RPG Life Sciences Ltd Management Discussions

1) Industry structure and developments

The Indian Pharmaceutical Market (IPM) is now valued at 2,45,943 crores with a year-on-year value growth of 8.6% as reported by IQVIA for MAT March 2026. It continues to demonstrate resilient growth and structural strength by expanding healthcare access, rising chronic disease burden, steady demand for branded generics, and increasing penetration across geographies.

2) Opportunities and Threats

The Indian pharmaceutical market has several unique structural characteristics. Branded generics constitute greater than 70% of the retail market and prices are low due to the high level of competition. Early incumbents have dominated due to formulation development capacities. Though Indias rank is much lower in value terms, it ranks 3rd in volume terms underscoring its role as a critical supplier of affordable medicine.

India is expected to break into top 10 countries in terms of spend on medicines as the spending is expected to grow at about 10% annually over the next five years. This augurs well for the domestic industry. The Government has emphasized on cost reduction to make healthcare more affordable and generic drugs have remained in focus.

Indian pharmaceutical industry has seen a gradual increase in government healthcare spending and expansion of the private hospital sector. Government initiatives such as allowing 100% Foreign Direct Investment (FDI) in health and medical services and Production Linked Incentive (PLI) schemes are benefiting the industry. The Government of India had announced the National Health Policy 2017 where the goal is to attain high level of health and well-being for all ages by improving access, improving quality and making cost of healthcare delivery affordable. The Government also plans to increase health expenditure to 2.25% of Gross Domestic Product (GDP). This is also expected to give a boost to the pharmaceutical sector.

In the Union Budget 2026-27, the government announced the Biopharma SHAKTI (Strategy for Healthcare Advancement), with an outlay of 10,000 crores over the next five years, aimed at positioning India as a global hub for biopharmaceutical manufacturing and innovation with an overall sector focus on AI integration, Contract Development and Manufacturing Organization (CDMO) services, and medical tourism. The Budget also includes customs duty exemptions on 17 drugs and places strong emphasis on building a robust biopharma ecosystem. The Government is focusing on creating

5 regional medical hubs for health tourism and is adopting AI to enhance manufacturing and supply chain efficiency through digital technologies.

Apart from such Government interventions, several socio-economic factors, including increasing sales of generic medicines, continued growth in chronic therapies and a greater penetration in rural markets, increasing health awareness, higher disposable incomes, lifestyle related diseases, and expanding health insurance coverage will further contribute to the growth of the Indian pharmaceutical market. Other contributing factors for growth are heightened health awareness, increasing affluence, changing lifestyles resulting in higher incidence of lifestyle diseases and a fast-growing health insurance industry. In addition, low cost of production and R&D boosts the efficiency of Indian pharmaceutical companies. The industry growth is led by chronic disease segments like cardiovascular, diabetes, dermatology, oncology and is largely influenced by changing lifestyles.

The pharmaceutical value chain is witnessing accelerated digital adoption, spanning drug development, manufacturing, supply chain, and patient engagement. Intelligent automation and datadriven insights are increasingly being leveraged to understand patient journeys, improve disease management, enhance drug development, and ultimately improve patient outcomes.

National List of Essential Medicines (NLEM) revision in 2022, resulted in 384 medicines coming under the price control and at present, about 18.58% of the Indian market is under price control. During the financial year 2025-26, the Wholesale Price Index (WPI) was only 0.01%, so there was no notable change in prices of products under NLEM. We expect prices to be marginally higher in the current financial year 2026-27 since WPI-based increase is % which is taking effect from April 1, 2026.

The Government of India has announced Production Linked Incentive (PLI) scheme for Promotion of Domestic Manufacturing of critical Key Starting Materials (KSMs)/Drug Intermediates and Active Pharmaceutical Ingredients (APIs) in the country. This could lead to opportunities for the Indian Pharma sector in the future.

The Department of Pharmaceuticals has issued the Uniform Code for Pharmaceuticals Marketing Practices 2024 ("the Code") which delineates permissible and impermissible activities for ethically promoting

drugs and addressing complaints regarding unethical marketing practices by pharmaceutical companies. It covers critical areas such as the conduct of medical representatives (MRs), the provision of brand reminders and free samples, Continuing Medical Education (CME), and relationships with Healthcare Professionals (HCPs) and support for research.

Intense price pressure in global regulated markets, emergence of new local players affecting branded generic prices, delay in approval of manufacturing facilities by regulated authorities and increased regulatory intervention in price fixation for domestic formulations are threats faced by players in the industry.

3) Segment-wise performance

The Company is exclusively engaged in the pharmaceutical business and operates across Domestic Formulations, International Formulations and Active Pharmaceutical Ingredients (API).

