Senores Pharmaceuticals Ltd Management Discussions

GLOBAL ECONOMY

The global economy in CY 2025 continues to demonstrate cautious resilience amid shifting macroeconomic dynamics. In its April 2025 edition of the World Economic Outlook, the International Monetary Fund (IMF) projects global GDP growth to ease to 2.8%, down from 3.3% in CY 2024. Although below both last years pace and pre-pandemic averages, the trend points to moderated expansion rather than an economic downturn.

Several factors shape this subdued forecast. Geopolitical frictions and trade disruptions are rising. Policy uncertainty weighs heavily on key economies. Consumer confidence is weakening, particularly in advanced markets. However, the global economy appears to be adapting to these pressures with a degree of steadiness. This reflects an ongoing transition toward long-term structural realignments.

OUTLOOK

Global economic headwinds persist, yet the international order is undergoing a strategic transformation. This is driven by reform, cooperation, and forward-looking policy shifts. Across regions, governments and institutions are accelerating efforts toward clean energy transitions and climate-resilient investment frameworks. Monetary authorities in advanced economies are adopting a more measured, data-informed stance on interest rate policy. Such measures signal a shift toward greater caution in an uncertain environment.

At the same time, emerging markets are reinforcing financial safeguards. They are deploying macroprudential tools to better navigate capital flow volatility and external vulnerabilities. Meanwhile, initiatives like the Regional Comprehensive Economic Partnership (RCEP) are reshaping trade dynamics. These are strengthening cross-border supply chains and fostering deeper economic integration across Asia and beyond. Collectively, these trends suggest a global recovery path that is more adaptive, inclusive, and strategically aligned for the medium term.

INDIAN ECONOMY

Indias real GDP reported a growth rate of 6.5% in 2024-25. This reflects the strength, adaptability, and resilience of its economic framework. Despite ongoing global challenges, including trade frictions and tariff-related shocks, India continues to demonstrate remarkable stability and forward momentum. This endurance highlights the effectiveness of the nations policy design and its increasing capacity to withstand external disruptions.

Fueling the momentum is domestic consumption, the central driver of this growth. Rural demand, in particular, has emerged as a critical stabilizer amid global volatility. This stems from a healthy agricultural season, which boosted rural incomes and spending, laying a firm foundation for continued economic expansion.

Within this favorable macroeconomic backdrop, manufacturing growth has moderated. The sector is expected to expand by 6.2% in 2024-25, down from 9.5% the previous year. Even so, the sector continues to exhibit strong fundamentals. The Manufacturing Purchasing Managers Index (PMI) rose to 58.4 in June 2025, its highest since April 2024. This uptick confirms continued expansion. Growth within the sector has been largely led by capital goods and consumer durables, supported by rising domestic capital formation and strengthening external demand. These trends reflect the growing depth, diversification, and resilience of Indias manufacturing ecosystem, steadily emerging as a key driver of sustainable economic growth.

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OUTLOOK

Indias economic trajectory remains aligned with its long-term development vision, Viksit Bharat @2047, which aims to transform the country into a fully developed economy by the centenary of its independence. A core aspect of this vision is the ambition to become a US$ 30 Tn economy by 2047, driven by inclusive growth, technological advancement, and infrastructure-centric development.

The GDP growth forecast of 6.5% for both 2025-26 and 2026-27 reflects continued macroeconomic stability and consistent policy direction. This momentum is supported by strong domestic demand, rapid digitalization, and ongoing structural reforms. Furthermore, improvements in ease of doing business, targeted Production-Linked Incentive (PLI) schemes, and expanding multimodal infrastructure are enhancing Indias appeal as a cost-efficient and strategically located manufacturing hub.

GLOBAL PHARMACEUTICAL MARKET

The global pharmaceutical industry is undergoing a significant transformation across its entire value chain. This shift is shaped by the pursuit of product innovation, equitable access to healthcare, improved operational efficiency, and closer engagement with healthcare providers and patients.

Despite the challenges posed by this evolving environment, the industry has demonstrated exceptional agility. In particular, during the COVID-19 pandemic, it delivered groundbreaking innovations and sustained resilient growth. The global pharmaceutical market was valued at US$ 1,635.0 Bn in CY 2023. Reflecting the current momentum, it is projected to reach US$ 2,251.0 Bn by CY 2028, expanding at a compound annual growth rate (CAGR) of 6.6%.

