Sun Pharmaceuticals Industries Ltd Management Discussions

Global Pharmaceutical Industry1

In 2023, the global pharmaceutical industry witnessed significant shifts in medicine usage and spending growth across regions, setting the stage for robust expansion in the years ahead. Despite downward revisions in vaccination and Covid-related therapeutic spending due to lower usage, the industry demonstrated strong resilience and agility by adopting novel therapies and increasing overall medicine usage. As the pandemic transitioned to an endemic, the outlook for medicine spending through 2028 was revised upwards, reflecting accelerated growth rates and a projected CAGR of 5-8%, reaching a total expenditure of US$2.3 trillion.

The volume of medicines used globally plateaued in 2023 but is anticipated to grow steadily at an average rate of 2.3% through 2028. China, India, and other Asian markets are poised to lead this growth, with Latin America also experiencing rapid expansion. North America, Western Europe, and Japan are expected to exhibit slower growth due to their already higher per capita use levels. Volume growth in Eastern Europe will likely return to pre-conflict trends in 2024.

Global medicine market is expected to continue on its growth path over the next five years driven by higher spending in regions such as the US, Europe and key Emerging Markets. Newly introduced branded products, increased uptake of original medicines and adoption of novel therapies will drive growth in these regions. At the manufacturer level, net sales growth is expected to be lower due to various factors including rebates and government-mandated discounts.

Biotechnology remains a focal point for growth in the next five years, alongside specialty medicines catering to chronic and rare conditions. The utilisation of medications in specific therapy areas has been on the rise since 2018, with notable growth observed in immunology, endocrinology, and oncology. Oncology and immunology will likely lead growth across therapy areas, driven by the introduction of new treatments and increasing patient populations. Immunology treatments have witnessed a steady increase in utilisation, driven by the more comprehensive adoption of older therapies.

Additionally, advancements in neurology, mental health treatments and the emergence of next-generation biotherapeutics are poised to reshape medicine spending and usage patterns. The approval and rapid uptake of GLP-1 agonist medicines for diabetes and obesity indications have also contributed to shifting medicine use patterns. Despite disruptions caused by the pandemic, antibacterial use has returned to historic levels. However, concerns persist regarding reduced rates of adult vaccinations, with an estimated 100 Million fewer doses administered since 2020.

Global Pharmaceutical Market

Table 1

Region	2023	2019-2023 CAGR	2028	2024-2028 CAGR
Developed Markets	1,276	7.2%	1,775-1,805	5-8%
Pharmerging Markets	304	7.8%	400-430	10-13%
Other Markets	28	5.6%	33-37	3-6%
Global Pharmaceutical Market	1,607	7.3%	2,225-2,255	6-9%

Global Pharmaceutical Market Share by Product Type1

Table 2

	Original Brands		Non-original		Unbranded		OTC, Vaccines &		Total
Region	(%)		Brands (%)		Generics (%)		Others (%)		(US$ Billion)
Year	2023	2028	2023	2028	2023	2028	2023	2028	2023	2028
Developed Markets	76	78-79	10	9-10	9	7-8	5	4-5	1,276	1,775-1,805
Pharmerging Markets	27	28-30	35	33-35	14	13-17	24	21-24	304	400-430
Other Markets	32	27-35	49	45-51	6	5-7	13	11-12	28	33-37
Global Markets	66	68-69	15	14-15	10	8-9	9	7-8	1,607	2,225-2,255

Developed Markets

In developed markets, medicine spending will likely be in an annual range of US$1.775 Trillion to US$1.805 Trillion by 2025. Innovative therapeutics are expected to drive this growth trajectory despite challenges from generic and biosimilar competition. Immunology treatments should exhibit steady utilisation increases, offset by emerging biosimilar competition. Spending in developed markets will likely accelerate, led by new products and existing branded medicines.

Developed Markets Pharmaceutical Spending and Growth1

Table 3

Region	2023	2019-2023 CAGR	2028	2024-2028 CAGR
Top 10 Developed Markets	1,082	7.0%	1,505-1,535	5-8%
Other Developed Markets	194	8.5%	255-285	5-8%
Total Developed Markets	1,276	7.2%	1,775-1,805	5-8%

US¹

Pharmaceutical spending in the US will likely increase steadily, with forecasts indicating a 2% to 5% annual rise until 2028. Off-invoice discounts and rebates, which will likely become more pronounced under the Inflation Reduction Act (IRA), are a major headwind expected in the US spending growth. Currently, these discounts result in spending estimated 37% lower than invoice levels in 2023 and are projected to increase to 47% by 2028.

Spending on medicines at invoice prices will likely surge by US$299 Billion through 2028, a significant escalation compared to the US$218 Billion increase observed over the past five years. Increased usage of protected branded products is expected to be a critical driver, contributing US$322 Billion in annual spending.

Challenges are expected to arise from losses of exclusivity (LOE), which will impact brand spending. Projections suggest a reduction of US$146 Billion through 2028, affecting both small molecule and biologics. Small molecule expiries will likely reduce brand spending by US$106 Billion, while biologic expiries will likely account for US$40 Billion in lower spending over the same period.

