined design spaces, ensuring consistency and efficiency. Furthermore, our Six Sigma initiatives across plants and R&D centers support innovation, optimize operational performance, and elevate the overall quality of our offerings to customers.

A dedicated team of scientists at Orchid is committed to the development of products and processes in the domain of cephalosporins and related heterocyclic chemistry. Their expertise also extends to the development of advanced heterogeneous catalysts, expansion into nonheterocyclic compounds, process improvements in key existing products, chiral compound synthesis, and the development of veterinary healthcare solutions. This diverse R&D capability enables Orchid to respond swiftly to evolving industry demands and strengthen its innovation pipeline.

New technologies are initially developed at the laboratory scale, where scientists and manufacturing engineers work in close coordination to ensure that the design parameters established during development are maintained within the defined design space. This collaborative approach allows for seamless scale-up to commercial production, maintaining process efficiency and quality. Our adoption of Six Sigma initiatives across R&D and manufacturing has enhanced process control and efficiency, supporting the continuous delivery of high-performance products to our customers.

Through strategic investments in R&D and the integration of advanced management tools in manufacturing, design, and project execution, Orchid continually improves cost competitiveness and product quality. Our efforts are directed at reducing process inefficiencies, plant underutilization, and development lead times, while enhancing supply chain efficiency and operational agility. These initiatives form the backbone of our drive toward excellence in pharmaceutical manufacturing.

We are committed to developing new, customer-centric solutions that address both current and emerging healthcare challenges. Significant investment is made in R&D, manufacturing, and marketing to support this mission. Protecting our intellectual property is a priority, and we rely on the patent frameworks of jurisdictions in which we operate. Alongside internal development, we also acquire IP and, when required, license technology from or to third parties. Our processes are built upon specialized proprietary know-how, which ensures sustainability and value creation.

Our R&D strategy is designed to deliver a sustainable pipeline of high-value products, with a strong focus on improving development speed and product yields. This approach continues to generate innovative, knowledge-driven solutions that enhance our production efficiency and strengthen our competitive position. In the face of strong global competition, particularly from China, we have taken proactive measures to localize the production of critical products and reduce dependency on imports by leveraging our internal technological capabilities.

The R&D team remains aligned with the Companys marketing strategy, constantly developing new cost-effective products and refining existing ones. This includes improving process efficiency and atom economy to maintain cost leadership in the market. Our scientists consistently evaluate opportunities to optimize production processes, reduce waste, and improve throughput, ensuring we remain agile and competitive across product categories.

Environmental sustainability remains a core value in our R&D efforts. We prioritize the development of commercially viable, eco-friendly, and IP-compliant technologies that support green chemistry principles. Our innovations focus on increasing atom efficiency, recycling solvents and reagents, minimizing hazardous chemicals, and shifting toward enzymatic or chemo- catalytic processes. These practices support our goal of zero discharge and a minimal environmental footprint while maintaining high product quality.

Our robust intellectual property strategy complements our innovative R&D approach. By actively identifying third-party IP risks and devising effective ‘design-around strategies, we have built a solid IP portfolio that secures our business in regulated markets. A dedicated IP team ensures that all products are developed using non-infringing processes, with continuous monitoring and compliance reviews. These efforts help mitigate IP risks and reinforce our leadership in the generic pharmaceutical landscape.

We have evolvedour production technologies including specialised proprietary know-how over a period of time with the help of R&D. We keep our optionsto licence-in/ licence-out technologies/know-how to accelerate businesses of interest. The basic missionof R&D remains to enhance innovation level, scientific efficiency and effectiveness in compliance with Orchid core values.

API Manufacturing

India is globally acknowledged as the third-largest producer of pharmaceuticals by volume, with a strong reputation for supplying affordable and quality medicines worldwide. The country plays a pivotal role in the global pharmaceutical value chain, especially in the manufacturing of Active Pharmaceutical Ingredients (APIs), and ranks as the third-largest producer of APIs by volume and the 14th largest by value globally. With an 8 percent share of the global API industry, India manufactures over 500 different APIs and contributes 57 percent of APIs to the World Health Organizations prequalified list. With a vast ecosystem comprising over 3,000 pharma companies and 10,000+ manufacturing[KM2] units, India also boasts the highest number of USFDA-approved facilities outside the United States, reinforcing its prominence as the "pharmacy of the world."