During the year under review, the Domestic Formulations business achieved sales revenue of 483.5 crores, higher by 13.8% over the previous year. The growth was driven by higher prescription generation, augmented product portfolio through new product launches and line extensions and control on sales hygiene and market inventories. The Company continued to focus on rejuvenation of its product portfolio by host of measures such as diligent life cycle management of the legacy brands, increasing new launches in chronic and specialty therapies such as Cardiovascular-metabolic, Urology, Rheumatology, Gastroenterology and Dermatology and by entering clinical Dermatology, Orthopedic and Critical Care segments. The Company also continued expanding customer coverage in targeted segment as well as in-clinic effectiveness of the field force through extensive scientific training, innovative product demonstrations, emphasis on focus brands and innovative promotional strategies.

The International Formulations business achieved sales revenue of 123.43 crores in FY26, registering a de-growth of 6.7% over the previous year due to inventory norms rationalization. The business has its footprints across geographies of UK, Australia, Canada, Myanmar, Germany, Colombia, Philippines, Vietnam, Mauritius, Chile, South Africa, Kenya, Mexico etc. The Company focused on expanding the business through strategic partnerships in India and with existing customers in EU, Canada, Middle East, Asia and Latin America as well as targeting new customers and new products. An existing product was submitted for registration in a new market viz. Croatia, Dominic Republic, Trinidad and Tobago. An application for registration of a new product was filed with Medicines and Healthcare products Regulatory Agency (MHRA), UK. The Company has received product approval in UAE, Bolivia and Guatemala. The Company has also received approval for Abbreviated New Drug

Submission (ANDS) from Health Canada for a new product viz. Naproxen 220 mg.

The API business achieved sales of 95.06 crores, growing 5.3% over the previous year. Key APIs for the Company include Quinfamide, Azathioprine, Haloperidol, Risperidone, Propantheline Bromide, Lercanidipine, etc.

4) Outlook

As detailed above, the outlook for Indian pharma market is positive. The Domestic Formulations business of the Company will continue to focus on building chronic therapies and specialty portfolios and a comprehensive life cycle management of current legacy products. The International Formulations business will focus on globalization of existing products, development of new products, scouting of new partners and entry into new markets. The API business is poised for sustained growth with continued focus on new product development and expansion of existing APIs into new territories.

The Companys Formulation facility at Ankleshwar, Plant (F1) has WHO GMP (India), Nigeria, Philippines FDA GMP clearance and Kenya Health Authority certifications and Plant (F2) has WHO GMP (India), EU GMP (Hamburg Health Authority, Germany), TGA Australia GMP clearance, Thai FDA GMP clearance, Health Canada Drug Establishment License, Kenya, Ethiopia, Nigeria and Sudan Health Authority certifications.

API facility at Navi Mumbai plant has WHO GMP (India), TGA Australia and PMDA Japan GMP certifications. Such certifications testify to a hallmark of quality and shall help the Company to enter in new markets across multiple geographies.

The Company has also undertaken modernization and expansion of both formulations and API plants with the objective of export business enhancement.

5) Risks and Concerns

Some of the key brands of the Company are under NLEM. The list of NLEM is increasing. Also, more and more Fixed Dose Combinations (FDC) are coming under scrutiny. The regulatory environment across the globe is becoming more and more stringent, and this makes entry into new geographies more challenging. Low to negative volume growth, reports of counterfeit drugs, rising low cost generics continue to impact the industry.

6) Internal Control Systems and their adequacy

The Company has set up internal control procedures commensurate with its size and nature of the business. These business procedures ensure optimum use and protection of the resources and compliance with the policies, procedures and statutes. The internal control systems provide for well-defined policies, guidelines and authorizations and approval procedures. The prime objective of such audits is to test the adequacy and effectiveness of the internal controls laid down by management and to suggest improvements.

7) Financial performance with respect to operational performance

The total income during the year stood at 733.06 crores. EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) was 172.67 crore, After deducting the Finance Cost of 0.89 crores. Depreciation of 21.48 crores and Taxes of 39.03 crores, the Adjusted Profit After Tax (PAT) was at 111.27 crores.

8) Material developments in human resources/ industrial front

The Company firmly believes that people are its most valued resource, and their efficiency plays a key role in achieving defined goals and building a competitive work environment. In its pursuit to attract, retain and develop best available talent, several programs are regularly conducted at various levels across the Company.

Employee relations continued to be cordial and harmonious across all levels and all the units of the Company.

9) Key Financial Ratios

Cautionary Statement

Statements in the Management Discussion and Analysis report describing the Companys objectives, projections, estimates, 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 influence the Companys operations include economic developments within the country, demand and supply conditions in the industry, input prices, changes in Government regulations and tax laws.