Interchangeable biosimilars for insulins and adalimumab presents opportunities for significant volume uptake. However, current uptake rates do not reflect this potential. Questions persist regarding the relationship between interchangeability, alternative originator formulations, and negotiating strategies, which could significantly influence the impact of loss of exclusivities.

New active substance (NAS) launches are expected to remain robust, with an anticipated 58 NAS launches in 2023 alone. Over the next five years, more than 250 NASs will likely launch in the US, driving US$119 Billion in spending. These NASs include numerous cancer drugs and next-generation biotherapeutics, highlighting continued innovation and R&D expenditure in the pharmaceutical sector.

Top Five Western European Markets (WE5)¹

Over the next five years, the top five European pharmaceutical markets are expected to witness a notable increase in spending. While new brands have historically been the primary driver of growth, their trajectory in the upcoming years may be influenced by lingering pandemic-related disruptions early in the period and heightened reimbursement scrutiny as budget pressures intensify.

Additionally, generics and biosimilars are expected to contribute US$18 Billion to growth in WE5 markets. The effect of LOEs, particularly on biologics, is projected to more than triple over the next five years. Europe boasts the largest biosimilar market globally, a testament to its well-established regulatory and commercial pathways facilitating uptake. Launch of over 175 NASs in leading European countries is expected to contribute US$50 Billion to overall spending. With a considerable portion of these NAS launches focusing on cancer drugs and neurology, alongside advancements in next-generation biotherapeutics, the European pharmaceutical landscape continues to evolve despite complex reimbursement dynamics.

Japan¹

In Japan, pharmaceutical spending growth is expected to be in the range of -2% to 1% over the next five years, reflecting the ongoing recovery from the COVID-19 pandemic alongside enduring trends impacting long-listed brands. The subdued rebound observed in 2021 has been compounded by off-cycle price cuts and residual pandemic effects. Annual pricing revisions will likely persist, albeit with lower impacts during off-year cycles than established biennial price cut years.

Over the past decade, there has been a notable shift in spending dynamics, with protected brands witnessing a steady increase in market share from 48% to 54%. This trend reversal is attributable to manufacturers investing earlier in Japan and government initiatives facilitating faster access to innovative medicines. Conversely, the contribution of long-listed products to spending has steadily declined from 24% in 2014 to 11% in 2023, with projections indicating a further decrease to 7% by 2028.

Moreover, policies encouraging the substitution of available generics have been largely effective, driving an anticipated rise in the generic share of spending. These policies incentivise healthcare practitioners to prescribe generics, reflecting ongoing efforts to optimise healthcare expenditure and promote cost-effective treatment options.

Pharmerging Markets1

Pharmerging markets have historically experienced growth primarily fueled by an increased volume of older generic medicines. However, recent shifts in spending patterns have propelled some pharmerging countries, like Russia and Turkey, into ‘other developed nations due to rising pharmaceutical spending levels and improved GDP per capita. Despite these advancements, pharmerging markets still face challenges, such as limited access to specialty medicines, which accounted for 13% of spending in 2023 and will likely remain unchanged by 2028.

Growth in pharmerging markets will likely be driven more by volume rather than the adoption of expensive therapies. These markets typically rely on generics or non-original branded products, reflecting lower shares of spending on originator products. Additionally, pharmaceutical products in pharmerging and lower-income countries tend to have lower prices than developed markets, reflecting the cost-conscious nature of these regions.

(Pharmerging Markets include Argentina, Bangladesh, Brazil, China, Colombia, Egypt, Indonesia, Mexico, Pakistan, India, Philippines, South Africa, Thailand, and Vietnam)

India¹

The Indian pharmaceutical market will likely grow substantially, with medicine spending expected to reach US$38-42 Billion by 2028, reflecting a CAGR of 7-10% between 2024 and 2028. Acute therapies like anti-infectives and vitamins/minerals saw improved volumes in 2023, while chronic therapies, including cardiac and respiratory segments, continue to perform well.

Speciality Medicines¹

Specialty medicines, catering to chronic, complex, and rare diseases, are poised to become a significant component of global pharmaceutical spending, accounting for 43% of expenditure by 2028. In leading developed markets, these medicines are expected to command over 55% of total spending, reflecting a rising trend in healthcare priorities. However, in pharmerging countries, specialty medicines still constitute a smaller share (13%) of total expenditures, primarily due to cost considerations.

The growth of specialty medicines underscores their importance in addressing specific patient needs, although they treat only a small fraction (2-3%) of the patient population. Despite their relatively limited patient base, these medicines are crucial in addressing unmet medical needs, particularly for individuals grappling with challenging health conditions.

Active Pharmaceutical Ingredients (APIs)2

The global API market will likely thrive, with estimates suggesting it will reach US$ 307 Billion by 2029.