Source: IQVIA Global Use of Medicines-2024, Evaluate Pharma, Frost & Sullivan GROWTH DRIVERS

Aging Population and Growing Disease Burden

The global shift toward an aging population is a major factor driving the growth of the pharmaceutical market. The proportion of people aged 60 and above is expected to nearly double from 12% to 22%, reaching approximately 2.1 Bn by CY 2050. This demographic trend is closely associated with an increase in chronic and age-related diseases like hypertension, diabetes, osteoporosis, and neurodegenerative disorders. All these conditions require continuous pharmaceutical intervention.

Rising Incidence of Chronic Diseases Across Age Groups

Chronic illnesses are no longer confined to older adults. Sedentary lifestyles and poor diet have triggered their rise among younger populations as well. Today, one in three adults globally lives with multiple chronic conditions (MCCs). The economic impact is immense. Chronic diseases could cost the world US$ 47 Tn by CY 2030. With most of these illnesses requiring lifelong treatment, the demand for pharmaceuticals remains both high and enduring.

Expanding Demand from Developing Nations

Developing countries are witnessing a twofold challenge: rising chronic disease rates alongside a continued prevalence of infectious diseases. India, for instance, is often called the diabetes capital of the world, with 77 Mn diabetics and an additional 25 Mn considered prediabetic. This trend is echoed across many developing nations, which are increasingly mirroring the pharmaceutical needs of developed markets. At the same time, infectious diseases such as malaria, dengue, and tuberculosis continue to pose a major public health challenge.

Increasing Consumer Awareness and Growth in Self-Medication

The COVID-19 pandemic has significantly heightened consumer awareness regarding personal health, wellness, and preventive care. As more individuals turn to self-care, the demand for over-the-counter (OTC) drugs has surged. In turn, this shift has fueled strong growth in the self-medication segment of the pharmaceutical market.

Surge in R&D Investments and Breakthrough Therapies

Investment in pharmaceutical R&D continues to rise, fueling innovation and expanding treatment options. According to Evaluate Pharma, global pharmaceutical R&D spending increased from US$ 184 Bn in CY 2018 to US$ 262 Bn in CY 2023. This funding has led to the introduction of novel therapies, including cell and gene therapies, monoclonal antibodies, and mRNA-based treatments. These achievements significantly enhance the therapeutic environment and drive market expansion.

REGULATED PHARMACEUTICAL MARKET

Regulated markets, as defined by the World Health Organization (WHO) under the category of Stringent Regulatory Authorities (SRAs), encompass 38 countries as of CY 2024. The group comprises key pharmaceutical centers such as the US, Canada, countries in the European Union, Japan, and Australia. This classification ensures high standards in drug approval, manufacturing, and safety. More countries are likely to join this list during the 2023-2028 period as they strengthen their regulatory frameworks.

As of CY 2023, regulated markets accounted for 77.0% of the global pharmaceutical industry and are projected to retain a 76.0% share through CY 2028. The total market value in these regions is expected to grow from US$ 1,258.7 Bn in CY 2023 to US$ 1,710.0 Bn by CY 2028, recording a CAGR of 6.3%. This sustained dominance is attributed to their robust access to both the innovative drug pipeline and a thriving generics market.

US PHARMACEUTICAL MARKET

The US remains the epicenter of global pharmaceuticals, accounting for approximately 43% of the global market, 56% of the regulated market, and a dominant 91% of the North American market in 2023.

It is not only the largest but also the most advanced pharmaceutical market, underpinned by a highly developed healthcare system and substantial government investment. Healthcare expenditure in the US exceeds 17% of national GDP, reflecting sustained investment in medical infrastructure, innovation, and public well-being.

Favorable regulatory policies, robust reimbursement mechanisms, and government support for pharmaceutical research continue to drive market growth. Additional key drivers include advanced healthcare facilities, widespread integration of advanced medical technologies, and significant investment in R&D.

In addition, the US fosters a culture of innovation that consistently leads to breakthrough discoveries in biotechnology, gene therapy, immunotherapy, and mRNA-based treatments. Collectively, these factors reinforce the nations position as the global leader in pharmaceutical development and market value.

US CDMO AND CMO MARKET

Outsourcing in the pharmaceutical industry is gaining strong momentum. Average penetration is expected to rise from approximately 27% in 2018 to nearly 37% by 2028. This growth is driven by increasing drug complexity, rapid technological advancements, expiring patents driving generic volumes, and a broader shift from capital-heavy to operational expenditure models.

The US Contract Development and Manufacturing Organization (CDMO) market, valued at USD 44.7 Bn in 2023, is projected to reach USD 64.8 Bn by 2028, clocking in a CAGR of 7.7%. With these drivers in play, the US remains the largest CDMO market globally, holding a dominant 40-45% share throughout the forecast period.