The API segment continues to be a vital contributor to Indias pharmaceutical exports, with over 500 manufacturing units catering to both regulated and semi-regulated markets. These facilities produce a wide range of APIs and intermediates that power global supply chains, particularly for essential and life-saving medicines. Indian manufacturers are known for producing high-quality generics at scale, enabling access to critical medicines across developing nations. This strength is supported by continuous process innovation, backward integration of Key Starting Materials (KSMs), and adherence to stringent regulatory standards.

To sustain and enhance this global leadership, Indian pharmaceutical companies are increasingly investing in Research & Development (R&D), especially in the areas of synthetic chemistry, complex APIs, and biosimilars. R&D functions across the industry are staffed by well-qualified professionals working in state-of-the-art facilities conforming to international norms. Additionally, industry stakeholders are advocating for harmonized global regulatory frameworks, deeper public- private partnerships, and policy incentives to boost innovation, expand scale, and strengthen Indias position as a trusted global healthcare partner.

Risk and Concerns:

Tariff Wars: US President announced significant tariffs on imported goods which includes pharmaceuticals, impacting trade relations, particularly with India. These tariffs have created a complex and challenging environment for the pharmaceutical industry, which relies heavily on global supply chains for ingredients and finished product. The pharmaceutical industry operates on complex global supply chains and tariff significant delays, create shortages, and increases operational expenses. Tariffs may also negatively impact research and development in the pharmaceutical sector by increasing costs for laboratory equipment, raw materials, and other necessities. This can also delay the introduction of new drugs and potentially impact research and innovation.

Evolving Regulatory Burden: Pharma manufacturers face increasing compliance complexities, especially with new quality data guidelines from the U.S. FDA. Adapting to these regulatory shifts demands ongoing investment in digital systems, quality assurance, and documentation upgrades, posing a cost and resource challenge.

Skilled Talent Shortage: With rapid advancements in automation, analytics, and new drug technologies, theres a widening talent gap in the pharma industry. Around 80% of facilities report difficulty in finding suitably skilled professionals, affecting innovation and operational efficiency.

Cybersecurity Threats: The pharma sector remains one of the most targeted industries for cyberattacks, with the average cost of a data breach reaching $4.82 million in 2023. Protection of proprietary data and patient information is now a top priority amid increasing digital integration.

Inflation and Cost Pressures: Despite its reputation as a recession-resistant sector, the pharma industry is not immune to macroeconomic pressures. Rising costs of raw materials, packaging, and logistics due to inflation continue to affect margins and strategic planning in FY 2024-25

Additionally, the broader risks associates with the business of the Company are:

Customer Concentration and Relationship Risk: Our business is significantly dependent on strong relationships with a limited number of key customers. Any adverse development-such as the inability to maintain existing relationships, deterioration in customers financial health, loss of a major customer, or reduced demand-can negatively affect our revenues, profitability, and overall financial condition.

Raw Material and Supply Chain Risk: We rely on a few countries and select suppliers for critical raw materials. Disruptions, delays, or price volatility in the procurement of these materials can impact production costs, supply schedules, and product pricing, thereby affecting our margins and business continuity.

Geopolitical and Foreign Exchange Risk: As we operate in multiple international markets, we are exposed to country-specific risks, geopolitical uncertainties, and foreign exchange fluctuations, all of which can affect our revenues, cash flows, and strategic execution.

Capacity Utilization Risk: Suboptimal utilization of our installed manufacturing capacities may lead to inefficiencies, higher per-unit production costs, and lower profitability.

Pricing Pressure: Intense competition and price sensitivity in the pharmaceutical industry may limit our ability to increase product prices, putting pressure on gross margins and overall profitability.

Credit and Collection Risk: We face counterparty credit risks in our operations. Delays or defaults in customer payments can adversely impact our cash flows and working capital management.

Regulatory and Reimbursement Risk: Global reforms and changes in healthcare regulations, including uncertainty in pharmaceutical pricing and reimbursement mechanisms, can impact product demand and pricing strategies.

Logistics and Distribution Risk: We depend entirely on third-party logistics partners for the delivery of products. Any failure, disruption, or inefficiency in their services could delay product deliveries and impact customer satisfaction and revenues.

Utility Disruption Risk: Our operations have significant power and water requirements. Any disruption in the supply of utilities could halt production and increase operational costs.

INTERNAL CONTROL SYSTEMS

The Company engages external audit teams to complement and enhance its internal audit and risk management functions. Internal Financial Controls over Financial Reporting (IFCR) are in place and functioning; however, based on auditor observations, the Company is actively working to further strengthen these systems. The Board of Directors and the Audit Committee closely monitor the effectiveness of the internal control framework, regularly reviewing its implementation to ensure robust compliance with applicable laws, accounting standards, and regulatory requirements.

I DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Profitability

From Continuing Operations

During the year ended on March 31, 2025, the EBITDA of the Company was at Rs. 155.4 Crore as against EBITDA of Rs. 141.07 Crores during the previous year ending on March 31, 2024.

The net profit of the Company before Extra-ordinary items & Tax for the year ended on March 31, 2025 stood at Rs. 106.48 Crores as against profit of Rs. 91.52 Crores during the previous year ending on March 31, 2024.

Earning per Share

EPS for the year ending on March 31, 2025 (before extra-ordinary items) stood at a positive Rs. 20.99 as compared to a positive Rs.19.59 for the previous year ending on March 31, 2024.

Components of Revenue & Expenditure

From

Continuing

Operations

The operating revenues for the year 2024-25 was Rs. 921.93 Crore as against Rs. 819.37 Crore during the previous year ending on March 31, 2024.

Material cost for the year ended March 2025 was Rs. 585.46 Crore (63.50 % of the Operating revenues)as compared to Rs. 528.35 Crores (64.48 % of the Operating revenues) during the previous year ending on March 31, 2024.

The other operating cost, including employee cost for the year ended March 2025 was Rs. 254.17 Crore as against Rs. 224.23 Crore during the previous year ending on March 31, 2024.

The Finance cost for the year ended March 2025 was Rs. 14.54 Crore as compared to Rs. 16.33 crore during the previous year ending on March31, 2024.

The Depreciation &

Amortisation for the year ending March 2025 was Rs. 34.44 Crore as compared to Rs. 33.22 Crore during the previous year ending on March 31, 2024.

Balance Sheet

The Equity and Reserves as at March 31, 2025 stood at Rs. 1324.05 Crore as compared to Rs. 1218.32 Crore as at March 31, 2024.

The total borrowings as at March 31, 2025 stood at Rs. 174.23 Crore as compared to Rs. 134.26 Crore as at March 31, 2024.

I MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT INCLUDING NUMBER OF PEOPLE EMPLOYED

The Human Resources function at Orchid is strategically aligned with the companys growth aspirations, with a strong focus on refining recruitment and selection practices, enhancing disciplinary frameworks, implementing reward and recognition initiatives, and fostering holistic employee development through learning and upskilling programmes. Orchid is committed to maintaining a safe, inclusive, and fulfilling work environment that not only attracts high

I DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS ALONG WITH DETAILED EXPLANATIONS

Debtors Turnover Ratio:

Particulars	FY 25	FY 24
Sales for the year (manufacturing sales)	909.14	819.36
Debtors at the beginning of the year	271.24	294.04
Debtors at the end of the year	310.39	271.24
Average Debtors for the year	290.82	282.64
Debtors Turnover Ratio	3.2	2.8

Inventory Turnover Ratio

Particulars	FY 25	FY 24
Cost of goods sold	544.22	484.46
Opening Inventory	258.19	225.27
Closing Inventory	320.37	258.19
Average Inventory	289.28	241.73
Inventory Turnover Ratio	1.88	2.0

Interest Coverage Ratio

Particulars	FY 25	FY 24
EBITDA	155.46	141.07
Interest Expenses	14.54	16.33
Interest Coverage Ratio	10.69	8.63

Current Ratio

Particulars	FY 25	FY 24
Current Assets at the end of the year	786.39	782.29
Current Liabilities at the end of the year	237.47	209.67
Current Ratio	3.31	3.73

Debt Equity Ratio

Particulars	FY 25	FY 24
Total Debts at the end of the year	174.24	134.47
Shareholders equity at the end of the year	1324.04	1,218.31
Debt Equity Ratio	0.13	0.11

RATIOS FOR INCLUSION - FY 2024 - 25 AND FY 2023 - 24

Operating Profit Margin (%)

Particulars	FY 25	FY 24
Operating Profit	123.53	110.68
Net Sales	921.92	819.37
Operating Profit Margin %	13.39	13.51

Net Profit Margin (%)

Particulars	FY 25	FY 24
Net Income at the end of the year	106.48	91.52
Net Sales at the end of the year	921.92	819.37
Net Profit Margin %	11.55	11.17

DETAILS OF CHANGE IN RETURN ON NET WORTH AS COMPARED TO IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF

Return on net-worth improved to positive of 8.04 % during the FY 2024-25 compared to 7.51 % of the previous year. Improvement has occurred due to current years increased profits due to the turnover increase and overall operational expenses were reduced during the year as compared to last year.