Consumer Healthcare (CHC) Market3

The consumer healthcare market includes personal healthcare products available without a prescription, including over-the-counter (OTC) drugs, health supplements, cosmetics, disinfectants, and consumer medical devices. Key segments include OTC pharmaceuticals and dietary supplements, which people can obtain from retail stores, online platforms, or hospitals. The global OTC pharmaceutical market in 2023 faced challenges primarily due to a weak cough and cold season, resulting in modest growth of 3.9%. This segments performance significantly influenced overall market dynamics, highlighting its vulnerability to seasonal variations. Regionally, there were notable disparities, with Asia-Pacific emerging as a prominent region. Categories like digestive remedies and skin treatments outpaced the market average, emphasising the importance of diversification. Looking ahead to 2024, initial growth estimates suggest a cautious start but anticipate a rebound in the latter half, projecting overall growth between 4% to 6% for the year.

Sun Pharma: A Leading Global Pharmaceutical Company

Sun Pharmaceutical Industries Limited (Sun Pharma), along with our subsidiaries and associates, is a leading global pharmaceutical entity and the largest pharmaceutical company in India. With a firm dedication to delivering high-quality medicines, Sun Pharma has earned the trust of customers and patients in over 100 countries. Central to our operations is a diverse and multicultural workforce representing over 50 nationalities, fostering innovation and excellence.

Sun Pharmas extensive portfolio encompasses innovative Specialty medicines, branded generics, pure generics, and APIs, catering to a wide spectrum of healthcare needs. Leveraging robust R&D capabilities, advanced manufacturing infrastructure, and a global commercial footprint, our Company remains agile and empathetic in addressing the dynamic requirements of patients and customers worldwide.

OurCompanys large-scale and extensive manufacturing base supplies medicines around the world. We manufacture and distribute a wide array of dosage forms, including pills, capsules, injectables, sprays, ointments, creams, liquids, drug delivery systems, APIs and intermediates.

Major Deals

Year	Deals	Country/Countries	Rationale
2023	In-licensed Nidlegy™	Europe, ANZ	New anti-cancer biopharmaceutical for the treatment of melanoma and non-melanoma skin cancers
2023	Acquired Concert Pharma in the US	US	Add a late-stage specialty product to dermatology franchise. Treatment of alopecia areata
2023	In-licensed Sezaby	US	Addition of product to Specialty portfolio. Treatment of neonatal seizures
2022	Acquired Uractiv portfolio from Fiterman Pharma	Romania	Expand non-prescription product basket in Romania and neighbouring markets
2022	Adding territories to Winlevi via licensing agreement	Japan, ANZ, Brazil, Mexico & Russia	Increase access to new markets for Winlevi
2022	Taro (Suns subsidiary) acquired Alchemee Business from Galderma	US, Japan & Canada	Acquired the "Proactiv", "Restorative Elements" and "In Defense of Skin" brands. Strengthens Taros OTC portfolio
2021	In-licensing agreement for Winlevi	US & Canada	Add a specialty product to dermatology franchise. Topical treatment of acne vulgaris
2020	Exclusive Out-licensing agreement with Hikma for Ilumya	Middle East & North Africa	Registration and commercialisation of the product in all Middle East & North Africa (MENA) markets
2020	In-licensing agreement with SPARC for SCD-044	Global	Potential indication in psoriasis, atopic dermatitis and other auto-immune disorders
2019	Out-licensing agreement with AstraZeneca UK for ready-to-use infusion oncology products	Mainland China	Commercialise oncology portfolio in Mainland China
2019	Licensing agreement with CMS for tildrakizumab, Cequa and 8 generic products	Greater China	Access to Greater China market
2018	Acquired Pola Pharma in Japan	Japan	Access to Japanese dermatology market
2016	Acquired global rights for Cequa & Odomzo	Global	Enhance Specialty pipeline. Treatment of dry eye and locally acting Basal Cell Carcinoma respectively.
2016	Acquired Biosintez	Russia	Local manufacturing capability to enhance presence in Russian market
2016	Out-licensing agreement with Almirall for tildrakizumab	Europe	Access to European market for tildrakizumab
2016	Acquired 14 brands from Novartis	Japan	Entry into Japan
2015	Acquired InSite Vision Inc.	US	Strengthen Specialty ophthalmic portfolio in US. To prevent pain in patients undergoing cataract surgery
2015	Sun Pharma – Ranbaxy merger	Global	Strengthen position in the Global Generic Pharma Industry. Creating largest pharma company in India with strong positioning in Emerging Markets.
2014	In-licensing agreement with Merck for tildrakizumab	Global	Strengthen the Specialty product pipeline. Treatment of plaque psoriasis
2014	Acquired Pharmalucence	US	Access to the sterile injectable capacity in the US
2012	Acquired DUSA Pharma, Inc.	US	Access to specialty drug-device combination in dermatology segment
2010	Acquired Taro Pharmaceutical Industries Ltd.	Israel	Access to dermatology generic portfolio Manufacturing facilities at Israel & Canada
1997	Acquired Caraco	US	Entry into the US Market

Global Specialty Business

Specialty medicines represent the latest generation of pharmaceuticals designed to treat chronic, complex, and rare diseases. By 2023, specialty medicines constituted approximately 40% of global pharmaceutical spending, a notable increase from 35% in 2018. This upward trajectory is evident in the top-10 developed markets, where specialty medicines accounted for 50% of pharmaceutical spending in 2023 and will likely reach 55% by 2028. This expansion highlights the sustained growth momentum of specialty medicines in addressing the unmet medical needs of patients worldwide.