The growing reliance on CDMOs and Contract Manufacturing Organizations (CMOs) reflects the pharmaceutical industrys need to address high capital costs, regulatory complexities, and talent shortages. These partners offer added capacity, advanced technologies, and global expertise, enabling faster time-to-market, reduced operational risks, and greater cost efficiency.

Shifting from CAPEX to OPEX allows companies to zero in on core functions while using CDMO/CMO strengths in scalability, compliance, and innovation. This collaboration is especially vital in the US, where small biotech firms dominate. They require efficient, asset-light operations to manage pricing pressures and accelerate product development.

EMERGING PHARMACEUTICAL MARKET

Emerging markets, which include all countries not designated as Stringent Regulatory Authorities (SRAs) by the WHO, are playing an increasingly important role in the global pharmaceutical sector. These markets are broadly divided into semi-regulated and unregulated categories. Semi-regulated countries include India, South Africa, Israel, Turkiye, the Philippines, and the Kingdom of Saudi Arabia, where regulatory systems are underdeveloped. On the other hand, in unregulated markets, such as Somalia and Haiti, regulatory systems are absent.

In 2023, emerging markets collectively surpassed several developed European economies in pharmaceutical spending, reaching a total market size of US$ 376.3 Bn. This shift is driven by two key dynamics. First, while developed economies are tightening healthcare budgets, many emerging markets are prioritizing healthcare. They are investing in infrastructure, expanding services, developing local pharmaceutical industries, and broadening health insurance coverage. Second, there has been a significant increase in paying power, affordability, and accessibility across many of these countries. Additional factors such as population growth, the increasing burden of both chronic and infectious diseases, strong government commitment to healthcare, and rising private sector investment in infrastructure and local manufacturing are contributing to the rapid expansion of these markets. As a result, emerging markets are now growing faster than many developed countries and are expected to continue playing a critical role in the global pharmaceutical industry.

f. Foiecast

Source: IQVIA Global Use of Medicines-2024, Evaluate Pharma, Frost & Sullivan INDIAN PHARMACEUTICAL MARKET

The Indian pharmaceutical market ranks among the fastest-growing worldwide, expanding from US$ 19.0 Bn in CY 2018 to US$ 23.8 Bn in CY 2023. This momentum stems from the governments continued prioritization of healthcare, rising incidence of chronic illnesses, broader nationwide access to healthcare, and the widespread availability of affordable, high-quality generic drugs. Furthermore, the sector contributes around 1.3% to the national GDP and has maintained a CAGR of 4.5% over the past five years.

F: Forecast

Source: IQVIA - Indian Pharmaceutical Market Insight, Pharmarack, Frost & Sullivan

Multiple forces are driving demand for pharmaceutical products in India. Shifting disease patterns, increased public awareness, improved affordability, wider access to healthcare services, and the expansion of both government and private health insurance coverage are some of those forces. Despite these advances, a high out-of-pocket (OOP) expenditure for healthcare continues to steer consumer preference toward cost-effective generic medications. This reinforces Indias position as a global leader in affordable pharmaceutical solutions.

Oral solids have long dominated the Indian pharmaceutical market due to their ease of administration, patient comfort, dosing flexibility, and cost-effective manufacturing. These benefits translate to lower overall treatment costs, making them a preferred dosage form across the country. The segment is also evolving rapidly, with innovations such as modified-release formulations, orally disintegrating tablets, lipid-based systems, coated particles, and multiparticulate technologies. As a result, the oral solids market is projected to exhibit a CAGR of 9.7%, rising from US$ 16.6 Bn in CY 2023 to US$ 26.3 Bn by CY 2028.

At the same time, dosage forms like injectables, inhalation therapies, and oral liquids are witnessing robust growth. This is driven by the scientific and clinical advantages injectables offer, including precise dosing, rapid onset of action, and superior bioavailability. Injectables are particularly suited for complex molecules and biologics, and can be formulated as long-acting or sustained-release therapies to improve patient compliance.

Other formulations such as topicals, inhalation products, oral liquids, sprays, and implants are also rising in prominence. Their targeted delivery makes them ideal for specific patient needs. Collectively, these dosage forms, grouped under the Others category, are projected to deliver the fastest growth in the sector. With a forecast CAGR of 11.8% between CY 2023 and CY 2028, this category underscores the expanding diversity and innovation in Indias pharmaceutical formulation space.

