Shilpa Medicare Ltd Management Discussions

GLOBAL INDUSTRY OVERVIEW Global Pharmaceutical Industry

The global pharmaceuticals market was valued at ~USD 1,700 billion in 2025 and is projected to grow to over USD 3,035 billion by 2034 at a CAGR of over 6% during the forecast period. The U.S. pharmaceutical market is expected to reach USD 800+ billion by 2028, driven by an ageing population, high R&D investment, and leadership in oncology and biologics. Growth is supported by government policies, improved healthcare access, and rising chronic disease prevalence. Global medical use is projected to grow at a 2.7% CAGR (unadjusted for population), while global medicine spending is expected to exceed USD 2.6 trillion by 2030, growing 5-8% annually. The key drivers include new products and patent expiries, notably the growing role of biosimilars.

Key regions for growth

North America

North America continues to be the largest pharmaceutical market globally, led by the United States, supported by high healthcare spending, strong innovation pipelines and early adoption of specialty therapies. Medicine spending growth in developed markets continue to be driven by innovative therapeutics, particularly in oncology, immunology, diabetes and obesity. Global medicine spending is expected to exceed USD 2.6 trillion by 2030, with the U.S. remaining the single-largest contributor to this growth. Patent expiries and increasing biosimilar adoption are also expected to moderate spending growth. North America remains the largest contributor due to strong R&D infrastructure and commercialisation capabilities.

Europe

The European pharmaceutical market is expected to reach USD 616.12 billion in 2026. The market is projected to grow at a CAGR of 6.67% from 2026 to 2034, reaching USD 1,032.76 billion by 2034. Growth is supported by ageing populations, increasing chronic disease burden and wider access to innovative medicines. Oncology remains the largest therapy segment, accounting for 31.6% of the market, supported by rising use of targeted therapies, immunotherapies and personalised treatments.

Rest of the World (RoW)

China, Latin America, the Middle East, Africa and other Asia-Pacific markets continue to contribute significantly to global pharmaceutical growth. China is the fastest-growing major pharmaceutical market since 2020 and expects its medicine usage to nearly double by 2030 compared to 2020 levels. Pharmerging markets are expected to contribute nearly USD 121 billion in pharmaceutical growth through 2030, supported by improving healthcare access, population growth and rising government healthcare spending. Investments in biosimilars, specialty therapies and digital health across emerging markets are rising while pricing sensitivity remains high. Expanding insurance coverage and healthcare infrastructure are expected to support long-term pharmaceutical demand across RoW markets.

(Source: Precedenceresearch . Precedenceresearch . lavia . Manufacturingchemist . novaoneadvisor . fortunebusinessinsiahts . Frost . Marketdataforecast .

(Source: IQVIA . Mordorintelliaence )

(Source: PIB , Mordorintelligence )

(Source: IPA )

(Source: fortunebusinessinsights )

(Source: Fortunebusinessinsights , Mordorintelliaence . Mordorintelliaence )

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(Source: Cdmoworld , EY)

(Source: Mordorintelliaence . IQVIA . Mordorintelliaence . EY)

The Company expanded its Specialty CDMO pipeline with new global clients, including a leading global pharmaceutical company. One U.S. CDMO program received USFDA approval, while another is expected to commercialise in FY27 following its June 2026 PDUFA date. Over 25 CDMO programs are at various stages of development. The dedicated OLC manufacturing block was commissioned during FY26. Additionally, two new NCE programs completed client audits and are expected to begin development in FY27.

The Company added over 15 oncology APIs targeting patent expiries through 2032. The new oncology manufacturing block is expected to be commissioned by the end of FY27. Methotrexate API received CEP certification, while an import-substitute nononcology API completed validation and is expected to be commercialised in FY27. Capacity expansion for UDCA and Tranexamic Acid is also underway. In peptides, capacity expansion is underway, with two products under validation. Teduglutide completed laboratory development and is expected to complete process validation in H1 FY27. For GLP-1, one products DMF is ready, while Semaglutide completed validation in FY26 and its DMF filing is targeted for H1 FY27. The polymers business achieved proof-of-concept for

an ophthalmic polymer, supplied initial commercial quantities, delivered a polymer for targeted drug delivery applications, and secured repeat orders from an MNC customer.

Formulations

Shilpa Medicare Limited offers a diverse range of pharmaceutical dosage forms, including tablets, capsules, injectables, oral dissolving films (ODF), transdermal patches, novel drug delivery systems, and CDMO services through subsidiaries Shilpa Medicare, Shilpa Therapeutics, and FTF Pharma. Its differentiated portfolio spans complex injectables, transdermal systems, oral films and 505(b)(2) products for regulated and emerging markets. The Company operates three manufacturing facilities in Jadcherla and Bengaluru. The Jadcherla facility has an annual production capacity of nearly 25 million OSD tablets, 4 million capsules, 3 million injectables, and 2 million vials of liquid lyophilisation. It holds regulatory approvals from authorities such as EU GMP, ANVISA, COFEPRIS, TGA, WHO-GMP, SHAPRA, and Health Canada.

