Sunrest Lifescience Ltd Management Discussions

The management of the Company is pleased to present its report on the business environment & industry scenario, industry risks and opportunities and Companys performance during the financial year 2024-25.

GLOBAL ECONOMY:

The global economy displayed signs of recovery from geopolitical concerns, elevated inflation levels and tight monetary policy. In F.Y. 2023-24, the global GDP expanded by an estimated 2.6%. In addition to this, the global inflation level fell from 5.8% in F.Y. 2024-25 to 4.2%, in F.Y. 2024-25. This decline in the global inflation level was facilitated by the fall in the global energy price and tight monetary policies. Additionally, the growth in the emerging market and developing economies was 4.3%, on the other hand, the advanced economies grew by 1.6% in the reported year. According to estimates by the International Monetary Fund (IMF), global GDP growth for the financial year stood at approximately 3.1%, marginally lower than the previous year, reflecting the lingering impacts of inflationary pressures, high interest rates, and regional conflicts.

• Monetary Policy Tightening and Inflation Control:

Major central banks across advanced economies maintained a tight monetary policy stance for most of the year in an attempt to rein in post-pandemic inflation. While inflation has shown a declining trend in several regions, interest rates remained elevated, impacting capital-intensive industries and consumption patterns. For pharmaceutical companies, this translated into increased financing costs, tighter capital availability, and pressure on margins in inflation-sensitive markets.

• Slower Growth in Advanced Economies

The United States, Eurozone, and Japan reported subdued economic expansion, with growth tapering due to restrictive monetary conditions,

weakening exports, and declining consumer confidence. Pharmaceutical demand remained steady, though pricing pressures and reimbursement constraints in public healthcare systems intensified.

• Emerging Markets: Resilience Amid Challenges

Emerging economies, particularly India, China, Indonesia, and parts of Africa, displayed robust economic activity, driven by domestic consumption, healthcare infrastructure development, and strong demographic demand. Indias pharmaceutical industry, in particular, benefited from increased exports, API manufacturing incentives, and its position as a global hub for affordable generics and vaccines.

• Focus on Public Health and Healthcare Investment

Governments and global health bodies remained focused on strengthening public health systems, ensuring medicine accessibility, and preparing for future health emergencies. These policy directions encouraged investment in life sciences, biotech innovation, and regulatory acceleration, creating a favorable landscape for pharmaceutical companies with strong R&D pipelines and compliance track records.

Biotechnology remains a focal point for growth in the next five years, alongside specialty medicines catering to chronic and rare conditions. 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.

INDIAN ECONOMY:

India remained one of the worlds fastest-growing deteriorated, dampening investor sentiment. Despite pressure from the foreign exchange market and portfolio

withdrawals, Indian equity markets saw a slight increase in trading. This resilience reflects the robust economy and the increasing investments by local organisations. India recorded a real GDP growth of approximately 6.8%, maintaining its position as one of the fastest-growing major economies in the world during F.Y.2024-25.

• Growth Drivers:

Domestic Consumption remained strong, supported by a growing middle class, rising disposable incomes, and improving rural demand. Government Capex in infrastructure, healthcare, and digital initiatives contributed significantly to GDP growth. Financial Sector Stability improved with better asset quality, higher credit growth, and increased fintech penetration.

• Inflation and Monetary Policy

Retail inflation remained within the RBIs comfort zone for most of the year, averaging around 5.4%, although food and fuel prices remained volatile. The Reserve Bank of India maintained a balanced monetary policy, ensuring adequate liquidity while containing inflation.

• External Sector

Indias exports showed moderate growth, while imports remained high, particularly in energy and capital goods. The rupee remained under pressure due to global capital outflows and crude oil price volatility. However, record- high foreign exchange reserves, remittance inflows, and FDI helped maintain external sector stability.

• Digital and Structural Transformation

India continued to make strides in digital infrastructure, public digital platforms (like UPI, ONDC), and ease of doing business. Reforms in taxation

(GST), labor, and compliance frameworks contributed to better investor sentiment and regulatory clarity.

• Government Support and Incentives

The Indian governments robust support and attractive incentives, such as the Production Linked Incentive (PLI) scheme, are pivotal in bolstering the pharmaceutical industry.

As a forward-looking pharmaceutical company, we are well-positioned to capitalize on the Indian economys strengths. Our investments in manufacturing capacity, R&D, and supply chain localization align with the governments "Atmanirbhar Bharat" (self-reliant India) vision. We also continue to collaborate with healthcare providers, research institutions, and policy stakeholders to support national health priorities and expand access to essential medicines across the country.

THE INDUSTRY OVERVIEW:

India is the largest provider of generic drugs globally and is known for its affordable vaccines and generic medications. The Indian Pharmaceutical industry is currently ranked third in pharmaceutical production by volume after evolving over time into a thriving industry growing at a CAGR of 6.5%.since the past nine years. Generic drugs, over-the-counter medications, bulk drugs, vaccines, contract research & manufacturing, biosimilar, and biologics are some of the major segments of the Indian pharma industry. India has the greatest number of pharmaceutical manufacturing facilities that are in compliance with the US Food and Drug Administration (USFDA) and has 500 API producers that make for around 9.5% of the worldwide API market.

Indian pharmaceutical sector supplies over 50% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicine in the UK. The domestic pharmaceutical industry includes a network of 3,000 drug companies and ~10,500 manufacturing units. India enjoys an important position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers

with a potential to steer the industry ahead to greater heights. Presently, over 80% of the antiretroviral drugs used globally to combat AIDS (Acquired Immune Deficiency Syndrome) are supplied by Indian pharmaceutical firms. India is rightfully known as the "pharmacy of the world" due to the low cost and high quality of its medicines. Indian pharmaceutical industry is known for its generic medicines and low-cost vaccines globally. Transformed over the years as a vibrant sector, presently Indian Pharma ranks third in pharmaceutical production by volume. The Pharmaceutical industry in India is the third largest in the world in terms of volume and 14th largest in terms of value. The Pharma sector currently contributes to around 1.72% of the countrys GDP.

According to a recent EY FICCI report, as there has been a growing consensus over providing new innovative therapies to patients, Indian pharmaceutical market is estimated to touch US$ 130 billion in value by the end of 2030. Meanwhile, the global market size of pharmaceutical products is estimated to cross over the US$ 2 trillion mark in 2025. The global pharmaceutical industry continued its forward trajectory in FY 2024-25, navigating a complex landscape marked by technological innovation, regulatory evolution, and shifting market dynamics. The industry demonstrated strong fundamentals, driven by rising healthcare needs, increased chronic disease prevalence, aging populations, and heightened emphasis on affordable healthcare access.