INDIAN ACTIVE PHARMACEUTICAL INGREDIENT (API) MARKET

India is the third-largest producer of APIs globally, accounting for 8% of the global API market. The country manufactures more than 500 distinct APIs and supplies approximately 57% of those on WHOs prequalified list, highlighting its strategic role in the global pharmaceutical supply chain.

Source: Frost & Sullivan

The demand for APIs is directly tied to pharmaceutical consumption, which continues to grow as disease patterns shift from acute to chronic conditions. Broader access to healthcare, improved affordability of medicines, and rising purchasing power among the middle class are contributing to higher drug volumes, thereby boosting API demand. The market is further supported by the strength of its generics industry and the increasing adoption of innovative therapies, including biologics. Domestic demand for APIs is rising to meet the needs of both high-volume generics and high-value innovative drugs. Additionally, there is a growing interest in complex APIs like Highly Potent Active Pharmaceutical Ingredients (HPAPIs), and those derived from fermentation. While these APIs enhance therapeutic efficacy, they require advanced technology and come with steeper production costs.

Government Initiatives

The Indian API market is gaining strong momentum from government initiatives aimed at boosting domestic production. The Production Linked Incentive (PLI) schemes, offering incentives from 20 Cr to 400 Cr, and the establishment of bulk drug parks are key pillars of this push. These policy measures are designed to enhance self-reliance in API manufacturing and reduce dependence on imports.

Government support is also fostering advancements in complex manufacturing areas such as fermentation-based APIs, enabling Indian manufacturers to broaden portfolios and enter higher-value markets. As a result, Indias global regulatory presence is expanding, evidenced in the number of FDA-approved API facilities in the country that rose from 173 in CY 2018 to 209 in CY 2023.

COMPANY OVERVIEW

Senores Pharmaceuticals Limited (also referred to as Senores or the Company) is a global pharmaceutical company. It is research-driven and formulation-focused, dedicated to developing and manufacturing high-quality pharmaceutical products. The Company primarily serves 2 to 3 regulated markets and 40+ emerging markets with their branded generics.

Senores is distinguished by its strong focus on niche product identification, complex formulation development, and specialty pharmaceuticals. It has end-to-end CDMO capabilities to manufacture IR tablets and capsules, including the ability to handle dry granulation, wet granulation, and top-spray granulation. Moreover, the Companys ability to consistently identify, develop, and commercialize differentiated products has made it a preferred partner for select customers worldwide.

Powered by robust R&D capabilities both in India and the US, Senores offers a portfolio of specialty, underpenetrated, and complex products. Its work spans multiple therapeutic categories and dosage formats, underscoring its commitment to innovation and accessible healthcare.

Manufacturing Facilities

?€? Atlanta Plant (the US): Senores manufactures oral solid dosage forms, including tablets and capsules, at its state-of- the-art facility in Atlanta. With 2 manufacturing lines and an annual installed capacity of 1.2 Bn, the plant is aligned with the highest international quality standards and regulatory compliance for regulated markets. Spanning over 1,85,264 sq. ft. total area, it is a USFDA-approved facility and also has DEA and BAA certifications, which makes it eligible to manufacture and supply controlled substances and cater to US government procurement programs.

?€? Ahmedabad Plant (India): The Ahmedabad facility is a highly advanced, large-scale manufacturing site with substantial production capacity. It handles high volumes of formulations annually, including injectables, vials, ampoules and PFS, and is managed by a skilled and experienced team. The facility manufactures formulations for the emerging markets.

?€? Ahmedabad API Facility 1 (India): The Naroda facility focuses exclusively on manufacturing Active Pharmaceutical Ingredients (APIs). The facility is fully compliant with Indian Good Manufacturing Practices (GMP) guidelines, maintaining high standards of quality, safety, and regulatory compliance.

?€? Ahmedabad API Facility 2 (India): Senores commissioned its second API unit in Mehsana, Gujarat in February 2025. Spread across ~230,000 sq. ft. this facility has a capacity of ~100 metric tons per annum.