Share of Specialty Medicines in Overall Pharmaceutical Spending By Market1

Table 4

	2013	2018	2023	2028
Top 10 developed markets	29	43	50	55
Other developed markets	23	31	36	41
Pharmerging markets	8	10	13	13
Global markets	24	35	40	43

Sun Pharmas Specialty Portfolio and Highlights

Beginning with the acquisition of DUSA in 2012, Sun Pharma embarked on a journey to enhance its global specialty offering. Our Company specialises in dermatology, ophthalmology, and onco-dermatology and remains dedicated to addressing critical patient needs within these therapeutic areas. Sun Pharmas investments in the Specialty portfolio revolves around three core strategies:

• Product access: We aim to expand our product portfolio by securing access through in-licensing agreements, strategic acquisitions, and in-house R&D efforts.

• Clinical development: Our Company is committed to advancing our pipeline of specialty assets through rigorous clinical development and ensuring the delivery of innovative treatments to patients worldwide.

• Commercial infrastructure: We recognise the importance of establishing a robust front-end commercial infrastructure to market and distribute our specialty products effectively. This approach includes investing in sales and marketing capabilities and bolstering distribution channels.

We track and report our global specialty revenues separately, which are also integrated into the Companys geographical business segments, including the US market and other key regions.

FY24 Highlights

Sun Pharma markets 26 specialty products across the globe, which contributed ~18% to the Companys consolidated revenues for FY24.

Currently Marketed Specialty Portfolio

Table 5

Product	Description
ILUMYA/	For treatment of adults with moderate-to-severe plaque psoriasis who are candidates for systemic therapy or phototherapy
ILUMETRI	• Long term clinical data shows that the significant response rate seen in 52 & 64 weeks were maintained over five years1
	• Ongoing Phase-3 trials for Psoriatic Arthritis
	• Current Markets include US, Australia, Japan, Canada, Europe (by partner Almirall), China (by partner CMS holdings)
	• Out licensed to Hikma for Middle East & North Africa
WINLEVI	Topical treatment of acne vulgaris in patients 12 years of age and older
	• Results from two pivotal clinical trials showed favorable safety and efficacy data for WINLEVI in patients with acne aged 12 years and older2
	• Current Markets: US and Canada
LEVULAN KERASTICK	For photodynamic therapy (treatment) of minimally to moderately thick actinic keratoses of the face or scalp, or actinic keratoses of the upper extremities
+ BLU-U	• First and only PDT approved to treat the face and scalp as well as the upper arms, forearms, and hands3
	• Current Markets: US
ABSORICA LD	Treatment of severe recalcitrant nodular acne in non-pregnant patients 12 years of age and older with multiple inflammatory nodules with a diameter of 5 mm or greater
	• After one 20-week course of ABSORICA therapy, 95% of patients didnt require additional isotretinoin treatment up to two years posttreatment4
	• Current Markets: US
ODOMZO	Treatment of adult patients with locally advanced basal cell carcinoma (BCC) that has recurred following surgery or radiation therapy, or those who are not candidates for surgery or radiation therapy.
	• ODOMZO was shown to shrink laBCC in almost 6 out of 10 patients (56%) in a clinical study. laBCC Patients were treated with ODOMZO? and followed for at least 18 months5
	• Currently marketed in US, Canada, Germany, France, Denmark, Switzerland, Spain, Italy, Australia and Israel
CEQUA	To increase tear production in patients with keratoconjunctivitis sicca (dry eye)
	• Phase 3 confirmatory study observed clinically and statistically significant improvements in tear production and ocular surface integrity in patients6
	• Current Markets: US, Canada
	• Out-licensed to CMS for Greater China in June 2019
BROMSITE	Treatment of postoperative inflammation and prevention of ocular pain in patients undergoing cataract surgery
	• More than 2x as many patients treated with Bromsite? were inflammation-free at day 15 than those treated with vehicle and nearly 80% of patients treated with Bromsite? were pain-free at day 1 post surgery7
	• Current Markets: US
XELPROS	Reduction of elevated intraocular pressure (IOP) in patients with open-angle glaucoma or ocular hypertension.
	• In clinical trials, XELPROS demonstrated reductions from baseline in IOP in patients with open-angle glaucoma or ocular hypertension8
	• Current Markets: US
YONSA	In combination with methylprednisolone for the treatment of patients with metastatic castration resistant prostate cancer (CRPC).
	• YONSA? was shown in clinical studies to be an effective form of abiraterone acetate, and can be taken with or without food, in combination with methylprednisolone9
	• Current Markets: US
SEZABY	First and only product approved in the US for treating seizures in neonatal patients
	• NEOLEV2 study compared phenobarbital to levetiracetam in the first-line treatment of neonatal seizures. 24 hours following the administration, 73% vs. 25% were seizure-free in the respective groups.10
	• Current Markets: US
Sprinkle	For therapeutic solutions for Long-Term Care (LTC) patients
Portfolio	• Products using sprinkle technology for patients who have difficulty swallowing
	• Sprinkle versions of metoprolol (cardiology), rosuvastatin (cardiology) & duloxetine (neuro-psychiatry)
	• Current Markets: US