The Bengaluru plant is fully automated with capabilities to manufacture oral dissolving films and transdermal patches, with an annual capacity of around 50 million ODF units and 30 million TDF units. The facility holds certifications from the US FDA, TGA, WHO-GMP, UK- MHRA, and EU GMP. The formulations business is supported by strong backward integration with the Companys API operations, enabling greater supply chain integration and improved operating efficiencies.

Performance in FY26

Formulations delivered the standout performance of the year, growing 30% year-on-year to %618 Crores from %474 Crores in FY25, the highest-ever annual revenue for the segment. Excluding licensing income, underlying revenue grew an even sharper ~75% year- on-year. This was driven substantially by the domestic launch of NorUDCA (Noduca™), the companys first-inclass NAFLD therapy, which gained strong commercial traction through the year and supported continued order-book visibility into FY27.

Geographically, Europe led the FY26 revenue mix at %223 Crores, up from %111 Crores in FY25 — crossing the %200 Crores milestone for the first time and growing 60% year-on-year in the fourth quarter alone. Licensing/Services revenue were at %120 Crores, while RoW grew to %123 Crores from %99 Crores. Domestic revenue rose to %72 Crores from %26 Crores, reflecting the NorUDCA launch, and US revenue grew to %80 Crores from %48 Crores in FY25. The shift underscores Europes emergence as the largest single geography within Formulations, even as growth was recorded across every region.

The Company has leveraged its proprietary intellectual property and expertise in high-quality generic formulations to collaborate with global pharmaceutical companies. This model enables Shilpa Medicare to licence advanced-stage or ready-to-market molecules, such as oncology and CNS therapies, in key markets such as the US and Europe. The Company partners with firms having strong regional distribution networks and generates revenue through upfront payments, milestone payments, supply agreements and profit sharing. This asset-light, high-margin model enables faster market entry while expanding partners portfolios with differentiated generic products.

Among regulated markets, Europe formulations revenue exceeded %200 Crores in FY26, registering over 100% year-on-year growth, while the U.S. business continued to strengthen, supported by commercialised 505(b)(2) products. Revenue from emerging markets and India also recorded healthy growth during the year.

NorUDCA continued to gain strong market traction following its launch in India under the proprietary brand NODUCA^TM through partnerships with three leading domestic pharmaceutical companies. Encouraged by favourable patient response, the Company plans to initiate clinical studies for the U.S. and Europe in FY27. Three commercial 505(b)(2) products remained operational in the U.S., with volumes expected to increase steadily.

The Company completed exhibit batches for Abraxane (Paclitaxel Albumin-bound Injection), with commercialisation targeted for FY28. Registration batches for Enzalutamide tablets were completed using a non-infringing process, with filings in the U.S. and Europe planned in FY27 and commercialisation expected in FY28. Rotigotine Transdermal Patch is scheduled for launch in Europe in FY27, while the U.S. submission was completed during FY26.

Ondansetron Extended-Release Injection is expected to be launched in India in FY27, with global clinical studies planned during the year. SMLTOP09 (topical Dutasteride for androgenetic alopecia) received DCGI approval for Phase III studies, with global clinical studies planned in FY27 following scientific advice from European regulators.

The Company became the first to secure EU approval for multiple strengths of Tadalafil Oral Dissolving Films under the hybrid application pathway, while the USFDA approved the suitability petition, enabling ANDA submission. Its pipeline also includes SMLOSD014, a complex anticoagulation product targeting a USD10 billion-plus U.S. market, SMLTDP012, an Alzheimers transdermal patch, and five additional complex/505(b) (2) products under development.

In CDMO, the integrated API and formulation program with Unicycive Therapeutics progressed further, with the FDA resubmission with the US FDA. However, the Company does not expect any meaningful revenue contribution from the program during FY27.

Biologics

Shilpa Medicare Limited conducts its biologics business through two wholly-owned subsidiaries, namely Shilpa Biologicals Private Limited and Shilpa Biocare Private Limited. This segment focuses on biosimilars, New Biological Entities (NBEs), microbial and mammalian products, recombinant proteins, Antibody-Drug Conjugates (ADCs) and CDMO services. With strong technical capabilities, the Company is well- positioned to develop innovative, complex biologics while maintaining high quality standards.

The Company offers comprehensive services at its Dharwad biologics facility, spanning product development to commercial manufacturing of microbial and mammalian-based drug substances and products. The facility is equipped with 4,000 litres of upstream capacity and 1,000 litres of microbial fermentation capacity, alongside a pre-filled syringe (PFS) line capable of processing 80 units per minute. It is also developing an integrated ADC manufacturing platform covering monoclonal antibodies, payloads, linkers and conjugation capabilities. The facility supports end-to-end biologics development and manufacturing for both proprietary products and CDMO partners. EU- GMP standards approve the facility.