FINANCIAL OVERVIEW / KEY PERFOMANCE INDICATORS

Particulars	2024-25	2023-24
Revenue from Operations ( in Cr)	398.3	214.5
EBITDA Margin (in %)	27.3	20.7
PAT Margin (in %)	14.0	15.3
Return on Capital Employed (in %)	11.4	11.7
Return on Equity (in %)	11.8	23.6
Debt-to-Equity (in times) 1	0.38	1.07
Revenue from Regulated Markets ( in Cr)	244.8	145.2

RISKS AND THEIR MITIGATION STRATEGY

Risk	Impact	Mitigation Strategy
Customer Quality- Related	Failure to meet technical or quality specifications may lead to order cancellations, customer loss, warranty claims, and reputational or financial damage.	\u2022 Engaging internal and external experts to ensure adherence to customer standards and proactively address audit findings
Regulatory	Non-compliance with existing or future pharmaceutical regulations may trigger litigation, penalties, product bans, or reputational and financial setbacks.	\u2022 Implementing robust compliance systems \u2022 Conducting regular internal audits \u2022 Addressing observations raised by regulatory authorities promptly
Geographical	A decline in revenue from the US could adversely affect business performance and financial stability.	\u2022 Diversifying the revenue base by expanding operations in other geographic markets
Operational	Breakdown or failure of equipment, industrial accidents, or natural disasters at manufacturing or R&D facilities could disrupt operations and adversely impact the financial condition.	\u2022 Ensuring timely repair, maintenance, and procurement of replacement equipment \u2022 Maintaining contingency plans for capacity expansions and shutdowns
Supplier-Related	Dependence on a limited supplier base, particularly a single-source model for each API in the US, heightens the risk of production delays if supply chains falter.	\u2022 Identifying and onboarding alternative suppliers on similar commercial terms to ensure continuity and flexibility
Technology- Related	Delays in adopting new technologies, or doing so inefficiently, may outdate infrastructure and weaken both operational strength and financial stability.	\u2022 Investing in upgrading R&D, plant, and machinery to align with evolving industry standards and innovations

HUMAN RESOURCES (HR)

At Senores Pharmaceuticals, human resources plays a vital role in fostering a culture of innovation, collaboration, and excellence. The HR team is dedicated to attracting and retaining top talent, nurturing employee growth through continuous learning and development initiatives, and ensuring a safe, inclusive, and motivating workplace. By aligning people strategies with the Companys objective of delivering high-quality, affordable healthcare solutions, HR not only drives employee engagement and performance but also strengthens Senores position as a trusted name in the pharmaceutical industry.

As of March 31, 2025 the Company had 194 employees on its payroll.

ENVIRONMENT, HEALTH AND SAFETY (EHS)

Senores has built a strong internal governance framework to ensure compliance with applicable regulatory standards across all operational regions. It also continues to embed sustainability into its operations through focused environmental and occupational health and safety initiatives.

The Company is subject to various environmental laws and regulations, including those related to the prevention and control of water and air pollution, environmental protection, and noise control. To minimize environmental impact, Senores uses rigorous monitoring systems and follows a structured approach to reduce, recycle, and reuse resources wherever possible.

In addition, maintaining a clean, safe, and healthy workplace remains a top priority. All employees undergo routine medical check-ups. Furthermore, the Company conducts regular training on safe material handling, process operations, waste management, and emergency response protocols.

Senores also enforces a comprehensive Environment, Health, and Safety (EHS) policy that ensures adherence to legislative requirements, licensing conditions, and various industry certifications. Frequent fire safety mock drills, safety awareness programs, and internal and external audits promote a culture of safety and compliance across all

facilities. Through these measures, the Company remains committed to ensuring its operations are conducted in a safe, responsible, and sustainable manner.

internal control systems and their adequacy

The Company has instituted a robust internal control framework to protect its assets, ensure proper authorization and documentation of transactions, and maintain accuracy in financial reporting. Both internal and external auditors periodically evaluate the effectiveness of these controls. These assessments encompass a wide range of operational processes to assess adherence to established policies, procedures, and regulatory standards.

Audit findings are shared with the Board of Directors, which evaluates compliance levels, system integrity, authorization controls, and asset protection mechanisms. Further, statutory and internal auditors work in close coordination with Senior Management to review observations and initiate corrective actions. This structured approach reaffirms the Companys commitment to transparency, accountability, and supports continuous improvement of the internal control environment.

cautionary statement

This document contains forward-looking statements relating to the financial performance and operational outcomes of Senores Pharmaceuticals Limited. These statements are inherently subject to risks, uncertainties, and assumptions made by the Company. Due to the nature of forward-looking statements there is a significant likelihood that the underlying assumptions, projections, and expectations may not materialize as anticipated. Readers are therefore cautioned not to place undue reliance on such statements, as various known and unknown factors may cause actual results, performance, or events to differ materially from those expressed or implied herein. Consequently, the conclusions, limitations, and risk factors outlined in the Management Discussion and Analysis section of Senores Pharmaceuticals Limiteds Annual Report for 2024-25 are fully applicable to this document and should be considered in conjunction with this cautionary note.