Sun Pharmas Global Specialty Pipeline

Sun Pharma has a pipeline of six specialty molecules undergoing clinical trials. The details of which are mentioned hereunder:

Table 6

Candidate	Mechanism of Action	Indication
deuruxolitinib	JAK Inhibitor	alopecia areata
Ilumya (tildrakizumab)	IL-23 Antagonist	psoriatic arthritis
NidlegyTM	Immunocytokines	melanoma & non melanoma skin cancers
MM-II	Liposomal intra-articular lubrication	Pain in osteoarthritis
SCD-044	Selective SIPR1 Agonist	atopic dermatitis psoriasis
GL0034	GLP-1R Agonist	Type 2 diabetes & obesity

All candidates for global markets except Nidlegy^TM where Sun is commercial partner for Europe, Australia & New Zealand, Nidlegy^TM is a trademark of Philogen.

Business Model

At Sun Pharma, we are committed to our vision of ‘Reaching People and Touching

Lives Globally as a Leading Provider of Valued Medicines. We strive to achieve this vision through a well-defined strategy that focuses on sustainable growth, cost leadership, business development, balanced investments, and future profitability.

Financial Ratios

Consolidated

Ratio	FY24	FY23	Variance (%)	Reasons (if Variance is >25%)
Return on Net Worth (%)	15.0	15.1	(0.7)
Debtors Turnover (times)	4.2	3.8	10.5
Inventory Turnover (times)	1.1	1.0	10.0
Interest Coverage	49.6	56.7	(12.5)
Current Ratio (times)	2.6	2.0	30.0	Reduction in debt and increase in Cash and Cash equivalents.
Debt Equity Ratio (times)	0.05	0.12	(58.3)	Reduction in debt and increased in Net Worth.
Operating Profit Margin (%)	25.7	25.5	0.8
Net Profit Margin (%)	20.1	19.6	2.6

Standalone

Ratio	FY24	FY23	Variance (%)	Reasons (if Variance is >25%)
Return on Net Worth (%)	12.1	7.1	70.4	Return on Net Worth is higher for the year ended March 31, 2024, due to lower profit in previous year on account of impairment charge on investment
Debtors Turnover (times)	2.2	2.9	(24.1)
Inventory Turnover (times)	1.6	1.5	6.7
Interest Coverage	5.7	10.9	(47.7)	Interest coverage ratio is lower due to increase in borrowings and consequent finance costs
Current Ratio (times)	3.36	1.97	70.7	Primarily due to payment towards product the year
Debt Equity Ratio (times)	0.47	0.33	42.4	Increase in borrowings
Operating Profit Margin (%)	25.5	29.7	(14.1)
Net Profit Margin (%)	14.4	8.3	73.5	Net Profit margin is 31, 2024, due to lower profit in previous year on account of impairment charge on investment

FY24 Business Highlights

Sun Pharma demonstrated a strong performance across its global operations with a consolidated topline growth of 10.4% compared to FY23. Business-wise, the topline growth was primarily led by the US market with 13.4% Y-o-Y growth, followed by Rest of the World markets with 11.1% Y-o-Y growth. India business also demonstrated 9.5% growth in revenue over the past year and Emerging Markets revenue witnessed a steady growth compared to previous year.

The Companys EBITDA for FY24 witnessed a growth of 11.8% compared to last year, with an EBITDA margin of 26.9%. Adjusted net profit for the year grew by 16.5% Y-o-Y, demonstrating profitable growth for FY24.

Overall, these results reflect Sun Pharmas continued focus on growth and profitability across its global operations. The Companys strong performance across its key markets demonstrates its ability to navigate through challenging times and continue to deliver value to its stakeholders.

Business-wise Review

Sun Pharmas US business comprises specialty and generic medicines, reflecting the Companys diverse offerings in the pharmaceutical market. Over the years, we have emerged as the 13^th largest generics pharmaceutical company in the United States and securing the second position by prescriptions in the US dermatology market. Concurrently, the Company has continuously expanded our footprint in the Specialty segment, with a strategic focus on dermatology, ophthalmology, and onco-dermatology. In FY24, US business contributed 32% to the Companys consolidated revenues, demonstrating the segments significant contribution to our Companys overall performance.

Moreover, Sun Pharma has established valuable relationships with leading wholesalers, distributors, chain drugstores, healthcare providers, and payors in the USA, underscoring our strong presence and network in the market. The Companys vertically integrated manufacturing capabilities enable us to efficiently serve our customers in the United States, ensuring seamless production and supply chain management to meet market demands effectively.