Performance in FY26

The Biologics segment reported revenue of P149 Crores for FY26, contributing ~10% to consolidated revenue. During the year, the segments development and manufacturing capabilities were increasingly monetised through high-value global collaborations, with two NBE programmes and one NCE now being co-developed with global partners, positioning Shilpa as a preferred CDMO for novel product development. The segment also advanced its biosimilars pipeline, including a licensing agreement with SteinCares for the LatAm region and the addition of four new biosimilar programmes, alongside continued progress on its ADC and recombinant human albumin platforms.

Recombinant Human Albumin

Recombinant Human Albumin (rHA) is a laboratory- grown form of human albumin, a protein naturally present in blood plasma that regulates blood volume and pressure by maintaining osmotic balance. Shilpa Medicare Limited has developed a novel rHA using animal-origin-free (AOF) raw materials, supported by patented technology in the U.S. and Europe.

To commercialise the product in Europe, the Company has partnered with Orion Corporation, which will

undertake marketing, distribution and sales, while Shilpa will receive development, regulatory and commercial milestone payments. The Company has invested in the development of rHA for over eight years and established a large-scale fermentation facility to support future commercial manufacturing. During FY27, the Company plans to initiate Phase III clinical studies in India and Europe, file a pre-IND application in the U.S., and continue customer engagement for non-therapeutic applications, with samples already shared with U.S. clients.

Shilpa Medicare Limited supports its BioCare product portfolio through a fully automated and integrated manufacturing facility at Kadechur. The unit is equipped with an advanced Distributed Control System (DCS) and a high-end protein filtration system. The facility has a fermentation capacity of over 200 kilolitres per annum, with product vessels ranging from 5 KL to 50 KL and buffer vessels from 5 KL to 15 KL.

OPPORTUNITIES & THREATS Opportunities

Presence in high-growth advanced therapy platforms — biosimilars, ADCs, recombinant human albumin and next-generation biologics

Global CDMO market projected to grow meaningfully; Indias CDMO market expected to grow at a faster rate

Large wave of off patent opportunities in biologic segment in coming years — a generational opportunity for credible Indian biosimilar developers

Rising global CDMO outsourcing amid the "China Plus One" supply-chain diversification strategy

Shift toward complex generics, injectables and specialty products as traditional generics face pricing pressure, favouring differentiated players

Threats

Complex and continually evolving regulatory compliance framework across multiple international jurisdictions

Supply chain disruptions arising from dependence on globally sourced raw materials amid geopolitical and logistical challenges

Economic and political instability across key import and export markets

Rapid technological change requiring sustained R&D investment to stay competitive

Currency and foreign exchange fluctuations, given significant international revenue exposure

FINANCIAL OVERVIEW (CONSOLIDATED)

Shilpa Medicare delivered its strongest year on record in FY26, with consolidated revenue rising 18% year- on-year to 41,549 Crores from 41,310 Crores in FY25. Profitability improved at a faster pace than revenue: gross profit grew 21% to 41,088 Crores, with gross margin expanding 100 basis points to 70%, aided by a more favourable product mix. EBITDA reached an all-time high of 4445 Crores, up 30%

year-on-year, with EBITDA margin improving roughly 300 basis points to 29%. Profit before tax rose 142% to 4295 Crores, while PAT grew 211% year-on-year to 4243 Crores, reflecting a marked acceleration at the bottom line. By revenue contribution, API remained the largest segment at 49% (4769 Crores), followed by Formulations at 40% (4618 Crores) and Biologics at ~10% (4149 Crores), with the balance from other products.

Key Financials (Consolidated)

Division-mix analysis of revenue is as follows:

Key Consolidated Ratios

HUMAN RESOURCE

At Shilpa Medicare Limited, human resources are recognised as a key pillar in building a productive, inclusive and engaged workforce. The Company prioritises talent management, employee development and strengthening organisational culture. Through regular training programmes and development initiatives, the Company empowers its employees so that they meet business objectives. The Company also promotes a merit-based environment and motivates employees through recognition and recreational activities.

The Company consistently strives to reinforce employee satisfaction and engagement by aligning HR practices with its business strategy. Its well-structured HR framework ensures a collaborative, transparent and positive work culture, aligning employee growth and long-term organisational goals.

RISK & MITIGATION

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company maintains a strong internal control system designed to ensure accurate financial reporting, operational feedback and adherence to regulatory requirements. The adoption of SAP has further significantly strengthened the financial reporting by embedding effective controls that prevent financial irregularities.

Additionally, the Company has implemented advanced monitoring software and comprehensive control mechanisms across its production, materials, and marketing. Regular internal audits are conducted to assess the effectiveness of these systems and to proactively identify potential risks. The Company remains committed to improving its internal control framework to increase efficiency.

CAUTIONARY STATEMENT

This document presents forward-looking statements concerning the anticipated future events, financial performance, and operational outcomes of the Company. These statements are based on specific assumptions and are subject to inherent risks and uncertainties. Therefore, it is important to recognise that the accuracy of these predictions cannot be guaranteed. We advise readers to approach these forward-looking statements with caution, as various factors may lead to significant differences between the anticipated results and actual future outcomes.