Milestones in the US Business

Table 9

Year	Major Initiatives
FY24	• Taro entered into a definitive merger agreement with Sun
FY23	• Acquired Concert Pharma giving access to deuruxolitinib for Alopecia Areata
	• Launched SEZABY in the US
FY22	• Launched Winlevi? in the US
FY20	• Launched Cequa and Absorica LD in the US
FY19	• Launched Ilumya, Yonsa & Xelpros in the US
	• Received US FDA approval for Cequa
	• Released Ready-to-Infuse INFUGEMTM
FY18	• Launched Odomzo in the US
	• Received US FDA approval for Ilumya
FY17	• Acquired Ocular Technologies to receive access to Cequa for dry eye
	• Acquired Odomzo, a branded oncology product from Novartis
FY13	• Acquired DUSA for entry into branded specialty
FY10	• Acquired Taro Pharma for entry into US dermatology
FY98	• Entered the US through Caraco acquisition

FY24 Highlights

Revenues from the US grew by 13.4% Y-o-Y to reach 153,493 Million in FY24. The growth was mainly driven by specialty with all growth products contributing viz. Ilumya, Cequa, Winlevi and Odomzo.

Road Ahead

• Enhance share of specialty/branded business

• Focus on complex generics and high entry barrier segments

• Offer a wide portfolio of products to customers across multiple dosage forms

• Ensure stringent compliance, robust product quality and an efficient supply chain

India Business: Largest Pharma Company in India 4, 5

Sun Pharma is Indias largest pharmaceutical company, holding an 8.5% market share and boasting a formidable presence in the countrys chronic and acute segments. With a comprehensive product portfolio spanning diverse therapeutic segments such as neuropsychiatry, cardiology, diabetes, gastroenterology, pain/analgesics, gynaecology, ophthalmology, urology, dermatology, respiratory, anti-infectives, and more, Sun Pharma addresses a broad spectrum of healthcare needs.

Leveraging our extensive sales force coupled with a widespread distribution network and expansive geographical reach, Sun Pharma effectively penetrates the Indian market. Our Companys proven brand equity in the medical community reinforces our identity as a trusted healthcare partner.

At Sun Pharma, our commitment to innovation is not just a statement, but a driving force. This is evident through our continuous launch of new products developed through in-house research and development initiatives. Simultaneously, we are strategically positioning ourselves as a preferred partner for in-licensing the latest generation of innovative products, aligning with our mission to enhance access to cutting-edge treatments for patients across India.

India Prescription Ranking Leadership in Key Therapeutic Areas5

Table 10

Specialist	February 2024	February 2023
Psychiatrists	1	1
Neurologists	1	1
Cardiologists	1	1
Diabetologists	1	1
Gastroenterologists	1	1
Nephrologists	1	1
Consultant Physicians	1	1
Urologists	1	1
Dermatologists	1	1
ENT specialists	1	1
Chest physicians	1	1
Ophthalmologists	1	2
Gynaecologists	2	2
Orthopaedic specialists	2	1
General surgeons	2	2

FY24 Highlights

Revenues from the India business* grew by 9.5% Y-o-Y to reach 148,893 Million, driven by growth across most of our Companys therapeutic segments.

* Our India business comprises the branded formulations business, described here, and part of the global consumer healthcare business, described in a later section.

New Product Approvals, Launches and Acquisitions in India

• Sun Pharma launched a novel ophthalmology treatment, CEQUA^?, in India for patients who have Dry Eye Disease (DED) with inflammation, a commonly occurring condition. CEQUA^? is the first dry eye treatment available in India that is delivered with nanomicellar (NCELL^?)* technology. Unique NCELL^? Technology and formulation

provides superior delivery over cyclosporine emulsion 0.05%, backed by several years of clinical experience in the US and other geographies.

• Sun Pharma entered into a license agreement with Pharmazz Inc., (Pharmazz), a US-based biopharmaceutical company to commercialise a first-in-class innovative drug, Tyvalzi™ (sovateltide) in India. Developed by Pharmazz for potential global use, Sovateltide is indicated for treating cerebral ischemic stroke. Sovateltide is a first of its kind drug to treat acute cerebral ischemic stroke that can be administered up to 24 hours after the onset of symptoms. India is the first global territory where Tyvalzi™ (sovateltide) is being introduced.

• Sun Pharma and Zydus Lifesciences Limited entered into a licensing agreement to co-market an innovative drug, desidustat in India. Desidustat is first-of-its-kind oral treatment for anemia associated with Chronic Kidney Disease (CKD) in India. Sun Pharma will market the drug under the brand name RYTSTAT^?.

• Sun Pharma and Bayer signed an agreement to market and distribute a second brand of finerenone in India. Finerenone, a patented medicine is indicated to reduce the risk of sustained eGFR decline, end-stage kidney disease, cardiovascular death, non-fatal myocardial infarction, and hospitalisation for heart failure in adult patients with chronic kidney disease associated with type 2 diabetes mellitus. Sun Pharma is marketing finerenone under the brand name Lyvelsa^?.

Road Ahead

• Enhance productivity

• Maintain leadership in a competitive market

• Innovate continuously to ensure high brand equity with doctors

• Evaluate licensing opportunities for latest patented products

As a leading Indian pharmaceutical company in emerging markets, Sun Pharma has established a significant presence in over 80 countries worldwide. With a robust global footprint spanning key regions such as Romania, Russia, South Africa, Brazil, and Mexico, Sun Pharma focuses on strategically important markets to drive growth and expand reach.

With a customer-centric approach, the Company prioritises understanding the unique needs of healthcare professionals and patients, fostering loyalty and driving adoption.

Supporting our global operations, Sun Pharma maintains a dedicated sales force comprising over 2,500 sales representatives across various markets. This extensive network is not just a number, but a testament to the Companys effectiveness in engaging with healthcare providers, promoting products, and driving sales growth.

FY24 Highlights

• Revenues from Emerging Markets grew by 9.1% Y-o-Y to reach 86,195 Million driven by growth across multiple markets.

New Product Approvals, Launches and Acquisitions in Emerging Markets

• New Drug Application (NDA) of tildrakizumab injection under the brand name of ILUMETRI has been approved by the National Medical Products Administration of the Peoples Republic of China (‘China) (NMPA). ILUMETRI is indicated for the treatment of adults with moderate-to-severe plaque psoriasis who are candidates for systemic therapy or phototherapy. In June 2019, Sun Pharma out-licensed tildrakizumab to a subsidiary of China Medical System Holdings Limited (CMS), for development, regulatory filings and commercialisation of the product in Greater China. Ilumetri was included in Chinas National Reimbursement Drug List from January 2024.

Road Ahead
• Gain critical mass in key markets	• Enhance specialty product basket	• Focus on profitable growth

We have a strong presence in key international markets including Western Europe, Canada, Australia and New Zealand, Japan, Israel, and others. Leveraging our global expertise and strategic partnerships, our Company has established a formidable market presence in these regions.

Our Companys expanding product basket encompasses specialty, hospital, and retail products, catering to diverse healthcare needs across different markets. Sun Pharma operates on a distribution-led model and employs a dedicated sales force to promote our specialty products in markets such as Canada, Japan, Australia, Israel, and Hungary. Additionally, the Company leverages our manufacturing facilities in India to supply products to these regions, ensuring seamless availability and distribution.

FY24 Highlights

• Revenues from the RoW markets increased by 11.1% Y-o-Y to reach 67,128 Million

New Product Approvals, Launches and Acquisitions in Rest of World

• Sun Pharma and Philogen entered into a licensing agreement for commercialising Philogens specialty product, Nidlegy™ (Daromun) in the territories of Europe, Australia and New Zealand. Nidlegy™, currently in Phase III clinical trials, is a new anti-cancer biopharmaceutical which is being developed for the treatment of melanoma and non-melanoma skin cancers. Sun Pharma has exclusive rights to commercialise Nidlegy™ for indications of skin cancers in the territories of Europe, Australia and New Zealand. Philogen will complete pivotal clinical trials for the product in Europe, pursue marketing authorisation with the regulatory authorities and manufacture commercial supplies. Sun Pharma will be responsible for commercialisation activities. The two partner companies will share post-commercialisation economics in about 50:50 ratio.

• Australian Therapeutic Goods Administration (TGA) granted regulatory approval for Winlevi^? (clascoterone cream 1%). Winlevi^? is indicated for the topical treatment of acne vulgaris in patients 12 years of age and older.

Road Ahead
• Enhance revenue contribution of specialty products	• Focus on complex generic launches	• Gain critical mass in key markets

Sun Pharmas Consumer Health Care business is amongst the top consumer health care businesses in India with a portfolio based on scientific formulations, having operations in about 25+ emerging markets.

With bellwether brands such as Revital H, Volini and Abzorb in its portfolio, Sun Pharmas consumer healthcare products have strong distribution reach across pharmacies, retail stores and online e-commerce platforms in India.

FY24 Highlights

• Sun Pharmas key brands – Volini, Revital H and Abzorb – launched new communications focused on driving category development by building relevance

• Implemented robust trade engagement programs focused on improving trade recommendation, availability and visibility

• Launched Revital Cal 500, a calcium supplement with a superior formulation to participate in the growing calcium supplements market

Road Ahead

• Sustained focus and investments in anchor brands with a view of category development

• Leverage on our brand equity to launch extensions and build a portfolio of products across new formats and benefit spaces

• Augmenting consumer reach through opening of new markets and distribution channels

• Improving sales force efficiency and deploy effective trade marketing initiatives

• Activating digital for wider consumer outreach

With 14 state-of-the-art API facilities, Sun Pharma maintains stringent control over costs and ensures seamless backward integration. Serving an extensive clientele, including major generic and innovator companies, Sun Pharmas API division has a diverse portfolio comprising over 380 APIs.

FY24 Highlights

Revenue from the API business decreased by 2.7% to 19,187 Million mainly due to lower sales recorded in India.

Road Ahead

• Support the formulations business by developing strategic APIs

• Ensure consistent supplies and high service standards for customers

Sun Pharmas dedicated R&D team endeavours to offer patients innovative and affordable medicines and treatments to alleviate their ailments. Our Company has continuously invested in building an extensive portfolio of specialty products, generics and branded generics for the global market.

Our R&D capabilities extend across various dosage forms, including injectables, orals, liquids, ointments, gels, sprays, hormones, and oral products. Additionally, our robust intellectual property capability supports our R&D team.

FY24 Highlights

• Invested 31,776 Million in R&D (6.7% of sales)

• Developed and filed ~250 formulation dossiers globally

• Extended our Specialty R&D pipeline

Global Manufacturing Base: World-class Infrastructure

With 41 state-of-the-art manufacturing facilities spanning six continents, Sun Pharma has established a leading position in the global pharmaceutical industry. Our vertically integrated network enables us to produce medicines in the areas of oncology, hormones, peptides, and steroidal drugs, while adhering to the highest quality standards. We offer a variety of dosage forms, including orals, creams, ointments, injectables, sprays, and liquids. At Sun Pharma, we are committed to providing high-quality pharmaceutical products that make a positive impact on peoples lives. Our extensive global footprint and world-class manufacturing infrastructure allow us to deliver on this promise to our customers and patients worldwide.

Road Ahead

• Develop complex products across multiple dosage forms

• Invest to extend the specialty pipeline

Sun Pharmas manufacturing facilities are certified by global regulatory agencies such as the USFDA, European Medicines Evaluation Agency (EMEA); UK Medicines and Healthcare Products Regulatory Agency (MHRA); Australias Therapeutic Goods Administration (TGA), South Africas Medicines Control Council (MCC); Germanys Federal Institute for Drugs and Medical Devices (BfArM); Brazilian Health Regulatory Agency (ANVISA); the World Health Organization (WHO), and South Koreas Ministry of Food and Drug Safety and Japans Pharmaceuticals and Medical Devices Agency.

Finishing Dosage Manufacturing FacilitiesTable 11

Country	Number of Finished Dosage Facilities
India	13
United States	3
Japan	1
Canada	1
Hungary	1
Israel	1
Bangladesh	1
South Africa	1
Malaysia	1
Romania	1
Egypt	1
Nigeria	1
Russia	1
Total	27

API Manufacturing Facilities

Table 12

Country	Number of API Facilities
India	9
Australia	2
Israel	1
United States	1
Hungary	1
Total	14

People: Nurturing a Diverse and Inclusive Global Workforce

With an extensive global workforce exceeding, 43,000 individuals from over 50 nations, Sun Pharma prioritises cultivating an inclusive workplace environment that fosters professional growth and advancement. Recognising the value of diverse perspectives, our Company promotes a culture of equality and opportunity. Through continued investment in learning and development initiatives, Sun Pharma empowers its workforce to stay ahead of the industry.

Commitment to Quality

Sun Pharmas robust quality management system ensures the highest quality standards are maintained across its research centres, manufacturing divisions, testing labs, and distribution centres. Our Quality Management Team oversees regulatory compliance for all products and manufacturing plants, and we hold current Good Manufacturing Practice (cGMP) certifications from various international regulatory bodies such as US FDA, EMA, WHO, and TGA. Our Corporate Quality Unit ensures the execution of the latest GMP upgrades and guidelines.

Internal Control

We at Sun Pharma believe that internal control is a prerequisite for governance and that we should exercise business plans within a framework of checks and balances. Our Company has a well-established internal control framework to continuously assess the adequacy, effectiveness, and efficiency of financial and operational controls. The management is committed to ensuring an effective internal control environment, commensurate with the size and complexity of the business, which assures compliance with internal policies, applicable laws, regulations and protection of resources and assets.

Global Internal Audit (GIA)

An independent and empowered Global Internal Audit Function at the corporate level, with support from a reputed audit firm, carries out risk-focused audits across our Indian and overseas businesses to ensure that business process controls are adequate and are functioning effectively. These reviews include financial, operational, compliance controls and risk mitigation plans. The Companys operating management closely monitors the internal control environment and effectively implements the recommendations. The Audit Committee of the Board monitors the performance of the Internal Audit Function, reviews key findings and provides strategic guidance. GIAs functioning is governed by the Audit Charter, duly approved by the Audit Committee of the Board, which stipulates matters contributing to the proper and effective conduct of the audit. The audit processes are fully automated using a ‘SunScience tool, which integrates internal audits.

Disclaimer

Statements in this ‘Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, plans or industry conditions or events are ‘forward-looking statements within the meaning of applicable securities laws and regulations. Actual results, performance or achievements could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and Indian demand-supply conditions, finished goods prices, feedstock availability and prices, competitors pricing in the Companys principal markets, changes in government regulations, tax regimes, economic conditions within India and the countries within which the Company conducts business and other factors, such as litigation and labour unrest or other difficulties. The Company assumes no responsibility to publicly update, amend, modify, or revise any forward-looking statements, based on any subsequent development, new information or future events or otherwise except as required by applicable law. Unless the context otherwise requires, references in this document to ‘we, ‘us or ‘our refers to Sun Pharmaceutical Industries Limited and consolidated subsidiaries.

References:

1. IQVIA Institute: Global Use of Medicine Outlook 2024

2. Mordor Intelligence

3. IQVIA

4. AIOCD-AWACS Data

5. SMSRC Data

6. Euromonitor